Under Warranty-Dealer Blaming Customer and not paying? Read this

[mav1178]

There's many different ways of dealing w/ conflict (which, regardless of how you are right or wrong, is a conflict between your wants/needs vs what the other party can provide), at the end you escalate when necessary (but don't escalate unnecessarily).

https://en.wikipedia.org/wiki/Conflict_resolution

[mav1178]

Originally Posted by Tcoat

I think that Mav's point is that the attorney/nasty letter/lemon law threat should be the last resort not the first. It is fine to be cynical but to go into the situation with guns a blazing because you presume that they will fight may just be what causes them to fight in the first place.

It's like the nuke version of negotiating. Filing a lawsuit in warranty claims is akin to launching nukes. Dangling a lawsuit is like the US telling Iran to comply w/ sanctions or we'll nuke them.

-alex

[stevesnj]

If I run into this scenario I would say "please give me the number to your legal department so my lawyer knows where to call".

[Lonewolf]

Originally Posted by Tcoat

I think that Mav's point is that the attorney/nasty letter/lemon law threat should be the last resort not the first. It is fine to be cynical but to go into the situation with guns a blazing because you presume that they will fight may just be what causes them to fight in the first place.

I agree that a suit of any type should not be the first course of action...besides, most suits require that you exhaust your immediate remedies (administrative or otherwise) before filing suit anyway.

[bedabi]

Originally Posted by stevesnj

Great article and case law showing that not covering warrantied items citing customer abuse is a bad thing for the dealer to do.

http://thegarage.jalopnik.com/dont-l...-wh-1736064825

As a trial lawyer, I though I'd offer some observations about this Jalopnik post.

First, if you look at the actual court decision cited in the blog entry by the lawyer-author seeking new clients, you'll note that it is a 1986 decision by the Supreme Court of Alaska. This is a 30 year old decision that will not be binding outside of Alaska. The decision itself observed that in other jurisdictions the burden of proof can fall on the car owner.

You should realize before feeling emboldened by this case that this decision rendered was after a jury trial that cost the car owner almost $46,000 in out of pocket costs (in 1986 dollars!) for attorney and expert fees, with no guarantee that the fees would be recovered. I've been a trial attorney for 20 years and leaving up to 6 total strangers to decide a case is always a roll of the dice. It could easily have gone the other way, as I'll post below. Then there are the additional costs of appealing the jury trial's ruling all the way to the top state court. This must have cost at least another $30,000 at the very minimum. The plaintiff probably would not have received those attorney and expert fees until the appeal process was completed.

Clearly, this plaintiff pursued this case because he had the wealth to prove a point.

[bedabi]

Here's more recent case law from the California appellate court in 2006 involving a Subaru WRX. The TL;DR version is in bold.

LUIS MENDEZ, Plaintiff and Appellant, v. SUBARU OF AMERICA, INC., Defendant and Respondent.

COURT OF APPEAL OF CALIFORNIA, SIXTH APPELLATE DISTRICT

June 2, 2006, Filed

OPINION
After the transmission in appellant Luis Mendez's new car failed, Subaru of America, Inc. (hereafter "Subaru") denied Mendez's warranty claim on the ground that the failure was due to customer abuse. Mendez sued Subaru on various warranty theories and for violations of the Consumer Legal Remedies Act (Civ. Code, 1 §§ 1750 et seq.). At trial, the jury found that the damage was due to customer abuse and that Subaru had not violated the Consumer Legal Remedies Act. Mendez appeals from the order after judgment awarding Subaru $ 75,000 in attorney fees pursuant to the attorney fee provision in the Consumer Legal Remedies Act ( § 1780, subd (d)), which authorizes an award of fees to a prevailing defendant after the court has found that [*2] the plaintiff did not prosecute the action in good faith.

Mendez contends the fee award should be reversed because the court applied an objective test rather than a subjective test when it determined that the action was not brought in good faith. He asserts there was insufficient evidence to support a finding of subjective bad faith by Mendez or his attorneys. We find no error and shall affirm the order.

