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Date: 05-14-2020
Case Style:
Alexis Michele Sosa v. Cashcall, Inc.
Case Number: G056974
Judge: Moore, J.
Court: California Court of Appeals Fourth Appellate District, Division Three on appeal from the Superior Court, County of Orange
Plaintiff's Attorney: Jeffrey N. Wilens
Defendant's Attorney: Michael R. Williams and Jared M. Toffer
Description:
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Potential lenders are generally prohibited from accessing a consumer’s
credit report without the consumer’s consent. There is an exception for lenders who
intend to make a “firm offer of credit to the consumer.” (Civ. Code, § 1785.11, subd.
(b)(2).)1
A “firm offer of credit” is a term of art; essentially it means the lender intends to
make the loan if a consumer agrees to the proposed terms. If a consumer proves that a
potential lender accessed his or her credit report without the requisite intent, then the
consumer can recover civil penalties (up to $2,500) for each unauthorized access.
Defendants CashCall, Inc. and LoanMe, Inc. (collectively “the lenders”),
accessed thousands of credit reports and mailed loan offers to the consumers. Plaintiff
Alexis Michele Sosa was among those consumers. Sosa sued the lenders for accessing
her credit report. During discovery, Sosa asked the lenders: of the consumers who were
mailed offers, how many were actually given loans? The trial court found Sosa’s
interrogatory to be irrelevant and granted the lenders’ motion for summary judgment.
We disagree. There is a triable issue of material fact: whether the lenders
intended to honor the proposed loan terms if Sosa accepted the offers. Further, Sosa’s
interrogatory was relevant to the lenders’ intent. Indeed, the trial court’s rulings dealt a
“one-two punch” to her lawsuit: the court first prohibited Sosa from obtaining relevant
evidence; then the court dismissed her case, in part, for lack of relevant evidence. Thus,
we reverse the court’s granting of the lenders’ motion for summary judgment.
I
FACTS AND PROCEDURAL BACKGROUND
Through a marketing and solicitation vendor (Ralis), the lenders requested
from a credit reporting agency (Experian), a broad list of anonymous consumers who met
certain loan criteria. After the lenders screened the initial list, Experian sent the lenders a
1
Further undesignated statutory references are to the Civil Code.
3
second, narrower list which included the consumers’ names, addresses, partial social
security numbers, and credit information. Through a print vendor, the lenders then
mailed loan offers to the targeted consumers.
A typical offer stated: “You are Pre-Qualified for a Personal Loan of up to
$10,600.”
2
The offers included a toll-free number: “Say ‘YES’ Now[.]” The offers
stated the proposed loan terms and conditions: “The APR ranges from 99.75% to
184.36%[.]” The offers included prescreen and opt-out notices: “This ‘prescreened’
offer of credit is based on information in your credit report indicating that you meet
certain criteria. This offer is not guaranteed if you do not meet our criteria. If you do not
want to receive prescreened offers of credit from this and other companies, call the
consumer reporting agencies toll-free . . . .”
In April 2015, LoanMe obtained a list of 369,025 consumer credit reports
from Experian, including Sosa’s credit report. Within 30 days, LoanMe mailed Sosa a
loan offer. LoanMe repeated this process in October 2015 (Sosa was among 250,000
consumers), and March 2016 (Sosa was among 519,848 consumers). In March 2017,
CashCall obtained a list of 598,816 consumer credit reports from Experian, including
Sosa’s consumer credit report.
Court Proceedings
Sosa filed a lawsuit alleging the lenders had violated the California
Consumer Reporting Agencies Act (CCRAA). (See § 1785.1 et seq.) Sosa brought the
action on behalf of herself. Sosa requested “two civil penalties of $2,500 each for each
occasion on which [the lenders] obtained data from [her] consumer’s file or her consumer
credit report without permission or an authorized purpose . . . .”
2
The lenders provided “exemplars” of the loan offers during discovery proceedings.
4
Later, Sosa filed a motion to compel responses to special interrogatories.
One interrogatory asked the lenders: “‘With respect to each firm offer of credit . . . state
what specific criteria was used to select [Sosa] for the offer . . . .’” The court granted the
motion in a written ruling because “there is an issue as to whether [the lenders] accessed
[Sosa’s] credit report for a permissible purpose . . . .” The second interrogatory asked the
lenders how many of the consumers who were mailed offers were actually given loans.
