Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2526

Introduced by Assembly Member Achadjian

February 19, 2016

An act to amend Section begin delete 1793.22 end delete begin insert 1793.2 end insert of the Civil Code, relating to consumer protection.

LEGISLATIVE COUNSEL’S DIGEST

AB 2526, as amended, Achadjian. Consumer begin delete protection. end delete begin insert goods: warranties: motor vehicle replacement. end insert

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Existing law requires a manufacturer of consumer goods sold in this state for which the manufacturer has made an express warranty to maintain sufficient service and repair facilities reasonably close where its goods are sold to carry out the terms of those warranties or to designate and authorize independent repair or service facilities to fulfill this purpose. Existing law requires a manufacturer that is unable to service or repair a new motor vehicle to conform to the express warranties after a reasonable number of attempts to replace the vehicle or promptly make restitution. Existing law requires a manufacturer, in the case of a replacement, to also pay other specified costs, including reasonable repair, towing, and rental car costs actually incurred by the buyer.

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This bill, in the case of a new motor vehicle replacement as described above, would require the manufacturer to pay the lesser of reasonable repair, towing, and rental car costs and those costs actually incurred by the buyer.

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Existing law, the Tanner Consumer Protection Act, establishes a presumption that a reasonable number of attempts have been made to conform a new motor vehicle to the applicable express warranties if, within 18 months from delivery or 18,000 miles on the odometer, whichever occurs first, one or more conditions occur.

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This bill would make nonsubstantive changes to these provisions.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 1793.2 of the end insert begin insert Civil Code end insert begin insert is amended to
read: end insert

1793.2.  

(a) Every manufacturer of consumer goods sold in
this state and for which the manufacturer has made an express
warranty shall:

(1) (A) Maintain in this state sufficient service and repair
facilities reasonably close to all areas where its consumer goods
are sold to carry out the terms of those warranties or designate and
authorize in this state as service and repair facilities independent
repair or service facilities reasonably close to all areas where its
consumer goods are sold to carry out the terms of the warranties.

(B) As a means of complying with this paragraph, a
manufacturer may enter into warranty service contracts with
independent service and repair facilities. The warranty service
contracts may provide for a fixed schedule of rates to be charged
for warranty service or warranty repair work. However, the rates
fixed by those contracts shall be in conformity with the
requirements of subdivision (c) of Section 1793.3. The rates
established pursuant to subdivision (c) of Section 1793.3, between
the manufacturer and the independent service and repair facility,
do not preclude a good faith discount that is reasonably related to
reduced credit and general overhead cost factors arising from the
manufacturer’s payment of warranty charges direct to the
independent service and repair facility. The warranty service
contracts authorized by this paragraph may not be executed to
cover a period of time in excess of one year, and may be renewed
only by a separate, new contract or letter of agreement between
the manufacturer and the independent service and repair facility.

(2) In the event of a failure to comply with paragraph (1) of this
subdivision, be subject to Section 1793.5.

(3) Make available to authorized service and repair facilities
sufficient service literature and replacement parts to effect repairs
during the express warranty period.

(b) Where those service and repair facilities are maintained in
this state and service or repair of the goods is necessary because
they do not conform with the applicable express warranties, service
and repair shall be commenced within a reasonable time by the
manufacturer or its representative in this state. Unless the buyer
agrees in writing to the contrary, the goods shall be serviced or
repaired so as to conform to the applicable warranties within 30
days. Delay caused by conditions beyond the control of the
manufacturer or its representatives shall serve to extend this 30-day
requirement. Where delay arises, conforming goods shall be
tendered as soon as possible following termination of the condition
giving rise to the delay.

(c) The buyer shall deliver nonconforming goods to the
manufacturer’s service and repair facility within this state, unless,
due to reasons of size and weight, or method of attachment, or
method of installation, or nature of the nonconformity, delivery
cannot reasonably be accomplished. If the buyer cannot return the
nonconforming goods for any of these reasons, he or she shall
notify the manufacturer or its nearest service and repair facility
within the state. Written notice of nonconformity to the
manufacturer or its service and repair facility shall constitute return
of the goods for purposes of this section. Upon receipt of that
notice of nonconformity, the manufacturer shall, at its option,
service or repair the goods at the buyer’s residence, or pick up the
goods for service and repair, or arrange for transporting the goods
to its service and repair facility. All reasonable costs of transporting
the goods when a buyer cannot return them for any of the above
reasons shall be at the manufacturer’s expense. The reasonable
costs of transporting nonconforming goods after delivery to the
service and repair facility until return of the goods to the buyer
shall be at the manufacturer’s expense.

