Cpf Agency Corp. v. Sevel's 24 Hour Towing Service

• Decision Date: 19 September 2005
• Docket Number: No. D044894.,D044894.
• Citation: 132 Cal.App.4th 1034,34 Cal.Rptr.3d 120
• Court: California Court of Appeals Court of Appeals
• Parties: CPF AGENCY CORP., Plaintiff and Appellant, v. SEVEL'S 24 HOUR TOWING SERVICE, Defendant and Respondent.

34 Cal.Rptr.3d 120

132 Cal.App.4th 1034

CPF AGENCY CORP., Plaintiff and Appellant, v. SEVEL'S 24 HOUR TOWING SERVICE, Defendant and Respondent.

No. D044894.

Court of Appeal, Fourth District, Division One.

September 19, 2005.

Law Office of Sean Brew and Sean Brew for Plaintiff and Appellant.

Bill Lockyer, Attorney General, Tom Greene, Chief Assistant Attorney General, Gary W. Schons, Assistant Attorney General, Ronald A. Reiter and Ian K. Sweedler, Deputy Attorneys General, as Amicus Curiae on behalf of Plaintiff and Appellant.

Law Offices of Joseph Maiorano, Joseph G. Maiorano, San Diego, and Gerald McCarthy, for Defendant and Respondent.

O'ROURKE, J.

Plaintiff CPF Agency Corp., on behalf of itself and the general public, sued Sevel's 24 Hour Towing Service (defendant), alleging defendant overcharged vehicle owners for vehicle storage fees in violation of Vehicle Code section 22658, subdivision (i)(2)¹ and also failed to comply with section 22851.12, which imposes limitations on a tow operator's right to charge lien sale preparation fees on towed vehicles. The court sustained defendant's demurrers to plaintiff's causes of action for fraud, negligence per se and violations of California's unfair competition law (Bus. & Prof.Code, § 17200 et seq., hereafter the UCL) on grounds the state regulation was preempted by federal law. On appeal, plaintiff contends the court erred in its ruling because (1) the regulation of storage fees in section 22658 falls within express exceptions to the general preemption provisions of the federal law at issue; and (2) the lien sale preparation fee limitations of section 22851.12 are not related to transportation of property and therefore fall outside of the federal law's general preemption provision, or alternatively fall within the same express exceptions to preemption. The Attorney General has submitted an amicus curiae brief in support of plaintiff's position.

Because we conclude the state regulations at issue are not preempted by federal law, we reverse the judgment and remand the matter with directions that the court enter a new order overruling defendant's demurrer.

FACTUAL AND PROCEDURAL BACKGROUND

We base our factual recitation on the properly pleaded material factual allegations of plaintiff's first amended complaint, which is the operative pleading in this matter, and any matters of which we may properly take judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr 718, 703 P.2d 58; Crowley v. Katleman (1994) 8 Cal.4th 666, 672, 34 Cal.Rptr.2d 386, 881 P.2d 1083.)

Defendant is in the business of towing, impounding and storing vehicles. On June 17, 2002, defendant towed a vehicle owned by plaintiff and operated by one of its employees, Joel Fitzgerald, from private property located at 2918 B Street in San Diego. Defendant impounded the vehicle and placed it in one of its storage facilities shortly after 4:30 p.m. At about 11:30 a.m. the next day, Fitzgerald arrived at defendant's business location to retrieve the vehicle and was presented with an invoice for $126, representing a towing fee of $88 and a storage fee of $38 for two days of storage (billed at $19 per day). After questioning the storage fees on the invoice, Fitzgerald was told it was defendant's company policy to charge $19 for each calendar day the vehicle was in storage.

Plaintiff sued defendant for fraud (first cause of action), negligence per se (second cause of action), and violations of the UCL (third and fourth causes of action). In its third cause of action, plaintiff alleged defendant "systematically, routinely, and knowingly failed to comply with the requirements of California Vehicle Code [s]ection 22658[, subdivision] (i)(2) when charging its excessive storage fees," thereby engaging in unfair business practices and unfair competition. In its fourth cause of action, plaintiff alleged defendant committed unfair and illegal practices in instances where a vehicle was not redeemed before 72 hours from the time of its initial storage, by improperly charging vehicle owners fees for lien sale preparations without first requesting certain information from the California Department of Motor Vehicles (DMV). Plaintiff sought restitution and disgorgement of improperly obtained fees, as well as injunctive relief.

