Plaintiffs, appellants, and cross-respondents (plaintiffs) are consumers who purchased vehicles from defendant, respondent, and cross-appellant Raceway Ford (Raceway), an automobile dealership. Plaintiffs alleged numerous causes of action based on laws proscribing certain acts against consumers, unfair competition, and deceptive business practices, bringing both individual claims and claims on behalf of two certified classes. The trial court, after a bench trial, entered judgment in favor of Raceway and against plaintiffs on all causes of action, except that a single plaintiff was granted rescission on a single cause of action. Separately, the trial court awarded attorney fees and costs to Raceway in the amount of $1,503,084.50. In these appeals, which we ordered consolidated for oral argument and decision, plaintiffs challenge the trial court's judgment on the merits (case No. E054517) and fee order (case No. E056595); Raceway has cross-appealed regarding one aspect of the trial court's fee order.
Plaintiffs also appeal the judgment in favor of Raceway with respect to the claims of a second certified class, consisting of Raceway customers who purchased used diesel vehicles from Raceway and who were charged fees for smog checks and smog certifications that were only properly applicable to purchases of gasoline vehicles. Plaintiffs argue that Raceway failed to plead and establish a valid defense to liability under the ASFA with respect to these fees, and that the class is entitled to judgment in its favor and the remedy of rescission, notwithstanding refunds paid by Raceway. We affirm the trial court's judgment with respect to plaintiffs' smog fee claims.
Additionally, plaintiffs appeal the judgment in favor of Raceway on certain individual plaintiffs' claims that Raceway violated the ASFA by failing to provide them with copies of their credit applications. Plaintiffs challenge the trial court's finding that these plaintiffs did not meet their burden of proving a violation. Plaintiffs' evidence in support of these claims does not compel a decision in their favor, so we affirm the trial court's ruling.
Finally, plaintiffs appeal the judgment in favor of Raceway with respect to claims under the UCL and the CLRA brought by plaintiff Francisco Salcedo in his individual capacity. The trial court found in favor of Mr. Salcedo on his claim of fraud, and granted him the remedy of rescission, though it declined to award any punitive damages. Plaintiffs contend that the judgment in Mr. Salcedo's favor on his fraud claim — which Raceway has not appealed — establishes as a matter of law that he should also have judgment entered in his favor on his UCL and CLRA claims. We agree, and reverse, remanding the matter to the trial court for entry of judgment in favor of Mr. Salcedo on the UCL and CLRA claims he brought in his individual capacity, and for
The basis for the trial court's award of fees to Raceway is in part undermined by our partial reversal of the judgment. We therefore need not and do not address the merits of the parties' arguments in the appeal and cross-appeal of the fee award, but instead vacate the trial court's fee award, and remand the issue of attorney fees and costs for reconsideration following final adjudication of the remainder of the case.
II. FACTUAL BACKGROUND
Plaintiffs' most recent amended complaint, the second amended complaint (SAC), alleges 18 causes of action, including claims on behalf of several separate classes, and other claims on behalf of certain individual plaintiffs. The claims at issue in the present appeal fall into four categories; we describe below the background facts relevant to each of these categories.
A. Backdating Claims
For some of its customers, Raceway acts not only as the seller of a vehicle, but also as the creditor, by extending financing for the sale. Generally, Raceway then attempts to assign the finance contract to a commercial lender. Sometimes, after the contract for the sale and financing has been signed and the customer has taken delivery of the vehicle, Raceway has later entered into a second or subsequent contract with the customer for the same vehicle. This occurred on some occasions when commercial lenders were unwilling to accept assignment of the contract on the terms Raceway had agreed to with its customer; in that case. Raceway could contact the customer and request to renegotiate the terms of the sale and financing.
Plaintiffs' backdating claims arise from the circumstance that, prior to late 2004, it was Raceway's practice to date second or subsequent contracts negotiated with customers using the date of the initial contract. A customer who agreed to enter into a second or subsequent contract with Raceway would sign not only a new purchase contract, dated to the initial date of sale,
The trial court certified a class, referred to as "Class One" or the "Backdating Class" by the parties, consisting of "[a]ll persons who, since January 12, 2001, (1) purchased a vehicle from Raceway Ford, for personal use, (2) on a later date rescinded their original purchase contract, and (3) signed a subsequent or second contract for the purchase of the same vehicle, which contract was dated the date of the original purchase contract and involved financing at an annual percentage rate greater than 0.00%." There are, according to plaintiffs, approximately 1,100 members of Class One.
