Gibson v. Credit Managers Assn.

Filed 5/19/08 Gibson v. Credit Managers Assn. CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

APPEAL from an order of the Superior Court of Los Angeles County,

Elihu Berle, Judge. Affirmed.

Ron Bochner for Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Donald G. Forgey, Caroline E. Chan and Jason Scupine for Defendant and Respondent.

_________________________

Samantha Gibson appeals an order denying her motion to certify a class of plaintiffs consisting of approximately 2,000 individuals whose vehicles were detained for a period of up to 10 days by defendant Credit Managers Association of California dba CMA Business Credit Services (CMA) after CMA accepted an assignment of the assets of M2 Collision Care Centers (M2) for the benefit of its creditors. ^[1] We affirm the trial courts order.

FACTUAL AND PROCEDURAL BACKGROUND

1. Gibsons lawsuit.

Gibson filed a class action complaint against CMA alleging conversion, trespass to chattel and violation of the unfair competition law (UCL) under Business and Professions Code section 17200 et seq. The complaint asserted that in April of 2005, Gibson left her vehicle for repair at an M2 facility in San Ramon. At the time, M2 operated 27 car repair facilities in California. However, on April 17, 2005, M2 ceased operations and assigned its assets to CMA. CMA posted security guards at each M2 facility, thereby denying Gibson and other M2 customers access to their vehicles for a period of more than one week without a court order or any explanation of the detention of the vehicles.

2. Gibson seeks class certification.

Gibson filed a motion to certify as a class of plaintiffs the approximately 2,000 California consumers whose vehicles were left at M2 facilities for repair and were thereafter detained by CMA. Gibson attached to the motion copies of media reports relating to the demise of M2. These reports indicate CMA knew the 2,000 vehicles in the possession of the M2 repair facilities were not included in the assignment. Further, CMA chose not to hire former M2 employees to return the vehicles immediately but instead waited until CMA had sold the majority of the M2 repair facilities at auction before it commenced the process of returning vehicles to their owners. In the motion, Gibson observed that Allstate Insurance and Farmers Insurance Exchange each had sued CMA on behalf of their insureds and both suits had been settled.

In opposition to Gibsons motion, CMA asserted its administration of M2s assets met the appropriate standard of business judgment and did not constitute conversion, trespass to chattel or any form of unfair business practice. CMA asserted all vehicles were returned within two weeks of the assignment and many owners were given discounts on their repair bills to compensate them for any inconvenience they may have suffered. CMA claimed determination of the issue of causation required an evaluation of the circumstances of each putative class members inability to obtain return of their vehicle, including whether each plaintiff was entitled to recover damages for loss of use.

In support of the opposition, counsel for CMA averred the lawsuits filed by Allstate and Farmers had been dismissed with no settlement paid by CMA.

Also in support of CMAs opposition, Michael Joncich, a CMA manager, averred that on April 17, 2005, CMA dispatched security guards to each of the collision centers to protect the assigned property. CMA attempted to respond to the hundreds of inquiries it received seeking information about M2 and provided a recorded message assuring owners their vehicles would be returned as soon as possible. CMA also posted status reports on its web site. CMA sold 21 of the M2 repair centers at auction on April 22, 2005. The new owners either released the vehicles to their owners or completed the repairs. During the weekend after the April 22, 2005 auction, CMA used the auction proceeds to hire former M2 employees to assist with the return of vehicles at the six collision centers that were not sold at auction. The release of vehicles to these owners began on Monday, April 25, 2005. CMA contacted vehicle owners and negotiated settlement of any outstanding repair charges in exchange for release of vehicles to owners. A significant number of vehicle owners were given discounts on their repair bills or some other form of remuneration in order to compensate them for any inconvenience that they may have suffered.

3. The first hearing; further filings.

At the first hearing on Gibsons motion for class certification, the trial court continued the matter to allow Gibson to complete pending discovery.

Gibson thereafter filed a supplemental brief to which she attached portions of the deposition testimony of Joncich and Robert Hoder. Joncichs deposition testimony indicated CMA might have information related to the identity of putative class members but finding it and compiling it . . . is probably next to impossible . . . [b]ecause the server is down, dismantled, and the people that are responsible for managing it are no longer available. . . . But none of the data has been destroyed.

