Terry v. Wasatch Advantage Group, LLC ( 2024 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 Denika Terry, et al., No. 2:15-cv-00799-KJM-DB 12 Plaintiffs, ORDER 13 v. 14 Wasatch Advantage Group, LLC, et al., 1S Defendants. 16 17 Plaintiffs are tenants who receive rental assistance through the federally subsidized 18 | Section 8 Housing Choice Voucher Program. They claim defendant lessors improperly charged 19 | plaintiffs, as well as the class members they represent, for additional services and required them 20 | to purchase renter’s insurance. Plaintiffs argue these services and the insurance requirement 21 | constitute impermissible rent under the Section 8 contracts and applicable regulations, and 22 | defendants therefore violated the Section 8 contracts and submitted false claims for 23 | reimbursement under the federal program. The court granted plaintiffs’ prior motion for partial 24 | summary judgment on the breach of contract and Unfair Competition Law (UCL) claims and 25 | denied defendants’ cross-motion for summary Judgment. Plaintiffs now have filed a partial 26 | motion for summary judgment on remedies. The court grants plaintiffs’ motion. 1 I. BACKGROUND 2 This court previously found defendants liable class-wide for the breach of contract and 3 UCL claims. Prior Order at 13–14, ECF No. 278. The court held “[p]laintiffs were damaged in 4 the amount of the excess rent they were required to pay.” Id. The court also has granted 5 plaintiffs leave to amend their complaint to specify a class cut-off date as November 30, 2022, see 6 Am. Order, ECF No. 329, and they have done so, see Sixth Am. Compl., ECF No. 331. The 7 parties have completed discovery on remedies. See Stip. & Order at 1, ECF No. 312. Plaintiffs 8 move for partial summary judgment on their remedies, including damages to eight newly 9 discovered tenants who qualify as members of the class. See Mot. Summ. J. (MSJ), ECF No. 10 323; Notice at 1–2, ECF No. 328. At hearing, defendants did not dispute the eight newly 11 discovered tenants should be included in the class and so the court treats them as class members. 12 That motion is now fully briefed. See Opp’n, ECF No. 326; Reply, ECF No. 327. The court 13 heard arguments on December 8, 2023. Mins., ECF No. 332. Anne Bellows, Stephanie Tilden 14 and Lindsay Nako appeared for plaintiffs and Ryan Matthews appeared for defendants. Id. 15 The relevant facts are undisputed. Plaintiffs retained a forensic accounting expert, David 16 Breshears, to assess the relevant class damages. Breshears analyzed ledger data and calculated 17 class members paid $2,800,185 in additional service charges between May 2011 and November 18 2022. See Breshears Decl. ¶¶ 12, 20, 37 & Ex. 2, ECF No. 323-4; Pl.’s Remedies MSJ Mem. at 19 5, ECF No. 323-1. He also estimated prejudgment interest was $2,062,690 as of July 20, 2023, 20 plus $767.17 per day thereafter. See Breshears Decl. ¶¶ 13, 38–39; Pl.’s Remedies Mem. at 15. 21 He later updated these figures to include damages to the eight additional tenants, bringing the 22 total excess rent to $2,803,080 and the total prejudgment interest to $2,065,132 as of July 20, 23 2023, with $767.96 accumulating per day thereafter. See Notice at 1. Defendants disagree with 24 plaintiffs’ proposed method for calculating damages and prejudgment interest, but they do not 25 dispute the facts behind plaintiffs’ proposal. 26 II. LEGAL STANDARD 27 Summary judgment is appropriate if “there is no genuine dispute as to any material fact 28 and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A dispute is 1 “genuine” if “a reasonable jury could return a verdict for the nonmoving party.” Anderson v. 2 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if it “might affect the outcome 3 of the suit under the governing law.” Id. The parties must cite “particular parts of materials in 4 the record.” Fed. R. Civ. P. 56(c)(1). The court then views the record in the light most favorable 5 to the nonmoving party and draws reasonable inferences in that party’s favor. Matsushita Elec. 6 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–88 (1986); Adickes v. S.H. Kress & Co., 398 7 U.S. 144, 157 (1970). 