FTC Holder Rule Under Consumer Legal Remedies Act And Car Dealership’s Tender Under the Automobile Sales Finance Act Were At Issue.
There are many California consumer statutes which allow fee shifting, mainly to the prevailing party—so that a fair amount of them are bilateral in nature (unlike in the employment context, favoring the employee). Two of them, applicable to the next decision we post on, are the Consumer Legal Remedies Act (Civ. Code, § 1780(e)) and the Automobile Sales Finance Act (Civ. Code, § 2983.4). These consumer fee-shifting statutes were at play in Duran v. Quantum Auto Sales, Inc., Case No. G053712 (4th Dist., Div. 3 Dec. 12, 2017) (unpublished), authored on behalf of a 3-0 panel by Presiding Justice O’Leary.
What happened here is that a car purchaser prevailed in her lawsuit against car dealership and financing company by which she obtained $41,800 in punitive damages, rescission, and restitution, not to mention an injunction against car dealership prohibiting it from misrepresenting a vehicle’s history of accidents and collision damage. That subsequently led the trial judge to award costs $23,264.91 in costs and $203,287 in attorney’s fees under the consumer fee-shifting statutes mentioned above, the award being made jointly and severally against the car dealership and financing company.
The joint and several nature of the costs/fees award triggered a reversal and remand on appeal.
With respect to the CLRA issue, there was an FTC Holder Rule restricting the liability upon a holder in due course like the financing company. However, the 4/3 DCA panel decided, after surveying out-of-state authority in Ohio and Texas (given the lack of California authority), that the best approach was to limit the financing company’s fee exposure, but determining it could be above the amount actually paid to the company but could not include joint and several liability to the extent that the costs/fee recovery was only attributable to car dealership—the Texas approach.
On the Automobile Sales Finance Act (ASFA) claim, the appellate court found there had not been a full tender by car dealership of amounts claimed to be owed by plaintiff, such that there was still need for an apportionment of the costs/fee recovery between the two defendants. However, the amounts of the total award were not disturbed, just the allocation to be determined on remand.