Quillen v. Car City CA2/1 ( 2023 )

Filed 3/27/23 Quillen v. Car City CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
MICHAEL QUILLEN, B318046
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 17STLC03903)
v.
CAR CITY, INC., et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Stephen M. Moloney, Judge. Affirmed in
part and reversed in part.
Arno H. Keshishian for Defendants and Appellants.
Law Offices of Michael Geller and Michael S. Geller for
Plaintiff and Respondent.
Defendant and appellant Car City, Inc. (Car City)
appeals from the judgment in a lawsuit brought by plaintiff and
respondent Michael Quillen, alleging Car City committed fraud,
violated the Consumer Legal Remedies Act (Civ. Code, § 1750
et seq.) (the CLRA) and violated the Unfair Competition Law
(Bus. & Prof. Code, § 17200) (the UCL) when it sold Quillen a
used vehicle. The trial court ruled in Car City’s favor on the
fraud claim, but in Quillen’s favor on the CLRA and UCL claims,
and ordered Car City to pay Quillen attorney fees and costs
according to proof.
We agree with Car City that substantial evidence does not
support the judgment on the CLRA claim, because the record
contains no evidence supporting that the Car City employee
statements on which Quillen based that claim were actually false
or misleading. Because the UCL claim is derivative of the CLRA
claim, the UCL claim is likewise unsupported by the record.1
Accordingly, we reverse the judgment to the extent it adjudicates
these two causes of action in Quillen’s favor and orders Car City
to pay Quillen fees and costs.
FACTS AND PROCEEDINGS BELOW
A. The Complaint
Quillen sued Car City and others2 in October 2017, alleging
causes of action against Car City for fraud and violations of the
1 Because our conclusion on this issue requires reversal,
we need not address Quillen’s arguments regarding the court’s
purported reliance on excluded, inadmissible evidence.
2 The complaint also named American Contractors
Indemnity Company and Chase Bank as defendants, neither of
which is a party to this appeal.
2
CLRA and UCL. All three causes of action were based on the
same alleged conduct in connection with Quillen’s purchase
of a used vehicle (the vehicle) from Car City. Specifically, the
complaint alleged that, before Quillen purchased the vehicle,
Car City employees assured Quillen it had not been in an
accident and was in excellent condition, but that two years later,
Quillen learned the vehicle’s frame was severely damaged, which
made the vehicle unsafe to drive.
B. Trial Testimony and Exhibits
The record on appeal does not include a reporter’s
transcript. We therefore base our summary of the evidence
presented at trial primarily on the detailed description of this
evidence contained in the trial court’s “final statement of
decision.”3 (Capitalization omitted.)
1. Quillen testimony and key documents
at trial
Quillen testified that he purchased the vehicle in December
2015. He test drove the vehicle before purchasing it and did not
detect any issues during the test drive. He further testified
that Alex Oganesyan was the Car City employee with whom he
discussed the vehicle before purchasing it, and that Oganesyan
initially told Quillen the vehicle had not been in an accident
and indicated “ ‘it was [in] great shape.’ ” Oganesyan then
provided Quillen with a CARFAX report that indicated:
(1) “No accident /damages reported to CARFAX”; (2) “No total
3 It is not clear from the record whether all of the
documents referenced in the statement of decision were admitted
into evidence, something we address further in discussing Car
City’s arguments on appeal.
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loss reported to CARFAX”; and (3) “No structural damage
reported to CARFAX.” According to Quillen’s testimony,
Oganesyan later told Quillen: “ ‘I must come clean since the
vehicle was in a bad accident in the past and incurred frame
damage.’ ” Oganesyan then provided Quillen with an AutoCheck
report that notes “ ‘frame/unibody damage’ but also indicates no
accidents involving the vehicle. The frame damage was reported
by an auto auction in September of 2013. According to the
AutoCheck report[,] ‘a wholesale auto auction has reported that
the vehicle has frame damage which can weaken the structure
of the vehicle.’ ”
Quillen testified that he asked to get a third-party
inspection of the vehicle, in response to which Oganesyan
became upset and would not let the vehicle leave the lot.
Quillen nevertheless purchased the vehicle, in part because
the certificate of title did not indicate “salvage title,” as it would,
had the vehicle been salvaged.
