Opinion
H044095
11-20-2019
LOBEL FINANCIAL CORP., Plaintiff, Cross-defendant and Respondent, v. NORA A. GUIAM, Defendant, Cross-complainant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 1-15-CV-275251)
The instant case involves a dispute over a repossessed vehicle. Appellant Nora A. Guiam appeals from a deficiency judgment entered after the trial court found in favor of respondent Lobel Financial Corporation. On appeal, appellant argues that the notice of intent to sell the repossessed vehicle was deficient. Appellant also contends that trial court erred in dismissing her cross-complaint for conversion and punitive damages. We find no error and affirm.
I. Background
The parties stipulated to the following facts. In February 2013, Maryann Guiam and appellant entered into a retail installment sales contract with Gilroy Auto Sales, Inc. for the purchase of a used vehicle. Appellant was a cosigner to the contract. In March 2013, the contract was "sold, assigned, or otherwise transferred" to respondent. In August 2014, Maryann "experienced financial difficulty" and two payments were returned for insufficient funds. Respondent thereafter "engaged Tri-City Recovery to repossess the subject vehicle" on August 25, 2014.
Although a party in the trial court proceedings, Maryann Guiam is not party to this appeal. Because appellant's last name is also Guiam, we refer to Maryann by her first name.
On August 26, 2014, respondent sent a "Notice of Our Plan to Sell Property"/"Notice of Intention to Dispose of Motor Vehicle" to Maryann and appellant by first class mail. The notice stated, under the heading "Right to Reinstate," that to "reinstate the contract and get back the Vehicle," Maryann and appellant would have the pay the amount stated. In addition, they would have to pay $15 to the San Jose Police Department, pursuant to Government Code section 26751. The notice also explained: "Storage charges are $30.00 per day and are payable to TRI-CITY RECOVERY, 180 LEWIS RD UNIT 20, SAN JOSE CA 95158 who is storing the Vehicle and began accruing from the date of repossession which was August 25, 2014."
Respondent and Tri-City Recovery had entered into a "Repossession Vendor Contract." The contract provided for two different daily storage rates. For vehicle storage for the "buyer" (i.e., respondent's debtor), Tri-City Recovery would charge a storage rate of $30 per day. However, if respondent ultimately kept the vehicle to sell it, Tri-City Recovery would provide respondent with 15 days of free storage and would charge $8 per day thereafter.
On September 25, 2014, respondent sold the subject vehicle at a private sale for $3,700.00. Respondent then sent appellant and Maryann an "Explanation of Calculation of Surplus or Deficiency . . . ." It explained that they owed an estimated deficiency balance of $3,011.17, which represented the balance due after all rebates and the sale of the vehicle were applied, plus expenses of the sale and collections costs. Tri-City Recovery billed respondent $375 for the repossession and $8 for storage, representing 16 days of storage.
In January 2015, respondent filed a complaint against Maryann and appellant, alleging that they owed $3,011.17 plus interest and attorney fees. Maryann and appellant denied the allegation and filed a cross-complaint seeking declaratory relief and damages. The cross-complaint alleged: (1) respondent's notice of intent to sell the repossessed vehicle (NOI) violated the Automobile Sales Finance Act (ASFA) (Civ. Code, § 2981 et seq.) because it failed to truthfully and accurately set forth "all the conditions precedent" for reinstatement of the vehicle contract; (2) respondent violated the Rosenthal Fair Debt Collection Practices Act (§§ 1788-1788.33) by, inter alia, attempting to collect the costs associated with repossession of the vehicle without providing proper notice to appellant; and (3) the inadequate NOI resulted in the wrongful dispossession and conversion of the vehicle.
The ASFA is sometimes referred to as the Rees-Levering Motor Vehicle Sales and Finance Act. (Raceway Ford Cases (2016) 2 Cal.5th 161, 164 (Raceway).)
Subsequent statutory references are to the Civil Code unless otherwise specified.
Maryann and appellant alleged that the NOI was inadequate because it "falsely represented" that they "were obliged to reimburse [respondent] a storage fee of $30.00 per day to reinstate the vehicle, when [respondent] incurred no such charge." Maryann and appellant noted that respondent "had an agreement with the repossession vendor that provided [respondent] with free storage for fifteen days, and at a rate of $8.00 per day thereafter." "This misrepresentation," they argued, "made [respondent's] subsequent sale of the vehicle unlawful, and preclude[d] obtaining a deficiency judgment." Maryann and appellant also alleged that respondent failed to send appellant a written notice of delinquency prior to the repossession, which meant respondent could not pursue the costs of repossession from appellant. Finally, Maryann and appellant contended that respondent was liable for conversion because they had sold the vehicle without authorization.
