Ruling
Kristol Serna vs. Hudson Insurance Company
Jul 16, 2024 |
24CECG02276
Re: Kristol Serna v. Hudson Insurance Company
Superior Court Case No. 24CECG02276
Hearing Date: July 16, 2024 (Dept. 502)
Motion: Plaintiff’s Motion for Attorney’s Fees and Costs
Oral Argument, if timely requested, will be heard on Thursday, July 18, 2024 at 3:30 PM in
Department 502.
Tentative Ruling:
To deny plaintiff’s motion for attorney’s fees and costs, in its entirety.
Explanation:
While plaintiff has not explained in her notice of motion what the exact basis for
her request for attorney’s fees is, it appears from her points and authorities brief that she
is relying on several statutes to support her claim, as well as the attorney’s fees clause in
the sales contract. She notes that, under Civil Code section 1717, “In any action on a
contract, where the contract specifically provides that attorney's fees and costs, which
are incurred to enforce that contract, shall be awarded either to one of the parties or to
the prevailing party, then the party who is determined to be the party prevailing on the
contract, whether he or she is the party specified in the contract or not, shall be entitled
to reasonable attorney's fees in addition to other costs.” (Civ. Code, § 1717, subd. (a).)
However, section 1717, subdivision (b)(2) also states that, “[w]here an action has been
voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no
prevailing party for purposes of this section.” (Civ. Code, § 1717, subd. (b)(2).)
Here, plaintiff dismissed her first amended complaint after she and Freeway
Funding reached a settlement of their claims against each other. Therefore, she cannot
recover her attorney’s fees under section 1717 based on the attorney’s fees clause in the
contract, as she dismissed her complaint pursuant to a settlement, and as a result she is
not the prevailing party on the contract as a matter of law.
Plaintiff also relies on the Consumer Legal Remedies Act (Civil Code section 1750,
et seq.) and the Rosenthal Fair Debt Collection Practices Act (Civil Code section 1788, et
seq.). Plaintiff points out that both the CLRA and the Rosenthal Act provide for an award
of attorney’s fees to the prevailing consumer plaintiff in an action under those statutes.
(Civil Code, §§ 1780, subd. (e); 1788.30, subd. (c).)
However, under the CLRA the consumer is required to give the person alleged to
have committed the wrongful acts written notice of their claim and an opportunity to
repair, replace, or otherwise rectify the goods or services at least 30 days before filing suit.
(Civil Code, § 1782, subd. (a)(1), (2).) Thus, if the consumer fails to give notice 30 days
before filing suit, or the merchant offers to repair or replace the defective item within the
30-day period, the consumer is barred from recovering damages or attorney’s fees
against the merchant in a subsequent CLRA suit. (Benson v. Southern California Auto
Sales, Inc. (2015) 239 Cal.App.4th 1198, 1212.)
In the present case, plaintiff’s counsel sent a demand letter under the CLRA to
Freeway on September 15, 2023. (Barry decl., ¶ 15, and Exhibit 6 thereto.) However,
instead of waiting at least 30 days for Freeway to respond to the demand, plaintiff filed
her complaint asserting a claim under the CLRA and other causes of action on
September 18, 2023, only three days after sending the demand letter. Therefore, plaintiff
failed to comply with the CLRA’s requirement to give Freeway 30 days’ notice and an
opportunity to repair, replace, or otherwise rectify the problem. As a result, plaintiff is now
barred from seeking damages or attorney’s fees under her CLRA claim. (Benson, supra,
at p. 1212.) Indeed, her complaint does not even seek money damages under the CLRA,
so she was apparently aware of the fact that her claim might have been filed
prematurely. Nevertheless, her failure to give Freeway 30 days to cure the problem
means that she cannot seek attorney’s fees based on the CLRA.
Plaintiff also relies on the Rosenthal Act’s fees provision to support her request for
attorney’s fees. Under Civil Code section 1788.30, subdivision (c), “[i]n the case of any
action to enforce any liability under this title, the prevailing party shall be entitled to costs
of the action. Reasonable attorney's fees, which shall be based on time necessarily
expended to enforce the liability, shall be awarded to a prevailing debtor; reasonable
attorney's fees may be awarded to a prevailing creditor upon a finding by the court that
the debtor's prosecution or defense of the action was not in good faith.” (Civ. Code, §
1788.30, subd. (c).)
