In re Fireside Bank Cases
| Decision Date | 01 December 2010 |
| Docket Number | Nos. H033044, H033198.,s. H033044, H033198. |
| Citation | 115 Cal.Rptr.3d 80,187 Cal.App.4th 1120 |
| Court | California Court of Appeals Court of Appeals |
| Parties | FIRESIDE BANK CASES. Sandra Gonzalez et al., Petitioner, v. Superior Court of Santa Clara County, Respondent; Fireside Bank, Real Party in Interest. |
Kemnitzer, Anderson, Barron, Ogilvie & Brewer, Andrew J. Ogilvie, Carol McLean Brewer, San Francisco, Alezander Community Law Center, Scott C. Maurer, Law Office of Balam O. Letona, Balam O. Letona, Santa Cruz, for Petitioner Sandra Gonzalez et al.
Severson & Werson, Jan T. Chilton, Mark D. Lonergan, Regina J. McClendon, San Francisco, for Real Party In Interest Fireside Bank.
In these coordinated class actions challenging a lender's collection practices, the trial court denied all relief to, and eventually entered dismissals with prejudice against, all class members against whom the lenderhad previously secured judgments in separate collection actions. The chief ground on which this ruling is challenged is that the Unfair Competition Law (UCL), Business and Professions Code sections 17200 et sequitur, empowered the trial court to disregard the judgments, or even grant affirmative relief from them, on a class-wide basis. We hold that the act cannot be so understood. Since no other ground of relief is urged, we will affirm the orders and judgment from which the appeal is taken. We will deny the related writ petition as moot.
This matter was previously before this court in Fireside Bank v. Superior Court (2005) 35 Cal.Rptr.3d 80, review granted and reversed in part by Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 56 Cal.Rptr.3d 861, 155 P.3d 268. The background of the case is suitably summarized in the Supreme Court's decision. ( Fireside Bank v. Superior Court, supra, 40 Cal.4th at pp. 1075-1076, 56 Cal.Rptr.3d 861, 155 P.3d 268.) It is enough here to observe that cross-complainant Sandra Gonzalez purchased a van under a conditional sales contract that was assigned by the dealer to cross-defendant Fireside Bank (Fireside). When she fell into arrears, Fireside repossessed the van and sent her a notice purporting to state theconditions on which she could cure the default and reinstate the contract. The notice, however, overstated the amount due by some $2,700, representing a credit to which she was entitled for unearned finance charges. When Gonzalez failed to cure, Fireside sold the van and sued her for the deficiency. She answered and cross-complained, asserting that by serving the defective redemption notice, Fireside had violated the Rees-Levering Motor Vehicle Sales and Finance Act (Rees-Levering Act; Civ.Code, §§ 2981-2984.4); that this precluded any recovery of deficiencies; and that by proceeding to collect deficiencies despite this violation Fireside had engaged in an unlawful business practice. ( Ibid.)
The trial court granted Gonzalez's motion for judgment on the pleadings as against Fireside's complaint. It did so, however, at the same time that it granted her motion to certify her cross-complaint as a class action, and thus before any notice had been given to the class. The Supreme Court directed us to reverse the pleadings order as a violation of the rule against "one-way intervention." ( Id. at pp. 1083-1089, 1093, 56 Cal.Rptr.3d 861, 155 P.3d 268.) However it found no error in the order certifying the class. ( Id. at pp. 1089-1093, 56 Cal.Rptr.3d 861, 155 P.3d 268.)
Meanwhile Fireside had brought a collection action in Santa Cruz County against Patricia Lind, who in October 2007 filed a class action cross-complaint against Fireside in that county on claims similar to those of Gonzalez. The two matters were coordinated in Santa Clara County.
