Punitive Damages v. Civil Penalties

As it relates to California lemon laws, a civil penalty is a type of punitive damages prescribed under the Song Beverly Consumer Warranty Act. Punitive damages, generally, are damages prescribed under California Civil Code 3294.

Punitive Damages

Punitive damages, in California, are prescribed under California Civil Code 3294 for “malice,” “oppression,” or “fraud.” As it relates to California lemon laws and intentional misrepresentations on the part of either the vehicle dealership or vehicle manufacturer, the relevant part of California Civil Code 3294 pertains to “fraud.” As California Civil Code (c) (3) states, “‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant to thereby depriving a person of property or legal rights or otherwise causing injury.” Punitive damages, theoretically and unlike civil penalties under the Song Beverly Consumer Warranty Act, are not capped. For example, these damages can amount to more than twice the amount of actual damages spent by the consumer when purchasing the vehicle.

Civil Penalty

As I have explained before, a civil penalty is a penalty assessed against the vehicle manufacturer in an amount beyond the consumer’s “actual damages.” Actual damages are amounts actually spent by the consumer when the consumer purchased the vehicle, such as vehicle down payment, payments made toward the vehicle, incidental and consequential amounts spent because of the vehicle’s non-conformities that make it a lemon. The purpose of the civil penalty is to “punish” the car manufacturer for its conduct. The penalty under the Song Beverly Consumer Warranty Act can be “up to two times the amount of actual damages,” which is usually two times the amount of the vehicle retail value, plus any incidental and consequential damages spent related to the vehicle’s non-conformities. A civil penalty, again, is a type of punitive damage. CA Civil Code Section 1794. 

The Difference

The difference between a civil penalty and punitive damages lies in the cause of action alleged. For example, if one asks the court for a civil penalty under the Song Beverly Consumer Warranty Act, one is asking the court to punish the vehicle manufacturer because the vehicle manufacturer “willfully failed to repurchase the consumer’s vehicle” for an alleged breach of the vehicle’s express warranties. If one asks the court for punitive damages, one is asking the court to punish the vehicle dealership, and perhaps the vehicle manufacturer, for conduct amounting to an “intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant to . . . deprive a person of property or legal rights . . .” California Civil Code (c) (3).

Conclusion

Civil penalties under the Song Beverly Consumer Warranty Act are a type of punitive damages for the vehicle manufacturer’s breach of their vehicles’ express warranties and for the vehicle manufacturer’s refusal to repurchase the vehicle and are capped at twice the amount of actual damages. Punitive damages are prescribed under a different civil code statute, and in the case of California lemon laws, they are alleged on the basis of fraud against the vehicle dealership or vehicle manufacturer and are theoretically not capped. Both of these, however, are not guaranteed as they are decided by a trier of fact. It is not uncommon, however, for parties to negotiate these penalties before trial.

Do you know what causes of action are appropriate to your lemon law claim? Luis Aguirre is a California Lemon Law attorney who has successfully prosecuted cases against vehicle manufacturer giants for breach of their vehicles’ express warranties. As the Song Beverly Consumer Warranty Act provides for attorneys’ fees, a consumer should have an incentive to contact a knowledgeable California lemon law attorney. 

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Luis Aguirre California Lemon Law Attorney 26060 Acero Suite 111
Mission Viejo, CA 92691 Telephone: 949.342.6199.

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