The court denied the motion in a written ruling because it “is beyond the scope of
relevant discovery (overbroad) as it does not pertain to the issue of whether a ‘firm offer
of credit’ was extended to [Sosa].”
The lenders filed a motion for summary judgment. The court found that
“it is undisputed that [the lenders] mailed offers of credit to [Sosa] as a result of the soft
inquir[ies] . . . made on [Sosa’s] credit. . . . Additionally, it is undisputed the offers of
credit ‘contained a minimum loan amount, the range of potential interest rates, and an
explanation of repayment terms.’ . . . The only reference to a possible denial of credit
included within the offers, referred specifically to circumstances where [Sosa] no long
met the standards used to send out the offer.”
The court ruled “the evidence offered to dispute the instant motion for
summary judgment is speculative and insufficient to support a finding in favor of [Sosa].
Consequently, the motion is granted.” (Boldfacing and capitalization omitted.)
II
DISCUSSION
Sosa argues the trial court erred in granting the lenders’ motion for
summary judgment, in part, based on its discovery ruling. We agree.
5
A. Standards of Review
Summary judgment “provide[s] courts with a mechanism to cut through the
parties’ pleadings in order to determine whether, despite their allegations, trial is in fact
necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 844 (Aguilar).) The trial court properly grants the motion if all the papers submitted
establish there is no triable issue of material fact and the moving party is entitled to
judgment as a matter of law. (Id. at p. 843; Code Civ. Proc., § 437c, subd. (b).)
The moving party bears the initial burden to make a prima facie showing
that no triable issue of material fact exists. (Aguilar, supra, 25 Cal.4th at p. 843.) If this
burden is met, the party opposing the motion bears the burden of showing the existence
of disputed facts. (Ibid.) Courts “‘construe the moving party’s affidavits strictly,
construe the opponent’s affidavits liberally, and resolve doubts about the propriety of
granting the motion in favor of the party opposing it.’” (Seo v. All-Makes Overhead
Doors (2002) 97 Cal.App.4th 1193, 1201-1202, italics added.)
In a motion for summary judgment “the court shall consider all of the
evidence set forth in the papers . . . and all inferences reasonably deducible from the
evidence, . . . that raise a triable issue as to any material fact.” (Code Civ. Proc., § 437c,
subd. (c).) A motion for summary judgment ruling is reviewed de novo. (Johnson v. City
of Loma Linda (2000) 24 Cal.4th 61, 65, 67-68.)
A proponent of discovery must explain how the evidence sought is relevant
to a disputed material fact. (Code Civ. Proc., § 2031.310, subd. (b)(1).) We review a
court’s ruling on a motion to compel discovery for an abuse of discretion. (2,022 Ranch
v. Superior Court (2003) 113 Cal.App.4th 1377, 1387.) An abuse of discretion “arises if
the trial court based its decision on impermissible factors [citation] or on an incorrect
legal standard [citations].” (People v. Knoller (2007) 41 Cal.4th 139, 156.)
6
B. Legal Principles Regarding Access to Consumer Credit Reports
Generally, credit reporting agencies are prohibited from disclosing
confidential consumer credit information. (§ 1785.11, subd. (a).) “In addition to any
other remedy provided by law, a consumer may bring an action for a civil penalty, not to
exceed two thousand five hundred dollars ($2,500), against” a party who illegally obtains
access and/or acquires data from a consumer’s credit report. (§ 1785.19, subd. (a)(1) &
(2).) “If a plaintiff prevails in an action under subdivision (a) he or she shall be awarded
the civil penalty, costs, and reasonable attorney fees.” (§ 1785.19, subd. (b).)3
Without a consumer’s consent, a potential lender may only access or obtain
data from a consumer credit report when the expected credit transaction “involves a firm
offer of credit to the consumer.” (§ 1785.11, subd. (b).) A “firm offer of credit” is
statutorily defined as “any offer of credit to a consumer that will be honored if, based on
information in a consumer credit report on the consumer and other information bearing
on the creditworthiness of the consumer, the consumer is determined to meet the criteria
used to select the consumer for the offer.” (§ 1785.3, subd. (h).)
“To determine whether the offer of credit comports with the statutory
definition, a court must consider the entire offer and the effect of all the material
conditions that comprise the credit product in question. If, after examining the entire
context, the court determines that the ‘offer’ was a guise for solicitation rather than a
legitimate credit product, the communication cannot be considered a firm offer of credit.”
