Justia Consumer Law Opinion Summaries

This case arose out of the purchase of a used 2007 BMW vehicle by plaintiff-appellant Michael Tun from defendant-respondent Plus West LA Corporation, dba CA Beemers (CA Beemers). Defendant-appellant Wells Fargo Dealer Services, Inc., an incorporated division of Wells Fargo Bank, N.A. (collectively Wells Fargo), subsequently accepted assignment of Tun's retail installment sales contract (RISC) under an agreement with CA Beemers and/or defendant and respondent West LA Corporation, dba California Beemers (California Beemers) (sometimes collectively dealer). Tun listed 11 causes of action in a third amended complaint, all based primarily on his contention that dealer knowingly and intentionally failed to disclose that the vehicle had suffered "frame/unibody damage" from a prior collision, which damage Tun further alleged "existed at the time it was sold" to him and which "substantially decreased the value of the vehicle." Tun alleged he first learned the vehicle had been in a prior collision when he took it to a mechanic near his home, after he experienced problems while driving the vehicle. After a multi-day trial, the jury returned a verdict in favor of the dealer, finding dealer had not committed fraud, breached its contract with Tun or otherwise engaged in conduct that violated the Consumers Legal Remedies Act. The jury also found that Wells Fargo was not derivatively liable as holder of the RISC. Following the verdicts, the trial court granted Tun's new trial motion only as to Wells Fargo, despite the fact Wells Fargo was only liable to the extent, if at all, dealer was liable. In granting the motion, the trial court determined it had erred in ruling pretrial that Tun could not comment to the jury regarding Wells Fargo's tender under section 2983.4—a statute awarding a party prevailing under the Automobile Sales Financing Act (hereafter ASFA) reasonable attorney fees and costs—of the amount Tun had paid under the RISC ($15,700). Wells Fargo appealed, arguing that the court had correctly ruled in limine that Tun could not comment on Wells Fargo's tender under section 2983.4 because that tender could not be treated as a judicial admission of liability; that the tender was irrelevant to the issues decided by the jury, which focused on the conduct of dealer in connection with the sale of the vehicle; that, even assuming error, Tun could not establish prejudice; and that the new trial order was improper because there were no issues left to try, inasmuch as Wells Fargo's liability, if any, was derivative of dealer's, and dealer was exonerated. After review, the Court of Appeals concluded the trial court erred in granting Tun a new trial against Wells Fargo because the Court concluded the court's pretrial ruling precluding comment on the Wells Fargo tender was not legal error. The Court rejected Tun's cross-appeal. View "Tun v. Wells Fargo Dealer Services" on Justia Law

In cases consolidated for review, the issues presented for the Supreme Court involved the scope of the State’s authority to regulate so-called “payday loans” pursuant to OCGA 16-17-1, et seq., known as the Payday Lending Act. Pursuant to the statute, the State filed suit alleging that CashCall, Inc. (“CashCall”), Delbert Services Corporation (“Delbert Services”), Western Sky Financial, LLC (“Western Sky”), and Martin A. Webb (collectively “Defendants”) violated OCGA 16-17-2 (a) by engaging in a small-dollar lending enterprise that collected illegal usurious interest from Georgia borrowers. Defendants operated outside the State of Georgia and their dealings with Georgia borrowers occurred telephonically or over the Internet, and when a loan is funded, the funds are transferred to the borrower via electronic transfer to the borrower’s bank account. The State sought civil penalties and injunctive and other equitable relief. Defendants filed motions to compel arbitration and to dismiss the action. The trial court referred the case to a special master who recommended the case be dismissed, but the trial court rejected the special master’s recommendation and denied Defendants’ motion to dismiss, finding that the State’s claim was not barred by the language of OCGA 16-17-1 (d). Because the trial court found a substantial likelihood that the State would prevail on the merits of the claim at trial, and found a substantial threat existed that the State would suffer irreparable injury in that there might not be sufficient funds available to satisfy a judgment should the State prevail at trial, the trial court ordered Defendants to deposit a $15 million sum into the court’s registry and to make quarterly deposits of any additional amounts that could be collected from Georgia borrowers in the future. The trial court, however, agreed to stay the granted relief during an appeal, upon the Defendants’ deposit of an additional $1 million into the escrow account created following entry of the consent order requiring the deposit of $200,000. In a separate order, the trial court denied the State’s motion to add as defendants J. Paul Reddam and WS Funding, LLC (“WS Funding”). Defendants filed a notice of appeal and the State filed a notice of cross-appeal. After review, the Supreme Court affirmed the order denying Defendants’ motion to dismiss, affirmed the modification of the injunction order, and reversed the order denying the State’s motion to add defendants. View "Western Sky Financial, LLC v. Georgia" on Justia Law

