Fourth District, Division 3 So Holds in Wholesale Used Car Dealer Dispute.
In Hyduke’s Valley Motors v. Lobel Financial Corp., Case No. G042816 (4th Dist., Div. 3 Sept. 29, 2010) (unpublished), plaintiff (a wholesale used car dealer) won money due to it from a second car dealer that refused to pay for vehicles sold to consumers under form conditional sales contracts executed by second dealer and the retail purchaser. Plaintiff then sought to recoup $52,458 in attorney’s fees based upon fee clauses in the conditional sales contract. (Second dealer went bankrupt such that plaintiff recovered moneys due from finance companies to which the sales contracts had been sold, with plaintiff pursuing the finance companies for fees also.)
Above: Paul Bunyan at used car lot. Bimidji, Minnesota. Sept. 1939. John Vachon, photographer. Library of Congress.
No way, said Acting Presiding Justice O’Leary for a 3-0 panel of the Fourth District, Division 3.
Plaintiff was not a party to the conditional sales contracts, so that Civil Code section 1717 wasn’t triggered. The “non-signatory” nuance of section 1717 did not apply because plaintiff would never have been liable for fees under the sales contracts. (Brown v. West Covina Toyota, 26 Cal.App.4th 555, 565 (1994), disapproved on other grounds in Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4th 985, 996 (1998) [action “grounded not upon contract, but upon the duty spring from the relations created by it” not an action “on a contract”].)
Finally, the third-party beneficiary theory did not work because nothing demonstrated that plaintiff was an intended beneficiary of the sales contracts between the second dealer and the purchasers. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 897 (2008).)
The end result is interesting: plaintiff won $75,140 from one finance company and $48,700 against another, but did not recover its $52,458 in fees. Seems like settlement should have been explored before trial given the fees involved for all sides.