At trial, Class One asserted claims under the ASFA, CLRA, and UCL based on the practice of backdating described above. The trial court found in favor of Raceway on all claims; its reasoning in support of this ruling will be discussed below.
B. Smog Fee Claims
Raceway concedes that it erroneously charged some of its customers who purchased used diesel vehicles certain fees related to performing a smog check and obtaining state smog certification that should only have been charged to purchasers of used gasoline-powered vehicles. These charges were explicitly disclosed in the contracts that the customers signed; the problem is that the fees should not have been charged at all, and neither Raceway nor the customers involved caught the error at the time of the transaction. Plaintiffs have not disputed that each of these customers has, during the pendency of this litigation, received two checks from Raceway, the first of which refunded the fees themselves, and the second of which represented an amount Raceway calculated to represent any finance charges the customers may have incurred on the fees.
The trial court certified a class, referred to by the parties as "Class Two" or the "Smog Fee Class," consisting of "[a]ll persons except for Robert Loverso[
C. Credit Application Claims
Certain individual plaintiffs,
D. Individual Claims of Francisco Salcedo
Plaintiff Francisco Salcedo is a Raceway customer who initially purchased and took delivery of a new pickup truck, a 2004 Ford. He testified that a representative of Raceway subsequently called him and told him that he needed to bring the vehicle back, because he did not qualify for financing. Mr. Salcedo returned the vehicle to the dealership. When he did so, he asked if he could get back his trade-in; he was told that he could not. He was told that instead he had to choose an alternative vehicle from several presented by Raceway that he would be qualified to purchase; he selected a used 2001 Chevrolet pickup truck, signing a new purchase contract for the second vehicle.
Raceway was acting within its contractual rights to require Mr. Salcedo to return the 2004 Ford. Under the terms of its contracts, Raceway holds a unilateral right of rescission for a period of 10 days after a sale, which may be exercised if Raceway is unable to verify a customer's credit and assign the
The trial court ruled that Mr. Salcedo had satisfied his burden of proof for his fraud claim, finding him to be "a credible witness when he testified that he was told by Raceway's authorized representative upon his return after the customary telephone call that he could not refuse to sign a second contract and unwind the transaction because they could not return his trade-in since they didn't know where it was." Raceway has not challenged this ruling on appeal.
The trial court's statement of decision does not specifically address two other claims asserted by Mr. Salcedo in his individual capacity,
Nevertheless, the parties and the trial court all appear to have understood the trial court to have rendered a decision in favor of Raceway on all claims asserted by plaintiffs at trial, with the sole exception of Mr. Salcedo's fraud claim. We therefore will proceed with our analysis of the case on the understanding that the court intended to enter judgment in favor of Raceway and against Mr. Salcedo on his UCL and CLRA claims. (See In re Marriage of Richardson (2002) 102 Cal.App.4th 941, 949 [126 Cal.Rptr.2d 45] ["`Where
III. PROCEDURAL BACKGROUND
Plaintiffs' initial complaint in this matter was filed on October 29, 2004. The SAC was filed on July 21, 2008. A bench trial on claims remaining in the case was held from March 3, 2010, through March 9, 2010.
The posttrial procedural history of this case is an object lesson on the importance of California Rules of Court, rule 3.1590(l), which provides the time within which, if a written judgment is required after a court trial, the trial court must sign and file the judgment.
On March 30, 2010, the trial court issued its tentative decision on the merits. On April 16, 2010, the trial court issued a statement of decision, identical in substance to the tentative decision, and finding in favor of Raceway on all causes of action except that a single plaintiff — Mr. Salcedo — was granted rescission on a single cause of action. On April 29, 2010, Raceway filed a request for entry of judgment, including a proposed judgment. On May 3, 2010, and May 5, 2010, plaintiffs filed objections to the request for entry of judgment and statement of decision, respectively, and requested a hearing under California Rules of Court, rule 3.1590(k). On May 13, 2010, the trial court issued a minute order denying the requested hearing, overruling the objections, and ordering that the statement of decision would stand as the decision of the court. No judgment, however, was signed and entered by the court.
