This action was commenced in the Superior Court of Alameda County in 1968 by six individual plaintiffs on behalf of themselves and other similarly situated persons against defendant Merchants Collection Association of Oakland, Inc. (Merchants),
To remedy the consequences of the foregoing alleged misfiling practice, plaintiffs sought a variety of relief, including (1) an injunction to restrain the agency from continuing to utilize the challenged practice in the future and (2) an order setting aside, as void, all judgments obtained by defendant in the two years prior to the suit, pursuant to complaints which did not comply with the requirements of section 396a of the Code of Civil Procedure or with the requirements of section 1812.10 of the Civil Code.
For the reasons discussed below, we have concluded that under the allegations of the amended complaint the judgment for defendant with respect to the claim for injunctive relief must be reversed. In alleging that the collection agency has wilfully commenced actions in improper counties, with knowledge that such counties are improper, and for the improper ulterior purpose of impairing its adversaries' ability to defend such suits, plaintiffs have sufficiently alleged facts which, if true, demonstrate that the agency has in the past been continually committing a gross "abuse of process" and that the agency threatens to continue this unlawful, tortious conduct in the future. If such allegations can be substantiated at trial, we conclude that plaintiffs are entitled to an injunction to restrain the alleged conduct because it constitutes both a continuing mass tort against which other legal remedies are inadequate and an "unlawful ... business practice" which may be enjoined under Civil Code section 3369.
With respect to plaintiffs' attempted wholesale attack on past judgments obtained on complaints inadequate under section 396a of the Code of
Finally, we conclude that inasmuch as plaintiffs concede that the judgments which they attack as violative of Civil Code section 1812.10 concern actions on "installment accounts," rather than on "installment contracts," as defined by the applicable code sections, plaintiffs' attack on pre-1968 judgments cannot succeed. In view of the specificity of the statutory definition of "installment contract" contained in the Unruh Retail Installment Sales Act, and the fact that at the time of the commencement of this litigation section 1812.10 covered only suits on such "contracts," we cannot find that the actions questioned by the instant suit were subject to the provisions of section 1812.10 when brought. Plaintiffs accordingly are not entitled to any relief under the Unruh Retail Installment Sales Act.
1. The facts
In reviewing the sufficiency of plaintiffs' complaint against defendant's demurrer, we, of course, must treat the demurrer as admitting all properly pleaded factual allegations of that complaint. (See, e.g., Serrano v. Priest (1971) 5 Cal.3d 584, 591 [96 Cal.Rptr. 601, 487 P.2d 1241, 41 A.L.R.3d 1187].) As described in the complaint, defendant Merchants is one of the largest collection agencies in Alameda County, filing over 2,000 actions in the Oakland-Piedmont municipal court each year — almost 14 percent of the entire number of suits filed in that court annually. Merchants does collection work primarily for large retail establishments, such as J.C. Penney Co. and H.C. Capwell Co., which maintain retail stores throughout the entire State of California; these establishments assign their customers' allegedly overdue obligations — unpaid balances remaining on their patrons' charge accounts — to Merchants for collection. The named plaintiffs in this action are all defendants in actions filed by Merchants in the Oakland-Piedmont Municipal Court in Alameda County; none of the individual plaintiffs resides in Alameda County and all contend that, as to them, the actions brought by defendant were improperly filed.
Although plaintiffs' objection is directed at defendant's single, alleged pattern of consciously filing inadequate complaints in improper venues, plaintiffs' first amended complaint is divided into three distinct causes of action.
The first cause of action attacks defendant's use of its improper filing practice in all contract actions in which the amount in controversy does not exceed $500. Code of Civil Procedure section 395, the general venue provision, establishes that in contract actions the proper court for trial is "either  the county where [the] obligation is to be performed,"  the county "in which the contract in fact was entered into" or  "the county in which the defendant ... resides at the commencement of the action" and provides further that "the county in which such obligation is incurred shall be deemed to be the county where it is to be performed unless there is a special contract in writing to the contrary." At all times relevant to this action section 396a of the Code of Civil Procedure provided that: "In all actions and proceedings ... within the subject matter jurisdiction of
Plaintiffs allege that the collection agency continually failed to bring such actions in a proper county and that the complaints it filed in these actions regularly failed to meet the requirements set out above. Plaintiffs incorporated into their first amended complaint copies of the verified municipal court complaints — "form complaints" — which the defendant agency had filed in the Oakland-Piedmont Judicial District against several of the named plaintiffs. In each instance, the collection agency's complaint alleged that the individual sued had become indebted to the agency's assignor in a specified amount — under $500 — for merchandise sold on an open book account by a designated large retailer, and that the agency was "informed and believe[d]" that the account was "payable in the City of Oakland, County of Alameda." The form complaint, drafted by defendant, failed to declare, however, either where the individual being sued resided, where the obligation sued upon was entered into or whether there was a special contract in writing providing for the performance, i.e., payment, of the obligation either in the Oakland-Piedmont Judicial District or in Alameda County generally.