Facts
In November 2001, Mendez purchased a new 2002 Subaru Impreza WRX (hereafter WRX). The WRX was equipped with a five-speed, manual transmission and came with a five-year, 60,000-mile warranty.
Mendez drove the car to and from work, five days per week. Mendez lived in San Jose and worked at a Cadillac dealership as an auto technician. Mendez had worked as an auto technician for 18 or 19 years. His duties included "auto diagnostics, troubleshooting" and working with transmissions. Mendez's then 18-year-old son, Orlando Mendez, 2 lived at home and also worked at the Cadillac dealership. Mendez and Orlando rode to work together in the WRX.

Mendez, his wife, and Orlando all drove the WRX. Although Mendez did not restrict his son's access to the WRX, he estimated that Orlando drove the car only once or twice between the date of purchase and the date the transmission failed. Orlando testified that he drove the WRX to work two to four times.

Mendez and Orlando testified that in mid-January 2002, while they were on their way to work, the transmission in the WRX failed. Mendez was driving the car. Mendez claimed he had just turned right from Saratoga Avenue onto Stevens Creek Boulevard, when he heard a "big bang noise, a grinding noise" coming from the transmission and lost first gear. Just prior to the incident, Mendez had come to a complete stop at the light at the intersection. When the light turned green, he gave the car some gas and put it into first gear. Mendez was traveling 10 to 15 miles per hour when the transmission failed. He tried to put the car into second gear, but it would not go. A couple of "guys" from an auto parts store helped Mendez and his son push the car to the Cadillac dealership where they worked. Mendez then arranged for the car to be towed to Stevens Creek Auto Imports, a Subaru dealership (hereafter Dealership) three blocks away. The car had approximately 4,000 miles on it when the transmission failed.

The following day, Mendez went to the Dealership and spoke to Roger Darrin, a service advisor. He told Darrin what had occurred and that he did not have first or second gear. Darrin told him he would check out the car later that day.

Shortly before the car was towed to the Dealership, Orlando called the Dealership and spoke to Roel Largo, an acquaintance who worked in the parts department. According to Largo, Orlando said the first gear had gone out on his WRX when he downshifted as he was about to exit from Highway 101. He said he put the vehicle into first gear rather than fourth gear. Largo transferred Orlando's call to Darrin. Orlando asked Darrin what would happen if he was driving at a certain speed and downshifted from fifth gear to first gear. Darrin told him he would "annihilate his transmission." Orlando asked if the damage would be covered under the warranty. Darrin told him it would not be covered, because it was due to driving conditions or driver error.
After the car was towed to the Dealership, a service technician told Darrin that the transmission had been "totaled" and that it looked "pretty warped inside," like there had been some "big trauma" to the transmission. All of the teeth on first gear of the drive shaft were missing. In addition, large sections of teeth were missing from the first driven gear on the pinion shaft. A couple of days after he spoke to Orlando, Darrin reported his telephone conversation with Orlando to Subaru. He also told the Subaru representative about the extensive damage to the transmission.
Seven or eight days after the incident, the Dealership told Mendez the transmission needed to be replaced. Ultimately, Subaru decided not to repair the transmission under warranty because the damage was not due to a defect in the material or craftsmanship. Peter Pelkey, Subaru's district service operations manager for the western region, made the decision based on the nature of the damage to the transmission, the telephone conversations between Orlando and Largo and Darrin, and Pelkey's inspection of the transmission.

Approximately a month after the incident, Darrin told Mendez that Subaru had decided not to replace the transmission because it had been abused. Mendez said this was the first time heard anything about abusing the car. Darrin accused Mendez of shifting from fifth to first gear while doing 65 miles an hour on the freeway. No one at the Dealership or Subaru ever told Mendez the car had been abused because of rapid acceleration, the theory the defense advanced at trial.

After Subaru denied his warranty claim, Mendez did not authorize anyone to repair the transmission at his expense. About six months after the incident, Mendez had the car towed to his home.

Procedural History I. Allegations of Complaint
In June 2002, Mendez filed an action against Subaru and the Dealership. The operative pleading, the first amended complaint, contains causes of action against Subaru for unfair business practices ( Bus. & Prof. Code, § 17200), breach of express and implied warranties under the Song-Beverly Consumer Warranty Act ( Civ. Code, §§ 1790 et seq.) and the Magnuson-Moss Warranty Act ( 15 U.S.C. §§ 2301 et seq.), violations of the Consumer Legal Remedies Act, and false advertising ( Bus. & Prof. Code, § 17500).

