Justia Consumer Law Opinion Summaries

Plaintiff-borrowers Thaddeus Potocki and Kelly Davenport sued Wells Fargo Bank, N.A. and several other defendants (collectively, “Wells Fargo”) arising out of plaintiffs’ attempts to get a loan modification. The trial court sustained Wells Fargo’s demurrer to the third amended complaint without leave to amend. On appeal, plaintiffs argued: (1) a forbearance agreement obligated Wells Fargo to modify their loan; (2) the trial court erred in finding Wells Fargo owed no duty of care; (3) Wells Fargo’s denial of a loan modification was not sufficiently detailed to satisfy Civil Code section 2923.61; and (4) a claim of intentional infliction of emotional distress was sufficiently pled. The Court of Appeal determined plaintiffs’ third contention had merit, and reversed judgment of dismissal, vacated the order sustaining the demurrer insofar as it dismissed the claim for a violation of section 2923.6, and remanded for further proceedings. View "Potocki v. Wells Fargo Bank, N.A." on Justia Law

Sue Watkins defaulted on a credit card she opened through Citibank. Citibank charged off the debt, eventually selling the account to a third party debt collection agency, Cavalry SPV I, LLC (Cavalry). Cavalry added prejudgment interest from the date of charge-off and attempted to collect the debt through an associated entity, Cavalry Portfolio Services, LLC (CPS). As part of its collection efforts, CPS reported the debt with the additional interest included to several credit reporting agencies. Watkins disputed the debt and did not pay it, Cavalry sued to collect, and Watkins filed a cross-complaint alleging violations of the Rosenthal Fair Debt Collection Practices Act and other associated statutes governing debt collection practices. The superior court conducted a bench trial, rejected the claims in Watkins's cross-complaint, and entered a judgment in favor of Cavalry in the amount of the original debt, plus attorney fees. After the parties submitted additional briefing regarding the fees, the court awarded approximately one-half of the amount Cavalry requested. On appeal, Watkins argued the superior court erred: (1) by finding her liable for the original debt; (2) denying the claims in her cross-complaint; and (3) awarding Cavalry attorney fees. In their cross-appeal, Cavalry and CPS contended the superior court erred by reducing the attorney fees award. The Court of Appeal concluded the superior court correctly determined that Watkins was liable for the original debt, but relied on an inaccurate interpretation of Civil Code. section 3289 (b) to support the accrual of statutory prejudgment interest. The superior court's denial of the counterclaims was nevertheless proper as Cavalry could have accrued such interest pursuant to section 3289 (a). Finally, the Court determined the superior court erred by awarding Cavalry and CPS attorney fees related to the defense of counterclaims. The Court therefore reversed judgment as to the fees and remanded the case to the superior court for further proceedings. View "Cavalry SPV I, LLC v. Watkins" on Justia Law

Timlick filed a class action complaint, alleging that after defaulting on a loan, Timlick received a collection letter from a third-party debt collector (NES) that did not comply with section 1812.701(b) of the Consumer Collection Notice law because certain statutorily-required language was not in a type-size that was at least the same as used to inform Timlick of the debt, or 12-point type. NES moved for summary judgment on the basis that it cured the alleged violation within the 15-day period prescribed by section 1788.30(d) and sent a letter to Timlick’s attorney, enclosing a revised collection letter. Timlick did not dispute NES’s facts but argued section 1788.30(d) should not apply. The trial court granted NES summary judgment. The court of appeal reversed. A debt collector that violates the minimum type-size requirement for consumer collection letters can utilize the procedure for curing violations under the Rosenthal Fair Debt Collection Practices Act, but the trial court erred by dismissing the entire putative class action, as this allowed the debt collector to unilaterally “pick off” the named plaintiff and avoid class action litigation. View "Timlick v. National Enterprise Systems, Inc." on Justia Law

In two unrelated transactions, Front Line Motor Cars (Dealer), a used car dealer licensed by the California Department of Motor Vehicles (DMV), repossessed cars after the buyers failed to obtain financing. Dealer then refused to return the buyers’ down payments. The buyers complained to DMV. DMV instructed Dealer to refund the buyers’ down payments. Dealer refused, asserting its actions were proper under the Rees-Levering Motor Vehicles Sales and Finance Act and that DMV lacked the power to sanction Dealer. DMV then brought a disciplinary action against Dealer. DMV accused Dealer of violating Civil Code sections 2982.5, 2982.7, and 2982.9, which were the only sections of the Act which required a seller to refund a buyer’s down payment upon the buyer’s failure to obtain financing. After an administrative hearing, DMV adopted the administrative law judge’s proposed order that Dealer’s license be conditionally revoked for two years due to Dealer’s violation of the Act. Dealer petitioned the superior court for a writ of administrative mandate, which the superior court denied. On appeal Dealer repeated its earlier arguments. The Court of Appeal affirmed, finding the unique facts in this case (which revealed Dealer lacked a good faith intent to enter into bona fide credit sales with the buyers), revealed the transactions involved seller-assisted loans subject to section 2982.5 of the Act, which expressly required Dealer to return the buyers’ down payments. View "Front Line Motor Cars v. Webb" on Justia Law

