In Ramirez v. Volkswagen Grp. of Am., Inc., No. CV 22-00734 MWF (MRWx), 2022 U.S. Dist. LEXIS 121034 (C.D. Cal. July 8, 2022), Judge Fitzgerald remanded a lemon law case after reducing the Plaintiff’s claimed damages by unrecoverable negative equity.
At the hearing, Plaintiff raised the issue of negative equity, which Defendant also addressed in the briefing, arguing that any actual damages, including the $25,299.90 set forth in the Court’s tentative, generally do not include negative equity, or the balance remaining on the vehicle Plaintiff traded in for the vehicle at issue, which in this case was $4,053. (See Opposition at 2, 7, 11). Plaintiff argued that by reducing the actual damages by this amount, the actual damages fall well below the threshold, even when factoring in any civil penalties, as discussed below. In response, Defendant reiterated the argument from the briefing that Plaintiff claimed entitlement to the negative equity in the Complaint, thus placing the value in controversy, and further that the mileage offset from when the vehicle was first presented for repairs would make the negative equity value irrelevant. (See id. at 7 n.1 (citing Complaint ¶ 20)). Plaintiff does not appear to have addressed the negative equity issue in her briefing. (See generally Motion, Reply). The Opposition does not set forth legal authority indicating whether or not the Court should consider [*8] negative equity in the issue of actual damages. At least one district court has recently found that negative equity may not be included in the amount of restitution damages under the Song-Beverly Act when determining the amount in controversy on a motion to remand. See Fisher v. Ford Motor Co., CV 22-339-W-AHG, 2022 WL 2181804, at *3 (S.D. Cal. June 16, 2022) (ultimately remanding case given deduction of negative equity from actual damages). Other district courts have agreed that negative equity is not includable in the purchase price of a vehicle for Song-Beverly Act purposes. See Canesco v. Ford Motor Co., —F. Supp. 3d —-, 2021 WL 5122231, at *13 (S.D. Cal. Nov. 4, 2021) (“Negative equity is not part of the ‘new motor vehicle’ price, so the manufacturer should not be required to reimburse the buyer for their cost”), Rivera v. Ford Motor Co., CV 18-7798 DSF (PJWx), 2020 WL 1652534, at *4 (C.D. Cal. Feb. 10, 2020) (holding “that a manufacturer is not required to include negative equity in a repurchase offer under the Song Beverly Act”). Accordingly, discounting the $4,053 negative equity, with a mileage offset of $4,858.48, the actual damages for the vehicle and collateral charges (such as a rental) amount to $23,326.42, or to $21,246.90 for just the vehicle. Alternatively, if considering a mileage offset of $1,438.05 accounting for when the vehicle was first presented for repairs, the actual damages would be $26,746.84. Regardless of which number is considered, [*9] which the Court finds it unnecessary to decide at this stage, each is inadequate to meet the $75,000 threshold, and the Court therefore considers other potential damages.