As pleaded in Gonzalez's second amended cross-complaint, the class claims included several allusions to Fireside's having already obtained judgments against some members of the class. A list of "[q]uestions of law and fact of common and general interest to the class" included "[w]hether Fireside or its agents obtained deficiency judgments from proposed class members based on defective Notices and whether Fireside collected or attempted to collect on such judgments, when it had no legal right to obtain such judgments or attempt to collect on them." A list of unlawful collection practices included "collection lawsuits and invalid judgments." It was alleged that "in the course of filing deficiency lawsuits," Fireside "filed affidavits ... averring compliance with Rees-Levering," which affidavits "were false due to Fireside's defective Notices." Fireside was alleged to have accumulated "ill gotten gains" by, among other things, "collecting on deficiency judgments invalidly obtained." And the relief prayed for included "[r]estitution or damages paid to class members based on all money they paid on invalid deficiency judgments obtained by Fireside, together with interest and/or profits thereon," "[d]isgorgement of all profits ... collected on ... invalid deficiency judgments," and "[a]n injunction requiring Fireside to vacate all judgments entered against class members and dismiss all pending lawsuits."
The cross-complaint in Lind included allegations resembling those above. It further asserted that Fireside's unlawful business conduct included "trick[ing] courts into entering judgments against consumers on claims which have no merit." And it prayed for, among other things, an order "requiring [Fireside] to seek an order from each court in which it has obtained a judgment ... setting aside that judgment."
On December 6, 2007, Fireside brought motions to strike all of these allegations from the two cross-complaints "insofar as they seek to overturn or bar Fireside from enforcing deficiency judgments it has previouslyobtained." 1 The grounds for the motion were stated as follows:
In response to these arguments, cross-complainants contended that res judicata was inapplicable because these matters did not involve the same cause of action as any previously adjudicated matter, and that collateral estoppel could not justify the requested order because that doctrine required Fireside to demonstrate that the issues it sought to preclude had been actually litigated in a prior matter. Cross-complainants implicitly conceded that the court lacked the power to declare the judgments void, but argued that the UCL empowered it to order Fireside to (1) restore sums it had collected from judgment debtors, and (2) ask the rendering courts to set the judgments aside.
The trial court granted the motions, directing in its "Pretrial Order No. 1" that the challenged language be stricken from the two cross-complaints. Cross-complainants filed amended cross-complaints reflecting the stricken text in strikeout typeface.
Two judgment-debtor members of the Gonzalez class, Cathy Moore and Cristian Lopez, moved for leave to intervene in the action and for entry of a judgment against them. The stated rationale for the motion was that the order striking references to the judgments had effectively disposed of their claims and that the orders sought were necessary to facilitate appellate review. Fireside attacked these requests as "an attempt to manufacture an appeal where none can exist," arguing that the order was not appealable because the claims of other class members remained unresolved, and that the relief sought would offend various other rules. In their reply memorandum the moving cross-complainants urged the court to designate a subclass of affected class members.
In an order styled "Pre-trial Order No. 2," the court denied the request for intervention on the grounds that the movants had failed to submit a proposed pleading, as is generally required for "permissive" intervention, and had made no attempt to establish the kind of stake required for "mandatory" intervention. The court also concluded that the movants lacked standing to intervene on behalf of a subclass that had not been formally designated, and that the request to designate a subclass should have been made in the original moving papers, not raised for the first time in a reply memorandum. The court rejected the request for entry of a judgment on the ground that the movants had not addressed concerns about notice, including notice to the class, and no authority appeared for such an order under the circumstances shown.
At the hearing leading to this order, class counsel observed that the court's tentative denial had been expressly made without prejudice and confirmed the court's willingness to entertain a further motion seeking to cure the perceived procedural defects. Moore and Lopez then brought a second motion to intervene, including a motion to designate a judgment-debtor subclass andappoint them its representatives. It was accompanied by aproposed cross-complaint in intervention. Fireside opposed the motion on the ground, among others, that intervention was an inappropriate means to acquire appellate standing or jurisdiction and that the designation of a subclass would unduly complicate the case. The court denied the motion, stating that the movants' interests were "adequately represented by Sandra Gonzalez" and that the designation of a subclass "could lead to more problems and that it is premature under the rules pertaining to class actions."
Cross-complainants filed timely notices or amended notices of appeal as to the original order granting the motion to strike and succeeding orders. Thereafter the court approved a settlement of the class action excluding judgment debtors from any relief, and ultimately entered a judgment dismissing their claims "with prejudice." Cross-complainants...
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