An internal Car City document entitled “vehicle disclosure
form” (capitalization omitted) includes a list of the following
statements, each of which Quillen initialed: “a. The vehicle has
prior accident damage that has been repaired; [¶] b. The vehicle
has frame damage reported; [¶ ] c. I have seen the CarFax report;
[¶ ] d. I have seen the AutoCheck report; [¶ ] e. I have seen the
[National Motor Vehicle Title Information System] title report;
[¶ ] f. I have test driven the vehicle; [¶ ] g. I have physically
inspected the vehicle and I have no demands or expectations
of the dealer; [¶ ] h. I have been informed that I have the right
to an independent inspection of the vehicle. [¶ ] . . . [¶ ] k. I am
purchasing the vehicle ‘as is’ no claim made by the dealer; and
[¶ ] l. I am satisfied with the vehicle’s condition.” (Underscoring
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omitted.) Quillen also “initialed and signed this document
confirming the representations made [therein].”
Quillen testified that, in April 2017, when the vehicle
had approximately 14,000 more miles on it than it had at the
time he purchased it (approximately 83,000 miles as opposed
to 69,315 miles), Quillen took the vehicle to Big O Tires because
the vehicle was not driving straight. Quillen testified he was told
that Big O Tires could not align the tires due to frame damage,
causing Quillen to have the vehicle inspected at Central Valley
Collision Inc., where he “was advised that it would cost in excess
of $10,000 to repair the frame damage.”
Another estimate for repair from San Francisco Auto Body
and Frame Repair Quillen subsequently obtained indicates
“VEHICLE NOT SAFE TO DRIVE WITH THE EXTENT OF
THE DAMAGES FOUND UNDERNEATH.”
2. Oganesyan testimony
Oganesyan testified that the vehicle at issue “was obtained
by Car City . . . as a trade-in for a vehicle that was purchased
from them.” According to Oganesyan, Car City enlists Steve’s
Muffler Brakes and Shocks to inspect vehicles “to see if a vehicle
is safe to be sold” and to place a value on a vehicle. He testified
that a such an inspection report (the Steve’s Muffler inspection
report) “g[ave] Car City the green light to sell the vehicle.”
Oganesyan “testified that he did not know if the vehicle needed
repairs. Instead, he relied on the safety inspection from Steve’s
Muffler.”
Oganesyan did not remember every detail of his
conversation with Quillen, but testified that he was relying
on the Steve’s Muffler inspection report and AutoCheck report
in that conversation. Consistent with Quillen’s testimony,
5
Oganesyan testified that he showed Quillen documents indicating
the vehicle had frame damage. The documents did not indicate
that the frame damage had been repaired. Inconsistent with
Quillen’s testimony, however, Oganesyan testified that Car City
permitted vehicles to be taken up to seven miles away from Car
City for independent inspection, and that “it is impossible not
to give the ‘ok’ to take a vehicle off the [l]ot to be inspected.” He
testified that “about 50 [percent] of Car City’s customers asked
for and received an independent inspection report,” for which Car
City pays.
3. Expert testimony
No expert testimony was presented at trial. Quillen
initially designated an expert to testify regarding the “safety
and condition of the vehicle” and whether it had been “repaired
in a reasonable and safe manner.” When Quillen sought to
change experts on the eve of trial and without enlisting the
proper procedures for doing so, the court did not permit the
substitute witness to offer expert testimony.
C. Statement of Decision
The court issued a detailed written statement of decision.
With respect to the fraud claim, the court found that Oganesyan
had made a misrepresentation in December 2015 “that the
[vehicle] was safe to drive.” The court based its finding that
the vehicle was not, in fact, safe to drive in December 2015 on
(1) statements by employees at Big O Tires in 2017, as relayed
to the court through Quillen’s testimony, and (2) the estimate of
repair documents obtained at some point in April 2017 or later
that reflected the vehicle was not safe to drive.
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The court further found, however, that Quillen had “offered
no evidence that . . . Oganesyan knew that his statement was
false, or that he made the statement with the intent to defraud.”
To the contrary, the court found “Oganesyan was credible when
he testified that he did not know that the car was not safe.” The
court further found that the Steve’s Muffler inspection report
was a “reasonable bas[is] for . . . Oganesyan to rely upon when
he made the false statement that the vehicle was safe to drive[,]”
and that “it was reasonable that . . . Oganesyan did not know
that the [vehicle] was not safe to drive because it was not an
obvious and readily discovered defect.”