II. Additional Trial Evidence and Judgment
The case went to trial in May 2004. At trial, Subaru presented evidence that Orlando was associated with I-Speed, a performance shop that specialized in accessories for Subaru vehicles. Orlando's work there included installing performance equipment on cars. Orlando admitted he is "into cars." He was active on www.i-Club.com, a website for Subaru enthusiasts. (The "i" in the website name refers to the Impreza.) Orlando admitted he posted on the website hundreds of times and gave others advice about parts they could purchase at I-Speed. Subaru presented evidence of three website postings in which Orlando referred to his father's WRX as his own car.

After the transmission in his father's car failed, Or-lando purchased his own Impreza, the 2000 RS model, which he then modified with performance-related equipment.

Orlando attended meetings with other WRX owners, where they looked at one another's cars. He testified that the majority of the people on the i-Club forum are against street racing, although some use their performance equipment to race on the track.

The defense evidence included one particularly incriminating website posting from January of 2003 in which a member of the group stated: "[I]f I were a dealership and someone needed warranty work and had [made modifications to the vehicle] . . . I would get paid if I keep my mouth shut to [Subaru] and did the work, provided they didn't send out an inspector. The only reason I, as a dealer, would get over on the guy with the broke car is to get more money out of him than Subaru would pay for the repair." Orlando responded, "I totally agree with you. I would do the same thing. They are going to get paid by [Subaru] to do the repair anyway. And you are exactly right about the dealer getting over on people. That is exactly why they try to find a way to void the warranty." Orlando testified that he was simply trying to say that Subaru "tries to find any reason to void the warranty." Mendez knew Orlando posted on i-Club. However, Orlando did not think his father knew what he posted.

Both sides presented expert testimony at trial. Mendez's expert examined the tires, transmission, and clutch to see if there was any evidence that supported the claim that the car had been shifted from fifth to first gear at 55 miles per hour. He concluded there was no such evidence. Moreover, there was no evidence the clutch or transmission had been abused or "drag raced" or of repeated high speed starts. A transmission will not sustain this kind of damage by going 10 to 15 mile per hour alone. However, if the car had been subjected to fast starts repeatedly and the gears had been fractured, then acceleration at 10 to 15 miles per hour could cause the damage seen here. Mendez's expert stated that the blue coloration on the clutch that the defense expert relied on to find abuse was normal. Having ruled out driver abuse, Mendez's expert opined that the gear box failed due to a defect in either materials or design. He stated the failure was due to either a problem heat treating the metal or a hardness problem with the metal or the fact that the gear "teeth" were not wide enough at the base to take the pressures from the car's engine. However, he admitted his theory that there was a hardness problem with the gears was pure speculation.
Subaru's expert also examined the transmission, clutch parts, and tires on the car. He concluded that under the driving conditions described by Mendez (accelerating to 10 to 15 miles per hour), there was not enough force or torque available in the power train to cause the type of damage that resulted here. Subaru's expert explained how a driver would rev up the engine and then "pop the clutch" to get a boost of power and stated that such fast starts popping the clutch are abusive to the car. He concluded that Mendez's car had been heavily accelerated for several applications. His conclusions were based on the metal flow where the teeth had broken off the gear, the presence of dust and wear material on the clutch parts, a blue discoloration and hot spots on the clutch pressure plate and flywheel, and "feathering" on the left rear tire. None of these conditions were due to normal wear. Instead, they were evidence that the car had been subjected to rapid accelerations. Subaru's expert also refuted Mendez's claim that the damage was due to a problem with the metal in the gears. The teeth were just broken and not bent and there was no fatigue cracking or anything of that nature.