In this initial count, plaintiffs contend that such form complaints do not satisfy the requirements of section 396a, and, relying on section 396a's mandate that "if such complaint or affidavit be not so filed, no further proceedings shall be had in the action except to dismiss the same ...," assert that all judgments obtained pursuant to these inadequate form complaints are void and should be set aside.
In addition to alleging the stratagem of this "pattern of practice" of filing inadequate complaints in an improper county, plaintiffs' first cause of action specifically alleges that defendant agency filed such suits "with knowledge" that the county in which such suits were brought was not a proper county for trial under section 395, and that the agency filed the factually deficient form complaints "to avoid stating the relevant facts which would indicate that their actions were not commenced in the proper court for trial." The
The allegations of plaintiffs' second cause of action substantially parallel those of the first cause, but this count is directed at those actions filed by the collection agency on the basis of retail sales agreements (as distinguished from other contract actions), and is not limited to actions claiming damages under $500. Plaintiffs assert that suits instituted by defendant on the basis of installment open book accounts in 1967 and 1968, the years covered by this action, were governed by the provisions of Civil Code section 1812.10 and that under that section such actions were also brought in an improper venue. Section 1812.10, a provision of the Unruh Retail Installment Sales Act, specifies the four locations in which an action on a "contract" governed by the Unruh Act may be brought: (1) "the county in which the contract was in fact signed by the buyer," (2) "the county in which the buyer resided at the time the contract was entered into," (3) "the county in which the buyer resides at the commencement of the action" or, (4) "the county in which goods purchased pursuant to such contract have been so affixed to real property as to become a part of such real property." Plaintiffs again claim that with respect to these "installment sales" actions defendant agency knowingly commenced its suits in an improper venue in order to make the defense of these actions more difficult and thereby to obtain an increased number of default judgments. Plaintiffs also claim that judgments obtained in actions falling within the provisions of section 1812.10, but brought in an improper county, are void.
The third cause of action, incorporating the allegations of the first and second causes, alleges that the improper "pattern and practice" set out in those counts constitutes an "unlawful and fraudulent business practice" within the meaning of Civil Code section 3369 and seeks an injunction, as provided by that section, to restrain the collection agency from continuing the practice in the future.
In sum, on the basis of the allegations of defendant's intentional misfiling practice, plaintiffs sought both injunctive relief and a nullification of all past judgments obtained over a two-year period as a result of defendant's practice; the trial court sustained a general demurrer to the first amended complaint. We turn first to the sufficiency of the complaint in relation to the prayer for injunctive relief.
2. Under the allegations of the complaint, plaintiffs are entitled to an injunction restraining the collection agency from continuing its practice of intentionally filing actions in improper venues.
Plaintiffs' first amended complaint alleges that defendant has knowingly and wilfully instituted actions against consumers in the wrong county, under inadequate complaints, for the ulterior purpose of impairing these individuals' defenses of the actions and with the intent of securing default judgments by virtue of the inconvenience of the improper forum. The complaint also alleges that defendant agency threatens to continue this practice in the future, undeterred by the fact that such conduct contravenes specific statutory provisions.
If plaintiffs can prove these allegations at trial, they will have established that defendant is engaged in a mass "abuse of process." In light of the apparent inadequacy of other legal remedies, we conclude that plaintiffs would be entitled to an injunction restraining this threatened multiple tort. Moreover, we also find that this behavior, when utilized as a general practice by a collection agency whose primary business is litigation, additionally constitutes an "unlawful ... business practice," and thus that the conduct may alternatively be enjoined under Civil Code section 3369.
(2) Under the alleged facts, defendant's conduct amounts to a tortious abuse of process, which may be enjoined since alternative legal remedies are inadequate to protect the interests of the plaintiff class.
