In re Ford
| Decision Date | 01 January 2014 |
| Docket Number | E056595,E054517 |
| Court | California Court of Appeals Court of Appeals |
| Parties | RACEWAY FORD CASES, |
OPINION TEXT STARTS HERE
Judgment affirmed in part, reversed in part, and remanded with directions; fee order vacated.
See 4 Witkin, Summary of Cal. Law (10th ed. 2005) Sales, § 239 et seq.
APPEAL from the Superior Court of Riverside County. Dallas Holmes, Judge. ) Affirmed in part, reversed in part, with directions. (Super.Ct.No. JCCP4476)
Rosner, Barry & Babbitt and Hallen D. Rosner, San Diego, Christopher P. Barry and Angela J. Smith for Plaintiffs and Appellants Carl Stone et al.
Callahan, Thompson, Sherman & Caudill and Kellie S. Christianson, Irvine, for Defendant and Respondent Raceway Ford, Inc.
Plaintiffs, appellants, and cross-respondents (plaintiffs) are consumers who purchased vehicles from defendant, respondent, and cross-appellant Raceway Ford (Raceway), an automobile dealership. Plaintiffs alleged numerous causes of action based on laws proscribing certain acts against consumers, unfair competition, and deceptive business practices, bringing both individual claims and claims on behalf of two certified classes. The trial court, after a bench trial, entered judgment in favor of Raceway and against plaintiffs on all causes of action, except that a single plaintiff was granted rescission on a single cause of action. Separately, the trial court awarded attorneys' fees and costs to Raceway in the amount of $1,503,084.50. In these appeals, which we ordered consolidated for oral argument and decision, plaintiffs challenge the trial court's judgment on the merits (case No. E054517) and fee order (case No. E056595); Raceway has cross-appealed regarding one aspect of the trial court's fee order.
With respect to the trial court's decision on the merits (case No. E054517), plaintiffs contend that, as a matter of law, Raceway's previous practice of “backdating” second or subsequent contracts for sale of a vehicle to the original date of sale violates the Automobile Sales Finance Act, also known as the Rees–Levering Motor Vehicle Sales and Finance Act (ASFA) ( Civ.Code,1 § 2981 et seq.), the Consumer Legal Remedies Act (CLRA) ( Civ.Code, § 1750 et seq.), and the Unfair Competition Law (UCL) (Bus. & Prof.Code, § 17200 et seq.). Plaintiffs ask that we reverse the trial court's judgment in favor of Raceway and against the certified class of plaintiffs who entered into backdated second or subsequent contracts with Raceway, and order entry of judgment in favor of plaintiffs.2 We agree that the practice of backdating could have resulted in inaccurate disclosures to class members, thereby violating the ASFA, at least in some cases. On the present record, however, we decline to order entry of judgment in favor of the plaintiff class. We instead reverse the trial court's judgment in favor of Raceway with respect to plaintiffs' backdating claims, and remand for further proceedings.
Plaintiffs also appeal the judgment in favor of Raceway with respect to the claims of a second certified class, consisting of Raceway customers who purchased used diesel vehicles from Raceway and who were charged fees for smog checks and smog certifications that were only properly applicable to purchases of gasoline vehicles. Plaintiffs argue that Raceway failed to plead and establish a valid defense to liability under the ASFA with respect to these fees, and that the class is entitled to judgment in its favor and the remedy of rescission, notwithstanding refunds paid by Raceway. We affirm the trial court's judgment with respect to plaintiffs' smog fee claims.
Additionally, plaintiffs appeal the judgment in favor of Raceway on certain individual plaintiffs' claims that Raceway violated the ASFA by failing to provide them with copies of their credit applications. Plaintiffs challenge the trial court's finding that these plaintiffs did not meet their burden of proving a violation. Plaintiffs' evidence in support of these claims does not compel a decision in their favor, so we affirm the trial court's ruling.
Finally, plaintiffs appeal the judgment in favor of Raceway with respect to claims under the UCL and the CLRA brought by plaintiff Francisco Salcedo in his individual capacity. The trial court found in favor of Mr. Salcedo on his claim of fraud, and granted him the remedy of rescission, though it declined to award any punitive damages. Plaintiffs contend that the judgment in Mr. Salcedo's favor on his fraud claim—which Raceway has not appealed—establishes as a matter of law that he should also have judgment entered in his favor on his UCL and CLRA claims. We agree, and reverse, remanding the matter to the trial court for entry of judgment in favor of Mr. Salcedo on the UCL and CLRA claims he brought in his individual capacity, and for consideration as to whether he should be awarded any additional remedies, beyond those already awarded to him based on his common law fraud cause of action.