On Special Verdict Form Number One, Question Number Four, the jury found that Subaru's "failure to comply with the warranty [was] caused by abuse or unreasonable use of the . . . WRX," which was not covered by the warranty. On Special Verdict Form Number Two, Question Number One, the jury found that Subaru did not violate the Consumers Legal Remedies Act. The court therefore entered judgment for Subaru. III. Motion for Attorney Fees
Subaru subsequently made a motion for attorney fees pursuant to section 1780, subdivision (d), the attorney fee provision of the Consumer Legal Remedies Act. Subaru argued it was entitled to fees under the statute because Mendez had not brought the action in good faith. Subaru contended the warranty claim was fraudulent and that Mendez's counsel had prosecuted the matter in bad faith and engaged in litigation tactics that needlessly increased the cost of defending the case. Although Subaru had incurred almost $ 168,000 in attorney fees, it asserted that a reasonable fee for defending the action was $ 75,000 and asked for an award in that amount.

5 In its moving papers, Subaru requested an award of $ 78,723, half the fees it had incurred up to the time it filed its motion. At the hearing of the motion, Subaru's counsel requested $ 75,000 in fees.
Mendez argued (1) he brought the action in good faith; (2) there was no evidence of fraud; (3) there was no evidence he brought the action to annoy, delay or harass Subaru; and (4) he reasonably prosecuted the case.
The trial court found Mendez had not brought the action in good faith and awarded Subaru $ 75,000 in attorney fees. Discussion I. Section 1780, subdivision (d)

Section 1780, subdivision (d), the attorney fee pro-vision in the Consumer Legal Remedies Act, provides: "The court shall award court costs and attorney's fees to a prevailing plaintiff in litigation filed pursuant to this section. Reasonable attorney's fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff's prosecution of the action was not in good faith."

The only case interpreting section 1780, subdivision (d) in the context of an attorney fee award to a defendant is Corbett v. Hayward Dodge, Inc. (2004) 119 Cal.App.4th 915 (Corbett), which was filed about a week after the trial court ruled on the attorney fee motion in this case. The plaintiff in Corbett filed an action against Hayward Dodge and Bank of America alleging fraud, intentional interference [*14] with prospective contract, and violations of the Consumer Legal Remedies Act and the unfair competition law ( Bus. & Prof. Code, § 17200 et seq.) arising out of the financing of a vehicle the plaintiff had purchased from Hayward Dodge. (Corbett, at pp. 918-919.) The plaintiff dismissed the fraud and contract interference claims. Hayward Dodge obtained summary judgment on the remaining causes of action and then moved for an award of attorney fees pursuant to section 1780, subdivision (d). (Corbett, at p. 919.)

The trial court denied the defendant's request for fees, reasoning that the complaint had " 'stated a plausi-ble claim against Hayward Dodge. Although the case may have been weak at all times, there is a distinction between weak cases that assert new theories and frivo-lous cases that are barred by established law.' " (Corbett, supra, 119 Cal.App.4th at p. 920.)

On appeal, Hayward Dodge contended that the trial court erred in applying a subjective bad faith test when it denied the fee request and that the court had "improperly imposed the burden of proof on it." (Corbett, supra, 119 Cal.App.4th at p. 920.) [*15] The defendant argued that the court should have applied an objective standard and determined "whether a reasonable attorney would not have found [the] claims meritorious." (Id. at pp. 920-921, 922.) The Court of Appeal disagreed and concluded that the statutory language limiting awards of attorney fees to defendants to those situations in which " 'the plaintiff's prosecution of the action was not in good faith' " requires a finding of subjective bad faith. (Id. at p. 924.) The court explained, "Courts have uniformly constructed this language as requiring a subjective test. Moreover, we note that this construction comports most closely with the apparent intent of the Legislature. . . . [S]ection 1760 provides: 'This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical proce-dures to secure such protection.' Accordingly, the statute is to be interpreted to encourage such prosecutions. The definition urged by Hayward Dodge and supported by no authority would chill such lawsuits." (Ibid.) The court [*16] also held that a defendant moving for attorney fees under section 1780, subdivision (d) has the burden of proving that the plaintiff did not prosecute the action in good faith. (Corbett, at p. 926.)
We agree with the reasoning of Corbett.

