Articles Posted in Consumer Law

In 2005, Nicholas and Mary Conroy refinanced their home with a mortgage loan secured by a deed of trust on the property. Five years later, the Conroys stopped making payments and defaulted on their loan. In an effort to avoid foreclosure, the Conroys filed suit against defendants Wells Fargo Bank, N.A., successor by merger to Wells Fargo Home Mortgage, Inc.; Fidelity National Title Insurance Company aka Default Resolution Network, LLC; and HSBC Bank USA, N.A. as trustee for Merrill Lynch Mortgage Backed Securities Trust, Series 2007-2 (Wells Fargo). The trial court sustained Wells Fargo’s demurrer without leave to amend and entered a judgment of dismissal. On appeal, the Conroys contended the trial court erroneously dismissed their claims. After review, the Court of Appeal found the Conroys’ operative complaint did not state valid causes of action for intentional or negligent misrepresentation because they did not properly plead actual reliance or damages proximately caused by Wells Fargo. The trial court properly determined the Conroys could not assert a tort claim for negligence arising out of a contract with Well Fargo. For lack of detrimental reliance on any of Wells Fargo’s alleged promises, the Conroys did not set forth a viable cause of action for promissory estoppel even under a liberal construction of the operative complaint. Because Wells Fargo considered and rejected a loan modification for the Conroys before that date, section 2923.6 does not apply to them. The plain language of section 2923.7 requires a borrower to expressly request a single point of contact with the loan servicer. The Conroys’ operative complaint did not allege they ever requested a single point of contact, and the Conroys did not state they could amend their cause of action to allege they actually requested one. The trial court properly dismissed the Conroys’ Unfair Competition Law claim because it was merely derivative of other causes of action that were properly dismissed. View "Conroy v. Wells Fargo Bank" on Justia Law

Hilliard owned a controlling interest in companies that owned radio stations. In 2003, the companies entered into a loan agreement with Wells Fargo, borrowing $18.9 million, secured by assets that exceeded $50 million. The loan was continuously in default after March 31, 2004. Although the agreement was amended several times, Wells Fargo never foreclosed. Hilliard sold his ranch and was attempting to sell radio stations when, without notice to Hilliard, Wells Fargo sold the loan to Atalaya. Atalay filed suit and was awarded judgments that resulted in Atalaya’s purchase of Hilliard’s companies in bankruptcies. Hilliard, now 78 years old, alleged that Wells Fargo took or assisted in taking his property for wrongful use, with intent to defraud, or by undue influence, violating Welfare and Institutions Code section 15610.30(a)(1)(2), a provision of the Elder Abuse and Dependent Adult Civil Protection Act. The court dismissed, finding that Hilliard lacked standing. The court of appeals affirmed. Hilliard’s circular argument—that the duty breached by Wells Fargo was owed to him personally, and not just as a shareholder, because he is an elder and elder abuse is by definition a personal claim—ignores the fact that his claim does not originate in circumstances independent of his status as a shareholder in the companies. View "Hilliard v. Harbour" on Justia Law

In consolidated class actions, plaintiffs claimed the brokers who represented them in the sale of their homes and a group of companies that provided services in connection with those sales violated their fiduciary duties by failing to disclose alleged kickbacks paid by the service providers to the brokers in connection with the sales. Defendants filed motions to compel arbitration on the basis of three separate agreements, at least one of which was executed by each plaintiff. The trial court found the arbitration clauses in two of the agreements inapplicable, but compelled the signatories of the third agreement to arbitrate with their brokers. Invoking the doctrine of equitable estoppel, the court also required the signatories of the third agreement to arbitrate their claims against the service providers, who were not parties to the arbitration agreements. The court of appeals reversed with respect to the two arbitration clauses the lower court found inapplicable. Each of the plaintiffs executed one or the other of these two agreements. The court dismissed the cross-appeal of the plaintiffs who were required to arbitrate because an order compelling arbitration is not appealable. View "Laymon v. J. Rockcliff, Inc." on Justia Law

