The opinion
Filed 9/9/25
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
THE PEOPLE, B329575
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC680425)
v.
ADIR INTERNATIONAL, LLC,
et al.,
Defendants and Appellants.
APPEALS from judgment of the Superior Court of Los
Angeles County. Steven J. Kleifield, Judge. Affirmed in part;
reversed and remanded in part.
Rob Bonta, Attorney General, Nicklas A. Akers, Assistant
Attorney General, Michele Van Gelderen, Alicia K. Hancock,
Michael Reynolds and Rosailda Perez, Deputy Attorneys General,
for Plaintiff and Appellant.
Eugene Kalinsky for the California Department of
Insurance and Ricardo Lara, Insurance Commissioner of the
State of California, as Amicus Curiae on behalf of Plaintiff and
Appellant.
Seth E. Mermin, David S. Nahmias and Erin Kramer for
UC Berkeley Center for Consumer Law & Economic Justice, Bet
Tzedek Legal Services, and Public Counsel as Amici Curiae on
behalf of Plaintiff and Appellant.
O’Melveny & Meyers, David L. Kirman and Anton
Metlitsky for Defendants and Appellants.
___________________________________________
The People of the State of California brought a civil
enforcement action against defendant Adir International, LLC
(Adir) and its owner defendant Ron Azarkman, alleging that
their sale of account/credit protection services and credit property
insurance violates Business and Professions Code section 17200,
the unfair competition law (UCL). As called for in actions under
the UCL, the People alleged predicate violations of law—here the
Insurance Code and the Unruh Retail Installment Sales Act,
Civil Code section 1801 et seq. (Unruh Act).
After a bench trial, the trial court found Adir had violated
the UCL by committing predicate violations of the Insurance
Code in selling its credit property insurance. The trial court
found Azarkman personally liable as well. The trial court found,
however, that defendants’ sale of account/credit protection
services did not violate the Unruh Act. All parties appeal from
the judgment.
We affirm in all respects the trial court’s finding that Adir
and Azarkman committed violations of the Insurance Code. We
reverse the trial court’s finding that their sale of account/credit
protection services is not barred by the Unruh Act, and remand
for further proceedings on the Unruh Act allegations. 1
1 We grant the People’s unopposed motion for judicial notice
and supplemental motion for judicial notice of various documents
evincing the history of the Unruh Act and later amendments.
2
BACKGROUND
Adir operates a chain of retail stores under the name
Curacao. Curacao sells electronics, appliances, furniture, and
home goods in its stores in California, Nevada, and Arizona.
Curacao’s core customers are recent, low-income
Spanish-speaking immigrants who have poor credit or no credit
history and so cannot get credit elsewhere.
Curacao acts as a retail creditor, offering store credit to its
customers. More than 90 percent of Curacao’s sales are to
customers who buy on Curacao’s store credit. Beginning at least
as early as 2012, Curacao offered credit to its California
customers in the form of retail installment accounts and retail
installment contracts. Curacao’s retail installment accounts are
revolving accounts, like credit card accounts, that accrue finance
charges monthly based on the unpaid balance. Curacao’s retail
installment contracts are fixed length, fixed-payment contracts,
similar to the arrangements many consumers use for vehicle
purchases. Finance charges are computed at the time of the
purchase and spread evenly over the term of the installment
payments. Curacao stopped offering retail installment contracts
around July 2020, but continues to offer retail installment credit
accounts.
3
In 2006, Curacao began offering consumers optional
“account protection,” known as “Adir Global Protection” or “AGP,”
on both retail installment accounts and retail installment
contracts. 2 Adir offered two forms of AGP: AGP Basic and AGP
Plus. AGP Plus includes the benefits of AGP Basic and also
includes a credit property insurance policy underwritten by a
third party that provides product replacement coverage.
(Hereafter, “AGP” refers to the account protection coverage
provided by both AGP Basic and AGP Plus; “AGP Plus” refers to
the credit property insurance portion of AGP Plus.)
At all times relevant to this action, Curacao was licensed as
a credit insurance agent by the California Department of
Insurance. Each year it registered each of its store managers as
“endorsees” under its credit insurance license and renewed both
its license and the registration of its endorsees. Curacao sales
associates were not endorsees but were eligible to receive a $2
“bonus” for selling AGP Basic, and a $1 “bonus” for upgrading a
customer from AGP Basic to AGP Plus.
Under the AGP program, consumers pay a monthly fee on
each enrolled account or contract in exchange for the ability to
“activate” AGP and defer their installment payments if a
“qualifying event” such as unemployment or disability occurs. In
2 For most of the relevant time period, this account
protection was marketed as “Adir Global Protection” or “AGP.” It
was rebranded as “Curacao Credit Shield” or “CCS” in 2020. We
use AGP to refer collectively to AGP and CCS.
4
some uncommon circumstances the payments can be cancelled
entirely. 3
If activation is approved and payments are deferred,
Curacao does not charge a $10 late payment fee on the enrolled
account or contract for each month of deferred payments. For
retail installment accounts, Curacao also does not charge a
finance charge on the enrolled account during the months of
deferral. AGP payment deferral does not reduce a consumer’s
outstanding account balance with Curacao, and when the
deferral ends, consumers must resume their regular monthly
payments.
If deferral has been activated, Curacao still charges the
applicable AGP fee every month on each retail installment
agreement enrolled in AGP with an outstanding balance. These
fees vary with the outstanding balance and, at the time of trial,
ranged from $4.95 to $16.95 per month, per account or contract.
Consumers can have multiple accounts and contracts enrolled in
AGP, so a consumer might be paying multiple AGP fees at once. 4
These multiple fees for AGP can add up, costing more to
consumers than they would pay if their balance were on a single
3 Almost all AGP activation requests approved by Curacao
have been for payment deferral, not cancellation. The trial court
found that for fiscal years 2016–2018, more than 99 percent of
approved AGP activations were for deferments.
4 AGP attaches to Curacao’s own retail installment accounts
and contracts only. Customers who purchase goods or services
from Curacao with bank-issued credit cards cannot enroll in
AGP.
5
account. Consumers may also end up paying more in AGP fees
than they pay in finance charges on those accounts.
Curacao customers are not required to purchase AGP or
AGP Plus to obtain credit. Both services can be cancelled at any
time. Until December 2020, customers purchasing AGP and AGP
Plus received their contracts and disclosures in printed form after
they agreed to the transactions. In December 2020, Curacao
transitioned to a contactless process. Enrollment became
available on tablets and smartphones.
The trial court found “AGP was profitable to the tune of
$83,591,688 for the period May 20, 2012 through January 2022.”
However, “the total AGP benefits provided to consumers between
February 2012 and January 2022 was approximately
$2,245,403,” or about 2.7 percent of the AGP fees charged. As the
trial court found: “While the stated purpose of AGP . . . is to
protect customers’ credit, it primarily serves to protect [Curacao]
against defaults. [Curacao] is able to give credit to the
uncreditworthy at prevailing rates because of the profitability of
AGP. Customers who choose to purchase AGP may benefit, but
overall AGP greatly increases the cost of borrowing for those who
choose to purchase it. Conversely, because many customers
purchase AGP, [Curacao’s] target customers are able to obtain
credit and purchase consumer goods they would otherwise not be
able to purchase due to their poor credit.”
In October 2017, the People filed this action alleging Adir
violated the UCL by making false and misleading statements in
violation of Business and Professions Code section 17500 and
committing a variety of predicate violations of other laws.
In May 2019, the People sought leave to amend their
original complaint to add allegations that defendants violated the
6
Unruh Act and Insurance Code through their sale of AGP Basic
and AGP Plus. Although Adir initially opposed such leave, it
ultimately stipulated to allow the People leave to file their
amended complaint in this action, which was filed on February
19, 2020.
On March 9, 2021, the parties agreed to a partial
settlement, which the trial court entered as a Partial Judgment
and Permanent Injunction. The Partial Judgment resolved the
People’s claims from their original October 2017 complaint, but
reserved for trial all allegations that defendants violated the UCL
through predicate violations of the Unruh Act and Insurance
Code related to the sale of AGP Basic, AGP Plus, and other
insurance.
On August 9, 2022, shortly before trial on the reserved
UCL claims, the parties stipulated to 31 undisputed facts, so as
to “streamline trial.”
On September 28, 2022, a bench trial on the People’s
reserved claims began. In addition to the stipulated facts, the
People presented discovery responses, documents, and witness
testimony to prove Adir and Azarkman had violated the Unruh
Act and Insurance Code between 2012 and 2022.
On October 18, 2022, at the close of evidence, defendants
moved for judgment in their favor. With respect to the Insurance
Code allegations, they argued for the first time that the
Insurance Code allegations should be stayed or dismissed under
the primary jurisdiction doctrine. The trial court denied the
motion.
On January 30, 2023, the trial court issued its final
Statement of Decision, ruling in favor of Adir and Azarkman on
the Unruh Act allegations, but finding they had violated multiple
7
provisions of the Insurance Code. The trial court held Azarkman
directly liable for Adir’s Insurance Code violations because he
had complete control over Curacao’s insurance sales practices
that violated the Insurance Code, was aware of those practices,
and permitted them to continue.
The trial court assessed civil penalties under the UCL
against both Adir and Azarkman for their violations of the
Insurance Code. The trial court found that each credit insurance
policy sold by Curacao constituted a separate violation of the
UCL based on the Insurance Code, for a total of 318,807 UCL
violations. The trial court awarded $25 per violation of the UCL.
The total penalty awarded for the 318,807 UCL violations was
$7,970,175.
Adir and Azarkman then filed a motion for a new trial
contending that the UCL’s four-year statute of limitations barred
violations occurring before February 19, 2016. The trial court
denied the motion, finding they had waived their statute of
limitations defense by stipulating at trial that “the relevant
period for the People’s claims begin[s] May 20, 2012.”
These appeals by the People and by Adir and Azarkman
followed. We begin with Adir and Azarkman.
DISCUSSION OF APPEALS BY ADIR AND AZARKMAN
Practices actionable under the UCL include anything that
can properly be called a business practice and that at the same
time is forbidden by law. (Farmers Ins. Exchange v. Superior
Court (1992) 2 Cal.4th 377, 383 (Farmers).) The UCL authorizes
lawsuits to remedy unlawful conduct even if the underlying
statute rendering the conduct unlawful does not itself create an
independent right of action. (Stop Youth Addiction, Inc. v. Lucky
Stores, Inc. (1998) 17 Cal.4th 553, 561–567.) Duplicate
8
enforcement by both public prosecutors and administrative
agencies is authorized: a UCL action by law enforcement does not
preclude a later administrative proceeding against the same
defendant concerning the same conduct, and an administrative
proceeding does not preclude a later law enforcement action
under the UCL. (Blue Cross of California, Inc. v. Superior Court
(2009) 180 Cal.App.4th 1237, 1250 (Blue Cross).) Indeed, even if
the underlying statute that renders the conduct unlawful
expressly authorizes a particular agency to enforce the statute
but does not include a parallel authorization of suits by local law
enforcement offices, those officials can still sue under the UCL for
violation of the statute. (Ibid.; People v. McKale (1979) 25 Cal.3d
626, 632–633.)
Adir and Azarkman contend the trial court erred in three
ways. “First, this specialized insurance matter should not have
been in court at all: under the doctrine of primary jurisdiction,
the Commissioner of Insurance should have considered the issues
in the first instance in an administrative forum. Second, the
court misconstrued and misapplied the three Insurance Code
provisions it found that Curacao violated. Third, the trial court
should not have permitted the State to make its case based on
time-barred allegations.” Defendants additionally contend the
trial court erred in holding Azarkman personally liable for the
violations. We find no error. 5
5 Undesignated statutory references are to the Insurance
Code.
9
I. Doctrine of Primary Jurisdiction
The doctrine of primary jurisdiction “ ‘comes into play
whenever enforcement of the [plaintiff’s] claim requires the
resolution of issues which, under a regulatory scheme, have been
placed within the special competence of an administrative body;
in such a case the judicial process is suspended pending referral
of such issues to the administrative body for its views.’ ”
(Farmers, supra, 2 Cal.4th at p. 390.) The doctrine thus applies
to claims properly cognizable in court that include some issues
within the special competence of an administrative agency. It
requires the court to enable a “referral” to the agency, staying
further proceedings so as to give the parties reasonable
opportunity to seek an administrative ruling. (Wise v. Pacific
Gas & Electric Co. (2005) 132 Cal.App.4th 725, 740.) The
doctrine is subject to a futility exception: “[I]t is improper to
invoke the primary jurisdiction of an administrative agency if it
is clear that further proceedings within that agency would be
futile.” (Jonathan Neil & Assoc., Inc. v. Jones (2004) 33 Cal.4th
917, 936 (Jonathan Neil).)
