Consumer Statutes, Costs: Recovery Of $133,239.75 In Attorney Fees, Pre-Judgment Interest And Costs Affirmed For Song-Beverly Plaintiff Who Had Paid Only $6,204.68 Under A Consumer Credit Contract.

2/8 DCA Agreed With Pulliam That The Holder Rule Cap Does Not Preclude Recovery Of Attorney Fees And Further Determines That The Cap Does Not Preclude Recovery Of Costs, Nonstatutory Costs, Or Prejudgment Interest.

            In Melendez v. Westlake Services, LLC, Case No. B306976 (2d Dist., Div. 8 January 28, 2022) (published), plaintiff who purchased a car through a retail installment contract sued the seller and holder of the contract for violations of CLRA, the Song-Beverly Consumer Warranty Act (California’s lemon law, Civ. Code, § 1790 et seq.), Civil Code § 1632 (requiring translation of contracts negotiated primarily in Spanish), and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), along with fraud and negligent misrepresentation claims. Through a settlement agreement, plaintiff ultimately recovered the $6,204.68 he had paid under the retail installment contract, with the remaining contract balance waived.  Additionally, pursuant to the terms of the agreement, plaintiff moved for and was awarded recovery of $115,987.50 in attorney fees, $2,956.62 in prejudgment interest, and $14,295.63 in costs.

            Defendant appealed and argued that the Federal Trade Commission’s Holder Rule – promulgated in 1975 as a consumer protection measure by which the holder of a consumer credit contract is subject to all claims the debtor could assert against the seller of goods/services obtained under the contract – limits the debtor’s recovery from the holder to the amount paid by the debtor under the contract. The 2/8 DCA disagreed.

            In affirming the trial court’s fees award, the panel followed the conclusions set forth in Pulliam v. HNL Automotive Inc., 60 Cal.App.5^th 396 (2021) [discussed in our February 02, 2021 post] – that the Holder-Rule limitation on recovery does not apply to attorney fees, and that the FTC’s contrary interpretation is not entitled to deference.  The panel also affirmed the trial court’s prejudgment interest and costs award to plaintiff – applying Pulliam’s fee recovery rationale, along with the conclusions set forth in Lafferty v. Wells Fargo Bank, N.A., 25 Cal.App.5^th 398 (2018) [discussed in our July 20, 2018 and June 11, 2020 posts] as to prejudgment interest and costs – though disagreeing with Lafferty’s conclusion on fee recovery.