Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. 37-2007-00056515- CU-CO-NC, Jacqueline Stern, Judge.
HALLER, J.
Grace and Gregory Hays appeal from a judgment allowing DaimlerChrysler Financial Services America, LLC (DaimlerChrysler) to sell their vehicle after a default and repossession, but precluding DaimlerChrysler from recovering a deficiency judgment after the sale. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In August 2004, the Hayses purchased a Mercedes-Benz (Mercedes) vehicle from Hoehn Motors, Inc. under an installment sales contract. The Hayses did not provide a down payment and borrowed the entire purchase price, which was $64,785.60, including interest. The Hayses agreed to pay this amount by paying $1,079.76 every month for five years. The contract provided that if the Hayses failed to timely pay a monthly amount, Hoehn Motors had the right to declare a default, repossess and sell the vehicle, and seek a deficiency judgment. Hoehn Motors also had the right to accelerate the loan upon a default, "subject to any right the law gives [the buyer] to reinstate this contract." The contract further provided that "[a]cceptance of a late payment or late charge does not excuse your late payment or mean that you may keep making late payments." Hoehn Motors later assigned the contract to DaimlerChrysler's predecessor in interest and/or subsidiary.
In the proceedings below, the Hayses unsuccessfully challenged DaimlerChrysler's status as a successor in interest. The Hayses do not reassert these legal challenges on appeal. We therefore omit a discussion of the facts underlying DaimlerChrysler's successor status. For ease of reference, we refer to DaimlerChrysler as the creditor throughout the opinion, even though a different corporate entity may have held this status at the particular time.
Three years after the purchase, in September 2007, DaimlerChrysler sued the Hayses for defaulting on the installment contract by failing to make a payment owed in April 2007. DaimlerChrysler alleged the Hayses owed $30,201.25 plus interest for the loan balance, and sought an order for: (1) repayment of this amount; or (2) possession of the vehicle and payment of any deficiency upon a sale of the vehicle.
In connection with the complaint, DaimlerChrysler also applied for a writ of possession of the vehicle under Code of Civil Procedure section 512.010. In support, DaimlerChrysler produced the declaration of Dale Medvec, a DaimlerChrysler employee, who had knowledge of the Hayses' payment history and account. Medvec stated the Hayses had failed to make the April 2007 payment and subsequent payments, and attached the contract showing DaimlerChrysler's right to accelerate payments and demand surrender of the vehicle upon a default. Medvec stated the market value of the vehicle was $28,500, and the balance owed on the contract was $30,201.25. After several unsuccessful attempts, DaimlerChrysler served the Hayses with the complaint, summons, and writ documents.
Under this code section, a plaintiff may obtain a writ of attachment in a pending action upon filing an affidavit under oath establishing various facts, including: (1) the plaintiff is entitled to possession of the property; (2) the property was wrongfully detained by the defendant; (3) a description of the property and a statement of its value; and (4) the location of the property. (See Code Civ. Proc., §§ 512.010, 512.020.)
In August 2008, the court held a hearing on DaimlerChrysler's application for writ of possession, and granted the application permitting the sheriff to seize the Mercedes vehicle. Two months later, on October 1, the Hayses filed a notice of change of address stating their new address was located on Via Gianni Turco in Fallbrook. In their prior court filings, they had indicated their residence was on Reche Road in Fallbrook (the same address identified in the 2004 sales contract).
On May 4 or 5, 2009, the San Diego County Sheriff executed the writ of possession and took possession of the Mercedes at the Via Gianni Turco address.
Two weeks later, the Hayses moved for an order reconsidering or quashing the writ and for release of the vehicle, asserting DaimlerChrysler did not serve them with the writ of possession at the correct address and had refused to accept payments for less than the full value of the car.
On May 15, 2009, the court denied the motion. The court found the Hayses had been properly served with the writ at the address in the court records. The court noted that the Hayses' address of record was on Reche Road, and until the Hayses filed their notice of change of address on October 1, 2008, service at this address was proper. The court also rejected the Hayses' claim that DaimlerChrysler was required to permit them to reinstate the loan before the repossession.
Four days later, on May 19, DaimlerChrysler sent the Hayses a notice of intention (NOI) to sell the Mercedes, a notice required under the Rees-Levering Automobile Sales Finance Act (Rees-Levering Act). (See Civ. Code, § 2981 et seq.) The notice was mailed to the Hayses at their former (Reche Road) address. The notice stated that DaimlerChrysler intended to sell the repossessed vehicle 15 days after the date the notice was mailed, unless the Hayses exercised their statutory right to request an extension. The notice also stated the Hayses had the right to funds received from the sale over the amount they owed, but if the sales price was less than the amount owed, the Hayses would be liable for the deficiency balance plus interest and costs.