On June 9, 2010, Raceway filed a second request for entry of judgment, including a revised proposed judgment. On June 15, 2010, the trial court denied plaintiffs' motion for leave to file a third amended complaint to conform to proof adduced at trial. The trial court also denied an oral request by plaintiffs for a stay of proceedings until after the Fourth District, Division One Court of Appeal issued a ruling on a similar action. The trial court directed counsel to submit a joint proposed judgment to the court.
The parties did not submit a joint proposed judgment prior to the issuance of Nelson v. Pearson Ford Co. (2010) 186 Cal.App.4th 983 [112 Cal.Rptr.3d
On July 29, 2010, Raceway filed a third request for entry of judgment, including a newly revised proposed judgment. Plaintiffs opposed the entry of judgment based upon the Nelson ruling. On September 29, 2010, the trial court continued the hearing on the motion for entry of judgment for 45 days to allow the Supreme Court to rule on the possible depublication of Nelson. On December 10, 2010, the trial court determined that it had no choice but to follow the binding precedent of an appellate court and ordered its previous statement of decision withdrawn, stated that it was now finding for plaintiffs under Nelson, and set a hearing for January 28, 2011, to determine the proper remedy.
Raceway filed a petition for writ of mandate in this court on December 23, 2010, arguing that the trial court should be required to enter judgment in conformity with its April 16, 2010, statement of decision. We agreed, and on March 22, 2011, in an unpublished opinion, we ordered that a peremptory writ of mandate issue, directing the trial court to vacate the December 10, 2010, order that vacated its April 16, 2010, statement of decision, and to enter a judgment nunc pro tunc to June 10, 2010, in conformity with the April 16, 2010, statement of decision. (Raceway Ford, Inc. v. Superior Court (Mar. 22, 2011, E052543) [nonpub.opn.].)
On June 27, 2011, the trial court issued a minute order vacating its December 10, 2010, order and stating that it was entering judgment nunc pro tunc to June 10, 2010, in conformity with its April 16, 2010, statement of decision. Despite this minute order announcing judgment, however, no judgment was signed and filed by the trial court.
On July 13, 2011, plaintiffs filed a motion for new trial and a motion to vacate and enter a different judgment, treating the trial court's June 27, 2011, minute order as a judgment. On August 19, 2011, the trial court issued a minute order denying the motions.
On September 7, 2011, plaintiffs filed the notice of appeal for case No. E054517, purporting to appeal from the June 27, 2011, minute order, as
On June 8, 2012, the trial court filed an order granting fees and costs to Raceway (fee order). Plaintiffs appealed the fee order (case No. E056595). On July 5, 2012, we ordered that case No. E054517 and case No. E056595 be consolidated for oral argument and decision. On July 9, 2012, Raceway filed its cross-appeal of the fee order in case No. E056595.
A. Standard of Review
"The most fundamental rule of appellate review is that a judgment is presumed correct, all intendments and presumptions are indulged in its favor, and ambiguities are resolved in favor of affirmance. [Citations.]" (City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266, 286 [149 Cal.Rptr.3d 491] (City of Santa Maria).)
"`In general, in reviewing a judgment based upon a statement of decision following a bench trial, "any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision. [Citations.]" [Citation.] In a substantial evidence challenge to a judgment, the appellate court will "consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.]" [Citation.] We may not reweigh the evidence and are bound by the trial court's credibility determinations. [Citations.] Moreover, findings of fact are liberally construed to support the judgment. [Citation.]'" (Cuiellette v. City of Los Angeles (2011) 194 Cal.App.4th 757, 765 [123 Cal.Rptr.3d 562] (Cuiellette), quoting Estate of Young (2008) 160 Cal.App.4th 62, 75-76 [72 Cal.Rptr.3d 520].) When a party challenges on appeal a ruling that it failed to carry a burden of proof, the substantial evidence standard is inappropriate, and "`the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law. [Citations.]'" (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 465-466 [126 Cal.Rptr.3d 301] (Sonic).)
B. Backdating Claims
Plaintiffs contend that Raceway's previous practice of backdating second or subsequent contracts to the date of the original sale violates the ASFA by (1) causing the annual percentage rate (APR) disclosed in second or subsequent contracts to be inaccurate; (2) purporting to require customers to pay an "illegal finance charge" for the period prior to the consummation of their second or subsequent contracts; and (3) violating the "single document" rule (§ 2981.9) and the itemized disclosure requirements of the ASFA (§ 2982, subd. (a)). They argue that Class One is entitled, as a matter of law, to the remedy of rescission for Raceway's violations of the ASFA. Plaintiffs further contend that the backdating also violated the UCL and the CLRA, and that they are entitled to judgment in their favor on those claims as well.
