July 25, 2012

Federal Court Grants Preliminary Approval of Class Action in Baker v GEMB, et al

The U.S. District Court for the Northern District of California (Oakland) has issued an order of preliminary approval in the class action entitled Baker v GEMB Lending Inc., et al (Case No. C10-05261). Judge Saundra Brown Armstrong ordered class notice to be sent out to a class of approximately 2,304 California consumers.

The settlement class is composed of California consumers who entered into a conditional sale contract in California for the purchase of a motor vehicle (including an RV or motorhome) that was later repossessed or voluntarily surrendered, who were issued a post repossession notice by GEMB and/or Thor at any time from October 12, 2006 through February 1, 2012, whose conditional sale contract was owned by GEMB, Thor and/or E*Trade at the time the notice was sent and who were assessed a deficiency balance following sale of the vehicle. The class definition excludes certain judgment and bankruptcy debtors.

This consumer class action challenges post-repossession notices sent by or on behalf of GEMB Lending, Inc., Thor CC Inc, Thor Credit Corporation, E*Trade Financial Corporation, CCB Credit Services, Inc and certain affiliated companies. Plaintiffs and the class alleged the notices did not comply with the Rees-Levering Act, thereby banning defendants from collecting any deficiency debt claimed to be owing after the vehicles were sold at auction. The class members will have 100% of the debt extinguished. Defendants will cease all collection activity concerning those accounts, and will contact the three major credit reporting agencies to delete the associated trade lines. The total amount of outstanding deficiencies to be eliminated is about $44,705,357. In addition to complete elimination of the remaining deficiency debt of nearly $45 million, the defendants agree to refund about 64% of the amount and borrower already paid toward the deficiency. Lenders sometimes refer to the latter amount as "voluntary payments," and even such "voluntary payments" will get the benefit of the 64% refund in this settlement. There is no claims process. Class members automatically will get the benefits to which they are entitled.

At the same time, each defendant denies that its post-repossession notices are defective or that they did anyting else that was unlawful. Thus, the settlement is a compromise, intended to resolve the matter without the delay of further litigation.

Bryan Kemnitzer and Nancy Barron of the law firm Kemnitzer, Barron & Krieg LLP, and Alexander Trueblood of the Trueblood Law Firm have been named co-lead counsel in the case. Class notice will be mailed out within 30 days. If you believe you are a member of the class, look for the class notice in the mail; if you have moved or believe class notice might not reach you, contact class counsel.The final fairness hearing is scheduled for December and distribution should occur early next year, subject to final approval by the court.

July 25, 2012

Wohlgemuth v Caterpillar - Appeals Court Rules in Favor of Consumers

Bill Krieg, of Kemnitzer, Barron & Krieg LLC, has won a second appellate victory for consumers within as many weeks. Today, in a case called Wohlgemuth v Caterpillar, Inc., the California 5th District Court of Appeals upheld a trial court ruling on attorneys fees in favor of the plaintiffs under Song Beverly Consumer Warranty Act. The Song Beverly Act provides that when plaintiffs win a lawsuit brought under the “California Lemon Law,” the manufacturer must pay the consumers’ legal fees for enforcing the statute. Otherwise, corporations could drive up the cost of litigation and make the cost of private enforcement prohibitively expensive. If manufacturers knew the law could not be enforced, they would ignore it.

Mr. and Mrs. Wohlgemuth purchased a new “Tradewinds” motor home that came with a warranty. To their dismay, they found the engine and exhaust system to be defective. When Caterpillar, the engine manufacturer, failed to repair it after numerous attempts, the Wohlgemuths demanded their rights under the lemon law – that is, refund or replacement of the defective RV. Caterpillar refused. Their only option was to file an action in court. The case went on for several years and legal costs accrued. Finally, on the eve of trial, Caterpillar sent an offer to settle for $50,000, but didn’t mention attorneys fees. The Wolgemuths accepted the settlement offer, which the court found “would allow them to achieve the main objective of the lawsuit by getting the engine/exhaust problem fixed by replacing the new engine.” But Caterpillar said the lemon law’s fee provision didn’t apply to the settlement. The trial court disagreed and awarded the consumers their legal costs and fees. That ruling has now been affirmed by the court of appeals.

This is an important decision for promoting consumer justice and access to the courts. California’s lemon law was one of the first in the country, and now all fifty (50) states have some form of the law. But a law is only as good as the means to enforce it. This judicial decision in favor of consumers is one more step forward in the effort Kemnitzer Barron & Krieg has been part of for nearly 30 years to ensure that new vehicles sold in California are safe and reliable.

July 21, 2012

Court Grants Preliminary Approval of $46 Million Settlement in Class Action Against Citizens Automobile Finance

The U.S. District Court for the Northern District of California has ordered class notice to be sent out in cases consolidated under the title Citizens Automobile Finance, Rees-Levering Cases, Cases No. C 10-05345 JSW. The Honorable Jeffrey S. White conditionally certified a class of approximately 2,167 California consumers who meet the definition paraphrased as follows: persons who purchased a motor vehicle and as part of that transaction entered into an agreement subject to California's Rees-Levering Automobile Financing Act, whose contract was assigned to Citizens, whose vehicle was repossessed or voluntarily surrendered, who were issued an NOI by Citizens from May 20, 2005 to June 30, 2011, and whose account was assessed a deficiency balance.

