Attorney’s Fees Not Available to Prevailing Party Under Rees-Levering Act Where Suit Alleged Violation of Unfair Competition Law Based on Rees-Levering Violation: An individual sued the holder of his retail installment sale contract for a violation of California’s Unfair Competition Law based on a violation of the California’s Rees-Levering Automobile Sales Finance Act. The U.S. District Court for the Southern District of California granted summary judgment for the creditor, and the creditor moved for an award of attorney’s fees pursuant to the RISC or, alternatively, pursuant to Rees-Levering. The court denied the motion. The court found that attorney’s fees were not warranted under the RISC because the attorney’s fee provision in the RISC was not legible in the record. The court added that attorney’s fees under Rees-Levering were not allowed in this case, where the “‘Rees-Levering violation is merely a predicate to a UCL claim [because] the public policy underlying the UCL must prevail over the reciprocal fee provision of Rees-Levering.’” See Wright v. General Motors Acceptance Corporation, 2012 U.S. Dist. LEXIS 57363 (S.D. Cal. April 23, 2012).

Court Certifies Class in Action Challenging Practice of Estimating Repossession Fee in Notice of Intent to Sell Collateral: A motorcycle buyer voluntarily surrendered the motorcycle to the secured creditor after he noticed various mechanical problems. The creditor sent the buyer a “Notice of Intent to Dispose of Repossessed Collateral,” which contained a balance owed, including an “Estimated Repossession Fee.” After the motorcycle was sold, the creditor sent the buyer a statement informing him of the deficiency balance due. The buyer entered into a payment plan but then defaulted. The buyer filed a class action lawsuit against the creditor for violations of California’s Rees-Levering Automobile Sales Finance Act and California’s Unfair Competition Law. He alleged that the Notice of Intent he and the putative class members received failed to provide required information, resulting in forfeiture of the creditor’s right to recover a deficiency balance. The U.S. District Court for the Eastern District of California certified a class. The court found that numerosity existed, noting that the size of the class was not affected by whether each class member’s vehicle was voluntarily surrendered as opposed to being repossessed because the Notice of Intent requirements applied to both circumstances. The court found that commonality was established over the questions of whether Rees-Levering applies to the creditor’s conduct and whether providing an “estimated value” for repossession services complies with that law. The court then held that the typicality element was also met because each of the putative class members received an “estimated” cost of repossession and the failure to provide a specific amount of the repossession fee was the identical type of injury suffered by all class members, no matter how close the estimate was to the actual value of those services. Finally, the court held that the class plaintiff and his counsel would fairly and adequately protect the interests of the class. The court found that questions of law or fact common to the members of the class predominated over any questions affecting only individual members, even though some class members’ loan documents contained an arbitration clause and class waiver and other class members’ documents did not. Finally, the court found that class litigation of common issues would reduce litigation costs and promote efficiency. See Mora v. Harley-Davidson Credit Corp., 2012 U.S. Dist. LEXIS 49636 (E.D. Cal. April 9, 2012).

Assignee of RISC Entitled to Repossess Vehicle Where Repair Shop Intended to Place Lien on Vehicle for Debtor’s Share of Repair Costs Authorized by Insurer: An individual bought a car that was later severely damaged in an accident. Her insurance company had the car repaired, but she did not pick up the car after the repairs due to a dispute with her insurer. The assignee of the car owner’s retail installment sales contract repossessed the car when it learned that the repair shop was threatening to place a lien on the title for the unpaid portion of the repairs and that the owner refused to pay because of the insurance dispute. After the repossession, both the car owner and the assignee filed complaints for declaratory judgment. The trial court found in favor of the assignee, explaining that the car owner’s failure to recover the vehicle from the repair shop allowed a lien to attach to the car, in violation of her contract. The Appellate Court of Illinois affirmed. The car owner argued that because she did not consent to the repairs, a lien could not attach to the car. The appellate court disagreed, noting that Illinois law provides that a lien attaches when work is commenced at the request of the reputed owner, authorized agent of the owner, or lawful possessor of the car. Because the car owner’s insurer arranged for the repairs and no one disputed that it was in lawful possession of the car, the appellate court found that the car owner’s consent was not necessary for the lien to attach. See Ries v. Fifth Third Bank, 2012 Ill. App. Unpub. LEXIS 897 (Ill. App. April 18, 2012).

Dealer Liable Under Vermont Consumer Fraud Act for Deficiencies in Title and Odometer Statement Despite Lack of Knowledge: A car dealership bought a used car at auction and received a clean document of title and odometer disclosure form to which the previous owner attested. The previous owner had also bought the car at auction where he received a salvage title to the car with unknown mileage. When the Vermont Department of Motor Vehicles issued the previous owner a new title, it erroneously issued a title that omitted information that the car had been salvaged and rebuilt. The dealership resold the car at auction. At resale, the odometer reading did not accurately reflect the car’s actual mileage, and the title did not reflect the fact that the car had been salvaged and rebuilt. When the buyer discovered this, he sued the dealership for violation of the Vermont Consumer Fraud Act. The trial court granted summary judgment for the buyer, and the Supreme Court of Vermont affirmed, holding that the VCFA does not require any degree of knowledge by the seller of the misrepresentation or omission in order to be held liable. The high court further held that the trial court did not abuse its discretion in refusing to consider the dealership’s evidence that the buyer bought the car “as is” where the dealership failed to include the relevant documents in its pleadings. See Gregory v. Poulin Auto Sales, Inc., 2012 Vt. LEXIS 28 (Vt. April 12, 2012).

Repossessing Creditor Must Establish that Sale Was Commercially Reasonable to Obtain Deficiency: After a creditor repossessed a vehicle for nonpayment and sold the vehicle, it sued the debtor for the deficiency balance. The trial court entered judgment in the creditor’s favor, but the Superior Court of New Jersey, Appellate Division, reversed. The appellate court found that a repossessing creditor must establish with evidence that the sale of the vehicle was commercially reasonable in order to obtain a deficiency. In this case, the creditor failed to present any such evidence and, thus, could not recover a deficiency. See Hann Financial Services Corp. v. DiPietro, 2012 N.J. Super. Unpub. LEXIS 844 (N.J. Super. App. Div. April 17, 2012).

So there you have it!  Stay legal, and we’ll see you next month.