Case Number: BC714108 Hearing Date: February 18, 2020 Dept: 47

Westlake Services, LLC dba Westlake Financial Services v. Yeforzon K. Onoa

(1) MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE,

SUMMARY ADJUDICATION; (2) MOTION FOR SUMMARY JUDGMENT OF FIRST AMENDED CROSS-COMPLAINT AND, ALTERNATIVELY, SUMMARY ADJUDICATION OF 2ND AND 3RD CAUSES OF ACTION

MOVING PARTY: (1) Cross-Complainant Yeforzon K. Onoa; (2) Cross-Defendant Westlake Services, LLC dba Westlake Financial Services

RESPONDING PARTY(S):(1) Cross-Defendant Westlake Services, LLC dba Westlake Financial Services; (2) Cross-Complainant Yeforzon K. Onoa

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a contract dispute in which Plaintiff alleges that it took possession of Defendant’s vehicle after he defaulted on his vehicle loan and sold it, leaving a balance due of $9,401.41.

Defendant filed a cross-complaint alleging that Plaintiff’s actions, including reporting to the three major credit agencies that Plaintiff owed this deficiency, violated the Rees-Levering Automobile Sales Finance Act, the California Consumer Credit Reporting Agencies Act, the Consumers Legal Remedies Act, and unfair competition law.

Cross-Complainant Yeforzon K. Onoa and Cross-Defendant Westlake Services, LLC have filed cross-motions for summary judgment or, in the alternative, summary adjudication, of the first amended cross-complaint.

TENTATIVE RULING:

Cross-Complainant Yeforzon K. Onoa’s motion for summary judgment is DENIED. Cross-Complainant’s alternative motion for summary adjudication is DENIED.

Cross-Defendant Westlake Services, LLC dba Westlake Financial Services’ motion for summary judgment is DENIED. Cross-Defendant’s alternative motion for summary adjudication is DENIED as to Issue No. 1 and DENIED AS MOOT as to Issue Nos. 2 and 3.

DISCUSSION:

Cross-Complainant’s Motion For Summary Judgment

At the outset, the Court notes that Cross-Complainant’s motion, memorandum, and separate statement address only two of the four causes of action in the first amended cross-complaint. Summary judgment is only appropriate if the entire action has no merit. (CCP § 437c(a)(1) [“A party may move for summary judgment . . . if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (bold emphasis added).) Cross-Complainant’s motion does not state that the other two causes of action have been disposed of, and indeed they have not been, as they are the subject of Cross-Defendant’s cross-motion for summary judgment or, alternatively, summary adjudication. Thus, even if Cross-Complainant proved that he was entitled to summary adjudication of the first and fourth causes of action, he still would not be entitled to summary judgment because he has made no attempt to show that he is entitled to summary adjudication of the second and third causes of action. This would also be true even if Cross-Defendant’s motion is denied in its entirety, since Cross-Complainant still would not have met his affirmative burden of proof as to the second and third causes of action. Cross-Complainant also concedes in his reply that he erroneously moved for summary judgment. In addition, even if Cross-Complainant had met his burden as to the second and third causes of action, he has not done so as to the first and fourth, as discussed below. Accordingly, the motion for summary judgment is DENIED.

Cross-Complainant’s Motion for Summary Adjudication

Cross-Defendant’s Evidentiary Objections

Pursuant to CCP § 437c(q), the Court rules only upon objections to evidence that the Court deems material to the disposition of this motion.

Declaration of Yeforzon K. Onoa

Here, none of the evidence objected to was material to the disposition of the motion.

Analysis

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

When deciding whether to grant summary judgment or adjudication, the Court must consider all of the evidence set forth in the papers, except evidence to which the Court has sustained an objection, as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment. (Ibid.)

When a cross-complainant seeks summary adjudication, he has the burden to produce admissible evidence as to each element of the cause of action. (CCP § 437c(p)(1).) If the cross-complainant meets his burden to show that there is no triable issue of material fact, the burden shifts to the cross-defendant to show that a “triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Ibid.) A cross-complainant no longer has the initial burden to disprove affirmative defenses. (Ibid.) If they are raised in opposition, however, the cross-complainant may have to address them in reply.

Issue No. 1: “Cross-Complainant is entitled to summary adjudication as to his first cause of action for violation of the Rees-Levering Automobile Sales Finance Act, California Civil Code § 2981, et seq., because the NOI sent to him failed to comply with Civil Code § 2983.2 as a matter of law.”