In Templeton Feed & Grain v. Ralston Purina Co. (1968) 69 Cal.2d 461, 466 [72 Cal.Rptr. 344, 446 P.2d 152], we recently reiterated the two fundamental elements that constitute the basis of the tort of abuse of process: "`first an ulterior purpose; and second, a wilful act in the use of
The recent case of Czap v. Credit Bureau of Santa Clara Valley (1970) 7 Cal.App.3d 1 [86 Cal.Rptr. 417], provides an apt analogy. In Czap the plaintiff instituted an action for abuse of process alleging that the defendant collection agency, with knowledge that plaintiff's wages were exempt from garnishment, was threatening to bring repeated levies on the debtor's salary, for the purpose of forcing the debtor to pay the judgment out of her exempt wages; the agency allegedly recognized that the repeated levies on the debtor's salary, though improper, would still, as a practical matter, jeopardize her employment. The plaintiff in Czap, as the plaintiffs here, sought an injunction to restrain the collection agency from continuing the alleged "abuse of process." The trial court in Czap sustained the agency's demurrer to the complaint; the Court of Appeal, however, reversed, concluding that plaintiff's allegations did indeed present a case of an abuse of process.
The Czap court observed: "Here it is alleged that respondent, knowing
The Czap court, after finding sufficient allegations of an abuse of process, went on to hold that an injunction could properly issue to enjoin the collection agency from continuing the repeated tortious conduct, since plaintiff's complaint sufficiently established the inadequacy of other legal remedies to prevent irreparable injury. (7 Cal. App.3d at p. 7.) As discussed hereafter, we believe that in the instant case alternative legal remedies similarly fail to prevent the on-going injuries caused by defendant's alleged tortious conduct, and that injunctive relief must be afforded to avoid irreparable injury.
Defendant first suggests that since all of the challenged actions are, by hypothesis, brought in the wrong county, plaintiffs have an obvious adequate legal remedy to the agency's alleged misfiling practice since any person sued in an improper county may obtain a change of venue. Thus, defendant contends, the complaint fails to establish any need for an injunction. Although, as a theoretical matter, this right to a change in venue does exist, plaintiffs persuasively explain that it is the very serious practical limitations of this "right" which the agency's misfiling practice seeks to exploit.
As plaintiffs point out, as a practical matter the mere filing of an action in an inconvenient forum will inevitably deter many debtors from voicing any objection to the suit. Two factors coalesce to produce this result. First, and most importantly, since the amount claimed in the agency's actions is relatively small, the cost of travel to a distant county, or of hiring an attorney for that purpose, even simply to interpose a motion of a change of venue, renders such counteraction by the debtor financially infeasible. Second, the bulk of individuals sued by defendant agency allegedly command low incomes and few resources and cannot afford to engage counsel to advise them of their "venue" rights.
Defendant further contends, however, that the Legislature has already perceived the practical limitations on the plaintiff class' ability to interpose change of venue motions, and has met the problem in section 396a of the Code of Civil Procedure. This provision requires the trial court, in actions falling within the section's terms, to dismiss "on its own motion" complaints filed in the wrong venue, thereby obviating the necessity of a defendant's appearance in such actions. As described more fully later in this opinion, section 396a is indeed designed to protect defendants in actions on small claims from the inconvenience and harassment incident to suits brought in improper venues; the section attempts to afford such protection by placing a responsibility on trial courts to protect such defendants' interests.
Once again, however, according to the allegations of the present complaint, the theoretical protection extended by this provision fails in the face of the realities of the situation. Plaintiffs allege that defendant agency has specifically designed its "form complaints" to avoid stating facts which would demonstrate that its actions are brought in an improper venue. They urge that, although these complaints do not satisfy section 396a, and thus should have been dismissed under this section, defendant has in fact succeeded in obtaining large numbers of default judgments on the basis of such complaints. In this respect defendant agency again has allegedly devised a procedure to take advantage of the practical limitations of the situation, this time exploiting the harried trial court's inability to scrutinize fully each complaint that is brought before it.
Defendant, of course, attempts to shift the entire onus for plaintiff's plight
In sum, if the facts concerning defendant's pattern of misfiling complaints are true, an injunction, and the additional sanctions that can be employed to enforce such a remedy, may be the only practicable means of curtailing such practices.
In finding an injunctive remedy appropriate in this case, we note additionally that the judiciary itself has a strong interest in eliminating any systematic misuse of the judicial machinery; indeed, an effective remedy is particularly necessary under the present allegations for several reasons.
First, we recognize that the "pattern or practice" of knowingly filing actions in distant counties in order to gain an unconscionable advantage is not a unique or isolated practice, but instead has been continuously identified in both the legal literature
Having noted the widespread occurrence of the alleged misfiling abuse, we must emphasize that, at this stage of the proceedings, defendant collection agency's actual use of such a practice remains only an allegation. For the purpose of reviewing defendant's demurrer, however, we must of course treat the complaint's allegations as true; in this posture, we believe that plaintiffs have stated a cause of action for injunctive relief from an abuse of process.
(3) Defendant's alleged conduct additionally constitutes an "unlawful ... business practice" which may be enjoined under Civil Code section 3369.
