Product Liability Update

By Chariese Solorio, Sarah M. Nakamoto, and Anthony Pimentel*

The California Court of Appeal in Mega RV Corp. v. HWH Corp. (2014) 225 Cal.App.4th 1318 held that component-part manufacturers are not obligated to indemnify retail sellers under California Code of Civil Procedure section 1792 of the California Song-Beverly Consumer Warranty Act (the “Act”) unless they provide an express warranty to the consumer pertaining to the component part at issue. Id. at 1323.

In Mega RV Corp., the plaintiffs purchased a motor home and later sued the retailer, manufacturer, and financer of the sale under the Act for alleged defects in the motor home. The manufacturer went bankrupt, and the retailer filed a cross-complaint seeking indemnity and declaratory relief from the manufacturer of the hydraulic components that were incorporated into the motor home. Id. at 1322. The retailer alleged that the motor home was designed and manufactured by the manufacturer, who integrated the component parts designed and manufactured by the component-part manufacturer. Id. at 1323. Moreover, the retailer alleged that the component-part manufacturer provided an express warranty for the component parts. Id.

The component-part manufacturer also filed a cross-complaint for declaratory relief and indemnity contending that the Act did not apply to it because it never issued an express warranty to the plaintiffs, retailer, or manufacturer for the component parts. Further, the component-part manufacturer alleged that the retailer and manufacturer were negligent and caused plaintiffs’ alleged damages. Id. at 1324. In addition, the plaintiffs amended their complaint to name the component-part manufacturer as a defendant. Id. at 1323.

The component-part manufacturer’s cross-complaint proceeded to a separate trial, even though it was premised on indemnity and declaratory relief issues that only needed to be decided if the plaintiffs established liability of the retailer in the first place. Id. at 1324. There, the trial court ruled in favor of the component-part manufacturer, determining that it had no obligation to indemnify the retailer. Id. at 1326. The retailer appealed. Id. at 1327. The appellate record contained no evidentiary documents, trial testimony, or trial exhibits suggesting that the component-part manufacturer provided an express warranty to the plaintiffs, retailer, or manufacturer for the component parts at-issue. As such, the appellate court held that the component-part manufacturer was not subject to section 1972 indemnity obligations. Id. at 1337.

Mega RV Corp. makes clear that if component-part manufacturers provide an express warranty to buyers or consumer goods under the Act, they will be deemed to have provided an implied warranty of merchantability and potentially will be liable in indemnity to retail sellers under section 1792. Id. at 1335. However, if a component-part manufacturer does not provide the consumer with an express warranty – like in the instant case – neither the consumer nor the retail seller can seek recovery from the component-part manufacturer under section 1972. Id.

*Anthony Pimentel is a 2023 summer associate in Snell & Wilmer’s Orange County office and is not admitted to practice law. He is anticipated to graduate from UC Irvine School of Law in May 2024.