Ramirez v. Balboa Thrift and Loan CA4/1 (2013) · DecisionDepot
Ramirez v. Balboa Thrift and Loan CA4/1
California Court of Appeal Mar 21, 2013 No. D060057Unpublished
Before: Haller
Filed 3/21/13 Ramirez v. Balboa Thrift and Loan CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PATRICIA RAMIREZ, D060057
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2009-00099225- CU-BT-CTL) BALBOA THRIFT AND LOAN,
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Diego County, Richard E. L.
Strauss, Judge. Reversed and remanded.
Patricia Ramirez appeals from an order denying her motion to certify a class on
her unfair competition claim (UCL) against Balboa Thrift and Loan (Balboa). Ramirez's
UCL claim is based on Balboa's alleged violation of the Rees-Levering Motor Vehicle
Sales and Finance Act (Rees-Levering Act or Act). (Civ. Code, § 2981 et seq.)1
1 All further statutory references are to the Civil Code unless otherwise specified. For readability, we omit the word subdivision when referring to the Act's subdivisions.
Ramirez contends the court erred in denying her class certification motion because
the court based its denial on an erroneous legal analysis of the Rees-Levering Act. We
conclude this contention has merit and reverse the order. We remand to permit the court
to consider the propriety of the class certification motion without the improper legal
"In other words, we review only the reasons given by the trial court for denial of class
certification, and ignore any other grounds that might support denial." (Bartold, supra,
81 Cal.App.4th at p. 829.) However, " '[a]ny valid pertinent reason stated will be
sufficient to uphold the order.' " (Linder, supra, 23 Cal.4th at p. 436; see Kaldenbach,
178 Cal.App.4th at pp. 843-844.)
Under these principles, if a trial court bases its denial of class certification on an
incorrect legal analysis, a reviewing court must reverse and remand, unless the trial court
independently relied on at least one other legally valid and factually supported ground.
(See In re Tobacco II Cases (2009) 46 Cal.4th 298, 311 [when a trial court's decision
rests on an error of law, that decision is an abuse of discretion]; Fletcher v. Security
Pacific Nat. Bank (1979) 23 Cal.3d 442, 454 [reversal and remand warranted where trial
court erroneously held that an unfair trade practice class action required proof of each
individual borrower's lack of knowledge]; McAdams v. Monier, Inc. (2010) 182
Cal.App.4th 174, 187 [reversing court order denying class certification where "trial court
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used improper criteria and made erroneous legal assumptions"]; Knapp v. AT&T Wireless
Services, Inc. (2011) 195 Cal.App.4th 932, 939 ["[w]e will reverse an order denying class
certification if the trial court used improper criteria or made erroneous legal assumptions,
even if substantial evidence supported the order"]; Ticconi v. Blue Shield of California
Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 534 [denial of motion to certify class
reversed where trial court erroneously concluded that the defense of unclean hands was
available in a UCL action based on the violation of certain Insurance Code sections].)
II. The UCL
In her complaint, Ramirez alleged a single cause of action under the UCL. The
UCL prohibits unfair competition, including unlawful, unfair, and fraudulent business
acts. (Bus. & Prof. Code, § 17200.) It embraces anything that can properly be called a
business practice and that is forbidden by law. (Korea Supply Co. v. Lockheed Martin
Corp. (2003) 29 Cal.4th 1134, 1143.) The UCL " 'borrows' violations from other laws by
making them independently actionable as unfair competitive practices." (Ibid.)
Ramirez's UCL claim is based on her allegation that Balboa violated the Rees-
Levering Act by failing to comply with the Act's requirement that an NOI contain the
specific "conditions precedent" to reinstatement of her vehicle loan. (§ 2983.2(a)(2).)
She sought to certify a class of individuals whose vehicles were repossessed by or
surrendered to Balboa and against whom Balboa asserted a deficiency claim. She
claimed that with respect to this class of persons, Balboa violated the Rees-Levering Act
in identical ways and thus common issues would predominate. She also alleged that she
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had standing because she suffered monetary injury in the form of her $25 payment and a
negative report on her credit report.
In analyzing whether the court erred in denying certification of the class, we first
summarize the relevant provisions of the Rees-Levering Act. We then examine whether
the court's stated reasons for denying the motion were based on a correct legal analysis
and supported by substantial evidence.
III. The Rees-Levering Act
The Act provides detailed rules governing motor vehicle conditional sale contracts
such as the one signed by Ramirez. (§ 2981 et seq.; see Juarez, supra, 152 Cal.App.4th
at p. 894.) The Act's purpose is "to provide more comprehensive protections in financing
for the unsophisticated motor vehicle consumer." (Salenga v. Mitsubishi Motors Credit
of America, Inc. (2010) 183 Cal.App.4th 986, 998 (Salenga), disapproved on other
grounds in Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1196-1197.)
