CLRA redress offer requiring waiver of claims can’t defeat consumer’s right to sue

Valdez v. Seidner-Miller, Inc., 33 Cal.App.5th 600 (2019)
Valdez alleged that Seidner violated the CLRA, the UCL, and
Civil Code section 16321 (requiring translation of certain contracts), and
committed fraud in connection with Seidner’s lease of a vehicle to Valdez and
his wife. The trial court ruled that Seidner made a timely and “appropriate”
offer to correct the alleged CLRA violations, barring Valdez’s claim under the
CLRA for damages and injunctive relief, as well as his other claims, because those
other claims were “inextricably intertwined” and based on the same conduct. The
court of appeals reversed; although the correction offer was timely, it wasn’t
appropriate because it conditioned an offer to remedy a violation of the CLRA
on Valdez waiving his right to injunctive relief and remedies under other
statutes and common law. “Neither can the business demand as part of its
correction offer that the consumer consent to additional settlement terms
unrelated to the compensation necessary to make the consumer whole.”
In 2015, Valdez sent Seidner a “notice of rescission and
demand for rectification” under the CLRA. Valdez and his wife had entered into
an agreement with Seidner to lease a 2014 Toyota Camry. “The negotiations were
conducted in Spanish, but Seidner did not provide Valdez and his wife a Spanish
translation of the lease agreement.” Although he wanted to buy and not lease,
he was told he lacked sufficient credit to do so, and that certain charges were
required by law.  When he returned to the
dealership approximately 10 months later, he learned he could not refinance the
car at the initial price.
The CLRA notice sought rescission of the transaction;
removal of the transaction from Valdez’s credit report; a refund of $1,500 for
the down payment, $4,626 for the monthly payments, and $1,500 for insurance;
and payment of $2,750 for attorney’s fees and costs. Seidner’s attorney
provided a draft settlement agreement denying all the allegations in Valdez’s
CLRA notice. Seidner agreed to pay off the outstanding loan balance, pay $5,126
to reimburse the down payment and monthly payments, and $2,750 for attorney’s
fees and costs within 10 days after surrender of the vehicle. The draft required
Valdez to return the vehicle “without damage or vandalism, save normal wear and
tear,” and allowed Seidner to void the settlement agreement if it determined
the vehicle was “in unacceptable condition.” It required confidentiality and contained
a release of all known and unknown claims and a covenant not to sue.
During negotiations, Valdez disclosed the vehicle had been
in an accident in October 2014 and the repair costs were approximately $3,300.
According to Seidner, the vehicle history report showed the vehicle was also in
an accident in 2015.  The parties nearly
came to an agreement, but Seidner requested inspection of the vehicle before it
would provide Valdez with the settlement funds. This was unacceptable to Valdez:
“There is no way this agreement can be based upon your client’s subjective
review of the car’s condition.” Seidner was prepared to remove the covenant not
to sue language and confidentiality provision, but not the requirement the
vehicle be inspected prior to release of the settlement funds. Valdez indicated
that he would agree to an inspection if Seidner paid the costs of his attorney
and expert to be present, but Seidner didn’t agree.
At least 30 days “prior to the commencement of an action for
damages” under the CLRA, the consumer must provide written notice “of the
particular alleged violations of Section 1770” and “[d]emand that the person
correct, repair, replace, or otherwise rectify the goods or services alleged to
be in violation of Section 1770.” Further, “no action for damages may be
maintained under Section 1780 if an appropriate correction, repair,
replacement, or other remedy is given, or agreed to be given within a
reasonable time, to the consumer within 30 days after receipt of the notice.” Seidner’s
offer was timely; it was sent 32 days after Seidner received the CLRA notice,
but day 30 was a Saturday and it was allowed to go to Monday.
However, by conditioning relief on release of claims not
subject to the CLRA’s prelitigation notice requirements and on compliance with
other settlement terms, including Seidner’s subjective approval of the
vehicle’s condition, the settlement offer wasn’t an appropriate correction
offer under the CLRA.
The offer’s broad release language and covenant not to sue
would have prohibited Valdez from asserting his section 1632, UCL, and fraud
claims and his claim for injunctive relief under the CLRA. “Yet Valdez had a
right to bring those claims without first providing notice under the CLRA.” Among
other things, Valdez sought injunctive relief prohibiting Seidner “from
entering into lease agreements without providing appropriate translations,
prior to execution, when negotiations are conducted primarily in a language
other than English ….” Since the draft settlement agreement did not provide
the requested injunctive relief, it wasn’t appropriate for Seidner to condition
its correction offer on release of Valdez’s claims for injunctive relief. A
“reasonable correction offer prevent[s] [the plaintiff] from maintaining a
cause of action for damages under the CLRA, but [does] not prevent [the
plaintiff] from pursuing remedies based on other statutory violations or common
law causes of action based on conduct under those laws.”
The court also pointed to Valdez’s claim under a fascinating
California law providing that “Any person engaged in a trade or business who
negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean,
orally or in writing, in the course of entering into [covered vehicle leases],
shall deliver to the other party to the contract or agreement and prior to the
execution thereof … a translation of every term and condition in that
contract or agreement ….” The statute’s goal was “to increase consumer
information and protections for the state’s sizable and growing Spanish-speaking
population.” It provides for rescission of the agreement as a remedy for a
violation. Seidner admitted that “a Spanish translation of the subject contact
was orally made to plaintiff before the plaintiff signed the document but inadvertently
no written translated document or written Spanish language contract was
provided to [Valdez].”
And there were also UCL and fraud claims. The court pointed
out that, if Valdez hadn’t added a CLRA claim, there’d be no notice/voluntary
correction issue.  It would be anomalous
to then hold that, once he added a CLRA claim, all those claims would be barred
by a correction offer.
Finally, Seidner’s correction offer “improperly allowed
Seidner unilaterally to void the proposed settlement agreement if it determined
after an inspection that the vehicle was in an unacceptable condition.”  Damage beyond normal wear and tear would
entitle Seidner to an offset for the damage. “But conditioning CLRA remedies on
Seidner’s subjective determination whether the vehicle was in an acceptable
condition rendered Seidner’s offer illusory.”
Seidner could have made an
appropriate correction offer had it offered simply to refund Valdez’s down
payment and monthly payments, pay off the outstanding loan balance, and pay
attorney’s fees and costs. Although Valdez would still have been able to pursue
his other claims, nothing would have prevented Seidner from attempting to
negotiate a separate settlement of those claims. But Seidner’s effort to exact
additional concessions from Valdez as part of a global settlement [didn’t
satisfy the] CLRA.

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