In Ramirez v. Balboa Thrift and Loan, the 4th District Court of Appeal reversed the trial court's denial of plaintiff's class certification motion, holding the trial court based its ruling on an inaccurate interpretation of Rees-Levering.
In Ramirez, plaintiff purchased a car with financing assigned to defendant Balboa, defaulted on payments and surrendered the car. Balboa sent plaintiff a "Notice of Intention to Dispose of Motor Vehicle" (NOI). Plaintiff did not seek to reinstate the loan, but later sent a $25 payment. Balboa wrote off the loan and reported the account as charged off on plaintiff's credit report. Plaintiff filed a putative class action alleging a 17200 cause of action based on alleged violations of Rees-Levering. Specifically, plaintiff alleged that Balboa's NOI violated section 2983.2(a)(2) of Rees-Levering because it did not contain the specific "conditions precedent" to reinstatement of the loan.
Balboa moved for summary judgment and/or summary adjudication based on the argument that plaintiff could not prevail on the 17200 claim because Balboa had an independent basis to deny reinstatement under section 2983.3(b)(1), because of plaintiff's alleged misrepresentations on the original credit application. The Court denied the motion, finding there were triable issues of fact related to whether plaintiff lied on the application.
Plaintiff moved for class certification. The trial court denied the motion, finding that individual issues of fact predominate over common issues because it was "unclear whether there were grounds to deny reinstatement as to each individual class member pursuant to Civil Code section 2983.3(b)(1)." Plaintiff appealed.
The Court of Appeal reversed, holding that the trial court's ruling was based on the improper legal conclusion that Balboa would be entitled to assert a statutory exception as a valid affirmative defense to the UCL claim alleged by class members who were given a reinstatement right in the NOI. The Court stated: "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)."
The Court remanded for the trial court to reconsider plaintiff's class certification motion.
Earlier this month, the Second Appellate District overturned a Los Angeles Superior Court order sustaining a demurrer to a Rees-Levering claim. In Rojas v. Platinum Auto Group, et al., plaintiff alleged that his automobile finance agreement was unenforceable because the defendant auto dealer mischaracterized his down payment in violation of the Rees-Levering Motor Vehicle Sales & Finance Act (“Rees-Levering”).
Plaintiff purchased a motor vehicle and made a deferred down payment in multiple payments over three months. Plaintiff alleged that the auto dealer identified the down payment as a “Remaining Cash Down Payment” instead of a “Deferred Down Payment,” as required by Rees-Levering. The trial court sustained defendants’ demurrer without leave to amend, reasoning that the dealer substantially complied with Rees-Levering disclosure requirements and that any trivial technicality did not result in any harm to the plaintiff.
The Appellate Court held that the trial court erred in relying on authority based on an earlier, less demanding statute, and that the legislature explicitly stated that any violation of Rees-Levering made a contract unenforceable regardless of the nature of the violation or any harm to the consumer.
Finally, the Court concluded that the trial court was correct in sustaining defendants’ demurrers to causes of action for violation of the Consumer Legal Remedies Act and Unfair Competition Law for failure to allege any actual harm, but that the court should have granted plaintiff leave to amend.