Filed 3/27/23 Quillen v. Car City CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

MICHAEL QUILLEN

,

Plaintiff and Respondent,

v.

CAR CITY, INC., et al.

,

Defendant s and Appellant s

. B 318046

(Los Angeles County Super. Ct. No. 17STLC03903 )

APPEAL from a judgment of the Superior Court of
Los Angeles County, Stephen M. Moloney, Judge. Affirmed in part and r eversed in part.
Arno H. Keshishian for Defendant s and Appellant s

. Law Offices of Michael Geller and Michael S. Geller for Plaintiff and Respondent.2 Defendant and a ppellant Car City, Inc. (Car City) appeals from the judgment in a lawsuit brought by plaintiff and respondent Michael Quillen, alleging Car City committed fraud,
violated the Consumer Legal Remedies Act (Civ. Code, § 1750

et seq.) (the CLRA) and violated the Unfair Competition Law ( Bus. & Prof. Cod e, § 17200 ) (the UCL) when it sold Quillen a
used vehicle. The trial court ruled in Car City’s favor on the fraud claim, but in Quillen’s favor o n the CLRA and UCL claims, and ordered Car City to pay Quillen attorney fees and costs according to proof.
We agree with Car City that substantia l evidence does not support the judgment on the CLRA claim

, because the record contains no evidence supporting that the Car City employee

s tatements on which Quillen based that claim were actually false or misleading. Because the UCL claim is derivative of the CLRA claim, the UCL claim is likewise unsupported by the record. 1 Accordingly, we reverse the judgment to the extent it adjudicates these two causes of action in Q uillen’s favor and orders Car City to pay Quillen fees and costs.

FACTS AND PROCEEDINGS BELOW

A. The Complaint Quillen sued Car City and others 2 in October 2017, alleging causes of action against Car City for fraud and violation s of the

1 Because our conclusion on this issue requires reversal,

we need not address Quillen’s arguments regarding the court’s purported reliance on excluded, inadmissible evidence.

2 The complaint also named American Contractors Indemnity Company and Chase Bank as defendants, neither of which is a party to this appeal.3

CLRA and UCL

. A ll three causes of action were based on the same alleged conduct in connection with Q uillen’s purchase
of a used vehicle (the vehicle) from Car City

. Specifica lly, the complaint alleged that, before Quillen purchased the vehicle,
Car City employees assure d Quillen it had not been in an
accident and was in excellent condition, but that two years later, Quillen learned the vehicle’s frame was severely damaged, which
made the vehicle unsafe to drive.

B. Trial Testimony and Exhibits The record on appeal does not include a reporter’s transcript

. W e therefore base our summary of the evidence presented at trial primarily on the detailed description of this
evidence contained in the trial court’s “ f inal s tatement of
d ecision. ” 3 (Capitalization omitted.)

1. Quillen t estimony and k ey d ocuments

a t t rial Quillen testified that he purchase d the vehicle in December 2015. He test drove the vehicle before purchasing it and did not detect any issues during the test drive . He further testified
that Alex Oganesyan w as the Car City employee with whom he discussed the vehicle before purchasing it, and that Oganesyan initially told Quillen the vehi cle had not been in an accident
and indicated “ ‘it was [in] great shape

. ’ ” Oganesyan then provide d Quillen with a CARFAX report that indicated : (1 ) “ No acciden t / damages reported to CARFAX ” ; (2) “ No total

3 It is not clear from the record whether all of the documents referenced in the statement of decision were admitted into evidence, something we address further in discussing Car City’s arguments on appeal.4

loss reported to CARFAX ” ; and ( 3 ) “ No structural damage reported to CARFAX.” According to Quillen ’s testimony, Oganesyan later told Quillen: “ ‘I must come clean s ince the vehicle was in a bad accident in the past and incurred frame damage.’ ” Oganesyan then provided Quillen with an AutoCheck report that notes “ ‘frame/unibody damage’ but also indicates no
accide n ts involving the vehicle. The frame damage was reported by an auto auction in September of 2013. According to the AutoCheck report[,] ‘a wholesale auto auction has reported that the vehicle has frame damage which can weaken the structure
of the vehicle.’ ” Quillen testified that he asked to get a third

- party inspection of the vehicle, in response to which Oganesyan
became upset and would not let the vehicle leave the lot. Quillen nevertheless purchased the vehicle