We additionally conclude that inasmuch as the alleged repeated violation of statutory requirements has been adopted as a "pattern" or "practice" of conduct by a collection agency, for whom the filing of litigation is a primary part of its business activity, this "pattern" of misfiling complaints
Section 3369 provides in relevant part: "Any person performing or proposing to perform an act of unfair competition within this State may be enjoined in any court of competent jurisdiction. [Par.] As used in this section, unfair competition shall mean and include unlawful, unfair or fraudulent business practice .... [Par.] Actions for injunction under this section may be prosecuted by the Attorney General or any district attorney ... or by any person acting for the interests of itself, its members or the general public." (Italics added.)
Defendant agency contends initially that section 3369's prohibition of "unfair competition" is confined to practices involving competitive injury, i.e., resulting in an unfair injury to a competitor, and thus that the injury to a consumer resulting from its alleged misfiling practice does not fall within the province of the statute. Defendant further claims that even if the section is not limited to anti-competitive acts, it should not be expanded so broadly beyond the concepts of common law "unfair competition" or "deceptive advertising" as to include the misuse of judicial procedures. For the reasons discussed below, we reject both of these arguments.
Although in a common law context, competitive injury originally composed an essential element of the tort of "unfair competition," the Legislature, by adopting section 3369, broadened the scope of legal protection against wrongful business practices generally, and in so doing extended to the entire consuming public the protection once afforded only to business competitors. Thus, section 3369 indicates that "unfair competition" as used in the section cannot be equated with the common law definition of "unfair competition," but instead specifies that, for the purposes of its provisions, unfair competition "shall mean and include unlawful, unfair or fraudulent business practice...." (Italics added.)
In 1938 the United States Congress amended the Federal Trade Commission Act to give the commission authority to regulate "unfair or deceptive acts or practices" (italics added), in addition to its original powers over "unfair methods of competition"; as the United States Supreme Court has observed, the addition of this "unfair ... practices" language, represented "a significant amendment showing Congress' concern for consumers as well as for competitors." (Italics added.) (FTC v. Colgate Palmolive Co. (1965) 380 U.S. 374, 384 [13 L.Ed.2d 904, 913, 85 S.Ct. 1035]; see FTC v. R.F. Keppel & Bros., Inc. (1934) 291 U.S. 304, 310 [78 L.Ed. 814, 818, 54 S.Ct. 423]; FTC v. The Sperry & Hutchinson Co. (1972) 405 U.S. 233,
Given this strong statutory indication that section 3369 is not confined to anti-competitive business practices, we cannot be surprised that the courts, in interpreting the section, have long declared that the provision is at least as equally directed toward "the right of the public to protection from fraud and deceit[,]" as toward the preservation of fair business competition. (Italics added.) (American Philatelic Soc. v. Claibourne (1935) 3 Cal.2d 689, 698 [46 P.2d 135].) In People ex rel. Mosk v. National Research Co. of Cal. (1962) 201 Cal.App.2d 765, 771 [20 Cal.Rptr. 516], the court directly confronted the contention proffered by defendant in the instant case and held that "[t]he equitable relief authorized by Civil Code section 3369 is not circumscribed by any prerequisite showing that the conduct in question be limited to the field of business competition." (See
We conclude that in a society which enlists a variety of psychological and advertising stimulants to induce the consumption of goods, consumers, rather than competitors, need the greatest protection from sharp business practices. (Cf. Vasquez v. Superior Court (1971) 4 Cal.3d 800, 807-808 [94 Cal.Rptr. 796, 484 P.2d 964].) Given the terms of the section, the purpose of the enactment and the controlling precedent, we reject defendant's suggested limitation of section 3369 to "anti-competitive" business practices.
Defendant additionally contends, however, that even if section 3369 is not limited to "competitive injuries," the section's proscription of "unfair competition" should not be read so broadly so as to include the agency's alleged misfiling practice; that, instead, the provision be confined to more traditional "deceptive" or "fraudulent" conduct, conduct sharing at least some of the common features of misrepresentation that characterized the precedent of "unfair competition." We recognize that most of the cases arising under section 3369 to date have challenged "business practices" in which a business enterprise was presenting itself, or its "merchandise," to the public in a deceptive manner so as to defraud consumers (see, e.g., Academy of Motion Picture, etc. v. Benson (1940) 15 Cal.2d 685 [104 P.2d 650]; American Philatelic Soc. v. Claibourne (1935) 3 Cal.2d 689 [46 P.2d 135]) and also that these decisions frequently refer to the "essence" of section 3369 as the protection from any conduct likely to deceive the consumer. (See, e.g., West v. Lind (1960) 186 Cal.App.2d 563, 567 [9 Cal.Rptr. 288].)