Defendants initially claim that under the doctrine of
primary jurisdiction this matter should never have been in court
at all and should have been considered “in the first instance” by
the Insurance Commissioner. Adir did not raise the issue of
primary jurisdiction until after the close of evidence. Thus,
defendants are reduced to arguing that the trial court, after trial,
should have stayed the claims alleging Insurance Code violations
and given the Insurance Commissioner the opportunity to act.
A trial court’s ruling on the primary jurisdiction doctrine is
reviewed for abuse of discretion. (Blue Cross, supra,
180 Cal.App.4th at p. 1260.) Generally, a trial court abuses its
10
discretion if it rules “ ‘ “in an arbitrary, capricious or patently
absurd manner that result[s] in a manifest miscarriage of
justice.” ’ ” (People v. Johnson & Johnson (2022) 77 Cal.App.5th
295, 352.)
Defendants contend that in deciding to decline to apply the
primary jurisdiction doctrine, the trial court “simply reasoned
that whether to defer to an expert agency’s ‘primary jurisdiction’
is a ‘matter of discretion.’ ” Relying on Farmers and Jonathan
Neil, they argue an abuse of discretion occurs when a trial court
declines to defer to an expert agency where, as here, the issues
squarely implicate that agency’s expertise. Further, where an
agency’s expertise is implicated, the trial court may not use
“judicial economy” as a ground not to defer.
Defendants misstate the record on appeal. They have cited
only the trial court’s summary of a lengthy discussion of the
primary jurisdiction doctrine. In its summary, the court clearly
was relying on factors other than its discretion and judicial
economy. The court expressly referred to “judicial economy and
the other factors that were discussed.”
The trial court in fact discussed and distinguished Farmers.
Defendants do not address the trial court’s finding that the
question of rate-setting in Farmers is fundamentally different
than the questions raised by this action. In addition, the trial
court discussed, as defendants do not, the apparent decision of
the Insurance Commissioner to assist the Attorney General in
the prosecution of this lawsuit, and to forbear from bringing an
enforcement action of his own during the pendency of this action
in the trial court. This is an important factor as it implicates the
futility doctrine: If the Commissioner supported the Attorney
General in its law enforcement action, there was no point in
11
referring the matter back to the agency so it could exercise its
expertise. That expertise was on display and available to the
court throughout the pendency of the action.
Because defendants do not acknowledge the trial court’s
full ruling, they cannot offer a cogent argument supporting their
claim that the trial court’s specific ruling was an abuse of
discretion. Defendants merely argue the facts of this case are
indistinguishable from those of Farmers and Jonathan Neil and
the similarity of the cases compels a finding that the trial court
erred here.
Defendants’ own argument shows the facts are
distinguishable. They contend that “as in Farmers and Jonathan
Neil, the Insurance Code provides for a ‘pervasive and
self-contained system of administrative procedure’ that could
have been invoked instead of a UCL suit. (Farmers, supra,
2 Cal.4th at p. 396.) Under [s]ection 1758.95, the commissioner is
empowered to take a number of remedial steps when he finds a
violation of the Insurance Code. Those measures include
suspending or revoking a credit insurance agent’s license
(§ 1758.95, subd. (a)(1)-(2), imposing fines, (ibid.) and issuing
cease and desist orders (§ 1758.95, subd. (b)).”
The specific issue before the Supreme Court in Farmers
was the validity of certain insurers’ rate-setting practices. The
Supreme Court referred to the “ ‘pervasive and self-contained
system of administrative procedure’ ” (Farmers, supra, 2 Cal.4th
at p. 396) in section 1858 which “establishes an administrative
scheme under which ‘[a]ny person aggrieved by any rate charged,
rating plan, rating system, or underwriting rule . . . may’ file a
complaint with the Insurance Commissioner.” (Farmers, at
p. 384.) Subsequent sections set out procedures in detail for the
12
Insurance Commissioner’s investigation and resolution of the
rate-setting complaint. (Id. at pp. 384–385.)
The issue in Jonathan Neil similarly involved a complaint
about insurance premiums and a “ ‘ “pervasive and self-contained
system of administrative procedure” ’ ([Farmers], supra, 2 Cal.4th
at p. 396), in the form of an assigned risk program heavily
regulated and indeed ultimately governed by the Commissioner.”
(Jonathan Neil, supra, 33 Cal.4th at p. 934.)
The issues here do not call upon the “pervasive and
self-contained system of administrative procedure” implicated by
rate challenges and the setting of insurance premiums, issues
which are heavily regulated by the Department of Insurance as
described in Farmers and Jonathan Neil. Here the trial court
was called upon to interpret particular phrases in the Insurance
Code. Statutory construction, a bedrock of judicial tasks, is
hardly an area where the trial court must defer to administrative
agencies. Defendants’ argument to the contrary borders on the
frivolous, which is demonstrated by their failure to raise the issue
until after they had gambled on the outcome of a bench trial and
faced an adverse judgment in the trial court.
Another more significant flaw in defendants’ arguments is
that they fail to address the decision of the Insurance
Commissioner to assist the Attorney General in this action.
Defendants do not mention this anywhere in their opening brief.
Although we do not normally consider arguments made for the
first time in a reply brief (Owens v. City of Oakland Housing,
Residential Rent & Relocation Bd. (2020) 49 Cal.App.5th 739, 746
(Owens)), we note defendants claim in reply that the Insurance
Commissioner’s failure to file an amicus curiae brief has
13
probative value in our analysis of this issue. 6 This prompted the
Insurance Commissioner to file an amicus curiae brief noting
“Defendants’ reply brief further inexplicably urges this [c]ourt to
make assumptions based on the fact that ‘the Department did not
file an amicus curiae brief opposing application of the
primary-jurisdiction doctrine.’ ” 7 The Insurance Commissioner
continued: “[T]he unique facts of this case obliterate any need for
a primary jurisdiction referral. Here, the trial court correctly
found [the Department of Insurance] had been cooperating with
the People throughout the life of the case, finding ‘[i]t was
apparent at trial . . . that the Department of Insurance was
assisting the Attorney General’s Office in obtaining an expert
witness.’ ”
Ignoring the first rule of holes, 8 defendants then filed a
separate brief to attack the Insurance Commissioner’s amicus
curiae brief for failing to “take any position on the merits of any
of the Insurance Code questions at issue” on appeal. “The
6 Defendants claim the Department of Insurance did not file
an amicus curiae brief in this case as it had in other cases. The
plural is not supported by any evidence or legal authority.
Defendants cite one case in which an amicus curiae brief was
filed. This is hardly a pattern.
7 As the Department of Insurance points out, California
Rules of Court, rule 8.200(c)(1) provides applications for
permission to file amicus curiae briefs may be filed within
14 days after the reply brief is required to be filed. Accordingly,
there would be no basis for an amicus curiae brief to be filed
before the close of briefing by the parties.
8 “When you are in a hole, stop digging.” (Apperson, The
Dict. of Proverbs, Wordsworth Collection (2006) p. 283, col. 1.)
14
Insurance Commissioner’s silence is deafening—if the
Commissioner agreed with the State’s reading of the Insurance
Code, he presumably would have informed the [c]ourt of that
fact.” We are not aware of any presumption in the law that
silence on an issue in an amicus curiae brief signifies a particular
position taken by amici curiae. The Insurance Commissioner
explained his limited purpose in filing an amicus curiae brief. He
had and has no obligation to comment on this case at all.
Defendants’ suggestions to the contrary are not well taken.
Given the Insurance Commissioner’s involvement in the
litigation and the nature of the Insurance Code violations alleged,
the trial court did not abuse its discretion in declining to stay the
action and refer the matter to the Insurance Commissioner.
II. Insurance Code Violations
Defendants contend the trial court misconstrued and
misapplied three Insurance Code provisions it found they had
violated. Defendants identify these three provisions as sections
1758.98, 1758.93 and 1758.97.
Defendants’ claims involve questions of law and the
application of law to undisputed facts, and so we review them de
novo. (People v. Ashford University, LLC (2024) 100 Cal.App.5th
485, 518 (Ashford Univ.).) We see no error.
A. Unauthorized Seller (Section 1758.98)
Defendants paid their employees a “bonus” for each AGP
Basic and AGP Plus product the employee sold. The parties
stipulated that employees received a $1 bonus for upgrading a
customer from AGP Basic to AGP Plus. It is undisputed AGP
Plus had an insurance component, specifically credit property
insurance. It is also undisputed the sales employees at issue
15
were not licensed to sell insurance and were not endorsees under
Curacao’s license.
During the time period relevant to this action, the
Insurance Code prohibited a credit insurance agent such as
Curacao from paying “any unlicensed person any compensation,
fee, or commission dependent on the placement of insurance
under the agent’s license.” (§ 1758.98, subd. (c); see also § 1758.9
[“No person shall sell or solicit any form of credit insurance in
this state unless that person is licensed as an insurance agent or
broker pursuant to Article 3 (commencing with Section 1631) or
is licensed as a credit insurance agent or endorsee under this
article.”].) The Insurance Code also provided: “No person shall
sell or solicit any form of credit insurance in this state unless that
person is licensed as an insurance agent or broker pursuant to
Article 3 (commencing with Section 1631) or is licensed as a
credit insurance agent or endorsee under this article.” (§ 1758.9.)
The trial court found defendants violated sections 1758.9
and 1758.98, subdivision (c), “by selling credit property insurance
to California consumers through employees who were not
individually licensed to sell insurance and not endorsed under
Curacao’s credit insurance agent license, and who were paid
commissions for selling that insurance.”
Defendants contend the trial court erred in finding the $1
bonus paid to employees for upgrading a customer’s plan from
AGP Basic to AGP Plus was a “commission.” We disagree.
California regulations specify: “ ‘Commission’ means any
tangible or intangible thing of value, the existence, size, quality
or quantity of which depends on the quantity or value of credit
insurance solicited, sold, or enrolled by the person receiving the
commission. ‘Commission’ does not include salary paid to an
16
employee of a creditor who sells, solicits, or enrolls, as long as the
amount of the salary does not depend on the quantity or value of
credit insurance solicited, sold, or enrolled by the employee.”
(Cal. Code Regs., tit. 10, § 2192.3, subd. (e).)
The trial court found: “A $1 bonus for AGP Plus was paid
for each policy the employee sold, so it ‘depends on the
quantity . . . of credit insurance’ sold or enrolled by the employee.
(See Stipulated Fact No. 20; Ex. 333.0011, .0016 [Curacao Sales
Associates Compensation Plan—Management Guide].) The
tiered bonus for separate credit property insurance ‘depends on
the . . . value of credit insurance’ sold or enrolled by the
employee. (See Stipulated Fact No. 21; Ex. 333.0011, .0016.)
Each bonus is a ‘commission’ under the Department of
Insurance’s regulations.”
Relying almost entirely on dictionary definitions of the
words “quantity” and “value,” defendants claim the term
“commission” can only refer to the dollar amount of insurance
policies sold, not the number of policies sold. According to
defendants, “quantity” means “[t]he amount of something
measurable.” (Black’s Law Dict. (12th ed. 2024) p. 1500, col. 2.)
“Value” means “[t]he monetary worth or price of something; the
amount of goods, services, or money that something commands in
an exchange.” (Id., at p. 1870, col. 2.) Defendants then jump to a
nonlegal source, contending that the word “amount” is usually
used with “mass nouns,” like describing “an increase in the
amount of litigation”—whereas “number” is used with count
nouns, like describing a “number of lawsuits.” (Garner, Garner’s
Modern American Usage (3d ed. 2009).) Based on this suggested
usage of the word “amount,” defendants contend the phrase
“quantity or value” must therefore refer to the amount of credit
17
insurance sold, not to the number of insurance policies sold. By
amount of insurance, defendants mean the dollar amount of the
coverage provided by the policy.
There are several flaws with this argument. The primary
flaw is that the California regulation does not use the phrase
“amount of insurance.” Defendants, however, rely on cases using
the specific phrase “amount of insurance” to support its claim
that the phrase “quantity of insurance” in the regulation refers to
the dollar amount of coverage. They cite cases using the phrase
“amount of insurance” to show it is a well understood term in
California insurance law and is used to refer to the dollar amount
of coverage provided by a policy. (People ex rel. Harris v. Pac
Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 779, fn. 2
[“minimum amounts of insurance”]; In re Hardy (2007) 41 Cal.4th
977, 985 [“unusually large amount of life insurance”].) That may
be so, but the Department of Insurance did not choose to use the
word “amount” in the regulation defining “commission.”
Defendants have not cited, nor are we aware of, any California
case using the phrase “quantity of insurance,” let alone using it to
refer to the dollar amount of coverage provided by an insurance
policy.
