Court of Appeal (Cal.) Finds No Song-Beverly Violation Where Service Contract Confers Both Overlapping and Additional Benefits to Manufacturer’s Warranty

In DeSiqueira v. Toyota Motor Ins. Services, Inc., 2011 WL 362400 (2011), the California Court of Appeal held in an unpublished opinion that a manufacturer’s extended service contract did not violate the Song-Beverly Act merely because the Plaintiff “has a dismal opinion of the importance or value of the Contract’s additional benefits”.  The Court of Appeal explained:

The Warranty Act describes the requirements for consumer service contracts. A service contract is an agreement “to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair of a consumer product…”  (Civ.Code, § 1791, subd. (o ).) Service contracts are sold in addition to or in lieu of express warranties. (Civ.Code, § 1794.4, subd. (a); Gavaldon v. Daim-lerChrysler Corp. (2004) 32 Cal.4th 1246, 1256-1257.) Apart from covering repair or maintenance services for a specific duration, a vehicle service contract may provide “additional benefits” such as towing, substitute transportation, emergency road service, rental car reimbursement, reimbursement for deducible amounts under a manufacturer’s warranty, and reimbursement for travel, lodging or meals. (Ins.Code, § 12800, subd. (c)(2).)  ¶   Under the Warranty Act, service contracts apply “only to items, costs, and time periods not covered by the express warranty. However, a service contract may run concurrently with or overlap an express warranty if (A) the contract covers items or costs not covered by the express warranty or (B) the contract provides relief to the purchaser not available under the express warranty, such as automatic replacement of a product where the express warranty only pro-vides for repair.” (Civ.Code, § 1794.41, subd. (a)(3), italics added.) The statute prevents a service contract from covering the same items as an express warranty. ( Gavaldon v. DaimlerChrysler Corp., supra, 32 Cal.4th at p. 1256.)  ¶  The Contract in this case differs from the Warranty in three respects. First, the Contract provides reimbursement for food and lodging expenses when the purchaser is stranded by a mechanical breakdown. The Warranty does not provide dislocation benefits. Second, the Contract provides “substitute transportation expenses” of $50 per day for five days, any time the vehicle is undergoing repairs. By contrast, the Warranty offers a “transportation assistance policy,” which makes a purchaser “eligible for transportation assistance if your Toyota must be kept overnight for warranty-covered repairs.” The Warranty’s transportation policy does not apply if repairs can be completed in one day but the vehicle is kept overnight due to dealer or owner scheduling conflicts. Third, the Contract entitles the purchaser to reimbursement for towing expenses if a covered component fails, “to the nearest dealership or authorized repair facility.” Towing service under the Warranty is not permitted to a non-Toyota repair facility. The Contract provisions fall squarely within the “additional benefits” listed in Insurance Code section 12800.  ¶  DeSiqueira does not dispute that the Contract is broader than the Warranty. He acknowledges that the Contract “provide[s] some additional benefits” beyond the scope of the Warranty, but characterizes the benefits as “minor,” “trivial” or “inconsequential.” DeSiqueira theorizes that only the Contract’s “additional benefits” run concurrently with the Warranty under the Act, and thus, “[t]he time period for coverage under a service contract for items, costs or relief which are the same as those found in a manufacturer’s warranty may not run concurrently with or overlap the manufacturer’s warranty.” Under DeSiqueira’s interpretation, he would receive 10 years of vehicle repairs: three years under the manufacturer’s Warranty, followed by seven more years under the Contract.  DeSiqueira’s interpretation contradicts the statutory language. On its face, Civil Code section 1794.41 allows a vehicle service contract to “run concurrently with or overlap” a warranty if the contract “covers items or costs not covered by the express warranty .” The statute does not circumscribe the “items or costs” covered by the service contract, nor does the statute set a dollar amount on the value of the additional benefits conferred by the service contract. It is irrelevant that DeSiqueira has a dismal opinion of the importance or value of the Contract’s additional benefits. Another purchaser-one who takes his Tundra outside the county to explore desolate areas-might find the expanded towing, rental car reimbursement and dislocation benefits to be very useful. Because the Contract indisputably covers costs beyond the scope of the Warranty for all seven years of its term, the Contract falls within the plain language of the statute