In Harrelson v. CarMax Auto Superstores California, LLC, 2013 WL 5348087 (Cal.App. 4 Dist. 2013), Harrelson filed a class action against CarMax, pleading the first class to be any person who in the four years preceding the filing of the complaint purchased a car from CarMax, signed a retail installment contract (RIC), and made a deferred down payment and whose purchase contract did not disclose that some portion of the down payment would be deferred until not later than the due date of the second regularly scheduled installment under the contract and that was not subject to a finance charge. A second class consisted of those persons who traded in a vehicle from which the proceeds would be used to purchase a car from CarMax and signed a separate vehicle purchase agreement (VPA). Harrelson sought rescission of, and restitution on, the contracts both individually and for the class. The trial court sustained CarMax’s demurrer, and the Court of Appeal affirmed – albeit in an unpublished decision.
Here, Harrelson claims in her first and third causes of action that CarMax violated Civil Code sections 2981.9, the single document rule, and 2982, subdivision (a) by failing to disclose the terms of payment. CarMax, relying primarily on Stone v. James (1956) 142 Cal.App.2d 738, the only case to directly address the statute of limitations period for violations of the aforementioned sections, to urge the applicable period is one year, pursuant to Code of Civil Procedure section 340, subdivision (a).. . . Harrelson suffered no harm as a result of the held-check form. Harrelson still paid the down payment with a check, which the parties agreed would not be cashed for five days. As for the separate VPA and discharge of lien disclosure, she suffered no harm. She traded in her Civic, she received a payment on the Civic, and the remainder she owed on the car was rolled into the purchase of the Saab. Harrelson’s claims are based purely on the statutory violation of ASFA. ¶ Nonetheless, under Civil Code sections 2982 and 2983, she would be entitled to a refund of all the sums that she expended on the Saab, subject to a limited discretionary offset for having used the car for over two and a half years. ( Nelson, supra, 186 Cal.App.4th at pp. 1012–1013.) Since there was no actual injury, this recovery and right of rescission constituted a penalty under Code of Civil Procedure section 340, subdivision (a). As stated, generally, the one-year statute of limitations for an action upon a statute for a penalty applies if the civil penalty is mandatory. ( Hypertouch, Inc. v. ValueClick, Inc., supra, 192 Cal.App.4th at p. 842.) Here, if Harrelson could prove a violation in the single document rule or the disclosures, she was entitled to rescission of the RIC. ¶ Stone correctly held that the statutory predecessor of current Civil Code section 2983 created a statutory liability for a penalty and was governed by Code of Civil Procedure section 340, subdivision (a)’s one-year limitations period. (Stone v. James, supra, 152 Cal.App.2d at pp. 738–740.) ¶ . . . Harrelson contends that since there were major amendments to ASFA in 1961, after Stone was decided, its findings are no longer applicable. ¶ However, at the time Stone was decided, the remedy for a violation of the disclosure requirements stated as follows: “(e) If the seller, except as the result of an accidental or bona fide error in computation, shall violate any provision of subdivisions (c), or (d) of this section the conditional sale contract shall not be enforceable, except by a bona fide purchaser for value, and the buyer may recover from the seller in a civil action the total amount paid on the contract balance by the buyer to the seller or his assignee pursuant to the terms of such contract.” (Civil Code, former § 2982, added by Stats.1945 ch. 1030 § 2, pp.1992–1993, as amended by Stats.1949, ch. 1594, § 1, p. 2843.) The amended version of the applicable remedy provisions is identical. We have set forth Civil Code sections 2983 and 2983.1, ante. Despite changes to the disclosure requirements of ASFA, the remedy of re-scission has remained the same. Thus, Stone correctly held that the statutory predecessor of current section 2983 created a statutory liability for a penalty and was governed by Code of Civil Procedure section 340, subdivision (a)’s one-year limitations period. While the 1961 changes did expand ASFA in many respects, it did not alter ASFA’s rescission remedy. ¶ … Based on the foregoing, Harrelson’s first and third causes of action failed to state a claim because they were barred by the one-year statute of limitations in section 340, subdivision (a). At the time that Harrelson signed the RIC, on October 13, 2008, she was aware of the alleged violations of ASFA. However, she waited over two and a half years (and until the Saab began having mechanical problems) to file suit here. Harrelson can express no injury under ASFA. Nonetheless, if she could prove a technical violation, she could seek rescission of the contract and return the Saab, minus any offset amount for her use of the car. The rescission afforded by ASFA is clearly a penalty, and hence Harrelson needed to file her complaint within the one-year period. Harrelson could only go forward on her second and fourth causes of action, alleging violations of the UCL, which carries a four-year statute of limitations. (Bus. & Prof.Code, § 17208; Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178–179.)
The Court of Appeal also affirmed the dismissal of the UCL claim because Plaintiff could not allege any injury-in-fact.
Harrelson presented no evidence in the complaint that she lost money or property as a result of the unfair competition. Harrelson’s claims of injury are all speculative. She claims she was making payments on an unenforceable contract. However, she has no grounds for claiming that it was unenforceable under ASFA. Further, she claims that she was burdened by buying a car that she could not afford. However, she makes no explanation (and we can think of none) that shows how the deal presented by CarMax induced her into buying the Saab. She agreed to the trade-in amount and the price of the Saab. ¶ Further, Harrelson concedes that CarMax waited to cash her check until October 18, 2008, as agreed. Further, CarMax purchased her Civic, she received the agreed-upon amount for it, and the remainder was financed. Even if the VPA and discharge of lien dis-closure had been on the same document as the RIC, the terms of the agreement would be the same, and the amount that she would owe to CarMax would remain the same. ¶ Harrelson has failed to point to any evidence of injury supporting the complaint’s allegations. The complaint relied significantly on ASFA violations and the fact that this constituted unfair competition. She completely failed to establish how the UCL violation on its own resulted in unfair competition, was deceitful, or was fraudulent. The contents of the RIC, the VPA, and discharge of lien disclosure set forth the terms of the agreement between Harrelson and Car-Max regarding the sale of the Civic and the purchase of the Saab. She never alleged that she lost money or property as a result of the alleged wrongdoing by CarMax. Therefore, Harrelson has not demonstrated the standing necessary to pursue and prevail on any of the causes of action in the complaint brought under the UCL in her complaint.