Bank of America v. Lallana

• Decision Date: 03 June 1997
• Docket Number: No. A073066,A073066
• Citation: 64 Cal.Rptr.2d 168,55 Cal.App.4th 543
• Court: California Court of Appeals Court of Appeals
• Parties: Previously published at 55 Cal.App.4th 543 55 Cal.App.4th 543, 32 UCC Rep.Serv.2d 999, 97 Cal. Daily Op. Serv. 4155, 97 Daily Journal D.A.R. 7009 BANK OF AMERICA, Plaintiff, Cross-Defendant and Respondent, v. Felisa V. LALLANA, Defendant, Cross-Complainant and Appellant.

Page 168

64 Cal.Rptr.2d 168

Previously published at 55 Cal.App.4th 543

55 Cal.App.4th 543, 32 UCC Rep.Serv.2d 999,

97 Cal. Daily Op. Serv. 4155,

97 Daily Journal D.A.R. 7009

BANK OF AMERICA, Plaintiff, Cross-Defendant and Respondent, v. Felisa V. LALLANA, Defendant, Cross-Complainant and Appellant.

No. A073066.

Court of Appeal, First District, Division 3, California.

June 3, 1997.

As Modified June 30, 1997.

Review Granted Oct. 1, 1997.

Andrew J. Ogilvie, San Francisco, Chimicles, Jacobsen & Tikellis, Patrick J. Grannan, Los Angeles, for Defendant, Cross-Complainant and Appellant.

Lillick & Charles, L.L.P., Stephen Oroza, James S. Monroe, San Francisco, for Plaintiff, Cross-Defendant and Respondent.

PHELAN, Presiding Justice.

This case of first impression arises out of an action for a deficiency judgment against the debtor, Felisa V. Lallana, following the sale of her repossessed automobile by the secured party, Bank of America (the Bank). That part of the case has now settled, but Lallana appeals a judgment in favor of the Bank on her cross-complaint alleging business practices in violation of Business and

                Professions Code former section 17200 et seq. 1  We hold that, before a creditor may obtain a deficiency judgment following a collateral sale of an automobile, the notice of that sale must comply with both the provision for the sale of repossessed collateral found in the Rees-Levering Motor Vehicle Sales and Finance Act (Civ.Code, § 2981 et seq., hereinafter the Rees-Levering Act) and the more general provision for the sale of repossessed collateral found in California Uniform Commercial Code section 9504, subdivision (3). 2  On the facts of this case, we further conclude the Bank conducted a public sale within the meaning of section 9504, subdivision (3), but only sent Lallana a notice of a private sale.  Thereafter, the Bank sought a deficiency judgment to which it was not entitled under section 9504.  Accordingly, we conclude the claim under section 17200 of the Business and Professions Code has been established and, therefore, reverse the judgment on the cross-complaint and remand for a determination of the proper relief to be awarded
                

FACTUAL AND PROCEDURAL BACKGROUND

Defendant Felisa V. Lallana and her son-in-law Sherden Williams ³ purchased a Mitsubishi Eclipse on credit pursuant to a conditional sales contract with the car dealer, and the dealer immediately assigned the contract and security agreement to the Bank. After Lallana and Williams defaulted on several car payments, the Bank repossessed the car. As required by Civil Code section 2983.2 of the Rees-Levering Act, the Bank notified them of their rights to redeem the vehicle or to reinstate the contract within 15 days of the date of the notice, and also informed them that, if they did not cure the default within that time and any extension thereof, the Bank would sell the vehicle. ⁴ The Bank concedes its notice never informed defendants when or where the sale would take place. The Bank's uncontradicted evidence established that, in instances of a direct car loan from the Bank to the car buyer, the Bank provides notice of a private sale under section 9504, subdivision (3). In cases of indirect loans, as this one, the Bank sends a "Notice of Intent to Sell Repossessed or Surrendered Vehicle" pursuant to the Rees-Levering Act. Throughout this litigation, the Bank maintained only that the Rees-Levering Act controls the sale in this case, and that the notice conformed to those requirements. The Bank alternatively asserted this was a "private sale," and the notice conformed to the "private sale" requirements under section 9504, subdivision (3).

On January 6, 1992, the Bank sold the vehicle through its vendor at a sealed bid auction. The vendor explained he used a sealed bid auction, rather than a "live" auction, i.e., with an auctioneer and oral bidding, because he found the sealed bid auctions brought higher prices. He testified the sales were open to any member of the public who was over 18 years old, possessed a valid California driver's license and paid the $5 entrance fee. Weekly public sales of repossessed vehicles were held which were advertised in general circulation and specialized newspapers variously as a "public auto auction" or "open to the public sealed bid auto auctions." The vendor testified that prior to the publication of the ads around the time of the Lallana sale, he informed the newspapers to drop the word "public" from the advertising copy, but at least one of these newspapers, The San Jose Mercury News, did not make the change.

