Ortiz v. Lyon Management Group, Inc.

• Decision Date: 03 December 2007
• Docket Number: No. G037225.,G037225.
• Citation: 69 Cal.Rptr.3d 66,157 Cal.App.4th 604
• Parties: Rae F. ORTIZ, Plaintiff and Appellant, v. LYON MANAGEMENT GROUP, INC., Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

69 Cal.Rptr.3d 66

157 Cal.App.4th 604

Rae F. ORTIZ, Plaintiff and Appellant, v. LYON MANAGEMENT GROUP, INC., Defendant and Appellant.

No. G037225.

Court of Appeal, Fourth District, Division 3.

December 3, 2007.

Lakeshore Law Center and Jeffrey Wilens, Yorba Linda; Law Offices of Jeffrey P. Spencer and Jeffrey Spencer, San Clemente, for Plaintiff and Appellant.

Irell & Manella, Gregory R. Smith, Marc S. Maister, Garland A. Kelley, Los Angeles, and Regine Rutherfurd, for Defendant and Appellant.

Orrick, Herrington & Sutcliffe, Edwin V. Woodsome, William W. Oxley and Khai LeQuang, Los Angeles; Hodel Briggs Winter, Irvine, Karla J. Kraft and Neyha G. Rajan; Irell & Manella, Marc S. Maister, Garland A. Kelley and Regine Rutherfurd, Newport Beach; Kimball, Tirey & St. John and Jeffrey Garland, San Diego; Lewis Brisbois Bisgaard & Smith and Thomas G. Oesterrich; Soltman, Levitt & Flaherty and Mitchell S. Brachman, Wetlake Village; Green & Hall, Robert L. Green and Michael J. Pepek, Santa Ana; Lynch Gilardi & Grummer, James Parton III and Francis D. Conway, San Francisco,

for The Irvine Company Apartment Communities, Inc., Shea Properties Management Company, Inc., Fairfield Properties, L.P., Archstone-Smith Trust, Far West Management Corporation, VPM Management, Inc., Apartment Investment and Management Company, FPI Management, Inc., Stratus Real Estate, Inc., Western National Property Management, and Prometheus Real Estate Group, Inc., as Amici Curiae on behalf of Defendant and Appellant.

OPINION

IKOLA, J.

These appeals raise an issue of first impression involving California's credit reporting statutes—the Investigative Consumer Reporting Agencies Act (ICRAA) (Civ.Code, § 1786 et seq.)¹ and the Consumer Credit Reporting Agencies Act (CCRAA) (§ 1785.1 et seq.)—and a novel class action issue.

First, plaintiff Rae F. Ortiz appeals from a summary judgment entered in favor of defendant Lyon Management Group, Inc. Plaintiff alleges defendant violated the ICRAA when it obtained a tenant screening report to assess her rental application.² The ICRAA governs "investigative consumer reports" containing "information on a consumer's character, general reputation, personal characteristics, or mode of living ...."(§ 1786.2, subd. (c).) Plaintiff contends her tenant screening report contained character information because it indicated whether any unlawful detainer actions had been filed against her.

We hold the ICRAA is unconstitutionally vague as applied to tenant screening reports containing unlawful detainer information. Reasonable persons cannot readily determine whether unlawful detainer information constitutes "character" information governed by the ICRAA or "credit-worthiness" information governed by the CCRAA. The court correctly granted summary judgment to defendant.

Second, defendant appeals from an order denying its motion for class certification. Defendant filed this motion after the court had already granted its summary judgment motion.

We hold defendant could not obtain class certification after the court decided the merits of plaintiffs individual claim. As a general procedural rule, class certification should be determined before the merits are adjudicated. And as a general substantive rule, a precertification decision on the merits against a named plaintiff does not bind absent class members. The court did not abuse its discretion by holding defendant to these general rules. We affirm.

FACTS

Plaintiff applied to rent an apartment managed by defendant. Plaintiff gave written consent to defendant to obtain a tenant screening report, including an "unlawful detainer (eviction) search." Defendant obtained plaintiffs tenant screening report. The report contained a section entitled, "Court Records on File," which simply stated, "No Court Records Found." The parties agree this section would have disclosed whether any unlawful detainer actions had been filed against plaintiff. They further agree the section correctly indicated no such actions had been filed. Defendant approved plaintiffs application, and she moved into one of defendant's apartments.

Nonetheless, plaintiff sued defendant for violating the ICRAA. She alleged defendant failed to give her a written notice and a report requesting form, as required by the ICRAA (but not the CCRAA). (§ 1786.16, subds. (a)(3), (b)(1).) She sought relief individually and on behalf of a class of similarly situated persons. Under ICRAA, the statutory violation would carry with it a minimum statutory damage award in her individual action of $10,000. (§ 1786.50, subd. (a)(1).)

