Tun v. Wells Fargo Dealer Servs., Inc.

• Decision Date: 07 November 2016
• Docket Number: D070447
• Citation: 5 Cal.App.5th 309,209 Cal.Rptr.3d 753
• Court: California Court of Appeals Court of Appeals
• Parties: Michael Z. TUN, Plaintiff and Appellant, v. WELLS FARGO DEALER SERVICES, INC., Defendant and Appellant; Plus West LA Corp. et al., Defendants and Respondents.

5 Cal.App.5th 309

209 Cal.Rptr.3d 753

Michael Z. TUN, Plaintiff and Appellant,

v.WELLS FARGO DEALER SERVICES, INC., Defendant and Appellant;

Plus West LA Corp. et al., Defendants and Respondents.

D070447

Court of Appeal, Fourth District, Division 1, California.

Filed November 7, 2016

Law Offices of Robert G. Padrick and Robert G. Padrick, Redwood City, for Plaintiff and Appellant.

Severson & Werson, Jan T. Chilton and Mark D. Lonergan, San Francisco, for Defendant and Appellant.

Beam, Brobeck, West, Borges & Rosa, Stephen A. Rosa and Susan D. Garbutt, Newport Beach, for Defendants and Respondents.

BENKE

, J.

This case arises from the purchase by plaintiff and appellant Michael Z. Tun (Tun) of a used 2007 BMW automobile (vehicle) from defendant and respondent Plus West LA Corporation, dba CA Beemers (CA Beemers). Defendant and appellant Wells Fargo Dealer Services, Inc., an incorporated division of Wells Fargo Bank, N.A. (collectively Wells Fargo), subsequently accepted assignment of Tun's retail installment sales contract (RISC) under an agreement with CA Beemers and/or defendant and respondent West LA Corporation, dba California Beemers (California Beemers) (sometimes collectively dealer).

In his 84–page third amended complaint (TAC), Tun asserted 11 causes of action based primarily on his contention that dealer knowingly and intentionally failed to disclose that the vehicle had suffered “frame/unibody damage” from a prior collision, which damage Tun further alleged “existed at the time it was sold” to him and which “substantially decreased the value of the vehicle.” Tun alleged he first learned the vehicle had been in a prior collision when he took it to a mechanic near his home, after he experienced problems while driving the vehicle.

After a multi-day trial, the jury returned a verdict in favor of dealer, finding dealer had not committed fraud, breached its contract with Tun or otherwise engaged in conduct that violated the Consumers Legal Remedies Act (Civ. Code,

¹§ 1750 et seq. ; hereafter CLRA). The jury also found that Wells Fargo was not derivatively liable as holder of the RISC.

Following the verdicts, the court granted Tun's new trial motion only as to Wells Fargo, despite the fact Wells Fargo was only liable to the extent, if at all, dealer was liable. In granting the motion, the court determined it had erred in ruling pretrial that Tun could not comment to the jury regarding Wells Fargo's tender under section 2983.4—a statute awarding a party prevailing under the Automobile Sales Financing Act (hereafter ASFA) reasonable attorney fees and costs—of the amount Tun had paid under the RISC ($15,700).

Wells Fargo appeals from the new trial order, arguing that the court had correctly ruled in limine that Tun could not comment on Wells Fargo's tender under section 2983.4 because that tender could not be treated as a judicial admission of liability; that the tender was irrelevant to the issues decided by the jury, which focused on the conduct of dealer in connection with the sale of the vehicle; that, even assuming error, Tun could not establish prejudice; and that the new trial order was improper because there were no issues left to try, inasmuch as Wells Fargo's liability, if any, was derivative of dealer's, and dealer was exonerated.

In his cross-appeal, Tun contends that the court erred in denying his new trial motion as to dealer but granting it as to Wells Fargo because such rulings have created “inconsistent verdicts”; that grounds other than the Wells Fargo tender supported the grant of the new trial motion; that he was entitled to judgment notwithstanding the verdict (JNOV) on various claims; and that because of the court's errors, dealer is not entitled to an award of attorney fees.

As we explain, we conclude the court erred in granting Tun a new trial against Wells Fargo because we conclude the court's pretrial ruling precluding comment on the Wells Fargo tender was not legal error. As we further explain, we also reject Tun's cross-appeal.

FACTUAL AND PROCEDURAL OVERVIEW

Witness Michael Assar testified that, for more than a decade, he was the sole shareholder of California Beemers, which operated a car dealership in West Los Angeles specializing in the sale of used BMW's. California Beemers held both a wholesale and a retail license until about March 2011, when California Beemers became a car wholesaler only. That same month, Assar opened CA Beemers in Costa Mesa, which held a retail license. Assar bought cars at auction through California Beemers that he then sometimes sold to CA Beemers to market and sell to the public.