All further statutory references are to the Civil Code unless otherwise specified.
On the second page of the notice, DaimlerChrysler checked a box indicating the Hayses did not have a right to reinstate the loan because they had "concealed the motor vehicle or removed it from the state." The notice stated that if the Hayses wished a return of the Mercedes, they were required to "redeem" the vehicle by paying in full the amount owed on the contract, which was $30,149.51 (consisting of the unpaid principal balance, late fees, and finance charges).
Two weeks later, on June 3, the court held a bench trial on DaimlerChrysler's complaint for possession of the vehicle and for a deficiency judgment. DaimlerChrysler presented evidence showing: the Hayses were repeatedly late on paying their monthly payments from the outset of the contract; the Hayses failed to make the payment owed on April 11, 2007; and the balance owed on the contract was $30,201.25 plus interest of $5,146.62. With respect to the allegation in DaimlerChrysler's NOI that the Hayses had attempted to conceal the vehicle, DaimlerChrysler's agent responsible for the Hayses' account testified he was not aware of any facts showing the Hayses had attempted to conceal the vehicle, but he assumed DaimlerChrysler had difficulty locating the vehicle based on its delay in repossessing the vehicle after the default.
Mrs. Hays was the sole defense witness. She acknowledged she did not pay the April 2007 monthly car payment, but said when she attempted to make an online payment in June 2007, she received information that she was to contact customer service. She was then told by account representatives that the account had been frozen and the lender was demanding full repayment for the vehicle. She testified that in June 2007 she attempted to reinstate the loan by sending the amounts past due, but DaimlerChrysler refused to let her do so. When the court asked whether Mrs. Hays had proof of these attempted payments, she said she did not bring any supporting evidence. Mrs. Hays acknowledged that she and her husband had repeatedly made late monthly payments on the loan, but said they always paid the late charges. During cross-examination, DaimlerChrysler's counsel asked Mrs. Hays whether she was ready and willing to tender all of the past due payments and bring her account current. Mrs. Hays indicated that she no longer wished to do so because she had recently purchased a new vehicle.
In closing arguments, DaimlerChrysler's counsel stated the evidence was undisputed that the loan was in default in April 2007, and that it was seeking a judgment reflecting the amount owed by the Hayses on the loan ($30,201.25) plus interest ($5,146.62), attorney fees ($12,006.50), and costs ($2,083), and affirming its right to sell the vehicle at a dealer's auction. Counsel said DaimlerChrysler intended to thereafter seek any deficiency if the sales price was less than the fair market value of the car.
Defense counsel argued that DaimlerChrysler failed to give proper statutory notice to the Hayses of their right to reinstate the loan and had not presented evidence to support its allegation that the Hayses had concealed the vehicle and thus were barred from reinstatement. Counsel asserted that the Hayses had the "absolute right to reinstate the loan" under provisions of the Rees-Levering Act before and after the repossession. Counsel thus requested the court to deny judgment in DaimlerChrysler's favor and stated he would file a motion for costs and attorney fees as the prevailing party. Counsel also urged the court to determine that DaimlerChrysler was not entitled to a deficiency judgment because of its failure to allow the Hayses to reinstate the loan. Mrs. Hays (who was representing herself) likewise argued that DaimlerChrysler did not prove its case, and requested the court to award attorney fees to the Hayses.
DaimlerChrysler's counsel responded that the court should not rule on DaimlerChrysler's deficiency rights because the issue was premature and not ripe as there had not yet been a sale. Counsel noted that the vehicle had been repossessed only about two weeks earlier, and therefore the statutory time period for providing proper notice and reinstatement rights had not yet expired.
After taking the matter under submission, the court issued a statement of decision finding DaimlerChrysler proved the Hayses owed "$30,201.25 plus interest of $5,146.62" on the contract, and stating that DaimlerChrysler "may sell the vehicle and apply the sale proceeds to that amount." But the court stated the Hayses "cannot be liable for any deficiency" because DaimlerChrysler did not send the statutory notice (NOI) to the Hayses at their current address, as required by section 2983.2, subdivision (a). The court found DaimlerChrysler sent the May 2009 notice to the Hayses' former Reche Road address, even though the Hayses had filed a notice of change of address on October 1, 2008.