Perhaps to reinforce their attempt to insert “amount” into
the regulation, defendants also point to that portion of the
definition of “value” which uses the word “amount.” This does not
strengthen their argument. Treating the words “quantity” and
“value” as both meaning “amount” is contrary to at least three
different rules of statutory construction. It would make one of
the two words surplusage, would give different words in the same
statutory scheme the same meaning and would not provide the
alternatives suggested by the use of the disjunctive. “It is a
18
settled principle of statutory construction that courts should
‘strive to give meaning to every word in a statute and to avoid
constructions that render words, phrases, or clauses
superfluous.’ ” (In re C.H. (2011) 53 Cal.4th 94, 103.) “When the
Legislature uses different words as part of the same statutory
scheme, those words are presumed to have different meanings.”
(Romano v. Mercury Ins. Co. (2005) 128 Cal.App.4th 1333, 1343;
see Regents of University of California v. Superior Court (2013)
220 Cal.App.4th 549, 565 [it is “our obligation to interpret
different terms used by the Legislature in the same statutory
scheme to have different meanings”].) “Additionally, the plain
and ordinary meaning of the word ‘or,’ when used in a statute, is
to designate separate, disjunctive categories. [Citation.] The
word ‘or’ suggests alternatives.” (In re E.A. (2018) 24 Cal.App.5th
648, 661; Bates v. Poway Unified School Dist. (2022)
83 Cal.App.5th 907, 926.)
In sum, defendants claim that “quantity or value” must
refer to the dollar “amount” of coverage, and where, as here, the
employee bonus is not dependent on the dollar amount of
coverage provided by a policy, the bonus is not a payment. We
reject this claim.
Another significant flaw in defendants’ dictionary-based
argument is that it considers only part of Black’s Law
Dictionary’s definition of “quantity.” We are not bound by Black’s
Law Dictionary however useful it may be on occasion, but if we
were to consult it, we would look at the full definition of
“quantity.” Black’s Law Dictionary defines “quantity” as “the
ascertainable number of countable things” or “[a] large amount or
number of something.” (Black’s Law Dict., supra, p. 1500, col. 2,
italics added.) Using this definition, “quantity of insurance”
19
would read “the ascertainable number of countable things of
insurance.” It is then reasonable to understand quantity of
insurance to mean the number of insurance policies sold, as a
policy is a countable thing.
For this same reason, defendants’ grammar-based
argument that “insurance” is a “mass noun[]” is similarly
unpersuasive. They note that one does not say one has “one
insurance” or “ten insurances.” We agree, but do not find this
helpful. As we have just noted, the individual units of a quantity
of insurance can be counted with numbers. This does require
some specification of the kind of numerical units used to measure
the mass noun. The description of the unit could be the dollar
amount of coverage or number of policies. Put differently, in
order for “quantity of insurance” to refer to the dollar amount of
coverage as defendants contend, one must at a minimum add a
word or symbol specifying a currency unit ($10,000 insurance) or,
more normally, use additional words ($10,000 in insurance
coverage or $10,000 worth of insurance). We see no logical
reason that one could add words to “10,000 insurance” to show
that the quantity referred to is the dollar amount of coverage but
not add a word to show the quantity referred to is the number of
policies (10,000 policies).
To the extent the phrase “quantity or value of credit
insurance” is ambiguous, we look to the meaning which would
best effectuate the Legislature’s intent. (People v. Cornett (2012)
53 Cal.4th 1261, 1265 (Cornett).)
The parties essentially agree that the Legislature was
concerned with preventing “misrepresentation, fraud and abuse,
[which arose] because of minimally trained sales personnel
aggressively selling high profit products on commission or other
20
compensation incentive plans. The result is that consumers often
overpay for an insurance product that may duplicate existing
insurance coverage.” (Sen. Rules Com., Off. of Sen. Floor
Analyses, 3d reading analysis of Assem. Bill No. 393 (1999–2000
Reg. Sess.) as amended Sept. 7, 1999, p. 8.)
Based on the above excerpt, defendants contend the
Legislature’s “concern was salespeople pushing high-dollar
policies. For two reasons the flat-rate bonuses here do not pose
these acute risks that the Legislature sought to prevent. First,
the bonus itself is de minimis—a $1 bonus per policy does not
create any significant incentive at all to push consumers into
policies they do not want. Second, and in any event, because the
amount of the bonus is the same regardless of the size of the
policy sold, the bonus does not create the same incentives for an
employee to push a buyer into purchasing ‘high profit,’
potentially duplicative insurance products.” (Italics omitted.)
The statement by the Legislature refers to “high profit”
policies. Defendants do not point to any evidence in the record
that only high dollar policies constitute high profit insurance
products. Selling a very large number of small dollar amount
policies that seldom pay out could easily be as profitable as
selling a small number of high dollar amount policies that pay
out quickly. We do not know, because there is no evidence on this
point in the record. We do know that the trial court found AGP
(with its small dollar policies and small dollar bonuses) as a
whole highly profitable for defendants.
Building on its unproven theory that high profit means
high dollar coverage, defendants claim the flat-rate nature of the
bonus would not push any employees into selling higher dollar
amount policies. They do not explain how its employees would
21
have the option to offer a higher dollar amount of coverage. The
parties stipulated that “To purchase AGP, a consumer pays a
monthly fee that is determined by the amount of the consumer’s
outstanding credit balance.” Put differently, the dollar amount of
the insurance available is determined by the customer’s credit
balance. The only “increase” in possible coverage appears to be
the one for which the $1 payment is in fact made: the upsell from
AGP Basic to AGP Plus (which adds credit property insurance).
While the customer’s payment is still based on the dollar amount
of the customer’s credit balance, the payments for AGP Plus are
higher than for AGP Basic. A flat-rate bonus works in a situation
like this, where the customer has only one option: purchasing or
not purchasing credit property insurance.
Defendants also attack the $1 payment as “de minimis,”
contending it would not create an incentive for employees to sell
insurance. If that is the case, defendants do not explain why it
offered the payment in the first place. We can think of no
rational explanation other than incentivizing employees to sell
insurance. We also do not accept that a $1 bonus is de minimis to
defendants’ employees. Adir has not pointed to any evidence in
the record showing the compensation it paid its sales employees,
and so we cannot conclude that $1 per sale would mean nothing
to them. For example, if any of those employees made the 2023
California minimum wage of $15 per hour (Lab. Code, § 1182.12),
an additional $1 would represent a 6.6 percent increase in his or
her pay for that hour. What workers would scorn a 6.6 percent
pay increase?
In their reply brief, defendants contend their interpretation
of the statute’s words does not result in surplusage. They
contend for the first time that quantity and value can have
22
separate meanings. They maintain that quantity refers to the
amount of coverage, but makes the new claim that value “could
also refer [to] how much a policyholder pays for the policy.” We
generally do not consider arguments made for the first time in a
reply brief. 9 (Owens, supra, 49 Cal.App.5th at p. 746.) We note,
however, that this argument would not help defendants, because
a commission may be based on quantity or value.
The total bonus an employee receives is based on the
number of AGP Plus policies the employee sells. Specifically, it is
$1 times the number of policies sold. The more policies an
employee sells, the more the employee earns. Because each
employee’s bonus is based on an “ascertainable number” of
9 To be clear, this was not the argument defendants made in
their opening brief. We quote: “The phrase ‘quantity or value’
thus refers to the amount of credit insurance sold, not to the
number of insurance policies sold. One does not have ‘one
insurance’ or ‘ten insurances.’ One has an amount of insurance—
say, $1 million of it. [Citations.] [¶] The flat-rate bonuses were
not a commission because the size of the bonuses did not depend
on the amount—that is, the quantity or value—of insurance sold.
Irrespective of whether an employee sold a policy with $100 in
coverage or $10,000 in coverage, the bonus was the same—a
$1.00 for the upgrade to AGP Plus.”
Defendants cited People v. Reynoza (2024) 15 Cal.5th 982 in
their opening brief, and that case clearly mentions the “canon
against surplusage” and the significance of using the disjunctive
“or.” (Id. at pp. 991–992.) Nevertheless, defendants made no
effort to discuss either rule of statutory construction in their
opening brief. We decline to allow them to sandbag their party
opponent in reply.
23
insurance policies sold, defendants paid a commission that
“depends on the quantity” of insurance sold.
B. Compliance and Training (Section 1758.93)
The trial court found defendants violated section 1758.93 in
two ways. They did not register or endorse that their employees
sold credit insurance and they did not use training materials
approved by the Department of Insurance to train employees who
sell credit property insurance on Curacao’s behalf. Instead, they
used unapproved training materials.
Defendants contend the trial court erred in finding that
they violated section 1758.93. They argue it is undisputed they
complied with the requirement of section 1758.93 to “provide
training to each endorsee about the credit insurance products to
be sold” and the requirement that the “[t]raining materials used
by the organization to train endorsees” be submitted to and
approved by the Department of Insurance on an annual basis.
(§ 1758.93, subd. (b).) They further contend they complied with
the requirement of section 1758.93 that each “endorsee” sign an
affidavit warranting that they have read the approved training
materials. (Id., subd. (a)(2).)
Defendants also claim the text of section 1758.93 imposes
requirements on “endorsees,” not on nonendorsees. According to
defendants, even if their sales employees should have been
“endorsees,” they were not in fact endorsees because they were
not “endorsed on the license of the credit insurance agent.”
(§ 1758.94, subd. (b).) They conclude there is no textual basis to
impose liability on them under this provision. They also accuse
the trial court of “bootstrapping” a violation of section 1758.9 onto
violations of section 1758.93: “[t]o hold that every violation of
[s]ection 1758.9 is also a violation of [s]ection 1758.93, as the trial
24
court apparently concluded, would make no sense of the statutes’
distinct purposes. And it would create impermissible statutory
overlap, because the provisions would not ‘reach[] some distinct
cases’ from each other. (Connor[ v. First Student, Inc. (2018)]
5 Cal.5th [1026,] 1038.)”
Defendants take much too narrow a reading of section
1758.93 and of the violations found by the trial court. The trial
court’s section 1758.93 discussion can be broken down into two
parts; each part concerns a different violation of section 1758.93.
The first part is found under the trial court’s heading
“Curacao did not register or endorse its employees who sell credit
property insurance with the Department of Insurance.” (Boldface
omitted.) Under this heading, the trial court begins its
discussion by finding: “The evidence showed that Curacao did not
register or endorse its employees who sell credit insurance under
its license with the Department of Insurance, in violation of
section 1758.93 of the Insurance Code and California Code of
Regulations, title 10, section 2192.9. [¶] The Insurance Code
allows an employee of a credit insurance agent to sell insurance
under the agent’s license if the employee has complied with the
requirements of Insurance Code section 1758.93 to become an
endorsee. (Ins. Code, § [1758].94, subd. (b).)”
The trial court next discusses the forms which defendants
submitted to the Department of Insurance: “Curacao annually
submitted forms to the Department of Insurance listing its
endorsees and an ‘Annual Certification of Endorsee Training’
[(Certificate)] in which it certified that ‘[n]o person other than an
authorized employee sells or offers insurance on [Curacao’s]
behalf,’ and that ‘[a]ll authorized employees have completed the
required training.’ . . . However, the endorsees listed on those
25
forms were only Curacao’s store and regional managers and did
not include any sales associates, credit agents, or telemarketers
who sell credit property insurance on Curacao’s behalf. . . . Those
employees are required to be licensed or endorsed to sell
insurance under Curacao’s license.” (Italics added.) To be clear,
although the trial court did not spell it out, this is a finding by
the trial court that defendants’ statement on the Certificate that
only employees authorized by its license sold insurance on its
behalf was false.
This statement in the Certificate that only authorized
employees sold insurance was not superfluous. Section 1758.93,
subdivision (b) requires the licensed organization to file an
annual “statement of compliance with this article.” (Ibid., italics
added.) Section 1758.93 is found in Article 16.7 of the Insurance
Code, entitled “Credit Insurance Agents (§§ 1758.9–1758.994).”
Thus, this required compliance statement is not limited to
training requirements.
Defendants did not and could not satisfy the requirement of
section 1758.93, subdivision (b) because Curacao did not and
could not file a valid statement of compliance. This is so because
Curacao did permit unauthorized employees to sell insurance on
its behalf. This is a violation of section 1758.93, subdivision (b).
The violation of falsely claiming that only authorized
employees sell insurance is distinct from the violation of allowing
unauthorized employees to sell insurance. “Any partial overlap
between the statutes does not render one superfluous.”
(Connor v. First Student, Inc., supra, 5 Cal.5th at p. 1038.)
The trial court’s second section discussing section 1758.93
focuses on defendants’ failure to train Curacao’s unlicensed
unendorsed employees, specifically its provision of unapproved
26
training materials to those employees. This section is entitled:
“Curacao did not use approved training materials to train its
employees who sell credit property insurance.” (Boldface
omitted.)