Two code sections of this statutory scheme are of particular relevance in
understanding Ramirez's claim: section 2983.2 and section 2983.3.
A. Section 2983.3
Section 2983.3 governs a party's right to reinstate a loan upon the buyer's default
after a repossession or voluntary surrender. Under section 2983.3, "[i]f after default by
the buyer, the seller or holder repossesses or voluntarily accepts surrender of the motor
vehicle, any person liable on the contract shall have a right to reinstate the contract and
the seller or holder shall not accelerate the maturity of any part or all of the contract prior
to expiration of the right to reinstate, unless the seller or holder reasonably and in good
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faith determines that any of the following has occurred . . . ." The statute then sets forth
six specific exceptions to the reinstatement right, including the one contained in section
2983.3(b)(1): "The buyer or any other person liable on the contract by omission or
commission intentionally provided false or misleading information of material
importance on his or her credit application."
Under this code section, if the seller/holder does not "reasonably and in good
faith" determine one of the exceptions applies, the buyer has a right to reinstate and if the
buyer wishes to do so, the buyer must reimburse the seller for all costs, including the
defaulted payments, applicable delinquency charges, and "all reasonable and necessary
collection and repossession costs and fees incurred, including attorney's fees and legal
expenses expended in retaking and holding the vehicle." (§ 2983.3(d)(1), (5).) Although
these costs to reinstate may be substantial, "the option of reinstating a contract is often
preferable to redemption, because reinstatement allows the buyer to recover the car
without having to pay the full balance due on the contract . . . ." (Juarez, supra, 152
Cal.App.4th at p. 894.)
B. Section 2983.2
Section 2983.2 governs a creditor's notice obligations after a repossession. (See
Juarez, supra, 152 Cal.App.4th at p. 899.) The code section requires a creditor to
provide the buyer with a notice of intention (NOI) to dispose of the repossessed vehicle.
(§ 2983.2(a).) Under the statutory provisions, the NOI must conform to specific mailing
requirements, must be given within 60 days following repossession, and must provide
extensive information on numerous subjects (set forth in nine separate paragraphs).
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(§ 2983.2(a).) Under section 2983.2(a)(2), this notice must include information about the
reinstatement right, including the timing of this right and "all the conditions precedent
thereto or that there is no right of reinstatement and provides a statement of reasons
therefor."
In Juarez, we interpreted the statutory requirement contained in section
2983.2(a)(2) that the NOI must identify all " 'conditions precedent' " to reinstatement of
the contract. (Juarez, supra, 152 Cal.App.4th at pp. 899-912.) We held the NOI must
"provide a level of specificity as to the conditions precedent to reinstatement sufficient to
inform the buyer—without need for further inquiry—as to exactly what the buyer must
do to cure the default. Thus, the statute requires that a creditor inform the consumer of
any amounts the buyer must pay to the creditor and/or to third parties and provide the
buyer with the names and addresses of those who are to be paid. The creditor must also
inform the consumer regarding any additional monthly payments that will come due
before the end of the notice period, as well as of any late fees, or other fees, the
amount(s) of these additional payments or fees, and when the additional sums will
become due." (Id. at pp. 904-905.) In so holding, we acknowledged "there may be
instances in which the creditor does not possess information about the amount a buyer
must pay to a third party to satisfy a condition precedent to reinstatement." (Id. at pp.
908-909.) But we said "the creditor must provide the buyer with all of the relevant
information it possesses and/or information it has the ability to discern, concerning
precisely what the buyer must do to reinstate his or her contract." (Id. at p. 909.)
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In Juarez, as here, a car buyer whose vehicle was repossessed brought a class
action alleging the creditor violated the UCL by failing to comply with the Rees-Levering
Act's requirements. (Juarez, supra, 152 Cal.App.4th at pp. 896-898.) After the court
certified the class, the court granted summary judgment in the creditor's favor based on
the court's conclusion that the NOI satisfied statutory requirements and thus the creditor
did not engage in an unlawful, unfair or deceptive practice within the meaning of the
UCL. (Id. at pp. 898-899.) This court reversed, holding the NOI did not "provide a level
of specificity as to the conditions precedent to reinstatement sufficient to inform the
buyer—without need for further inquiry—as to exactly what the buyer must do to cure
the default." (Id. at pp. 904, 912.) We thus remanded for the trial court to consider the
class claims under all three prongs of the UCL. (Id. at p. 912 & fn. 13.)
We have since reaffirmed that a buyer may potentially recover under the UCL for
claimed violations of the Rees-Levering Act's NOI notice requirement. (See Salenga,
supra, 183 Cal.App.4th at pp. 998-1002.) The California Supreme Court has additionally
upheld the certification of class claims based on a violation of the Rees-Levering Act's
NOI requirements. (See Fireside Bank v. Superior Court, supra, 40 Cal.4th at p. 1076
[class claim under the Act and the UCL "on behalf of all persons who had received
postrepossession notices . . . in which the listed redemption amount [improperly] failed to
subtract the credit for unearned finance charges"].)