Fred, age 86, and his 79-year-old wife, Martha, filed suit under the Elder Abuse and Dependent Adult Civil Protection Act. In the 1990s, before the defendants were involved, the couple purchased life insurance policies, which were held by a revocable living trust for their children. The Trust was self-sustaining, with no need for additional cash for ongoing premium costs. In 2013, Fred was suffering from cognitive decline; Martha had Alzheimer’s disease. Defendants allegedly carried out a scheme that involved arranging the surrender of one policy and the replacement of the other with a policy providing limited coverage, at massively increased cost. The premiums for the new coverage were $800,000, forcing the couple to feed cash into the Trust. Defendants argued that the Children’s Trust owned the policies, that the money was paid voluntarily for the benefit of their children, and that the Trust does not have an Elder Abuse Act claim “because [it] is not 65 years old.” The court of appeals reversed dismissal. Regardless of what specific damages may be available to the couple, as distinguished from the Trust, it can be fairly inferred that the couple suffered some damages unique to themselves. The defendants “knew or should have known” of the “likely” harm their scheme would have on the couple. View "Mahan v. Charles W. Chan Insurance Agency" on Justia Law

Overstock, an online retailer, compared the price at which it offered an item to an advertised reference price. Until 2007, it showed a “List Price” for the product, with the number stricken through; it then showed the price at which Overstock was offering the product. Overstock eventually changed the “List Price” label to “Compare.” A commercial from 2013 claimed: “We compare prices so you don’t have to." Overstock’s policies allowed the list price to be set by finding the highest price for which an item was sold in the marketplace. Overstock did not determine whether other Internet retailers had made any substantial sales at the comparison price. After the state began investigating potential claims against Overstock, the parties entered into an agreement tolling the statute of limitations as of March 2010. The trial court found Overstock had engaged in unfair business practices (Bus. & Prof. Code, 17200) and false advertising (section 17500), granted injunctive relief, and imposed $6,828,000 in civil penalties. The court of appeals affirmed, holding that the trial court properly applied the four-year limitations period of section 17208 and that there was sufficient evidence that Overstock made false and misleading statements, violating laws against unfair business practices and false advertising. View "People v. Overstock.Com, Inc." on Justia Law

Plaintiff filed suit against the Bank, alleging violations of the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., and California's unfair competition law (UCL), Bus. & Prof. Code, 17200 et seq., fraudulent omission/concealment, and injunctive relief. The trial court dismissed the complaint with prejudice. The trial court applied the doctrines of res judicata (claim preclusion) and collateral estoppel (issue preclusion) based on plaintiff's prior unsuccessful lawsuit against the Bank for breach of contract. The court concluded that the Bank's demurrer was properly sustained without leave to amend where the TILA claim was not subject to claim preclusion or issue preclusion, but was time-barred; plaintiff adequately alleged injury in fact and had standing to pursue a UCL claim, but the UCL claim was time-barred; the fraudulent omission/concealment claim was likewise time-barred; plaintiff's request for injunctive relief necessarily failed as well; and the Bank's demurrer was properly sustained without leave to amend. Accordingly, the court affirmed the judgment. View "Ivanoff v. Bank of America" on Justia Law

