Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from a judgment and an order of the Superior Court of San Diego County, Luis R. Vargas, Judge, Super. Ct. No. GIC831918
McCONNELL, P. J.
In this breach of warranty action, defendant National RV, Inc. (National) appeals a judgment entered in favor of plaintiffs Gerald and Marlene Deitrick after a jury trial, and a postjudgment order awarding the Deitricks statutory attorney fees. National contends the judgment is unsupported by substantial evidence as the Deitricks produced no evidence of the fair market value of their motor home in its defective state. We agree, as the Deitricks' only evidence on damages was Marlene's opinion as to the value of the motor home to her, which is irrelevant in determining fair market value. We reverse the judgment and direct the court to enter judgment for National. We also reverse the attorney fees order as the Deitricks are no longer prevailing parties.
We are required to refer to Marlene Deitrick individually and we use her first name to avoid confusion.
FACTUAL AND POCEDURAL BACKGROUND
In February 2003 the Deitricks bought a 2003 Dolphin LX motor home from 10,000 RV Sales, Inc. (10,000 RV), a San Diego dealer. National manufactured the motor home. The sale price on the purchase contract was $132,815, but the Deitricks actually paid $23,000 less because of an "over-allowance" 10,000 RV gave them for a 1997 motor home they traded in.
See Thompson v. 10,000 RV Sales, Inc. (2005) 130 Cal.App.4th 950, 958, for an explanation of an "over-allowance."
In March 2003 the Deitricks accepted delivery of the motor home and began living in it full time. Beginning in April, the motor home's coach leaked at various places during rains, including the ceiling, doors, windows and room slide-outs. Over the next few months the Deitricks unsuccessfully tried to reach National by telephone. The Deitricks finally reached National in November 2003, and it directed them to take the motor home to a facility in Texas, where they were traveling, for warranty work. The water leaks persisted and caused wet carpets, stains, mold, rust and other problems. In January 2004, the Deitricks took the motor home to National's factory in Perris, California, and it attempted repairs. When the Deitricks drove back to where they were parking in Ramona, there was a hard rain and the motor home leaked all over. The Deitricks took the motor home back to the factory in February and March 2004, but repair attempts were unsuccessful and it continued to leak.
In June 2004 the Deitricks sued National for violation of the federal Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (Magnuson-Moss Act; 15 U.S.C. § 2301 et seq.). A jury trial was held in October 2005.
The Magnuson-Moss Act "creates federal minimum disclosure and content requirements for written consumer product warranties and gives consumers a private cause of action for breach of warranty." (Gusse v. Damon Corp. (C.D.Cal. 2007) 470 F.Supp.2d 1110, 1115.) The Magnuson-Moss Act " 'calls for the application of state written and implied warranty law,' not the creation of additional federal law, except in specific instances in which it expressly prescribes a regulating rule." (Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 833.)
The Deitricks' expert, William Guentzler, testified the motor home "has a severe roof leak. Water exits through the right-hand air-conditioning vent and the antenna crank in the living room area." Water stains were apparent on the ceiling, and during a "rain tunnel" test, water leaked onto the floor and passenger seat. Guentzler believed the roof leak was caused by a gap in "the cover of the junction box on the satellite dish."
Guentzler also testified the motor home "has a leak at the front corner of the living room slide-out" caused by an extensive "gasket void" in a seal, and "it has progressed to the point . . . where the flooring has bulged and lost its structural integrity and is no longer flat and level." The leak "had degraded the carpet so that the carpet's structural integrity was compromised," and "the wood underneath [it] was blackened from multiple times of being exposed to moisture." The bedroom slide-out had similar problems.
Further, Guentzler testified there was a leak at the driver's door caused by a gasket that was never properly repaired. He said the carpet near the driver's seat "is always wet," and it "is compromised and has black spots and mold on it." The flooring underneath the carpet was stained.
The Deitricks did not call an appraiser regarding the motor home's fair market value. National successfully moved to exclude Marlene's opinion testimony on damages.
Marlene testified the leaks worsened over time, they were "extremely nerve-wracking," the Deitricks could not stay in rainy areas and several times she got wet while seated in the motor home's passenger seat. She described extensive ceiling stains and said there was a leak near her bed. Further, she testified, "I know the mold has had my sinuses for many months just so clogged up I really can't smell anything; I don't even smell food cooking or baking."
Marlene's counsel asked, "How have the water leaks in the motor[]home decreased the value of this motor[]home to you?" (Italics added.) National objected, and despite the court's earlier ruling it allowed her to respond. She stated, "At least 50 percent of what its value would be if it didn't have them."