Respondent argued that the NOI was proper. It noted that case law required that it disclose "all conditions precedent" to reinstatement of the contract and repossession of the vehicle. This included informing Maryann and appellant of any obligations to third party payees. Respondent contended that it did just that, and that it was beside the point that it had "negotiated a lower rate of storage for itself." Thus, since the daily rate for storage for the buyer was $30 per day, respondent asserted that the NOI was accurate. In addition, given that the NOI was valid and the repossession was lawful, respondent argued that the conversion cause of action failed. Respondent did not dispute that it failed to send appellant a written notice of delinquency prior to repossession.
At a hearing, the trial court found that the NOI satisfied the ASFA because it accurately stated "all information of conditions precedent" to reinstatement. The court also tentatively concluded that Business and Professions Code section 7507.10, subdivision (f), which "says that the repossessor has to give notice to [Maryann and appellant] of storage fees that would be imposed," authorized Tri-City Recovery's $30 daily storage fee. Because the NOI was proper, the court determined that the conversion cause of action failed. Finally, the court found that because there was "no evidence that [appellant] received a notice of delinquency," she was "not responsible for the [$383 of] repossession fees." The court allowed the parties to submit letter briefs concerning Business and Professions Code section 7507.10, subdivision (f).
In a letter brief, Maryann and appellant contended that Business and Professions Code section 7507.10, subdivision (f)'s notice requirement was controlled by Business and Professions Code section 7507.5: "No charge shall be made for services incurred in connection with the recovery, transportation, and storage of collateral except under terms agreed to by the legal owner at the time of the repossession authorization or specifically agreed upon at the subsequent time. Repair work, cleaning, or detailing shall not be performed and shall not be charged to the legal owner." Thus, Maryann and appellant argued that because the agreement between Tri-City Recovery and respondent set the storage rate at $8 per day (after 15 free days), respondent had no right to charge $30 per day. In that regard, Maryann and appellant asserted that the NOI was inaccurate because it misstated the daily storage rate.
The court issued a tentative written decision that mirrored its earlier oral pronouncement. The tentative decision was adopted as the court's final statement of decision, and judgment was entered in favor of respondent.
II. Discussion
Appellant argues that the NOI failed to accurately disclose "all conditions precedent" to reinstating the subject vehicle because it inaccurately represented the storage fees. Appellant also claims that the storage fee violated the ASFA because the fees were not "incurred" within the meaning of the statute. Next, appellant argues that Business and Professions Code section 7507.10, subdivision (f) does not provide an independent basis for charging storage fees. Finally, appellant contends that respondent is liable for conversion.
"ASFA, which took effect on January 1, 1962, 'is a consumer protection law governing the sale of cars in which the buyer finances some, or all, of the car's purchase price.' [Citation.] 'The act replaced the 1945 Automobile Sales Act and was designed to provide a more comprehensive protection for the unsophisticated motor vehicle customer.' [Citation.]" (Raceway, supra, 2 Cal.5th at p. 165.) In the trial court, the parties stipulated that the vehicle purchase contract was subject to the ASFA's provisions.
Under the ASFA, a buyer has the right to statutory notice, as set forth in section 2983.2, prior to the sale or disposition of a repossessed vehicle. Section 2983.2, subdivision (a)(2) provides that the notice must inform the buyer that "there is a conditional right to reinstate the contract" and that to do so within the 15-day window, the buyer must fulfill "all the conditions precedent" necessary to redeem or reinstate the contract. In Juarez v. Arcadia Financial, Ltd. (2007) 152 Cal.App.4th 889 (Juarez), the court interpreted the clause " 'all the conditions precedent' " to require a level of specificity sufficient to inform the buyer exactly what he or she must do to reinstate the contract without the need for additional inquiry. (Id. at p. 894.) Thus, the notice must include "any amounts the buyer must pay to the creditor and/or to third parties, and provide the buyer with the names and addresses of those who are to be paid." (Id. at p. 904.) It also must state "any other specific actions the buyer must take." (Id. at p. 899.) "If the creditor does not provide the defaulting buyer with this information, the creditor has not informed the defaulting buyer of 'all of the conditions precedent' to reinstatement of the contract." (Id. at p. 905.)
