Source: http://thecomplexlitigator.com/?offset=1367007010022&category=Class+Actions%3A+Consumer+Issues
Timestamp: 2019-04-23 23:51:24+00:00

Document:
Since Bank of America etc. Assn. v. Pendergrass, 4 Cal. 2d 258, 263 (1935) (Pendergrass), California Courts have, to various degrees, excluded evidence of fraud when the fraud is directly contrary to the terms of a written agreement. In Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association (January 14, 2013), the California Supreme Court revisited the Pendergrass rule, concluding that it was time to overrule Pendergrass.
The plaintiffs in Riverisland restructured debt, secured by real property. They defaulted and the Association recorded a notice of default. After the plaintiffs repaid their loan, the Association dismissed the foreclosure proceedings. The plaintiffs then sued for fraud, contending that they were promised two years of forbearance by the Association’s Vice President in exchange for additional collateral. The plaintiffs did not read the subsequently prepared agreement and simply signed it. The trial court granted summary judgment, excluding evidence of fraud at odds with the writing pursuant to the Pendergrass rule. On appeal, the Court of Appeal reversed, narrowly construing Pendergrass. The Supreme Court granted review.
The Supreme Court observed that the Pendergrass rule has been criticized but followed by California courts, although Courts attempting to avoid its result have narrowly construed it. The Supreme Court noted that the Court of Appeal in this case adopted such a narrow construction, deciding that evidence of an alleged oral misrepresentation of the written terms themselves is not barred by the Pendergrass rule.
There are good reasons for doing so. The Pendergrass limitation finds no support in the language of the statute codifying the parol evidence rule and the exception for evidence of fraud. It is difficult to apply. It conflicts with the doctrine of the Restatements, most treatises, and the majority of our sister-state jurisdictions. Furthermore, while intended to prevent fraud, the rule established in Pendergrass may actually provide a shield for fraudulent conduct. Finally, Pendergrass departed from established California law at the time it was decided, and neither acknowledged nor justified the abrogation. We now conclude that Pendergrass was ill-considered, and should be overruled.
While this case arises in the context of an individual suit for fraud, it provides substantial relief for consumer class action cases alleging claims of fraud stemming from misrepresentations about the subject of a later written agreement.
Lebrilla v. Farmers Group, Inc., 119 Cal. App. 4th 1070 (2004) reversed a trial court's denial of certification in a suit against an automobile insurer. The suit alleged that sheet metal parts known as "crash parts" were used to effectuate accident repairs, but the "crash parts" were not manufactured by original equipment manufacturers. The use of "crash parts" allegedly resulted in substandard repairs that did not restore damaged vehicles to pre-loss condition. In Ortega v. Topa Insurance Company (May 24, 2012), the Court of Appeal (Second Appellate District, Division Three) examined a similar, but not identical situation, in which non-OEM parts were used to complete repairs to vehicles. The trial court concluded that common issues could not predominate when evaluation of a breach of contract claim would require a comparison of each installed non-OEM part to the OEM equivalent to determine whether the repair part was inferior to the OEM part.
We do not read Lebrilla v. Farmers Group, Inc., supra, 119 Cal.App.4th 1070, to suggest, for example, that all non-OEM replacement parts are uniformly inferior. That case addressed crash parts. (Id. at p. 1073 & fn. 1.) In this case, to recover damages each member of the putative Steered Claimant Class (Class B) must identify the non-OEM part, which includes radiators and heat and cooling systems, among others, and prove the particular manufacturer's part is inferior. Thus, unlike Lebrilla, the court would have to determine whether the installed repair part is inferior. As alleged, common issues do not predominate.
Slip op., at 18. Pretty straightforward analysis. When the issue was the adequacy of "crash parts," the question of their adequacy could be resolved on a classwide basis. Here, the the issue of adequacy could vary wildly, depending upon what part was replaced and what manufacturer supplied the replacement part. This particular case provides an example of the relatively narrow category of class complaints that reveal predominance issues on the face of the complaint itself.
Today the United States Supreme Court issued its decision in CompuCredit Corp. v. Greenwood (Jan. 10, 2012). At issue was whether a sentence in that act, at 15 U. S. C. §1679c(a), which says, "You have a right to sue a credit repair organization that violates the [Act]," preserves the right to sue in court. Because the Credit Repair Organizations Act is silent as to whether claims may be heard in an arbitration forum, the Court held, 8-1, that the arbitration agreement in question should be enforced according to its terms. Justice Ginsburg dissented strongly, and the short concurring opinion by Justices Sotomayor and Kagan stated that the case was a much closer call than the majority opinion suggests, noting good points raised in the dissenting opinion of Ginsburg. In particular there seems to be a strong disagreement about whether Congressional intent must be explicitly stated or may be inferred from a consistent set of statements suggesting a specific intent. Not much more to say about this, other than to note that its essentially a tautology that the majority gets to decide whether they see a clear Congressional intent or not. If they say there isn't an intent, then they are right by default.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 §1679