Court of Appeal (Cal.) Finds NOI Compliant in Unpublished Decision

In Lobel Fin. Corp. v. Guiam, No. H044095, 2019 Cal. App. Unpub. LEXIS 7717, at *8 (Nov. 20, 2019), the Court of Appeal found that an automobile finance company’s NOI withstood an ASFA challenge.

In this case, respondent sent appellant an NOI pursuant to the ASFA. The terms of the NOI are not in dispute. What is in dispute is whether the NOI includes “all the conditions precedent” to reinstatement, as required by the ASFA. We conclude that the NOI in this case complied with the ASFA and was consistent with Juarez‘s construction of the statute. Here, respondent provided appellant with notice that it intended to dispose of the repossessed vehicle. The notice itemized what appellant needed to do to reinstate the contract and regain possession of the vehicle. It stated “the amounts due, to whom they are due, the addresses and/or contact information for those parties, and any other specific actions the buyer must take.” (Juarez, supra, 152 Cal.App.4th at p. 899.) The notice included the “amounts the buyer must pay to the creditor and/or to third parties . . . .” (Id. at p. 904, italics added.) Specifically, respondent informed appellant that to regain physical possession of the vehicle, the tow company storing the vehicle would need to be paid at a rate of $30 per day. We are unpersuaded by appellant’s argument that the third-party storage fee violates the ASFA. Appellant points to section 2983.3, subdivision (d)(5), which provides: “[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, including attorney’s fees and legal expenses expended in retaking and holding the vehicle.” Appellant argues that respondent did not “incur” a $30 per day storage fee because respondent had negotiated 15 days of free storage followed by an $8 per day rate. Thus, she contends “because a storage charge fee of $30.00 per day was not ‘incurred’ by [respondent], reimbursement by [appellant] of such fee to [respondent] was not a ‘condition precedent’ to reinstatement of the vehicle.” This argument, however, misconstrues the evidence. The NOI did not state that Maryann and appellant would have to reimburse respondent for the storage of the vehicle to obtain reinstatement of the vehicle. Rather, it stated that they would have to reimburse Tri-City Recovery for storage costs prior to obtaining physical possession of the vehicle. Thus, the NOI did not misrepresent that respondent had “incurred” a $30 daily fee and did not demand reimbursement to respondent of storage fees as a condition for reinstatement. Similarly, the NOI also stated that Maryann and appellant would have to pay a $15 fee to the San Jose Police Department prior to obtaining physical possession of the car. This fee, like the storage fee, would have to be paid to a third party. And while it was not necessary for reinstatement, it was necessary to obtain physical possession of the vehicle. Appellant also argues that the storage fees were unauthorized, and that therefore the NOI misrepresented the steps necessary to obtaining possession of the vehicle. She points to Business and Professions Code section 7507.5, which provides that charges for storage of collateral cannot be made “except under terms agreed to by the legal owner at the time of the repossession authorization or specifically agreed upon at a subsequent time.” Appellant contends that Tri-City Recovery’s right to charge a storage fee “flows directly from an agreement with the legal owner,” which in this case stated a daily rate of $8 per day after 15 free days of storage. Because Tri-City Recovery had no independent relationship with Maryann and appellant, she argues it had no right to charge them.  We disagree that the storage fees were unauthorized. Respondent entered into a contract with Tri-City Recovery, which authorized Tri-City Recovery to repossess and store the subject vehicle. The contract established a storage rate of $30 per day when charged to the buyer. In this context, respondent was the legal owner of the vehicle at the time of the repossession. Thus, the storage fees were authorized and established by the contract, and the NOI accurately stated the amount of the storage fees and to whom the fees would need to be paid.  Finally, appellant argues that respondent is liable for conversion of the vehicle. The sale of the vehicle was unauthorized, she argues, and therefore Maryann and appellant were deprived of their right of possession. Appellant relies on Cerra v.Blackstone (1985) 172 Cal.App.3d 604 (Cerra). In Cerra, this court concluded that a buyer could pursue a claim of conversion where the seller sent an NOI that “did not even come close to complying with Civil Code section 2983.2” (id. at p. 606), and then engaged in conduct amounting to an “[u]njustified refusal” to allow the buyer to redeem or reinstate the contract. (Id. at p. 609.) In this case, the NOI did comply with section 2983.2 and, unlike in Cerra, there was no attempt on the buyer’s part to try to redeem or reinstate the contract. Appellant’s conversion cause of action therefore fails.