Defendant contends that plaintiff cannot recover her fees under the Rosenthal
Act because she did not give notice of a violation of the Act within 15 days of filing her
lawsuit. Defendant cites to section 1788.30, subdivision (d), which states that, “[a] debt
collector shall have no civil liability under this title if, within 15 days either after discovering
a violation which is able to be cured, or after the receipt of a written notice of such
violation, the debt collector notifies the debtor of the violation, and makes whatever
adjustments or corrections are necessary to cure the violation with respect to the
debtor.” (Civil Code, § 1788.30, subd. (d).) Defendant argues that this provision means
that plaintiff had to give 15 days’ notice before filing her action under the Rosenthal Act,
and that because plaintiff did not give such notice, she is barred from recovering her
attorney’s fees.
However, section 1788.30(d) does not require the debtor to give 15 days’ notice
before filing suit. It only provides that, if written notice of a violation is given and the debt
collector takes action to correct the violation, then the debt collector is not liable under
the Act. Defendant cites to no cases or other authorities that provide that the debtor
must always give written notice of a violation at least 15 days before filing suit under the
Act, or that failure to give notice results in the waiver of the right to recover attorney’s
fees under the Act. Defendant cites to Benson v. Southern California Auto Sales, supra,
in support of its position, but Benson only dealt with the issue of whether attorney’s fees
are recoverable under the CLRA, not the Rosenthal Act. Since the Rosenthal Act
contains different language that does not expressly require the debtor to give 15 days’
notice to the debt collector before filing suit, defendant has not shown that the lack of
notice bars plaintiff’s claim for attorney’s fees. As a result, the court will not deny the
motion based on the alleged lack of statutory support for her prayer for attorney’s fees.
On the other hand, plaintiff still needs to show that she is the prevailing party in
order to obtain her attorney’s fees under the Rosenthal Act. (Civ. Code, § 1788.30, subd.
(c).) The Rosenthal Act does not define what the term “prevailing party” means.
However, other courts have analyzed the concept of “prevailing party” in the context of
similar fee provisions in statutes such as the CLRA and Civil Code section 1717.
In Kim v. Euromotors West/The Auto Gallery (2007) 149 Cal.App.4th 170, the Court
of Appeal discussed the standards for determining whether a party had “prevailed” for
the purpose of obtaining attorney’s fees under the CLRA. “In Reveles, supra, the court
applied the general definition of ‘prevailing party’ found in Code of Civil Procedure
section 1032.5. It concluded that a plaintiff is the prevailing party under section 1780(d)
‘if he obtained a “net monetary recovery” on his [CLRA] claim.’ More recently, the court
in Graciano, supra, held that, in deciding prevailing party status under the CLRA, ‘the
court should adopt a pragmatic approach, determining prevailing party status based on
which party succeeded on a practical level. Under that approach, the court exercises
its discretion to determine “the prevailing party by analyzing which party realized its
litigation objectives.”’” (Kim v. Euromotors West/The Auto Gallery, supra, at p. 179,
citations omitted.)
The Kim court also cited to Elster v. Friedman (1989) 211 Cal.App.3d 1439, wherein
the court stated that, “[a] plaintiff prevails, in essence, when he gets most or all of what
he wanted by filing the action.” (Elster, supra, at pp. 1443–1444.) “In Elster, the plaintiffs
were the prevailing party because ‘what they wanted’ was to enjoin the defendant from
harassing them and that is the relief they obtained.” (Kim, supra, at pp. 179–180.)
“In Coltrain v. Shewalter, the court held that the critical issue for the prevailing
party under Code of Civil Procedure section 425.16, subdivision (c) (the anti-SLAPP
statute) ‘is which party realized its objectives in the litigation.’ In cases concluding by
way of dismissal, that is usually the defendant. ‘Since the defendant's goal is to make
the plaintiff go away with its tail between its legs, ordinarily the prevailing party will be the
defendant. The plaintiff, however, may try to show it actually dismissed because it had
substantially achieved its goals through a settlement or other means....’” (Id. at p. 180,
citations omitted.)
