Valdez v. Seidner-Miller, Inc.

• Decision Date: 27 March 2019
• Docket Number: B281003
• Citation: 33 Cal.App.5th 600,245 Cal.Rptr.3d 268
• Court: California Court of Appeals Court of Appeals
• Parties: Refugio VALDEZ, Plaintiff and Appellant, v. SEIDNER-MILLER, INC., Defendant and Respondent.

33 Cal.App.5th 600

245 Cal.Rptr.3d 268

Refugio VALDEZ, Plaintiff and Appellant,

v.SEIDNER-MILLER, INC., Defendant and Respondent.

B281003

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

Filed March 27, 2019

Rosner, Barry & Babbitt, Hallen D. Rosner, Michelle A. Cook, San Diego; Law Office of David Valdez, Jr., and David Valdez, Jr., Culver City, for Plaintiff and Appellant.

Law Offices of Morton Minikes, Morton Minikes ; Madrid Law Firm, Eduardo M. Madrid and Erica L. Madrid, Chino, for Defendant and Respondent.

FEUER, J.

Refugio Valdez alleged Seidner-Miller, Inc. (Seidner), violated the Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq. ), the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq. ), and Civil Code section 1632¹ (requiring translation of certain contracts), and committed fraud in connection with Seidner’s lease of a vehicle to Valdez and his wife. Valdez appeals from a judgment entered following the trial court’s grant of summary judgment in favor of Seidner. Relying on Benson v. Southern California Auto Sales, Inc. (2015) 239 Cal.App.4th 1198, 1205, 192 Cal.Rptr.3d 67 ( Benson ), the trial court ruled Seidner made a timely and "appropriate" offer to correct the alleged CLRA violations, barring Valdez’s claim under the CLRA for damages and injunctive relief, as well as his section 1632, UCL, and fraud claims, because the claims were "inextricably intertwined" and based on the same conduct.

On appeal, Valdez contends Seidner’s correction offer was not timely or appropriate under the CLRA. Although we conclude Seidner’s correction offer was timely, it was not appropriate. To the extent Benson reached a contrary conclusion, we disagree with it. Where a business conditions its offer to remedy a violation of the CLRA on the consumer waiving his or her right to injunctive relief and remedies under other statutes and common law, the offer is not an appropriate correction offer as contemplated by section 1782, subdivision (b), and does not bar a lawsuit by the consumer.² Neither can the business demand as part of its correction offer that the consumer consent to additional settlement terms unrelated to the compensation necessary to make the consumer whole. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

A. Valdez’s CLRA Notice

On August 11, 2015 Valdez sent Seidner a "notice of rescission and demand for rectification" under the CLRA. The CLRA notice alleged on August 15, 2014 Valdez and his wife, Bertha Valdez, entered into an agreement with Seidner, doing business as Toyota of Glendora, to lease a 2014 Toyota Camry. Valdez wanted to purchase the car, but a Seidner salesperson told Valdez and his wife they did not have sufficient credit to qualify for a purchase. The salesperson represented they could lease the car and refinance the contract after 10 payments. The salesperson also stated GAP insurance³ and an alarm were required by law to be included in the lease agreement. The negotiations were conducted in Spanish, but Seidner did not provide Valdez and his wife a Spanish translation of the lease agreement.

When Valdez returned to the dealership approximately 10 months later, he learned he could not refinance the car at the initial price. Rather, the purchase would cost more than the vehicle’s price under the lease. Moreover, Valdez applied for and was denied credit for refinancing by four banks. The CLRA notice alleged Seidner’s actions violated the CLRA and the UCL, and constituted fraud.

The CLRA notice sought rescission of the transaction; removal of the transaction from Valdez’s credit report; a refund of $ 1,500 for the down payment, $ 4,626 for the monthly payments, and $ 1,500 for insurance; and payment of $ 2,750 for attorney’s fees and costs. The CLRA notice also requested Seidner "[i]dentify and make whole all similarly situated consumers." The CLRA notice stated Seidner’s response must be in writing and sent within 30 days to Valdez’s attorney.

B. Seidner’s Settlement Offer

On September 14, 2015 Seidner’s attorney, Andrew Stearns, sent an e-mail to Valdez’s attorney, David Valdez, with an attached draft "settlement agreement and release of claims." Under the draft settlement agreement, Seidner denied all allegations in Valdez’s CLRA notice. Seidner agreed to pay off the outstanding loan balance, pay $ 5,126 to reimburse the down payment and monthly payments,⁴ and $ 2,750 for attorney’s fees and costs within 10 days after surrender of the vehicle. The draft settlement agreement required Valdez to return the vehicle "without damage or vandalism, save normal wear and tear," and allowed Seidner to void the settlement agreement if it determined the vehicle was "in unacceptable condition."