The Taniguchis obtained a $510,500 home loan, secured by a deed of trust. A 2009 loan modification reduced their monthly payments and deferred until the loan's maturity approximately $116,000 of indebtedness. The modification provided that failure to make modified payments as scheduled would be default so that the modification would be void at the lender’s option. The modification left unchanged the original acceleration clauses and power of sale. The Taniguchis defaulted on the modified loan and were informed that to avoid foreclosure, they would have to pay their four missed payments and associated late charges, foreclosure fees and costs, plus all sums deferred under the modification (about $120,000 in principal, interest and charges). The Taniguchis filed suit. Restoration recorded a notice of trustee’s sale. The Taniguchis obtained a temporary restraining order. The Taniguchis alleged violations of Civil Code section 2924c by demanding excessive amounts to reinstate the loan, unfair competition, breach of contract, and breach of the covenant of good faith and fair dealing. The trial court entered judgment in favor of Restoration. The court of appeal vacated in part. When principal comes due because of a default, section 2924c allows a borrower to cure that default and reinstate the loan by paying the default amount plus fees and expenses. Section 2924c gives the Taniguchis the opportunity to cure by paying the missed modified payments and avoid the demand for immediate payment of the deferred amounts. Nothing in the loan modification suggests that the Taniguchis forfeited that opportunity; section 2924c does not indicate that a forfeiture would be enforceable. View "Taniguchi v. Restoration Homes, LLC" on Justia Law

In the underlying actions, the People asserted claims under Business and Professions Code section 17501 against real parties in interest and alleged that real parties sold products online by means of misleading, deceptive or untrue statements regarding the former prices of those products. The trial court sustained real parties' demurrer without leave to amend on the ground that the statute was void for vagueness as applied to real parties.The Court of Appeal granted the petition for writ of mandate seeking relief from the ruling regarding the section 17501 claims, and held that real parties failed to demonstrate any constitutional defect on demurrer. Regarding real parties' challenge to section 17501 as an unconstitutional regulation of free speech, as a preliminary matter, the court rejected petitioner's contention that the statute targets only false, misleading or deceptive commercial speech; the plain language of the statute restricts protected commercial speech and thus, the statute was subject to the test for constitutional validity set forth in Central Hudson Gas & Elec. v. Public Serv. Comm'n (1980) 447 U.S. 557, 566; and, because the undeveloped record was inadequate to apply the test, real parties' "free speech" challenge necessarily failed on demurrer. The court also rejected real parties' contention that section 17501 was void for vagueness, and rejected the facial and as-applied challenges. View "People v. Superior Court" on Justia Law

Where a business conditions its offer to remedy a violation of the Consumer Legal Remedies Act (CLRA) on the consumer waiving his or her right to injunctive relief and remedies under other statutes and common law, the offer is not an appropriate correction offer as contemplated by Civil Code section 1782, subdivision (b), and does not bar a lawsuit by the consumer. Neither can the business demand as part of its correction offer that the consumer consent to additional settlement terms unrelated to the compensation necessary to make the consumer whole.Plaintiff filed suit alleging that Seidner violated the CLRA, the unfair competition law (UCL), and Civil Code section 1632 (requiring translation of certain contracts), and committed fraud in connection with the company's lease of a vehicle to plaintiff and his wife. The Court of Appeal reversed the trial court's grant of summary judgment in favor of Seidner. The court held that, although Seidner's correction offer was timely, it was not appropriate. The court also held that, to the extent Benson v. Southern California Auto Sales, Inc., (2015) 239 Cal.App.4th 1198, reached a contrary conclusion, the court disagreed with it. In this case, Seidner did not make an appropriate correction offer, and thus failed to meet its burden of showing a complete defense to plaintiff's claims to support the grant of summary judgment. View "Valdez v. Seidner-Miller, Inc." on Justia Law