Hoders deposition testimony indicated that, in this case, CMA intended to sell as many of the repair centers as possible at auction and thereafter have the new owners return the cars to their owners. Had that plan failed, the secured creditors would have hired M2 employees to return the vehicles to their owners.

Based on Hoders deposition testimony, Gibson argued the secured creditors could have hired M2 employees at the outset of the assignment to expedite return of the vehicles to their owners. Instead, CMA maximized its own return, which was based on a percentage of the recovery. Gibson further noted the settlements CMA entered into with Allstate and Farmers expressly reserved the rights of the insured putative class members to seek recovery against CMA. Gibson asserted 1,500 of the putative class members had been identified. In a subsequent filing, Gibson claimed CMA had withheld the M2 server that contained information Gibson needed to ascertain the identity of the remaining 500 putative class members.

4. The second hearing.

At the second hearing on Gibsons motion to certify the class, the trial court noted each vehicle owner may have had a different expectation with respect to how long it would take to repair their vehicle. The trial court suggested some owners might have been given a repair window of two weeks and others may have been waiting for parts. Gibsons counsel responded that, regardless of the expectations of the owners, the vehicles were lost to their owners for 7 to 10 days during which time no repairs were performed. Further, the damage suffered by each plaintiff could be determined by reference to rental car rates.

The trial court continued the matter to permit counsel to determine whether anything supportive of the class certification motion might be found in a server and several boxes of documents CMA produced at the hearing.

Gibson thereafter filed a further supplemental brief asserting that loss of use of the vehicles for more than eight days demonstrated commonality and Gibsons inability to identify 500 of the putative class members was based on CMAs failure to comply with discovery. Gibson also filed a motion to compel further responses to discovery. Gibson asserted CMA had agreed to produce the server which might contain information related to the identity of potential class members, but instead had produced an Ethernet hub.

5. The third hearing.

At the outset of the third hearing on the motion to certify the class, the trial court ruled the class was ascertainable because the 2,000 vehicle owners could be determined from the records of the new owners of the repair shops. However, the trial court found Gibson had failed to show that common issues of law or fact predominated. Rather, the only common factual issue was the detention of vehicles that had been left for repair for a period of up to 10 days. The trial court ruled, [T]his issue alone is not sufficiently important so that adjudication on a class basis will benefit the litigants as an efficient way of handling this case in terms of the administration of justice. The trial court found there were numerous individual issues that had to be addressed including: what was the agreed period of custody for each putative class members vehicle; what was the anticipation as to how long the vehicle would be in the custody of the repair facility . . . ; did any of the putative class members consent to the time period of the retention of the vehicle and the delay; whether the loss of use caused any damage to any of the members, and, of course, there are specific issues of damages, such as what would be the value of the loss of use and the cost of the rental charges suffered by any class member and whether they have any other vehicle to use in the family which perhaps [prevented] any loss.

CONTENTIONS

Gibson contends common questions of fact predominated the issues framed by the pleadings, the trial court erroneously required Gibson to make unnecessary showings, CMA withheld discovery relevant to the issue of consent and the trial court failed to address Gibsons UCL claim.

DISCUSSION

1. General principles.

Code of Civil Procedure section 382 authorizes class actions when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . . The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citations.] The community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.] [] The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. [Citation.] A trial court ruling on a certification motion determines whether . . . the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. [Citations.] . . . []  We review the trial courts ruling [on a motion for class certification] for abuse of discretion. Because trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, they are afforded great discretion in granting or denying certification . . . . [Accordingly,] a trial court ruling supported by substantial evidence generally will not be disturbed unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation] [citation]. . . . Any valid pertinent reason stated will be sufficient to uphold the order. [Citations.] (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326-327; see also Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.)

A class action also must be the superior means of resolving the litigation, for both the parties and the court. . . . [R]elevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing. [Citation.] [B]ecause group action also has the potential to create injustice, trial courts are required to carefully weigh respective benefits and burdens and to allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts. [Citation.] [Citations.] (Newell v. State Farm General Ins. Co. (2004) 118 Cal.App.4th 1094, 1101; see Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2006) 14:16, pp. 14-11 to 14-12 (rev.# 1, 2006) [benefits of class action evaluated by (1) interest of each putative class member in controlling his or her case personally; (2) potential difficulties in managing a class action; (3) nature and extent of already pending litigation by individual class members involving the same controversy; and (4) desirability of consolidating all claims in a single action before one court].) (Aguiar v. Cintas Corp. No. 2 (2006) 144 Cal.App.4th 121, 132-133.)