3
The lenders have not argued that Sosa is required to show actual damages for the
alleged section 1785.19 violations. (See Olson v. Six Rivers National Bank (2003) 111
Cal.App.4th 1, 9, second italics added [“A person (or bank) who obtains a consumer
credit report for purposes other than those approved . . . may be held liable for damages
or a civil penalty”]; compare Trujillo v. First American Registry, Inc. (2007) 157
Cal.App.4th 628, 632-634 [plaintiffs were required to show actual damages in a
complaint alleging violations of sections 1785.14, 1786.20, 1786.29, and 1786.18].)
7
(Cole v. U.S. Capital Inc. (7th Cir. 2004) 389 F.3d 719, 727-728 (Cole).)
4
“To decide
whether [a lender] has adhered to the statute, a court need only determine whether the
four corners of the offer satisfy the statutory definition (as elaborated in Cole), and
whether the terms are honored when consumers accept.” (Murray v. GMAC Mortg.
Corp. (7th Cir. 2006) 434 F.3d 948, 956 (Murray), italics added.)
C. Analysis
If we were to confine our review to the “four corners” of the lenders’ offers,
we would conclude that offers met the definition of a “firm offer of credit.” As the trial
court found, there is no dispute that the offers to Sosa included the minimum loan
amounts, the ranges of potential interest rates, and a required explanation of the proposed
repayment terms. (See Cole, supra, 389 F.3d at pp. 727-728.)
But what is, in fact, a triable issue of material fact is the second part of the
test for a “firm offer of credit.” That is, we do not know from the four corners of the loan
offers what was the lenders’ intent: whether the lenders would have honored the
proposed loan terms had Sosa accepted them. (See Murray, supra, 434 F.3d at p. 956.)
In other words, we do not know whether the lenders’ mailings were legitimate credit
products, or merely guises for solicitation. (See Cole, supra, 389 F.3d at pp. 727-728.)
Indeed, there are reasonable inferences on both sides of this material issue.
The lenders asserted in the trial court: “On each of the occasions LoanMe
and CashCall conducted a prescreening inquiry into [Sosa’s] credit, they did so for the
sole purpose of extending to [Sosa] a firm offer of credit.” (Italics added.) In support,
the lenders offered a declaration from Andre Valenzuela, an employee of the lenders’
marketing vendor, Ralis. Valenzuela stated that: “[The lenders] regularly make
4
The CCRAA is substantially based on federal consumer credit laws; therefore, federal
authority is “entitled to substantial weight when interpreting the California provisions.”
(Olson v. Six Rivers National Bank (2003) 111 Cal.App.4th 1, 12.)
8
prescreened firm offers of credit to potential loan applicants. In order to accomplish this,
Ralis, on behalf [of the lenders], will request from Experian . . . a list of consumers that
meet certain criteria as specified by CashCall and/or LoanMe.” (Italics added.) This
appears to be a legal conclusion by the lenders’ vendor, rather than a statement of the
lenders’ intent.
5
But in any event, the lenders’ purported factual assertion seems
reasonable. That is, it seems reasonable to assume that potential lenders would send
offers to only those consumers with whom they intend to actually make loans.
However, Sosa maintains in this court, as she did in the trial court: “[The
lenders’] ‘purpose’ or ‘intent’ is a triable issue of material fact.” Sosa argues:
“Significantly, [the lenders] did not provide a declaration from anyone employed by
LoanMe or CashCall who expressly stated that all qualified acceptances would have been
honored. In fact, there is no declaration from anyone . . . stating whether the lenders
actually did grant loans or intended to grant loans to all qualified recipients who accepted
the offer.” (Italics added.) To be clear, there is absolutely no evidence in the record to
substantiate whether any of the hundreds of thousands of loan offers mailed by the
lenders to the consumers were actually honored.
Sosa supports her argument by pointing out that a jury is instructed: “You
may consider the ability of each party to provide evidence. If a party provided weaker
evidence when it could have provided stronger evidence, you may distrust the weaker
evidence.” (CACI No. 203; Evid. Code, § 412 [“If weaker and less satisfactory evidence
is offered when it was within the power of a party to produce stronger and more
satisfactory evidence, the evidence offered should be viewed with distrust”].)
5
Sosa argued for the first time at oral argument that Valenzuela’s declaration constitutes
impermissible hearsay. “We do not consider arguments that are raised for the first time at
oral argument.” (Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010)
184 Cal.App.4th 1539, 1554, fn. 9.) Nonetheless, even if Sosa’s belated evidentiary
argument is correct, this does not alter our analysis or our conclusion that the lenders’
motion for summary judgment was erroneously granted.