“[A] number of courts have elected to take a more ‘pragmatic’ and less restrictive
approach to assess whether a buyer has prevailed. Under that approach, it is not
enough for a buyer to show that she ‘obtained a net monetary recovery.’ Instead, courts
ask: To what extent did the buyer achieve her litigation objectives? By and large,
litigation objectives are measured by what the party sought to obtain by filing suit.” (Duff
v. Jaguar Land Rover North America, LLC (2022) 74 Cal.App.5th 491, 502, citations
omitted.)
“As one Court of Appeal has explained, ‘[t]ypically, a determination of no
prevailing party results when both parties seek relief, but neither prevails, or when the
ostensibly prevailing party receives only a part of the relief sought.’ By contrast, when the
results of the litigation on the contract claims are not mixed—that is, when the decision
on the litigated contract claims is purely good news for one party and bad news for the
other—the Courts of Appeal have recognized that a trial court has no discretion to deny
attorney fees to the successful litigant.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 875–876,
citations omitted, italics in original [interpreting the concept of “prevailing party” for the
purpose of awarding fees under Civil Code section 1717].)
“Accordingly, we hold that in deciding whether there is a ‘party prevailing on the
contract,’ the trial court is to compare the relief awarded on the contract claim or claims
with the parties' demands on those same claims and their litigation objectives as
disclosed by the pleadings, trial briefs, opening statements, and similar sources. The
prevailing party determination is to be made only upon final resolution of the contract
claims and only by ‘a comparison of the extent to which each party ha[s] succeeded
and failed to succeed in its contentions.’” (Id. at p. 876, citation omitted.)
In the present case, plaintiff was not the “prevailing party” for the purpose of the
Rosenthal Act or any other fee shifting statute. Plaintiff argues that she achieved her
litigation objectives because she obtained a settlement that rescinded the sales
contract, waived the unpaid balance due on the contract, and removed the negative
references on her credit report. However, as defendant points out, plaintiff’s complaint
sought more than simply to rescind the contract, waive the unpaid balance due, and
remove the negative credit history. She also sought actual damages, restitution of the
amounts she paid under the contract, incidental and consequential damages, punitive
damages, civil penalties, equitable and injunctive relief, prejudgment interest, attorney’s
fees and costs, and other relief under Business and Professions Code section 17200 as
provided by law. (Complaint, p. 12, Prayer for Relief, see also First Amended Complaint,
pp. 12-13, Prayer for Relief.) Also, in her demands to defendant, plaintiff sought not only
to rescind the contract, cancel any outstanding debt owed on the contract, and
remove the poor credit report, but also emotional distress and unfair debt collection
practice damages, restitution of the amounts she paid to defendant, and attorney’s fees.
(Barry decl., ¶¶ 16, 19, and Exhibits 6 and 7 thereto.)
Yet the settlement did not grant most of the relief plaintiff sought, as it did not give
her any restitution of payments she had made, money damages, punitive damages,
injunctive relief, civil penalties, or prejudgment interest. (Exhibit 8 to Barry decl.) While
plaintiff did receive part of the relief she sought, as she did not have to pay off the
remaining amount of the loan and the negative report was removed from her credit
history, she had to give up the vehicle to Freeway Funding and she received no
damages, penalties, or restitution payments. In fact, she received no money from the
settlement at all.
Also, Freeway received some benefit from the settlement, as it was able to retain
the vehicle and plaintiff agreed to sign any paperwork necessary to transfer her interest
in the vehicle to Freeway. Freeway could then resell the vehicle to offset some of its losses
from plaintiff’s failure to pay off the sale contract. Freeway also obtained a dismissal of
plaintiff’s claims against it, so it did not have to worry about the potential for any future
liability to plaintiff.
