People v. First Federal Credit Corp.
| Decision Date | 20 December 2002 |
| Docket Number | No. B144014.,B144014. |
| Citation | 104 Cal.App.4th 721,128 Cal.Rptr.2d 542 |
| Court | California Court of Appeals Court of Appeals |
| Parties | The PEOPLE, Plaintiff and Respondent, v. FIRST FEDERAL CREDIT CORPORATION et al. Defendants and Appellants. |
David P. Lampkin, Los Angeles, for Defendants and Appellants.
Steve Cooley, District Attorney, Thomas Papageorge, Head Deputy District Attorney, Dana Aratani, Patrick Moran and Matthew G. Monforton, Deputy District Attorneys, for Plaintiff and Respondent.
Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Herschel T. Elkins, Senior Assistant Attorney General, Ronald Reiter, Supervising Deputy Attorney General, and Joseph Ragazzo, Deputy Attorney General, as Amicus Curiae on behalf of Plaintiff and Respondent.
Defendants and appellants First Federal Credit Corporation (First Federal), Frederick Tucker (Tucker) and Ida Lee Hansen (Hansen) (collectively, defendants) appeal a judgment imposing $200,000 in civil penalties pursuant to the Unfair Competition Law (UCL) (Bus. & . Prof.Code §§ 17200 et seq, 17206) 1 and the false advertising law (§§ 17500 et seq, 17536).
The essential issue presented is whether the People had the burden of presenting evidence of defendants' financial status as a prerequisite to the imposition of civil penalties under sections 17206 and 17536.
We conclude evidence of a defendant's financial condition, although relevant, is not essential to the imposition of the statutory penalties, making the issue of a defendant's financial inability a matter for the defendant to raise in mitigation. The judgment imposing civil penalties is affirmed.
On June 9, 1998, the Los Angeles District Attorney filed a complaint against First Federal, Tucker and Hansen seeking an injunction, civil penalties and other relief. The operative first amended complaint, in two causes of action, alleged defendants engaged in unlawful, unfair or fraudulent acts or practices in the conduct of the business in violation of section 17200, and that defendants made untrue and misleading statements to induce the public to obtain and pay for loan services in violation of section 17500.
The matter was tried to the court. The evidence showed, inter alia, that defendants misled prospective borrowers to believe the loans were offered in conjunction with the federal government, certain borrowers found the final loan terms were substantially different than originally quoted, the loan process took much longer than promised, prospective borrowers who canceled their applications were charged cancellation fees far in excess of what was written on the original agreement, and applicants who did not pay the exorbitant cancellation fees had their credit adversely affected.
The trial court imposed total civil penalties of $200,000. In an extensive statement of decision, the trial court based the penalties on the factors set forth in sections 17206 and 17536, both of which provide in pertinent part: "In assessing the amount of the civil penalty, the court shall consider any one or more of the relevant circumstances presented by any of the parties to the case, including, but not limited to, the following: the nature and seriousness of the misconduct, the number of violations, the persistence of the misconduct, the length of time over which the misconduct occurred, the willfulness of the defendant's misconduct, and the defendant's assets, liabilities, and net worth." (§ 17206, subd. (b); § 17536, subd. (b).)
As to the nature and seriousness of the misconduct, the trial court found the victims were lured into a position of vulnerability and suffered significant injury that seriously affected their finances. The number of violations exceeded 400. Persistence was shown by "the breadth of defendants' conduct and actions in the face of protestations of victims in paying cancellation fees" and defendants' history of adverse contact with governmental regulators. As to length of time, the misconduct originated in the late 1980's and went on continuously for a number of years.
Defendants argued below that the evidence as to their assets, liabilities and net worth did not support a finding of significant penalties. The trial court disagreed, stating defendants had the burden to establish their financial inability to pay penalties. The trial court found the evidence of defendants' assets was sufficient to support penalties of $200,000. It specifically rejected Tucker's assertion of personal inability to pay as not credible.
The trial court arrived at the $200,000 penalty as follows. It found at least 300 separate violations of section 17200 had occurred and imposed a penalty of $500 for each violation thereof, amounting to $150,000. It also found at least 400 separate violations of section 17500 had occurred and imposed a $125 penalty for each such violation, amounting to $50,000. The trial court ordered that defendants be jointly and severally liable for these penalties, ordered restitution and permanently enjoined defendants from engaging in various acts or practices.
Defendants filed a timely notice of appeal from the judgment.
Defendants contend the civil penalties must be reversed because there is no meaningful evidence of defendants' financial condition; the trial court erred in placing the burden of introducing evidence of financial condition on the defendants; the trial court further erred in imposing joint and several liability for the penalties; the finding that Hansen violated the false advertising law must be reversed because it rests on insufficient evidence, and the permanent injunction is overbroad and an abuse of discretion as to her.2
The statutory scheme provides for civil penalties for engaging in unfair competition under section 17200 and for disseminating false statements under section 17500, with a maximum penalty of $2,500 for each violation. (§§ 17206, subd. (a), 17536, subd. (a).) The duty to impose a penalty for each violation is mandatory. (People v. National Association of Realtors (1984) 155 Cal.App.3d 578, 585, 202 Cal.Rptr. 243; People v. Custom Craft Carpets, Inc. (1984) 159 Cal.App.3d 676, 686, 206 Cal.Rptr. 12.)