(d) (1) Except as provided in paragraph (2), if the manufacturer
or its representative in this state does not service or repair the goods
to conform to the applicable express warranties after a reasonable
number of attempts, the manufacturer shall either replace the goods
or reimburse the buyer in an amount equal to the purchase price
paid by the buyer, less that amount directly attributable to use by
the buyer prior to the discovery of the nonconformity.

(2) If the manufacturer or its representative in this state is unable
to service or repair a new motor vehicle, as that term is defined in
paragraph (2) of subdivision (e) of Section 1793.22, to conform
to the applicable express warranties after a reasonable number of
attempts, the manufacturer shall either promptly replace the new
motor vehicle in accordance with subparagraph (A) or promptly
make restitution to the buyer in accordance with subparagraph (B).
However, the buyer shall be free to elect restitution in lieu of
replacement, and in no event shall the buyer be required by the
manufacturer to accept a replacement vehicle.

(A) In the case of replacement, the manufacturer shall replace
the buyer’s vehicle with a new motor vehicle substantially identical
to the vehicle replaced. The replacement vehicle shall be
accompanied by all express and implied warranties that normally
accompany new motor vehicles of that specific kind. The
manufacturer also shall pay for, or to, the buyer the amount of any
sales or use tax, license fees, registration fees, and other official
fees which the buyer is obligated to pay in connection with the
replacement, plus any incidental damages to which the buyer is
entitled under Section 1794, including, but not limited to, begin insert the lesser
of end insert reasonable repair, towing, and rental car costs begin insert and those costs end insert
actually incurred by the buyer.

(B) In the case of restitution, the manufacturer shall make
restitution in an amount equal to the actual price paid or payable
by the buyer, including any charges for transportation and
manufacturer-installed options, but excluding nonmanufacturer
items installed by a dealer or the buyer, and including any collateral
charges such as sales or use tax, license fees, registration fees, and
other official fees, plus any incidental damages to which the buyer
is entitled under Section 1794, including, but not limited to,
reasonable repair, towing, and rental car costs actually incurred
by the buyer.

(C) When the manufacturer replaces the new motor vehicle
pursuant to subparagraph (A), the buyer shall only be liable to pay
the manufacturer an amount directly attributable to use by the
buyer of the replaced vehicle prior to the time the buyer first
delivered the vehicle to the manufacturer or distributor, or its
authorized service and repair facility for correction of the problem
that gave rise to the nonconformity. When restitution is made
pursuant to subparagraph (B), the amount to be paid by the
manufacturer to the buyer may be reduced by the manufacturer by
that amount directly attributable to use by the buyer prior to the
time the buyer first delivered the vehicle to the manufacturer or
distributor, or its authorized service and repair facility for
correction of the problem that gave rise to the nonconformity. The
amount directly attributable to use by the buyer shall be determined
by multiplying the actual price of the new motor vehicle paid or
payable by the buyer, including any charges for transportation and
manufacturer-installed options, by a fraction having as its
denominator 120,000 and having as its numerator the number of
miles traveled by the new motor vehicle prior to the time the buyer
first delivered the vehicle to the manufacturer or distributor, or its
authorized service and repair facility for correction of the problem
that gave rise to the nonconformity. Nothing in this paragraph shall
in any way limit the rights or remedies available to the buyer under
any other law.

(D) Pursuant to Section 1795.4, a buyer of a new motor vehicle
shall also include a lessee of a new motor vehicle.

(e) (1) If the goods cannot practicably be serviced or repaired
by the manufacturer or its representative to conform to the
applicable express warranties because of the method of installation
or because the goods have become so affixed to real property as
to become a part thereof, the manufacturer shall either replace and
install the goods or reimburse the buyer in an amount equal to the
purchase price paid by the buyer, including installation costs, less
that amount directly attributable to use by the buyer prior to the
discovery of the nonconformity.