The draft settlement agreement required the parties to keep confidential the facts relating to Valdez’s CLRA notice and the terms of the agreement. It also contained a release of all known and unknown claims and a covenant not to sue. In addition, the draft agreement provided Valdez would dismiss any actions he had filed with prejudice within five days of receipt of Seidner’s consideration.

C. The Settlement Negotiations

The parties engaged in settlement negotiations through their attorneys from September to early December 2015. During the negotiations, Valdez disclosed the vehicle had been in an accident in October 2014 and the repair costs were approximately $ 3,300. According to Seidner, the vehicle history report showed the vehicle was also in an accident on July 6, 2015.

On October 9, 2015 Stearns sent a letter to David Valdez confirming the parties had agreed to "all items except the manner in which the vehicle was to be surrendered." Seidner requested inspection of the vehicle before it would provide Valdez with the settlement funds. David Valdez responded that "making the settlement subject to an inspection is ... not acceptable." He added in a followup e-mail, "There is no way this agreement can be based upon your client’s subjective review of the car’s condition."

Stearns responded that Seidner was prepared to remove the covenant not to sue language and confidentiality provision, but not the requirement the vehicle be inspected prior to release of the settlement funds. Although Valdez indicated he would agree to an inspection if Seidner paid the costs of his attorney and expert to be present, Seidner did not agree to this modification. Valdez did not respond to Seidner’s final settlement letter sent on December 4, 2015, which reiterated the inspection requirement.

D. The Complaint

On January 22, 2016 Valdez filed a complaint against Seidner and Toyota Motor Credit Corporation, alleging causes of action for violations of the CLRA, section 1632, and the UCL, and for fraud. Valdez alleged Seidner violated section 1632 because the negotiations were conducted in Spanish, but Seidner did not provide him with a Spanish translation of the lease. He sought rescission of the lease, restitution, and attorney’s fees and costs pursuant to the attorney’s fees provision in the lease.

Valdez also alleged violations of the CLRA based on Seidner’s failure to provide a Spanish translation and specified misrepresentations, including that Valdez could return to Seidner in 10 months to refinance at the initial price and Valdez was required to pay for GAP insurance and an alarm. According to the complaint, Seidner "failed to provide or offer a reasonable remedy within thirty days of receiving the [CLRA notice]." Valdez sought $ 15,342.50 in damages under the lease and unspecified damages for emotional distress (§ 1780, subd. (a)(1)); punitive damages (§ 1780, subd. (a)(4)); rescission; "injunctive relief prohibiting [Seidner] from entering into lease agreements without providing appropriate translations ... when negotiations are conducted primarily in a language other than English"; other relief deemed proper (§ 1780, subd. (a)(5)); and attorney’s fees and costs (§ 1780, subd. (e)).

Valdez further alleged Seidner’s business practices violated the UCL based on the CLRA and section 1632 violations. He sought rescission of the lease, restitution, and injunctive relief ( Bus. & Prof. Code, § 17203 ), as well as attorney’s fees and costs under the lease. Finally, Valdez alleged a fraud claim based on the same alleged misrepresentations, including that Seidner "made the promise of refinancing the [lease] without any intention of performing" and "willfully deceived [Valdez] with the intent to induce him to enter into the [lease]." Valdez alleged he reasonably relied on the representations and would not have signed the lease but for the representations. He sought $ 15,342.50 in damages, rescission, restitution, punitive damages under section 3294, and attorney’s fees and costs under the lease.

E. Seidner’s Motion for Summary Judgment

On September 14, 2016 Seidner filed a motion for summary judgment, or in the alternative, summary adjudication.⁵ Seidner argued Valdez’s lawsuit was barred under section 1782, subdivision (b), because Seidner timely offered an appropriate correction, including rescission of the lease, reimbursement of the money paid by Valdez, and payoff of the lease to the lender, which would make Valdez whole. Seidner acknowledged its offer was subject to "the vehicle being returned in the same condition as when it was leased to [Valdez]," allowing for reasonable wear and tear.

In his opposition, Valdez argued Seidner did not offer a remedy within 30 days of receiving the CLRA prelitigation notice, and the remedy it offered was not appropriate. Valdez asserted an appropriate remedy under section 1782 was only a defense to a claim for damages under the CLRA, not a claim for rescission under the CLRA,⁶ violations of section 1632 or the UCL, or fraud. Valdez also argued Seidner’s additional terms, including the confidentiality provision and its unilateral right to void the agreement based on its subjective assessment of the vehicle condition, rendered the correction offer illusory.

Seidner responded in its...