Determination of these penalties is governed by section 17206, subdivision (b) and by section 17536, subdivision (b), which contain identical language: (§§ 17206, subd. (b) and 17536, subd. (b), italics added.)
Under a plain reading of these penalty statutes, evidence of a defendant's financial condition, although relevant, is not essential for determining the penalty.
When the words of a statute are clear and unambiguous, there is no need for statutory construction and courts should not indulge in it. (California Fed. Savings & Loan Assn. v. City of Los Angeles (1995) 11 Cal.4th 342, 349, 45 Cal.Rptr.2d 279, 902 P.2d 297.) Further, significance should be given, if possible, to every word of a statute, and a construction that renders a word surplusage should be avoided. (Delaney v. Superior Court (1990) 50 Cal.3d 785, 798-799, 268 Cal.Rptr. 753, 789 P.2d 934.)
The term "relevant circumstances" is preceded by the phrase "any one or more." (§§ 17206, subd. (b), 17536, subd. (b).) Thus, giving the statutes their ordinary meaning, a defendant's financial condition is only one of at least six relevant factors a court may consider in determining an appropriate penalty, and the court is authorized to impose a penalty based on evidence as to any one or more of the enumerated factors.
Further, the term "relevant circumstances" is followed by the phrase "presented by any of the parties to the case ...." (§§ 17206, subd. (b), 17536, subd. (b).) Thus, these statutes do not require the People to present evidence of a defendant's financial circumstances. The statutes also do not require a defendant to present evidence of financial condition. If neither party presents any evidence relating to financial condition or some other enumerated factor, the court is still required to impose civil penalties based upon other relevant evidence before the court.
Duly giving significance to every word of the statutes, we conclude evidence of a defendant's financial condition is merely one factor to be considered, such evidence may be presented by either party to the action, and the court is required to impose a penalty even in the absence of any evidence as to a defendant's financial status. Had the Legislature intended to require evidence of a defendant's financial status to be presented by the People as a prerequisite to the imposition of civil penalties under sections 17206 and 17536, it would not have included the specific qualifying phrases "any one or more of the relevant circumstances" and "presented by any of the parties to the case" in subdivision (b) of the statutes.
Our conclusion the People do not have the burden of establishing a defendant's ability to pay a statutory penalty pursuant to sections 17206...
To continue reading
Request your trial
-
Nationwide Biweekly Admin., Inc. v. Superior Court of Alameda Cnty.
...( Kaufman, at p. 431, & fn. 9, 115 Cal.Rptr. 812, 525 P.2d 716, italics added.)In People v. First Federal Credit Corp . (2002) 104 Cal.App.4th 721, 128 Cal.Rptr.2d 542, the right to jury trial likewise was not at issue. Rather, the issue in that case was whether the imposition of penalties ......
-
Nationwide Biweekly Admin., Inc. v. Superior Court of Alameda Cnty.
...65 ; Beaumont Investment , supra , 111 Cal.App.4th at pp. 130-131, 3 Cal.Rptr.3d 429 ; People v. First Federal Credit Corp. (2002) 104 Cal.App.4th 721, 733-734, 128 Cal.Rptr.2d 542.) In sum, in light of the language and legislative history of the FAL and the relevant judicial precedent, we ......
-
Mt. Hawley Ins. Co. v. Lopez
...20 Cal.3d 10, 17, 141 Cal.Rptr. 20, 569 P.2d 125 [prosecutors can seek restitution under the FAL]; People v. First Federal Credit Corp. (2002) 104 Cal.App.4th 721, 128 Cal.Rptr.2d 542 [district attorney sought civil penalties under the UCL and FAL].) In addition, the goal of the legislation......
-
City of Carlsbad v. Shah
...to prohibit a defendant from continuing to engage in unscrupulous and misleading conduct. See People v. First Fed. Credit Corp., 104 Cal.App.4th 721, 735, 128 Cal.Rptr.2d 542 (2002). Shah has provided every indication that he intends to continue his misrepresentations in an effort to deceiv......
-
California Antitrust and Unfair Competition Law Update: Substantive Law
...5th 438 (2018), review granted, S250047, Sept. 19, 2018.107. Id. at 470-71.108. See, e.g., People v. First Federal Credit Corp. , 104 Cal. App. 4th 721 (2002); People v. Bestline Products, Inc., 61 Cal. App. 3d 879 (1976); People v. Witzerman, 29 Cal. App. 3d 169 (1972); see also People v. ......
-
Recent Developments in California Competition and Privacy Law
...Biweekly Administration, Inc. v. Superior Court, 24 Cal. App. 5th 438 (2018).54. See, e.g., People v. First Federal Credit Corp., 104 Cal. App. 4th 721 (2002); People v. Bestline Products, Inc., 61 Cal. App. 3d 879 (1976); People v. Witzerman, 29 Cal. App. 3d 169 (1972); see also People v. ......
-
California Antitrust and Unfair Competition Law Update: Substantive Law
...Nationwide Biweekly Administration, Inc. v. Superior Court, supra, at 470-471.119. See, e.g., People v. First Federal Credit Corp., 104 Cal. App. 4th 721 (2002); People v. Bestline Products, Inc., 61 Cal. App. 3d 879 (1976); People v. Witzerman, 29 Cal. App .3d 169 (1972); see also, People ......