, in part because
the c ertificate of t itle did not indicate “salvage title

, ” as it would, had the vehicle been salvaged. An internal Car City document entitled “ v ehicle d isclosure
f orm” (capitalization omitted) includes a list of the following statements, each of which Quillen initialed: “a. The vehicle has prior accident damage that has been repaired ; [ ¶ ] b. The vehicle has frame damage reported ; [ ¶ ] c. I have seen the CarFax report; [ ¶ ] d. I have seen the Auto C heck report; [ ¶ ] e. I have seen the [National Motor Vehicle Title Information System] title report; [ ¶ ] f. I have test driven the vehicle; [ ¶ ] g. I have physically inspected the vehicle and I have no demands or expectations of the dealer; [ ¶ ] h. I have been informed that I have the right

to an independent inspection of the vehicle. [ ¶ ]

. . . [ ¶ ] k. I am purchasing the vehicle ‘as is’ no claim made by the dealer; and [ ¶ ] l . I am satisfi ed with the vehicle’s condition.” (Underscoring5

omitted.) Quillen also “initialed and signed this document confirming the representations made [therein].” Quillen testified that, in April 2017, when the vehicle
had approximately 14,000 more miles on it than it had at the
time he purchased it (approximately 83,000 miles as opposed

to 69,315 miles), Quillen took the vehicle to Big O Tires because
the vehicle was not driving straight. Quillen testified he was told that Big O Tires could not align the tires due to frame damage, causing Quil l en to have the vehicl e inspected at Central Valley
Colli sion Inc. , where he “ was advised that it would cost in excess of $10,000 to repair the frame damage.” Another estimate for repair from San Francisco Auto Body
and Frame Repair Quillen subsequently obtained indicates
“VEHICLE NOT SAFE TO DRIVE WITH THE EXTENT OF
THE DAMAGES FOUND UNDERNEATH.”

2. Oganesyan t estimony Oganesyan testified that the vehicle at issue “was obtained by Car City

. . . as a trade

- in for a vehicle that was purchased from them.” According to Oganesyan , Car City enlists Steve’s
Muffler Brakes and Shocks to inspect vehicles “to see if a vehicle is safe to be sold” and to place a value on a vehicle. He testified
that a such an inspection report (the Steve’s Muffler inspection report) “g [ ave ] Car City the green light to sell the vehicle.” Oganesyan “ testified that he did not know if the vehicle needed repairs. Instead, he relied on the safety inspection from Steve’s Muffler.” Oganesyan did not remember every detail of his conversation with Quillen, but testified that he was relying

on the Steve’s Muffler inspection report and Auto C heck report
in that conversation. Consistent with Quillen’s testimony,6

Oganesyan testified that he showed Quillen documents indicating the vehicle had frame damage

. The document s did not indicate that the frame damage had been repaired

. Inconsistent with Quillen’s testimony, however, Oganesyan testified that Car City permitted vehicles to be take n up to seven miles awa y from Car City for independent inspection, and that “it is impossible not

to give the ‘ok’ to take a vehicle off the [l] ot to be inspected. ” He testified that “about 50 [percent] of Car City’s customers asked for and received an indepen dent inspection report,” for which Car City pays.

3. Expert t estimony No expert testimony was presented at trial. Quillen initially designated an expert to testify regarding the “safety
and condition of the vehicle” and whether it had been “repa i red
in a reasonable and safe manner

. ” When Quillen sought to change experts on the eve of trial and without enlisting the proper procedures for doing so, the court did not permit the substitute witness to offer expert testimony.

C

. Statement of Decision

The court issued a detailed written statement of decision. With respect to the fraud claim, the court found that Oganesyan had made a misrepresentation in December 2015 “that the [vehicle] was safe to drive

. ” The court based its finding that
the vehicle was not, in fact, safe to drive in December 2015 on (1) statements by employees at Big O Tires in 2017, as relayed

to the court through Quillen’s testimony, and (2) the estimate of repair documents obtained at some point in April 2017 or later that reflect ed the vehicle was not safe to drive.7 The court further found , however, that Quillen had “offered
no evidence that

. . . Oganesyan knew that his statement w a s false, or that he made the statement with the intent to defraud .” To the contrary, the court fou nd “Oganesyan was credible when
he testified that he did not know that the car was not safe

. ” The court further found that the Steve’s Muffler inspection report

was a “reasonable bas[i s] for

. . . Oganesyan to rely u pon when
he made the false statement that the vehicle was safe to drive[,]”
and that “it was reasonable that

