Benson v. S. Cal. Auto Sales, Inc.

• Decision Date: 27 August 2015
• Docket Number: G050484
• Citation: 239 Cal.App.4th 1198,192 Cal.Rptr.3d 67
• Court: California Court of Appeals Court of Appeals
• Parties: Robert BENSON, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA AUTO SALES, INC., et al., Defendants and Respondents.

239 Cal.App.4th 1198

192 Cal.Rptr.3d 67

Robert BENSON, Plaintiff and Appellant,

v.SOUTHERN CALIFORNIA AUTO SALES, INC., et al., Defendants and Respondents.

G050484

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

Filed August 27, 2015

Rosner, Barry & Babbitt, Christopher P. Barry and Lacee B. Smith, San Diego, for Plaintiff and Appellant.

Madison Harbor, and Jenos Firouznam–Heidari, for Defendants and Respondents.

OPINION

BEDSWORTH, J.

INTRODUCTION

Robert Benson appeals from an order denying his motion for attorney fees and costs from respondent Southern California Auto Sales, Inc. (SCAS), after judgment was entered in his favor on a complaint based on the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq. ). Under the CLRA, a plaintiff cannot maintain a suit for damages if the defendant made an appropriate and timely correction offer. The court found that SCAS had offered Benson an appropriate correction upon receiving the statutorily required notice of problems with its used car. Benson contends the trial court erred in deciding SCAS had offered him an appropriate correction under the CLRA, and further that he was entitled to attorney fees as the prevailing party.

We affirm the trial court's order. Determining whether a correction offer was appropriate is a matter California law wisely leaves to the trial court's discretion. We do not find the trial court abused its discretion in this case. Whether a plaintiff can recover attorney fees and costs incurred in an action for damages after being offered an appropriate correction is a matter of statutory interpretation, and we conclude CLRA fees and costs are not available under these circumstances.

FACTS

Benson purchased a used Infiniti from SCAS on October 1, 2011. He alleged that he subsequently learned the car had a damaged frame. He also alleged the car's price on the contract he signed was $1,496 higher than the advertised price ($24,995) and the contract falsely stated he did not make a deferred down payment, when he actually did.¹

Benson's counsel sent SCAS two letters, both dated December 10, 2012. One letter, entitled "Notice of Violation of California Law, Including but not Limited to the Consumer Legal Remedies Act," was written "to comply with California Civil Code [section] 1782(a)."² Benson demanded rescission of the purchase contract, return of his car payments, a $5,000 penalty, and incidental damages in an unspecified amount. He offered to return the car to SCAS. The other letter, entitled "Companion Letter to CLRA Letter Notice of Rejection, Revocation and Rescission, Offer of Settlement of Entire Matter," proposed a settlement on the following terms: SCAS pay the "damages" portion of the other letter (including investigative fees and attorney fees), pay all court costs, pay $38,500, and pay $2,850 to finalize the settlement and return the car. Benson for his part would return the vehicle and dismiss the entire case as to all parties.

The CLRA, section 1782, subdivision (b), gives a merchant 30 days to respond to a demand for correction, but Benson did not wait for that response. He filed his complaint on January 2, 2013, less than 30 days after the date of the two demand letters, alleging 17 causes of action.³ He confined his CLRA cause of action to requests for injunctive relief.

On January 9, 2013, SCAS responded to the notice letter. While denying any wrongdoing, SCAS offered to settle the matter as follows: rescission of the contract, return of the vehicle to SCAS, refund of all car payments, satisfaction of the debt to the finance company, $2,500 for incidental and attorney fees, waiver of any claim for mileage, execution of a mutual settlement and release agreement. As SCAS noted, Benson had driven the car for well over a year before he complained, and he would be basically "walk[ing] away" from it, having had free use of it for that time.

Benson replied to SCAS's offer by demanding a total of almost $30,000 to settle the case, in addition to rescinding the contract. Included in the total amount was a demand for $8,500 to settle "all remaining causes of action" in addition to the CLRA claim. The record contains no written response to this demand.

Benson filed his first amended complaint pursuant to stipulation on November 22, 2013, listing 10 causes of action. In addition to a CLRA violation, the complaint alleged violation of the Automobile Sales Finance Act (ASFA; § 2981 et seq.), unfair competition and false advertising claims, Vehicle Code violations, negligent and intentional misrepresentation, and violation of the Song–Beverly Consumer Warranty Act (§ 1790 et seq.). This complaint sought damages for CLRA violations.