For the reasons stated below, we reverse the trial court's judgment in favor of Raceway on the backdating claims, but decline to order that judgment be entered in favor of plaintiffs, instead remanding for further proceedings.
1. Claims Under the ASFA
In a closed-end credit transaction
Federal authority applying Regulation Z supports the proposition that, where a consumer enters into a second contract with a dealership relating to a vehicle sale, the date of "consummation" of the credit transaction associated with the second contract is generally the date of the second contract. In Gibson v. LTD, Inc. (4th Cir. 2006) 434 F.3d 275, for example, the Fourth Circuit considered a second contract for sale of the same vehicle, entered into one week after the first, after financing could not be obtained under the original terms. (Id. at p. 286.) Noting that the second contract contemplated an increased downpayment, and therefore a changed finance charge, the court found the second contract "consummated a new finance arrangement," requiring new disclosures to be made under Regulation Z before its consummation. (Gibson, supra, at p. 286.) Similarly, in Janikowski v. Lynch Ford, Inc. (7th Cir. 2000) 210 F.3d 765 (Janikowski), the Seventh Circuit analyzed two contracts between an automobile dealership and a consumer regarding the same vehicle, entered into one day apart, after financing could not be approved on the original terms. (Id. at pp. 767-768 & fn. 3.) The Janikowski court treated the two contracts as separate legal obligations, noting that the consumer was under no obligation to purchase the vehicle on credit terms other than those described in the first contract until the second contract was signed. (Id. at pp. 767-768, fn. 3.)
(9) The purpose of Regulation Z is to "promote the informed use of consumer credit by requiring disclosures about its terms and cost." (12 C.F.R. § 226.1(b) (2014).) Nevertheless, with exceptions not relevant here, Regulation Z "does not generally govern charges for consumer credit." (12 C.F.R. § 226.1(b) (2014).) More specifically, nothing in Regulation Z forbids interest on consumer credit contracts to be calculated as accruing from a date prior to consummation of the contract, if the parties agree among themselves to such a calculation. As noted above, the current version of Regulation Z requires that the "term of the transaction" used for purposes of calculating and disclosing APR must be no earlier than the date of consummation. (See 12 C.F.R. § 226, appen. J(b)(2) (2014).) It does not follow from this requirement regarding how the APR must be calculated and disclosed to the consumer that there is any substantive limitation on the date from which interest may be calculated in the contract generally, such that "preconsummation interest" is an "illegal finance charge," as Nelson would have it. (Nelson, supra. 186 Cal.App.4th at p. 1003.)
In concluding otherwise, Nelson stretches an already thin thread of authority beyond the breaking point. Nelson cites Krenisky, supra, 728 F.2d at p. 67, fn. 3, and Rucker v. Sheehy Alexandria, Inc. (E.D.Va. 2002) 228 F.Supp.2d 711, 717 (Rucker I) for the proposition that "[s]everal courts have decided that accrual dates prior to the date of consummation are prohibited." (Nelson, supra, 186 Cal.App.4th at p. 998.) We will set aside the circumstance that the footnote in Krenisky is dictum from a Second Circuit Court of Appeals opinion issued 30 years ago, and that this dictum had been followed in that time period precisely twice before Nelson, once in Rucker I, and again by the same federal district court in Virginia, as part of the same case. (See Rucker I, supra, at p. 717; Rucker v. Sheehy Alexandria, Inc. (E.D.Va. 2003) 244 F.Supp.2d 618, 623 (Rucker II or, collectively with Rucker I, Rucker).
In Rucker II, the district court makes the point that preconsummation interest is not itself illegal or improper just as directly as in Rucker I. The court notes that Krenisky "held that Regulation Z precludes the use of an earlier effective date when calculating an APR," (Rucker II, supra, 244 F.Supp.2d at p. 623, italics added), but "... TILA and Regulation Z do not set limits on what effective terms the parties may agree to; they merely dictate the manner in which the terms of the credit transaction must be disclosed." (Id. at pp. 625-626). Thus, in the Rucker case, the parties "could have agreed to a payment schedule which reflects the retroactive imposition of the agreed upon ... rate starting on April 3 [(the date to which the contract at issue was backdated)]; all that TILA requires is that the disclosed APR on the [contract] be calculated pursuant to the consummation date of April 13, not the agreed upon effective date of April 3." (Id. at p. 626.)