In addition, Freeway claims that it only settled its cross-claims against plaintiff
because plaintiff was claiming to be homeless and insolvent, and therefore she was
judgment proof and there was no point in attempting to prosecute the cross-claims
against her. (Barry decl., ¶ 20 and Exhibit 9 thereto.) “[I]t seems inaccurate to
characterize the defendant as the ‘prevailing party’… if the plaintiff dismissed for reasons,
such as the defendant's insolvency, that have nothing to do with the probability of
success on the merits.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 621.) Here, the
defendant’s dismissal of its cross-claims against plaintiff was apparently based on the
fact that plaintiff was insolvent and judgment proof, and thus it would have been a waste
of time and money to continue litigating its claims against her. Consequently, the fact
that defendant dismissed its cross-complaint against plaintiff does not mean that plaintiff
was the prevailing party here.
In summary, both parties obtained some of the relief that they sought by settling
their claims against each other, even though neither side recovered any money
damages or payments. The overall effect of the settlement was to allow the parties to
walk away from the dispute with a “clean slate.” Under the circumstances, then, there
was no “prevailing party” for the purpose of the Rosenthal Act or any other fee-shifting
statute, and plaintiff is not entitled to an award of her attorney’s fees or costs. As a result,
the court intends to deny the plaintiff’s motion for attorney’s fees and costs.1
Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure
section 1019.5, subdivision (a), no further written order is necessary. The minute order
adopting this tentative ruling will serve as the order of the court and service by the clerk
will constitute notice of the order.
Tentative Ruling
Issued By: KCK on 07/15/24 .
(Judge’s initials) (Date)
1Since plaintiff was not the prevailing party, there is no need for the court to consider whether the
requested amount of fees and costs is reasonable or whether a lodestar multiplier is warranted.
Ruling
KATHRYN BURDGE vs AIRSTREAM, INC.
Jul 18, 2024 |
24CV00800
24CV00800
BURDGE v. AIRSTREAM INC.
AIRSTREAM’S MOTION TO STAY
The motion to stay is denied.
I. BACKGROUND
Kathryn Burdge’s (“Burdge’) amended complaint, filed on March 26, 2024, alleges a
violation of the Song-Beverly Consumer Warranty Act in relation to her purchase of a 2023
Airstream Atlas RV. She purchased the Airstream in Temecula, California and she resided in
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Santa Cruz County at the time of the purchase. Burdge asserts various deficiencies/defects with
the RV.
In connection with the purchase of the Airstream, Burdge signed a Limited Warranty
which stated, in part, the following: “LEGAL REMEDIES: EXCLUSIVE JURISDICTION FOR
DECIDING LEGAL DISPUTES RELATING TO THE ALLEGED BREACH OF EXPRESS
WARRANTY AND BREACH OF THE IMPLIED WARRANTIES ARISING BY
OPERATION OF LAW AS WELL AS THOSE RELATING TO REPRESENTATIONS OF
ANY NATURE RESTS IN THE COURTS WITHIN THE STATE OF MANUFACTURE,
WHICH IS OHIO.” (Ex. B to Dec. of March.)
This language is found on the second page of the Limited Warranty and is the second
paragraph before the signature line for the purchaser. The sales contract is 6 pages long and
signatures were required on each page and, on some pages, multiple signatures on each page.
II. MOTION
Airstream seeks to stay this action to allow Burdge to re-file the case in Ohio, the forum
selection state. Airstream bases its motion on the above-referenced forum selection clause
contained in the signed limited warranty. Airstream contends a motion to enforce a forum
selection clause is a motion to stay (or dismiss) the action to allow a plaintiff to file in the proper
court.
Airstream argues the forum selection provision is mandatory and reasonable. Further,
Airstream acknowledges Burdge cannot be compelled to waive her rights under Song-Beverly,
and thus, it will stipulate to have the Ohio courts apply Song-Beverly in this case. Airstream
contends a stay would allow for time to determine if the Ohio courts would apply Song-Beverly.
If they will not, then Burdge could bring the case back to Santa Cruz.
Burdge opposes the stay. She argues Airstream failed to provide evidence demonstrating
she freely and voluntarily agreed to the forum selection clause. Even though Burdge signed the
limited warranty “she had to sign the document even if she did not understand the importance of
the forum selection clause.” (Opp at pg. 3.) That is, Burdge was required to sign the
acknowledgment of document and that does not prove she waived her rights under Song-Beverly
freely and voluntarily.
