Ramirez v. Balboa Thrift and Loan: Court of Appeal Reverses Denial of Class Certification in UCL Action

Ramirez v. Balboa Thrift and Loan (3/21/13, pub. 4/22/13) is an interesting case on class certification.

The plaintiff, Ramirez, brought a putative class action, alleging that a car finance company, Balboa, violated the Unfair Competition Law by improperly pursuing a deficiency claim after Ramirez surrendered her car to Balboa. Specifically, Ramirez alleged that Balboa violated the UCL and the Rees-Levering Motor Vehicle Sales and Finance Act (the Act) by failing to comply with the Act's requirement that its "Notice of Intention to Dispose of Motor Vehicle" (NOI) contain the specific "conditions precedent" to reinstatement of her vehicle loan.

The trial court denied certification, finding that individual issues predominated. Specifically, the trial court held that it was unclear "whether there were grounds to deny reinstatement" of each putative class member's motor vehicle loan under Civil Code section 2983.3(b)(1). Section 2983.3(b)(1) provides that a buyer has no right to reinstate her loan if the seller or holder "reasonably and in good faith" determines that the buyer "intentionally provided false or misleading information of material importance on his or her credit application."

The Court of Appeal reversed.

Ramirez challenges the court's reliance on section 2983.3(b)(1) to deny her class certification motion. We agree this ground was not a proper basis for denying class certification. The court's conclusion was based on an improper legal assumption, i.e., that Balboa would be entitled to assert this statutory exception as a valid affirmative defense to the UCL claim alleged by class members who were given a reinstatement right in the NOI.

Slip op. at 17. 

The Court relied on the fact that under the Act, "a seller/holder who wishes to preserve its rights to claim a deficiency must determine within a 60-day period after repossession whether a buyer is entitled to a reinstatement, and then notify the buyer of this decision." If the seller determines that the buyer is not entitled to reinstatement, it must state the reasons for this determination. Slip op. at 18-19.

With regard to Balboa's argument that individual issues predominated because other class members may not have had the right to reinstatement, the Court held that "Balboa did not proffer any facts showing that any such exception would apply to any of the other class members." Slip op. at 20.

The Court did not consider Balboa's other grounds for opposing certification because it found that the trial court had relied primarily on the mistaken legal analysis discussed above. Instead, the Court remanded for reconsideration on the proper legal analysis. Slip op. at 20-22.

The opinion is available here.