The court found that Quillen “was not credible in
his account of the business transaction with . . . Oganesyan”
and specifically did not find credible Quillen’s testimony
that Oganesyan had refused to permit Quillen to obtain an
independent inspection.
As to the CLRA claim, the court ruled in Quillen’s favor.
As it had in the context of the fraud claim, the court found
Oganesyan had misrepresented that the vehicle was safe to drive,
which constituted a “deceptive act[ ] or practice[ ] in the sale of
consumer goods” as required for a CLRA violation.
The court acknowledged that Oganesyan had disclosed to
Quillen that the vehicle had frame damage, but concluded that
“this true statement was made in circumstances that minimized
the concern about . . . the vehicle’s safety to drive,” noting that
Oganesyan had “offered misleading information about the vehicle
with the CARFAX report showing no accident or frame damage”
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and initially telling Quillen “the vehicle was not in an accident
and was in excellent condition.”4
Finally, as to the UCL cause of action, the court concluded
that the CLRA violation Quillen had established constituted an
“unlawful . . . business practice[ ]” supporting the UCL claim. On
this basis, it ruled in Quillen’s favor on the UCL claim as well.
Accordingly, the court entered judgment in favor of Quillen
and against Car City in the amount of $48,763.74, and awarded
attorney fees to be established upon noticed motion, and costs
pursuant to a proper memorandum of costs.5
Car City timely appealed the judgment.
DISCUSSION
Car City first argues that, in reaching its decision in
Quillen’s favor on the CLRA and UCL claims, the court relied
on two pieces of evidence that had been excluded as inadmissible
hearsay: Quillen’s testimony regarding what Big O Tire
employees told him in April 2017, and an estimate for repair
reflecting the damage to the vehicle around that same time.
Quillen counters that Car City cannot make this argument,
because the record does not establish the trial court actually
excluded this evidence. We need not decide whether Car City
can establish that the trial court excluded the challenged
evidence and/or that the court erred in relying on it, however.
4 As noted in the factual summary, Quillen testified
that Oganesyan ultimately did disclose the car had been in
an accident before Quillen purchased the vehicle.
5 The court also ruled in Quillen’s favor on the cause
of action against Chase Bank Finance, and awarded no relief
against American Contractors Indemnity Company.
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Even assuming the court properly relied on it, the record still
does not contain substantial evidence to support all elements
of the CLRA and UCL claims, as we explain further below.
A. CLRA Claim
“The CLRA proscribes particular ‘unfair methods
of competition and unfair or deceptive acts or practices’
in transactions for the sale or lease of goods or services to
consumers. (Civ. Code, § 1770, subd. (a); see Daugherty v.
American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824,
833.)” (Collins v. eMachines, Inc. (2011) 202 Cal.App.4th
249, 255 (Collins).) Deception is a necessary component of
the conduct proscribed by the CLRA. (See Durell v. Sharp
Healthcare (2010) 183 Cal.App.4th 1350, 1367 [“ ‘plaintiffs in
a CLRA action [must] show not only that a defendant’s conduct
was deceptive’ ”]; see Civ. Code, § 1760 [CLRA’s “underlying
purposes . . . are to protect consumers against unfair and
deceptive business practices and to provide efficient and
economical procedures to secure such protection”].) Although
there is no statutory or case law definition of a “deceptive
practice” for these purposes, the statute lists numerous
examples, including “[r]epresenting that goods . . . have . . .
characteristics . . . [which] they do not have.” (Civ. Code,
§ 1770, subd. (a)(5).) Courts have also deemed “the concealment
or suppression of material facts” to be deceptive, based on
principles of fraud. (See Collins, supra, at p. 255.) It follows
that, under the CLRA, even if a representation is true, it
may still be deceptive because “ ‘[a] perfectly true statement
couched in such a manner that it is likely to mislead or deceive
the consumer, such as by failure to disclose other relevant
information, is actionable.’ [Citation.]” (Consumer Advocates v.
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Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1362; see
also Jones v. Credit Auto Center, Inc. (2015) 237 Cal.App.4th
Supp. 1, 11.)
