Sargoy v. Resolution Trust Corp.

• Decision Date: 12 August 1992
• Docket Number: No. B054757,B054757
• Citation: 10 Cal.Rptr.2d 889,8 Cal.App.4th 1039
• Court: California Court of Appeals Court of Appeals
• Parties: Joan McLaughlin SARGOY, et al., Plaintiffs and Appellants, v. RESOLUTION TRUST CORPORATION, et al., Defendants and Respondents.

Page 889

10 Cal.Rptr.2d 889

8 Cal.App.4th 1039

Joan McLaughlin SARGOY, et al., Plaintiffs and Appellants, v. RESOLUTION TRUST CORPORATION, et al., Defendants and Respondents.

No. B054757.

Court of Appeal, Second District, Division 7, California.

Aug. 12, 1992.

Kollender & Sargoy, Kenneth J. Sargoy and Timothy T. Tierney, Los Angeles, for plaintiffs and appellants.

Fleming & Ingalls, Donald R. Ingalls, Jerome P. Doctors, Hancock, Rothert & Bunshaft, Aubin K. Barthold, Robert V. Richter and Michael L. Challgren, Van Nuys, for defendants and respondents.

FRED WOODS, Associate Justice.

I.

INTRODUCTION

Joan McLaughlin Sargoy (appellant) has appealed from a dismissal of her first amended complaint. Appellant brought the instant class action suit against Valley Federal Savings and Loan Association (Valley Federal), now operated by the Resolution Trust Corporation, alleging that Valley Federal's practice of offering higher interest rates to senior citizens violated the Unruh Civil Rights Act. ¹ Ms. Lois Lomeli

                (Lomeli), one of Valley Federal's branch managers, was also named as a defendant for allegedly aiding Valley Federal in its purportedly unlawful discriminatory practice. 2  The trial court sustained Lomeli's and Valley Federal's demurrer to the complaint on the grounds that it failed to state a cause of action, refusing to give appellant leave to amend.  The trial court implicitly found that Valley Federal's practice was consistent with California's well established public policy of assisting senior citizens as reflected in innumerable public and private sector discount and benefit programs.  Relying on Koire v. Metro Car Wash (1985) 40 Cal.3d 24, 219 Cal.Rptr. 133, 707 P.2d 195, a California Supreme Court opinion that tacitly approved such age-based discounts, the trial court found that Valley Federal's practice did not constitute the type of insidious or arbitrary discrimination prohibited by the Unruh Civil Rights Act
                

II. ISSUES PRESENTED

The sole issue on appeal is whether a Savings and Loan Association that offers higher interest rates to senior citizens engages in arbitrary discrimination violative of the Unruh Civil Rights Act.

III. STANDARD OF REVIEW ON APPEAL

This appeal followed an order of dismissal after respondent's demurrer was sustained without leave to amend. The purpose of a demurrer is to test the sufficiency of a complaint by raising questions of law. (Nordlinger v. Lynch (1990) 225 Cal.App.3d 1259, 1271, 275 Cal.Rptr. 684.) Furthermore, the court is to accept as true all allegations of fact contained in the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 216 Cal.Rptr. 718, 703 P.2d 58.) When a demurrer is sustained the reviewing court must determine whether the complaint states sufficient facts to state a cause of action. (Ibid.) The lower court will only be reversed for an abuse of discretion if there is a reasonable possibility that the complaint could have been cured by an amendment. (Ibid.)

IV. STATEMENT OF FACTS

On March 26, 1990, appellant entered Valley Federal's Encino branch and sought to open a "PrimePlus" account. Appellant was informed that because she was under the age of 55, she did not qualify for the "PrimePlus" program.

Valley Federal's "PrimePlus" program enables persons age 55 and older to earn slightly higher interest rates on their deposit accounts than those afforded to persons under age 55. For instance, at the time complained of herein, a "PrimePlus" passbook account earned 7.00 percent interest, while a regular passbook account earned 5.25 percent interest.

On March 26, 1990, the very same day appellant was refused a "PrimePlus" account, appellant filed this class action alleging Valley Federal violated the Unruh Civil Rights Act by refusing to allow her to receive the "PrimePlus" interest rate offered to senior citizens for her deposit account. Lomeli was individually named as a defendant for allegedly aiding Valley Federal in its unlawfully discriminatory practice. In addition, appellant alleged that she represented an entire class of similarly situated individuals under the age of 55 who also were ineligible for the senior citizen "PrimePlus" deposit accounts.

On May 9, 1990, appellant filed a first amended complaint alleging the same one cause of action. Appellant sought damages of $250 for every non-senior deposit account holder of Valley Federal who did not receive the "PrimePlus" "interest bonus."

Appellant further sought an injunction to prohibit Valley Federal from offering the higher "PrimePlus" interest rates to senior citizens in the future.