In this case, respondent sent appellant an NOI pursuant to the ASFA. The terms of the NOI are not in dispute. What is in dispute is whether the NOI includes "all the conditions precedent" to reinstatement, as required by the ASFA. We conclude that the NOI in this case complied with the ASFA and was consistent with Juarez's construction of the statute. Here, respondent provided appellant with notice that it intended to dispose of the repossessed vehicle. The notice itemized what appellant needed to do to reinstate the contract and regain possession of the vehicle. It stated "the amounts due, to whom they are due, the addresses and/or contact information for those parties, and any other specific actions the buyer must take." (Juarez, supra, 152 Cal.App.4th at p. 899.) The notice included the "amounts the buyer must pay to the creditor and/or to third parties . . . ." (Id. at p. 904, italics added.) Specifically, respondent informed appellant that to regain physical possession of the vehicle, the tow company storing the vehicle would need to be paid at a rate of $30 per day.
We are unpersuaded by appellant's argument that the third-party storage fee violates the ASFA. Appellant points to section 2983.3, subdivision (d)(5), which provides: "[T]he buyer or any other person liable on the contract, shall, in all cases, reimburse the seller or holder for all reasonable and necessary collection and repossession costs and fees incurred, including attorney's fees and legal expenses expended in retaking and holding the vehicle." Appellant argues that respondent did not "incur" a $30 per day storage fee because respondent had negotiated 15 days of free storage followed by an $8 per day rate. Thus, she contends "because a storage charge fee of $30.00 per day was not 'incurred' by [respondent], reimbursement by [appellant] of such fee to [respondent] was not a 'condition precedent' to reinstatement of the vehicle."
This argument, however, misconstrues the evidence. The NOI did not state that Maryann and appellant would have to reimburse respondent for the storage of the vehicle to obtain reinstatement of the vehicle. Rather, it stated that they would have to reimburse Tri-City Recovery for storage costs prior to obtaining physical possession of the vehicle. Thus, the NOI did not misrepresent that respondent had "incurred" a $30 daily fee and did not demand reimbursement to respondent of storage fees as a condition for reinstatement.
Similarly, the NOI also stated that Maryann and appellant would have to pay a $15 fee to the San Jose Police Department prior to obtaining physical possession of the car. This fee, like the storage fee, would have to be paid to a third party. And while it was not necessary for reinstatement, it was necessary to obtain physical possession of the vehicle.
Appellant also argues that the storage fees were unauthorized, and that therefore the NOI misrepresented the steps necessary to obtaining possession of the vehicle. She points to Business and Professions Code section 7507.5, which provides that charges for storage of collateral cannot be made "except under terms agreed to by the legal owner at the time of the repossession authorization or specifically agreed upon at a subsequent time." Appellant contends that Tri-City Recovery's right to charge a storage fee "flows directly from an agreement with the legal owner," which in this case stated a daily rate of $8 per day after 15 free days of storage. Because Tri-City Recovery had no independent relationship with Maryann and appellant, she argues it had no right to charge them.
We disagree that the storage fees were unauthorized. Respondent entered into a contract with Tri-City Recovery, which authorized Tri-City Recovery to repossess and store the subject vehicle. The contract established a storage rate of $30 per day when charged to the buyer. In this context, respondent was the legal owner of the vehicle at the time of the repossession. Thus, the storage fees were authorized and established by the contract, and the NOI accurately stated the amount of the storage fees and to whom the fees would need to be paid.
Finally, appellant argues that respondent is liable for conversion of the vehicle. The sale of the vehicle was unauthorized, she argues, and therefore Maryann and appellant were deprived of their right of possession. Appellant relies on Cerra v. Blackstone (1985) 172 Cal.App.3d 604 (Cerra). In Cerra, this court concluded that a buyer could pursue a claim of conversion where the seller sent an NOI that "did not even come close to complying with Civil Code section 2983.2" (id. at p. 606), and then engaged in conduct amounting to an "[u]njustified refusal" to allow the buyer to redeem or reinstate the contract. (Id. at p. 609.) In this case, the NOI did comply with section 2983.2 and, unlike in Cerra, there was no attempt on the buyer's part to try to redeem or reinstate the contract. Appellant's conversion cause of action therefore fails.
III. Disposition
The judgment is affirmed.
/s/_________
Mihara, J. WE CONCUR: /s/_________
Elia, Acting P. J. /s/_________
Bamattre-Manoukian, J.