8 III. ANALYSIS 9 A. Total Damages 10 The parties disagree whether damages should be reduced to account for the value of the 11 renters’ insurance and media packages defendants provided plaintiffs. Opp’n at 1–4; Reply at 2– 12 5. This dispute relates to both the contract and UCL claims. The court begins with the contract 13 claims. 14 California law applies a liberal rule in allowing a court or jury to determine the amount of 15 damages. Hunt Foods v. Phillips, 248 F.2d 23, 33 (9th Cir. 1957); Cal. Lettuce Growers v. Union 16 Sugar Co., 45 Cal. 2d 474, 486–87 (1955). California law also limits contract damages to those 17 reasonably within the contemplation of the parties as a probable result of a breach at the time the 18 contract was formed. Brandon & Tibbs v. George Kevorkian Accountancy Corp., 19 226 Cal. App. 3d 442, 457 (1990). The California Civil Code provides, “[n]o damages can be 20 recovered for a breach of contract which are not clearly ascertainable in both their nature and 21 origin.” Cal. Civ. Code § 3301. Moreover, “[i]t is well established that ‘[p]arties may, by 22 contract, limit the remedies available to them in the event of breach,’” San Pasqual Band of 23 Mission Indians v. California, 194 Cal. Rptr. 3d 231, 238–29 (2015) (internal citation omitted), 24 and “in reviewing a written contract, [courts] look to the objective manifestation of the parties’ 25 intent as expressed by the language of the agreement,” see id. at 238 (citing Cal. Civ. Code. § 26 1638) (emphasis in original). 27 The remedy plaintiffs suggest—complete recovery of the excess rent—is the same remedy 28 provided in the Housing Assistance Payment (“HAP”) Contract at issue in the breach of contract 1 claim. The contract states in the event the owner demands excess rent, the owner “must 2 immediately return any excess rent payment to the tenant.” See HAP Contract, Part C, ¶ 5(f), 3 ECF No. 323-3; 24 C.F.R. § 982.451(b)(3)−(4). The language of the contract is unambiguous. 4 Nonetheless, defendants attempt to rewrite the contract by suggesting they are owed 5 compensation for the services in question. If the parties had intended for defendants to be 6 compensated for the value of any services provided in the event of breach or excess payment, 7 they could have provided for that in the contract. 8 Moreover, this court previously determined the charges for both the media packages and 9 renters’ insurance constituted unlawful “rent” and “[p]laintiffs were damaged in the amount of the 10 excess rent they were required to pay[.]” Prior Order at 12–14. Defendants’ position relies on the 11 premise that at least some of these payments were not rent, but rather payments for services. 12 Defendants’ argument runs afoul of the court’s previous order. As there is no genuine dispute of 13 material fact, and in accordance with the court’s prior order, plaintiffs are entitled to the excess 14 rent payments under the contract. See Arch Ins. Co. v. Sierra Equip. Rental, Inc., No. 12-00617, 15 2016 WL 4000932, at *5–6 (E.D. Cal. July 25, 2016) (granting summary judgment on 16 ascertainable measure of damages from a breach of contract claim); cf., Coremetrics, Inc. v. 17 Atomic Park.com, LLC, No. 04-0222, 2005 WL 3310093, at *6–8 (N.D. Cal. Dec. 7, 2005) 18 (finding summary judgment inappropriate as to the measure of damages requested when there 19 was a disputed issue of material fact). 20 Defendants also argue reductions should be made to account for the benefit of the bargain 21 plaintiffs enjoyed. Opp’n at 5–6. However, defendants charged plaintiffs for the disputed 22 services as rent. See Prior Order at 13–14. Defendants cannot now portray the excess rent 23 payments as an agreement to buy renters’ insurance and media packages. See Rodman v. Safeway 24 Inc., 125 F. Supp. 3d 922, 933 (N.D. Cal. 2015), aff’d, 694 F. App’x 612 (9th Cir. 2017) 25 (rejecting deductions from damages proposed by defendants when they were “hidden benefits” 26 not “part of the bargain entered into by class members”). Plaintiffs never bargained for the 27 benefits of nor decided to purchase the services; instead, they had no choice but to pay the 1 disputed amounts if they wanted to continue renting the apartments. For these reasons, the 2 defense cannot rely on arguments about the benefit of the bargain to contradict the contract. 