The deceptive practice on which Quillen based his CLRA
claim were Oganesyan’s statements that the vehicle was safe
to drive and in good condition, which the court found were false,
and Oganesyan’s informing Quillen about the frame damage in
a manner the court found was misleading because it “minimized”
the effect of the damage on the car’s safety. But in order for
these statements to be false and misleading, it must be true
that, in December 2015 when Oganesyan made them, the vehicle
was not safe to drive as Oganesyan claimed and/or that the
frame damage was more extensive than Oganesyan led Quillen
to believe. But no evidence in the record—not even the evidence
Car City argues was excluded—supports either finding. Indeed,
the only evidence in the record regarding the vehicle’s condition
around December 2015 are the CARFAX report, AutoCheck
report, and Steve’s Muffler inspection report, all of which indicate
the vehicle was safe to drive. The estimates of repairs in the
record and the hearsay testimony regarding what Big O Tires
employees told Quillen speak to the condition of the vehicle in
April 2017 or later. This is not substantial evidence establishing
the condition of the vehicle two years and 14,000 miles earlier.
Without substantial evidence that the vehicle was in any way
unsafe to drive at the time Oganesyan made the challenged
statements, the record does not support that Oganesyan’s
statements to the contrary were false or misleading. (See
Civ. Code, § 1770, subd. (a)(5) [deceptive business practice to
“[r]epresent[ ] that goods . . . have . . . characteristics . . . [which]
they do not have,” italics added].) Nor can Oganesyan be found
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to have concealed or suppressed a fact if there is no evidence
in the record supporting that fact. (See Collins, supra, 202
Cal.App.4th at p. 255 [conduct proscribed by CLRA includes
concealment of material fact “because fraud or deceit
encompasses the suppression of a fact by one who is bound
to disclose it, or the suppression of a fact that is contrary to
a representation that was made,” italics added]; Gutierrez v.
Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234,
1258 [“an omission is actionable under the CLRA if the omitted
fact is (1) ‘contrary to a [material] representation actually made
by the defendant ’ or (2) is ‘a fact the defendant was obliged to
disclose,’ ” italics added].)
Substantial evidence thus does not support a deceptive
practice prohibited by the CLRA, and does not support the court’s
ruling in Quillen’s favor on the CLRA claim.6
B. UCL Claim
A UCL claim requires an “unlawful, unfair or fraudulent
business act or practice.” (Bus. & Prof. Code, § 17200.) The
court ruled in Quillen’s favor on the UCL claim on the basis that
Quillen had established Car City violated the CLRA, and thus
had engaged in an “ ‘unlawful’ . . . business practice” that harmed
Quillen. (See Cel-Tech Communications, Inc. v. Los Angeles
Cellular Telephone Co. (1999) 20 Cal.4th 163, 180; see ibid. [“[b]y
proscribing ‘any unlawful’ business practice, ‘section 17200
6 Because we conclude substantial evidence does not
support the judgment as to the CLRA claim on this basis, we
need not address the parties’ arguments about whether the
CLRA contains a scienter requirement necessitating proof the
defendant knew a statement was false in order to establish a
deceptive business practice based on a misrepresentation.
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[the UCL] “borrows” violations of other laws and treats them
as unlawful practices’ that the unfair competition law makes
independently actionable”].) Because substantial evidence
does not support the CLRA claim, it likewise does not support
an “unlawful . . . business act or practice” under the UCL.
(Bus. & Prof. Code, § 17200.) Nor can we uphold the judgment
on the UCL claim on the basis that Oganesyan’s statements
reflect a fraudulent business practice, as this would be
inconsistent with the court’s unchallenged finding that Car
City did not make a fraudulent statement. Finally, substantial
evidence does not support that Oganesyan’s statements were
“unfair” for the same reasons substantial evidence does not
support that these statements were deceptive: The record does
not reflect that there was anything about the state of the vehicle
in December 2015 that Oganesyan misrepresented or failed to
disclose to Quillen.
Accordingly, the judgment must be reversed to the extent
it adjudicates the CLRA and UCL causes of action in Quillen’s
favor.
C. Attorney Fees and Costs
Following our partial reversal, Quillen is no longer the
prevailing party as against Car City on any cause of action, and
the award of attorney fees and costs against Car City must be
reversed as well. (See Merced County Taxpayers’ Assn. v.
Cardella (1990) 218 Cal.App.3d 396, 402 [“[a]n order awarding
costs falls with a reversal of the judgment on which it is based”].)
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DISPOSITION
The judgment is reversed as to the CLRA and UCL causes
of action against Car City, and to the extent it entitles Quillen
to collect attorney fees and costs from Car City. In all other
respects, we affirm.
Appellant Car City is awarded its costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur:
CHANEY, J.
WEINGART, J.
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