The basis for the trial court's award of fees to Raceway is in part undermined by our partial reversal of the judgment. We therefore need not and do not address the merits of the parties' arguments in the appeal and cross-appeal of the fee award, but instead vacate the trial court's fee award, and remand the issue of attorney fees and costs for reconsideration following final adjudication of the remainder of the case.
Plaintiffs' most recent amended complaint, the second amended complaint (SAC), alleges 18 causes of action, including claims on behalf of several separate classes, and other claims on behalf of certain individual plaintiffs. The claims at issue in the present appeal fall into four categories; we describe below the background facts relevant to each of these categories.
For some of its customers, Raceway acts not only as seller of a vehicle, but also as creditor, by extending financing for the sale. Generally, Raceway then attempts to assign the finance contract to a commercial lender. Sometimes, after the contract for the sale and financing has been signed and the customer has taken delivery of the vehicle, Raceway has later entered into a second or subsequent contract with the customer for the same vehicle. This occurred on some occasions when commercial lenders were unwilling to accept assignment of the contract on the terms Raceway had agreed to with its customer; in that case, Raceway could contact the customer and request to renegotiate the terms of the sale and financing.3 Alternatively, a customer could initiate a renegotiation with Raceway, for example, because he or she had regrets about the initial terms.
Plaintiffs' backdating claims arise from the circumstance that, prior to late 2004, it was Raceway's practice to date second or subsequent contracts negotiated with customers using the date of the initial contract. A customer who agreed to enter into a second or subsequent contract with Raceway would sign not only a new purchase contract, dated to the initial date of sale, but also an “Acknowledgement of Rescinded Contract” or “Acknowledgement of Rewritten Contract,” which also was backdated to the date as the original contract. The acknowledgements state that the original contract has been “ ‘rescinded (canceled) such that no obligations shall be owed by either party under the original contract.’ ”
The trial court certified a class, referred to as “Class One” or the “Backdating Class” by the parties, consisting of “[a]ll persons who, since January 12, 2001, (1) purchased a vehicle from Raceway Ford, for personal use, (2) on a later date rescinded their original purchase contract, and (3) signed a subsequent or second contract for the purchase of the same vehicle, which contract was dated the date of the original purchase contract and involved financing at an annual percentage rate greater than 0.00%.” There are, according to plaintiffs, approximately 1100 members of Class One.
At trial, Class One asserted claims under the ASFA, CLRA, and UCL based on the practice of backdating described above. The trial court found in favor of Raceway on all claims; its reasoning in support of this ruling will be discussed below.
Raceway concedes that it erroneously charged some of its customers who purchased used diesel vehicles certain fees related to performing a smog check and obtaining state smog certification that should only have been charged to purchasers of used gasoline-powered vehicles. These charges were explicitly disclosed in the contracts that the customers signed; the problem is that the fees should not have been charged at all, and neither Raceway nor the customers involved caught the error at the time of the transaction. Plaintiffs have not disputed that each of these customers has, during the pendency of this litigation, received two checks from Raceway, the first of which refunded the fees themselves, and the second of which represented an amount Raceway calculated to represent any finance charges the customers may have incurred on the fees.
The trial court certified a class, referred to by the parties as “Class Two” or the “Smog Fee Class,” consisting of “[a]ll persons except for Robert Loverso 4 who, since January 12, 2001, purchased a diesel vehicle from Raceway Ford for personal use and were charged a smog fee and a smog certification fee.” There are, according to plaintiffs, 48 members of Class Two. At trial, Class Two asserted only a claim under the ASFA. 5 The trial court entered judgment in favor of Raceway, finding that Raceway's actions constituted a “bona fide error corrected with full refunds plus interest within a reasonable time under the Automobile Sales Finance Act,” and holding that “Raceway is not legally required to do more to correct” its errors. Plaintiffs contend that Class Two is entitled to judgment in its favor under the ASFA and the remedy of...
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