Defendant demurred to plaintiff's first amended complaint. It argued plaintiff failed to state facts sufficient to state causes of action, and further, the court lacked subject matter jurisdiction. As to the first, second and third causes of action, defendant argued the court lacked subject matter jurisdiction because the statute on which these claims were based, section 22658, subdivision (i)(2), limiting storage fees that may be charged by towing services, was preempted by the Federal Aviation Administration Authorization Act of 1994 (the FAAAA), title 49 United States Code (U.S.C.) sections 14501 et seq.² As to the fourth cause of action, defendant argued section 22851.12 was preempted by the FAAAA, and additionally that plaintiff had no standing because it was not charged lien sale preparation fees. Finally defendant argued, in view of the preemption by federal law, the first amended complaint lacked the legal and factual support for a permanent injunction.

The court sustained defendant's demurrers to plaintiff's first, second and third causes of action without leave to amend. It ruled the FAAAA preempted section 22658, subdivision (i)(2) because the section relates to the price, route or service of a motor carrier, and it did not fall within certain exceptions to preemption in the FAAAA. It further found, for purposes of plaintiff's third cause of action, that defendant's practice in charging for storage per calendar day was not unfair within the meaning of the UCL. The court overruled defendant's demurrer to plaintiff's fourth cause of action; although the court found section 22851.12 preempted by the FAAAA, it concluded the practice of charging for lien sale preparation fees without first incurring any expense in connection with lien sales was unfair within the meaning of the UCL. Based on the latter ruling, the court overruled defendant's demurrer to plaintiff's claim for injunctive relief. Plaintiff dismissed its remaining cause of action, and thereafter entered into a stipulated judgment and order of dismissal of the entire first amended complaint, which was entered by the trial court in July 2004. This appeal followed.

DISCUSSION

I. Standard of Review

On appeal from a judgment after a demurrer is sustained without leave to amend, we review the trial court's ruling de novo, exercising our independent judgment on whether the complaint states a cause of action. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501, 82 Cal.Rptr.2d 368.) "`We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan, supra, 39 Cal.3d at p. 318, 216 Cal.Rptr. 718, 703 P.2d 58; accord Rangel v. Interinsurance Exchange (1992) 4 Cal.4th 1, 7, 14 Cal.Rptr.2d 783, 842 P.2d 82.)

II. Preemption

We decide here whether certain provisions regulating towing companies set out in sections 22658 and 22851.12 are preempted by the FAAAA. The issue presented is one of law that we address de novo. (People ex rel. Renne v. Servantes (2001) 86 Cal.App.4th 1081, 1087, 103 Cal.Rptr.2d 870 (Servantes).)

A. Principles of Federal Preemption

"Article VI of the Constitution provides that the laws of the United States `shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of any state to the Contrary notwithstanding.'" (Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516, 517, 112 S.Ct. 2608, 120 L.Ed.2d 407.) Under the Supremacy Clause, state law that conflicts with federal law is "without effect." (Ibid., quoting Maryland v. Louisiana (1981) 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576.) "Consideration of issues arising under the Supremacy Clause `start[s] with the assumption that the historic police powers of the States [are] not to be superseded by . . . Federal Act unless that [is] the clear and manifest purpose of Congress.' [Citation.] Accordingly, `"[t]he purpose of Congress is the ultimate touchstone"' of pre-emption analysis," and its intent may be express in the federal statute's language or implicit in the statute's structure and purpose. (Cipollone, supra, 505 U.S. at p. 516, 112 S.Ct. 2608.) Absent an express congressional command, state law is pre-empted if it actually conflicts with federal law, or if federal law so thoroughly occupies a legislative field "`"as to make reasonable the inference that Congress left no room for the States to supplement it."'" (Ibid.)

"When . . . Congress considers the issue of preemption and adopts a preemption [provision in a] statute that provides a reliable indication of its intent regarding preemption, the scope of federal preemption is determined by the preemption [provision] and not by the substantive provisions of the legislation. [Citation.] The reason is that `Congress' enactment of a provision defining the pre-emptive reach of a statute implies that matters beyond that reach are not pre-empted.'" (Lindsey v....