. . . Oganesyan did not know that the [vehicle] was not safe to drive because it was not an obvious and readily discovered defect.” The court found that Quillen “was not cred ible in
his account of the business transaction with . . . Oganesyan”
and specifically did not find credible Quillen’s testimony
that Oganesyan had refused to permit Quillen to obtain an independent inspection. As to the CLRA claim, the court ruled in Quil len’s favor. As it had in the context of the fraud claim, the court found Oganesyan had misrepresented tha t the vehicle was safe to drive,
which constituted a “deceptive act[ ] or practice[ ] in the sale of consumer goods” as required for a CLRA violation

. The court acknowledged that Oganesyan had disclosed to Quillen that the vehicle had frame damage, but concluded th at “this true statement was made in circumstances that minimized
the concern about

. . . the vehicle’s safety to drive,” noting that Oganesy an had “offered misleading information about the vehicle with the CARFAX report showing no accident or frame damage”8

and initially telling Quillen “the vehicle was not in an accident and was in excellent condition.” 4 Finally, as to the UCL cause of action , the court concluded that the CLRA violation Quillen had established constituted an

“ unlawful . . . business practice [ ] ” supporting the UCL claim . On this basis, it ruled in Quillen’s favor on the UCL claim as well. Accordingly, the court entered judgment in favor of Quillen and against Car Ci t y in the amount of $48,763. 74, and awarded attorney fees to be established upon noticed moti on , and costs pursuant to a proper memorandum of costs. 5 Car City timely appealed the judgment.

DISCUSSION Car City first argues that, in reaching its decision in Quillen’s favor on the CLRA and UCL claims, the court relied

on two pieces of evidence that had been excluded as inadmissible hearsay : Quillen’s testimony regarding what Big O Tire employees told him in April 2017, and an estimat e for repair reflecting the damage to the vehicle around that same time

. Quillen counters th at Car City cannot make this argument,
because th e record does not establish the trial court actually
excluded this evidence. We nee d not decide whether Car City

can establish that the trial court excluded the challenged

ev i denc e and/or that the court erred in relying on it

, however.

4 As noted in the factual summary, Quillen testified that Oganesyan ultimately did disclose the car had been in

an accident before Quillen purchased the vehicle.

5 The court also ruled in Quillen’s favor on the cause of action against Chase Bank Finance, and awarded no relief against American Contractors Indemnity Company.9

E ven assuming the court properly relied on it

, the record still
does not contain substantial evidence to support all elements
of the CLRA and UCL claims , as we explain further below

.
A. CLRA Claim “The CLRA proscribes particular ‘unfair methods
of competition and unfair or deceptive acts or practices’
in transactions for the sale or lease of goods or services to

consumers. (Civ. Code, § 1770, subd. (a); see Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 833.)” ( Collins v. eMachines, Inc . (2011) 202 Cal.App.4th 249, 255 ( Collins ) .) Deception is a necessary component of
the conduct proscribed by the CL RA. ( See Durell v. Sharp
Healthcare (2010) 183 Cal.App.4th 1350, 1367 [“ ‘plaintiffs in

a CLRA action [must] show not only that a defendant’s conduct

w as deceptive’ ”]; see Civ. Cod e, § 1760 [CLRA’s “underlying
purposes . . . are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection ”]. ) A lthough there is no statutory or case law definition of a “ deceptive practice ” for these purposes, the s tatute lists numerous examples, including “ [ r ] epresenting that goods

. . . have

. . . characteristics

. . . [ which ] they do not have .” (Civ. Code, § 1770, subd. (a)(5) .) Courts have also deemed “the concealment or suppression of material facts ” to be deceptive, based on principles of fraud. ( See Collins, supra , at p. 255.) It follows that, under the CLRA, even if a representation is true, it

may still be deceptive because “ ‘[a] perfectly true state ment couched in such a manner that it is likely to mislead or deceive
the consumer, such as by failure to disclose other relevant information, is actionable.’ [Citation.]” ( Consumer Advocates v.10

Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1362; see also Jones v. Credit Auto Center, Inc. (2015) 237 Cal.App.4th Supp. 1, 11.) The deceptive practice on which Quillen based his CLRA
claim were Oganesyan’s statements that the vehicle was safe

to drive and in good condition

, which the court found were false,
and Oganesyan ’s informing Quillen about the frame damage in

a manner the court found was misleading because it “minimized” the effect of the damage on the car’s safety

. But in order for
these statements to be false and misleading, it must be true that, in December 2015 when Oga n e s yan made them , the vehicle

was not safe to drive as O ganesyan claimed and/or that the frame damage was more extensive than Oganesyan led Quill en
to believe. But n o evidence in the rec ord