IV. Analysis
In denying Ramirez's class certification motion, the court stated: "[I]ndividual
issues of fact predominate over common questions of fact. Specifically, it is unclear
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whether there were grounds to deny reinstatement as to each individual class member
pursuant to Civil Code section 2983.3(b)(1)."
Ramirez challenges the court's reliance on section 2983.3(b)(1) to deny her class
certification motion. We agree this ground was not a proper basis for denying class
certification. The court's conclusion was based on an improper legal assumption, i.e.,
that Balboa would be entitled to assert this statutory exception as a valid affirmative
defense to the UCL claim alleged by class members who were given a reinstatement right
in the NOI.3
Under section 2983.3, a defaulting buyer whose car has been repossessed by or
voluntarily surrendered to a creditor must be given the opportunity to reinstate the
contract, absent proof of certain statutory circumstances, including that the buyer (1)
"intentionally provided false or misleading information of material importance on his or
her credit application"; (2) concealed the motor vehicle from the creditor; (3) committed
or threatened to commit acts of destruction or failed to take care of the vehicle in a
reasonable manner; (4) committed, threatened to commit, or attempted to commit
criminal acts of violence against the seller/holder or its agent; or (5) the buyer knowingly
used the vehicle in connection with the commission of a criminal offense.
3 Although a court should avoid addressing the merits of an issue in the context of a class certification motion, a court may consider the merits where, as here, a class certification issue is necessarily "intertwined" with the merits of the case. (See Fireside Bank v. Superior Court, supra, 40 Cal.4th at pp. 1091-1092; Linder, supra, 23 Cal.4th at p. 443; Soderstedt v. CBIZ Southern California, LLC (2011) 197 Cal.App.4th 133, 151- 152.)
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(§ 2983.3(b)(1)-(5).) "Exercise of the right to reinstate the contract shall be limited to
once in any 12-month period and twice during the term of the contract." (§ 2983.3(c).)
Although there is no specific time limit contained in section 2983.3 for making the
deadlines and notice requirements if the seller intends to or does seek a deficiency. Of
relevance here, section 2983.2 states: "Except as provided in Section 2983.8 [pertaining
to mobilehome sales], those persons shall be liable for any deficiency after disposition of
the repossessed or surrendered motor vehicle only if the notice prescribed by this section
is given within 60 days of repossession or surrender and does all of the following:
[¶] . . . [¶] (2) States either that there is a conditional right to reinstate the contract until
the expiration of 15 days from the date of giving or mailing the notice and all the
conditions precedent thereto or that there is no right of reinstatement and provides a
statement of reasons therefor." (§ 2983.2(a)(2), italics added.)
Under this subsection, a seller cannot recover a deficiency unless the NOI
specifically and timely notifies the buyer of the conditions precedent to loan
reinstatement OR timely notifies the buyer that there is no right of reinstatement and
provides a statement of reasons for this conclusion. Reading together sections 2983.2
and 2983.3, a seller/holder who wishes to preserve its rights to claim a deficiency must
determine within a 60-day period after repossession whether a buyer is entitled to a
reinstatement, and then notify the buyer of this decision. Given the Legislature's manifest
intent to set forth the exclusive process for creditors to obtain a deficiency balance after a
vehicle repossession or surrender, there is no room for reading additional exceptions into
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the statutory scheme. The statutes cannot be reasonably interpreted to allow a creditor
who failed to give timely notice of a statutory exception to the mandatory reinstatement
right to later alter its position and retroactively deny reinstatement, regardless whether the
retroactive denial is for affirmative or defensive purposes. Any other conclusion would
require that we ignore the plain language of sections 2983.2(a)(2) and 2983.3(b).
In asserting its position, Balboa does not rely on the statutory language, but
instead argues that a denial of its right to a deficiency judgment would violate its
constitutional due process rights. In particular, Balboa argues that "it would be denied
due process if [after the 60-day period] it was not allowed to investigate and litigate each
customer's right to reinstatement. . . . Discovery to each class member's credit
application would be required to determine if they also lied on the credit application. It
would violate Defendant's due process right to deny this discovery and individual defense
at trial."
The argument is without merit. The Legislature did not preclude a creditor from
raising a fraud defense; it merely required a creditor to raise and discover the
applicability of any statutory exception within 60 days of repossession if it wants a
deficiency judgment. This limitation as to a seller's remedies does not establish a
constitutional violation. As recognized by the California Supreme Court, a secured
creditor who sells a defaulting debtor's repossessed car may obtain a deficiency
judgment, but only by complying with all of the Act's provisions. (Bank of America v.