9
Further, Sosa argues that based on the hundreds of thousands of loan offers
that the lenders mailed to consumers: “Several inferences arise from these facts. Maybe
[the lenders] knew the response rate would be extremely low and they would be able to
fund loans to all ‘takers.’ But a contrary inference is that [the lenders] intended to use the
credit pulls to identify many suitable candidates for loans while only extending loans to
the ‘cream of the crop’ of the responders.” (See Veera v. Banana Republic, LLC (2016)
6 Cal.App.5th 907, 921 [“‘“bait and switch” is a form of false advertising in which
advertisements may not be bona fide because what the merchant intends to sell is
significantly different from that which drew the potential customer in’”].)
Here, there are reasonable inferences on both sides of the only material
factual issue in dispute in this case: whether the lenders actually intended to honor the
loan terms if Sosa was currently eligible and accepted the mailed offers. Again, in a
motion for summary judgment, we must consider “all inferences reasonably deducible
from the evidence, . . . that raise a triable issue as to any material fact.” (Code Civ. Proc.,
§ 437c, subd. (c).) Further, we must “‘resolve doubts about the propriety of granting the
motion in favor of the party opposing it.’” (Seo v. All-Makes Overhead Doors, supra,
97 Cal.App.4th at pp. 1201-1202.) Given these legal standards, we find in Sosa’s favor
and reverse the trial court’s granting of the lenders’ motion for summary judgment.
The lenders argue “it was incumbent on [Sosa] to offer some evidence to
show that either (1) she applied for a loan from [the lenders] after receiving their offers of
credit and was denied a loan despite meeting [the lenders’] credit criteria, or (2) she
responded to [the lenders’] offers of credit and was diverted into some other . . . business
dealing (e.g., not a personal loan).” We disagree. The lenders do not cite any authority
for the proposition that a consumer must first apply for a loan in order to have standing to
sue under section 1785.19. Indeed, in a lawsuit seeking a civil penalty under section
1785.19, it is sufficient for a consumer to show that his or her credit report was accessed
without a permissible purpose. (See § 1785.19, subd. (a)(1) & (2).)
10
Our analysis is also supported by the consumer protection purposes of the
CCRAA: “The Legislature finds and declares as follows: [¶] . . . [¶] (b) Consumer
credit reporting agencies have assumed a vital role in assembling and evaluating
consumer credit . . . . [¶] (c) There is a need to insure that consumer credit reporting
agencies exercise their grave responsibilities with fairness, impartiality, and a respect for
the consumer’s right to privacy. [¶] (d) It is the purpose of this title to require that
consumer credit reporting agencies adopt reasonable procedures for meeting the needs of
. . . consumer credit . . . in a manner which is fair and equitable to the consumer, with
regard to the confidentiality . . . and proper utilization of such information in accordance
with the requirements of this title. [¶] (e) The Legislature hereby intends to regulate
consumer credit reporting agencies pursuant to this title in a manner which will best
protect the interests of the people . . . .” (§ 1785.1, subds. (b),(c),(d) & (e), italics added.)
To be sure, rather than forcing Sosa to first apply for a loan, we think that
her disputed interrogatory would have provided relevant evidence that may have tended
to prove (or disprove) her cause of action. “‘Relevant evidence’ means evidence,
including evidence relevant to the credibility of a witness . . . , having any tendency in
reason to prove or disprove any disputed fact that is of consequence to the determination
of the action.” (Evid. Code, § 210.) Generally, a party’s intent is proven by
circumstantial evidence. (Locke v. Warner Bros., Inc. (1997) 57 Cal.App.4th 354, 368.)
Here, Sosa asked the lenders: of the consumers who were mailed offers,
how many were actually given loans? We think this interrogatory was highly relevant to
the lenders’ intent. That is, the answer would have provided circumstantial evidence
relevant to the issue of whether the lenders intended to honor the proposed loan terms if
consumers such as Sosa accepted the mailed offers. (See Murray, supra, 434 F.3d at
p. 956, italics added [“To decide whether [a lender] has adhered to the statute, a court
need only determine whether the four corners of the offer satisfy the statutory
definition . . . and whether the terms are honored when consumers accept”].)
11
The lenders cite a federal district court’s unpublished opinion for the
proposition that Sosa has engaged in “blind speculation” that the lenders did not intend to
honor the offers they had mailed to her. (See Derderian v. Southwestern & Pac.
