Source: https://caselaw.findlaw.com/ca-court-of-appeal/1711826.html
Timestamp: 2019-04-25 04:59:39+00:00

Document:
Robert BENSON, Plaintiff and Appellant, v. SOUTHERN CALIFORNIA AUTO SALES, INC., et al., Defendants and Respondents.
Rosner, Barry & Babbitt, Christopher P. Barry and Lacee B. Smith for Plaintiff and Appellant. Madison Harbor, and Jenos Firouznam-Heidari for Defendants and Respondents.
Robert Benson appeals from an order denying his motion for attorney fees and costs from respondent Southern California Auto Sales, Inc. (SCAS), after judgment was entered in his favor on a complaint based on the Consumer Legal Remedies Act (CLRA). Under the CLRA, a plaintiff cannot maintain a suit for damages if the defendant made an appropriate and timely correction offer. The court found that SCAS had offered Benson an appropriate correction upon receiving the statutorily required notice of problems with its used car. Benson contends the trial court erred in deciding SCAS had offered him an appropriate correction under the CLRA, and further that he was entitled to attorney fees as the prevailing party.
We affirm the trial court's order. Determining whether a correction offer was appropriate is a matter California law wisely leaves to the trial court's discretion. We do not find the trial court abused its discretion in this case. Whether a plaintiff can recover attorney fees and costs incurred in an action for damages after being offered an appropriate correction is a matter of statutory interpretation, and we conclude CLRA fees and costs are not available under these circumstances.
Benson's counsel sent SCAS two letters, both dated December 10, 2012. One letter, entitled “Notice of Violation of California Law, Including but not Limited to the Consumer Legal Remedies Act,” was written “to comply with California Civil Code [section] 1782(a).” 2 Benson demanded rescission of the purchase contract, return of his car payments, a $5,000 penalty, and incidental damages in an unspecified amount. He offered to return the car to SCAS. The other letter, entitled “Companion Letter to CLRA Letter Notice of Rejection, Revocation and Rescission, Offer of Settlement of Entire Matter,” proposed a settlement on the following terms: SCAS pay the “damages” portion of the other letter (including investigative fees and attorney fees), pay all court costs, pay $38,500, and pay $2,850 to finalize the settlement and return the car. Benson for his part would return the vehicle and dismiss the entire case as to all parties.
The CLRA, section 1782, subdivision (b), gives a merchant 30 days to respond to a demand for correction, but Benson did not wait for that response. He filed his complaint on January 2, 2013, less than 30 days after the date of the two demand letters, alleging 17 causes of action.3 He confined his CLRA cause of action to requests for injunctive relief.
On January 9, 2013, SCAS responded to the notice letter. While denying any wrongdoing, SCAS offered to settle the matter as follows: rescission of the contract, return of the vehicle to SCAS, refund of all car payments, satisfaction of the debt to the finance company, $2,500 for incidental and attorney fees, waiver of any claim for mileage, execution of a mutual settlement and release agreement. As SCAS noted, Benson had driven the car for well over a year before he complained, and he would be basically “walk[ing] away” from it, having had free use of it for that time.
Benson replied to SCAS's offer by demanding a total of almost $30,000 to settle the case, in addition to rescinding the contract. Included in the total amount was a demand for $8,500 to settle “all remaining causes of action” in addition to the CLRA claim. The record contains no written response to this demand.
Benson filed his first amended complaint pursuant to stipulation on November 22, 2013, listing 10 causes of action. In addition to a CLRA violation, the complaint alleged violation of the Automobile Sales Finance Act (ASFA), unfair competition and false advertising claims, Vehicle Code violations, negligent and intentional misrepresentation, and violation of the Song–Beverly Consumer Warranty Act. This complaint sought damages for CLRA violations.
Trial was set for May 12, 2014, then continued to June 16. Benson, the finance company, SCAS, and SCAS's owner, who had been sued as an individual, settled in early May. SCAS stipulated to a judgment in the amount of $34,500 against it “on the complaint.” The balance of the loan was waived, and Benson agreed to turn over the car. The settlement included Benson's release of all three defendants.
The settlement/judgment allowed Benson to make a motion for attorney fees and costs—which he filed on May 21 against these three defendants—and allowed the settling defendants to contest the fee motion “on any grounds available to them.” In particular, the settlement agreement allowed the defendants to contend that they were the prevailing parties “in light of the pre-litigation offer per the CLRA.” Citing the CLRA and the ASFA as their basis, Benson's counsel asked for $171,915 in fees and $10,358 in costs, for a total of $182,273.
The trial court denied the motion, explaining that Benson could not maintain a cause of action for damages under the CLRA because SCAS offered him “an appropriate correction, repair, replacement or other remedy” (§ 1782, subd. (b)) (collectively “appropriate correction”) back in January 2013. He was therefore not entitled to his fees or his costs. Benson protested that what SCAS had offered was not appropriate because it included a settlement and release of all his claims, not just his CLRA claim. The court responded that all of Benson's claims were “inextricably intertwined with the CLRA claim and based on the same conduct.” The order denying the motion was entered on June 18, 2014.