Lallana (1998) 19 Cal.4th 203, 215 [" ' "[T]he rule and requirement are simple. If the
secured creditor wishes a deficiency judgment he must obey the law. If he does not obey
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the law, he may not have his deficiency judgment." ' "]; see Salenga, supra, 183
Cal.App.4th at pp. 998-999, 1000 ["[w]hen a secured creditor pursues a deficiency
judgment, it must follow the statutorily prescribed notice procedures of the [Rees-
Levering] Act"].)
Moreover, to the extent creditors retain rights to bring affirmative claims (such as
fraud) against buyers, these rights exist only during the applicable limitations period. In
this case, Balboa did not allege, or seek to assert, a common law fraud claim against
Ramirez (or any of the class members), and instead merely sought to rely on a statutory
exception (that is not necessarily equivalent to a common law fraud claim) long after the
time period had lapsed for asserting the statutory exception.
Equally important for class certification purposes, even assuming the statutory
exception could be asserted after the statutory time period had expired, Balboa did not
proffer any facts showing that any such exception would apply to any of the other class
members. Instead, it merely stated that individual issues would predominate because it
should be provided the right to "investigate" each class member to determine whether it
could find any facts showing the applicability of any of the statutory exceptions. Without
any foundational basis showing that such evidence could or would be discovered, this
possibility does not raise a likelihood that individual issues would predominate over
common issues in the litigation. (See Brinker, supra, 53 Cal.4th at p. 1025 [in deciding
certification question court must examine the plaintiff's theory of recovery and "assess
the nature of the legal and factual disputes likely to be presented," italics added].)
20
Balboa alternatively argues that many other grounds exist for affirming the court's
order, including (1) the fact that Balboa issued at least eight different form NOI's during
the class period; (2) the fact that Balboa had settled with or obtained judgments against
some class members; (3) whether Ramirez's claims were typical of the class; (4) the
existence of differing forms of injury among class members; and (5) whether Ramirez's
claimed injuries were sufficient to show standing for purposes of a UCL claim.
These arguments raise important issues regarding the propriety of class
certification in this case, and it is tempting to consider them in reviewing the court's
order. However, based on our review of the court's statements and written order, it is
apparent that the court relied primarily if not exclusively on the section 2983.3(b)(1)
reinstatement exception to conclude individual issues would predominate. Although the
court's final order also refers to "the reasons stated on the record," the court did not
identify any other reasons on the record. Moreover, it is unclear on the record before us
whether the court would have reached a similar conclusion on the class certification
motion absent its reliance on the section 2983.3(b)(1) exception. The court specifically
stated at the hearing that it did not view resolution of Ramirez's class certification motion
as an "easy case" and stated it was unnecessary to address certain issues Balboa had
raised in opposition to the class certification motion. In its final order, the court cited
only the section 2983.3(b)(1) statutory exception as the "[s]pecific[ ]" reason for its order.
Further, many of the other grounds for opposing the class certification motion require a
factual analysis of the record, a task best performed by the trial judge in the first instance.
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On this record, the appropriate disposition is to reverse and remand for the court to
consider Ramirez's class certification motion on a proper legal analysis. When a trial
court "fail[s] to follow the correct legal analysis when deciding whether to certify a class
action, 'an appellate court is required to reverse an order denying class certification . . . ,
"even though there may be substantial evidence to support the court's order." ' " (Bartold,
supra, 81 Cal.App.4th at pp. 828.)
DISPOSITION
Order reversed. The matter remanded for the court to reconsider Ramirez's class
certification motion and Balboa's opposition to the motion in a manner consistent with
the determinations expressed in this opinion. Appellant to recover her costs on appeal.
HALLER, J.
WE CONCUR:
MCCONNELL, P. J.
MCDONALD, J.
22
AI Brief
AI-generated · verify before citing
Holding. The trial court erred in denying class certification based on the assumption that individual factual issues regarding the Rees-Levering Act's reinstatement exceptions predominated, as this relied on an improper legal analysis of the creditor's notice obligations.
Issues
Whether the trial court applied improper legal criteria in denying class certification based on individual issues regarding statutory reinstatement exceptions.
Whether the creditor's failure to identify conditions precedent in a Notice of Intention (NOI) to dispose of a vehicle constitutes a common issue of law or fact for class certification purposes.
Disposition. Reversed and remanded.
Quotations verified verbatim against the opinion
“The court's conclusion was based on an improper legal assumption, i.e., that Balboa would be entitled to assert this statutory exception as a valid affirmative defense to the UCL claim alleged by class members who were given a reinstatement right”
“the statute requires that a creditor inform the consumer of any amounts the buyer must pay to the creditor and/or to third parties and provide the buyer with the names and addresses of those who are to be paid.”