A Rare Yeti Sighting: Bank Wins AFSA NOI Case in California Court of Appeal Unpublished Decision

In an unpublished decision, BANK OF STOCKTON, Plaintiff & Respondent, v. GAYLE A. GRESHAM, Defendant & Appellant., No. H050099, 2023 WL 8252076, at *1–2 (Cal. Ct. App. Nov. 29, 2023), the Court of Appeal found the Bank’s post-repossession letter to be compliant with Rees-Levering.  The facts were as follows:

Gresham entered into a contract with Capital Volkswagen to buy a car. The contract provided that if Gresham defaulted on her monthly payments, Capital Volkswagen could repossess and resell the car and recover the deficiency from Gresham. Capital Volkswagen later assigned the contract to Bank, along with the car’s title.  A. Bank’s Repossession of Car and NOI to Gresham Gresham defaulted on her payments and surrendered the car to Bank at a mutually agreed upon location. Bank engaged Tri City Recovery (Tri City) to repossess the vehicle, and Tri City charged Bank $275 for the repossession. Tri City’s fee was divided into two parts: $250 for voluntary repossession and $25 for Tri City’s delivery of the car to Brasher’s San Jose Auto Auction (Brasher’s) after Gresham’s surrender.2 On January 11, 2018, Bank sent Gresham a NOI, notifying Gresham of Bank’s intention to re-sell the car after the expiration of the ASFA prescribed 15 days. The NOI stated that Gresham’s contract was governed by ASFA. It contained ASFA-mandated disclosures, including the disclosure that Gresham had the right to redeem—that is, regain possession—of the car within 15 days by paying the full amount owed under the contract, or alternatively, a conditional right to reinstate the contract by paying “all Reinstatement Amounts itemized on pages 4 to 6 of the Additional Disclosures.”  The reinstatement amounts set forth in the NOI were divided into four categories: (1) “amounts currently due the bank”; (2) “amounts currently due to third parties”; (3) “amounts that will become due to the bank after 1/11/18, the date of the NOI”; and (4) “amounts that will become due to third parties after 1/11/18, the date of the NOI.” Under the second category, “amounts currently due to third parties,” Bank listed a $25 transportation fee and specified that the fee would be payable to Brasher’s. This transportation fee was separate and distinct from the $275 repossession fee that Bank listed under its first category, “amounts currently due the bank.” Under the fourth category, “amounts that will become due to third parties after 1/11/18,” Bank listed a daily storage fee of $10, beginning on the date of the NOI and continuing until redemption or reinstatement. The NOI specified that this daily rate would be payable to Brasher’s as well. Other third-party fees set forth in the NOI included a $15 law enforcement release fee payable to the San Jose Police Department, and redemption, administration, reconditioning, and DMV fees payable to Brasher’s.

The Court of Appeal found no violation of Rees-Levering.

