Consumer Law

grudge litigation over warranties with no harm leads to fee award

grudge litigation over warranties with no harm leads to fee award

Grundman v. Tranik Enters., Inc., 2021 WL 565813, 2d Civil
No. B297024 (Cal. Ct. App. Feb. 16, 2021)

“This appeal concerns the sale of four luxury watches and a
buyer who suffered no cognizable injury. The watches work and there was nothing
wrong with the internet sales of these watches.” How’s this going to go?

The watches were sold without the manufacturer’s express
warranty but the seller, AuthenticWatches.com, provided its own warranty. Grundman
sued under the CLRA, the federal Magnuson-Moss Consumer Warranty Act,
California’s Grey Market Goods Act, and its Song-Beverly Consumer Warranty Act.
The complaint alleged that Tranik posted watch manufacturer trademarks and
logos on AuthenticWatches.com but did not disclose the watches were not
eligible for authorized service from the manufacturer. After granting summary
judgment (and judgment on the pleadings for the Grey Market Goods claim), the
trial court awarded Tranik over $177,000 in attorney’s fees, finding that Grundman
brought the action in bad faith on behalf of her husband Fulda, who had a “blood
feud” with Tranik.

The feud included Fulda’s purchase of
AuthenticWatches.online as an internet domain; filing of a  trademark application for AuthenticWatches.com;
and creation of an Amazon.com storefront using the name “AuthenticWatches.com”
advertising watches with a link to AuthenticWatches.online. Unsurprisingly,
that triggered a federal lawsuit.

Ultimately, Grundman bought four watches, and demanded a
refund as soon as they were delivered because they didn’t come with a
manufacturer’s warranty even though AuthenticWatches.com provided its own
warranty. Fulda was deposed and stated that he spent “close to a million
dollars on legal fees” in his vendetta against Tranik, which started when he
had to pay a $150 shipping fee as part of their very first watch dispute in
2013.

“The Grey Market Goods Act requires that trademarked goods
imported by someone other than the manufacturer’s authorized United States
distributor without a warranty valid in the United States be sold with a
conspicuous disclosure.” There’s no standalone cause of action; instead, the
remedy is to sue under the UCL or CLRA. Judgment on the pleadings was
appropriate because this claim duplicated the CLRA claim.

CLRA: Grundman didn’t show reliance—or harm causation. She
testified that she didn’t read or recall reading the AuthenticWatches.com
disclosures, but bought the watches to help Fulda’s vendetta. The watches were
in good working order and she didn’t return them. There was thus no reliance or
cognizable injury. The court pointed out that the site’s “Authenticity and
Service Guarantee” disclosed that: “ ‘We are not, nor are we affiliated with
authorized dealers of any of the timepiece manufacturers advertised.’ ” It
further disclosed that “ ‘AuthenticWatches.com does not sell products in
accordance to manufacturer suggested retail pricing, therefore, the warranty of
merchantability provided is directly through AuthenticWatches.com.’ ” Though
she claimed the watches were counterfeit, she testified that she did not know
whether they were. “Missing here is the deceptive sales representation,
reliance on that representation, and economic damage.” She argued that the
watches were worth less without a manufacturer’s warranty, but there was no evidence
of that, not even an appraisal.

Appellant did not present the
watches for repair or refund, and for good reason. Fulda had the watches
tested, found no timekeeping defects, and wore one of the watches to his
deposition. Fulda said the watch keeps good time and that he wears it regularly
because it is one of his favorite watches.

(He also said: “[m]oney is no object. I want to make as big
a mess of this as possible.”) Yeah, I would probably have awarded fees too.

“To sue for a Song Beverly Warranty Act violation, appellant
must present the watch for repair.” She didn’t. That also got rid of the MMWA
claim.

 

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