At the close of Marlene's testimony, National moved for nonsuit on the ground the Deitricks presented no competent evidence of the motor home's fair market value with the defects. The court denied the motion.
National's expert, Mitchell Durbin, testified the value of the Deitricks' motor home was diminished "tremendously," but by "massive" modifications they made, such as the addition of electrical outlets, the addition of cabinets that did not match the original cabinets, the covering of bedroom and kitchen windows with cabinets, the replacement of leather seats with cloth seats and the removal of curtains. Durbin testified there was only minimal water damage and after it was cleaned up it would not affect marketability or value. He believed the majority of water infiltration occurred because the Deitricks did not properly maintain the room slide-outs and other components of the motor home. He conceded that the water leaks would have to be repaired before any resale.
After the close of evidence, National moved for a directed verdict on the ground the Deitricks produced no evidence of the motor home's fair market value as defective. The court denied the motion.
The jury returned a verdict in which it found National gave the Deitricks an express warranty, their motor home had a defect covered by the warranty, they gave National reasonable notice of the defect and a reasonable number of attempts to repair it, and they suffered damages in the amount of $33,203.75. Judgment was entered on November 16, 2005.
This amount is one-fourth of the $132,815 sale price of the motor home that appeared on the purchase contract.
In February 2006 National moved for judgment notwithstanding the verdict on the ground of lack of competent damages evidence. The court denied the motion as untimely. The court granted the Deitricks' motion for statutory attorney fees and awarded them $177,551 in fees and $13,404.38 in costs.
DISCUSSION
I
National contends the court erred by allowing Marlene to give opinion testimony on the value of the motor home in its defective state because it lacked sufficient foundation. National asserts Marlene was required to have "personal knowledge of the value of a motor home with water leaks" and there was no evidence she had such knowledge. Alternatively, National submits the jury's verdict is not supported by substantial evidence because Marlene's opinion merely showed the motor home's subjective value to her, and not its fair market value. We dispose of the matter on the latter ground.
The parties agree that in a Magnuson-Moss Act action, the "measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount." (U. Com. Code, § 2714, subd. (2), italics added.) The term "value" in this statute means the "fair market value of the goods." (Gem Jewelers, Inc. v. Dykman (N.Y.App. 1990) 160 A.D.2d 1069, 1070; Wharton, Aldhizer & Weaver v. Savin Corp. (Va. 1986) 350 S.E.2d 635, 636-637; Ellison v. Heritage Dodge, Inc. (S.C.App. 1984) 320 S.E.2d 716, 717-719; Fredrick v. Dreyer (S.D. 1977) 257 N.W.2d 835, 839.) The Deitricks, of course, had the burden of proving this measure of damages. (Rose v. Chrysler Motors Corp. (1963) 212 Cal.App.2d 755, 763.)
As the Deitricks point out, the owner of personal property may testify to its value without showing any special qualifications. (1 Witkin, Cal. Evidence (4th ed. 2000) Opinion Evidence, § 18, p. 546; Evid. Code, § 800.) The "opinion of an owner of personal property is in itself competent evidence of the value of that property, and sufficient to support a judgment based on that value." (Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 921, citing Golding v. R.K.O. Pictures, Inc. (1950) 35 Cal.2d 690, 700-701.)
However, an owner's right to testify to valuation is not absolute (Contra Costa Water Dist. v. Bar-C Properties (1992) 5 Cal.App.4th 652, 661), and he or she "is bound by the same rules of admissibility of evidence as is any other witness." (People v. La Macchia (1953) 41 Cal.2d 738, 746, overruled on another ground in Los Angeles County v. Faus (1957) 48 Cal.2d 672, 608; Evid. Code, §§ 702, subd. (a), 803.) For instance, in forming an opinion of fair market value an owner may not rely on factors that have only a contingent, remote, uncertain or speculative effect on the property's value. (Gilroy v. Filice (1963) 221 Cal.App.2d 259, 269.)
Moreover, the subjective value of a defective product to the purchaser is immaterial in a breach of warranty action. For example, in Wharton, Aldhizer & Weaver v. Savin Corp., supra, 350 S.E.2d 635, 637, a defective copier case, the court held the "statements by two of Wharton's partners that the copier had no value to them or their firm 'does not establish the fact that it had no value,' " meaning fair market value. (Italics added.) In Monroe v. Hyundai Motor America, Inc. (Ga.App. 2004) 606 S.E.2d 894, a defective car case, the owner testified that had he " 'known about the defects and nonconformities in this vehicle, [he] would not have paid more than $12,000 for it on' the date of purchase." (Id. at p. 896.) The trial court struck the statement on the ground it merely addressed the usefulness of the car to the plaintiff rather than its fair market value. (Id. at p. 897.)
