Flores v. Southcoast Automotive: UCL and CLRA Remedies Are Cumulative

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In Flores v. Southcoast Automotive Liquidators, Inc., No. B268271 (2nd District, Div. 5, Nov. 27, 2017) (slip op. available here), the California Court of Appeal affirmed that “an appropriate correction offer under the Consumers Legal Remedies Act [“CLRA”] does not prevent a consumer from pursuing causes of action for fraud and violation of the UCL [Unfair Competition Law] based on the same conduct, because the remedies are cumulative.” Slip op. at 2.

In 2013, defendant-appellant Southcoast Automotive Liquidators, a car dealership, marketed its inventory of used cars in print and online. Print ads included the caveat that the advertised price expires at 12:00 p.m. on the day of publication, though online advertisements (which were only posted for three hours at a time) did not contain this fine print regarding expiration. Slip op. at 3. Plaintiff-respondent Flores saw and printed an internet ad offering the car she intended to purchase the next day for $9,995. Ms. Flores, who was buying her first car, was assisted by her parents, who spoke to the dealership’s employees by phone to confirm the car’s price and condition. Id. at 3-4. When they arrived the following day, the advertised vehicle was not available, but the dealer offered the same model with more than twice as many miles and in worse condition for the same price. Id. at 4. The plaintiff accepted the deal; although the loan paperwork she signed listed higher prices, the dealership assured her the correct price would be inserted later. Id. at 5. The vehicle broke down almost immediately, and Ms. Flores eventually retained counsel, who sent the dealer a letter on May 31, 2013, asserting “that Dealer’s acts constituted unfair methods of competition and/or unfair or deceptive acts in violation of the CLRA.” Id. at 6.

On June 7, 2013, the plaintiff sued Southcoast Automotive alleging several causes of action, including violations of the CLRA, UCL, and Song-Beverly Consumer Warranty Act (Cal. Civ. Code, § 1790, et seq.); she sought an injunction under the CLRA and alleged violations of all three prongs of the UCL (unlawful, unfair, and fraudulent). On June 25, 2013, the dealership offered complete rescission of the purchase agreement with no offset for the payments Flores already made, plus $1,500 for incidental costs (a negotiable amount, so long as Flores provided receipts for incidental damages such as civil penalties and attorney fees). Then, on July 3, 2013, in response to the counter-demand for $15,000 for civil penalties and attorneys’ fees, the dealer fully denied her claims but offered to rescind the contract, refund all payments, and pay $1,500 for incidental costs. If Ms. Flores rejected the offer, Southcoast Automotive stated it “would deposit with the court the amount that Dealer believed to be a full remedy and seek a determination that it was the prevailing party entitled to fees and costs, including attorney fees, for being forced to respond to a complaint after a full remedy was offered.” Slip op. at 7-8.

Unable to resolve her claims, in February 2015, Ms. Flores filed an ex parte motion for permission to file an amended complaint seeking damages and restitution under the CLRA, in addition to injunctive relief. The defendant argued that Ms. Flores’ claims under the UCL were derivative of and precluded by the claim under the CLRA. Slip op. at 7-8. Ultimately, in a revised judgment entered on June 9, 2015, from which the Southcoast Automotive appealed, the trial court found in favor of the plaintiff but held that the dealership had made a valid settlement offer in good faith that precluded damages under the CLRA. Id. at 9. Relief included rescission of the purchase contract and a permanent injunction against the dealer under the UCL, “enjoining advertising any vehicle for sale in print or on the internet without clearly stating the date and time of any expiration.” Id. at 12.

The Court of Appeal subsequently affirmed the judgment in a decision based on the dealer’s contention that the CLRA is the exclusive remedy for the misconduct at issue. Slip op. at 14. Offering an extensive analysis of the statute, the court held that the CLRA expressly provides that remedies are cumulative, even for the same set of facts, noting that “plaintiffs routinely plead fraud, UCL, and CLRA claims based on similar allegations.” Id. at 15-16. Because the UCL claim “was based directly on evidence of fraudulent advertising practices [pursuant to statute] and was not dependent on finding an underlying violation of the CLRA,” the fact that damages under the CLRA were precluded by a reasonable correction offer had no effect on the viability of the plaintiff’s other causes of action. Id. at 18.

The Flores decision is good news for the plaintiffs’ bar, confirming that claims may be pleaded under the CLRA, UCL, and fraud for the same nucleus of operative facts, provided that they are applied appropriately to each cause of action.

Authored by:
Karen Wallace, Associate