California Lemon Law Lawyer Blog

Consumers whose cars are repossessed have the right to know exactly what they have to do, including how much they have to pay, to reinstate their delinquent contracts, the Court of Appeal decided yesterday. Its decision, in a class action appeal we handled, is a great win for California consumers.

It may seem elementary, but auto finance company Arcadia Financial Ltd. was sending post-repossession notices of intent to sell (NOIs) that did not include what amount a consumer had to pay to reinstate their contract and get their car back. Our clients, Sergio and Laura Juarez, tried to figure out the reinstatement sum and sent it in. Arcadia took their money but wouldn't give them their car back, claiming they owed more money. So they lost their car and then got sued by Arcadia for the $12,000 deficiency remaining on the contract after Arcadia sold their car.

The Court of Appeal ruled that under California law, the repossessing finance company has to tell consumers how much they have to pay and what else they have to do.

"Creditors must provide consumers with sufficient information to allow consumers to fulfill all of the conditions the consumer must meet before a creditor will reinstate the contract. Arcadia's NOI does not satisfy these requirements."

Why is this important? Under California law, if the creditor does not meet all of its disclosure requirements in an NOI, the creditor cannot go after the consumer for the deficiency--the amount remaining on the contract after the car is sold. So Arcadia can no longer pursue the Juarezes--or any class members who got NOIs without a reinstatement sum--for the deficiency. In addition to asking the court to order Arcadia to return all the money it collected from class members who got these NOIs, we will also ask the court to order Arcadia to remove its tradeline from each of the class members' credit reports.

You can find the Court of Appeal's decision here.

We are pleased to announce that Judge Carter Holly of the San Joaquin County
Superior Court has preliminarily approved the settlement of a class action lawsuit against
finance company WFS Financial Inc for alleged unlawful business practices.

After WFS Financial repossessed his car, the class representative, Jose F. de la Cruz of San Jose, claimed that WFS sent him a Notice that it intended to sell his car that did
not meet the requirements of California law. Then, after it sold the car and applied the
proceeds to pay down his contract balance, WFS tried to collect the deficiency from him. The
deficiency is the amount remaining due on the contract after the sale proceeds from
a foreclosure are applied to pay down the amount owed. Because Mr. de la Cruz claimed
that California consumers are not liable for any deficiency if the post-repossession Notice
does not exactly comply with California statutes, Mr. de la Cruz alleged that WFS’s
attempts to collect from him and other California consumers who received the same form
of Notice were unlawful.

Consumers who received the same form of Notice that Mr. de la Cruz received
and who made deficiency payments to WFS will receive all their money back if the
settlement is finally approved. In addition, WFS will cancel the deficiency obligations of
consumers who received that form of Notice, and will instruct credit reporting agencies to
delete WFS’s tradeline from their credit records.

WFS Financial denies that its Notices did not comply with California law, and
denies any liability, but agreed to the settlement solely to resolve the litigation.
Class members will receive direct mail notice of the settlement and their
opportunity to participate or object.

Judge Holly will conduct a hearing to determine whether to finally approve the settlement on October 9, 2007 at 10:00 a.m at the San Joaquin County Superior Court in Stockton. Carol McLean Brewer and Andrew Ogilvie of our law firm represent the class

On May 31, 2007, KABOB filed a class action against BMW alleging that BMW has an illegal secret warranty on the run-flat tires on its 2006 and 2007 BMW 3 Series cars. The suit also states that the run-flat tires are defective and not fit for their ordinary purposes--the tires often wear out with less than 10,000 miles of use!

The 3 Series cars come equipped with Bridgestone run-flat tires, which are designed to enable drivers to continue driving a limited number of miles with a punctured tire. The problem is that the tires wear unevenly and prematurely. Many BMW owners are having to replace the tires in less than 10,000 or 20,000 miles.

In January 2007, BMW informed its dealers that owners with worn and rough-riding run-flats who had driven less than 10,000 miles were eligible for free tires and labor. Owners with 10,000 to 20,000 miles on the odometer were eligible for a 50% discount on the tires and labor.

The class action alleges BMW's advice to its dealers concerning free or discounted tires is a "secret warranty;" "secret" because BMW failed to provide all BMW owners with notice of the warranty's existence as required by California's secret warranty law. The complaint seeks a court order requiring BMW to inform all California owners and lessees of the existence of the warranty and to provide a means of reimbursing owners who went out-of-pocket for replacement tires who otherwise would have received the benefit of the secret warranty.

The suit also alleges that BMW violated the California lemon law by selecting these defective tires for the 3 series cars and that consequently owners and lessees are entitled to damages.