Specialty Fin., Inc. (9th Cir. 2016) 673 Fed.Appx. 736, 738.) We disagree. An
unpublished federal trial court opinion is merely persuasive authority. (Futrell v. Payday
California, Inc. (2010) 190 Cal.App.4th 1419, 1432, fn. 6.) And when reviewing a trial
court’s ruling on a motion for summary judgment, we must examine “the entire context”
of the facts in each particular case. (See Cole, supra, 389 F.3d at pp. 727-728.)
In this case, because of the court’s erroneous discovery ruling, Sosa was
effectively prevented from discovering relevant evidence in order to effectively challenge
the lenders’ motion for summary judgment.
Our dissenting colleague cites four federal opinions for the legal
proposition that in a motion for summary judgment a lender can “rely solely on the terms
of the mailed offer to show it intended to honor the offered credit.” (Dis. opn., post, at p.
3.) We respectfully disagree.
Three of the federal court opinions are distinguishable; the fourth does not
hold that a lender can rely solely on the terms of its offer to prove its intent. (See Gelman
v. State Farm Mut. Auto. Ins. Co. (3d Cir. 2009) 583 F.3d 187, 192 [appellate court
analyzed the details of an insurer’s firm offer of insurance, rather than a lender’s firm
offer of credit]; Villagran v. Central Ford, Inc. (S.D. Tex. 2007) 524 F.Supp.2d 866, 871
[trial court analyzed a motion to dismiss for failure to state a claim (equivalent to a
demurrer), rather than a motion for summary judgment]; Dixon v. Shamrock Financial
Corp. (D. Mass. 2007) 482 F.Supp.2d 172, 176 [same]; Sullivan v. Greenwood Credit
Union (D. Mass. 2007) 499 F.Supp.2d 83, 87 [trial court held that a lender can rely on the
terms of an offer mailed to a consumer so “long as that loan is in fact available”].)
12
Our colleague states “it is difficult to decipher precisely how the majority
applied the sequential burden shifting procedure under Aguilar[, supra, 25 Cal.4th 826].”
(Dis. opn., post, at p. 8.) We shall attempt to clarify.
In a motion for summary judgment, the moving party bears the initial
burden to make a prima facie showing that no triable issue of material fact exists.
(Aguilar, supra, 25 Cal.4th at p. 845.) If this burden is met, the party opposing the
motion bears the burden of showing the existence of disputed facts. (Ibid.) “In
determining if . . . there is no triable issue as to any material fact, the court shall consider
all of the evidence . . . and all inferences reasonably deducible from the evidence, except
summary judgment shall not be granted by the court based on inferences reasonably
deducible from the evidence if contradicted by other inferences or evidence that raise a
triable issue as to any material fact.” (Code Civ. Proc., § 437c, subd. (c), italics added.)
Here, in the motion for summary judgment, the lenders attached a
declaration (from a vendor) averring that the lenders accessed consumer credit reports for
the purpose of making firm offers of credit. But as to the hundreds of thousands of credit
reports that were accessed, the lenders did not submit any evidence whatsoever that they
actually followed through on any of the loan offers mailed to the consumers.
So did the lenders meet their initial burden? Well, it is arguably a
reasonable inference that the lenders intended to honor the advertised loans if the
consumers had accepted the proposed loan terms. But given the hundreds of thousands
of mailed loan offers, and the complete absence of evidence regarding whether any of the
loan offers were actually honored (compounded by the court’s erroneous discovery
ruling), it is also a reasonable inference that the thousands of loan offers were not, in fact,
firm offers of credit. (See Murray, supra, 434 F.3d at p. 956, italics added [“a court need
only determine whether the four corners of the offer satisfy the statutory definition . . . ,
and whether the terms are honored when consumers accept”]; see also Los Angeles
Unified School Dist. v. Trustees of Southern California IBEW-NECA Pension Plan
13
(2010) 187 Cal.App.4th 621, 627-628 [“‘information is discoverable if it is unprivileged
and is either relevant to the subject matter of the action or reasonably calculated to reveal
admissible evidence’”].)
Thus, to clarify our analysis regarding burden shifting, when there is a
reasonable inference that is contradicted by another reasonable inference, the motion for
summary judgment “shall not be granted.” (See Code Civ. Proc., § 437c, subd. (c).)
Outcome: The judgment is reversed. Sosa is entitled to recover her costs on appeal.
Plaintiff's Experts:
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