Trial was set for May 12, 2014, then continued to June 16. Benson, the finance company, SCAS, and SCAS's owner, who had been sued as an individual, settled in early May. SCAS stipulated to a judgment in the amount of $34,500 against it "on the complaint." The balance of the loan was waived, and Benson agreed to turn over the car. The settlement included Benson's release of all three defendants.

The settlement/judgment allowed Benson to make a motion for attorney fees and costs—which he filed on May 21 against these three defendants—and allowed the settling defendants to contest the fee motion "on any grounds available to them." In particular, the settlement agreement allowed defendants to contend that they were the prevailing parties "in light of the pre-litigation offer per the CLRA." Citing the CLRA and the ASFA as their basis, Benson's counsel asked for $171,915 in fees and $10,358 in costs, for a total of $182,273.

The trial court denied the motion, explaining that Benson could not maintain a cause of action for damages under the CLRA because SCAS offered him "an appropriate correction, repair, replacement or other remedy" ( § 1782, subd. (b) ) (collectively "appropriate correction") back in January 2013. He was therefore not entitled to his fees or his costs. Benson protested that what SCAS had offered was not appropriate because it included a settlement and release of all his claims, not just his CLRA claim. The court responded that all of Benson's claims were "inextricably intertwined with the CLRA claim and based on the same conduct." The order denying the motion was entered on June 18, 2014.

DISCUSSION

Section 1750 et seq. constitute the CLRA. Its remedies are non-exclusive (§ 1752), and the Legislature intended that it be "liberally construed" to promote its purposes, "which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection." (§ 1760.) According to the legislative history from 1970, the year of its enactment, the law was designed "to provide affirmative remedies for consumers which will protect them from unscrupulous business practices while insulating responsible businessmen from spurious or vexatious lawsuits." (Assem. Com. on Judiciary, Rep. on Assem. Bill No. 292 (1970 Reg. Sess.) Sept. 23, 1970.)

Section 1780, subdivision (a), provides: "Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person to recover or obtain any of the following: [¶] (1) Actual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000). [¶] (2) An order enjoining the methods, acts, or practices. [¶] (3) Restitution of property. [¶] (4) Punitive damages. [¶] (5) Any other relief that the court deems proper." Subdivision (e) of section 1780 requires a court to award court costs and attorney fees to "a prevailing plaintiff in litigation filed pursuant to this section."

Section 1782 imposes a condition on a consumer's ability to sue for damages under the CLRA.⁴ The consumer must give notice in writing of the particular CLRA violations and demand a correction, repair, replacement, or other rectification. Under section 1782, subdivision (b), no action for damages may be maintained "if an appropriate correction, repair, replacement, or other remedy is given, or agreed to be given within a reasonable time, to the consumer within 30 days after receipt of the notice." This section was added early in the legislative process to insure that "the consumer must give the merchant an opportunity to correct his mistake." (Assem. Com. on Judiciary, Explanation of Amendments to Assem. Bill No. 292, as amended (1970 Reg. Sess.) May 18, 1970.)

The issue on appeal is twofold. First, was SCAS's January 9, 2013, offer an appropriate correction in response to Benson's notice, and, second, if it was, does the fact that Benson could not maintain an action for CLRA damages preclude him from seeking court costs and attorney fees under the statute? We have found no published California opinions dealing with either aspect.

I. Was SCAS's Correction Offer "Appropriate"?

"[The notice] requirement exists in order to allow a defendant to avoid liability for damages if the defendant corrects the alleged wrongs within 30 days after notice, or indicates within that 30-day period that it will correct those wrongs within a reasonable time." ( Morgan v. AT & T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1261, 99 Cal.Rptr.3d 768.) "The clear intent of the act is to provide and facilitate precomplaint settlements of consumer actions wherever possible and to establish a limited period during which such settlement may be accomplished." ( Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 40, 124 Cal.Rptr. 852.)

Benson argues on appeal that SCAS's response letter to his CLRA demand was not an appropriate offer of correction. The trial court found it was.

Whether circumstances supporting the award of attorney fees exist is a separate issue from the amount of those fees. ( Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 153–154, 50...