In Grim v. Safe-Guard Products Intern., LLC, 2011 WL 1246675 (Cal. App. 2011), the California Court of Appeal held, in an unpublished decision, that an RV purchaser could not state a class action under the UCL arising out of the sale of a GAP product because of a lack of uniformity.  The facts were as follows: 


Plaintiff and appellant Veronica Grim bought a new recreational vehicle (RV) from defendant and respondent, Dan Gamel, Inc. (Gamel). At the same time, and also through Gamel, plaintiff bought “ ‘GAP’ Total Protection,” an insurance policy issued by defendant and respondent, Safe–Guard Products International, LLC (Safe–Guard). The purpose of the insurance policy was to pay the difference between the fair market value of the RV and any amount still owed on the financing agreement plaintiff signed upon purchase of the RV in the event the RV was stolen or destroyed during the first 84 months of ownership. The complaint alleges that plaintiff was induced to purchase the policy because the Gamel finance manager and the Safe–Guard promotional materials represented that the fair market value would equal the amount paid to plaintiff by her motor vehicle insurance policy. In net effect, plaintiff alleged that she understood the policy would cover any “gap” between the amount she still owed on the RV and the amount she would be paid under her motor vehicle policy in the event of a total loss of the RV. [FN1. In common usage, a term like “GAP contract,” in which a term is consistently rendered in all capital letters, would involve an acronym. The record does not suggest any such usage here, and “GAP,” despite the capitalization, seems to refer to the actual “gap” between market value and remaining finance charges. Nevertheless, to conform with the usage of the parties in this case, we will refer to the insurance contracts involved in the present case as GAP policies or GAP contracts.]  Approximately five months later, the RV was destroyed by fire. Plaintiff’s motor vehicle insurer determined that the fair market value of the RV was $160,269.60 and paid $160,003.60 toward the remaining balance under plaintiff’s financing agree-ment. The remaining balance on the financing agreement, however, was $178,915.31. Plaintiff filed a claim with Safe–Guard for the difference.  Safe–Guard denied the claim. Instead of having the RV appraised, Safe–Guard used the value set forth in the National Automobile Dealers Association (NADA) Retail Guide. Pursuant to the retail guide, the RV was worth $193,745. Accordingly, there was no gap between the value of the RV and the amount still owed by plaintiff. 


Plaintiff filed a class action under the UCL, and moved for class certification, for all persons who purchased “GAP Total Protection” policies during the class period.  The trial court denied the motion due to the absence of commonality.  The Court of Appeal affirmed, explaining: 


To the extent the present plaintiff’s causes of action are premised upon false advertising by Safe–Guard that the GAP policy would cover any difference between the buyer’s insurance settlement and remaining finance charges, we agree with the trial court that plaintiff has failed to establish any uniformity of sales representations concerning the nature of the coverage. Plaintiff failed to establish that Safe–Guard prescribed a sales presentation, required the use of any particular sales brochures or materials, or otherwise controlled what the independent dealerships told customers about the policy. It is apparent that in the trial court, and in its opening brief on appeal, the focus of plaintiff’s claim was upon alleged misrepresentations by dealers, facilitated or required by Safe–Guard. However, plaintiff failed to establish that it could prove the uniformity of such representations, and the evidence before the trial court was sufficient to establish that individual issues of representations to particular customers would predominate.  . . . ¶  . . . In her first amended complaint, plaintiff alleged that “Defendants knew that any claim for recovery of a ‘gap between the insurance settlement and the balance on the loan’ would be denied because Defendants only intended to insure and reimburse a ‘gap’ between an ‘Established Retail Guide’ valuation and the balance on a loan.” In her reply brief, plaintiff emphasizes this aspect of her claim. She asserts: “Here, common issues predominate because central to and the source of all class member claims is a single, specific material misrepresentation/failure to disclose: Defendants knew but failed to disclose that Safe–Guard would only pay the difference between the class member’s loan balance and the value of the vehicle as established by Safe–Guard (not the class member’s own insurance company) using an undisclosed ‘Established Retail Guide.’ “    If these allegations are taken to mean that Safe–Guard knowingly chose the NADA retail guide because it uniformly established a high fair market value that would relieve Safe–Guard of any obligation to pay under the GAP policy (and if we inferred an allegation that Gamel knew about this choice by Safe–Guard), we could agree that this case is distinguishable from Kaldenbach v. Mutual of Omaha Life Ins. Co., supra, 178 Cal.App.4th 830 and, instead, would be governed by Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282 and McAdams v. Monier, Inc. (2010) 182 Cal.App.4th 174. In each of those latter two cases, the courts held that common issues of nondisclosure of material facts by the defendant predominated over issues concerning what the defendants and their sales agents may have affirmatively represented to purchasers of the defendants’ products.    In the present case, however, plaintiff failed to assert this theory as the primary basis for her claim when she moved for class certification, relying instead on the theory that Safe–Guard prescribed (and dealers followed) a practice of misrepresentation of fair market value as equating to the amount of the vehicle insurance policy settlement. Of equal importance, plaintiff presented no evidence whatsoever that Safe–Guard intentionally or knowingly adopted the NADA retail guide in an attempt to routinely avoid payment on the gap policies. (See, e.g., McAdams v. Monier, Inc., supra, 182 Cal.App.4th at pp. 179–180 [allegation that defendant “knew but failed to disclose … that the color composition of its tiles would erode away well before the end of the tiles’ represented 50–year life”].) Because plaintiff has presented no evidence to support this theory of the case, she has likewise failed to establish that this issue would be the predominant issue in any trial of the case. Accordingly, the trial court did not abuse its discretion in concluding that individual issues would predominate and that class certification was inappropriate.