Burdge asserts Airstream failed to provide evidence that the designated forum will not
diminish her rights afforded under California law. Specifically, she argues, even if the court finds
she freely and voluntarily agreed to the forum selection clause, Airstream cannot show that Ohio
law will not diminish her substantive rights. Burdge contends Airstream’s offer to stipulate to
have the Song-Beverly apply in Ohio is insufficient because the choice of law in the Limited
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Warranty states that Ohio law will govern procedural issues and how the express warranty is
construed and interpreted.
III. DISCUSSION
“Trial courts generally have the inherent power to stay proceedings in the interests of
justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33
Cal.App.4th 1484, 1489; see also Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, 1376-79;
CCP § 128(a)(3) [“Every court shall have the power to do all of the following: To provide for the
orderly conduct of proceedings before it, or its officers.”].)
"The procedure for enforcing a forum selection clause is a motion to stay or dismiss for
forum non conveniens." (Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1294.)
“California law is ‘in accord with the modern trend which favors enforceability of such
[mandatory] forum selection clauses. [Citations.] No satisfying reason of public policy has been
suggested why enforcement should be denied a forum selection clause appearing in a contract
entered into freely and voluntarily by parties who have negotiated at arm's length. For the
foregoing reasons, we conclude that forum selection clauses are valid and may be given effect, in
the court's discretion and in the absence of a showing that enforcement of such a clause would be
unreasonable.’ [Citation.]” (Quanta Computer Inc. v. Japan Communications Inc. (2018) 21
Cal.App.5th 438, 444-445.)
“‘California courts will refuse to defer to the selected forum if to do so would
substantially diminish the rights of California residents in a way that violates our state's public
policy.’ [Citation.]” (Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147.) “The party
opposing enforcement of a forum selection clause ordinarily ‘bears the substantial burden of
proving why it should not be enforced.’ [Citations.] That burden, however, is reversed when the
claims at issue are based on unwaivable rights created by California statutes. In that situation,
the party seeking to enforce the forum selection clause bears the burden to show litigating
the claims in the contractually designated forum ‘will not diminish in any way the
substantive rights afforded … under California law.’ [Citations.]” (Id.) (Emphasis added.)
In this case, while she did sign the limited warranty, the court agrees with Burdge that the
warranty was not signed knowingly as to the forum selection clause and that application of the
clause would be unreasonable and/or unfair. The clause is buried in the second to the last
paragraph and is written in legalese such that a reasonable consumer could not be expected to
understand they were acquiescing to file a lawsuit in Ohio. The exclusive jurisdiction section
does not adequately inform the consumer that they would need to file suit in Ohio for warranty
issues, especially given that Burdge lives in California and purchased the Airstream in
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California. The court also notes the length of the sales contract and number of signatures
required as factors which balance in Burdge’s favor.
The court does not find Airstream has carried its burden in demonstrating that Burdge’s
substantive rights will not be diminished in any way if the case is brought in Ohio. Despite the
offer of Airstream’s counsel to stipulate to apply California law in Ohio, there is no guarantee
the Ohio courts will agree to this arrangement; that is, what is the effect of the stipulation in the
Ohio courts? Second, Airstream’s proposal would create two pending actions, which does not
promote judicial economy. Third, having California courts apply California law simply makes
more sense in terms of protecting Burdge’s rights under the Song-Beverly Act and for efficient
case management.
Notice to prevailing parties: Local Rule 2.10.01 requires you to submit a proposed formal order
incorporating, verbatim, the language of any tentative ruling – or attaching and incorporating the
tentative by reference - or an order consistent with the announced ruling of the Court, in
accordance with California Rule of Court 3.1312. Such proposed order is required even if the
prevailing party submitted a proposed order prior to the hearing (unless the tentative is
simply to “grant”). Failure to comply with Local Rule 2.10.01 may result in the imposition of
sanctions following an order to show cause hearing, if a proposed order is not timely filed.
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