Court of Appeal (Cal.) Says FTC Holder Rule Does Not Cap Fees, but Is Limited to Sums Spent to Litigate Case Against the Holder; Says Holder’s Tender under Section 2983.4 Provides No Defense

We therefore turn to Veros’s alternative argument the Holder Rule does not include liability for statutory attorney fees. Duran asserts Veros stepped into Quantum’s shoes and became liable for all claims that could be raised against Quantum, which would include statutory attorney fees. As discussed in Duran I, the Holder Rule unambiguously places no limitation on the types of claims or defenses a consumer may assert against a creditor-assignee. Thus, consumers can raise any affirmative claims (tort or contractual) related to the transaction. The only express limitation concerns the maximum recovery available to the consumer: “Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.” (16 C.F.R. § 433.2, italics added, capitalization omitted.)  Thus, the Holder Rule authorizes a consumer to assert a CLRA claim against both the dealership and the creditor-assignee. In all CLRA actions, there are mandatory attorney fees awarded to the prevailing party, whether it be the plaintiff or defendant. We found no legal authority in California discussing CLRA’s attorney fees (or any other statutory attorney fees) when the consumer has borrowed the CLRA cause of action under the Holder Rule. We found a split of opinion in out-of-state authority. . . We conclude the attorney fees and costs award must be reversed and remanded for a new hearing. Duran may recover attorney fees and costs from Veros in excess of the amounts paid on the contract, but limited to those fees/costs that resulted from litigation of claims against it. (Oxford Finance, supra, 807 S.W.2d at p. 465.)

We conclude section 2983.4 does not apply in this case for several reasons. First, when Quantum deposited the money it represented before trial that the tender related to the CLRA claim, not the ASFA allegations. Second, Veros did not make the tender because it had assigned the contract to Quantum.  Third, if the tender could be construed as relating to the ASFA claims, it was not “the full amount to which the plaintiff [was] entitled.” (Tun, supra, 5 Cal.App.5th at p. 326; § 2983.4.) The court’s rescission and restitution remedy required Quantum to refund $1,856.30 in payments, refund a $1,000 down payment, refund $172 in incidental costs, and pay the outstanding loan amount for the car (approximately $11,467.70). Quantum’s tender of $4,156.15 fell significantly short of the “full amount to which [Duran] was entitled.” (§ 2983.4.)