Defendants contend section 1758.93, subdivision (b) only
imposes a duty to “provide training to each endorsee about the
credit insurance products to be sold.” This is not a complete
summary of an organization’s training requirements.
An organization must provide training to employees before
they can apply to become endorsees. Section 1758.93, subdivision
(a)(2) states: “The employee submits an application to the
department that includes a signed affidavit, in a form prescribed
by the commissioner, stating the applicant has read the credit
insurance training material submitted to the commissioner and
that the applicant has received from the organization training in,
and is knowledgeable about, the credit insurance products to be
sold, ethics, and market practices.” (Ibid., italics added.) Put
differently, the purpose of this training is to prepare employees to
sell insurance.
Section 1758.93, subdivision (b) describes permissible
training materials: “Failure by a credit insurance licensee to
submit training materials or changes for departmental review or
use of unapproved or disapproved training materials shall
constitute grounds for denial of an application for a license,
nonrenewal of a license, or suspension of a license, as
appropriate.” (Ibid., italics added.)
Read together, section 1758.93, subdivisions (a)(2) and (b),
require that even in training employees who are not yet
endorsees, an organization must use approved training materials.
There is nothing to suggest the Legislature intended this training
27
material requirement to apply only when an organization trains
employees it intends to become endorsees. There is only one
reason for an organization to train its employees to sell
insurance: the organization intends for those employees to sell
insurance on commission. Whether or not the employee
ultimately applies to and does become an endorsee should not
dictate the nature of the training, at least when the organization
pays its employees to sell insurance on a commission basis. (And
certainly, an organization’s intent to violate the law by having
those employees sell insurance without endorsement should not
dictate the nature of the training.) Thus, all organizations which
pay commissions to their employees when they sell insurance
must train those employees according to the requirements of
subdivision (b), using approved training materials. 10
Permitting the use of unapproved training materials for
employees the organization does not intend to become endorsees
would be at least tacit approval of this illegal practice of allowing
nonendorsees to sell insurance and have at least the potential to
harm customers who purchase insurance from untrained sellers.
Of course, if the organization deliberately or mistakenly does not
require the trained employee to become an endorsee before
10 It is true that during the period covered by this lawsuit, the
term “commission” did not include employees who were paid a
fixed salary regardless of the quantity or value of credit
insurance sold and so those non-commissioned employees did not
need to become endorsees in order to legally sell credit insurance.
We need not and do not reach the issue of whether the
Legislature intended for an organization to train its fixed salary
employees using only approved training materials, as that
situation is not before us and the law has since changed.
28
selling insurance, the organization has broken the law. But that
violation would be worse if the organization has used unapproved
training materials. Indeed, the primary difference between
endorsees and nonendorsees is that endorsees have been properly
trained to sell insurance.
C. Late Disclosures (Section 1758.97)
The trial court made a detailed ruling on the disclosure
claims: “The evidence showed that Curacao regularly failed to
provide disclosures required by Insurance Code section 1758.97
to consumers before it enrolled those consumers in credit
property insurance. [¶] Section 1758.97 prohibits a credit
insurance agent from selling or offering to sell insurance unless
two forms of disclosures are made, among other conditions. First,
under sub[division] (a), the agent must provide brochures or
written material that summarize the terms and conditions of the
coverage, among other disclosures. (Ins. Code, § 1758.97,
subd. (a).) Second, the agent must make several disclosures
including: the insurance offered may duplicate the purchaser’s
other insurance coverage, and that the agent’s endorsee is not
qualified or authorized to evaluate the purchaser’s existing
coverages. (Ins. Code, § 1758.97, subd. (b).) The disclosures
under sub[division] (b) must be made ‘in a statement
acknowledged by the purchaser in writing on a separate form,
electronically, digitally, or by audio recording,’ if the credit
insurance ‘is sold at the same time and place as the related credit
transaction.’ (Ibid.) All of the disclosures above ‘must be printed
and must be clear and conspicuous.’ ([Cal. Code Regs., tit. 10],
§ 2192.6[, subd. ](a).) [¶] The evidence presented at trial
demonstrated that Curacao’s regular practice was to provide the
disclosures required by section 1758.97, sub[division] (b), only
29
after the customer had already enrolled in AGP Plus or separate
credit property insurance. . . . A customer being enrolled in AGP
Plus or separate credit property insurance at a store would be
asked to sign an electronic keypad without being shown the
disclosures either in printed form or on a computer screen. . . .
The insurance forms and disclosures would then be printed out
with the customer’s electronic signature printed on the forms. . . .
The evidence showed that Curacao’s computer sales system—the
‘AR System’—did not display the credit insurance disclosures
during the signature process, so a consumer could not view what
they had signed until the insurance forms had been printed out
with the customer’s signature already appended. . . . [¶]
Curacao’s practice of providing the insurance disclosures required
by section 1758.97, sub[division] (b), after the customer has
enrolled in the coverage violates section 1758.97. The statute
does not allow an agent to ‘sell or offer to sell insurance’ unless
the agent ‘makes the disclosures’ under [section 1758.97,
subdivision] (b). (Ins. Code, § 1758.97, subd. (b).) It is not
permissible to provide these disclosures after the consumer has
signed the contract and disclosures without seeing the terms,
conditions, and disclosures that they signed.”
Section 1758.97 provides in pertinent part: “A credit
insurance agent shall not sell or offer to sell insurance pursuant
to this article unless all of the . . . conditions [in subdivisions (a)
through (e)] are satisfied.” (Ibid.) Subdivision (a) of section
1758.97 requires the credit insurance agent to “provide[]
brochures or other written materials to the prospective purchaser
that [provide specified information].” (Id., subd. (a).) Subdivision
(b) of section 1758.97 requires the credit insurance agent to
“make[] all of the [specified] disclosures, either with or as part of
30
each individual policy or group certificate, or with a notice of
proposed insurance, or, if the insurance is sold at the same time
and place as the related credit transaction, in a statement
acknowledged by the purchaser in writing on a separate form,
electronically, digitally, or by audio recording.” (Id., subd. (b).) 11
11 Section 1758.97 provides in full:
“A credit insurance agent shall not sell or offer to sell
insurance pursuant to this article unless all of the following
conditions are satisfied:
“(a) The credit insurance agent provides brochures or other
written materials to the prospective purchaser that do all of
the following:
“(1) Summarize the material terms and conditions of
coverage offered, including the identity of the insurer.
“(2) Describe the process for filing a claim, including
a toll-free telephone number to report a claim.
“(3) Disclose any additional information on the price,
benefits, exclusions, conditions, or other limitations
of those policies that the commissioner may by rule
prescribe.
“(b) The credit insurance agent makes all of the following
disclosures, either with or as part of each individual policy
or group certificate, or with a notice of proposed insurance,
or, if the insurance is sold at the same time and place as
the related credit transaction, in a statement acknowledged
by the purchaser in writing on a separate form,
electronically, digitally, or by audio recording:
31
Defendants contend the trial court erred because “[n]othing
in the statutory language prohibits that contemporaneous
transmission of the disclosures.” They then point to the specific
disclosure requirements of subdivisions (a) and (b) of section
1758.97. They claim: “The trial court’s opinion does not analyze
the statutory language at all, and thus cannot support the
decision to impose liability under this provision.”
It is defendants’ burden as cross-appellants to show error
on appeal. The trial court explained its understanding that the
opening provision of section 1758.97 created a requirement that
the disclosures precede the sale of the insurance. That opening
“(1) That the purchase of the kinds of insurance
prescribed in this article is not required in order to
secure the loan or an extension of credit.
“(2) That the insurance coverage offered by the credit
insurance agent may provide a duplication of
coverage already provided by a purchaser’s other
personal insurance policies or by another source of
coverage.
“(3) That the endorsee is not qualified or authorized
to evaluate the adequacy of the purchaser’s existing
coverages, unless the individual is licensed pursuant
to Article 3 (commencing with Section 1631).
“(4) That the customer may cancel the insurance at
any time. If the customer cancels within 30 days
from the delivery of the insurance policy, certificate,
or notice of proposed insurance, the premium will be
refunded in full. If the customer cancels at any time
thereafter, any unearned premium will be refunded
in accordance with applicable law.”
32
sentence provides: “A credit insurance agent shall not sell or offer
to sell insurance pursuant to this article unless all of the . . .
conditions [in subdivisions (a) through (e)] are satisfied.” (Ibid.)
In their opening brief, defendants focus on subdivisions (a)
and (b) of section 1758.97 and do not discuss the language of the
first sentence of the section at all. They focus on the wrong part
of section 1758.97. The key sentence of this section is the first
sentence: “A credit insurance agent shall not sell or offer to sell
insurance pursuant to this article unless all of the following
conditions are satisfied.” (Ibid.) Subdivisions (a) and (b) are
simply two of the conditions which must be satisfied.
Defendants do not explain how the trial court erred in
finding that the word “unless” created a precondition. Further,
the substance of subdivisions (a) and (b) of section 1758.97 do not
support defendants’ argument. The specified conditions in those
subdivisions involve information which would be relevant for the
purchaser to consider before making a decision about whether to
purchase the product. If anything, the substance of those two
subdivisions supports the interpretation that the provision of
information and disclosures is a precondition to the sale of
insurance, not some action taken afterwards to validate the sale.
Defendants also fail to explain how a contemporaneous
exchange could be achieved. Handing or sending the disclosure
information to the prospective customer at the same time the
agent begins the sales pitch is unworkable and violates the spirit
of the condition. Perhaps rare individuals can devote their full
attention to both listening to an agent’s oral sales pitch and
reading a multi-page disclosure document at the same time, but
there is no reason to believe the Legislature wrote this section
with such individuals in mind. For the average consumer, if the
33
sales pitch and the disclosures are to have any effect at all, one
must precede the other. Either the customer will listen to the
sales pitch and then read the disclosures afterwards, or read the
disclosures and hear the sales pitch afterwards, if at all. In any
event, the actual sales transaction of the product cannot precede
or occur simultaneously with the required disclosures.
Given defendants’ failure to support or explain their
contentions, we find they have waived their claim of error.
(United Grand Corp. v. Malibu Hillbillies, LLC (2019)
36 Cal.App.5th 142, 146 (United Grand) [“ ‘In order to
demonstrate error, an appellant must supply the reviewing court
with some cogent argument supported by legal analysis’ ”].)
Because our review is de novo, we nevertheless consider
this claim and find that the key word in this first sentence is the
subordinating conjunction “unless.” “Unless” is a subordinating
conjunction, the meaning of which can derive from the context in
which it is used. When the independent clause is negative,
“unless” often turns the subordinated clause into a precondition
for the occurrence of the clause. “A customer cannot rent a car
unless he or she has a driver’s license” creates a precondition for
renting the car: one must have acquired the license before renting
the car. One cannot rent the car and then go obtain a driver’s
license. Thus, in section 1758.97, satisfaction of the subdivisions
(a) and (b) requirements is a precondition to a permissible sale of
credit insurance.
In reply, defendants belatedly contend that “unless” always
means “except on the condition that” and further contend that
the condition in the subordinate clause may occur
contemporaneously with the event in the independent clause.
Thus, in their view, an agent may satisfy section 1758.97 by
34
“contemporaneous transmission” of the disclosures. We do not
consider arguments made for the first time in a reply brief.
(Owens, supra, 49 Cal.App.5th at p. 746.)
We also note that for the first time in their reply brief,
defendants contend that purchasers receiving the disclosures
“contemporaneously to signing their contracts” makes sense for
the customers because they “can review the disclosures at [their]
leisure and ‘cancel the insurance at any time,’ with ‘the premium
[to] be refunded in full’ if the customer cancels in the first
30 days.” Were we to consider this argument (Owens, supra,
49 Cal.App.5th at p. 746), we note that there is absolutely no
basis to believe the Legislature separately required this
cancellation provision to make it easier for insurance sellers to
time their disclosures so that the customers cannot read the
disclosures until after they have purchased credit insurance.
Again, for the first time in its reply brief, Adir contends the
phrase “offer to sell” in section 1758.97 precludes the creation of a
precondition in the dependent clause. It argues that requiring
complete disclosure before an offer to sell defies common sense.
Were we to consider this argument (Owens, supra,
49 Cal.App.5th at p. 746), we note Adir relies on a particular
definition of “offer”: a “ ‘ “ ‘manifestation of willingness to enter
into a bargain.’ ” ’ ” (See Donovan v. RRL Corp. (2001) 26 Cal.4th
261, 271 (Donovan).) The full definition of “offer” in Donovan is
“ ‘ “ ‘the manifestation of willingness to enter into a bargain, so
made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.’ ” ’ ” (Ibid.)
