Justia Consumer Law Opinion Summaries

Articles Posted in California Courts of Appeal
by
Plaintiffs Linda and Dwayne Struiksma lost title to their home in a foreclosure sale. The purchaser at the sale then brought an unlawful detainer action against them under Code of Civil Procedure section 1161a(b)(3). A default judgment was issued, and plaintiffs were evicted from their property. Plaintiffs then filed this action against defendants HSBC Bank USA, N.A. and Ocwen Loan Servicing, LLC (collectively, defendants), their lender and loan servicer, who were not parties to the unlawful detainer action. Generally, they alleged defendants carelessly failed to credit several payments to their loan balance. Thus, plaintiffs contended they were never in default and defendants wrongfully foreclosed on the property. The trial court sustained defendants’ demurrer to the complaint, finding all of plaintiffs’ claims were precluded by the unlawful detainer judgment except for a claim under the Truth in Lending Act (TILA), which was defective for other reasons. Plaintiffs were denied leave to amend on all claims and appealed the resulting judgment. The Court of Appeal determined the trial court erred in ruling plaintiffs’ claims were precluded, and published this case to clarify the preclusive effect of an unlawful detainer action under section 1161a. Defendants also argued certain claims the trial court found precluded failed for reasons other than preclusion. Given its ruling, the court had no opportunity to consider these arguments. So, this case was remanded for the trial court to consider them in the first instance. As to the TILA claim, the Court held it suffered from several defects, and the trial court correctly sustained the demurrer to this claim without leave to amend. View "Struiksma v. Ocwen Loan Servicing, LLC" on Justia Law

by
Lee, a San Francisco independent optometrist, sued corporate affiliates operating optical retail stores in California that offer competing eyeglass products and optometry services, on behalf of a putative class of independent optometrists. He alleged that the chain stores operated in a manner that violated state laws regulating the practice of optometry and the dispensing of optical products, constituting unfair and/or unlawful business practices in violation of California’s Unfair Competition Law (UCL). He claimed that “adults are, on average, willing to drive more than 20 miles for routine medical care” and that “[i]f patients had not been able to visit illegal optometry locations, a statistically significant and statistically ascertainable percentage of such patients would have instead visited at least one member of the Class. The complaint sought a judgment “[o]rdering the restitution/disgorgement of all sums obtained by Defendants through improper taking of market share from Class Members through violations of the UCL.”The court of appeal affirmed the suit's dismissal. Compensation for lost market share is not a remedy authorized by the UCL, because it does not constitute restitution, the only form of nonpunitive monetary recovery authorized under the UCL. Compensation for expected but unearned future income to which the plaintiff has no legal entitlement is not recoverable as restitution under the UCL, regardless of how it is characterized. View "Lee v. Luxottica Retail North America, Inc." on Justia Law

by
National Western Life Insurance Company (NWL) appealed a jury verdict holding the company liable for negligence and elder abuse arising from an NWL annuity sold to Barney Williams by Victor Pantaleoni, an independent agent. In 2016, Pantaleoni sold a $100,000 NWL annuity to Williams, who had contacted Pantaleoni to revise a living trust after the death of Williams’ wife. When Williams returned the annuity to NWL during a 30-day “free look” period, Pantaleoni wrote a letter over Williams’ signature for NWL to reissue a new annuity. In 2017, when Williams cancelled the second annuity, NWL charged a $14,949.91 surrender penalty. The jury awarded Williams damages against NWL, including punitive damages, totaling almost $3 million. NWL moved for judgment notwithstanding the verdict, which was denied. The Court of Appeal reversed: “Assuming NWL had monitored Pantaleoni as Williams suggested, there was no evidence showing that NWL knew or should have known of Pantaleoni’s fraud. … That Williams wrote the note cancelling the first annuity and Pantaleoni apparently wrote the letter requesting that it be reissued for Williams’ signature did not suggest to NWL that the letter was forged.” View "Williams v. National Western Life Insurance Co." on Justia Law