3 Turning to the UCL claim, California courts have held equitable remedies are not 4 available under the UCL if plaintiffs have an adequate remedy at law. See Guzman v. Polaris 5 Indus. Inc., 49 F.4th 1308, 1312 (9th Cir. 2022), cert. denied sub nom. Polaris Indus. Inc. v. 6 Albright, 143 S. Ct. 2612 (2023) (“‘[F]ederal courts must apply equitable principles derived from 7 federal common law to claims for equitable restitution under California’s [UCL] and [CLRA],’ 8 including ‘the principle precluding courts from awarding equitable relief when an adequate legal 9 remedy exists.’”) (quoting and citing Sonner v. Premier Nutrition Corp., 971 F.3d 834, 837, 842 10 (9th Cir. 2020)). Plaintiffs have shown they have an adequate remedy at law: their contract 11 damages will compensate them for the excess rent paid. At hearing, plaintiffs also confirmed 12 their remedy under the contract claim is sufficient. For these reasons, plaintiffs are not entitled to 13 summary judgment on remedies under the UCL. 14 In sum, because defendants do not disagree with plaintiffs’ total measure of damages, and 15 because the court finds defendants are not entitled to their proposed reductions under California 16 contract law, the court finds as a matter of law the total measure of damages from the excess 17 rent paid amounts to $2,803,080. 18 B. Pre-Judgment Interest 19 Defendants do not dispute plaintiffs are entitled to prejudgment interest. See Opp’n at 3 20 (confirming “[d]efendants have no objection [to] prejudgment interest—at the time of 21 judgment—[being] calculated on an individualized basis from when each Plaintiff’s damages 22 were incurred”). They dispute only the proposed calculation of pre-judgment interest. Opp’n at 23 2−3, 6−7. 24 “Section 3287 [of the California Civil Code] provides for an award of prejudgment 25 interest whenever a plaintiff prevails in a breach of contract claim for an amount of damages that 26 is certain or is capable of being made certain by calculation.” Unocal Corp. v. United States, 27 222 F.3d 528, 541 (9th Cir. 2000) (citing Cal. Civ. Code § 3287). California law provides the 1 rate of interest for breach of contract is “10 percent per annum after a breach.” Cal. Civ. Code 2 § 3289(b). 3 Though defendants’ opposition suggests the parties disagree on how interest is calculated, 4 plaintiffs’ reply suggests the parties in fact agree interest should be individually calculated based 5 on the date each plaintiff incurred damages, and plaintiffs contend their interest calculation does 6 estimate prejudgment interest individually. Reply at 1, 5–7. At hearing, defendants confirmed 7 they have no objection to plaintiffs’ method of prejudgment interest calculation as clarified in 8 plaintiffs’ reply. Moreover, defendants did not retain their own expert to calculate prejudgment 9 interest and have proposed no meaningful alternative calculation. Because the parties agree 10 plaintiffs are entitled to prejudgment interest only for the period between each plaintiff’s injury 11 and the judgment, the court finds the amount of damages is calculable and undisputed. In 12 addition, because defendants have not provided “affirmative evidence to create a fact issue,” 13 F.T.C. v. Stefanchik, 559 F.3d 924, 931 (9th Cir. 2009) (internal citation omitted), the court 14 grants plaintiffs’ motion for summary judgment as to the prejudgment interest and its 15 calculation, totaling $2,065,132 as of July 20, 2023 and $767.96 per day thereafter. 16 IV. CONCLUSION 17 The court grants plaintiffs’ motion for summary judgment as to the measure of 18 damages and the prejudgment interest rate on the contract claim and denies plaintiffs’ 19 motion as to the UCL claim. 20 This order resolves ECF No. 323. 21 IT IS SO ORDERED. 22 DATED: January 31, 2024.