Given this definition, it is easy to see how the required complete
disclosure could occur before an offer to sell is made. An agent
could simply ask if the customer is interested in learning about
35
“account and product protection” (the term used on at least one
Adir brochure) without providing any details. This would not
justify the customer in understanding that an affirmative
response would result in the purchase of such protection. 12 If the
agent did receive an affirmation response, the agent could then
make the disclosures required by section 1758.97, subdivisions (a)
and (b) before consummating the sale.
This understanding is also consistent with the Legislature’s
purpose in enacting Insurance Code, Article 16: to protect
consumers. Defendants’ interpretation, by contrast, is more
beneficial to sellers than to consumers. To adopt their argument,
we would have to find the Legislature intended to benefit
insurance sellers by permitting them to withhold relevant
information about the insurance until after the sale is complete.
We decline to so find.
Defendants contend that even if presale disclosure is
required, the trial court “entirely failed to consider a significant
change in Curacao’s disclosure methods in December of 2020. At
that time, Curacao transitioned all sales procedures to a
contactless process, making enrollment available on a tablet or a
smartphone.” Defendants contend this process requires
customers to read the disclosures before enrolling in AGP Plus.
Defendants conclude this omission requires reversal.
12 As the Supreme Court pointed out in Donovan, “The
determination of whether a particular communication constitutes
an operative offer, rather than an inoperative step in the
preliminary negotiation of a contract, depends upon all the
surrounding circumstances.” (Donovan, supra, 26 Cal.4th at
p. 271.)
36
The trial court may well have chosen not to discuss the
contactless system because defendants provided no evidence of its
complete contents. Put differently, defendants offered evidence
that they had changed the format of their disclosure methods, but
did not offer admissible evidence that the timing of the
disclosures, as established by the People, had changed.
Defendants’ witness who testified about the contactless system
relied on an exhibit which did not show all the pages (screens) of
the system. When the witness tried to testify to the contents of
the screens which were not shown in the exhibit, the People
objected. The trial court ruled the witness could “testify to the
general subject matter of the screens, just not any specifics.”
III. Tolling Agreement
Defendants contend the trial court failed to apply the
statute of limitations to exclude all violations that predate
February 19, 2016 from its damage calculations. They
acknowledge they entered into this stipulation of fact with the
People: “The parties agreed to toll the four-year statute of
limitations set forth in Business & Professions Code section
17208 with the effective date of May 20, 2016, which the parties
agree extends the relevant period for the People’s claims
beginning May 20, 2012.” Defendants contend, however, “[r]ead
in context” this stipulation “has nothing to do with the timeliness
of the Insurance Code claims. The stipulated fact simply reports
on the existence of a tolling agreement that was in fact entered
on May 20, 2016.” Defendants argue the parties could not have
agreed in 2016 to toll claims that did not yet exist. They also
appear to contend that tolling is a legal issue, not a factual one.
Apart from Business and Professions Code section 17208,
defendants cite no legal authority at all to support their claims.
37
For that reason alone, we find the claim waived. (United Grand,
supra, 36 Cal.App.5th at p. 146.)
Assuming for the sake of argument that there is no waiver,
we would choose to apply the doctrine of judicial estoppel and
decline to consider this claim. “ ‘Judicial estoppel prevents a
party from asserting a position in a legal proceeding that is
contrary to a position previously taken in the same or some
earlier proceeding. The doctrine serves a clear purpose: to
protect the integrity of the judicial process.’ ” (Jackson v. County
of Los Angeles (1997) 60 Cal.App.4th 171, 181 (Jackson).) “ ‘The
gravamen of judicial estoppel is not privity, reliance, or prejudice.
Rather, it is the intentional assertion of an inconsistent position
that perverts the judicial machinery.’ ” (Id. at p. 183.)
“ ‘ “Judicial estoppel is ‘intended to protect against a litigant
playing “fast and loose with the courts.” ’ ” ’ ” (Id. at p. 181.)
Application of the doctrine is discretionary. (Koo v. Rubio’s
Restaurants, Inc. (2003) 109 Cal.App.4th 719, 735.) One reason
to apply the doctrine is to “ ‘preclude[] a party from gaining an
advantage by taking one position, and then seeking a second
advantage by taking an incompatible position.’ ” (Ibid., fn.
omitted.)
The doctrine applies when “(1) the same party has taken
two positions; (2) the positions were taken in judicial or
quasi-judicial administrative proceedings; (3) the party was
successful in asserting the first position (i.e., the tribunal adopted
the position or accepted it as true); (4) the two positions are
totally inconsistent; and (5) the first position was not taken as a
result of ignorance, fraud, or mistake.” (Jackson, supra,
60 Cal.App.4th at p. 183.) All of those requirements are satisfied
here.
38
Defendants entered into a series of stipulated facts before
trial. In stipulated fact No. 30, they agreed to the position that
tolling applied to the claims and violations to be adjudicated at
trial. The stipulation itself contains no limitations on the claims
or violations covered by the tolling. Even assuming for the sake
of argument that the stipulation could be understood as referring
to a separate written tolling agreement, nothing in the
stipulation indicates that such an agreement contains any
relevant limitations on the claims or violations covered by the
agreement.
It is undisputed defendants entered into the factual
stipulations in an attempt to shorten the projected length of the
trial and obtain an earlier trial date. This strategy was
successful and they received an earlier trial date.
There is nothing to suggest defendants took this position
out of ignorance, fraud or mistake. At the time they entered into
the stipulation, they knew the only claims remaining to be tried
involved the predicate Insurance Code and Unruh Act violations
for the UCL claim. In addition to the tolling stipulation,
defendants entered into three other stipulations of fact about
evidence related to the People’s insurance claims going back to
2012. During trial, defendants continued to take the position
that tolling applied to the claims on trial. In opening statements,
attorneys for defendants referred to “2012 until this year” as “the
relevant time period of this case.” They also failed to object to
evidence showing they had committed violations before 2016.
Shortly after trial, in their objection to the trial court’s
proposed statement of decision about the number of Insurance
Code violations, defendants relied on the stipulation to support
their objection without in any way indicating that the stipulation
39
was invalid or limited. It was only after the trial court issued its
final statement of decision imposing a fine for each sale of a
credit insurance policy that defendants changed their position on
tolling and argued tolling did not apply to the insurance claims
and violations. This position is totally inconsistent with their
pretrial position. Given that about half of the fines arose from
violations before 2016, defendants were clearly seeking a second
advantage from this change of position.
IV. Azarkman’s Personal Liability
The trial court found Azarkman personally liable for
Curacao’s unlawful business practices “because he has complete
control over those practices, he was aware of those unlawful
business practices, and he has permitted those practices to
continue. He is also liable for aiding and abetting Curacao’s
unlawful business practices.”
More specifically, the trial court found: “The evidence
showed that Ron Azarkman controls Curacao and has controlled
the company for years. . . . Ron Azarkman is currently the sole
owner of Curacao either directly or through entities he owns. . . .
Mr. Azarkman and his personal trust have been the only two
members of the LLC that runs Curacao and receive all of the
company’s distributions. . . . [¶] Ron Azarkman is also the Chief
Executive Officer of Curacao and sits alone atop the entire
corporate organization. . . . As the CEO, Mr. Azarkman sets the
short- and long-term strategies of the company, sets the tone for
and monitors the margins, and receives and reviews monthly
profit and loss reports, balance sheets, and daily sales
reports. . . . As he testified, Mr. Azarkman has ‘the authority to
do anything in the company.’ ”
40
As the trial court explained: “The principals or executives
of a company are directly liable for the company’s violations of
the Unfair Competition Law where they have ‘control over the
operations of the business,’ were ‘informed’ about the practices at
issue, and permitted those practices to continue. (People v.
Toomey (1984) 157 Cal.App.3d 1, 15; People v. Conway (1974)
42 Cal.App.3d 875, 886; People v. First Federal Credit Corp.
(2002) 104 Cal.App.4th 721, 735; People [ex rel. Harris] v. Sarpas
(2014) 225 Cal.App.4th 1539, 1564.) Actual knowledge of the
unlawful practices is not required where the principal ‘reasonably
should have known’ that the company engaged in the challenged
acts or practices. (People v. Dollar Rent-A-Car Systems, Inc.
(1989) 211 Cal.App.3d 119, 132.) [¶] Company principals and
executives can also be held liable for aiding and abetting Unfair
Competition Law violations. [Citations.] [¶] Because the Unfair
Competition Law imposes strict liability, it is irrelevant for
purposes of liability whether the principal or executive knew the
conduct was illegal; it is sufficient to show that the principal or
executive knew the conduct was occurring and permitted it to
continue. (See Hewlett[ v. Squaw Valley Ski Corp. (1997)]
54 Cal.App.4th [499,] 520 [holding that where the defendant
intended to cut down trees, ‘the fact that it may have believed its
conduct was lawful . . . is not a defense’ to liability under the
UCL’s unlawful prong].)”
The trial court discussed Azarkman’s long-standing
knowledge of AGP sales structure: “Mr. Azarkman was aware
that Curacao stores and associates had goals for services, which
included the sale of credit property insurance and received sales
reports that show credit insurance sales broken down by
store. . . . Mr. Azarkman was also aware that Curacao attached
41
bonuses to those services goals.” The trial court specifically
found: “AGP was enormously profitable for the company and for
Mr. Azarkman personally, and any contention that he wasn’t
aware that Curacao was paying commissions to its unregistered,
unlicensed employees for the sale of credit property insurance is
not credible.”
This claim involves questions of law and the application of
law to essentially undisputed facts. Our review is de novo.
(Ashford Univ., supra, 100 Cal.App.5th at p. 518.)
Azarkman contends the trial court erred in finding him
personally liable for the UCL violations because a “defendant’s
liability must be based on his personal ‘participation in the
unlawful practices’ and ‘unbridled control’ over the practices that
are found to violate section 17200.” (Emery v. Visa Internat.
Service Assn. (2002) 95 Cal.App.4th 952, 960 (Emery), quoting
People v. Toomey, supra, 157 Cal.App.3d at p. 15 (Toomey).)
Azarkman contends he did not personally participate in the sale
of AGP Plus and so cannot be held personally liable.
In Emery, the discussion involves whether a corporation
(VISA) could be held liable for the acts of merchants with which
it had no relationship and over which it had no control. (Emery,
supra, 95 Cal.App.4th 952.) As the Emery court also noted, the
evidence showed that VISA was unaware of the acts of these
merchants. Unsurprisingly, the court found no basis to hold
VISA liable. Given this factual context, the quotes in Emery from
Toomey are at best dicta.
In Toomey itself, the court does refer to “personal
participation” but it also clearly states: “His position in the
corporation and operation of the business subjects him to liability
for misleading solicitations made by his employees. (People v.
42
Conway, supra, 42 Cal.App.2d [at p.] 886.)” (Toomey, supra,
157 Cal.App.3d at pp. 14–15.) This reference to Conway comes
immediately after the Toomey court had cited People v. Conway
for the proposition that “it is settled that a managing officer of a
corporation with control over the operation of the business is
personally responsible for acts of subordinates done in the normal
course of business. (People v. Conway[, at pp.] 885–886; People v.
International Steel Corp. (1951) 102 Cal.App.2d Supp. 935, 942.)
In [People v.] Conway the court found the evidence ‘sufficient to
show that appellant, . . . was in a position to control the activities
of the dealership and thus could be held criminally liable for false
advertising.’ ” (Toomey, at p. 15.)
Azarkman’s reliance on People ex rel. Harris v. Sarpas,
supra, 225 Cal.App.4th 1539 (Sarpas) and People v. JTH Tax,
Inc. (2013) 212 Cal.App.4th 1219 (JTH Tax) is similarly
misplaced.
In Sarpas, one of the owners of the business claimed he
could not be held liable because he did not personally participate
in the calls or marketing scheme that were the basis of the UCL
violations. The court stated: “Liability under the UCL . . . must
be based on the defendant’s participation in or control over the
unlawful practices found to violate [Business and Professions
Code] section 17200 or 17500.” (Sarpas, supra, 225 Cal.App.4th
at p. 1563, italics added.) The Court of Appeal agreed with the
trial court that: “ ‘The evidence at trial established that Sarpas
and Nazarzai were each active participants in the day-to-day
operations of USHA, managed the business, jointly owned USHA,
and split the profits from USHA. They are thus directly liable for
the actions of the company and liable for their failure to prevent
43
the deceptive, illegal, and unfair acts of their agents, independent
contractors, and employees.’ ” (Ibid.)
We are baffled by Azarkman’s reliance on JTH Tax, a case
which addressed whether a franchisor can be vicariously liable
under an agency theory for its franchisees’ illegal advertising.
(JTH Tax, supra, 212 Cal.App.4th at p. 1243.) There are no such
issues in this case.