The language of section 3369, however, does not limit its coverage to such "deceptive" practices, but instead explicitly extends to any "unlawful, unfair or deceptive business practice"; the Legislature, in our view, intended by this sweeping language to permit tribunals to enjoin on-going wrongful business conduct in whatever context such activity might occur.
In permitting the restraining of all "unfair" business practices, section 3369 undeniably establishes only a wide standard to guide courts of equity; as noted above, given the creative nature of the scheming mind, the Legislature evidently concluded that a less inclusive standard would not be adequate. In the instant case, however, we need not undertake the task of determining the "fairness" of defendant's alleged conduct in light of contemporary standards, because insofar as defendant's alleged practice involves the repeated violation of specific venue statutes, the practice is enjoinable under section 3369 as an "unlawful ... business practice," totally apart from its inherent "fairness." As originally enacted in 1933, section 3369 defined "unfair competition" only in terms of "unfair or fraudulent business practice[s]"; most of the reported cases, dealing in deceptive conduct, arose under the statute as so worded. In 1963, however, the Legislature amended section 3369 to add the word "unlawful" to the types of wrongful business conduct that could be enjoined. Although the legislative history of this amendment is not particularly instructive,
The recent case of Diaz v. Kay-Dix Ranch (1970) 9 Cal.App.3d 588 [88 Cal.Rptr. 443] represents the first reported appellate decision in an action brought under section 3369 to enjoin an "unlawful" business practice.
As discussed above, under the allegations of plaintiffs' first amended complaint, defendant's practice consists of repeated violations of specific statutory provisions of both the Code of Civil Procedure and the Civil Code; such a pattern of behavior clearly constitutes "unlawful" conduct, and if an enterprise pursues such a course of conduct as a "business practice," we conclude that the activity may be enjoined under section 3369. Defendant agency does not, and could not, claim that under the allegations of the complaint the challenged conduct is not a "business practice." The complaint specifically alleges that the agency undertakes its alleged misfiling "as a pattern and practice" and obviously such practice, if in fact conducted, directly relates to the defendant collection agency's conduct of its "business." We thus conclude that plaintiffs' allegations sufficiently state a cause of action for injunctive relief under Civil Code section 3369, and that the trial court erred in sustaining defendant's demurrer to plaintiffs' third cause of action.
3. (4) Default judgments obtained by defendant agency pursuant to complaints inadequate under Code of Civil Procedure section 396a, although vulnerable to attack on appeal or to timely motion for relief from default, are not "void" for lack of jurisdiction in the fundamental sense.
Having determined that, under the allegations of the complaint, plaintiffs are entitled to an injunction enjoining the continuation of defendant's alleged "distant filing" practice, we now reach the question of whether plaintiffs are entitled to the additional, more sweeping remedy of setting aside all judgments obtained by defendants pursuant to this practice during the two-year period preceding the institution of this action. As noted above, plaintiffs seek to set aside two separate categories of judgments: those falling within section 396a of the Code of Civil Procedure and those purportedly covered by section 1812.10 of the Civil Code. We initially address the contentions relating to the former category of cases, involving section 396a.
As detailed above, plaintiffs contend that defendant has continually filed suits in the wrong county, utilizing "form complaints" inadequate under section 396a, and has improperly obtained numerous judgments on the basis of such inadequate complaints. Plaintiffs base their present attempt to set aside all such judgments on the ground that the provisions of section 396a are "jurisdictional" and thus that all judgments obtained on the basis of complaints violative of section 396a are "void." In opposing the granting of such relief, defendant primarily emphasizes that venue objections are traditionally waived by a party if not raised in the original litigation. Accordingly defendant contends that because plaintiffs, as a class, failed to raise the alleged noncompliance with section 396a in their original actions, they may not now attack such final judgments in the instant proceeding.
Section 396b explicitly recognizes, however, that the cases governed by the immediately preceding section, section 396a, i.e., actions within the subject matter jurisdiction of justice courts, constitute an exception to its general rule.
Although, for the reasons discussed below, we agree with plaintiffs' contention that section 396a embodies an exception, in cases involving small monetary claims, to the general rule that a failure to move for a change of venue constitutes a "waiver" of any venue defects, it does not follow that this "nonwaivability" feature of section 396a automatically renders all final judgments obtained under inadequate complaints subject to
a. Under section 396a, a party's failure to move for a change of venue does not constitute a "waiver" of his venue rights.
In general, section 396a is designed to protect defendants in actions involving relatively small monetary claims from the inequitable harassment that may ensue when the action is filed in a distant venue. A brief historical review will place the section in a proper perspective.
