HWB AUTOMOTIVE GROUP INC v. NISSAN DIVISION OF NISSAN MOTOR CORPORATION IN (1996)

An automobile dealer sued an automobile manufacturer for fraud.   On the eve of trial, the manufacturer moved for summary judgment on the ground that the dealer had failed to exhaust its administrative remedies before the California New Motor Vehicle Board.   The motion was granted and the dealer appeals.   We reverse.   Assuming the Board had jurisdiction, the manufacturer waived its right to assert its exhaustion defense by not pursuing it in a timely fashion.

BACKGROUND

In 1990, HWB Automotive Group, Inc. purchased a new car dealership and entered into a dealership agreement with Nissan Motor Corporation in U.S.A. In 1994, HWB filed this action against Nissan, alleging that Nissan failed to disclose an agreement with a neighboring dealership that would dramatically affect HWB's market, failed to disclose its intent to close HWB's dealership, and failed to disclose other things which, had they been known by HWB, would have prevented it from entering into the dealership agreement.   Nissan filed a general denial and raised 17 boilerplate affirmative defenses, including an alleged failure to exhaust administrative remedies.   None of these “defenses” are supported by any factual allegations.

The parties launched their discovery efforts (over a dozen depositions, interrogatories, requests for production, and so on) but (with one minor exception) none of it had anything to do with HWB's purported failure to exhaust its administrative remedies.¹  About a year later, Nissan moved for summary judgment on the ground that HWB had failed to exhaust its administrative remedies before the Board.   The motion was granted, and HWB appeals from the judgment thereafter entered.

DISCUSSION

Assuming without deciding that the Board had jurisdiction over this dispute, we agree with HWB that Nissan waived its right to assert the defense of exhaustion of administrative remedies.

 Exhaustion of administrative remedies is a procedural prerequisite to access to the courts, not something affecting the courts' subject matter jurisdiction, and it is therefore waived if it is not timely asserted.  (Wallis v. Farmers Group, Inc. (1990) 220 Cal.App.3d 718, 735–736, 269 Cal.Rptr. 299;  Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 288–291, 109 P.2d 942;  Green v. City of Oceanside (1987) 194 Cal.App.3d 212, 219–223, 239 Cal.Rptr. 470;  Sacramento County Deputy Sheriffs' Assn. v. County of Sacramento (1990) 220 Cal.App.3d 280, 286, 269 Cal.Rptr. 6.)   The decision whether there has been a waiver is one of law subject to de novo review on appeal where, as here, the underlying facts are undisputed and only one inference may reasonably be drawn.  (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 319, 24 Cal.Rptr.2d 597, 862 P.2d 158.)

 Ordinarily, a defendant raises a legitimate exhaustion defense by way of demurrer.  (See e.g., Yamaha Motor Corp. v. Superior Court (1986) 185 Cal.App.3d 1232, 1236–1237, 230 Cal.Rptr. 382;  Mathew Zaheri Corp. v. Mitsubishi Motor Sales (1993) 17 Cal.App.4th 288, 291, 21 Cal.Rptr.2d 325.)   Where, as here, a defendant does no more than insert boilerplate exhaustion language as one of 17 affirmative defenses and then does nothing to pursue the issue during a year of extensive discovery on all other issues, the conclusion is inescapable that the defendant has intentionally relinquished a known right to administrative review in favor of the benefits of the judicial system.   (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31, 44 Cal.Rptr.2d 370, 900 P.2d 619;  Green v. City of Oceanside, supra, 194 Cal.App.3d at pp. 222–223, 239 Cal.Rptr. 470.)

DISPOSITION

The judgment is reversed and the matter is remanded to the trial court with directions to set the case on track for trial.   HWB is awarded its costs of appeal.

FOOTNOTES

1.   When Nissan responded to an interrogatory from HWB asking about its defenses, Nissan stated:  “Nissan is informed and believes that HWB previously filed a protest with the California New Motor Vehicle Board with respect to the relocation of the Quality Nissan dealership, which relocation is alleged to be a basis for the purported causes of action pled by HWB in this lawsuit.   However, on or about October 16, 1991, HWB withdrew and waived its protest prior to a resolution by the Board.   HWB has knowledge of these facts, and Nissan believes that HWB possesses documents supporting these facts.”   Nissan never asked HWB about these facts and it never asked for any documents relevant to this defense.

MIRIAM A. VOGEL, Associate Justice.

SPENCER, P.J., and ORTEGA, J., concur.