In addition, at least one court has explicitly rejected the notion, which underpins Nelson's analysis, that a backdated contract results in liability "preconsummation." In Nigh v. Koons Buick Pontiac GMC, Inc. (Nigh) the Fourth Circuit considered the argument that, with respect to a contract entered into on March 5, but backdated to February 25, disclosures made on March 5 were untimely. (Nigh v. Koons Buick Pontiac GMC, Inc. (4th Cir. 2003) 319 F.3d 119, 129, revd. on other grounds sub nom. Koons Buick Pontiac GMC, Inc. v. Nigh (2004) 543 U.S. 50 [160 L.Ed.2d 389, 125 S.Ct. 460].) The Nigh court rejected the argument, remarking that, "though superficially clever, [it] is without merit." (Nigh, supra, at p. 129.) Though the plaintiff "was liable for monies calculated from February 25 on, he did not become liable for, those monies until March 5, by which point he had received the material disclosures." (Ibid.) Here, similarly, plaintiffs' backdated contracts did not cause them to pay a finance charge when no contract existed, as Nelson would have it. (Cf. Nelson, supra, 186 Cal.App.4th at p. 1003.) Plaintiffs only became liable for finance charges pursuant to their second or subsequent contract with Raceway once those contracts were signed, even if their payments were calculated using a starting date prior to consummation.
We conclude that Nelson misreads Krenisky and Rucker, as well as TILA and Regulation Z, when it declares "preconsummation interest to be an illegal finance charge." (See Nelson, supra, 186 Cal.App.4th at p. 1003.)
Nevertheless, we will not order that judgment be entered instead in favor of Class One, as plaintiffs have requested. We reject plaintiffs* contention that any interest calculated from prior to the actual date of signing of the backdated contracts constitutes an illegal finance charge. The only potential violation shown by plaintiffs is an inaccurately calculated APR, which would violate Regulation Z and, by virtue of Regulation Z's incorporation by reference into the unlettered first paragraph of section 2982, would violate the ASFA. But although the disclosed APR on second or subsequent contracts of some class members may have fallen outside the margin of error allowed by Regulation Z, that may not be so for all class members. It is also possible that the only change between some class members' initial contract and their second or subsequent contract was a lowering of the APR. Such a second or subsequent contract would not be a "refinancing" in the meaning of Regulation Z, and no additional disclosures beyond those relating to the first contract would be required. We therefore remand to the trial court to determine in the first instance how best to adjudicate the case given the potentially differing circumstances of the various members of the Backdating Class, as it is currently defined,
2. Remedies for Violation of ASFA
Assuming that at least some members of the Backdating Class can show that their backdated second or subsequent contract with Raceway is a refinancing in the meaning of Regulation Z, and the APR disclosed in that
As noted, Nelson finds backdated contracts between a dealership and buyer to violate section 2981.9 and subdivision (a) of section 2982, thereby rendering the contracts unenforceable under section 2983. (Nelson, supra, 186 Cal.App.4th at p. 1002.) Here we part ways with the analysis of our sister court: we find neither subdivision (a) of section 2982 nor section 2981.9 applicable.
In reaching a contrary conclusion, Nelson relies on the notion, which we rejected above, that any interest accruing from before the consummation date
In Thompson, the court considered the effect of a dealership's inclusion of "over-allowances" on trade-in vehicles. (Thompson, supra, 130 Cal.App.4th at p. 963.) "Over-allowance" refers to the difference between the trade-in vehicle's value as stated in the contract and the dealer's evaluation of the vehicle's value. (Id. at p. 980.) In Thompson, the dealer used over-allowances to "manipulate numbers" to increase the likelihood the buyer would be approved for financing by third party lenders evaluating the transaction. (Id. at pp. 973. 977, 979-980 & fn. 21.) The Thompson court reaches the unsurprising conclusion that the use of "phantom" numbers to make a buyer appear creditworthy, thereby defrauding not only lenders, but also buyers (who end up paying increased sales tax and license fees on inflated cash price amounts, and who also become obligated to pay for loans they may not otherwise have qualified for and may not be able to afford) violates the ASFA and constitutes an unfair business practice. (Thompson, supra, at pp. 961, 978-979.)