Prior to 1933, the justice courts, which had jurisdiction over such small claims, operated with strict territorial limitations on their jurisdiction; during this early era, defendants were insulated from the harassment of actions brought in distant, inconvenient forums by the provisions of section 848 of the Code of Civil Procedure (since repealed), which in most cases limited the service of summons in justice court matters to defendants residing within the township of the justice court in which suit was brought.
In 1933 the code provisions dealing with the jurisdiction of municipal and justice courts were completely reorganized, and both courts were given statewide jurisdiction over the person. (Code Civ. Proc., §§ 83, 84.)
By the section's terms, if an adequate complaint is not filed "no further proceedings shall be had in the action ... except to dismiss the same ... unless the defendant consents in writing, or in open court ... to the keeping of the action ... in the court where commenced." Thus, whereas under section 396b a defendant is required to make a timely motion for change of venue to preserve venue rights, under section 396a the defendant is explicitly absolved of this burden and, unless he consents in writing or in
Section 396a places these special requirements on both the plaintiff and the trial court in recognition of the serious potential for harassment that arises if a plaintiff, in a small monetary action, commences his action in a distant forum. As we have discussed above, defendants in such cases will often be financially unable to expend the money to travel to a distant forum, or to hire an attorney to do so, even simply to move for a change of venue. Without the protection of section 396a, a plaintiff, aware of these practical limitations, could exploit the situation by filing all such actions in distant counties where a defendant could not afford either to defend or to move for change of venue, and could thereby unfairly obtain default judgments or favorable settlements in such actions. To eliminate such abuse, section 396a requires the plaintiff to reveal facts demonstrating where the action should be tried, and then places upon the trial court the initial responsibility for protecting an absent defendant's interest.
In light of both the language and the purpose of the provision, we believe that the present plaintiffs' failure to appear and to move for a change of venue in their earlier litigation cannot properly be considered a "waiver" of their venue rights under section 396a. Notwithstanding these individuals' failure to make such change of venue motions, section 396a required the trial courts in the prior actions to scrutinize independently the collection agency's complaints and to dismiss or transfer such complaints on the court's own motion if they proved to be inadequate. As we have already noted, the "form complaints" allegedly utilized by the defendant agency with regularity are insufficient under sections 395 and 396a (see fn. 15, supra), and thus, as plaintiffs suggest, the trial courts in the earlier actions properly should not have permitted the entry of default judgments pursuant to such complaints.
The instant plaintiffs, however, possessed a variety of means of avoiding the adverse consequences resulting from the trial court's erroneous failure to independently protect their interests in the earlier litigation. First, although section 396a does not require defendants to move for a change of venue, the provision clearly permitted these parties to file such a motion to advise the court of any defect in the complaint; in fact, since a formal motion is not required, plaintiffs could have protected their interests, and assisted the trial court in its statutory duty, by bringing any inadequacies of the complaint to the court's attention through an informal letter or by any other appropriate means. (See 1 Chadbourn, et al., Cal. Pleading, § 405, p. 373.) Moreover, after a trial judge had erroneously entered a default
(5) The venue requirements of section 396a are not "jurisdictional" in a fundamental sense, and final judgments — including those entered pursuant to faulty complaints — may not be set aside as "void."
Plaintiffs contend, however, that in addition to being subject to reversal on appeal, or to being set aside under section 473 of the Code of Civil Procedure, default judgments entered pursuant to inadequate complaints are "void" for lack of jurisdiction and are thus vulnerable to direct or collateral attack at any time. It is on this "jurisdictional" theory — a theory quite distinct from the "waiver" issue discussed above — that plaintiffs' instant attempt to set aside all default judgments entered in favor of the defendant collection agency during the two years preceding the commencement of this suit ultimately rests. As discussed below, we have concluded that section 396a does not affect the trial court's jurisdiction in a fundamental sense, and thus that improperly entered judgments which have become final are not subject to collateral attack.