Cross-Complainant argues that he is entitled to summary adjudication of his cause of action for violation of the Rees-Levering Automobile Sales Finance Act because the Notice of Intent to Dispose of Motor Vehicle (“NOI”) that Cross-Defendant sent him did not comply with the requirements of Civil Code § 2983.2(a). That section contains the following requirements, in relevant part:

Except where the motor vehicle has been seized as described in paragraph (6) of subdivision (b) of Section 2983.3, any provision in any conditional sale contract for the sale of a motor vehicle to the contrary notwithstanding, at least 15 days’ written notice of intent to dispose of a repossessed or surrendered motor vehicle shall be given to all persons liable on the contract. The notice shall be personally served or shall be sent by certified mail, return receipt requested, or first-class mail, postage prepaid, directed to the last known address of the persons liable on the contract. . . . Except as otherwise provided in Section 2983.8, 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:

(1) Sets forth that those persons shall have a right to redeem the motor vehicle by paying in full the indebtedness evidenced by the contract until the expiration of 15 days from the date of giving or mailing the notice and provides an itemization of the contract balance and of any delinquency, collection or repossession costs and fees and sets forth the computation or estimate of the amount of any credit for unearned finance charges or canceled insurance as of the date of the notice.

(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.

* * *

(5) Designates the name and address of the person or office to whom payment shall be made.

(6) States the seller’s or holder’s intent to dispose of the motor vehicle upon the expiration of 15 days from the date of giving or mailing the notice, or if by mail and either the place of deposit in the mail or the place of address is outside of this state, the period shall be 20 days instead of 15 days, and further, that upon written request to extend the redemption period and any applicable reinstatement period for 10 days, the seller or holder shall without further notice extend the period accordingly.

* * *

The notice prescribed by this section shall not affect the discretion of the court to strike out an unconscionable interest rate in the contract for which the notice is required, nor affect the court in its determination of whether the rate is unconscionable.

(Civ. Code § 2983.2(a) (bold emphasis added).)

Cross-Complainant primarily relies on the language of the NOI to argue that it does not comply with the required statutory disclosures. (Cross-Complainant’s Separate Statement Nos. 8-9, 13-15.) However, as to some of the disclosures, Cross-Complainant has not met his prima facie case, as discussed below. As to the others, Cross-Defendant has shown that triable issues exist.

First, Cross-Complainant argues that the NOI violates subsection (a)(2) by demanding that he call Westlake Financial. The contract clearly states, however, that Cross-Complainant is required to call Westlake Financial “to arrange for the retrieval of your Vehicle from the location indicated below.” (Complaint, Exh. B, at p. 2.) The contract does not require him to call to inquire about the “conditions precedent” to the reinstatement of the contract. (Civil Code § 2983.2(a)(2).) Thus, Cross-Complainant has not met his prima facie burden to show that there is no triable issue of material fact as to this alleged violation.

Second, Cross-Complainant argues that the NOI violates subsections (a)(1), (2), and (5) by failing to inform him that proof of payment of the $15 law enforcement fee “must be made to the person in possession of the vehicle.” (Motion, at p. 11.) The use of the passive voice – “must be made” – along with Cross-Defendant’s memorandum – demonstrates why this argument must fail. Cross-Defendant notes that Government Code § 26751, which requires the person in possession of the vehicle to obtain proof of payment of the fee, does not specify that the proof must come from the debtor. (Oppo., at p. 8.) Cross-Defendant has presented evidence that it is its practice to ensure that the proof of payment, provided to it by the debtor, is transmitted to the person in possession of the vehicle. (Cross-Defendant’s Separate Statement Nos. 9, 10; Declaration of Michelle Cooper ¶ 3 & Exh. A (Depo. of J. Alvarado 56:14-17, 57:2-6).) Thus, even if Cross-Complainant met its initial burden, Cross-Defendant has come forward with evidence that demonstrates there is a triable issue of fact as to whether this disclosure was necessary.

Third, Cross-Complainant argues that the NOI violates subsection (a)(1) by failing to discuss an additional $50 fee that would have to be paid to redeem his vehicle. Cross-Complainant relies on the deposition of Cross-Defendant’s person most knowledgeable, who testified that Westlake requires payment of a $50 redemption fee at the time of redemption. (Cross-Complainant’s SS No. 11.) With this evidence, Cross-Complainant met its prima facie burden to show that there is no triable issue of fact as to this violation of the requirement to disclose all “delinquency, collection or repossession costs and fees.” (Civil Code § 2983.2(a)(1).) However, Cross-Defendant has come forward with evidence that Westlake does not charge consumers any fees that are not in the NOI. (Cross-Defendant’s SS No. 11 (Depo. of J. Alvarado 26:16-21, 27:1-19.) Thus, there is at least a triable issue of fact as to whether the failure to disclose this redemption fee violates the statute, or alternatively, if there were ever such a fee to be charged.