The "over-allowances" at issue in Thompson are distinguishable, however, from the inaccurately disclosed APRs at issue in Nelson and (potentially) the case at bar. The over-allowances in Thompson rendered false other information disclosed in the contracts, including the cash price of the vehicle being purchased, the value of the traded in vehicle, and the total downpayment — disclosures explicitly required by subdivision (a) of section 2982. (Thompson, supra, 130 Cal.App.4th at p. 979 [noting that including over-allowances resulted in inaccurate disclosures]; see § 2982, subd. (a)(1)(A), (6)(C), and (G).) In contrast, an APR calculated improperly in a backdated contract does not result in the propagation of inaccurate numbers throughout the rest of the contract. The APR is not used in deriving any information to be disclosed pursuant to subdivision (a) of section 2982. In other words, Raceway's backdated contracts not only contain all the disclosures required by subdivision (a) of section 2982. those disclosures are accurate in all respects. If anything in the contracts' disclosures is inaccurate, it is the APR, and, as noted, APR is not one of the required disclosures listed in subdivision (a) of section 2982. We conclude, therefore, that the backdated Raceway contracts are not rendered unenforceable because of any violation of that subdivision.
Nelson holds that a backdated second contract for a vehicle, similar to those at issue in this case, violates the single document rule because such a document does not contain "`all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle.'" (Nelson, supra, 186 Cal.App.4th at p. 1004.) The Nelson court observes that a reviewer presented with an original contract and a backdated second contract would not be able to tell, on the basis of the documents alone, which is the operative contract, the date the operative second contract was actually consummated, or whether the buyer had paid a finance charge with respect to a period of time prior to consummation. (Ibid.) It rejects the argument that the second contract contains all the required information, because the consummation date, which is "an essential fact in calculating an accurate APR," does not appear on the face of that contract, and the APR disclosed therein is inaccurate, so the "disclosure itself is meaningless and the informational purpose of the ASFA is not served." (Id. at p. 1005.)
Moreover, Nelson's interpretation of the single document rule stretches a rule that on its face deals with format of a contract into a rule governing the accuracy of the substance of the disclosures contained in the contract, while citing no authority in support of that expansive interpretation. (See Nelson, supra, 186 Cal.App.4th at pp. 1004-1005.) The only case cited in Nelson's discussion of the single document rule is Rucker I. (Nelson, supra, at p. 1004.) But the portions of Rucker I cited therein consist of language cherry-picked from discussions of policy reasons underlying Regulation Z, and policy concerns raised by "[t]he combination of spot delivery contracts and the industry practice of backdating documents to the original delivery date" and "yo-yo" sales schemes. (Rucker I, supra, 228 F.Supp.2d at pp. 717-719.) Nothing like the single document rule is discussed anywhere in Rucker.
In short, we conclude that section 2981.9 is not implicated by the potentially inaccurate disclosures of APR caused by Raceway's backdating of second or subsequent contracts. The single document rule governs the format of the contract, not its substance, and we reject Nelson's interpretation to the contrary as unpersuasive.
Furthermore, plaintiffs (unlike the plaintiff in Rucker) asserted no claim under TILA, so the statutory damages available under federal law for violations of the APR disclosure requirement governed by Regulation Z are unavailable to plaintiffs here. (See Rucker I, supra, 228 F.Supp.2d at p. 720 [discussing 15 U.S.C. § 1640, providing statutory damages for violation of APR disclosure requirement set at twice the amount of the finance charge in connection with the transaction, bounded by a statutory minimum of $100 and a statutory maximum of $1,000].) Nevertheless, plaintiffs did bring claims under other provisions of California law besides ASFA. We therefore turn now to Class One's CLRA and UCL claims.