II. Plaintiff's Contentions
Plaintiff contends the trial court erred because it applied an objective test rather than a subjective test when it determined that the action was not brought in good faith and that there was insufficient evidence to support a finding of subjective bad faith by Mendez or his attorneys. We address each of these contentions in turn. III. Analysis A. The Trial Court Applied the Proper Test

Mendez contends the trial court erred because it did not apply the subjective test of bad faith set forth in Corbett. As noted previously, the court granted Subaru's motion for attorney fees approximately one week before the court filed its opinion in Corbett. Thus, when the trial court ruled on the motion in this case, it did not have the benefit of the appellate court's opinion in Corbett. It appears nonetheless that the court applied the subjective test.
When asked what standards it had applied, the court stated, "My finding . . . is that by clear and convincing evidence, Mr. Mendez and his son were at-tempting to commit fraud against Subaru, certainly by preponderance of the evidence, and that's by an objective standard, a reasonable person standard. And not only that, but I believe that Mr. Mendez subjectively believed that also. Could not have reasonably thought otherwise given the evidence here." Thus, the court concluded that there was evidence that Mendez was trying to defraud Subaru that met both an objective as well as the subjective test of bad faith. The court's holdings that plaintiff "believed that also" and could not have "thought otherwise" indicate that the court was making findings regarding Mendez's state of mind. We therefore conclude that there is no merit to Mendez's contention that the court applied the wrong standard.

B. Attorney Misconduct Was Not the Basis of the Award
Mendez contends there was insufficient evidence that his counsel acted in bad faith. He contends the findings represented the court's opinion that his counsel acted irresponsibly, without caution, and objectively should have found that the action was meritless.

However, a review of the record shows [*18] that attorney misconduct was not the basis of the finding of bad faith.

At the hearing on the motion for attorney fees, the trial court stated that the conduct of Mendez's counsel was "below the level of professionalism that we expect and certainly fell below the standards of the rules of eth-ics that . . . have been promulgated by the Santa Clara County Bar Association. It's unfortunate that that occurs. But I'm not hearing that's a basis here for recovery of fees, and I'm not hearing that that's a part of the fee request here. It's simply a complaint that fees were roughly double what they should have been here for Subaru in defending this matter because of that." (Italics added.)

Furthermore, the formal written order on the motion, which was prepared by counsel for Subaru, stated that Mendez's counsel had a duty to monitor the action and determine whether it was brought in good faith and failed in that duty. However, after Mendez's counsel objected to the order prepared by Subaru's counsel and refused to approve it as to form, the court added the following hand-written clarification to the order: "Attorney misconduct not basis for [] 1780(d) award, but explains size of award. "

Based on the court's statements at the hearing and on the notation on the order, Mendez's lawyer's lack of professionalism was not a basis for the award, other than to assist the court in determining the amount of "reasonable attorney's fees" to award in this case. ( § 1780, subd. (d).) We therefore conclude that there is no basis for Mendez's contentions concerning the fee award and his attorney's conduct. C. Sufficient Evidence Supports the Finding of Plaintiff's Bad Faith

We turn next to Mendez's contention that there was insufficient evidence to support the court's conclusion that he had not prosecuted the action in good faith.

1. The Trial Court's Finding of Bad Faith
The court found that Mendez had attempted to defraud Subaru. The court based its conclusion on "overwhelming evidence . . . that Orlando Mendez abused this vehicle," including his Internet postings, in particular the posting where Orlando endorsed the position that defrauding Subaru was a legitimate approach to seeking warranty coverage when coverage is not appropriate, Mendez's contention that starting off and going 15 miles an hour stripped first gear, and the timing of when the vehicle was turned into Subaru. The trial judge felt very strongly that Mendez had not prosecuted the action in good faith and stated that Subaru had met its burden of proof both by a preponderance of the evidence and by clear and convincing evidence. As for Mendez's state of mind, the court found that Mendez "subjectively believed" that he and his son were attempting to commit a fraud against Subaru and that Mendez "[c]ould not have reasonably thought otherwise given the evidence here."

2. Standard of Review
In general, attorney fee awards are reviewed for an abuse of discretion. Under section 1780, subdivision (d), attorney fees "shall" be awarded to a prevailing plaintiff, but are discretionary ("may" be awarded) in cases involving prevailing defendants who prove that the plaintiff has not prosecuted the action in good faith. Corbett held that "on appeal from a denial of a request for attor-ney fees, we presume the order of the trial court is correct and the standard of review is abuse of discretion." (Corbett, supra, 119 Cal.App.4th at p. 927.)

