In Coordinated Automobile Lease Tax Cases (L.A.Sup. Coord. No. JCCP 4378), Judge Anthony Mohr presided over litigation involving whether automobile leases and the holders of such contracts properly assessed use taxes on such items as acquisition fees and service contracts. On April 9, 2008, Judge Mohr sustained the demurrers of the various automobile finance companies without leave to amend, holding that consumers’ remedies for collection of an excess tax — whether the tax was ‘excess’ was never proven — did not lie under the CLRA or UCL against the finance companies who acted as ‘involuntary tax collectors’ for collecting these use taxes. Rather, consumers’ sole remedy lay in filing individual tax refund claims with the State Board of Equalization. See Judge Mohr’s Ruling here After prevailing on their demurrers, the finance companies moved for an award of attorneys’ fees and costs under the Vehicle Leasing Act. (Civ. Code § 2988.9).
The issue is whether this case involved an “action on a lease contract subject to the provisions of [the VLA]” Defendant argues that in order to recover attorneys fees pursuant to section 2988.9, all it needs to do is demonstrate that the complaint has at its core a lease contract subject to the VLA. Plaintiff contends that attorneys’ fees are only available where the complaint asserts violations of the VLA, which the operative complaint does not.
Judge Mohr concluded:
None of these cases is directly on point. However, all of them – with the exception of Brown, which is distinguishable for the reasons discussed, supra, — follow a trend towards a liberal interpretation of the phrase “on a contract”. This court determines to follow that trend and finds that Section 2988.9 “authorizes an award of fees to the prevailing party in any type of action in which the subject matter involves a contract subject to the provisions of the VLA,” (Id. at 994) regardless of whether the complaint asserts violations thereof. The court further finds that Plaintiff’s complaint asserts an action in which the “the subject matter involves a contract subject to the provisions of the VLA.” Id.; see 3AC paras. 9, 14, 36. Therefore, Defendant is entitled to attorneys’ fees pursuant to Section 2988.9 Defendant’s motion for an award of attorney’s fees is GRANTED.
See Judge Mohr’s Fee Order here.
The “trend toward liberal interpretation” referred to by Judge Mohr was, coincidentally, echoed two days earlier by the Court of Appeal in Kachlon v. Markowitz (2008) 2008 DAR 17005 (To determine whether an action is “on the contract” under Civil Code § 1717, the proper focus is not on the nature of the remedy, but on the basis of the cause of action. Here, the prevailing party sought a declaration that it owed nothing on a note, as well as an injunction against foreclosure under a deed of trust. Both documents contained an attorneys’ fees clause. Though both causes of action both sought equitable relief, they were based on the contracts and were actions ‘on the contract’ under section 1717.)