Wang v. Massey Chevrolet

• Decision Date: 21 March 2002
• Docket Number: No. B147471.,B147471.
• Citation: 97 Cal.App.4th 856,118 Cal.Rptr.2d 770
• Parties: Andrew WANG et al., Plaintiffs and Appellants, v. MASSEY CHEVROLET, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

118 Cal.Rptr.2d 770

97 Cal.App.4th 856

Andrew WANG et al., Plaintiffs and Appellants, v. MASSEY CHEVROLET, Defendant and Respondent.

No. B147471.

Court of Appeal, Second District, Division 7.

March 21, 2002.

Robert F. Brennan, Glendale, and Robert A. Wiener, Sherman Oaks, for Plaintiffs and Appellants.

Callahan, McCune & Willis and Toni Kern for Defendant and Respondent.

LILLIE, P.J.

In this action alleging, inter alia, fraud in the inducement of an automobile lease, plaintiffs appeal from summary judgment granted in favor of defendant Massey Chevrolet (Massey) on their complaint for damages for fraud and violations of the Consumers Legal Remedies Act (Civ.Code, § 1750 et seq.), and for injunctive relief for unfair competition under Business and Professions Code section 17200. The principal issue on this appeal is whether the trial court properly determined that plaintiffs' claims were barred by the parol evidence rule.

FACTUAL AND PROCEDURAL BACKGROUND

In October 1999, plaintiffs filed the instant action. The first amended complaint (complaint) contains three causes of action: (1) violation of the Consumer Legal Remedies Act, including Civil Code section 1770, subdivisions (a)(13) and (14);¹ (2) fraud, and (3) injunctive relief for unfair competition under Business and Professions Code section 17200.

The complaint arises from events in August 1997, when plaintiffs allegedly negotiated with Massey to purchase a Chevrolet Suburban for a total of $35,213; plaintiffs wanted to purchase the vehicle by making an immediate down payment of $20,000 and then financing the remaining balance of $15,213 with a short term loan that they wanted to pay off in late September or October 1997, when a CD would mature. Instead, Massey "schemed to bait plaintiffs with an acceptable discounted car price on a retail deal and then switched them to a lease. Dealer [Massey] did this by using 'buying terms' instead of `lease terms' and deceptive mathematics ... to deliberately confuse plaintiffs into believing a lease was just like a purchase." Plaintiffs alleged that through this ploy, Massey "was able to ultimately obtain plaintiffs' signature on a lease agreement by which terms they would have to make 60 payments totaling $22,437, and if plaintiffs wished to purchase at the end of the lease they would have to pay an additional $15,310. This plus the $20,000 check plaintiffs gave as a down payment brought the cost of the vehicle to $57,747.... The difference between plaintiffs initial negotiated purchase price [of $35,213] and the lease they ended up with is $22,534.... So, in effect, by being switched into a lease plaintiffs were being defrauded by not less than $22,534." Plaintiffs also alleged that because a lease was more profitable, Massey would receive on such leases kickbacks or rebates from General Motors Acceptance Corporation (GMAC), named as a codefendant in the complaint, but not a party to this appeal.

The complaint contains the following detailed factual allegations as to the negotiations and representations made by Massey: On the morning of August 17, 1997, plaintiffs saw a full-page advertisement by Massey Chevrolet in the newspaper, which stated that hundreds of trucks and vans were on sale, including custom Suburbans and Tahoes, with "$7,000 off MSRP." About 10:00 a.m plaintiffs arrived at Massey and were shown some vehicles by Massey's sales person Mr. Sib Ghani (Ghani); plaintiffs gave the advertisement to Ghani and told him that they would consider buying one of the trucks if the selling price was really $7,000 off the window sticker price; Ghani took the advertisement back to the sales office to ask his boss and returned to tell the Wangs that they could make a deal with $7,000 off the window sticker if they would buy a truck that day.

After the Wangs test drove a Suburban they liked, they began negotiations with both a sales and finance person from Massey; plaintiffs told them repeatedly that they intended to "own the suburban free and clear," that they were prepared to make a down payment of $20,000 and they wanted to take out a short-term loan for the balance because they planned to pay the balance off in two or three months when their CD matured; if a short-term loan could not be obtained through the dealer, plaintiffs planned to get a short-term loan through their own bank and pay off the Suburban in a few days. Plaintiffs also told Massey's finance manager, Mr. Sutterman (Sutterman), that they were GM Credit Card members and had earned the amount of $845.23, which they wanted to apply to the purchase of the Suburban; although Sutterman represented that he had applied for the rebate, which the GM card program would mail to the Wangs, Sutterman never applied for the rebate on their behalf; eventually a person with the GM Card program had to apply for it on the Wang's behalf.