Defendant moved for summary judgment, which the court granted. It found the tenant screening report contained no character information subject to the ICRAA. It noted the court records entry was blank, containing no unlawful detainer or character information at all. Even if it did, the court observed unlawful detainer information would not prove plaintiff had a bad character. The court also held plaintiffs broad reading of the ICRAA would render it unconstitutionally vague and inconsistent with federal law. The court did not, however, immediately enter judgment.

Almost two months later, defendant moved for class certification. The court denied the motion, holding defendant waived any right to class certification by seeking summary judgment on plaintiffs individual claims. The court entered judgment, and both parties appealed.

DISCUSSION

The ICRAA is Unconstitutionally Vague as Applied to Unlawful Detainer Information

Plaintiffs appeal presents us with a platypus, a categorization challenge.³ Early zoologists categorized animals into distinct families with little effort until faced with an animal that laid eggs like a reptile but nursed its young like a mammal. The platypus defied the previously discrete categories. It was thought to be hoax, or at least a paradox. The zoologists "solved" this paradox by creating a new category, the monotreme order of mammals, to account for the platypus and its cousin, the spiny anteater. But the paradox arose only because the zoologists had adopted purportedly distinct categories that did not actually correspond to the full variety of animal life.

Our categorization challenge involves tenant screening reports. The Legislature enacted two distinct statutes to regulate tenant screening reports. The ICRAA governs reports containing information on a consumer's character, while the CCRAA governs reports containing information on a consumer's creditworthiness. Whether an unlawful detainer action has been filed against a consumer appears to speak to both creditworthiness and character.⁴ Unlawful detainer information defies categorization. But we cannot create a new statute to govern it.

Our challenge arises not because unlawful detainer information is somehow paradoxical, but because the statutory scheme fails to set forth truly distinct categories. It presents a false dichotomy between creditworthiness and character. The ICRAA's nebulous reference to character information, as applied to tenant screening reports containing unlawful detainer information, is unconstitutionally vague.

"[T]he underlying concern [of a vagueness challenge] is the core due process requirement of adequate notice." (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1115, 60 Cal.Rptr.2d 277, 929 P.2d 596 (Gallo).) A vague statute cannot be upheld because "`[w]e insist that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.'" (Cranston v. City of Richmond (1985) 40 Cal.3d 755, 763, 221 Cal.Rptr. 779, 710 P.2d 845 (Cranston).) "A statute should be sufficiently certain so that a person may know what is prohibited thereby and what may be done without violating its provisions." (Lockheed Aircraft Corp. v. Superior Court (1946) 28 Cal.2d 481, 484, 171 P.2d 21 (Lockheed).) "[A] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law." (Connolly v. General Const. Co. (1926) 269 U.S. 385, 391, 46 S.Ct. 126, 70 L.Ed. 322 (Connally).)

To determine whether a statute is unconstitutionally vague, it must be "applied in a specific context." (Gallo, supra, 14 Cal.4th at p. 1116, 60 Cal.Rptr.2d 277, 929 P.2d 596.) Thus, "in judging the constitutionality of [a statute] we must determine not whether [it] is vague in the abstract but, rather, whether it is vague as applied to this appellant's conduct in light of the specific facts of this particular case." (Cranston, supra, 40 Cal.3d at p. 765, 221 Cal.Rptr. 779, 710 P.2d 845.) Also, the challenged statute need only be reasonably certain or specific. (Gallo, at p. 1117, 60 Cal.Rptr.2d 277, 929 P.2d 596.) It "cannot be held void for uncertainty if any reasonable and practical construction can be given to its language." (Lockheed, supra, 28 Cal.2d at p. 484, 171 P.2d 21.) Finally, "[a]ll presumptions and intendments favor the validity of a statute...." (Ibid.)

We turn to the statutes. In 1975, the California Legislature enacted two statutes modeled after the Federal Credit Reporting Act (FCRA) (15 U.S.C. § 1680 et seq.).⁵ (See Cisneros v. U.D. Registry, Inc. (1995) 39 Cal.App.4th 548, 559, 46 Cal.Rptr .2d 233 [noting legislative history].) "[S]tatutes or statutory sections relating to the same subject must be harmonized, both internally and with each other, to the extent possible." (DynaMed, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387, 241 Cal. Rptr. 67, 743 P.2d 1323 (Dyna-Med).)

The first statute, the CCRAA, governs "consumer credit reports." (§ 1785.1 et seq.) It defines a consumer credit report as "any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer's credit worthiness, credit standing, or credit capacity,"...