Plaintiffs' characterization of section 396a as a "jurisdictional" provision rests primarily on the mandatory nature of the section's terminology. Plaintiffs point out that section 396a declares that the "plaintiff must state facts in the complaint ... from which it can be determined which court is ... the proper court for trial [and] ... if such complaint be not so filed, no further proceeding shall be had in the action... except to dismiss the same, ..." (Italics added.) Relying on the case of State of California v. Superior Court (1936) 14 Cal.App.2d 718, 721-723 [58 P.2d 1322],
As this court has cautioned on many occasions, however, the term "jurisdiction" carries a variety of meanings;
In Newman v. County of Sonoma (1961) 56 Cal.2d 625 [15 Cal.Rptr. 914,
The Newman court's analysis with respect to Code of Civil Procedure section 394 applies equally to Code of Civil Procedure section 396a. Although the language of the section is mandatory, the present action is not one in which the Constitution makes venue jurisdictional, nor is section 396a a statute which specifies a particular place of trial as part of the grant of subject matter jurisdiction. (Cf. McPheeters v. Board of Medical Examiners (1946) 74 Cal.App.2d 46, 49 [168 P.2d 65]; Civ. Code, § 1812.10 (found jurisdictional in (1968) 51 Ops.Cal.Atty.Gen. 179).) The grant of general subject matter jurisdiction for the contract actions which plaintiffs now attack is, of course, encompassed in a variety of provisions in the Civil Code (see Civ. Code, § 1427 et seq.); instead of including section 396a as a limitation on that grant of jurisdictional power, the Legislature included the section in the Code of Civil Procedure "among several venue provisions which are clearly not jurisdictional." (56 Cal.2d at p. 627.) In addition, section 396a, like section 394 involved in Newman, permits a defendant to stipulate to the trial of the action in a venue other than provided by the section.
(6) At the time of the commencement of this action Civil Code section 1812.90 did not govern defendant's actions on open book accounts, and thus plaintiffs are not entitled to have judgments in such actions set aside.
In addition to attacking final judgments obtained by defendant agency in the small monetary matters governed by Code of Civil Procedure section 396a, plaintiffs' first amended complaint also seeks — in the second cause of action — to set aside past judgments in actions "on installment sales," allegedly obtained in violation of Civil Code section 1812.10,
Defendant claims that in 1968, when plaintiffs' present action was filed, suits brought on such "accounts" were not suits on "contracts" within the meaning of Civil Code section 1812.10, and thus that plaintiffs cannot properly challenge judgments obtained prior to 1968 for noncompliance with that section. Plaintiffs, while conceding in this court that the actions they attack involve "installment accounts," contend that suits on such accounts have been covered by section 1812.10's requirements since the section's enactment in 1965.
As originally enacted, section 1812.10 set out the mandatory venue requirements for all actions "on a contract under the provisions of this chapter." (Italics added.) In 1969, the Legislature amended the section to include all actions "on a contract or installment account under the provisions of this chapter," (italics added) and the critical question is whether this addition was merely a "remedial" change, simply making explicit the broad scope that the Legislature had always intended, or whether the amendment was essential to bring actions on installment accounts within section 1812.10's reach.
From the initial enactment of the Unruh Retail Installment Sales Act in 1959, the act has separately defined "retail installment contracts" and "retail installment accounts" in distinct statutory sections. Civil Code section 1802.6
In light of the clear distinction drawn by the act between "retail installment contracts" and "retail installment accounts" we cannot interpret section 1812.10's original reference to "actions on a contract" as also embodying actions brought on an "installment account." Although the terms of the Unruh Act must certainly be construed liberally to protect the consumer (see Morgan v. Reasor Corp. (1968) 69 Cal.2d 881, 889 [73 Cal.Rptr. 398, 447 P.2d 638]), we believe that in light of the definition provided by the act itself, creditors who brought suits on "installment accounts" prior to the 1969 amendment of section 1812.10 could not reasonably be expected to comply with the requirements of that provision. Under the present section as amended, of course, there is no question but that such actions on installment accounts are fully subject to section 1812.10.
We thus conclude that plaintiffs cannot under Civil Code section 1812.10 properly attack final judgments in actions on installment accounts which the defendant agency had secured prior to the institution of this suit in 1968. Consequently, defendant's demurrer to plaintiffs' second cause of action was properly sustained.
According to the allegations of the complaint, which we must assume
Initially, we have concluded that on the basis of these allegations, plaintiffs have stated a cause of action entitling them to injunctive relief, either on a theory that defendant's conduct constitutes a recurring "abuse of process" against which other legal remedies are inadequate, or alternatively, because such conduct constitutes an "unlawful ... business practice" enjoinable under section 3369 of the Civil Code. Accordingly, the demurrer to plaintiffs' third cause of action was improperly sustained.
Second, we have determined that final default judgments, though secured in violation of Code of Civil Procedure section 396a, are not "void" for lack of jurisdiction in the fundamental sense. Consequently, defendant's demurrer to plaintiffs' first cause was correctly sustained.
Finally, we have concluded that plaintiffs are not entitled to attack judgments obtained by defendant prior to 1968 under section 1812.10 of the Civil Code, because prior to 1969, the agency's actions on "installment accounts" were not governed by the provisions of that section. The demurrer to plaintiffs' second cause of action was thus properly sustained.