Lallana's car was first advertised on December 17, 1991, and the car was featured in Lallana cross-complained for an injunction and restitution for herself and the general public, alleging the Bank engaged in several unfair business practices in violation of Business and Professions Code section 17200, including its failure to notify her and other defaulting borrowers of the time and location of the public sales as required by section 9504, subdivision (3). A bifurcated trial was held on her cross-complaint, at which Lallana did not testify. She presented no evidence that the car should have commanded a higher price, nor did she suggest the Bank and Faulknor were guilty of colluding to sell the vehicle at a commercially unreasonable price. It is undisputed neither she nor Williams requested the Bank tell them when and where the sale would be held.

four, 2-day auctions. All sales were "with reserve," meaning the car is sold to the highest bidder over the minimum set by the Bank. The Bank did not bid at this or other sales. The car was eventually sold for $5,000 with the Bank's approval because it was below the Bank's minimum price, and was much less than the lowest Kelly Blue Book value of $10,000. On November 24, 1992, the Bank sued Lallana and Williams for the amount of the deficiency, $11,249.84, plus interest, costs and attorney fees.

The trial court found the sales price was commercially reasonable and the Bank did not engage in any of the alleged unfair business practices. Judgment was entered in its favor on the cross-complaint. In particular, the court held the specific notice provisions for the sale of a repossessed vehicle under the Rees-Levering Act controlled over the more general notice provisions for sales of any repossessed collateral contained in section 9504, subdivision (3). Alternatively, the court held the sealed bid auction was a "private sale" under section 9504, subdivision (3), which does not require notice to the defaulting borrower of the time and place of the sale.

In her appeal from that judgment, Lallana argues only that this sale was a public sale and the Bank failed to comply with the requirements of section 9504, subdivision (3), as incorporated in Civil Code section 2983.8.

DISCUSSION

Whether the notice of sale was legally sufficient presents a pure question of law to which we apply our independent judgment. (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 699, 170 Cal.Rptr. 817, 621 P.2d 856; Public Utilities Com. v. Energy Resources Conservation & Dev. Com. (1984) 150 Cal.App.3d 437, 443, 197 Cal.Rptr. 866.) "To determine the intent of legislation, we first consult the words themselves, giving them their usual and ordinary meaning. When statutory language is clear and unambiguous there is no need for construction, and courts should not indulge in it. The plain meaning of words in a statute may be disregarded only when that meaning is repugnant to the general purview of the act, or for some other compelling reason." (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 601, 7 Cal.Rptr.2d 238, 828 P.2d 140, internal quotation marks and citations omitted.) Statutory provisions relating to the same scheme of law must be harmonized to the extent possible. (Ford & Vlahos v. ITT Commercial Finance Corp. (1994) 8 Cal.4th 1220, 1234, 36 Cal.Rptr.2d 464, 885 P.2d 877 (Ford & Vlahos ); Title Ins. & Trust Co. v. County of Riverside (1989) 48 Cal.3d 84, 91, 255 Cal.Rptr. 670, 767 P.2d 1148.)

I. Notice Must Comply With Section 9504, Subdivision (3)

Civil Code section 2983.2 of the Rees-Levering Act, spells out the requirements for notifying the debtor before the sale of a repossessed vehicle may take place and provides that a debtor with notice may be held liable for any deficiency. Liability for any deficiency will attach "[e ]xcept as otherwise provided in Section 2983.8 ...." (Italics added.) Lallana does not dispute the Bank's notice of intent to sell satisfied these statutory requirements. ⁵ Likewise, the Bank concedes Civil Code section 2983.8, as amended in 1984, provides: "Notwithstanding Section 2983.2 or any other provision of law, no deficiency judgment shall lie in any event in any of the following instances: [p] ... [p] (b) After any sale or other disposition of a motor vehicle unless the court has determined that the sale or other disposition was in conformity with the provisions of this chapter and the relevant provisions of Division 9 (commencing with Section 9101) of the Commercial Code, including Section 9504." (Stats.1984, ch. 1376, § 1, p. 4859, italics added.)

the Rees-Levering Act notices sent in this and other like instances did not disclose the time and location of the sale.

Section 9504, subdivision (2)(b) provides in relevant part: "If the security interest secures an indebtedness, the debtor is liable for any deficiency ... only (i) if the debtor was given notice, if and as required by subdivision (3), of the disposition of the collateral in accordance with subdivision (3), and the disposition of the collateral by the secured party pursuant to this section was conducted in good faith and in a commercially reasonable manner . ..." (Italics added.)

Subdivision (3) of section 9504 provides: "A sale or lease of collateral may be as a unit or in parcels, at wholesale or retail and at any time and place and...