The court concluded that this NOI was insufficient because it provided “virtually no useful information as to what [a defaulting buyer] would have to do to have their contract reinstated.” (Juarez, supra, 152 Cal.App.4th at pp. 905-906.) Rather, “the burden is on the buyer to gather sufficient accurate information as to how he or she can fulfill the conditions of reinstatement.” (Ibid.) The court held that to satisfy the “all the conditions precedent” requirement of section 2983.2, subdivision (a)(2), a NOI must include “any amounts the buyer must pay to the creditor and/or to third parties, and provide the buyer with the names and addresses of those who are to be paid.” (Juarez at pp. 904-905.) On the issue of payments to third parties, Juarez acknowledged that there may be instances where the creditor does not possess information regarding the specific amounts a debtor may owe. (Id. at pp. 908-909.) But that “does not mean that creditors need not provide information about the amounts owed to the creditor or to third parties when the creditor does (or reasonably should) know those amounts.” (Id. at p. 909.) In that instance, the creditor must provide the buyer with “all of the relevant information it possesses and/or information it has the ability to discern, concerning precisely what the buyer must do to reinstate his or her contract.” (Ibid., italics in original.) In this case, Bank sent Gresham a NOI pursuant to ASFA. The terms of the NOI are not in dispute. What is disputed is whether the NOI included “all the conditions precedent” to reinstatement, as required under section 2983.2, subdivision (a)(2). We conclude that it did. The NOI provided Gresham with notice that Bank intended to dispose of the repossessed vehicle after the statutorily prescribed 15 days and itemized what Gresham needed to do to reinstate the contract and regain possession of the vehicle. The NOI set forth the “amounts [Gresham] must pay to the creditor and/or to third parties” and included “the amounts due, to whom they are due, [and] the addresses and/or contact information for those parties.” (See Juarez, supra, 152 Cal.App.4th at pp. 899, 904-905, italics added.) Among the list of payments owed to third parties, the NOI included a $25 transportation fee and a $10 daily storage fee. The NOI made clear that those two fees were payable to Brasher’s.  2. Trial Court Correctly Held That There Was No Triable Issue of Material Fact on the Transportation Fee.  On appeal, Gresham argues that Bank’s inclusion of the $25 transportation fee in the NOI was improper because that fee was duplicative of the fee Tri City charged Bank for its repossession of the vehicle. But according to evidence Bank presented in the trial court, the transportation fee Tri City charged Bank was for Tri City’s delivery of the vehicle to Brasher’s after Gresham’s surrender of the vehicle. It did not include any additional charge Brasher’s may have incurred for moving the vehicle after the vehicle had arrived at its location, and Gresham did not present any evidence to show that such movement did not or could not have occurred. In contrast, Bank presented uncontroverted evidence, in the form of deposition testimony and declarations, that the $25 transportation fee payable to Brasher’s was separate from the repossession fee Bank paid Tri City. Bank also presented evidence tending to show that movement of a vehicle after its arrival at an auction was not unusual. As the trial court noted in its summary judgment order, Gresham’s assertion that the two transportation fees were necessarily duplicative of each other was based on “nothing more than pure conjecture … that once the Vehicle was delivered to the auction, there would never be any reason to move it from where is[sic] was initially placed.” Such conjecture is not enough to create a triable issue on Gresham’s allegation that the NOI was deceptive because it attempted to charge her a duplicative fee.  3. NOI Complied with Section 2983.2  Gresham next contends that the NOI’s inclusion of both the $25 transportation fee and the $10 daily storage fee represented “a false statement to the consumer concerning the right to redeem the vehicle.” For support, Gresham references section 2983.3, subdivision (d)(5), which provided in 2018 (the year Bank sent the NOI to Gresham): “[T]he buyer or any other person liable on the contract, shall, in all cases, reimburse the seller or holder for all reasonable and necessary collection and repossession costs and fees incurred … in retaking and holding the vehicle.” (Stats. 1961, ch. 1626, § 4.) Gresham argues that because Bank did not incur the $25 transportation fee or the $10 daily storage fee, “payment by Gresham of such fees were not a valid ‘condition precedent’ to reinstatement of the contract.” Effective January 1, 2022, the Legislature amended section 2983.3, subdivision (d)(5) to provide, “[T]he buyer or any other person liable on the contract shall, in all cases, reimburse the seller or holder for all reasonable and necessary collection and repossession costs and fees actually paid by the seller or holder … in retaking and holding the vehicle.” (Stats. 2021, ch. 401, § 2, italics added.)3 Gresham further contends that the Legislature’s 2022 amendment to section 2983.3, changing the word “incurred” to “actually paid,” supports her contention that Bank acted deceptively by including the transportation and daily storage fees.  We construe sections 2983.2 and 2983.3 liberally as statutes generally designed to provide notice to consumers of the steps necessary to reclaim a vehicle. (See Cerra v. Blackstone (1985) 172 Cal.App.3d 604, 608 [“The legislative purpose in enacting [ASFA] was to provide more comprehensive protection for the unsophisticated motor vehicle consumer.”].) As Gresham herself recognizes in her opening brief, the purpose of the 2022 amendment to 2983.3 was to discourage creditors from overestimating repossession costs and requiring “a more exact accounting of the costs related to the repossession, potentially making it easier for lower income Californians to regain access to their automobiles.” We do not read the statutes to limit what the consumer must pay to redeem the vehicle solely to what is owed to the holder or seller, as opposed to any third party, but to provide an accurate tally of what is owed to recover the vehicle. Here, the NOI provided notice to Gresham that payment of specific fees to Bank and Brasher’s was necessary to obtain physical possession of the vehicle after reinstatement. The NOI was thus compliant with section 2983.2.  Our position here is consistent with Juarez, which held that a NOI that complies with section 2983.2 must include “any amounts the buyer must pay to the creditor and/or to third parties.” (Juarez, supra, 152 Cal.App.4th at pp. 899, 904-905, italics added.) And while a creditor may not always know the specific amounts a debtor owes to a third party, Juarez makes clear that a creditor must include such information “when the creditor does (or reasonably should) know those amounts.” (Id. at p. 909.) Thus, in providing Gresham with a NOI that included payment amounts owed to both Bank and to third parties such as Brasher’s, Bank was not making false statements or engaging in deceptive practices, but rather, following the court’s directive in Juarez. Gresham further contends, for the first time in her reply brief, that Brasher’s had no independent basis to charge fees to Gresham because of the lack of a privity relationship between them.4 She argues that in repossessing the car, Brasher’s was acting “purely in its capacity as Bank’s agent.” Gresham reiterated this position during oral argument, contending that because the sole privity relationship was between herself and Bank, the NOI could include only fees incurred by Bank. Gresham argues that since it is undisputed that Bank did not incur either the $25 transportation fee or the $10 daily storge fee, it could not then charge those fees to Gresham. As Gresham is raising this issue for the first time in her reply brief, it is not properly before us, and we respectfully decline to address it. (See Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 322 [“We do not entertain issues raised for the first time in a reply brief, in the absence of a showing of good cause why such issues were not raised in the opening brief.”].)  Based on our independent review of the evidence the parties presented in support of their summary judgment motions, we conclude that the trial court correctly found that Gresham failed to establish a triable issue of material fact on her assertion that the NOI deceptively attempted to charge her a duplicative transportation fee. We further conclude that the trial court correctly found that Bank’s NOI complied with section 2983.2.6 The trial court properly entered