We recognize that mass production of goods accounts for the mass selling of goods, a process that, by means of advertising, often entices the installment purchase of products for which the buyer cannot pay. Yet this mass merchandising does not justify the mass filing of law suits at places where they do not belong. Despite any claims of economy or expedition the exponents of such selling and such litigation can offer, a defendant may still insist that in order to exert his individualized right of defense, he be sued in the proper venue.
The judgment is reversed with respect to plaintiffs' third cause of action; in all other respects the judgment is affirmed.
Wright, C.J., McComb, J., Peters, J., Mosk, J., Burke, J., and Sullivan, J., concurred.
In addition to the main prayers for injunctive relief and the setting aside of final judgments, plaintiffs requested that defendant agency be required to deposit in court all moneys collected on the allegedly "void" judgments, and that the agency be required to disclose the names of all defendants in such actions to plaintiffs. Plaintiffs also prayed for such general and punitive damages as might be appropriate.
Moreover, in adopting its restricted interpretation of section 43(a) of the Lanham Act, the Colligan court drew considerably on principles of federalism, which it believed warranted the limiting of federal "involvement" in the area of unfair competition and consumer protection, fields traditionally subject to state regulation. (442 F.2d at pp. 692-693.) Such considerations of federalism are, of course, entirely inapplicable to our court's present task of interpreting a state statute; indeed, the restrained federal stance exhibited in Colligan makes the recognition of an effective state consumer remedy all the more imperative. In sum, we find nothing in the Colligan decision which requires us to constrict the natural reach of section 3369's broad standing provision.
In denying such relief, our court was influenced both by the fact that the recent amendment evidenced an obvious legislative decision that such violations not be enjoinable and also by the traditional reluctance of equity to enjoin criminal behavior. (See People v. Lim (1941) 18 Cal.2d 872, 880 [118 P.2d 472].) Although the Landowitz opinion does contain some language which may be read to limit section 3369 to common law "unfair competition," subsequent cases, as we have seen, have not confined the section so narrowly; in view of the factual context of Landowitz, such language was not crucial to the decision. Moreover, as we discuss infra, in 1963, well after Landowitz, section 3369 was amended to cover any "unlawful" business practice and thus, in any event, Landowitz's view of the reach of the unamended provision cannot be regarded as controlling in the instant case.
The case of Carlon v. Gray (1935) 10 Cal.App.2d 658, 662 [52 P.2d 966], is in point. In Carlon the challenged complaint, like the form complaints at issue here, contained only the plaintiff's conclusory statement that the contract "was to be performed in the ... named county." The court held that "[t]he opinion of the pleader cannot be substituted for the facts existing in the case which would, or would not give the [j]ustice's [c]ourt ... jurisdiction, and the setting forth of an opinion is not a compliance with the section of the code requiring that the `plaintiff must state facts.'"
It is thus clear that the agency's form complaints do not satisfy section 396a; the crucial question is whether this defect renders judgments obtained pursuant to such complaints vulnerable to collateral attack.
"In all actions and proceedings within the subject matter jurisdiction of justice courts whether commenced in a justice or municipal court, plaintiff must state facts in the complaint, verified by his oath, or the oath of his attorney, or in an affidavit of the plaintiff or of his attorney filed with the complaint, from which it can be determined which court is, under the provisions of this title, the proper court for the trial of such action or proceeding. When such affidavit is filed with the complaint, a copy thereof must be served with the summons. Except as herein provided, if such complaint or affidavit be not so filed, no further proceedings shall be had in the action or proceeding, except to dismiss the same, unless defendant consents, in the manner hereinafter provided, to the keeping of the action or proceeding in the court where commenced. The court, or judge, may, on such terms as may be just, allow the complaint to be amended to conform to the requirements of this paragraph, or permit such affidavit to be filed subsequent to the filing of the complaint.... If it appears from such complaint or affidavit, or otherwise, that the court in which such action or proceeding is commenced is not the proper court for the trial thereof, as determined by the provisions of this title, the court in which such action or proceeding is commenced, or a judge thereof, shall, whenever such fact appears, transfer it to such proper court, on its own motion, or on motion of the defendant, unless the defendant consents in writing, or in open court (such consent in open court being entered in the minutes or docket of the court), to the keeping of the action or proceeding in the court where commenced. If such consent be given, the action or proceeding may continue in the court where commenced."
In 1970 the language of the section was slightly altered, but such changes are not relevant to our present discussion.
"An action on a contract under the provisions of this chapter shall be commenced in the county in which the contract was in fact signed by the buyer, in the county in which the buyer resided at the time the contract was entered into, in the county in which the buyer resides at the commencement of the action, or in the county in which the goods purchased pursuant to such contract have been so affixed to real property as to become a part of such real property."