2011-00099541-CU-BT

Jordan Eugene vs. A-L Financial Corp

Nature of Proceeding: Motion for Preliminary Injunction

Filed By: Tay, Amy

Plaintiffs Jordan Eurgene, et al.’s Motion for Preliminary Injunction is ruled upon as
follows.

This is a putative class action arising out of Defendant A-L Financial Corp’s
procedures for prepossession of motor vehicles under conditional sales contracts.
Plaintiffs allege that under the Rees-Levering Automobile Finance Act, Defendant is
required to send consumers a Notice of Intent to Dispose of Motor Vehicle (“NOI”) with
specific disclosures following the repossession of a motor vehicle. Plaintiffs allege that
Defendant’s printed NOI form fails to disclose all required information, and thus that
Defendant is barred by Civil Code §2983.8 from collecting a post-repossession
deficiency balance from any putative class members.

On June 20, 2013, Defendant filed a Motion to Compel Arbitration based on the
decision in Vasquez v. Green Motors, Inc., (2013) 302 P.3d 573 (depublished, review
granted).) This Court has continued the hearing on the Motion to Compel Arbitration
and on Plaintiffs’ Motion for Class Certification until the Supreme Court issues a
decision in the Vasquez case and in the related case Sanchez (Gil) v. Valencia
Holding Company LLC, depublished review granted (March 21, 2012) 272 P.3d 976.

Plaintiffs now move for a preliminary injunction enjoining Defendant from prosecuting
all pending collection actions against putative class members that Defendant has filed
after the initiation of this class action. Plaintiffs also seek an order requiring Defendant
to file a Notice of Related Cases concerning pending collection actions against
putative class members and to provide Plaintiffs’ counsel with the names and address
of all putative class members against whom Defendant has filed a collection action or
obtained a judgment.

Plaintiffs contend that all pending collection actions against members of the putative
class prosecution are related to the class action because they all involve the issuance
of the NOI form which Plaintiffs assert is defective. Plaintiffs argue that the prosecution
of these actions must be enjoined in order to prevent the finalization of judgments in
the other actions that would have res judicata effect on the class members’ claims in
this action.

Plaintiffs further contend that if Defendant is allowed to proceed with prosecution of the
collection actions, it will continue to take judgments against putative class members
despite the fact that they have a potential defense to the collection actions, specifically,
Defendant’s failure to utilize a compliant NOI form. Plaintiffs argue that putative class
members subject to pending collection actions will suffer irreparable harm if the actions
are not enjoined because they will be subject to unlawful deficiency judgments,
damage to their credit scores, and loss of ability to secure housing and credit. Plaintiffs
contend that pecuniary compensation will not be sufficient to afford adequate relief to
these class members because the deficiency judgments will have collateral
estoppel/res judicata effect and the class members will have only limited procedural
means to set aside the judgments.

In general, a court may not enjoin a judicial proceeding in another court. (Civil Code
§3423(a).) Plaintiffs argue that this Court has the authority to enjoin the collection
actions under the exception to Civil Code §3423 that provides that actions pending in
other Superior Courts may be enjoined where the injunction is necessary to prevent a
multiplicity of proceedings. (See also CCP §526(b)(1).)

In opposition, Defendant argues that any determination regarding the propriety of
injunctive relief is premature in the absence of class certification. “[T]hough trial courts
generally have broad discretion to manage and order class affairs, in the absence of a
defense waiver they should not resolve the merits in a putative class action before class certification and notice issues absent a compelling justification for doing so.” (
Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1083.) Defendants contend
this rule extends to motions for preliminary injunction. (See Home Savings and Loan
Ass’n v. Superior Court (1976) 54 Cal.App.3d 208, 214 (Holding that superior court
was prohibited from adjudicating any issues on application for summary judgment or
preliminary injunction prior to determination and notification of the class.).)

Defendant also contends that the circumstances required to authorize this Court to
enjoin proceedings pending in other Superior Courts under Civil Code §3423(a) are
not present here. Specifically, Defendant argues that there is presently no risk of a
multiplicity of proceedings. Defendant contends that unless and until a class is
certified, the putative class members against whom Defendant is prosecuting
deficiency collection actions are each participants in only one proceeding – the
collection action. Defendant notes that the purpose of the exception to the rule against
injunction of other court proceedings is to protect litigants, not the courts, from a
multiplicity of actions. (Stearns v. Los Angeles City School Dist. (1966) 244 Cal.App.2d
696, 708.)

Defendant further argues that the collection actions are not related to the instant
putative class action because in the absence of a class certification they do not involve
the same parties. Defendant also contends that the actions are not related because
each collection action involves a unique set of factual circumstances, including the fact
that each NOI form is filled out differently for each repossession depending on the
facts of the particular account.

Defendant also contends that Plaintiffs cannot show they will be subject to irreparable
harm, having filed the instant motion for injunctive relief more than two years after
initiating this action. Defendant argues that Plaintiffs knew about pending collection
actions against putative class members at the inception of the lawsuit, and yet did not
seek an injunction for over two years. Defendant contends that this delay undermines
Plaintiffs’ assertion that denial of injunctive relief will subject putative class members to
irreparable harm.

In light of the foregoing, the Court agrees with Defendants that any determination
regarding imposition of a preliminary injunction is properly decided after the ruling on
the Motion for Class Certification. Were the Court to presently enjoin the pending
collection actions as Plaintiffs request, only to later deny class certification, the Court
perceives that the costs of imposing and administering the injunction in the various
collection actions would have been needlessly incurred. As Defendant argues,
Plaintiffs waited over two years to seek injunctive relief. Plaintiffs offer no reason why
delaying determination of the instant motion until the ruling on the class is certified
would result in irreparable harm.

Accordingly, the motion for preliminary injunction is denied, without prejudice.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.