However, even under the abuse of discretion standard, there can be a "substantial evidence component" where the court makes factual findings. [*21] "We defer to the trial court's factual findings so long as they are supported by substantial evidence, and determine whether, under those facts, the court abused its discre-tion." (Tire Distributors, Inc. v. Cobrae (2005) 132 Cal.App.4th 538, 544.) Here, the order granting Subaru's motion for attorney fees was based on a finding that the action had not been prosecuted in good faith. As this court observed in Knight v. City of Capitola (1992) 4 Cal.App.4th 918, 932 in the context of an attorney fee award under Code of Civil Procedure section 1038, "Good faith, or its absence, involves a factual inquiry into the plaintiff's subjective state of mind (citations): Did he or she believe the action was valid? What was his or her intent or purpose in pursuing it? A subjective state of mind will rarely be susceptible of direct proof; usually the trial court will be required to infer it from circumstantial evidence. Because the good faith issue is factual, the question on appeal will be whether the evidence of record was sufficient to sustain the trial court's finding."

"When a trial court's factual determination is attacked on [*22] the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contra-dicted or uncontradicted, which will support the deter-mination. . . ." (Bowers v. Bernards (1984) 150 Cal. App. 3d 870, 873-874, 197 Cal. Rptr. 925, italics omitted.) As long as there is substantial evidence, the appellate court must affirm, even if the reviewing justices personally would have ruled differently if they had presided over the proceedings below and even if other substantial evi-dence would have support a different result. (Id. at p. 874.) In reviewing the sufficiency of the evidence to support the trial court's factual finding, we view the evi-dence in the light most favorable to the respondent (Sub-aru) and indulge all reasonable inferences in support of the judgment. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614, 122 Cal. Rptr. 79.)

3. The Verdict and the Ev-idence in Support of the Finding of Bad Faith a. The Jury's Finding
On Special Verdict Form Number One, the jury found that the damage to the transmission was due to "abuse or unreasonable use" of the vehicle. On Special Verdict Form Number Two, the jury found that Subaru did not violate the Consumer Legal Remedies Act. Based on those findings, there was no merit to Mendez's warranty claims or his cause of action for vio-lations of the Consumer Legal Remedies Act. "[A] showing that a party's action or tactic is totally and com-pletely without merit does not settle the issue of whether that action or tactic was in bad faith. Such a showing is certainly evidence that the action is brought in bad faith (citation), because a trial court is entitled to infer from the utter lack of merit that the party knew that it lacked such merit, and yet continued to pursue the action for some ulterior motive. However, the trial court may not be willing to draw that inference if it is convinced that, despite the complete lack of merit, the party was acting in the good faith (albeit erroneous and even unreasonable) belief that the action was meritorious. Thus, the inference of bad faith is one which the trial court may make, but it is not mandatory that it do so." (Summers v. City of Cathedral City (1990) 225 Cal. App. 3d 1047, 1073, 275 Cal. Rptr. 594.) [*24]

b. The Circumstantial Evidence
In addition to the jury's finding, there was considerable circumstantial evidence that permitted the court to make the inference of bad faith. Mendez had worked as an auto mechanic for 18 or 19 years. His work duties included working with transmissions. Although Mendez conceded he "was not that interested in cars," while on the stand, he examined and discussed several of the transmission and clutch parts, demonstrating his expertise as an auto mechanic. One can infer from the fact that Mendez worked as a mechanic at a car dealership that he was familiar with warranty claims. Although he did not know what I-Speed was, Mendez admitted he probably went onto the i-Club website to look for information about transmission failures. He did not say when this occurred in relationship to the transmission failure.
Also, Mendez testified that he could not recall what day the transmission failed and that the transmission failed the same day that he had it towed to the Dealership. However, in answers to interrogatories, he had stated that the transmission failed on or about January 17, 2002. Documentary evidence indicated that the vehicle was towed to the Dealership [*25] on January 21, 2002.

As to the evidence concerning the actions and statements of Orlando, Mendez argues that while there may have been evidence that his son abused the car, there was no legal, logical, or factual nexus between Orlando's abuse of the vehicle and Mendez's own subjective knowledge of such abuse.