With these principles in mind, we turn to the issues presented.

2. The trial court did not abuse its discretion in finding insufficient commonality of interest among the putative class members.

Gibson contends the trial court erroneously focused on (1) whether the consent the putative class members gave M2 extended to CMAs detention of the vehicles, (2) whether the class must show out-of-pocket losses in order to claim loss of use, and (3) whether the trial court could raise speculative concerns about commonality when CMA withheld and misrepresented the state of discovery.

a. Consent.

With respect to the scope of the consent given by the vehicle owners, Gibson notes CMA admitted it took possession of the vehicles, denied the owners access to the vehicles and delayed return of the vehicles to the owners. Gibson asserts this demonstrates conversion and trespass to chattel. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1350-1351.) Questions related to the defendants good faith, lack of knowledge and motive are immaterial. (Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1065-1066.) Although consent is a defense to conversion, the consent given in this case did not include consent to CMAs liquidation plan. Gibson concludes the trial court erred in assuming that some putative class members may have consented to the delay caused by CMAs denial of access to the vehicles.

We find no abuse of the trial courts discretion in its common sense approach to the consent issue. Individuals who leave their cars for repair understand that loss of use of the vehicle is inevitable. Further, the duration of the loss depends on numerous factors, many of which are beyond the control of the repair facility, including the ability to obtain necessary parts and delays due to complexity of the repair or the discovery that additional work may be needed. Given the wide variety of circumstances presented when a vehicle is repaired, combined with the loss of use of the vehicle intrinsic in such repairs, the trial court did not abuse its discretion in concluding the need to investigate the unique circumstances surrounding the return of each vehicle to its owner augured against a finding of commonality.

b. Damages.

Gibson asserts she demonstrated that each putative class member suffered damages and there is no need at this stage of the proceedings to show the amount of each class members damage. Further, there was no evidence any vehicle owners were compensated or settled their loss of use claim and the settlement with Allstate and Farmers expressly reserved the right of the insured to pursue loss of use claims. Even if there were such evidence, it would be excluded under the collateral source rule. (Anheuser-Busch, Inc. v. Starley (1946) 28 Cal.2d 347, 349.)

Gibsons argument there was no evidence any vehicle owners were compensated for their inconvenience overlooks Joncichs declaration which averred, A significant number of vehicle owners were given discounts on their repair bills or some other form of remuneration in order to compensate them for any inconvenience that they may have suffered. Consequently, analysis of each claim would include investigation of whether the vehicle owner had been accorded any consideration upon release of the repaired vehicle.

Gibson next contends the trial court failed to recognize that class certification is appropriate even if each plaintiff may at some point be required to make an individual showing as to his or her eligibility for recovery or amount of damages. (See Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 333 [ a class action is not inappropriate simply because each member of the class may at some point be required to make an individual showing as to his or her eligibility for recovery ]; Daar v. Yellow CabCo. (1967) 67 Cal.2d 695, 707-708; Hicks v. Kaufman & BroadHome Corp. (2001) 89 Cal.App.4th 908, 916.) Further, damages in this case may easily be computed by reference to car rental rates. (Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1278.) Gibson claims the trial courts finding that damages for loss of use is an individual issue suggests the trial court believed each putative class member must suffer more than mere loss of use in order to show damages. However, loss of use, standing alone, is sufficient to demonstrate damage. (Meyers v. Bradford (1921) 54 Cal.App. 157, 160-161.)

Gibsons argument in this regard misses the point. The trial court did not conclude the putative class members could not show damages. Rather, the trial court found each plaintiffs damages would be unique and therefore the case was not amenable to class action certification. As has been noted, the trial courts analysis proceeded from the premise that repair of a vehicle necessarily involves some loss of use. Thus, some vehicle owners might not have been inconvenienced by the delay in the repair of their vehicle and others would not have had access to their vehicles in any event due to the unavailability of parts or for other reasons related to the repair. Moreover, some of the vehicle owners already had received some compensation for the loss of use of the vehicle through adjustments in the repair charges.