Based on these findings, the court entered a judgment on September 3, 2009. The judgment states: "Defendants [the Hayses] are indebted to Plaintiff [DaimlerChrysler] [in] the sum of $30,201.25 principal and $5,146.62 in interest. However, Defendants cannot be liable for any deficiency to Plaintiff, as the [NOI] was mailed by Plaintiff to Defendants at Reche Road, when it should have been mailed to Defendants at Via Gianni Turco. [¶]... Plaintiff is entitled to possession of the vehicle..., and may sell the vehicle. Plaintiff may not seek any shortfall from Defendants after applying that amount to the balance due."
On October 8, 2009, the court filed an amended judgment "Nunc Pro Tunc to 9/3/2009." The amendment added language at the end of the final sentence, so the final sentence now reads: "[DaimlerChrysler] may not seek any shortfall from [the Hayses] after applying that amount to the balance due and Defendants are not liable for and shall not be required to make any further payments on said vehicle." This clarification was apparently in response to the Hayses' claims they were still receiving demand letters from DaimlerChrysler.
The Hayses appeal, contending the court erred in upholding DaimlerChrysler's rights to repossess and sell the vehicle and challenging the court's failure to award attorney fees to them.
DISCUSSION
I. Appealability
DaimlerChrysler contends the Hayses' appeal is untimely because it was filed more than 60 days after service of the notice of entry of the original judgment (September 18, 2009). The Hayses respond that the appeal was timely because it was filed within 60 days after service of the notice of entry of the amended judgment (October 14, 2009). We agree with the Hayses' position.
Although the court stated the amended judgment was entered "Nunc Pro Tunc" to the earlier judgment, a determination of the timeliness of an appeal from an amended judgment depends on the nature of the amendment. (See Torres v. City of San Diego (2007) 154 Cal.App.4th 214, 222.) If the amended judgment contains a substantive change to the prior judgment, a new appeal period starts to run from notice of entry or entry of the amended judgment. (Ibid.) However, if the new judgment simply corrects a clerical error, the time to appeal is not affected. (Ibid., see also Phillips v. Phillips (1953) 41 Cal.2d 869, 875.)
In this case, the amended judgment added a sentence clarifying that the Hayses had no obligation to make any further payments on their contract. Because this amendment involved the exercise of judicial discretion and was not merely a clerical change, a new appeal period began running from the October 14, 2009 date. Thus, the notice of appeal, filed on December 7, 2009, was timely.
II. Summary of Rees-Levering Automobile Sales Finance Act
The Hayses' sales contract is governed by the Rees-Levering Act, which provides a detailed framework applicable to conditional sales contracts for motor vehicles. (§ 2981 et seq.; see Juarez v. Arcadia Financial, Ltd. (2007) 152 Cal.App.4th 889, 894 (Juarez).) Two code sections of this statutory scheme are of particular relevance here: section 2983.2 and section 2983.3.
Under section 2983.3, a defaulting buyer whose car has been repossessed by a creditor must be given the opportunity to reinstate the contract, absent proof of certain statutory circumstances, including that the buyer attempted to conceal the vehicle from the creditor. (§ 2983.3, subd. (b).) The reinstatement costs may include the defaulted payments, delinquency charges, collection and repossession costs, and attorney fees. (§ 2983.3, subd. (d)(1), (5).) Although these allowable costs may be substantial, "the option of reinstating a contract is often preferable to redemption, because reinstatement allows the buyer to recover the car without having to pay the full balance due on the contract...." (Juarez, supra, 152 Cal.App.4th at p. 894.) "Exercise of the right to reinstate the contract shall be limited to once in any 12-month period and twice during the term of the contract." (§ 2983.3, subd. (c).) Section 2983.3 states that "[i]f the seller... [improperly] denies the right to reinstatement..., the seller... shall not be entitled to a deficiency...." (§ 2983.3, subd. (e).)
Section 2983.2 governs a creditor's notice obligations after a repossession. (See Arguelles-Romero v. Superior Court (2010) 184 Cal.App.4th 825, 829-830; Juarez, supra, 152 Cal.App.4th at p. 899.) The code section requires a creditor to provide the buyer with a notice of intention (NOI) to dispose of the repossessed vehicle. (§ 2983.2, subd. (a).) The notice must conform to specific mailing requirements, must be given within 60 days following repossession, and must provide extensive information as to the right of redemption, reinstatement of the contract, payment, intended disposition, right to an accounting, and notice of potential liability for a deficiency plus interest. (§ 2983.2, subds. (a), (b).) Section 2983.2 states the buyer "shall be liable for any deficiency after disposition of the repossessed" vehicle "if the notice prescribed by this section is given within 60 days of repossession...." (§ 2983.2, subd. (a), italics added.)
