Branick v. Downey Sav. And Loan Ass'n

Citation39 Cal.4th 235,138 P.3d 214,46 Cal.Rptr.3d 66
Decision Date24 July 2006
Docket NumberNo. S132433.,S132433.
CourtUnited States State Supreme Court (California)
PartiesThomas BRANICK et al., Plaintiffs and Appellants, v. DOWNEY SAVINGS AND LOAN ASSOCIATION, Defendant and Respondent.

Heller Ehrman, Vanessa Wells, Warrington S. Parker III and Daniel K. Slaughter, San Francisco, for State Farm Mutual Automobile Insurance Company, The Hertz Corporation and Visa U.S.A. Inc., as Amici Curiae on behalf of Defendant and Respondent.

Pillsbury Winthrop Shaw Pittman, Bruce A. Ericson, John M. Grenfell, Michael J. Kass and Ranah L. Esmaili, San Francisco, for California Bankers Association as Amicus Curiae on behalf of Defendant and Respondent.

Mayer, Brown, Rowe & Maw, Evan M. Tager and Donald M. Falk, Palo Alto, for Cingular Wireless LLC as Amicus Curiae on behalf of Defendant and Respondent.

Munger, Tolles & Olson, Ronald L. Olson, Steven B. Weisburd and Dean N. Kawamoto, Los Angeles, for the California Chamber of Commerce, the California Manufacturers & Technology Association, the California Financial Services Association and the California Motor Car Dealers Association as Amici Curiae on behalf of Defendant and Respondent.

Fred J. Hiestand, Sacramento, for The Civil Justice Association of California as Amicus Curiae on behalf of Defendant and Respondent.

WERDEGAR, J.

In the companion case of Californians for Disability Rights v. Mervyn's LLC, (July 24, 2006, S131798) ___ Cal.4th ___, 46 Cal.Rptr.3d 57, 138 P.3d 207 (CDR), we hold that Proposition 64 (Gen. Elec.(Nov.2, 2004)), which limited standing to sue under California's statutory unfair competition and false advertising laws (Bus. & Prof. Code,1 §§ 17200 et seq., 17500 et seq.; see §§ 17203, 17204, 17535), governs pending cases. We granted review in this case to decide whether plaintiffs, whose standing Proposition 64 has revoked, may amend their complaint to substitute a new plaintiff who does enjoy standing and, if so, whether such an amendment relates back for purposes of the statute of limitations to the date on which the original complaint was filed.

We hold as follows: Proposition 64 does not affect the ordinary rules governing the amendment of complaints and their relation back. We thus reject defendant's contention that courts may never permit a plaintiff to amend a complaint to satisfy Proposition 64's standing requirements. Whether plaintiffs in this case may amend, however, cannot be determined at this stage of the proceedings because plaintiffs have not yet filed a motion for leave to amend, identified any person who might be named as a plaintiff, or described the claims such a person might assert. On remand, should plaintiffs in fact file a motion to amend, the superior court should decide the motion by applying the established rules governing leave to amend (Code Civ. Proc., § 473) and the relation back of amended complaints (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 408-409, 87 Cal.Rptr.2d 453, 981 P.2d 79).

I. INTRODUCTION

On February 3, 2003, before the voters approved Proposition 64, plaintiffs Thomas Branick and Ardra Campbell filed a complaint against defendant Downey Savings and Loan Association under the unfair competition and false advertising laws. (§§ 17200 et seq., 17500 et seq.) Plaintiffs alleged defendant had misrepresented and overcharged customers for fees charged by governmental entities to record official documents used in real estate transactions, such as deeds, reconveyances and powers of attorney, among others. Plaintiffs did not allege they had transacted business with defendant, paid fees to defendant, suffered injury in fact, or lost money or property as a result of defendant's alleged practices. Instead, plaintiffs claimed standing to sue on behalf of "the general public" under the language of former sections 17204 and 17535. As relief, plaintiffs sought restitution, interest, injunctive relief, and costs and attorneys' fees under Code of Civil Procedure section 1021.5.2

Defendant moved for judgment on the pleadings on the ground that the federal Home Owners' Loan Act (12 U.S.C. § 1461 et seq.) and the regulations promulgated thereunder by the Office of Thrift Supervision (12 C.F.R § 560.2 (2006)) preempted plaintiffs' claims. The superior court granted the motion and entered judgment for defendant.

Plaintiffs appealed. On November 3, 2004, while the appeal was pending, Proposition 64 took effect, having been approved by the voters the preceding day. (See Cal. Const., art. II, § 10, subd. (a).) The Court of Appeal, after considering the parties' supplemental briefs on the effect of Proposition 64, reversed. Relying on Gibson v. World Savings & Loan Assn. (2002) 103 Cal.App.4th 1291, 128 Cal.Rptr.2d 19, the Court of Appeal held federal law did not preempt plaintiffs' claims. Concerning Proposition 64, the court concluded the measure's standing provisions governed pending cases and thus revoked the standing of plaintiffs, who did not allege that they had "suffered injury in fact and [had] lost money or property as a result of [the alleged] unfair competition." (§ 17204.) Finally, the Court of Appeal "remand[ed] the matter to the trial court to determine whether, if there is a request to amend the amended complaint, the circumstances of this case warrant granting leave to amend." "[T]hat issue," the Court of Appeal observed, "was not before the trial court at the time it granted the motion for judgment on the pleadings and dismissed the case...."

Defendant petitioned for review. We granted the petition, directing the parties to brief and argue the following issue: "If the standing limitations of Proposition 64 apply to actions under the Unfair Competition Law that were pending on November 3, 2004, may a plaintiff amend his or her complaint to substitute in or add a party that satisfies [the] standing requirements of Business and Professions Code section 17204, as amended, and does such an amended complaint relate back to the initial complaint for statute of limitations purposes?"3

II. DISCUSSION

After Proposition 64, only those private persons "who [have] suffered injury in fact and [have] lost money or property" (§§ 17204, 17535) may sue to enforce the unfair competition and false advertising laws. Uninjured persons may not sue (§§ 17204, 17535), and private persons may no longer sue on behalf of the general public (Prop. 64, § 1, subd. (f)).4 Because Proposition 64 applies to pending cases (see CDR, supra, ___ Cal.4th ___, 46 Cal. Rptr.3d 57, 138 P.3d 214, uninjured plaintiffs who filed suit on behalf of the general public before the measure passed have now lost standing.5

Proposition 64 does not expressly address the question whether uninjured plaintiffs whose complaints were pending when the measure took effect may amend their complaints to substitute new plaintiffs who enjoy standing to sue under current law. Defendant argues that to allow substitution would contradict the policy objectives underlying Proposition 64 and is, thus, implicitly forbidden. Defendant refers to the "Findings and Declarations of Purpose" accompanying the measure, in which the voters expressed their understanding that the unfair competition laws were "being misused by some private attorneys who" "[f]ile frivolous lawsuits as a means of generating attorney's fees without creating a corresponding public benefit," "[f]ile lawsuits where no client has been injured in fact," "[f]ile lawsuits for clients who have not used the defendant's product or service, viewed the defendant's advertising, or had any other business dealing with the defendant," and "[f]ile lawsuits on behalf of the general public without any accountability to the public and without adequate court supervision." (Prop. 64, § 1, subd. (b)(1)-(4).) "Plaintiffs' counsel," defendant argues, "should not benefit from their impermissible actions by substituting new plaintiffs and having the new allegations `relate back' to the filing of the initial complaint."

The argument is not convincing. The policy objectives underlying Proposition 64 are fully achieved by applying the measure to pending cases,...

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