In Chaiwong v. Hanlees Fremont, Inc., 2017 WL 3838106 (N.D. Cal. Sept. 1, 2017), Judge Gilliam dismissed a Rosenthal Act/UCL claim filed against an automobile lender by a consumer and the dealer to whom the customer traded in their vehicle.
The following facts are undisputed unless otherwise noted. Plaintiff leased a Chevrolet Equinox from Fremont Chevrolet on June 22, 2010. Dkt. No. 19 ¶¶ 20, 22, & Ex. 3. The lease agreement listed the “Scheduled Lease End Date” as September 21, 2013. Id. ¶ 20, & Ex. 3 at 4.2However, the lease also stated that “[i]f this lease ends on or after the last scheduled payment is due, we will treat the lease as if it ended as scheduled and not as if it ended early” (the “Treat As” clause). Id., Ex. 3 at 4. The lease also stated that at lease end Plaintiff would owe “any excess mileage charge, any lease end daily extension charge, and [Ally’s] estimated or actual cost of repairing excess wear, plus any tax,” but that Plaintiff was free to terminate the lease “anytime” prior to its scheduled end date, though early termination fees would then apply. Id., Ex. 3 at 4. Prior to Plaintiff’s termination of the lease, Ally accepted assignment of the contract. Id. ¶ 22. On September 19, 2013, Plaintiff attempted to “trade” the vehicle in to Defendant Hanlees, a third party dealership, in connection with the lease of a Hyundai Santa Fe, rather than returning the vehicle to Ally directly. Id. ¶ 24. Plaintiff claims that Hanlees “represented to Plaintiff that it was authorized to accept the [Equinox] as a trade-in vehicle.” Id. ¶ 27. Plaintiff also claims that as a result of his alleged “trade-in” of the vehicle, Hanlees became responsible for paying Ally the $17,543.50 balance owed on the lease but only issued a check to Ally in the amount of $15,736.00. Id. ¶ 32. While Hanlees initially indicated that it wished to purchase the Equinox, Ally mistakenly repossessed the vehicle in October 2013 causing Hanlees to change its mind, and Ally issued Hanlees a refund of the $15,736.00 check. Dkt. No. 25 ¶¶ 65, 66; Dkt. No. 19, Ex. 2. Because Plaintiff relinquished the Equinox two days prior to the “Scheduled Lease End Date” listed in the contract, Plaintiff believed he was terminating his lease with Ally early. Dkt. No. 19 ¶ 26. However, because Plaintiff had already made the final payment on the lease, Ally treated the lease as if it had ended as scheduled, and charged Plaintiff $9,712.76 for excess wear and mileage and related sales/use taxes. Id. ¶ 37; Dkt. No. 21 at 3. Within a few months of “trading” the vehicle in, “Plaintiff began receiving calls from Ally “stating that he was delinquent on payments for the lease of the Chevrolet.” Dkt. No. 19 ¶ 33. Plaintiff “notified [ ] Ally that he had traded in the Chevrolet to [ ] Hanlees.” Id. In addition, Plaintiff “immediately” notified Hanlees of the issue and “requested that [ ] Hanlees fulfill its contractual obligation to pay off any remaining lease balance on the Chevrolet” to Ally. Id. . . . Each of Plaintiff’s claims against Ally rests on the same flawed contention: that Plaintiff terminated his lease with Ally early when he “traded” his Equinox in for a Hyundai two days prior to the scheduled lease end date. As an initial matter, the Court notes that Plaintiff’s argument is counterintuitive—were Ally to treat the lease as though it had been terminated early, Plaintiff would be liable for $17,534.50 in early termination fees rather than the $9,187.76 Ally charged him in excess wear and mileage fees. Dkt. No. 19 ¶¶ 30, 40. Nevertheless, Plaintiff requests that the Court find that he terminated the lease early, presumably so that Plaintiff may pass off the early termination fees to Hanlees, while at the same time avoiding liability for the excess wear and mileage fees he incurred prior to termination. Not only would such a finding be untenable, but it would directly contradict the express terms of the lease agreement, which provide that surrender of the Equinox after the date of Plaintiff’s final payment would be treated “as if [the lease had] ended as scheduled and not as if it ended early.” Id., Ex. 3 at 4.