Azarkman next presents a straw man argument contending
that “ ‘[K]nowledge of . . . operations’ alone does not permit
liability. (Sea Horse Ranch, Inc. v. Superior [Court] (1994)
24 Cal.App.4th 446, 457[, citing] People v. [International] Steel
Corp.[, supra,] 102 Cal.App.2d [at pp.] Supp. [942–943].)” The
trial court in no way premised its ruling on Azarkman’s
knowledge alone. The full quote from Sea Horse Ranch is
consistent with the standard in this case: “the corporate secretary
was found not liable; although he had knowledge of the burning
operations, he had no control over them.” (Sea Horse Ranch, at
p. 457.)
Finally, Azarkman argues “no case has ever held that the
second fact—that Azarkman was the chief executive of the
company and generally controlled its operations—is enough to
establish liability in the absence of evidence that the executive
directed and personally participated in the specific unlawful
program.” It can be difficult to establish a negative, but it is
worth noting Azarkman does not cite any cases supporting his
claim that “general” control is not sufficient. Regardless, the trial
court found far more than “general” control by Azarkman, as set
forth above.
44
DISCUSSION OF APPEAL BY THE PEOPLE
I. Unruh Act Fees
The People contended defendants’ sales of AGP 13 violated
the Unruh Act, specifically Civil Code sections 1805.4 and 1810.4.
They argued these two sections of the Civil Code permit holders
of retail installment contracts or accounts to charge fees,
expenses and other charges (collectively fees) specifically
authorized by the Unruh Act. The trial court concluded that
defendants’ practice of charging their credit customers for AGP
did not run afoul of the Unruh Act. It found that any Unruh Act
limitation on fees applied only to fees included in the actual
agreement between the parties which created the credit
relationship, that is, the retail installment agreement, so that
sellers were free to charge other fees, such as AGP, if the buyer
agreed. The People contend the trial court erred in so ruling.
As the appeal raises a question as to how these statutes
apply to undisputed facts, our review is de novo. (Poole v. Orange
County Fire Authority (2015) 61 Cal.4th 1378, 1384.) We hold
Civil Code sections 1805.4 and 1810.4 limit all permissible fees to
only those specifically authorized by the Unruh Act.
The parties’ disagreement centers on the meaning of the
clause beginning with “no fee” in Civil Code section 1805.4, and
the sentence beginning with “[n]o fee” in Civil Code section
1810.4. Civil Code section 1805.4, which applies to installment
contracts, provides in pertinent part: “The finance charge shall be
inclusive of all charges incident to investigating and making the
13 References here to AGP include both AGP Basic and AGP
Plus.
45
contract and for the extension of the credit provided for in the
contract, and no fee, expense or other charge whatsoever shall be
taken, received, reserved or contracted for except as otherwise
provided in this chapter.” (Ibid., italics added.) The section then
goes on to permit a bad check fee of not more than $15. (Ibid.)
Civil Code section 1810.4, which applies to installment
accounts, provides in pertinent part: “The finance charge shall
include all charges incident to investigating and making the
retail installment account. No fee, expense, delinquency,
collection, or other charge whatsoever shall be taken, received,
reserved, or contracted by the seller or holder of a retail
installment account except as provided in this section.” (Ibid.,
italics added.) That section then goes on to permit the same bad
check fee allowed for retail installment contracts in Civil Code
section 1805.4 as well as an attorney fee shifting agreement and
an annual fee of not more than $15 for retail installment
accounts for which a credit card is issued. (Id., § 1810.4.)
The trial court characterized the issue as follows: “The
fundamental disagreement between the parties is whether both
sections are only directed toward fees that are incident to
investigating and making the contract and for the extension of
the credit provided for in the contract. If they are only directed
toward fees that are incident to investigating and making the
contract and for the extension of the credit provided for in the
contract, the parties are free to voluntarily enter into other
agreements that are not terms or conditions of extending credit.
If they are intended to be more expansive, AGP might be
prohibited.”
46
This issue framing relied upon an implicit assumption that
the phrase “incident to . . . making the contract and for the
extension of the credit provided for in the contract” refers to the
terms or conditions of the initial retail installment agreement.
The trial court then found: “The limitation on ‘no fee,
expense or other charge’ is in the same sentence as ‘incident to
investigating and making the contract.’ By its plain terms, the
provisions are related to each other and the ‘no fee, expense, or
other charge’ language refers to ‘charges incident to investigating
and making the contract.’ There is no indication by the plain
terms that what the [L]egislature really meant was for ‘no fee,
expense or other charge’ unrelated to ‘charges incident to.’ The
statute restricts fees, expenses and other charges that are
incident to investigating and making the contract.”
The trial court then found its interpretation was
“confirmed” by the language used to authorize the other fees or
expenses. The trial court found that “[e]ach of these by their
terms are related to ‘contract’ formation in that they would be
agreements reached at the time credit was extended, but they
cannot be included in the finance charge because they are
unknown future charges.”
As this quoted discussion shows, the trial court based its
analysis almost entirely on Civil Code section 1805.4, which is
quite similar to Civil Code section 1810.4, but not identical to it.
Civil Code section 1805.4 uses the phrase “for the extension of the
credit provided for in the contract” while Civil Code section
1810.4 does not. The “no fee, expense or other charge” provision
in Civil Code section 1805.4 is part of one continuous sentence,
while the provision in Civil Code section 1810.4 is used in a
separate sentence.
47
The trial court did not discuss the absence of the phrase
“extension of the credit” from Civil Code section 1810.4. This is a
significant omission by the trial court, which relies heavily on the
concept of “extending credit” in its analysis of the two sections.
The trial court did recognize that the “no fee, expense or
other charge” provision was in a separate sentence in Civil Code
section 1810.4, 14 but found that the provision was nonetheless
“reasonably interpreted as related [to] the ‘incident to’ language.”
The trial court found that to interpret the provision otherwise
would make it inconsistent with Civil Code section 1805.4 and
canons of statutory interpretation which indicate that when the
same words are used they should be interpreted consistently.
(See In re Marriage of Pinto (1972) 28 Cal.App.3d 86, 89 [holding
that “When statutes are in pari materia, the interpretation of
similar phrases or sentences in one controls the interpretation of
virtually the same phrases or sentences in the other” (italics
omitted)].)
To reach its conclusion, however, the trial court did not rely
on the meaning of the words in the “no fee, expense or other
charge” provisions. It relied on the placement of that provision in
the same sentence as the “incident to investigating and making
the contract” language in Civil Code section 1805.4. There is no
such same sentence placement on which to rely in Civil Code
section 1810.4. Presumably, if the trial court had considered
Civil Code section 1810.4 first, it would have had to reach a
different conclusion as to the meaning of the “no fee, expense or
other charge” clause, because that clause is found in a separate
14 More precisely, Civil Code section 1810.4 refers to “[n]o fee,
expense, delinquency, collection, or other charge.” (Ibid.)
48
sentence, and there is nothing in the text of the section to
indicate the Legislature intended the sentences to be read
together.
The trial court did not explain its rationale for giving
primacy to the structure of Civil Code section 1805.4, and we see
none. The two sections at issue are both found in the original bill
as enacted and the structure of the relevant language has not
changed since. They are essentially parallel provisions. Civil
Code section 1805.4 discusses the finance charge and “no fee,
expense or other charge” provision for retail installment
contracts, while Civil Code section 1810.4 discusses it for retail
installment accounts.
As was the case with Civil Code section 1805.4, the trial
court also relied on the reference in Civil Code section 1810.4 to
other fees being allowed “as long as they are ‘provided in this
section[,]’ i.e. meaning within section 1810.4” to support its
interpretation. In this case, the trial court found that the Unruh
Act provided for “at least one other fee that is not in [Civil Code]
section 1810.4: the cost of insurance ([Civ. Code,] § 1810.5).”
(Boldface omitted.) The trial court concluded that to be
consistent with Civil Code section 1810.5, Civil Code section
1810.4 must be read to restrict only fees, expenses and other
charges that are incident to investigating and making the
contract.
A. Charges Incident to Investigating and Making the
Contract
The trial court and the parties focus on whether the phrase
“charges incident to investigating and making the contract”
applies to the “no fee, expense or other charge” provision. Put
differently, the trial court found the phrases “no fee, expense or
49
other charge” and “[n]o fee, expense, delinquency, collection, or
other charge” to be ambiguous and looked to the canons of
statutory construction to interpret those phrases. 15 The trial
court apparently sees no ambiguity in the phrase “charges
incident to investigating and making the contract” because the
trial court provides no serious analysis of its meaning. We view
these two phrases differently.
As in any case involving statutory interpretation, “our
primary task is determining legislative intent. [Citation.] In
doing so, we ‘look first to the words of the statute, “because they
generally provide the most reliable indicator of legislative
intent.” ’ [Citations.] Where a statutory term ‘is not defined, it
can be assumed that the Legislature was referring to the
conventional definition of that term.’ [Citations.] We thus give
the words in a statute ‘their plain and commonsense meaning.’ ”
(Heritage Residential Care, Inc. v. Division of Labor Standards
Enforcement (2011) 192 Cal.App.4th 75, 81–82.)
“The plain meaning controls if there is no ambiguity in the
statutory language. [Citation.] If, however, ‘the statutory
language may reasonably be given more than one interpretation,
“ ‘ “courts may consider various extrinsic aids, including the
purpose of the statute, the evils to be remedied, the legislative
history, public policy, and the statutory scheme encompassing the
statute.” ’ ” ’ ” (Cornett, supra, 53 Cal.4th at p. 1265.)
15 We infer this ambiguity finding from the trial court’s
recourse, mentioned above, to the stated extrinsic aid of in pari
materia which is appropriate if a statute is ambiguous. (See
Yassin v. Solis (2010) 184 Cal.App.4th 524, 536.)
50
Although the trial court does not reference it, the trial court
appears to be applying the doctrine of noscitur a sociis (it is
known by its associates), which is the principle that “ ‘ “the
meaning of a word may be enlarged or restrained by reference to
the object of the whole clause in which it is used.” ’ ” (Dyna-Med,
Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379,
1391, fn. 14.) However, that principle is “applicable to terms that
are ‘associated’ by grouping or serial enumeration in the same
phrase or clause, not to terms that are set apart in different
clauses for apparent disparate treatment.” (Texas Commerce
Bank v. Garamendi (1992) 11 Cal.App.4th 460, 473 (Texas
Commerce).) The principle does not apply when a statute “sets
the two terms apart in separate clauses with different qualifying
phrases.” (See id. at pp. 473–474.)
The latter situation is the one present here. Even if we
were to treat Civil Code section 1805.4 as using a serial
enumeration of permissible charges under the Unruh Act, this
section clearly places this enumeration in two separate clauses
with different qualifying phrases. The first clause uses
inclusionary language (“shall be inclusive” and “all charges”)
while the second clause uses exclusionary language (“no fee . . .
except”). The language shift alone creates a dichotomy. The
statute gives disparate treatment to the two clauses. The first
clause lists a specific component of a specific permissible charge
(the finance charge), while the second clause refers the reader to
other sections of the Unruh Act to determine the nature and
components of the other (unspecified) permissible charges.
Again, they are dichotomous.
51
For similar reasons, we do not find applicable the doctrine
of ejusdem generis, as suggested by defendants. That doctrine
instructs that when a statute contains a list or catalogue of items,
a court should determine the meaning of each by reference to the
others, giving preference to an interpretation that uniformly
treats items similar in nature and scope. (In re Corrine W. (2009)
45 Cal.4th 522, 531.) It generally does not apply when there are
two clauses that are dichotomous. (See Texas Commerce, supra,
11 Cal.App.4th at pp. 472–473.) In contrast, “[c]ases typically
apply ejusdem generis to phrases that enumerate several specific
items followed by a general reference to ‘other . . .’ or ‘other
materials . . . .’ ” (Id. at p. 473.) Here, the “fees, expenses and
other charges” are not “general words” as defendants claim; they
are explicitly given a specific meaning in other parts of the
Unruh Act. Similarly, “finance charge” has a fixed definition
elsewhere in the Unruh Act, in Civil Code section 1802.10. There
is no reason to ignore these other sections limiting, defining
and/or describing fees and charges simply because the fees and
charges are listed together in one section.
To put the matter in more everyday terms, if a cookie shop
had a menu stating that all chocolate chip cookies shall be made
with walnuts and no cookies will be sold except as listed on the
menu, a reasonable customer would not expect that all cookies on
the menu were made with walnuts. The customer would look at
the menu to determine the ingredients of the other cookies.
A more fundamental problem with the trial court’s
interpretation is that the trial court does not consider what the
phrase “charges incident to investigating and making the
contract” means. We find that to be the ambiguous phrase, not
the “no fee” phrase. What would “investigating . . . the contract”
52
mean? How does one investigate a document? The most likely
meaning is investigating the prospective buyer’s
creditworthiness, but that is an indirect way of phrasing it. The
verb “to make” is often used in connection with the creation of
something physical, indeed as a synonym of create or produce,
and so could refer to the act of creating a physical (or digital)
contract document. In the law, “making” a contract very often
refers to the last act necessary to validate the contract, that is
acceptance. (See, e.g., C.H. Parker Co. v. Exeter Refining Co.