— not even the evidence Car City argues was excluded

— support s either finding

. Indeed,

t he only evidence in the record regarding the vehicle’s condition
around December 2015 are the CARFAX report, AutoC heck report, and Steve’s Muffler inspection report, all of which indicate
the vehicle was safe to drive. The estimates of repairs in the
record and the hearsay testimony regarding what Big O T ires employees told Quillen speak to the condition of the vehicle in April 2017 or later . This is not substantial evidence establishing the condition of the vehicle two years and 14,000 miles earlier.
Without substantial evid e nce that the vehicle was in any way
unsafe to drive at the time Oganesyan made the challenged

statements
, the record does not support that Oganesyan’s statements to the contrary were false or misleading

. ( See
Civ. Code, § 1770, subd. (a)(5) [deceptive business practice to

“ [ r ] epresent [ ] that goods

. . . have

. . . characteristics

. . . [ which ] they do not have

, ” itali c s added] .) Nor can Oganesyan be found11

to have concealed or suppressed a fa ct if there is no evidence
in the record supporting that fact. (See Collins, supra , 202 Cal.App.4th at p. 255 [conduct proscribed by CLRA includes concealment of material fact “because fraud or deceit encompasses the suppression of a fact by one who is bound

to disclose it, or the suppression of a fact that is contrary to

a representation that was made

, ” italics added]; Gutierrez v. Carmax Auto Superstores California (2018) 19 C al.App.5th 1234,
1258 [“an omission is actionable under the CLRA if the omitted fact is (1) ‘ contrary to a [ material ] representation actually made by the defendan t ’ or (2) is ‘ a fact the def endant was obliged to
disclose

, ’ ” i talics added ] .)
Substantial evidence thus does not support a deceptive practice prohibited by the CLRA , and does not support the court’s ruling in Quillen’s favor on the CLRA claim

. 6

B

. UCL Claim A UCL claim requires an “unlawful, unfair or fraudulent business act or practice.” (B us . & Prof. Code, § 17200.) T he

court ruled in Quillen’s favor on the UCL claim on the basis that Quillen had established Car City violated the CLRA, and thus had engaged in an “ ‘ unlawful ’ . . . business practice” that harmed Quillen. (S ee Cel

- Tech Comm unications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 ; see ibid

. [“ [b] y proscribing ‘ an y unlawful ’ business practice, ‘ section 17200

6 Because we conclude substantial evidence does not support the judgment as to the CLRA claim on this basis, we need not address the parties’ arguments about whether the C LRA contains a scienter requirement necessitating proof the defendant knew a statement was false in order to establish a deceptive business practice based on a misrepresentation.12

[the UCL] “borrows” violations of other laws and tr eats them

as unlawful practices’ that the un fair competition law makes independently actionable ”].) Because substantial evidence
does not support the CLRA claim, i t likewise does not support

an “unlawful . . . business act or practice” under the UCL. ( Bus

. & Prof. Code, § 17200.) Nor can we uphold the judgment

on the UCL claim on the basis that Oganesyan’s statements
reflect a fraudulent business practice, as this would be
inconsistent with the court’s unchallenged finding that Car City did not make a fraudulent statement. Finally, substantial evidence does not support that Oganesyan’s statements were
“unfair” for the same reasons substantial evidence does not support that these statements were deceptive: T he record does not reflect that there was anything about the state of the vehicle in December 2015 that Oganesyan misrepresented or failed to disclose to Quillen. Accordingly, the judgment must be reversed to the extent
it adjudicates the CLR A and UCL causes of action in Quillen’s
favor.

C. Attorney Fees and Costs Following our partial reversal, Quillen is no longer the prevailing party as against C ar City on any cause of action, and
the award of attorney fees and costs against Car City must be
reversed as well. ( See Merced County Taxpayers ’ Assn. v.
Cardella (1990) 218 Cal.App.3d 396, 402 [“[a]n order awarding
costs falls with a reversal of the judgment on which it is based”].)13 DISPOSITION The judgment is reversed as to the CLRA and UCL causes of acti on against Car City , and to the extent it entitles Quillen

to collect attorney fees and cost s from Car City. In all other respects , we affirm. Appellant Car City is awarded its costs on appeal. NOT TO BE PUBLISHED

.

R OTHSCHILD, P. J. We concur:

CHANEY , J.

WEINGART , J.