3. CLRA Claims
In Nelson, the court concluded that a dealership violates section 1770, subdivision (a) by entering into backdated second contracts that disclose inaccurate APRs because, by doing so, the dealership represents that it has the "legal right to collect finance charges effective [the date of the original contract], an obligation prohibited by Regulation Z." (Nelson, supra, 186 Cal.App.4th at p. 1023.) As noted above, however, we disagree with Nelson's conclusion "preconsummation interest" constitutes an "obligation prohibited by Regulation Z." (Ibid.) Regulation Z governs how APR is to be calculated and disclosed to the consumer; it does not prohibit the parties from contracting for interest to be calculated from a date prior to the consummation of the contract. As such, plaintiffs' assertion they "were obligated to pay a finance charge they were not obligated to pay" is incorrect. Nor do the contracts at issue involve an obligation that is "prohibited by law." (See § 1770, subd. (a)(14).) We therefore affirm the trial court's judgment in favor of Raceway with respect to Class One's claims under the CLRA, and need not consider what remedies might be available to plaintiffs under the CLRA.
4. UCL Claims
Assuming that at least some members of Class One can show that their second or subsequent contracts with Raceway were refinancings, requiring new disclosures, and the disclosed APR fell outside the margin of error
It is possible that Raceway violated the ASFA with respect to at least some members of Class One, namely, those whose second or subsequent contracts with Raceway constitute "refinancings" (as that term is defined in Regulation Z) and disclose APRs that are outside of the margin of error allowed by Regulation Z. If so, however, contrary to Nelson, that does not render the contracts unenforceable, because neither section 2981.9 nor subdivision (a) of section 2982 is implicated by such inaccurately disclosed APRs. The ASFA — unlike TILA — does not provide for statutory remedies, and plaintiffs' only theory of actual damages presented in the litigation relies on Nelson's analysis of "preconsummation interest" that we have rejected. Plaintiffs' claims under the CLRA and the UCL, which might otherwise provide additional remedies besides those authorized by the ASFA, fail because plaintiffs have not demonstrated Raceway engaged in any of the acts proscribed by the CLRA, nor shown standing to bring a UCL claim. Thus, even if Class One (or some subsection thereof) is able to demonstrate a verdict in its favor on its ASFA claims is appropriate, only a symbolic judgment unaccompanied by any specific remedy would be available in these circumstances.
It is worth noting here, however, that further adjudication of the merits of Class One's ASFA claims is not necessarily an idle exercise, even if no substantial monetary or other remedy is available to plaintiffs. The trial court previously awarded attorney fees and costs in the amount of $1,503,084.50 to Raceway as the prevailing party under the ASFA. (See § 2983.4 ["Reasonable attorney's fees and costs shall be awarded to the prevailing party in any action on a contract ... subject to the provisions of this chapter...."].) A
C. Smog Fee Claims
We conclude it does not. Like the single document rule, discussed above, section 2982 governs the "formalities" of contracts, not their substance. (See § 2982.) Subdivision (a) of section 2982 requires a comprehensive "`itemization of the amount financed,'" with specific disclosures that must be made in the contract. (§ 2982, subd. (a).) If the disclosures are made, and are true in the sense of accurately describing the terms of the parties' agreement, then the contract comports with the requirements for the "formalities" of conditional sale contracts.
The authority cited by plaintiffs does not require the conclusion that Raceway violated the ASFA because of the charges accurately described, but erroneously included in the contracts between Raceway and the members of Class Two. Authority addressing contracts that do not accurately describe the parties' agreement is not on point here. In Nelson, for example, the improperly calculated APR figure disclosed in the contracts at issue provided false information about the transaction — specifically, the cost of credit expressed as a yearly rate — to the consumer.
Our conclusion — that section 2982, subdivision (a) is not violated in the circumstances of this case, so the trial court's judgment in Raceway's favor with respect to the claims of Class Two should be affirmed — does not leave other vehicle buyers who are charged inappropriate fees by dealerships without redress. It seems likely that one or another provision of California statutory or common law would provide such consumers a remedy — albeit perhaps not the rescission and restitution sought by plaintiffs under the ASFA — especially if, unlike Raceway, the dealership at issue was not forthcoming with payment of refunds, or had charged inappropriate fees with fraudulent intent. Class Two, however, asserts only a claim under the ASFA: plaintiffs did not appeal the trial court's denial of class certification for Class Two's UCL claims, and did not assert any claims under other legal or equitable theories. We need not consider here, therefore, what other claims might have been brought on these, or similar, facts. In addition, because we conclude plaintiffs failed to demonstrate any violation of the ASFA with respect to Class Two, we need not consider the parties' arguments with respect to whether Raceway successfully cured any violation.