Lauron had two Chase credit cards, one ending in 5285 and one ending in 5274. The Cardmember Agreement for 5274 stated that: “THE TERMS AND ENFORCEMENT OF THIS AGREEMENT AND YOUR ACCOUNT SHALL BE GOVERNED AND INTERPRETED IN ACCORDANCE WITH FEDERAL LAW AND, TO THE EXTENT STATE LAW APPLIES, THE LAW OF DELAWARE, WITHOUT REGARD TO CONFLICT-OF-LAW PRINCIPLES. THE LAW OF DELAWARE, WHERE WE AND YOUR ACCOUNT ARE LOCATED, WILL APPLY NO MATTER WHERE YOU LIVE OR USE THE ACCOUNT.” Chase sold both accounts to PCC for collection. PCC filed suit. Lauron cross-complained, alleging violation of the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. 1692) and California’s Rosenthal Act by attempting to collect a time-barred debt. The court granted Lauron summary judgment, determining that Delaware’s three-year state of limitations applied and that the limitations period had expired before PCC filed suit, so that PCC was attempting to collect a time-barred debt in violation of the FDCPA and the Rosenthal Act. The court of appeal reversed because, with respect to 5285 Lauron had not established when PCC’s claims accrued nor that the Cardmember Agreement applied. With respect to 5274, the court correctly applied Delaware law, but did not establish when the claims accrued. View "Professional Collection Consultants v. Lauron" on Justia Law

Plaintiffs filed a class action against Banana Republic, a clothing retailer, alleging that signs in its store windows advertising a 40 percent off sale were false or misleading because they did not disclose that the discount applied only to certain items. Plaintiffs cited the Unfair Competition Law (Bus. & Prof. Code, 17200), the False Advertising Law (Bus. & Prof. Code, 17500), and the Consumers Legal Remedies Act (Civ. Code, 1750) and produced evidence that, in reliance on the advertising, they were lured to shop at certain stores and selected items for purchase. As the items were being rung up, plaintiffs were told for the first time that the discount did not apply to their chosen merchandise. Having waited in line and out of embarrassment, they bought some (but not all) of the items, without the discount. The trial court granted Banana Republic summary judgment, concluding that plaintiffs failed to raise a triable issue that they suffered injury in fact. The court of appeal reversed. Plaintiffs raised a triable issue whether they lost “money or property sufficient to qualify as injury in fact, i.e., economic injury,” and whether “that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising.” View "Veera v. Banana Republic, LLC" on Justia Law

Real parties in interest, Kevin Hicks et al., filed an action against petitioner Elliott Homes, Inc. (Elliott), the builder of their homes, seeking damages for construction defects. Elliott moved to stay the litigation until real parties in interest complied with the prelitigation procedure set forth in “SB 800” or “Right to Repair Act” (Act), Civil Code sections 895 through 945.5. Real parties in interest opposed the motion, arguing that the prelitigation procedure did not apply because they had not alleged a statutory violation of the Act. The trial court denied Elliott’s motion for a stay, and Elliott petitioned the Court of Appeal for a writ of mandate compelling the trial court to vacate its order, and enter a new order granting the motion for a stay. The Court issued an alternative writ of mandate and stayed the proceedings in the trial court. Elliott contended the trial court erred in concluding that real parties in interest did not need to comply with the prelitigation procedure set forth in the Act prior to filing the underlying action and in denying the motion to stay. The Court of Appeal granted the petition. View "Elliott Homes, Inc. v. Super. Ct." on Justia Law

Condon purchased a car. Believing the dealership knowingly failed to disclose prior damage, Condon sued. The contract required arbitration of disputes. An arbitration award would be final, unless “the arbitrator’s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief.” In such case, “that party may request a new arbitration under the rules of the arbitration organization by a three-arbitrator panel. Condon maintained the provision was unconscionable because of the possibility of a second arbitration, which he claimed favored the dealer. The trial court ordered arbitration. The arbitrator, ADR, found for Condon, ordered him reimbursed, and excused Condon from making further payments. The defendants did not oppose Condon’s motion for costs and fees. ADR awarded $180,175.34. Defendants requested ADR to proceed to new arbitration. ADR concluded it lacked authority to resolve the parties’ disagreement over whether new arbitration was proper. Condon returned to court, which confirmed the award and denied defendants’ request for a second arbitration, reasoning that the forum lacked separate “appellate” rules and could not conduct a second arbitration. The court of appeal reversed. ADR did not refuse to conduct a second arbitration because of the lack of appellate rules, but solely because Condon objected. View "Condon v. Daland Nissan, Inc." on Justia Law