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Trenton Pierce v. Western Surety Company

June 22, 2012

TRENTON PIERCE, PLAINTIFF AND RESPONDENT,
v.
WESTERN SURETY COMPANY, DEFENDANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of Fresno County. Donald S. Black, Judge. (Super. Ct. No. 09CECG01077)

The opinion of the court was delivered by: Kane, J.

CERTIFIED FOR PUBLICATION

OPINION

Vehicle Code*fn1 section 11710 requires a licensed motor vehicle retail dealer to procure and file a bond in the amount of $50,000. Any person who suffers a loss by reason of the dealer's fraud has a right of action against the dealer and the surety on the bond in an amount not to exceed the value of the vehicle purchased. (§ 11711, subd. (a).)

Here, respondent Trenton Pierce made a section 11711 claim on the bond issued by appellant Western Surety Company (Western Surety) to Autorama, a licensed dealer. Western Surety eventually settled with Pierce. Thereafter, the trial court awarded attorney fees to Pierce. The court concluded that Autorama would have been liable for attorney fees if Pierce had successfully sued it on the contract and therefore Western Surety was also liable for attorney fees. The court further found that the claims Pierce made under various consumer protection statutes also entitled him to attorney fees from Western Surety.

Western Surety challenges the attorney fees award. Western Surety argues that, because section 11711 does not specifically authorize attorney fees, Pierce is not entitled to such fees by statute. Western Surety further contends that Pierce is not entitled to fees under the retail sales contract because the section 11711 bond is not security for the covenants of the contract. Rather, the bond provides for specific damages for specific fraud.

A surety's liability is commensurate with that of the principal within the express terms of the bond and any applicable statutes. Although the retail sales contract between Pierce and Autorama included an attorney fees provision, Pierce did not sue Autorama on that contract. Rather, Pierce sued for fraud. However, Pierce is entitled to attorney fees through his cause of action against Autorama for violation of the Consumer Legal Remedies Act. Therefore, the order will be affirmed.

BACKGROUND

In September 2008, Pierce purchased a 2005 truck from Autorama for approximately $19,700. In March 2009, Pierce filed the underlying complaint for fraud and deceit, negligence, and violation of several consumer protection statutes against Autorama and Western Surety. Pierce alleged that, at the time of purchase, Autorama failed to disclose that the truck had sustained material prior wreck damage. Pierce further alleged that Autorama charged Pierce substantially more than the advertised price of the truck and misrepresented that it would pay off the balance owed on Pierce's trade-in vehicle. Pierce also made a claim against Western Surety on the motor vehicle dealer bond.

Autorama went out of business shortly after the complaint was filed and Pierce took a default judgment against it. Thereafter, Pierce attempted to settle his claim with Western Surety through multiple offers. However, Western Surety summarily rejected these offers and proceeded with discovery requests.

In June 2010, Western Surety settled the issue of the balance owed on Pierce's trade-in vehicle with the lender. Pierce then served a Code of Civil Procedure section 998 offer to compromise for $10,000, excluding attorney fees and costs, on Western Surety. Western Surety accepted this offer.

On Pierce's motion, the trial court awarded attorney fees to Pierce in an amount not to exceed the remaining balance on the bond. The court noted that section 11711 does not provide for an award of attorney fees to a consumer who is the victim of a motor vehicle dealer's fraud. Nevertheless, because the surety's liability is commensurate with the principal's and the original sales contract had included an attorney fees clause, the court found that Pierce had the right to recover against Western Surety to the same extent that Pierce could have recovered against the dealer. The court further noted Pierce was entitled to attorney fees as the prevailing party on the causes of action under the Consumer Legal Remedies Act, the Song-Beverly Consumer Warranty Act, and the Automobile Sales Finance Act.

DISCUSSION

Section 11710 requires a motor vehicle dealer to procure and file a bond executed by a surety insurer in the amount of $50,000 as a condition of being licensed. This bond is "conditioned that the applicant shall not practice any fraud or make any fraudulent representation which will cause a monetary loss to a purchaser, seller, financing agency, or governmental agency." (ยง 11710, subd. (a).) Under section 11711, any person who suffers "any loss or damage by reason of any fraud practiced on him or fraudulent representations made to him by a licensed dealer ... and such person has possession of a written instrument furnished by the licensee, containing stipulated provisions and guarantees which the person believes have been violated by the licensee ... then any such person ...


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