D. Credit Application Claims
It is undisputed that Raceway had a policy of providing each customer a copy of any credit application made during the course of negotiations, as required by the ASFA. (See § 2981.9.) Certain individual plaintiffs, however, assert that this policy was not implemented in their case — that they did not receive copies of their credit applications from Raceway. The trial court ruled in favor of Raceway on the issue. On appeal, plaintiffs contend that Raceway's evidence of a policy or practice is insufficient as a matter of law to overcome the "transaction-specific testimony" of the individual plaintiffs who testified that they did not receive copies of their credit applications. They additionally contend — somewhat half-heartedly — that the trial court's decision was "based on an incorrect legal basis." We disagree with both of these contentions.
Plaintiffs' argument regarding the "legal standard" applied by the trial court is quickly dispatched. Plaintiffs assert that "[t]o the extent the trial court based its decision on whether a credit application was required solely for the second contract, the decision was based on an erroneous legal standard." This argument, however, only knocks down a straw man: the trial court applied no such standard. The trial court made the (undisputed) factual finding that consumers who entered into second or subsequent contracts with Raceway were not required to submit new credit applications, so there could have been no violation of section 2981.9 with respect to those contracts.
The trial court further found plaintiffs failed to establish any violation of section 2981.9 with respect to plaintiffs' initial contracts with Raceway. As noted, Raceway presented testimony establishing it had a policy and practice to provide each customer a copy of any credit application. Such testimony is circumstantial evidence supporting the conclusion that, in any given instance,
E. Individual Claims of Francisco Salcedo
As noted, the trial court found Raceway liable for common law fraud with respect to Mr. Salcedo, because it misrepresented that he "could not refuse to sign a second contract and unwind the transaction," when Raceway was unable to assign his initial contract for purchase of a vehicle. Mr. Salcedo also asserted individual claims under the UCL and CLRA, based on the same fraudulent misrepresentations by Raceway. The trial court never explicitly ruled on Mr. Salcedo's UCL and CLRA claims, although the parties and the court apparently understood the court's judgment on those claims to be in favor of Raceway. Plaintiffs contend that, as a matter of law, the same facts that established judgment should be entered in Mr. Salcedo's favor on his common law fraud claim also establish a violation of the UCL and CLRA, so he is entitled to judgment in his favor on those claims, as well. We agree.
Indeed, though Raceway never explicitly concedes the point, neither does it offer any argument why the elements of Mr. Salcedo's individual UCL and CLRA claims might not have been established, even though he did prove common law fraud. Instead, Raceway's response is, in essence, that Mr. Salcedo is not entitled to any further remedies, since he was already granted rescission. The issue of remedies, however, is a separate question from whether Mr. Salcedo is entitled to judgment in his favor.
In any case, the issue of remedies is one that should be decided by the trial court in the first instance. Here, it is not apparent from the record that the trial court ever considered whether Mr. Salcedo might be entitled to any additional remedies, based on his individual UCL and CLRA claims, over and above those awarded for his common law fraud claim. On remand, the trial court should enter judgment in Mr. Salcedo's favor on his individual UCL and CLRA claims, and determine — explicitly, and on the record — what remedy, if any, Mr. Salcedo should be awarded with respect to those claims. Mr. Salcedo also should be treated as the prevailing party not only with respect to his fraud claim, but also his individual UCL and CLRA claims, for purposes of determining any award of attorney fees and costs.
F. Fee Order
Our ruling here with respect to plaintiffs' appeal of the judgment below undermines the basis for the trial court's award of fees to Raceway, namely, the proposition that Raceway prevailed on all claims asserted by plaintiffs except for Mr. Salcedo's fraud claim. As such, we need not address the merits of the arguments raised by the parties in plaintiffs' appeal and Raceway's cross-appeal of the fee order — the fee order must be vacated, and the issue of attorney fees and costs remanded for reconsideration following final adjudication of all claims.
In case No. E054517, the judgment below is affirmed in part and reversed in part as follows:
In case No. E056595, the trial court's fee order is vacated, and the matter of an award of attorney fees and costs remanded for determination by the trial court, after final adjudication of all claims.
Ramirez, P.J., and Richli, J., concurred.
Plaintiffs suggest the cynical view that the "computer error" could have been "just a scheme to see how many illegal charges can be slipped into deals before someone catches on," but the trial court made the factual finding that there was no such scheme, only a "bona fide error." We have no cause to disturb that finding.