(1938) 26 Cal.App.2d 610, 612–613.) What costs would be
incident to a buyer’s acceptance of the contract?
These ambiguities make it appropriate to refer to the
legislative history of the Unruh Act. (Cornett, supra, 53 Cal.4th
at p. 1265.)
Both sections were included in the original enactment of
the Unruh Act and have remained essentially unchanged since.
Thus, we consider first the legislative history of the original
enactment of the Unruh Act.
B. Legislative History of the Finance Charge Structure
The “charges incident to investigating and making the
contract” are part of the finance charge, and so we look to the
history of the finance charge. As originally enacted, the Unruh
Act imposed specific limits on the amount of a finance charge,
then referred to as a service charge. Civil Code section 1805.1
specified the maximum service charge a seller could charge for a
retail installment contract as percentages of the balance owed,
with minimum charges defined in dollars. Civil Code section
1810.4 did the same for retail installment accounts.
Both the preliminary and final reports of the Subcommittee
on Lending and Fiscal Agencies for the Unruh Act recognize that
53
sellers incur administrative costs in creating the credit
relationship and the documents memorializing that relationship.
The preliminary report states: “Realizing that certain
administrative costs are incurred in negotiating and establishing
accounts which would not be defrayed in contracts of small
amount or short maturities by the foregoing rates, this committee
recommends minimum credit service charge rates of $12 for
contracts with maturities of more than eight months, and $10 if
the contract has maturities of eight months or less.” (Assem.
Interim Com. on Finance and Insurance, Preliminary Rep. of
Subcommittee on Lending and Fiscal Agencies (Mar. 1958)
15 Assem. Interim Com. Rep. (1957–1959) No. 19, p. 12, Appen.
To Assem. J. (1958 Reg. Sess.) (Assembly Interim Committee
Preliminary Report).) Relatedly, for revolving accounts, the
report recommended allowing a rate of 1.5 percent for the first
$1,000 of the balance and a rate of 1 percent for the portion of the
balance over $1,000. (Id. at pp. 12–13.) The term “credit service
charge” was later shortened to service charge. This rate
structure was reflected in Civil Code sections 1805.1 and 1810.3
of the proposed bill attached to the preliminary report. (Assem.
Interim Com. Preliminary Rep., at pp. 24, 29.)
The final report also discusses the administrative costs of
establishing accounts: “The merit in a rate schedule which
reduces as the amount being financed increases, lies in the fact
that the transaction cost of handling is no greater on a contract
for more than $1,000 than it is on a contract for only $100 except
for the cost of investigating the buyer’s credit standing. . . .
[¶] . . . [¶] Minimum rates are provided by [Civil Code] [s]ection
1805.1[, subdivision] (c) for the purpose of absorbing acquisition
costs, which include the costs of credit investigation and
54
processing the documents involved in setting up the account.”
(Assem. Interim Com. on Finance and Insurance, Final Rep. of
Subcommittee on Lending and Fiscal Agencies (Mar. 1959)
15 Assem. Interim Com. Rep. (1957–1959) No. 22, p. 18, Appen.
To Assem. J. (1959 Reg. Sess.) (Assembly Interim Committee
Final Report).) Civil Code section 1810.3 of the attached
proposed bill also reflected this rate structure.
Civil Code sections 1805.1 and 1810.3 were adopted intact
from the draft proposed bill attached to the final report. (Civ.
Code, § 1810.3 was renumbered as Civ. Code, § 1810.4.)
To summarize: the drafters intended for sellers to be
compensated for the costs of negotiating, investigating buyers,
and setting up accounts through the structure of the service
charge (now called the finance charge). This purpose would
generally be unknown to most sellers, who are unlikely to have
obtained and read the subcommittee reports.
Thus, we conclude that the statement “finance charge . . .”
is simply an explanation that the administrative costs of setting
up the agreement between the parties are (literally) included in
the finance charge. Put differently, the administrative costs of
setting up the agreement cannot be separately charged by the
seller in addition to the finance charge, the purpose of which is to
compensate the seller for these costs.
Given that the phrase “investigating and making the
contract” does not refer broadly to setting the terms and
conditions of the retail installment agreement, the phrase cannot
function to restrict the “no fees clause” only to fees specifically
included in the retail installment agreement.
55
C. “Extension of the Credit Provided”
The trial court relied heavily on the phrase “extension of
the credit provided for in the contract” in the phrase “all charges
incident to investigating and making the contract and for the
extension of the credit provided for in the contract.” The trial
court concluded that phrase referred to the initial decision to
extend credit to a buyer and so related to the original terms and
conditions of the retail installment agreement. The phrase
“extending credit” can mean providing credit. Here, however, the
phrase refers to credit “provided for in the contract.” If the credit
was provided for in the contract, what charges would be incident
to actually extending the credit? And, as we have noted, the trial
court did not consider the omission of the phrase from Civil Code
section 1810.4. We find the phrase ambiguous in its context.
Accordingly, we refer to the legislative history.
Although the phrase has been in Civil Code section 1805.4
since the first proposed draft bill attached to the preliminary
report, there is no discussion of the specific phrase “extension of
the credit” in either the preliminary or final report. There is also
no discussion in the legislative history of the omission of the
phrase from Civil Code section 1810.4.
The only reference in the reports to extending “credit” is a
passing one in a section of the final report entitled “GENERAL
STATEMENT AND OBSERVATIONS.” (Assem. Interim Com.
Final Rep., supra, at p. 12.) The report observes: “It is a
time-honored principle that consumer credit should be extended
to those who are entitled to it.” (Ibid.)
In contrast, the “extension” with which the subcommittee
was concerned was the extension of payments. There are several
references to abuses of sellers in connection with such extensions
56
in the reports. The reports, however, do not use the word “credit”
in these discussions. 16
The drafters did place a provision in both proposed draft
bills and in the enacted bill which governs the extension of
payments. As enacted, Civil Code section 1807.1 provided: “The
holder of a retail installment contract may, upon agreement with
the buyer, extend the scheduled due date or defer the scheduled
payment of all or of any part of any installment or installments
payable thereunder.” (Civ. Code, § 1807.1, subd. (a), italics
added.) “[T]he agreement for such extension or deferment must
be in writing and signed by the parties thereto.” (Ibid., italics
added.)
Understanding “extension of the credit provided” as
referring to extension of payments under Civil Code section
1807.1 would explain the omission of the phrase from Civil Code
section 1810.4. That section is concerned with retail installment
accounts. Civil Code section 1807.1 permitted the extension of
payments for retail installment contracts. Thus, it would make
16 In the preliminary report, one of the 12 concerns identified
by the drafters used the term extension: “Arbitrary and
unregulated charges for payment extensions.” A second concern
uses the word extended: “Failure to properly credit the customer
with the unearned portion of the finance charge when contracts
are extended, consolidated or when subsequent purchases are
added to an existing contract.” (Assem. Interim Com.
Preliminary Rep., supra, at p. 7.) In the final report, the word
extension appears only in the following section, again as an area
needing protection: “REFINANCING AND EXTENSIONS [¶]
Charges for such arrangements are provided in connection with
installment contracts, with limitations on the rate of charge.”
(Assem. Interim Com. Final Rep., supra, at p. 11.)
57
sense for the phrase “extension of the credit” to appear in Civil
Code section 1805.4, which applies to retail installment contracts,
and not in section 1810.4 which applies to retail installment
accounts.
This understanding of “extension of the credit provided”
would refer at most to one component of one charge in a retail
installment agreement. Like the “investigating and making”
charge, it does not refer to or encompass all the terms and
conditions of that agreement. Thus, it cannot limit the no fee
clauses to those terms and conditions provided in that agreement.
D. Sections Referenced in Civil Code Sections 1805.4
and 1810.4
To support or confirm their interpretation of the phrase
“charges incident to investigating and making the contract,” the
trial court and defendants rely on the code sections referenced in
the “no fee, expense or other charge” clause of Civil Code section
1805.4 and what they believe are conflicts between the restriction
of Civil Code section 1810.4 to fees etc. provided “in [that]
section” and two other sections. We have rejected that
interpretation. We do not find that the limitations in Civil Code
sections 1805.4 and 1810.4 render the “no fee” provisions
ambiguous.
1. Civil Code Section 1805.4
The trial court relied on the code sections which are
referenced in the “no fee, expense or other charge” clause to
“confirm” its interpretation of the “charges incident to
investigating and making the contract” clause.
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The trial court noted: “[Civil Code] [s]ection 1805.4
specifically allows retailers to contract for other fees or expenses
that are ‘provided in this chapter.’ The other expenses allowed
for in the chapter are: a delinquency charge that is included in
the contract ([Civ Code,] § 1803.6 [‘a contract may provide’]),
dishonored check fee ‘in connection with’ the contract ([Civ Code,]
§ 1805.4 [‘issued in connection with the retail installment
contract’]), and cost of insurance if any ‘is included in the
contract’ ([Civ Code,] § 1803.5). Each of these by their terms are
related to ‘contract’ formation in that they would be agreements
reached at the time credit was extended, but they cannot be
included in the finance charge because they are unknown future
charges.”
Only two of the three provisions require the fee to be
included in the contract. We see no requirement that the
dishonored check fee be agreed to by the parties and included in
their contract; the section simply states it authorizes the “seller
or holder of a retail installment contract may charge and collect a
fee.” (Civ. Code, § 1805.4.) The only limitation is that the check
be issued in connection with the retail installment account.
Thus, the trial court’s reasoning that this provision is ambiguous
is not persuasive.
2. Civil Code Section 1810.4
As we mention above, the trial court found an anomaly
when it compared Civil Code sections 1810.4 and 1810.5. Civil
Code section 1810.4 limits fees to those allowed in that section
(that is in section 1810.4 itself), but Civil Code section 1810.5
permits the buyer to be charged for insurance. The trial court
found the only way to “harmonize” these two sections was to limit
the “no fee” provision in section 1810.4 to fees and other charges
59
contained in the retail installment agreement. Thus, in the trial
court’s view, all other (later or separate) fees, including for
insurance, would be permitted.
We do not think this solves the problem. Civil Code section
1810.5 requires conformance with Civil Code section 1803.5 and
Civil Code section 1803.5 permits the cost of insurance to be
included in the contract. We also find the People’s explanation
more persuasive.
The Unruh Act was prompted by and intended to curb
abusive practices by retail installment sellers and finance
companies. The Legislature found buyers suffered “ill treatment
at the hands of installment sellers or finance companies.”
(Assem. Interim Com. Final Rep., supra, at p. 9.) Sellers engaged
in “harsh practices,” including “excessive amounts [being] exacted
from the consumer” in finance charges, delinquency and
collection charges in “whatever amount the traffic will bear,” and
attorney fees and court costs charged to the debtor’s account
“although they are not always actually incurred and are not
always paid over to an attorney.” (Id., at pp. 9–10.)
Civil Code section 1810.4 provides: “No fee, expense,
delinquency, collection, or other charge whatsoever shall be
taken, received, reserved, or contracted by the seller or holder of a
retail installment account.” (Ibid., italics added.) This provision
provides limits on a seller who is taking, receiving, reserving or
contracting for the seller’s own retail installment account, which
is consistent with the Legislature’s intent to curb excessive or
fictitious charges by sellers.
60
Under Civil Code sections 1810.5 and 1803.5, the seller is
not taking, receiving or reserving a fee for the seller’s retail
installment account. 17 Civil Code section 1803.5, incorporated by
reference into Civil Code section 1810.5, provides that “[t]he
amount, included for such insurance, shall not exceed the
premiums chargeable in accordance with rate fixed for such
insurance by the insurer.” (Civ. Code, § 1803.5, subd. (b), italics
added.) Thus, we agree with the People that Civil Code section
1810.5, together with Civil Code section 1803.5, permits passing
through actual costs of insurance provided by a third-party
insurer. We note that Civil Code section 1803.5 requires the
seller to provide a copy of the insurance policy to the buyer.
Again, the seller is acting as a conduit between the insurance
provider and the buyer. Sellers acting as conduits do not present
the same potential for abuse as sellers acting for their own
account.
Reading Civil Code section 1810.4 as restricting only
amounts set and retained by the seller or holder for its own
account harmonizes these two statutes without creating an
internal conflict. (California Mfrs. Assn. v. Public Utilities Com.
(1979) 24 Cal.3d 836, 844 [“Words must be construed in context,
and statutes must be harmonized, both internally and with each
other, to the extent possible.”].) It also honors the manifest
legislative purpose and heeds our Supreme Court’s admonition
17 It is true that there must be an agreement between the
seller and the buyer concerning the insurance, but again, the
seller is not contracting for a fee for his own account. The
contract is fundamentally between the insurer and the buyer: the
insurer provides insurance in exchange for a premium from the
buyer.