(2) With respect to claims arising out of deficiencies in the
construction of a new residential dwelling, paragraph (1) shall not
apply to either of the following:

(A) A product that is not a manufactured product, as defined in
subdivision (g) of Section 896.

(B) A claim against a person or entity that is not the
manufacturer that originally made the express warranty for that
manufactured product.

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SECTION 1.  

Section 1793.22 of the Civil Code is amended
to read:

1793.22.  

(a) This section shall be known, and may be cited
as, the Tanner Consumer Protection Act.

(b) It shall be presumed that a reasonable number of attempts
have been made to conform a new motor vehicle to the applicable
express warranties if, within 18 months from delivery to the buyer
or 18,000 miles on the odometer of the vehicle, whichever occurs
first, one or more of the following conditions occur:

(1) The same nonconformity results in a condition that is likely
to cause death or serious bodily injury if the vehicle is driven and
the nonconformity has been subject to repair two or more times
by the manufacturer or its agents, and the buyer or lessee has at
least once directly notified the manufacturer of the need for the
repair of the nonconformity.

(2) The same nonconformity has been subject to repair four or
more times by the manufacturer or its agents and the buyer has at
least once directly notified the manufacturer of the need for the
repair of the nonconformity.

(3) The vehicle is out of service by reason of repair of
nonconformities by the manufacturer or its agents for a cumulative
total of more than 30 calendar days since delivery of the vehicle
to the buyer. The 30-day limit shall be extended only if repairs
cannot be performed due to conditions beyond the control of the
manufacturer or its agents. The buyer shall be required to directly
notify the manufacturer pursuant to paragraphs (1) and (2) only if
the manufacturer has clearly and conspicuously disclosed to the
buyer, with the warranty or the owner’s manual, the provisions of
this section and that of subdivision (d) of Section 1793.2, including
the requirement that the buyer must notify the manufacturer directly
pursuant to paragraphs (1) and (2). The notification, if required,
shall be sent to the address, if any, specified clearly and
conspicuously by the manufacturer in the warranty or owner’s
manual. This presumption shall be a rebuttable presumption
affecting the burden of proof, and it may be asserted by the buyer
in any civil action, including an action in small claims court, or
other formal or informal proceeding.

(c) If a qualified third-party dispute resolution process exists,
and the buyer receives timely notification in writing of the
availability of that qualified third-party dispute resolution process
with a description of its operation and effect, the presumption in
subdivision (b) may not be asserted by the buyer until after the
buyer has initially resorted to the qualified third-party dispute
resolution process as required in subdivision (d). Notification of
the availability of the qualified third-party dispute resolution
process is not timely if the buyer suffers any prejudice resulting
from any delay in giving the notification. If a qualified third-party
dispute resolution process does not exist, or if the buyer is
dissatisfied with that third-party decision, or if the manufacturer
or its agent neglects to promptly fulfill the terms of the qualified
third-party dispute resolution process decision after the decision
is accepted by the buyer, the buyer may assert the presumption
provided in subdivision (b) in an action to enforce the buyer’s
rights under subdivision (d) of Section 1793.2. The findings and
decision of a qualified third-party dispute resolution process shall
be admissible in evidence in the action without further foundation.
Any period of limitation of actions under any federal or California
laws with respect to any person shall be extended for a period
equal to the number of days between the date a complaint is filed
with a third-party dispute resolution process and the date of its
decision or the date before which the manufacturer or its agent is
required by the decision to fulfill its terms if the decision is
accepted by the buyer, whichever occurs later.

(d) A qualified third-party dispute resolution process shall be
one that does all of the following:

(1) Complies with the minimum requirements of the Federal
Trade Commission for informal dispute settlement procedures as
set forth in Part 703 of Title 16 of the Code of Federal Regulations,
as those regulations read on January 1, 1987.

(2) Renders decisions which are binding on the manufacturer
if the buyer elects to accept the decision.

(3) Prescribes a reasonable time, not to exceed 30 days after the
decision is accepted by the buyer, within which the manufacturer
or its agent must fulfill the terms of its decisions.

(4) Provides arbitrators who are assigned to decide disputes
with copies of, and instruction in, the provisions of the Federal
Trade Commission’s regulations in Part 703 of Title 16 of the
Code of Federal Regulations as those regulations read on January
1, 1987, Division 2 (commencing with Section 2101) of the
Commercial Code, and this chapter.