Massey required the plaintiffs to deposit their check for $20,000 during the negotiations. After several hours of negotiations, Massey worked out something totally different than what they wanted, and plaintiffs were "extremely stressed and hungry and repeatedly asked [Massey] to return the check for $20,000 and their GM credit card and they would apply for the short-term loan themselves"; Massey ignored their requests, kept their check and credit card, and told them they should not worry because they could work out the loan so they could drive home with the new Suburban that day. Again and again, two of Massey's sales people and two of the finance people took turns trying to convince them to sign a lease contract they had prepared instead of a short-term financing agreement; plaintiffs insisted that they wanted to purchase the vehicle and pay off the balance of $15,213 in October 1997. Finally, around 4:00 p.m., about six hours after plaintiffs had arrived, Sutterman presented them with a Lendco Financial Services lease agreement listing the following terms: a capitalized cost of $39,762.55; a term of 60 months; lease end value of $15,200; and a monthly payment plus tax of $425.80.

Plaintiffs asked why the capitalized amount changed from $35,213 as they had originally negotiated; Massey responded that "The amount varied for loan process purposes." When plaintiffs asked to change the number of months from 60 to just two, Massey responded, "We don't need to change the number of months and you can pay it off in two months or at any time." When plaintiffs asked if there was a penalty for early payoff in October 1997, Massey told them that "There is no early payoff penalty," and the payoff would be $15,213 in October of 1997, although Massey was uncertain whether plaintiffs would have to pay taxes on the payoff. In response to plaintiffs' questions, Massey told plaintiffs that there were no contractual differences between a loan and the lease. With the foregoing assurances and explanations, plaintiffs signed the Lendco lease agreement in Sutterman's office. Under the Lendco lease, the "Estimated Wholesale Value of Leased Vehicle at Lease End" was listed as $15,200.

Two days later, on August 19, Ghani called plaintiffs and told them that Massey had found a better loan company which gave them a lower monthly payment; Massey wanted them to sign a new lease agreement. On August 23, 1997, Sutterman presented plaintiffs with a lease titled "GMAC Lease Agreement"; the GMAC lease listed the lessor as Massey. The GMAC lease provided the following terms: a capitalized cost of $41,762.55; a term of 60 months; a lease end price of $15,310; and a monthly payment with tax of $373.95. Plaintiffs again asked questions as to why the price was not $35,213, as they had negotiated, why the term could not be changed to just two months, and if there was a penalty for early payoff. Sutterman replied that the price of the car varied for loan process purposes, there was no need to change the number of months because plaintiffs could pay off the loan at any time with no penalty, and the payoff would be $15,213 minus any rebate from use of the GM credit card, which would bring the payoff to about $14,400. With the foregoing explanations and assurances, plaintiffs signed the GMAC lease contract. At the same time, they also executed a document rescinding the Lendco lease; the rescission agreement stated that the purpose of the rescission was "Lowered payments; otherwise the same."

After plaintiffs' CD matured, they pulled the money from their account and on October 3, 1997, called GMAC and asked them about the early payoff for their loan; GMAC told them that the payoff amount would be $24,512.89 plus tax. Plaintiffs then called Sutterman who referred them to Massey's agent who had prepared the lease contracts, Jeff Myers (Myers). After four attempts to reach Myers, he told plaintiffs that the lease was not supposed to be closed in two months, that the lease monthly payment would give them a better income tax shelter and write off, and "You have to pay what you signed."

Plaintiffs called the GM Customer Satisfaction Procedure line on October 7, 1997, to file a complaint; they also called Massey dozens of times in an effort to resolve the matter; the matter was not resolved, and plaintiffs were told not to get outside help, that Massey wanted to discuss the matter with their legal department and get back to them. Sometime in late October 1997, Sutterman told plaintiffs that they could not resolve the matter because he could not get approval from his boss and there was nothing he could do.

In their claim for violation of the Consumer Legal Remedies Act (Civ.Code, § 1750 et seq.), plaintiffs alleged that Massey deliberately confused, cheated, and took advantage of them by using deceptive mathematics, lying about the terms of the leases, and using "buying terms" instead of "lease terms" in their negotiations; Massey deliberately confused plaintiffs into believing a lease was just like a purchase and based on Massey's misrepresentations, plaintiffs...