Don Mealing, as Trustee of the Mealing Family Trust (Mealing), sought a judgment directing Diane Harkey for Board of Equalization 2014 (Campaign) to repay a loan Diane Harkey made to the Campaign, and to apply the proceeds to partially satisfy a nearly $1.6 million judgment Mealing obtained against Diane's husband, Dan Harkey. Mealing claimed the Campaign's indebtedness to Diane was a community property asset of Dan and Diane that could be used to partially satisfy the judgment. To preserve the Campaign's assets, Mealing applied ex parte for an order under Code of Civil Procedure section 708.240, subdivision (a), to prohibit the Campaign from making any payments to Diane on the loan. The trial court denied the application without explanation and Mealing appealed. On appeal, Mealing argued the trial court lacked discretion to deny his application because he made a prima facie showing that he obtained a judgment against Dan, the judgment remained unpaid, and Diane's loan to the Campaign was a marital asset that he could use to partially satisfy the judgment, and the Campaign presented no evidence to overcome that showing. Finding no error however, the Court of Appeals affirmed: Diane was not a judgment debtor, which was statutorily defined as the person against whom a judgment was rendered. View "Mealing v. Diane Harkey for Board of Equalization 2014" on Justia Law

BMW of North America, LLC and GMG Motors, Inc., doing business as BMW of San Diego (BMW San Diego) appealed a judgment awarding Nancy Goglin over $185,000 in attorney fees and costs for successfully settling her claims under the Song-Beverly Consumer Warranty Act and other consumer protection statutes. Both BMW North America and BMW San Diego contended Goglin was not entitled to any attorney fees or costs because BMW San Diego offered an appropriate remedy before Goglin filed her complaint, which Goglin unreasonably refused to accept. Alternatively, BMW San Diego argued the fee award should have been be reduced because there was insufficient evidence to show Goglin's counsel's hours worked and hourly rate were reasonable given the litigation's lack of risk and complexity. After review, the Court of Appeals was not persuaded by these contentions and affirmed. View "Goglin v. BMW of North America" on Justia Law

The executor of Bonnie Pereida's estate filed suit and obtained a judgment on claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961. Pereida had spent hundreds of thousands of dollars on rare coins that she thought would be a good hedge against inflation. In this case, the majority owner of the company that sold her the coins also owned the company that acted as a purportedly independent grader of the coins, and the grades it had assigned did not reflect the coins’ value. The court concluded that Pereida's RICO claims survived her death, but that the evidence did not prove a pattern of racketeering activity at trial. The court found that there is no evidence from which to conclude that the fraud Pereida fell victim to would have continued indefinitely but for this lawsuit. Accordingly, the court reversed and remanded for further proceedings as to state law claims. View "Malvino v. Delluniversita" on Justia Law

Plaintiff filed suit against CarMax, alleging violations of four California consumer protection laws: (1) the Consumer Legal Remedies Act (CLRA); (2) the Song-Beverly Consumer Warranty Act (Song-Beverly); (3) common law fraud and deceit; and (4) the Unfair Competition Law (UCL). Plaintiff's claims under the CLRA and UCL were both based on CarMax’s alleged violation of California Vehicle Code section 11713.18(a)(6), which requires a car dealer to provide consumers with a “completed inspection report” prior to the sale of any “certified” vehicle. The district court dismissed the fraud and Song-Beverly claims and granted CarMax summary judgment on his CLRA and UCL claims. The court concluded that the district court did not err in exercising diversity-based subject matter jurisdiction over his case. The court concluded that when the potential cost of complying with injunctive relief is considered along with plaintiff's claims for compensatory damages and punitive damages, the district court did not err in finding that the jurisdictional amount-in-controversy requirement was satisfied. The court held that a report, like the ones in this case, that fails to indicate the results of an inspection in a manner that conveys the condition of individual car components to a buyer is not a "completed inspection report" under California law. The court noted that if CarMax’s generic, and ultimately uninformative, list of components inspected were considered a “completed inspection report,” section 11713.18(a)(6)’s effectiveness in promoting transparency in the sale of certified cars would be substantially diminished. Therefore, the court reversed and remanded the district court's grant of summary judgment to CarMax on the CLRA and UCL claims. View "Gonzales v. CarMax Auto Superstores LLC" on Justia Law

Customers of an indoor trampoline park, of Sky Zone Lafayette, must complete a “Participant Agreement, Release and Assumption of Risk” document (“Agreement”) prior to entering the facility. The Agreement contains a clause waiving the participant’s right to trial and compelling arbitration. Plaintiff, James Duhon, was such a customer, and was injured in the course of participating in the park’s activities. After plaintiff filed suit seeking damages, Sky Zone moved to compel arbitration pursuant to the Agreement. The district court overruled Sky Zone’s exception, but the court of appeal reversed, finding the arbitration provision should be enforced. After review, the Supreme Court found that the arbitration clause in the Sky Zone agreement was adhesionary and therefore unenforceable. View "Duhon v. Activelaf, LLC" on Justia Law