The issue on appeal is twofold. First, was SCAS's January 9, 2013 offer, an appropriate correction in response to Benson's notice, and, second, if it was, does the fact that Benson could not maintain an action for CLRA damages preclude him from seeking court costs and attorney fees under the statute? We have found no published California opinions dealing with either aspect.
I. Was SCAS's Correction Offer “Appropriate”?
We believe the determination of appropriateness of a correction offer under the CLRA should be left to the trial court's discretion. Appropriateness involves the kind of global assessment—based on “the entirety of a case, a case [the trial court] inevitably will be more familiar with than the appellate courts that may subsequently encounter the case in the context of a few briefs, a few minutes of oral argument, and a cold and often limited record” (Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 713)—that calls for judicial discretion. (Cf. Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 430–431 [trial court's evaluation of whether plaintiff made good faith effort to resolve discovery dispute reviewed for abuse of discretion]; PacifiCare of California v. Bright Medical Associates, Inc. (2011) 198 Cal.App.4th 1451, 1464 [reasonable range of settlement within court's discretion]; see Corbett v. Hayward Dodge, Inc. (2004) 119 Cal.App.4th 915, 927 (Corbett ) [if court applied proper legal test for award of attorney fees, review is for abuse of discretion].) In a case such as this, where the trial court has had the parties before it on multiple occasions during an 18–month period, it is far more conversant with nuances, subtleties, and the small but telling details that go into such a decision than an appellate court could ever be. Accordingly the trial court should use its discretion, basing it on substantial evidence, to determine whether a correction was appropriate, subject, of course, to review for abuse of that discretion.
Substantial evidence supports the court's exercise of discretion in this case. The initial complaint was filed before the 30–day notice period had expired. Although the original complaint alleged several grounds for injunctive relief and the first amended complaint alleged several additional grounds, the judgment pursuant to settlement makes no mention whatsoever of any alteration in SCAS's practices. It is concerned solely with who will pay how much to whom and with the motion for attorney fees. The judgment also provided for a waiver and release of all claims between Benson and the defendants.
In addition to Benson's CLRA claim, the first amended complaint contained eight causes of action against SCAS, the only defendant against which judgment was entered. Among them were causes of action for violation of the Unfair Competition Law and the False Advertising Law, Business and Professions Code sections 17200 et seq. and 17500 et seq. Neither the UCL nor the FAL supports a claim for damages, only for restitution and injunctive relief. (Zhang v. Superior Court (2013) 57 Cal.4th 364, 371; Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 694 (Leatherman ); Bus. & Prof.Code §§ 17203, 17535.) Neither section authorizes the recovery of attorney fees.5 Benson alleged violations of Vehicle Code sections 11713 and 11713.1, subdivision (e).6 The basis of the first Vehicle Code cause of action was misleading statements, namely the car's price was $24,499; the car was a trade-in; and the car had clean title. The basis of the second was the failure to sell the car at its advertised price. A violation of either statute is a misdemeanor (see Veh.Code, § 40000.11, subd. (a)), and subjects the car dealer to discipline from the Department of Motor Vehicles. (Veh.Code, § 11705, subd. (a)(10).) Our Supreme Court has declined to consider whether a consumer has a private right of action under Vehicle Code section 11713.1, subdivision (e). (Donovan v. Rrl Corp. (2001) 26 Cal.4th 261, 291 fn. 12.) 7 Neither Vehicle Code section affords consumers an opportunity to claim attorney fees.
As for giving up non-CLRA claims as part of the deal, which he argues renders the correction offer inappropriate, Benson has not shown these claims added any value to the claim that prompted the CLRA notice and that evoked the correction offer. “Regardless of the nature or number of legal theories advanced by the plaintiff, he is not entitled to more than a single recovery for each distinct item of compensable damage supported by the evidence.” (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1158.) The CLRA prohibits deception and permits recovery of punitive damages, so the two fraud claims added nothing to Benson's potential recovery. The ASFA claim allowed Benson to get his money back, a CLRA remedy SCAS was offering. The Vehicle Code claims did not permit any extra recovery, and the UCL and FAL claims permitted restitution (Bus. & Prof.Code, §§ 17203, 17535), which, again, SCAS was offering. The Song–Beverly Consumer Warranty Act permits a buyer to recover damages, “includ[ing] the rights of replacement or reimbursement”—exactly what Benson would have recovered under the CLRA. (§ 1794.) As the trial court observed, all of these claims were “inextricably intertwined with the CLRA claim and based on the same conduct.” One might even go further and suspect they were included in the first amended complaint solely for their potential in terrorem effect.