Sixty-nine current and former residents of mobilehome park Terrace View Mobile Home Estates filed a lawsuit against the park's owners, Terrace View Partners, LP, Thomas Tatum, Jeffrey Kaplan, and management company, Mobile Community Management Company (collectively, defendants). The operative first amended complaint, styled as a class action, included 12 causes of action based on allegations that defendants' failure to maintain the park in "good working order and condition" created a nuisance that, along with unreasonably high space rent increases, made it difficult or impossible for park residents to sell their mobilehomes. After the court denied plaintiffs' motion for class certification, the parties and the court agreed to try the case in phases, with the first phase involving 16 residents living in 10 spaces in Terrace View. A first-phase jury returned a special verdict finding defendants liable and awarded the individual plaintiffs economic and noneconomic damages for: intentional interference with property rights, breach of the covenant of good faith and fair dealing, nuisance (based on substantially failing to enforce the park's rules and regulations), breach of contract/breach of the covenant of quiet enjoyment, and negligence/negligence per se. The jury found defendants were not liable for nuisance based on failing to provide and maintain the park's common facilities and physical improvements in good working order and condition, and were not liable for elder financial abuse against five plaintiffs. After the jury was discharged, the court issued an order on plaintiffs' cause of action alleging defendants violated Business and Professions Code section 17200 et seq., the "unfair competition law" (UCL). The court ruled that a "catch-up" provision in defendants' long-term leases that could greatly increase rent at the end of a lease term was unfair in violation of the UCL. The judgment also reflected the court's rulings at the beginning of trial that certain other provisions in the parties' lease agreements violated California's Mobilehome Residency Law or were otherwise unlawful. Defendants appealed. The Court of Appeal concluded the jury's award of compensatory damages and punitive damages had to be reversed. Although the jury's award of economic damages may have included unspecified amounts that could be upheld on appeal if the special verdict form had segregated them, "it is clear from the record that the vast majority of the economic damages awarded represented reimbursement for overpayment of rent and diminution in value of homes caused by high rent. Because the award of such damages cannot be sustained under any of the theories of liability presented to the jury and it is impossible to sever any properly awarded damages from improperly awarded damages." The Court therefore reversed the entire award of compensatory damages and the attendant awards of punitive damages and attorney fees and costs to plaintiffs. View "Bevis v. Terrace View Partners, LP" on Justia Law

Plaintiffs-appellants Jamie and Kelly Etcheson brought an action under the Song-Beverly Consumer Warranty Act (commonly known as the "lemon law") against defendant and respondent FCA US LLC (FCA) after experiencing problems with a vehicle they had purchased new for about $40,000. After admitting the vehicle qualified for repurchase under the Act, FCA made two offers to compromise under Code of Civil Procedure section 998: one in March 2015, to which plaintiffs objected and the trial court found was impermissibly vague, and a second in June 2016, offering to pay plaintiffs $65,000 in exchange for the vehicle's return. Following the second offer, the parties negotiated a settlement in which FCA agreed to pay plaintiffs $76,000 and deem them the prevailing parties for purposes of seeking an award of attorney fees. Plaintiffs moved for an award of $89,445 in lodestar attorney fees with a 1.5 enhancement of $44,722.50 for a total of $134,167.50 in fees, plus $5,059.05 in costs. Finding the hourly rates and amount of counsels' time spent on services on plaintiffs' behalf to be reasonable, the trial court tentatively ruled plaintiffs were entitled to recover $81,745 in attorney fees and $5,059.05 in costs. However, in its final order the court substantially reduced its award, concluding plaintiffs should not have continued to litigate the matter at all after FCA's March 2015 section 998 offer. It found their sought-after attorney fees after the March 2015 offer were not "reasonably incurred," and cut off fees from that point, awarding plaintiffs a total of $2,636.90 in attorney fees and costs. Pointing out their ultimate recovery was double the estimated value of FCA's invalid March 2015 section 998 offer, which they had no duty to counter or accept, plaintiffs contended the trial court abused its discretion by cutting off all attorney fees and costs incurred after that offer. The Court of Appeal agreed and reversed the order and remanded back to the trial court with directions to award plaintiffs reasonable attorney fees for their counsels' services, including those performed after FCA's March 2015 offer, as well as reasonable fees for services in pursuing their motion for fees and costs. View "Etcheson v. FCA US LLC" on Justia Law

A jury awarded plaintiff-appellant Shirlean Warren $17,455.57 in damages pursuant to California's “lemon law.” In this appeal, Warren challenges her attorney fee award and her costs and expenses award. Warren claims the court abused its discretion in applying a 33% negative multiplier to her requested lodestar attorney fees. Warren argues that, by applying the negative multiplier, the court erroneously limited her attorney fee award to a proportion of her $17,455.57 damages award, and thus used a prohibited means of determining reasonable attorney fees. She also claimed she was entitled to recover prejudgment interest on her damages award and that the court erroneously struck the $5,882 expense for trial transcripts from her cost bill. The Court of Appeal concluded Warren did not show she was entitled to prejudgment interest on her jury award as a matter of right. Nor did Warren show the court abused its discretion in refusing to award any prejudgment interest. The Court agreed, however, that Warren was entitled to recover the $5,882 expense that her attorneys incurred for trial transcripts. View "Warren v. Kia Motors America, Inc." on Justia Law