This consumer class action challenges the post-repossession notices sent by Citizens Automobile Finance, Inc. or RBS Citizens, N.A. Plaintiffs and the class alleged the notices did not comply with the Rees-Levering Act, thereby banning Citizens from collecting any deficiency debt claimed to be owing after the vehicles were sold at auction. The class members will have 100% of the debt extinguished. Citizens will cease all collection activity concerning those accounts. Citizens will contact the three major credit reporting agencies instructing them to delete the trade lines associated with these accounts. The total amount of outstanding deficiencies to be eliminated is about $46,786,977. The evidence in the case showed that Citizens has collected about $1,715,640 from class members. As part of this settlement, Citizens has agreed to refund about 85% of this amount.These sigificant and substantial benefits are automatic, without any claims process.

At the same time, Citizens expressly denies any wrongdoing and denies that its post-repossession notices are defective. Thus, the settlement is a compromise, intended to resolve the matter without the delay of protracted litigation.

In addition to Bryan Kemnitzer and Nancy Barron of the law firm Kemnitzer, Barron & Krieg LLP, the class was represented by Mark Chavez of the law firm Chavez & Gertler LLP, as well as attorneys Michael Lindsey and John Hanson.

Class notice will be mailed out on August 6, 2012. Final approval is scheduled for November and distribution should occur early next year subject to final approval by the court.

July 19, 2012

Court Issues Final Approval in Young v Rudolph

In a California consumer class action challenging post-repossession notices, Sacramento Judge David I. Brown issued final approval of a settlement on June 29, 2012. The case is Young v Rudolph Incorporated, Sacramento Superior Court Case No. 34-2009-00064451. Nancy Barron and Bryan Kemnitzer, of Kemnitzer, Barron & Krieg represented the class.The class administrator's account has been funded, paving the way for distribution of benefits.

This case challenged the post-repossession notices sent by Rudolph Incorporated. Plaintiffs and the class alleged the notices did not comply with the Rees-Levering Act, thereby banning Rudolph from collecting any deficiency debt it claimed was owing after the vehicles were sold at auction. Every class member will have 100% of the alleged debt extinguished and those borrowers who received class notice and who had paid some portion of the claimed deficiency will get a check for restitution of the amount paid. Rudolph has also offered to contact the three major credit reporting agencies (Experian, Equifax, Transunion) and request removal of the negative trade line associated with the repossession account. The benefits to the class are automatic. There is no claims process.

The class is defined as all persons who purchased a vehicle on credit, entered into an agreement subject to California's Ree-Levering Automobile Financing Act, whose contract was assigned to Rudolph, whose vehicle was repossessed, to whom Rudolph issued a certain statutory Notice from November 19, 2005 to March 17, 2011, and from whom Rudolph then claimed a deficiency balance. The settlement class excludes bankruptcy discharges and judgments prior to September 2010. There are about 385 class members, who collectively had about $1,761,322 in deficiency debt that will be extinguished by this settlement and judgment.

In many cases, consumers have defenses to repossession, or to the deficiency charges assessed after repossession. These defenses may be due to California consumer protection laws. Consumers who are billed for post-repossession charges or who are sued after repossession for amounts remaining due after the car is gone should promptly seek legal advice.

July 3, 2012

Consumer Victory Against Car Dealer Bond

In a landmark appellate case, Kemnitzer, Barron & Krieg has won a court ruling that will help thousands of defrauded car buyers get the legal help they need. In Pierce v Western Surety Company, the California Court of Appeals held that a used car buyer could get attorneys fees under the Consumers Legal Remedies Act when he sued for fraud and misrepresentation on a dealer's statutory bond. What does this mean?

Fly-by-night used car dealers that cheat consumers and then disappear are a real problem, and always have been. To address this injustice, the Vehicle Code requires licensed car dealers to file a $50,000 bond. Fraud victims have a claim against the surety on the bond up to the value of the car. So far, that sounds pretty good. The problem is that suing on the bond is not easily done without legal help. As long as no one could could get a lawyer to help them, the law was toothless.

In September 2008, Trenton Pierce bought a used truck from an outfit called Autorama. It turned out to be an undisclosed wreck. He contacted Bill Krieg in the Fresno office of Kemnitzer, Barron & Krieg. Before filing a lawsuit Krieg sent a letter to Autorama under the Consumers Legal Remedies Act and copied the bond company, Western Surety. Failing a response, he sued. Autorama promptly went out of business.

Krieg tried to resolve the case with Western Surety multiple times. Lawyers for Western Surety settled separately with the lender, but refused to deal with Pierce, while using tactics that ran up legal fees in an effort to get him to just go away. Finally, about two years later, Western Surety agreed to settle with him for $10,000, excluding attorneys fees. It could have saved its own legal costs, as well as those Pierce incurred, if it had just done so earlier. Without a lawyer, Western Surety's bullying tactics would have left Pierce with little or nothing at all. Krieg filed a motion to have the surety pay his fees, so that Pierce would not have to take legal costs out of his own recovery.

The surety argued that the Vehicle Code is silent as to recovery for attorneys fees. Krieg argued that Pierce was making a claim for fraud under the Consumers Legal Remedies Act, which protects consumers with a fee-shifting provision if the consumer prevails. The court found that the bond expressly covers claims for fraud and held in favor of Pierce.

At the heart of this battle is consumer access to the courts. Consumers cannot fight big business for years on end without legal help, and corporations know this. Fee shifting statutes, such as the Consumers Legal Remedies Act, the California lemon law and others, level the legal playing field. The holding in Pierce v Western Surety chocks one up for civil justice.