With respect to the vehicle at issue in this case, Assar testified he bought it in late March 2011 at an auction in Riverside and then sent the vehicle to California Beemers, Inc. (CBI), which Assar also owned and which was the mechanic shop for California Beemers and CA Beemers. Assar testified that before purchasing the vehicle at auction, he was aware the vehicle had been designated as damaged because on the windshield written in a grease pen it stated, “ ‘Frame Damage Unibody’ ” and because the auctioneer made a similar announcement before the car went to auction. Assar further testified that the vehicle was not in fact frame-damaged and that the owner of the vehicle designated it as such to avoid any and all liability in connection with the sale of the vehicle. Despite multiple bids, Assar was the highest bidder and paid $27,500 for the vehicle, excluding the auction fee.

The vehicle invoice Assar received from the auction house also stated, “ ‘frame/unibody frame.’ ” After purchasing the vehicle, Assar paid $130 to have the vehicle inspected by the auction house. The inspection report noted the frame damage, stating “ ‘floor pan damage,’ ” but also stated, “ ‘Frame check, okay.’ ” Assar testified that he ordered a “Carfax report” on the vehicle; that the Carfax report did not disclose any frame damage or damage due to accident or collision; and that once he obtained the inspection report from the auction house and compared it to the Carfax report, he realized the two reports were inconsistent. Assar decided not to return the car to the auction house, as, in his view, Carfax “doesn't know much.” After the vehicle was subsequently inspected at CBI, Assar put it up for sale through retailer CA Beemers.

Assar testified that California Beemers, but not CA Beemers, advertised the vehicle on an internet website on a wholesale basis only; that, as a result, the price of the vehicle was slightly lower than the retail price because a wholesaler had to be able to sell the car at retail and make a profit; that if someone (i.e., Tun) saw the vehicle advertised on the internet, it would have been for wholesale purposes only; and that after CA Beemers opened for business on March 1, 2011, it did not advertise cars widely on the internet but instead only on its own website.

Tun, however, testified that he found the vehicle from an advertisement on the internet; that the sale price of the vehicle was about $34,900, or (slightly) lower than the price he ultimately paid for it; that he printed out the vehicle advertisement from the internet website; and that along with witness Glenda Villon, his then fiancé, he went to CA Beemers in Costa Mesa with the printout to look at the vehicle. When Tun showed the printout of the vehicle to Frank Safai, a CA Beemers salesperson, according to Tun Safai was unable to locate that particular vehicle on the lot. Tun nonetheless testified the vehicle identification number from the vehicle in the advertisement matched the number of the vehicle he ultimately purchased from CA Beemers.

Tun testified he looked at one or two other BMW's on the CA Beemers lot; that he test drove the vehicle and ended up purchasing it; that during the course of test driving the vehicle, he specifically asked Safai if the vehicle had been in any accidents, to which Safai responded, “ ‘No’ ”; that there was nothing written on the car suggesting it had “ ‘frame damage,’ ”; that Safai presented him with the Carfax report, which showed the car was “clean” and had not been involved in any accidents; and that Safai specifically pointed to various provisions within that report, which also showed the vehicle had not been in any collisions or suffered frame/unibody damage.

Tun also testified that he wanted to trade in his truck towards the purchase of the vehicle; that he told Safai the truck had not been in an accident while he owned it; that before Tun signed any of the paperwork to purchase the vehicle, Safai informed him the truck had in fact been in an accident and had frame damage; that Safai also informed him he was “upside down” on the truck; and that, as a result, Safai stated they would add the difference between what Tun owed on the truck and its value, on the one hand, to the balance owed on the vehicle Tun was then purchasing, on the other hand.

Next, Tun testified that he used two credit cards to make a $3,000 down payment on the vehicle; that after the documents were prepared by CA Beemers's finance manager, Joe Hariri, Safai, Tun and Villon went into a back room where Tun alone signed the documents; that Safai did not review any of the details of the documents with Tun as he signed, but rather just pointed to where Tun was to sign; that neither Tun nor Villon had sufficient time to read any of the documents Tun was signing; and that Tun signed a “stack[ ]” of documents in about 10 minutes, noting the signing went “quick[ly].” Tun admitted that nobody from CA Beemers represented the vehicle came with a warranty.

After taking possession of and driving the vehicle for a “couple of weeks,” Tun began to notice problems with its headlights, the sunroof and the brakes. Tun contacted Safai, who agreed to resolve these problems but requested Tun bring the vehicle in on a weekday, rather than on the weekend. Because Tun could not leave the vehicle for service on a weekday, he took it to a mechanic by...