Fourth, Cross-Complainant argues that the NOI violates subsection (a)(2) and Civil Code § 2983.3(d) by failing to disclose that Westlake requires proof of residence, proof of income, and additional references to reinstate the contract. However, Cross-Defendant has demonstrated that there is at least a triable issue of fact as to whether Westlake requires these stipulations. Westlake’s Repossession Compliance Manual, for example, states that the agent may requires this information but that it is “not a requirement to reinstate and should not delay the release of the vehicle if payment has been made.” (Cross-Defendant’s SS No. 12 (Depo. of Tracy Bergiman, Exh. A, at p. 19).)

Fifth, Cross-Complainant argues that the NOI violates subsection (a)(6) by failing to state that he is entitled to a 10-day extension when he completed the extension form “without further notice.” The NOI states that the reinstatement period will “automatically” be extended, rather than stating that it will be extended “without further notice.” This is a distinction without a difference or, at most, there is a dispute as to whether this language is sufficient. The statute does not state that the notice must specifically include the phrase “without further notice,” and therefore it is at least arguable that the word “automatically” satisfies that requirement.

Sixth, and finally, Cross-Complainant argues that the NOI violates subsection (a)(1) and (2) by failing to set forth a late fee of $21.97 that was due on June 10, 2016, during the restatement period. As with the $50 redemption fee discussed above, however, Cross-Defendant has presented evidence that it is its policy to waive this fee. (Cross-Defendant’s SS No. 16 (Cooper Decl. Exh. A (Depo. of J. Alvarado 26:16-19, Exhs. 2 & 6; Depo. of T. Bergiman 14:5-11, 19:12-13 & Exh. A).) There is at least a triable issue of material fact, therefore, regarding whether the NOI needed to disclose this fee.

Accordingly, Cross-Complainant’s motion for summary adjudication is DENIED as to Issue 1.

Issue No. 2: “Cross-Complainant is entitled to summary adjudication as to his fourth cause of action for violation of the unlawful prong of the unfair competition law, Business & Professions Code § 17200 et seq., because the NOI sent to him failed to comply with Civil Code § 2983.2 as a matter of law.”

For the reasons discussed in connection with Issue No. 1, summary adjudication is DENIED as to Issue No. 2.

Cross-Defendant’s Motion For Summary Judgment

Although Cross-Defendant (correctly) pointed out that Cross-Complainant erroneously sought summary judgment while only addressing two of the four causes of action in the first amended cross-complaint, Cross-Defendant has essentially done the same by seeking summary adjudication of only two of the four causes of action. Summary judgment is only appropriate if the entire action has no merit. (CCP § 437c(a)(1) [“A party may move for summary judgment . . . if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (bold emphasis added).) Although Cross-Defendant raises some arguments regarding Cross-Complainant’s first cause of action, it makes no attempt to show that it is entitled to summary adjudication of his fourth cause of action, while at the same time criticizing Cross-Complainant for simply incorporating his evidence regarding the first cause of action into his separate statement as to the fourth cause of action. In addition, as to the first cause of action, Cross-Defendant largely repeats its arguments in opposition to Cross-Complainant’s motion – e.g., “ONOA relies heavily upon Juarez,” and so on. (Motion, at p. 8.) At most, as discussed in connection with Cross-Complainant’s motion, Cross-Defendant has shown that there are disputed issues of fact as to the first and fourth causes of action. In addition, as discussed below, Cross-Defendant is not entitled to summary adjudication of the second cause of action, which means that it has not shown that the entire action has no merit. Accordingly, the motion for summary judgment is DENIED.

Motion for Summary Adjudication

Request for Judicial Notice

Cross-Defendant requests that the Court take judicial notice of (1) the First Amended Cross-Complaint, and (2) Cross-Defendant’s Answer to the First Amended Cross-Complaint. These requests are GRANTED per Evidence Code § 452(d) (court records).

Cross-Defendant’s Evidentiary Objections

Pursuant to CCP § 437c(q), the Court rules only upon objections to evidence that the Court deems material to the disposition of this motion.

Declaration of Brian Kemnitzer

Here, the evidence objected to was not material to the disposition of the motion.

Analysis

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

When deciding whether to grant summary judgment or adjudication, the Court must consider all of the evidence set forth in the papers, except evidence to which the Court has sustained an objection, as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment. (Ibid.)