(5) Requires the manufacturer, when the process orders, under
the terms of this chapter, either that the nonconforming motor
vehicle be replaced if the buyer consents to this remedy or that
restitution be made to the buyer, to replace the motor vehicle or
make restitution in accordance with paragraph (2) of subdivision
(d) of Section 1793.2.

(6) Provides, at the request of the arbitrator or a majority of the
arbitration panel, for an inspection and written report on the
condition of a nonconforming motor vehicle, at no cost to the
buyer, by an automobile expert who is independent of the
manufacturer.

(7) Takes into account, in rendering decisions, all legal and
equitable factors, including, but not limited to, the written warranty,
the rights and remedies conferred in regulations of the Federal
Trade Commission contained in Part 703 of Title 16 of the Code
of Federal Regulations as those regulations read on January 1,
1987, Division 2 (commencing with Section 2101) of the
Commercial Code, this chapter, and any other equitable
considerations appropriate in the circumstances. Nothing in this
chapter requires that, to be certified as a qualified third-party
dispute resolution process pursuant to this section, decisions of
the process must consider or provide remedies in the form of
awards of punitive damages or multiple damages, under subdivision
(c) of Section 1794, or of attorneys’ fees under subdivision (d) of
Section 1794, or of consequential damages other than as provided
in subdivisions (a) and (b) of Section 1794, including, but not
limited to, reasonable repair, towing, and rental car costs actually
incurred by the buyer.

(8) Requires that no arbitrator deciding a dispute may be a party
to the dispute and that no other person, including an employee,
agent, or dealer for the manufacturer, may be allowed to participate
substantively in the merits of any dispute with the arbitrator unless
the buyer is allowed to participate also. Nothing in this subdivision
prohibits any member of an arbitration board from deciding a
dispute.

(9) Obtains and maintains certification by the Department of
Consumer Affairs pursuant to Chapter 9 (commencing with Section
472) of Division 1 of the Business and Professions Code.

(e) For the purposes of subdivision (d) of Section 1793.2 and
this section, the following terms have the following meanings:

(1) “Nonconformity” means a nonconformity which substantially
impairs the use, value, or safety of the new motor vehicle to the
buyer or lessee.

(2) “New motor vehicle” means a new motor vehicle that is
bought or used primarily for personal, family, or household
purposes. “New motor vehicle” also means a new motor vehicle
with a gross vehicle weight under 10,000 pounds that is bought or
used primarily for business purposes by a person, including a
partnership, limited liability company, corporation, association,
or any other legal entity, to which not more than five motor
vehicles are registered in this state. “New motor vehicle” includes
the chassis, chassis cab, and that portion of a motor home devoted
to its propulsion, but does not include any portion designed, used,
or maintained primarily for human habitation, a dealer-owned
vehicle and a “demonstrator” or other motor vehicle sold with a
manufacturer’s new car warranty but does not include a motorcycle
or a motor vehicle which is not registered under the Vehicle Code
because it is to be operated or used exclusively off the highways.
A demonstrator is a vehicle assigned by a dealer for the purpose
of demonstrating qualities and characteristics common to vehicles
of the same or similar model and type.

(3) “Motor home” means a vehicular unit built on, or
permanently attached to, a self-propelled motor vehicle chassis,
chassis cab, or van, which becomes an integral part of the
completed vehicle, designed for human habitation for recreational
or emergency occupancy.

(f) (1) Except as provided in paragraph (2), no person shall sell,
either at wholesale or retail, lease, or transfer a motor vehicle
transferred by a buyer or lessee to a manufacturer pursuant to
paragraph (2) of subdivision (d) of Section 1793.2 or a similar
statute of any other state, unless the nature of the nonconformity
experienced by the original buyer or lessee is clearly and
conspicuously disclosed to the prospective buyer, lessee, or
transferee, the nonconformity is corrected, and the manufacturer
warrants to the new buyer, lessee, or transferee in writing for a
period of one year that the motor vehicle is free of that
nonconformity.

(2) Except for the requirement that the nature of the
nonconformity be disclosed to the transferee, paragraph (1) does
not apply to the transfer of a motor vehicle to an educational
institution if the purpose of the transfer is to make the motor vehicle
available for use in automotive repair courses.

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