Class Action

New CLRA decision: Ball v. FleetBoston Financial Corp.

By Kimberly A. Kralowec

In Ball v. FleetBoston Financial Corp., ___ Cal.App.4th ___ (Jun. 5, 2008; pub. ord. Jul. 7, 2008), the Court of Appeal (Fourth Appellate District, Division Three) addressed whether the Consumers Legal Remedies Act ("CLRA") applies to credit card transactions. Citing Berry v. American Express Publishing, Inc., 147 Cal.App.4th 224 (2007), the Court held that it does not.

The Supreme Court has recently granted review in two other CLRA cases. In Fairbanks v. Superior Court (Farmers New World Life Ins. Co.), no. S157001 (review granted 11/14/07), it will address whether the CLRA applies to insurance, and in Meyer v. Sprint Spectrum, no. S153846 (review granted 08/16/07), it will address whether the CLRA's prohibition of "unconscionable" contract terms provides a remedy against a defendant who included an unconscionable term, but had not yet enforced it.

Whether the CLRA applies to extensions of credit has been addressed in a number of decisions, with conflicting results. In Knox v. Ameriquest Mortgage Co., 2005 WL 1910927 (N.D. Cal. Aug. 10, 2005), for example, the court held (in contrast to Berry and Ball) that "California courts generally find financial transactions subject to the CLRA," and concluded that ?because other types of financial transactions involving banking services appear to be covered by the CLRA, the Court finds that the CLRA covers the mortgages at issue.? Id. at *4 (citing Kagan v. Gibraltar Savings & Loan Association, 35 Cal.3d 582 (1984); Corbett v. Hayward Dodge, Inc., 119 Cal.App.4th 915 (2004)). Two other federal district courts have reached the same conclusion. Hernandez v. Hilltop Financial Mortgage, Inc., 2007 WL 3101250 (N.D. Cal. Oct. 22, 2007); Jefferson v. Chase Home Finance LLC, 2007 WL 1302984 (N.D. Cal. May 3, 2007). On the other hand, in McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457 (2006), the court held that the CLRA did not apply to ?transactions resulting in the sale of real property.? Id. at 1488.

In sum, the question is ripe for review, and a petition for review was filed in Ball on July 15, 2008 (no. S165154). It will be interesting to see what happens.

Full post as published by The UCL Practitioner on August 06, 2008 (boomark / email).