There was evidence that Orlando called the Dealership before the car was towed in and asked what would happen if he down-shifted from fifth to first gear at 55 miles per hour. After Darrin told him the transmission would be "annihilated," Orlando inquired whether the damage would be covered under the warranty. Darrin told him it would not be covered. However, the expert testimony did not support the conclusion that the transmission had been damaged by downshifting from fifth to first at freeway speeds. A reasonable inference from this evidence is that Orlando was looking for some way to explain the damage that would be covered by warranty.

Orlando admitted he was deeply involved with cars, worked or volunteered at a performance shop, posted on the i-Club website hundreds of times, and referred to his father's WRX as his own. He went to meetings with other WRX enthusiasts. Members of i-Club raced their cars on a track. He admitted that members of the i-Club forum talked about ways to get around the exclusions to warranty coverage. He advised others to remove any modifications they had made to their cars before making a warranty claim, to insure that the claim would not be denied and admitted to making the incriminating posting that indicated that he was not opposed to trying to defraud Subaru.

Although there was no direct evidence that Orlando damaged the car, expert testimony that the damage was due to repeated rapid accelerations, coupled with Orlando's interest in fast cars and his attempt to find an explanation for the damage that would be covered by the warranty, permit the inference that Orlando damaged the transmission by abusing the vehicle and tried to make Subaru pay for the damages under warranty. The question then becomes whether there was substantial evidence that supported the inference that Mendez pursued the warranty claim and prosecuted the action even though he knew his son had abused the vehicle.

Orlando lived at home with his parents at the time of the incident. Orlando worked at the Cadillac dealership with his father; they commuted to work together every day. Mendez did not restrict his son's access to the WRX and normally gave him permission to drive it. He also knew his son posted on the i-Club forum. All of this supports the inference that Mendez knew of Orlando's interest in cars, especially fast cars. The fact that Orlando advised strangers on the Internet on ways of getting around the exclusions to warranty coverage, the severe nature of the damage to the transmission, plus the close relationship between Mendez and Orlando supports an inference that Orlando also counseled his father to pursue the warranty coverage even though they both knew the vehicle had been abused.
Of course, the trial court sat through the trial and had an opportunity to assess the witnesses' credibility.

Under the conflicting inference rule, which is a corollary to the substantial evidence rule, an appellate court must indulge all reasonable inferences that may be de-duced from the facts in support of the party who pre-vailed below. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633.) "If the evidence gives rise to conflicting inferences, one of which supports the trial court's findings, we [*28] must af-firm." (Milton v. Perceptual Development Corp. (1997) 53 Cal.App.4th 861, 867.)
The trial court was entitled to infer that the case was without merit, that Mendez knew his claim was without merit, and that he prosecuted it for some ulterior motive.

For all of these reasons, we conclude that the trial court's finding that Mendez did not bring this action in good faith was supported by substantial evidence. Since there was substantial evidence to support the trial court's finding that Mendez had not brought the action in good faith, we cannot say the court abused its discretion when it awarded Subaru attorney fees pursuant to section 1780, subdivision (d).
Disposition
The court's order on the motion for attorney fees is affirmed.
McAdams, J.
WE CONCUR:
Mihara, Acting P.J.
Duffy, J.

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In other words, the jury believed and the appellate court affirmed that the circumstantial evidence of Orlando's posting on i-club, his comments to the dealership, etc., was enough to conclude that the transmission was destroyed from abuse and not faulty manufacturing. Then the court awarded about $75,000 in legal fees to Subaru.

In short, if you're going to modify your car anywhere beyond factory parameters, don't get cocky thinking you'll win in court at the end.

[strat61caster]

Subaru's expert explained how a driver would rev up the engine and then "pop the clutch" to get a boost of power and stated that such fast starts popping the clutch are abusive to the car. He concluded that Mendez's car had been heavily accelerated for several applications. His conclusions were based on the metal flow where the teeth had broken off the gear, the presence of dust and wear material on the clutch parts, a blue discoloration and hot spots on the clutch pressure plate and flywheel, and "feathering" on the left rear tire. None of these conditions were due to normal wear. Instead, they were evidence that the car had been subjected to rapid accelerations.

Subaru paid someone several thousands of dollars to go on record stating that a hard launch in a WRX is abusive. Nothing to do with modifications, track time, autocross, or the moneyshift that was likely the real problem. "Your honor, he dumped the clutch and put his right foot to the floor in a sports sedan we designed, we don't believe that's proper usage."