In these circumstances, the trial court properly could rely on the rule that   . . . the community of interest requirement is not satisfied if every member of the alleged class would be required to litigate numerous and substantial questions determining his individual right to recover . . . . [Citation.] [Citation.] (Dunbar v. Albertsons, Inc. (2006) 141 Cal.App.4th 1422, 1431-1432; Frieman v. San Rafael Rock Quarry, Inc. (2004) 116 Cal.App.4th 29, 40.)

c. Ongoing discovery related to the certification issue.

With respect to the discovery issue, Gibson contends trial court erroneously denied the request for certification before it ruled on Gibsons motion to compel production of M2s server, which Gibson speculates would include any consent the putative class members had given to M2. Gibson asserts her inability to make an adequate showing of commonality was caused by CMAs failure to provide M2s server, which CMA agreed to produce but instead produced an Ethernet hub. Gibson asserts it is an abuse of discretion to deny class certification without giving the plaintiff an opportunity to conduct discovery on class action allegations. (Stern v. Superior Court (2003) 105 Cal.App.4th 223, 232-233.)

In addressing this issue, we note Gibson sought the server in the trial court to obtain information related to the identity of putative class members. After the trial court ruled the class was ascertainable, all issues related to ongoing discovery had been resolved in Gibsons favor. Gibson therefore cannot show the trial court addressed the certification issue while relevant discovery remained outstanding.

In an apparent attempt to avoid this result, Gibson now claims the server would have contained evidence of the scope of the consent given by each vehicle owner. However, this claim was not raised in the trial court and cannot provide a basis for reversal on appeal.

2. The UCL claim.

Gibson contends the trial court erroneously made no separate analysis of the UCL claim or whether that class was certifiable. Gibson notes a claim may be made under Business and Professions Code section 17204 by a person who has suffered injury in fact and has lost money or property as a result of such unfair competition. Here, each putative class member suffered injury in fact and loss of property. CMA also engaged in an unfair business practice by withholding the vehicles of the putative class members for an appreciable period of time. Gibson claims CMA should have known this case was not appropriate for the assignment method of liquidation. Thus, the trial court could have fashioned injunctive relief prohibiting CMA from accepting future assignments without first determining the status of the assets. (California Service Station etc. Assn. v. Union Oil Co. (1991) 232 Cal.App.3d 44, 57.) Gibson also notes the trial court could have used Gibsons class action complaint as a vehicle to order CMA to disgorge any wrongfully obtained profits through a fluid recovery fund.

Gibson has not cited any authority that required the trial court separately to address the certification issue with respect to the UCL claim. In the absence of such authority, the trial courts denial of class certification based on its view of the case as a whole is sufficient to withstand Gibsons attack.

In any event, the UCL is not an all-purpose substitute for a tort or contract action. [Citation.] Instead, the act provides an equitable means through which both public prosecutors and private individuals can bring suit to prevent unfair business practices and restore money or property to victims of these practices. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150.) Only injunctive relief and restitution are available. (Id. at p. 1144.)

Injunctive relief is appropriate only when there is a threat of continuing misconduct. (Code Civ. Proc., 525 [injunction is a writ or order requiring a person to refrain from a particular act]; Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403.) Gibson claims CMA could be enjoined from seizing assets that are not part of an assignment in future cases. However, it is unlikely the trial court validly could have enjoined CMA from seizing assets related to future assignments by other secured creditors.

With respect to Gibsons claim of restitution under the fluid recovery fund, the theory underlying fluid class recovery is that because each class member cannot be compensated exactly for the damage he or she suffered, the best alternative is to pay damages in a way that benefits as many of the class members as possible and in the approximate proportion that each member has been damaged, even though some class members may not receive compensation and some non-class-members will benefit from the distribution. (Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 128.) No necessity for such a remedy appears here.

In sum, no error appears in the trial courts failure to address Gibsons UCL claim separately.

DISPOSITION

The order denying class certification is affirmed. Gibson shall bear costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KLEIN, P. J.

We concur:

CROSKEY, J.

ALDRICH, J.

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^[1] An order denying a class certification motion is appealable. (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.)