by
Reck purchased a new car manufactured by FCA, experienced frequent issues with the vehicle, and unsuccessfully requested its repurchase. Reck sued under the Song-Beverly Consumer Warranty Act, Civ. Code, 1790 After discovery, FCA served Reck with a second Civil Code section 998 offer, proposing to settle the matter for $81,000 plus costs, expenses, and attorney fees. Their counsel, Knight, had incurred $15,000 in legal fees. The Recks rejected the offer. Two days after trial commenced, the case settled for $89,500 plus fees and costs to be determined separately.Counsel sought attorney fees under section 1794(d): $46,487.50 in services provided by Knight and $78,344 in legal services provided by Century Law. FCA objected, arguing that the Recks incurred approximately $100,000 in attorney fees between April 2018, when the $81,000 settlement offer was refused, and August 2018, when they agreed to settle; that adding a second law firm to try the case resulted in unnecessary duplication of effort; and that three of their motions had been denied or withdrawn. The trial court found the case “not particularly complex” and awarded $20,158 in attorney fees with a requested .5 multiplier, finding that the $8,500 difference did not justify an award of fees for any hours spent preparing for trial.The court of appeal reversed. The Song-Beverly Act mandates the recovery of reasonable attorney fees to a prevailing plaintiff based upon “actual time expended.” The trial court did not undertake a lodestar analysis of fees reasonably incurred following the rejection of the settlement offer. In the context of public interest litigation with a mandatory fee-shifting statute, it is an error of law for the court to categorically deny or reduce an attorney fee award on the basis of a plaintiff’s failure to settle when the ultimate recovery exceeds the section 998 settlement offer. View "Reck v. FCA US LLC" on Justia Law

by
Plaintiff filed suit against defendant, alleging violations of the Song-Beverly Consumer Warranty Act, Civ. Code, 1790 et seq, after the new vehicle he leased developed unrepairable defects. The trial court entered a judgment awarding plaintiff restitution and civil penalties under the Act, as well as an order awarding him attorney fees.In the published portion of the opinion, the court held that, under section 1793.2, subdivision (b)(2), if a manufacturer is unable to repair a vehicle after a reasonable number of attempts, then it must either replace the vehicle in accordance with subparagraph (A) or make restitution in accordance with subparagraph (B). In this case, awarding plaintiff the residual value of the vehicle—an amount he admits he did not pay and was not obligated to pay under the terms of the lease—would leave him in a better position than he was in at the time he leased the vehicle. Therefore, it would be contrary to the Legislature's intent in using the term restitution to describe a lessee's damages remedy under the Act. The court was unpersuaded by plaintiff's assertion that excluding the residual value from the restitution award would result in unequal treatment of lease transactions, as compared to purchase transactions, in violation of the Act. Therefore, the restitution award did not violate the equal treatment mandate of the Act. The court rejected plaintiff's contention that he was obligated to terminate the lease and purchase the vehicle when he sought restitution under the Act. Rather, the court read the Act as expressly imposing reacquisition, branding, and disclosure requirements solely on manufacturers who cannot repair a vehicle after a reasonable number of attempts. View "Crayton v. FCA US LLC" on Justia Law

by
In a fifth amended class action complaint, plaintiffs Kelly Peviani, Judy Rudolph, and Zachary Rudolph, on behalf of themselves and others similarly situated, sued defendants Arbors at California Oaks Property Owner, LLC and JRK Residential Group, Inc. Plaintiffs alleged “Defendants advertise with colorful brochures and promising language that the Property is a safe, habitable, and luxurious place to live, with numerous amenities including a playground, cabanas and lounges, tennis and basketball courts, a rock climbing wall, gym, and pools and heated spas. But the Property is nothing of the kind. Instead, the Property is littered with used condoms, drug use, broken security gates, violence, is devoid of security patrols, and police are called to the complex on a regular basis. The pools are dirty, and the fitness equipment is broken. The complex is unsafe for tenants, especially children, and does not deliver on its material promises.” The complaint included eight causes of action: (1) false advertising; (2) breach of the implied warranty of habitability; (3) nuisance; (4) breach of the implied covenant of good faith and fair dealing; (5) bad faith retention of security deposits; and (6) three causes of action for unfair competition. Plaintiffs moved for certification of two classes, but the trial court denied the motion. Plaintiffs contended on appeal the trial court erred by denying their class certification motion. In regard to the false advertising claim, the trial court denied class certification due to a lack of commonality that would, in turn, cause the class to be unmanageable. After review of the trial court record, the Court of Appeal determined the trial court's commonality finding was flawed, making its related conclusion pertaining to manageability unreliable. Judgment was reversed and the matter remanded for further proceedings. View "Peviani v. Arbors at California Oaks Property Owner" on Justia Law