"When a judgment is attacked as being unsupported by the evidence, 'the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the conclusion reached by the [trier of fact].' " (PWS, Inc. v. Ban (1991) 234 Cal.App.3d 223, 230.) " '[I]f the word "substantial" means anything at all, it clearly implies that such evidence must be of ponderable legal significance. Obviously the word cannot be deemed synonymous with "any" evidence. It must be reasonable in nature, credible, and of solid value; it must actually be "substantial" proof of the essentials which the law requires in a particular case.' " (Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1203-1204; see also People v. La Macchia, supra, 41 Cal.2d at p. 750 [in eminent domain action introduction of evidence of the subjective value of property to the owner "violates the principle that the true and only criterion of damages is market value, and not the value in use to the owner, either actual or prospective"].)
Marlene's counsel asked her, "How have the water leaks in the motor[]home decreased the value of this motor[]home to you?" (Italics added.) She responded, "At least 50 percent of what its value would be if it didn't have them." This is the Deitricks' sole evidence on damages. Her counsel did not question her further on damages and made no attempt to clarify her testimony. Further, National did not cross-examine her on the damages issue.
Given the manner in which her counsel questioned her, we can only construe Marlene's opinion testimony as showing the value of the defective motor home to her. Because the Deitricks adduced no evidence of fair market value, as required under Uniform Commercial Code section 2714, subdivision (2), the jury's verdict is speculative and unsupported by substantial evidence. Accordingly, we must reverse the judgment and direct the trial court to enter a new judgment for National. "When the plaintiff has had full and fair opportunity to present the case, and the evidence is insufficient as a matter of law to support plaintiff's cause of action, a judgment for defendant is required and no new trial is ordinarily allowed." (McCoy v. Hearst Corp. (1991) 227 Cal.App.3d 1657, 1661.)
National also contends the trial court erred by denying its motion for an order offsetting the $5,000 that 10,000 RV paid the Deitricks in settlement of their claims against it. Given our holding the issue is moot.
II
The Deitricks contend the "special circumstances" exception of Uniform Commercial Code section 2714, subdivision (2) applies because National was unable to repair the water leaks in the motor home and there is no market for a motor home with such defects. They rely on the testimony of National's expert that before marketing the motor home the leaks would have to be repaired. They assert that under these circumstances "no one is in a better position to estimate the diminished value than the owner who has experienced the defective conditions and is part of the 'market.' " They note there are several opinions in which the owners of mobile homes were allowed to testify as to fair market value. (See, e.g., Harlan v. Smith (Ala.App. 1986) 507 So.2d 943, 945; Simmons v. C.W. Myers Trading Post, Inc. (N.C.App. 1982) 290 S.E.2d 710, 712-713.)
The "special circumstances" exception may arise when an owner uses a product for a period without notice of the defects. For instance, in Vreeman v. Davis (Minn. 1984) 348 N.W.2d 756, 757, the court held that when water leaks in a mobile home and attendant damages appeared over time, there were " 'special circumstances' permitting the diminished value of the mobile home to be ascertained at a later date" as opposed to the date of acceptance. (Accord, Harlan v. Smith, supra, 507 So.2d at p. 945.) Here, however, the date of valuation of the motor home in its defective state was not a contested issue. Further, the Deitricks concede the measure of damages is fair market value and not some alternative measure.
Perhaps Marlene could have given a competent opinion on fair market value, but her attorney never asked her to do so. Rather, he limited his question to the value of the motor home to her. The Deitricks point to no authority for the proposition that her subjective opinion was proper evidence. Indeed, if the term "value" in Uniform Commercial Code section 2714, subdivision (2) were interpreted to mean subjective value, consumers could easily be overcompensated for defective products. A consumer is not entitled to a windfall, but "may be put in as good a position as if the other party had fully performed." (U. Com. Code, § 1304, subd. (a).) The Deitricks do not even address National's contention that Marlene's opinion was insufficient to support the jury verdict because it established only the motor home's value to her rather than fair market value.
DISPOSITION
The judgment for the Deitricks is reversed and the trial court is directed to enter judgment for National. The order awarding the Deitricks attorney fees as prevailing parties under the Magnuson-Moss Act (15 U.S.C. § 2310(d)(2)) is also reversed. National is entitled to costs on appeal.
WE CONCUR: BENKE, J., NARES, J.