Although sections 2983.2 and 2983.3 identify only the denial of a deficiency judgment as the remedy for a creditor's violation of a buyer's notice and reinstatement rights, the courts have recognized a buyer may also have the right to bring affirmative claims, such as conversion and unfair competition claims, for an improper denial of a reinstatement right and to recover resulting damages under appropriate circumstances. (See Juarez, supra, 152 Cal.App.4th at pp. 899-912; Cerra v. Blackstone (1985) 172 Cal.App.3d 604, 609-610.)
III. The Hayses' Appellate Contentions
In this case, the trial court expressly agreed with the Hayses that DaimlerChrysler violated the Rees-Levering Act by failing to send the required notice of their reinstatement rights to their proper address after the repossession. And the court agreed to provide the Hayses with their requested remedy for a violation of the Act: an order prohibiting DaimlerChrysler from recovering any deficiency upon the sale of the vehicle. This remedy provided the Hayses with a substantial benefit because the undisputed evidence established the Hayses owed more on their vehicle than the vehicle's fair market value.
On appeal, the Hayses agree this portion of the judgment was proper. But they argue this court should reverse the judgment "to the extent it (implicitly) confirmed [DaimlerChrysler's] right to repossess the vehicle, and to the extent it (expressly) ruled that [DaimlerChrysler] could sell the vehicle." These arguments are without merit.
First, with respect to the repossession, there is no factual or legal basis for concluding DaimlerChrysler's repossession of the Mercedes was improper. The evidence was undisputed that the Hayses failed to timely pay the monthly payment in April 2007, and therefore DaimlerChrysler had the contractual right to repossess the vehicle. DaimlerChrysler applied for a writ of possession under Code of Civil Procedure section 512.010 and, based on the affidavits and documentary evidence presented, the court properly granted the motion. The court then issued a writ directing the sheriff to seize the Mercedes vehicle.
The Hayses argue the repossession was unlawful because they were not given the right to reinstate the loan before the repossession. However, they provide no legal authority supporting their argument that they must be given this reinstatement right before a repossession. The Hayses rely primarily on the portions of the Rees-Levering Act discussed above (sections 2983.2 and 2983.3), which provide a buyer with certain reinstatement and notice rights after a repossession has occurred. By their express terms, these provisions apply to a buyer's rights after a repossession or voluntary surrender of the vehicle. Neither section 2983.2 nor section 2983.3 requires a lender to provide a reinstatement right before a repossession or surrender of the vehicle.
The Hayses' reliance on this court's Juarez decision is misplaced. (Juarez, supra, 152 Cal.App.4th 889.) In Juarez, we held that after a repossession, a creditor's section 2983.2 notice of intent to sell must include the specific monetary amount necessary to cure the default and reinstate the loan (unless the case falls within a statutory exception to the reinstatement right). (Juarez, supra, 152 Cal.App.4th at pp. 901-912.)We thus determined the trial court erred in granting the creditor's summary judgment on the buyers' claims that the creditor engaged in unlawful, unfair, and fraudulent business practices "with regard to the [notices] it sent to buyers after repossessing their vehicles." (Id. at p. 898, italics added.) Juarez did not state or suggest a repossession is wrongful if a buyer was not provided the right to reinstate a loan before the repossession occurred.
The Hayses alternatively rely on section 1812.2, which sets forth rights pertaining to an installment sales contract involving consumer goods, to argue the repossession was wrongful because DaimlerChrysler did not provide them with notice of the default before the repossession. This arguments fails for several reasons.
First, the Hayses never cited section 1812.2 in the proceedings below, and thus failed to preserve the issue on appeal. Second, this case is governed by the Rees-Levering Act, and not the Unruh Act, of which section 1812.2 is part. (See § 1801 et seq.) Third, even if section 1812.2 applied here, DaimlerChrysler presented evidence that it sent the Hayses written notice of the default in July 2007, long before the repossession. Although the Hayses argued they never received the notice, the court, as the trier of fact, was entitled to find the oral testimony credible and conclude that a timely notice of default was given. Fourth, the penalty for failure to comply with section 1812.2 is that the creditor is "barred from recovery of any finance charge or of any delinquency, collection, extension, deferral or refinance charge." (§ 1812.7.) This is essentially the same remedy reflected in the judgment. The court ruled that DaimlerChrysler was entitled to sell the car, but was barred from any recovery of deficiency or costs.
