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Flannery v. VW Credit, Inc.

California Court of Appeals, Fourth District, First Division

December 17, 2014

JOYCE FLANNERY, Plaintiff and Appellant,
v.
VW CREDIT, INC., Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2012-00102894-CU-MC-CTL Timothy Taylor, Judge.

Page 607

[Copyrighted Material Omitted]

Page 608

COUNSEL

Law Office of Barry D. Mills, Barry D. Mills; Law Office of Michael Doukas and Michael Ernest Doukas for Plaintiff and Appellant.

Reed Smith, Jesse L. Miller, Lisa B. Kim and Anne M. Grignon for Defendant and Respondent.

OPINION

BENKE, Acting P. J.

Plaintiff and appellant Joyce Flannery filed a complaint which alleges that by virtue of defendant and respondent VW Credit, Inc.'s (VW) failure to comply with provisions of California's Vehicle Leasing Act (VLA) (Civ. Code, § 2985.7 et seq.), VW violated California's Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.) (the Rosenthal Act) and California's unfair competition law (Bus. & Prof. Code, § 17200 et seq.) (the UCL). VW filed a demurrer to the complaint, which the trial court sustained without leave to amend. On appeal, Flannery contends the court erred by applying the doctrine of substantial compliance to consumer protection laws.

Page 609

VW has moved to dismiss the appeal as untimely. We deny the motion to dismiss and reverse the dismissal. Following the trial court's ruling on its demurrer, VW sought and received entry of an order dismissing the complaint and provided Flannery with notice of entry of the order; however, before the time in which to appeal from the dismissal expired, VW asked the trial court to vacate the dismissal and enter a new dismissal that included VW's costs. The trial court granted VW's request and entered an order vacating the first dismissal and ordering entry of a second dismissal, which included VW's costs. VW then served Flannery with notice of entry of the second dismissal. Thereafter, Flannery filed a notice of appeal from the second dismissal. VW argues that the notice of appeal was untimely because it was not filed within 60 days after service of notice of entry of the first dismissal; VW contends that, notwithstanding the literal meaning of the trial court's order vacating the first dismissal, we should interpret the order as simply amending the first judgment to add VW's costs and thereby render Flannery's notice of appeal untimely. We decline to do so. We interpret the trial court's order literally; the first dismissal was vacated by the terms of the trial court's order, and a second dismissal was entered from which Flannery filed a timely notice of appeal.

With respect to the merits, we reverse. Although the doctrine of substantial compliance has been employed when doing so avoids injustice and is consistent with the purposes of a particular statute, those considerations are not present here, where VW failed to provide consumers with notice of their right to an appraisal upon early termination of their automobile leases in the language prescribed by Civil Code section 2987. As we explain, the Legislature has expressed its intent that the VLA provisions in dispute here be strictly enforced. In addition to the Legislature's evident preference, strict enforcement encourages greater care on the part of lessors when providing statutory notices and avoids repeated resort to judicial construction with respect to which part of a verbatim notice prescribed by the Legislature is material and which is not. Importantly, strict enforcement of the VLA does not provide consumers with any unfair advantage or benefit but only relieves them of liability for any deficiency.

Because the parties' briefing here has been directed solely to VW's obligations under the VLA, we do not reach the question of whether VW's alleged violation of the VLA will support any relief under provisions of the Rosenthal Act and the UCL.

Page 610

I FACTUAL AND PROCEDURAL BACKGROUND

In 2011, Flannery was the lessee of a Volkswagen Jetta. VW was the lessor and, in the middle of 2011, VW repossessed the Jetta. Following the repossession, VW sent Flannery a notice that attempted to comply with the requirements of Civil Code section 2987, subdivision (d)(2)(B).[1] By its terms, subdivision (d)(2)(B) of section 2987 requires that lessors of vehicles which have been repossessed give the lessees a notice that contains the following statement: "'The amount you owe for early termination will be no more than the difference between the Gross Early Termination Amount stated above and (1) the appraised value of the vehicle or (2) if there is no appraisal, either the price received for the vehicle upon disposition or a greater amount established by the lessor or the lease contract.

"'You have the right to get a professional appraisal to establish the value of the vehicle for the purpose of figuring how much you owe on the lease. If you want an appraisal, you will have to arrange for it to be completed at least three days before the scheduled sale date of the vehicle. The appraiser has to be an independent person acceptable to the holder of the lease. You will have to pay for the appraiser. The appraised value will be considered final and binding on you and the holder of the lease.' " (§ 2987, subd. (d)(2)(B).)[2] (Italics added.)

If a lessor fails to provide a notice that complies with section 2987, subdivision (d)(2), a lessee is not liable for any deficiency. (§ 2987, subd. (d)(3).)

The notice VW sent Flannery did not contain all of the language required by the statute. VW's notice deleted the phrase "to establish the value of the vehicle for the purpose of figuring how much you owe on the lease." Thus, VW's notice read: ...


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