by
Plaintiff filed suit against defendant, the manufacturer of a new vehicle he leased, alleging violations of the Song-Beverly Consumer Warranty Act. The trial court entered a judgment awarding plaintiff restitution and civil penalties under the Act, as well as awarding him attorney fees.In the published portion of the opinion, the Court of Appeal affirmed in part, reversed in part, and remanded. The court concluded that the trial court did not err by refusing to include in its restitution award the residual value of the vehicle under the lease. The court explained that awarding plaintiff the residual value of the vehicle—an amount he admits he did not pay and was not obligated to pay under the terms of the lease—would leave him in a better position than he was in at the time he leased the vehicle. Therefore, this would be contrary to the Legislature's intent in using the term restitution to describe a lessee’s damages remedy under the Act. The court was unpersuaded by plaintiff's assertion that excluding the residual value from the restitution award would result in unequal treatment of lease transactions, as compared to purchase transactions, in violation of the Act. Rather, the court concluded that the restitution award did not violate the equal treatment mandate under the Act. Furthermore, the court read the Act as expressly imposing reacquisition, branding, and disclosure requirements solely on manufacturers who cannot repair a vehicle after a reasonable number of attempts. Absent an agreement on appeal as to the causation issue and the amount of premiums and registration renewal fees to which plaintiff is entitled, the court reversed and remanded for further proceedings under Kirzhner v. Mercedes-Benz USA, LLC (2020) 9 Cal.5th 966, 969. View "Crayton v. FCA US LLC" on Justia Law

by
Plaintiff filed suit under the Song-Beverly Consumer Warranty Act, popularly known as the lemon law, alleging claims related to defects with her car's throttle body connector. In this case, the trial court gave the jury a special instruction, at the request of plaintiff and over defendant's objection, that if a defect existed within the warranty period, the warranty would not expire until the defect had been fixed.The Court of Appeal concluded that the special instruction misstated the law and conflicted with another instruction given to the jury, CACI No. 3231, which correctly explains the continuation of warranties during repairs. Therefore, the trial court erred in giving the special instruction, and the error was prejudicial. The court reversed and remanded for further proceedings. However, the court affirmed the trial court's order granting a nonsuit on plaintiff's cause of action for breach of implied warranty. The court concluded that, under the lemon law, only distributors and retail sellers, not manufacturers, are liable for breach of implied warranties in the sale of a used car where, as here, the manufacturer did not offer the used car for sale to the public. Finally, the court reversed the attorney fee award to plaintiff. View "Nunez v. FCA US LLC" on Justia Law

by
In a putative class action, plaintiffs Joe Maldonado, Alfredo Mendez, J. Peter Tuma, Jonabette Michelle Tuma, and Roberto Mateos Salmeron (collectively referred to as “the Customers”), claimed Fast Auto Loans, Inc., (Lender) charged unconscionable interest rates on loans in violation of California Financial Code sections 22302 and 22303. Lender filed a motion to compel arbitration and stay the action pursuant to an arbitration clause contained within the Customers’ loan agreements. The court denied the motion on the grounds the provision was invalid and unenforceable because it required consumers to waive their right to pursue public injunctive relief, a rule described in McGill v. Citibank, N.A., 2 Cal.5th 945 (2017). On appeal, Lender argued the “McGill Rule” did not apply, but even if it did, other claims were subject to arbitration. Alternatively, Lender contended the McGill Rule was preempted by the Federal Arbitration Act . Finding Lender’s contentions on appeal lacked merit, the Court of Appeal affirmed the trial court’s order. View "Maldonado v. Fast Auto Loans" on Justia Law

by
The plaintiffs are a non-profit organization “dedicated to improving the care, quality of life, and choices for California’s long-term care customers,” residents and former residents of facilities managed by CVSC, and the estates of formers residents at the defendant's facility. The defendant is licensed by the California Department of Public Health (CDPH) to operate or manage a skilled nursing facility (SNF). The defendant had an agreement with CVSC, a corporation engaged in the nursing home business as a management company, to operate the SNF. This Management Services Agreement is allegedly representative of similar agreements executed by CVSC to operate other California SNFs. The plaintiffs asserted that state law requires that an SNF be operated and managed by the entity that holds the license to operate the SNF, not by a management company.The trial court held that approval of unlicensed management companies to operate licensed SNFs does not violate state or federal law. The court of appeal affirmed, rejecting an argument that the management agreements are illegal because the licensee (not an unlicensed management company) must operate and manage the SNF. The operation of a SNF by an unlicensed management company does not diminish the continuing responsibility of a licensee to its SNF. View "California Advocates for Nursing Home Reform v. Aragon" on Justia Law