Customers of an indoor trampoline park, of Sky Zone Lafayette, must complete a “Participant Agreement, Release and Assumption of Risk” document (“Agreement”) prior to entering the facility. The Agreement contains a clause waiving the participant’s right to trial and compelling arbitration. Plaintiff Theresa Alicea executed the Agreement prior to her husband, Roger Alicea, taking their minor sons to Sky Zone. The Aliceas’ son, Logan, was injured while jumping on a trampoline. The Aliceas filed suit against Sky Zone, individually and on behalf of Logan. Sky Zone moved to compel arbitration pursuant to the Agreement. The district court overruled Sky Zone’s exception and the court of appeal denied Sky Zone’s writ application. After review, the Supreme Court held the arbitration clause in the Sky Zone agreement was adhesionary and therefore unenforceable. Accordingly, the Court affirmed the rulings of the lower courts. View "Alicea v. Activelaf, LLC" on Justia Law

After plaintiff began missing loan payments on a house she bought in Long Beach, ReconTrust initiated a non-judicial foreclosure. In this case, the lender was Countrywide, the borrower was plaintiff and the trustee was ReconTrust. Plaintiff subsequently filed suit alleging that ReconTrust violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e(2)(A), by sending her notices that misrepresented the amount of debt she owed. Plaintiff also sought to rescind her mortgage transaction under the Truth in Lending Act (TILA), 15 U.S.C. 1635(a), on the ground that defendants had perpetrated fraud against her. The district court twice dismissed plaintiff's rescission claim without prejudice and then granted ReconTrust's motion to dismiss the FDCPA claims. The court held that actions taken to facilitate a non-judicial foreclosure, such as sending the notice of default and notice of sale, are not attempts to collect “debt” as that term is defined by the FDCPA; the court's holding affirms Hulse v. Ocwen Federal Bank; the court acknowledged that the Fourth and Sixth Circuit declined to follow Hulse; and the notices at issue in this case didn’t request payment from plaintiff, they merely informed plaintiff that the foreclosure process had begun and explained the foreclosure timeline. Therefore, the court affirmed the dismissal of the FDCPA claim. The court also concluded where, as here, the district court dismisses a claim and instructs the plaintiff not to refile the claim unless he includes certain additional allegations that the plaintiff is unable or unwilling to make, the dismissed claim is preserved for appeal even if not repleaded. Therefore, the court remanded to the district court to consider plaintiff's TILA rescission claim in light of Merritt v. Countrywide Fin. Corp. View "Vien-Phoung Thi Ho v. ReconTrust Co." on Justia Law

In the Dodd-Frank Act of 2010, 12 U.S.C. 5491, Congress established a new independent agency, the Consumer Financial Protection Bureau (CFPB), an independent agency headed not by a multi-member commission but rather by a single Director. PHH is a mortgage lender that was the subject of a CFPB enforcement action that resulted in a $109 million order against it. PHH seeks to vacate the order, arguing that the CFPB’s status as an independent agency headed by a single Director violates Article II of the Constitution. The court concluded that CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decisionmaking and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency. The court noted that this new agency lacks that critical check and structural constitutional protection, yet wields vast power over the U.S. economy. The court concluded that, in light of the consistent historical practice under which independent agencies have been headed by multiple commissioners or board members, and in light of the threat to individual liberty posed by a single-Director independent agency, Humphrey’s Executor v. United States cannot be stretched to cover this novel agency structure. Therefore, the court held that the CFPB is unconstitutionally structured. To remedy the constitutional flaw, the court followed the Supreme Court’s precedents and simply severed the statute’s unconstitutional for-cause provision from the remainder of the statute. With the for-cause provision severed, the court explained that the President now will have the power to remove the Director at will, and to supervise and direct the Director. Because the CFPB as remedied will continue operating, the court addressed the statutory issues raised by PHH and agreed with PHH that Section 8 of the Act allows captive reinsurance arrangements so long as the amount paid by the mortgage insurer for the reinsurance does not exceed the reasonable market value of the reinsurance; CFPB’s order against PHH violated bedrock principles of due process; and the CFPB on remand still will have an opportunity to demonstrate that the relevant mortgage insurers in fact paid more than reasonable market value to the PHH-affiliated reinsurer for reinsurance, thereby making disguised payments for referrals in contravention of Section 8. Accordingly, the court granted the petition for review, vacated the order, and remanded for further proceedings. View "PHH Corp. v. CFPB" on Justia Law