California League Seeks to 'De-Publish' Lower Court's Ruling on Repos
SACRAMENTO, Calif. -- Now part of a financial coalition seeking redress on repo defaults before the California Supreme Court, the California Credit Union League said this month it seeks to set aside a lower court's enforcement of certain disclosure data for curing repo disposals.
The request from the league filed Aug. 21 seeks to "de-publish"
a ruling by a lower appeals court
in San Diego which held the state's Rees-Levering Repossession Notices law forces lenders to provide debtors certain reinstatement information to cure repo disposals.
The league has warned en-
forcement of the ruling by San Diego's Court of Appeals could have costly repercussions for CUs in California and elsewhere if it becomes precedent.
De-publishing has been an often-tried legal maneuver to avoid a protracted appeals process.
"We thought we were acting independently in filing a request to the Supreme Court and then we learn there are others," said Chris Collver, research analyst with the league noting other groups filing similar petitions include the California Bankers Association and American Financial Services Association, which represents small finance firms.
The case and the lower court's ruling stems from a class action suit brought by consumer groups against Arcadia Financial Ltd., a small loan firm in which the court held that "every repossession sale notice governed by Rees-Levering must tell the borrower" a series of facts which include:
-Exactly how much must be paid to cure any default and reinstate the loan.
-Whether any additional charges will be due during the reinstatement period and if so, their amounts and the dates they are due.
-The name and address of everyone to whom reinstatement payments must be made.
Under the act, defaulting debtors whose cars have been repossessed by a creditor must be given the opportunity to redeem their vehicles by paying the full balance due under the contract.
The act, said the league, also requires defaulting debtors be allowed to reinstate their contracts by curing the default and meeting certain other conditions set by the creditor.
The league went on to explain that Rees-Levering requires creditors provide a defaulting debtor with a notice of intention to dispose of the repossessed vehicle. The act requires the notice to include information about the debtor's right to redeem or reinstate and set forth "all the conditions precedent" to reinstatement
In the suit against Arcadia, the plaintiffs argued that notices the firm sent to defaulting buyers violated a requirement that a disclosure notice inform the buyer "of all the conditions precedent" to reinstatement. Arcadia, the plaintiffs argued, did not inform the defaulting borrowers "of the dollar amounts necessary to reinstate the contracts."
The plaintiffs, Sergio and Laura Juarez, sought the return of funds Arcadia obtained by collecting deficiency claims and judgments from buyers who ultimately did not redeem their vehicles or reinstate their contracts.
In a bulletin sent to its members last month, the league warned the case "may have a serious impact on every credit union that engages in automobile lending in California." Hence the league seeks to have the opinion de-published.
"Depublication is the California Supreme Court's discretionary power--to order that a Court of Appeals opinion not be published thereby depriving the opinion of precedental value," said the league.
If successful, the maneuver will prevent the decision from becoming binding in the Fourth District and "will prevent others from citing it as a legal authority," said the league adding the matter may still get taken up in the next session of the legislature.