With respect to the Hayses' challenge to the portion of the court's judgment permitting DaimlerChrysler to "sell" the vehicle, we agree that where, as here, a creditor does not provide a defaulting buyer with timely notice of his or her statutory reinstatement rights after a repossession or improperly precludes a buyer from exercising these reinstatement rights, a court has the authority to prevent the creditor from conducting a sale until the creditor provides the buyer with the opportunity to reinstate the loan. (See § 2983.3, subd. (b).) Additionally, a buyer may have the right to bring affirmative claims against the creditor for recovery of damages resulting from the lack of notice or the denial of the reinstatement right. (See Cerra v. Blackstone, supra, 172 Cal.App.3d at pp. 609-610.)
However, in this case, the Hayses did not bring affirmative claims, nor did they request that the court order DaimlerChrysler to provide them with the opportunity to reinstate the loan. Instead, Mrs. Hays made clear in her testimony that she was not seeking to reinstate her loan to obtain return of the car because she had already purchased another vehicle. Thus, during closing arguments, the Hayses and their counsel focused their efforts on an attempt to persuade the court to rule that DaimlerChrysler could not obtain a deficiency judgment.
This position was understandable given the timing of the default and repossession. The Hayses had possession of the vehicle for more than two years without making any payments on the loan and the five-year loan period had almost expired. Thus, a conclusion that DaimlerChrysler was not entitled to seek a deficiency judgment meant that the Hayses were not required to pay for this lengthy use of the car or the loan balance or any additional collection or interest charges for their prior default (charges that may be properly included in a reinstatement fee (see § 2983.3, subd. (d)(1)). Further, the evidence showed the vehicle's market value was less than the amount owed on the contract. Under these circumstances, if the court had ordered DaimlerChrysler to return the vehicle to the Hayses instead of conducting the sale, the Hayses would have been required to pay a substantial amount on the loan, and to reinstate the loan they would have had to pay DaimlerChrysler this amount plus the additional costs. Thus, the Hayses argued the court should bar DaimlerChrysler from any deficiency judgment upon a sale of the car. The court accepted this argument and selected the remedy of a sale with no deficiency judgment.
The Hayses now ask this court to reverse the judgment and order the court to modify the judgment to additionally state that DaimlerChrysler was not entitled to sell the car. On the record before us, this remedy is logically inconsistent with the remedy already provided to the Hayses. The court selected between two mutually exclusive remedies: (1) allow the Hayses to pay the funds to reinstate and then recover their vehicle or (2) permit DaimlerChrysler to sell the car with no deficiency permitted. The court's selection of the second remedy (specifically requested by the Hayses) meant the first remedy was no longer viable.
Additionally, even if the Hayses had properly sought a ruling precluding DaimlerChrysler from selling the vehicle, the issue is now moot because it is undisputed the sale has already taken place. Thus, a reversal on this matter would provide the Hayses no additional relief. The Hayses received what they asked for: an order precluding DaimlerChrysler from seeking the amounts the Hayses owed over and above the sale proceeds, including the collection costs and attorney fees. To the extent they seek damages and other affirmative remedies, they are not entitled to these remedies in this lawsuit because they never filed an affirmative claim against DaimlerChrysler.
Finally, the Hayses contend we should reverse the order "for an immediate determination of [their] attorneys' fees and costs incurred in this proceeding." They argue they were the prevailing parties in the action because DaimlerChrysler failed to properly serve them with a section 2983.2 notice or provide them a reinstatement right under section 2983.3. This contention fails because the Hayses never filed a motion for attorney fees, and thus the court never made a determination on this issue. (See Cal. Rules of Court, rule 3.1702.) During closing arguments, the court stated that if a party wished to seek an attorney fees award, the party would be required to follow applicable statutory procedures and request these fees and costs by noticed motion. After failing to do so, the Hayses cannot now claim the trial court erred in refusing to award them attorney fees as prevailing parties.
DaimlerChrysler moved to augment the record with four documents, three of which were part of the proceedings below. The Hayses do not oppose the motion with respect to these three documents, and we grant the motion to augment the record with these documents. However, we deny the motion with respect to the fourth document (labeled Exhibit 58) because it was not produced in the proceedings below and was prepared after the trial. (See Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.)
DISPOSITION
Judgment affirmed. Appellants to pay respondent's costs on appeal.
WE CONCUR: McCONNELL, P. J., IRION, J.