More nails in the coffin, buy used, stuff the warranty.

Edit: I fully believe Subaru was correct in denying the claim, the car as described coupled with the phone call clearly points to a moneyshift. My problem is that Subaru put effort into explicitly stating that something that thousands of people do every weekend (hard launch at an autocross, a type of event that Subaru sometimes sponsors) is outside the design use for their premier 'sport sedan'.

[Tcoat]

"In other words, the jury believed and the appellate court affirmed that the circumstantial evidence of Orlando's posting on i-club, his comments to the dealership, etc., was enough to conclude that the transmission was destroyed from abuse and not faulty manufacturing. Then the court awarded about $75,000 in legal fees to Subaru."
Thank you @bedabi I am pretty sure some people thought I was way off base.


And this, ladies and gentleman, is why I preach watch what you say!

[pantdino]

Originally Posted by bedabi

As a trial lawyer, I though I'd offer some observations about this Jalopnik post.

First, if you look at the actual court decision cited in the blog entry by the lawyer-author seeking new clients, you'll note that it is a 1986 decision by the Supreme Court of Alaska. This is a 30 year old decision that will not be binding outside of Alaska. The decision itself observed that in other jurisdictions the burden of proof can fall on the car owner.

You should realize before feeling emboldened by this case that this decision rendered was after a jury trial that cost the car owner almost $46,000 in out of pocket costs (in 1986 dollars!) for attorney and expert fees, with no guarantee that the fees would be recovered. I've been a trial attorney for 20 years and leaving up to 6 total strangers to decide a case is always a roll of the dice. It could easily have gone the other way, as I'll post below. Then there are the additional costs of appealing the jury trial's ruling all the way to the top state court. This must have cost at least another $30,000 at the very minimum. The plaintiff probably would not have received those attorney and expert fees until the appeal process was completed.

Clearly, this plaintiff pursued this case because he had the wealth to prove a point.

Thanks for posting this! It's hysterical that ruling only applies in Alaska.

[mav1178]

Originally Posted by strat61caster

Edit: I fully believe Subaru was correct in denying the claim, the car as described coupled with the phone call clearly points to a moneyshift. My problem is that Subaru put effort into explicitly stating that something that thousands of people do every weekend (hard launch at an autocross, a type of event that Subaru sometimes sponsors) is outside the design use for their premier 'sport sedan'.

That's why I have been saying the same thing over and over again: you want the dealer to be on your side.

The LAST person you want to be against you is the dealer, because the management of the dealer owns the relationship with the regional and corporate reps at Subaru (or any other maker, for that matter), and those relationships come up important if you have a legitimate issue.

I don't understand this whole M-M Act + lawsuit mentality that people have and the internet stories that prop up this myth.

-alex

[Tcoat]

Originally Posted by mav1178

That's why I have been saying the same thing over and over again: you want the dealer to be on your side.

The LAST person you want to be against you is the dealer, because the management of the dealer owns the relationship with the regional and corporate reps at Subaru (or any other maker, for that matter), and those relationships come up important if you have a legitimate issue.

I don't understand this whole M-M Act + lawsuit mentality that people have and the internet stories that prop up this myth.

-alex

[why?]

So true. No need to post everything you do with your can on the internet. And if you go into a dealership be super polite and do the aww shucks know nothing routine. Just by being a polite kind person you can get people to do what you want, even if they would not do it normally.

[Tcoat]

Originally Posted by why?

So true. No need to post everything you do with your can on the internet.

Dude those are totally different websites you are talking about there!

[mav1178]

Originally Posted by why?

And if you go into a dealership be super polite and do the aww shucks know nothing routine. Just by being a polite kind person you can get people to do what you want, even if they would not do it normally.

I wouldn't plead ignorance completely... but I often find it best to provide the dealer with a business case of why the warranty claim should be approved and why it's in their interest.

No threats about taking business elsewhere, but I lay out arguments as to why my claim is pretty much guaranteed work and why the dealer should support my position. What is implied is that the legitimate work can be taken to a more sympathetic dealer or someone who can see the cost/benefit of doing business with me.

-alex