When a cross-defendant seeks summary adjudication of a cause of action, it must show, by a preponderance of the evidence, that one or more elements of the cause of action cannot be established or that there is a complete defense to the cause of action. (CCP § 437c(p)(2).) Once the cross-defendant has met this burden, the burden shifts to the cross-complainant to show the existence of a triable issue of fact regarding that element of the cause of action or that defense. (Ibid.) If the cross-complainant cannot do so, the cross-defendant is entitled to judgment as a matter of law. (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468.) On the other hand, if the cross-defendant fails to meet its burden, the motion must be denied, and the cross-complainant need not make any showing at all. (Ibid.)

Issue No. 1: “The second cause of action for violation of the California Consumer Credit Reporting Agencies Act, CC § 1785.1, fails since the sections allowing for a private right of action are preempted by FCRA.”

Cross-Defendant argues that it is entitled to summary adjudication of the second cause of action for violation of the California Consumer Credit Reporting Agencies Act because that Act is preempted as to private rights of action.

Cross-Defendant has cited no binding authority that establishes that private rights of action under the CCRA are preempted. In addition, as Cross-Complainant notes, one of the authorities cited by Cross-Defendant was not “reversed in part on other grounds,” as Cross-Defendant asserts, but reversed on these precise grounds. (Gorman v. Wolpoff & Abramson, LLP (9th Cir. 2009) 584 F.3d 1147, 1170 [“By the plain language of the statute, . . . these sections are not preempted by § 1681t(b)(1)(F).”].)

Because the private right of action to enforce section 1785.25(a) is found in sections 1785.25(g) and 1785.31, which are not expressly saved from preemption under the FCRA, some courts have held that FCRA preempts private consumer actions against furnishers under California law. See, e.g., Lin v. Universal Card Servs. Corp., 238 F.Supp.2d 1147, 1152–53 (N.D.Cal.2002). However, we recently rejected this view in Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir.2009). There, we concluded that the provisions creating a private right of action do not constitute a “requirement or prohibition” within the meaning of 15 U.S.C. § 1681t(b)(1)(F) because they merely provide a vehicle for enforcing actual requirements or prohibitions. Id. at 1170–71. Moreover, we concluded that it was highly unlikely that Congress “explicitly retained the portions of the California statutory scheme that create obligations, without leaving in place any enforcement mechanism.” Id. at 1170. Therefore, we held that “the private right of action to enforce California Civil Code section 1785.25(a) is not preempted by the FCRA.” Id. at 1173.

(Carvalho v. Equifax Information Services, LLC (9th Cir. 2010) 629 F.3d 876, 888.) In Carvalho, the plaintiff based her claim only on § 1785.25(f), not § 1785.25(a). (Carvalho, supra, 629 F.3d at 889.) Here, in contrast, Cross-Complainant’s allegations are explicitly based, at least in part, on § 1785.25(a). (1AXC ¶ 34.)

Although not directly related to the question whether private rights of action to enforce § 1785.25(a) are preempted, the California Supreme Court has cautioned against interpreting FRCA preemption broadly. (Brown v. Mortensen (2011) 51 Cal.4th 1052, 1067-1068.) In Brown, which involved the interplay between the FCRA and HIPPA, the Court rejected an attempt to read into the sections of the FCRA regarding “the duties of a furnisher to preserve medical confidentiality, a clear and manifest congressional intent to preempt state legislation on that topic, when the same Congress in HIPAA had just authorized and encouraged further state regulation of such matters.” (Id. at 1067.) The court also noted that the Ninth Circuit cautioned in Gorman that “[t]he legislative history surrounding § 1681t(b)(1)(F) is murky . . . .” (Brown, supra, 51 Cal.4th at 1068 n.12.) On balance, Cross-Defendant has not convinced the Court, by way of binding authority or otherwise, that private rights of action based on § 1785.2(a) are preempted.

Accordingly, Cross-Defendant’s motion for summary adjudication is DENIED as to Issue 1.

Issue No. 2: “The third cause of action for violation of the Consumer Legal Remedies Act fails since the CLRA relates to representations made at the time of sale and the seller could not have known about the contents of Westlake’s NOI issued two years later.”

Cross-Complainant has agreed to dismiss this cause of action. Accordingly, the motion for summary adjudication is DENIED AS MOOT as to Issue No. 2.

Issue No. 3: “Insofar as the third cause of action for violation of the Consumer Legal Remedies Act relates to conduct of Westlake as the financier, the claim fails because the CLRA only relates to the sale or lease of goods and services and does not include intangible goods.”

For the reason discussed in connection with Issue No. 2, the motion for summary adjudication is DENIED AS MOOT as to Issue No. 3.

Moving parties to give notice, unless waived.

IT IS SO ORDERED.

Dated: February 18, 2020 ___________________________________

Randolph M. Hammock

Judge of the Superior Court