61
that the provisions of the Unruh Act “should be liberally
construed to protect consumers, with a view toward expanding,
rather than limiting, its coverage.” (King v. Central Bank (1977)
18 Cal.3d 840, 846.) 18
Defendants contend a potential conflict exists between Civil
Code sections 1810.4 and 1810.12. “Subdivision (b) of [Civil
Code] [s]ection 1810.12 states that a buyer and seller may enter
into a separate ‘written extension or deferral agreement,’ which
may provide for the ‘costs of collection.’ ([Civ. Code, ]§ 1810.12,
subd. (b).) Those ‘costs of collection’ are a ‘fee, expense,
delinquency, collection, or other charge,’ but they are not
‘provided in’ [Civil Code] [s]ection 1810.4. So if [Civil Code]
[s]ection 1810.4 governed agreements separate from the retail
installment agreements, it would prohibit the ‘costs of collection’
authorized by [Civil Code] [s]ection 1810.12. Again, the Unruh
Act should not be interpreted to bar the charges that it elsewhere
allows.”
Civil Code section 1810.12, subdivision (a), permits a seller
to collect delinquency charges otherwise prohibited by Civil Code
section 1810.4 “[n]otwithstanding” that section. (Civ. Code,
§ 1810.12, subd. (a).) Civil Code section 1810.12, subdivision (b)
permits a seller to charge certain collection costs without
acknowledging section 1810.4’s limitations or using the word
“notwithstanding.” (Civ. Code, § 1810.12, subd. (b).) Most of
subdivision (b) provides specifics of the delinquency charges
18 The possibility, raised by defendants, that the seller might
obtain a commission from the insurance company does not
undermine this analysis. Insurance is regulated by other
statutes.
62
which may be collected under subdivision (a); it is only the last
sentence which refers to collection costs. Given the general
continuity of subject matter, it would be reasonable to
understand the “[n]otwithstanding Section 1810.4” as also
carrying over to subdivision (b). (Id., subds. (a), (b).)
Alternatively, legislative history suggests that this was an
oversight as the Legislature understood the delinquency charges
and collection costs were both restricted by Civil Code section
1810.4, and by adding Civil Code section 1810.12
“notwithstanding [Civil Code section 1810.4], a seller or holder of
a retail installment account [would be permitted to charge]
delinquency and collection charges identical to those prescribed
for installments in default under a retail installment contract.”
(Legis. Counsel’s Dig., Sen. Bill. No. 1037 (1983–1984 Reg. Sess.)
1983, Summary Dig., p. 258, italics added.) But we need not rely
on legislative history alone. As a later enactment, to the extent
of any conflict with Civil Code section 1810.4, Civil Code section
1810.12 controls. (See State Dept. of Public Health v. Superior
Court (2015) 60 Cal.4th 940, 960 [when interpreting conflicting
statutes that cannot be reconciled, later enactments supersede
earlier ones, and more specific provisions take precedence over
more general ones].)
E. Civil Code Sections 1805.4 and 1810.4 Limit Fees
Both Civil Code sections 1805.4 and 1810.4 use the word
“whatsoever” in their “no fee” clause. Civil Code section 1805.4
states “no fee, expense, or other charge whatsoever,” while Civil
Code section 1810.4 states “[n]o fee, expense, delinquency,
collection, or other charge whatsoever.”
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The word “whatsoever” has been interpreted as absolute
and all-encompassing. In City of Carlsbad v. Insurance Co. of
State of Pennsylvania (2009) 180 Cal.App.4th 176, an insurance
policy that excluded coverage for any property “ ‘damage arising
out of land subsidence for any reason whatsoever’ ” was
interpreted to mean the exclusion clause barred coverage “for all
property damage caused by the landslide, regardless of the
cause.” (Id. at pp. 181–182.) In Subsequent Injuries Fund v.
Industrial Accident Commission (1963) 217 Cal.App.2d 322, the
court described a statute reducing compensation to injured
workers by other “payments ‘from any source whatsoever. . .’ ” as
using the “broadest possible language” to reach all payments for
conditions for which the state fund was otherwise liable. (Id. at
p. 329; see also id. at p. 331 [“ ‘[From] any source whatsoever’
means just that.”].)
Here, the plain and commonsense meaning of the
prohibition on unauthorized “fee[s], expense[s], delinquenc[ies],
collection[s], or other charge[s] whatsoever” and unauthorized
“fee[s], expense[s] or other charge[s]” is that only those charges
authorized in Civil Code sections 1810.4 and 1805.4 are allowed,
to the exclusion of all others. Put differently, because
credit/account protection fees are not authorized in Civil Code
section 1810.4 or in Chapter 3 of the Unruh Act (for Civ. Code,
§ 1805.4), they are not permitted.
The legislative history of Civil Code section 1810.4 confirms
this understanding. In 1982, the Legislature amended Civil Code
section 1810.4 to allow retail creditors to charge annual fees on
credit card retail installment accounts. (Sen. Bill No. 1366
(1981–1982 Reg. Sess.).) Such an amendment was necessary,
according to the analysis by the Senate Democratic Caucus of
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Senate Bill No. 1366, because “[e]xisting law relating to retail
installment accounts provides that, except as specified, no fee,
expense, delinquency, collection, or other charge whatsoever shall
be taken, received, reserved, or contracted by the seller or holder
of the retail installment account.” (Sen. Democratic Caucus, 3d
reading analysis of Sen. Bill No. 1366 (1982–1983 Reg. Sess.) as
amended Apr. 19, 1982, p. 1.) The Senate Republican Caucus of
Senate Bill No. 1366 agreed an amendment was necessary to
permit retail installment account holders to impose annual fees
because existing law provided that “ ‘[n]o fee, expense . . . or other
charge whatsoever shall be taken, received . . . (except) attorney’s
fees and (court) cost[s.] . . .’ ” (Sen. Republican Caucus, analysis
of Sen. Bill No. 1366 (1982–1983 Reg. Sess.) p. 1.) The enrolled
bill report by the Business, Transportation and Housing Agency
recommended the Governor sign Senate Bill No. 1366. (Business,
Transportation & Housing Agency, Enrolled Bill Rep. on Sen.
Bill. No. 1366 (1982–1983 Reg. Sess.) June 24, 1982 (Enrolled Bill
Rep.).) Enrolled bill reports are legislative history that may be
considered by courts in construing a statute. (Elsner v. Uveges
(2004) 34 Cal.4th 915, 934, fn. 19.) The enrolled bill report here
explained: “Existing law relating to retail[] installment accounts
specifies the maximum charges which may be exacted by a seller.
The law does not provide for a credit card membership fee when a
credit card is issued in connection with a retail installment
account. This bill would permit such a fee.” (Enrolled Bill Rep.,
supra.)
Defendants contend such an interpretation is contrary to
the legislative history of the bill, noting that Assemblyman
Unruh told his colleagues that “[t]he purpose of this legislation is
to protect the consumer when he purchases goods or services on
65
an installment plan.” (Assemblyman Jesse M. Unruh, Proposed
Retail Installment Sales Law, Assem. Bill No. 500 (Unruh
Memo).) The “major problems of disclosure,” Assemblyman
Unruh explained, “lie in the methods used to obtain contracts.”
(Ibid.) So “[t]he provisions of [the Unruh] Act are designed to
require full disclosure of all pertinent details of the transaction”
through which an installment agreement is obtained. (Ibid.)
Assemblyman Unruh’s explanation could not have been clearer
that the concern of the Unruh Act was the “purchase[]” of credit,
not separate negotiations or agreements between the parties.
We do not read his comments so narrowly. Assemblyman
Unruh continued that an Assembly investigation had uncovered
“many abusive practices,” including “non-disclosure of terms and
conditions and of excessively high finance charges.” (Unruh
Memo, supra.) In discussing finance charges, he expressed an
intent to prohibit exaction of “unconscionably high charges” by
“unethical business concerns.” (Ibid.) An interpretation of Civil
Code section 1810.4 as limiting the universe of charges the seller
or holder may impose on a retail buyer in the whole course of
their creditor-debtor relationship is consistent with this purpose.
There is no suggestion in Assemblyman Unruh’s comments that a
new form of abusive creditor practices or unconscionably high
charges should be allowed if introduced any time after the
moment of sale. By definition, an installment purchase creates
an ongoing relationship. “[P]rotect[ing] the consumer when he
purchases goods or services on an installment plan” requires
restricting the universe of charges that may be imposed over the
course of that relationship. (Unruh Memo, supra.)
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Further, the subtext of defendants’ argument is that the
Legislature was concerned only with the formation of the retail
sales agreement at the moment of purchase because that is when
the seller wields the most power over the buyer and can use that
leverage to get the buyer to agree to terms favorable to the seller.
Neither Assemblyman Unruh nor the Legislature was that naive.
As the preliminary and final reports show, many sellers were
tricking buyers into accepting unfavorable terms using a variety
of methods, including getting buyers to sign blank contracts or
contracts with very small type or faint text. The final
subcommittee report identified “misleading advertising and
selling methods [and] overselling” as problems as well. (Assem.
Interim Com. Final Rep., supra, at p. 13.) Trickery and
overselling are not unlimited to the moment of purchase or point
of sale.
While the final subcommittee report and bill were limited
to specifically remedy the abusive practices identified at the time
of the subcommittee’s investigation and report, the report does
not claim that these are all the possible abusive or “harsh
practices” being used by sellers. Indeed, the report specifically
states that the identified abuses are the “major types of harsh
practices” uncovered by the investigation. (Assem. Interim Com.
Final Rep., supra, at p. 9.)
We hold that the “no fee” provisions of Civil Code sections
1805.4 and 1810.4 bar all fees not specifically authorized (and
regulated) by the Unruh Act for retail installment purchases.
This holding is consistent with preventing sellers from avoiding
the limitations of the Unruh Act and tricking buyers with whom
they have a retail installment agreement into agreeing to new
fees related to that agreement. It reduces, and perhaps
67
eliminates, the need for the Legislature to amend the Unruh Act
every time a seller thinks of a new service that takes advantage
of buyers.
We note that during the pendency of this action, defendants
were apparently considering new ways to obtain fees from
buyers. Defendants contend that our interpretation of the Unruh
Act “would foreclose [(as the trial court explained)] ‘the possibility
of umbrella-type products or services that would benefit
consumers and were never contemplated by the Legislature,
including not only debt protection, but also interest rate-lock
agreements, price protection . . . , credit monitoring, or identity
protection.’ ”
Neither the trial court nor defendants have offered any
details of these products or services, or explain what they mean
by the term “umbrella-type.” Without specifics, we cannot
determine whether the services would benefit consumers. We
can state that some of these services are currently available for
free, and would not be impacted by a bar on unauthorized fees.
Other services are not typically offered by retail sellers and
would not be impacted by this opinion.
In the absence of an explanation from defendants, we take
judicial notice of the fact that “interest rate lock” is a term
commonly used in connection with mortgages, and lenders do not
typically charge a fee for them. Retail installment sales have
none of the key characteristics of a residential mortgage, and it is
difficult to see how an interest lock would benefit a retail
installment purchaser. Of course, retail installment sellers such
as Adir remain free to emulate mortgage lenders and offer an
interest rate lock for free, as an incentive for customers to make a
purchase with them. We also take judicial notice of the fact that
68
price protection provisions are typically offered as a free benefit
by credit card issuers. Retail installment sellers could do the
same. We take judicial notice of the fact that some retail sellers,
such as Target and Nordstrom, offer price adjustments or price
matching for free to all customers regardless of the form of
payment. Retail installment sellers such as Adir could adopt a
similar free policy. Retail installment sellers would not be
authorized to charge a fee for these products or services, but
given that the market does not currently charge for these
products or services and they are common, we see no basis to be
concerned that this opinion, which bars some fees, will harm
consumers.
As for the vaguely worded “credit monitoring” and “identity
protection” services, we take judicial notice of the fact that such
services seem to be provided by specialized entities such as
LifeLock and Experian. These entities are not retail sellers and
are not covered by the provisions of the Unruh Act at issue in this
case. Interested consumers will still have access to these
services. Nothing in this opinion would prevent Adir or other
retail installment sellers from informing their customers about
the existence of current credit monitoring and identity theft
protection programs offered by others.
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DISPOSITION
The judgment in favor of Adir and Azarkman on the Unruh
Act claim is reversed and remanded to the trial court for further
proceedings. In all other respects, the judgment is affirmed.
Costs are awarded to the People.
CERTIFIED FOR PUBLICATION
STRATTON, P. J.
We concur:
WILEY, J.
VIRAMONTES, J.
70