Settlement deals routinely include mutual releases of all claims. SCAS would have been foolish indeed to correct the CLRA claim if eight other virtually identical claims were going forward notwithstanding the correction. Substantial evidence supported the trial court's exercise of discretion in finding that the other claims had little or no independent value.
Benson asserts that requiring him to give up these claims violates the CLRA prohibition against waiver of claims. There is no such prohibition. The CLRA prohibits waiving CLRA claims (§ 1751); it says nothing about waiving other kinds of claims.
Benson also argues, in essence, that the judgment proves his entitlement to maintain an action for damages as set forth in section 1782, subdivision (b). He got damages pursuant to the judgment, so he must have been entitled to get them. Hence the response to his notice letters must have been inappropriate. Because he got damages.
The written notice requirement is intended to forestall litigation, by requiring consumer and merchant to attempt to fix the problem before resorting to the courts. Precluding a merchant from obtaining an end to litigation that, in essence, consists of nine different versions of the same cause of action frustrates this intention. As Benson himself acknowledged, all his “causes of action arise from the same underlying ‘common core of facts.’ ” It would be sensible, then, to settle all causes of action as a unit. At least, it is not an abuse of discretion for the trial court to regard the correction offer in that light. The court did not abuse its discretion in deciding that the correction SCAS offered was appropriate.
II. Are Attorney Fees Nevertheless Available?
We conclude that if a suit for damages cannot be maintained under the CLRA because a merchant offered an appropriate correction in response to a consumer's notice, then a plaintiff cannot collect attorney fees for such a suit.11 We interpret section 1782 to create a requirement analogous to exhaustion of administrative remedies (see, e.g., Gov.Code, §§ 12960, subd. (b), 12965, subd. (b)), or to a demand on the board of directors before filing a shareholder's derivative suit (see Corp.Code, § 800, subd. (b)), or notification of a local public entity of a plaintiff's intent to sue for money or damages. (See Gov.Code, § 905; see also Vasquez v. State of California (2008) 45 Cal.4th 243, 252 [similar statutes].) In all of these instances, a lawsuit cannot go forward until the potential plaintiff has received a response to a notice or the time for responding has expired. If the deficiency is caught early enough, it can result in a dismissal on demurrer. (See Myers v. Mobil Oil Corp. (1985) 172 Cal.App.3d 1059, 1063 [administrative remedies]; Charter Township of Clinton Police & Fire Retirement System v. Martin (2013) 219 Cal.App.4th 924, 928–929 [demand or demand futility]; Lewis v. City and County of San Francisco (1971) 21 Cal.App.3d 339, 340 [notification of tort claim against public entity]; see also Kagan v. Gibralter Sav. & Loan Assn. (1984) 35 Cal.3d 582, 590, overruled on other grounds in Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634 [CLRA action for damages will not lie if prospective defendant corrects wrongs].) If the plaintiff sues without fulfilling this requirement, the lawsuits are fatally defective from the beginning. It follows, then, that the plaintiff should not be able to make the defendants pay his or her attorneys for filing and maintaining such a suit. Attorney fees are not recoverable in actions for damages under the CLRA unless the response to the notice letter is not an appropriate one or no response is forthcoming within the statutory time period.
The order denying appellant's motion for attorney fees and costs is affirmed. Respondent is to recover its costs on appeal.
1. Benson also alleged the advertisement for the car falsely stated it was a trade-in. The first amended complaint, however, alleged that before purchasing the car, he asked the salesman whether the car was a prior rental vehicle, and the salesman said it was.
2. All further statutory references are to the Civil Code unless otherwise indicated.
3. The complaint named other defendants, including the finance company (Capital One Auto Finance, Inc.) and two individuals.
6. Benson also alleged a violation of Vehicle Code section 11711, but only against SCAS's bonding company.
7. A consumer can “borrow” these Vehicle Code sections to state a cause of action under Business and Professions Code section 17204 as instances of unlawful business acts or practices. (See Cel–Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180; Bus. & Prof.Code, § 17200.) As noted above, however, the private plaintiff is restricted to restitution and injunctive relief.
9. This inference is strengthened by the invoices Benson's counsel submitted along with the fee motion. According to the relevant invoice, the two demand letters were drafted on the same day a “complaint for damages” was prepared.
10. The settlement agreement and judgment explicitly provided that the settling defendants could contest the attorney fee motion on any grounds, including the effect of the correction offer, so Benson's argument that the trial court should not have inquired into the appropriateness of the offer founders on the language of the judgment itself. A stipulated judgment is a contract, construed under ordinary contract rules. (Jamieson v. City Council of the City of Carpenteria (2012) 204 Cal.App.4th 755, 761.) This one allowed the defendants to assert the correction offer as a defense to the attorney fee motion, and they did.
WE CONCUR: O'LEARY, P.J. MOORE, J.

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