On October 5, 1990, the trial court, relying on Koire v. Metro Car Wash, supra, 40 Cal.3d 24, 219 Cal.Rptr. 133, 707 P.2d 195, sustained the demurrer of respondents without leave to amend, finding that Valley Federal's practice of offering higher interest rates to senior citizens did not violate the Unruh Civil Rights Act. Axiomatically, the court found that since Valley Federal had not violated the Unruh Civil Rights Act, no liability could possibly attach to respondents.

Appellant filed a timely notice of appeal.

V. DISCUSSION

A. EXISTING CALIFORNIA CASE LAW HOLDS THAT BENEFICIAL TREATMENT OF SENIOR CITIZENS DOES NOT CONSTITUTE INVIDIOUS OR ARBITRARY DISCRIMINATION VIOLATIVE OF THE UNRUH CIVIL RIGHTS ACT.

The trial court's decision is consistent with established California statutory law and case precedent.

Appellant argues that the Unruh Civil Rights Act bars every type of age-based preference regardless of the socially beneficial effects or justifiable interests supporting such favorable treatment. That, however, is not what the Unruh Civil Rights Act proscribes. Neither the language of Unruh itself nor the interpretation of the Unruh Civil Rights Act by the California courts have held that all distinctions based on age are unlawful. Rather, the California Supreme Court has held that Unruh prohibits only arbitrary, invidious or unreasonable discrimination. (In re Cox (1970) 3 Cal.3d 205, 216-217, 90 Cal.Rptr. 24, 474 P.2d 992.)

California courts have uniformly found discriminatory treatment to be reasonable, and thus nonarbitrary, where a strong public policy exists in favor of such treatment. (Koire v. Metro Car Wash, supra, 40 Cal.3d 24, 219 Cal.Rptr. 133, 707 P.2d 195; Starkman v. Mann Theatres Corp. (1991) 227 Cal.App.3d 1491, 278 Cal.Rptr. 543; Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721, 180 Cal.Rptr. 496, 640 P.2d 115.) For instance, in Koire and Starkman, the California Supreme Court and Court of Appeal, respectively, recognized that age-based price discounts for the elderly are justified by social policy considerations and thus did not constitute arbitrary or invidious forms of discrimination. In each instance, the courts found that such age-based price preferences were not prohibited by the Unruh Civil Rights Act.

In Koire v. Metro Car Wash, supra, 40 Cal.3d 24, 219 Cal.Rptr. 133, 707 P.2d 195, the California Supreme Court considered whether a car wash and nightclub that offered free admission on certain nights to women but not to men violated the Unruh Civil Rights Act. The defendants argued that their sex-based discounts were analogous to permissible age-based discounts. The Supreme Court rejected that argument and distinguished age-based price discounts from sex-based discounts, discussing at length the permissibility and desirability of offering discounts to senior citizens.

The Supreme Court observed:

"The public policy considerations applicable to price discounts for children or senior citizens are very different from those applicable to sex-based discounts....

"...

"... [S]tate and federal legislation has been enacted to address the special needs of our elderly citizens. (See, e.g., 42 U.S.C., § 1381 et seq. [supplemental security income]; Welf. & Inst. Code, § 12050 et seq. [eligibility for old age security benefits].) In Marina Point, supra, 30 Cal.3d at page 742 [180 Cal.Rptr. 496, 640 P.2d 115], this court chronicled the special housing needs of the elderly, and the 'age-conscious' legislation aimed at meeting those needs, as evidence that public policy supported some age-based housing discrimination. The Legislature subsequently expressed its agreement. (See [Civ.Code, § 51.3].)

"Children and elderly persons frequently have limited earning capacities which justify differential treatment in some circumstances....

"... [M]any elderly persons have limited incomes. While efforts are being "Thus, price discounts for children or for the elderly are justified by social policy considerations as evidenced by legislative enactments.... In fact, the Legislature has specifically provided for certain price discounts for senior citizens." (Id., at pp. 37-38, 219 Cal.Rptr. 133, 707 P.2d 195, italics added, fn. omitted.)

                made to increase employment opportunities for senior citizens (see Unemp.Ins.Code., § 16000 et seq.), many are unable to work due to health problems.  For others, retirement may even be legislatively encouraged or mandated.  (See, e.g., Rittenband v. Cory (1984) 159 Cal.App.3d 410, [205 Cal.Rptr. 576] [upholding the constitutionality of a provision of the Judges' Retirement Law (Gov.Code, § 75000 et seq.) which decreases pension benefits to judges who fail to retire at age 70];  Gov.Code, § 20980 et seq.)   In addition, our society has recognized that senior citizens are entitled to retire at some point in their lives.
                

Similarly, in Starkman v. Mann Theatres Corp., supra, 227 Cal.App.3d 1491, 278 Cal.Rptr. 543, the court recently considered whether the Unruh Civil Rights Act prohibits the offering of discount theater tickets to senior citizens and children. In that case, the trial court granted a motion for summary adjudication of the issues in favor of the large theater chain which offered such discounts, and the plaintiff appealed. Drawing heavily upon the Supreme Court's reasoning in Koire, the appellate court agreed with the trial court...