Judge: Deirdre Hill, Case: 20TRCV00236, Date: 2022-10-28 Tentative Ruling

Case Number: 20TRCV00236    Hearing Date: October 28, 2022    Dept: M

Hearing Date:                          October 28, 2022

Moving Parties:                      Defendant Citibank, N.A.

Responding Party:                  Plaintiff South Bay Credit Union

(1)   Motion to Seal and Maintain the Confidentiality of Records (filed on August 29, 2022)

(2)   Motion to Seal and Maintain the Confidentiality of Records (filed on September 26, 2022)

            The court considered the motion, opposition, and reply papers.

RULING

            The motions are GRANTED.  The court ORDERS that the documents lodged by plaintiff on August 16, 2022 and September 14, 2022, in support of its motions for leave to file a second amended complaint are sealed.

At this time, no other records relating to this case are to be sealed.  No person other than the court is authorized to inspect the sealed records.  CRC Rule 2.551(e)(2), (3).  

The court directs the court clerk to comply with the requirements and procedures set forth in CRC Rule 2.551(e) and (f) with respect to the records the court has ordered to be filed under seal. 

BACKGROUND

On March 12, 2020, plaintiff South Bay Credit Union filed a complaint against Citibank US NA dba BRP Credit Card and BRP US Inc. for (1) breach of agreement, (2) conversion, and (3) deceptive business practices.

On July 10, 2020, plaintiff filed a FAC. The FAC alleges that it involves a vehicle 2018 Can-Am Maverick Duane. FAC, ¶9. On March 22, 2018, Darrold Efflandt Jr. [now deceased] executed and delivered to plaintiff a written loan agreement, under which he agreed to repay all sums advanced by plaintiff.  Said agreement granted plaintiff a security interest in the vehicle.  Id., ¶10.  At the same time Efflandt entered into the loan agreement, he executed a written Authorization for Payoff and Demand for Termination Statement. Id., ¶11. The written instructions signed by Efflandt, the registered owner of the vehicle and borrower of defendant, Citibank, specifically instructed Citibank to do the following:  “Endorse and surrender to South Bay Credit Union any Documents of Title (including Certificate of Title in the case of motor vehicle, boat or trailer) which you may have in your possession.”  Id., ¶12.  On March 22, 2018, plaintiff issued a check made payable to BRP Credit Card in the sum of $17,926.69.  The check stated that it was in payment regarding “Darrold Efflandt Jr. 2016 Can Am Maverick 3JBVVAW24JKG00022.”  The restrictive endorsement on the back of the check stated: “Endorsement of this check acknowledges and guarantees the following: 1. Receipt of payment in full for the motor vehicle described below. 2. That South Bay CU – ELT#EXN is to be the legal owner. 3. That on the following listed person(s) shall be the registered owner(s) Owner Darrold Effandt.” Id., ¶13. The check was remitted to defendant BRP and endorsed and negotiated by Citibank US NA. Id., ¶14.

Plaintiff further alleges that defendants failed and refused to remit the title to the vehicle to plaintiff or to file anything with the DMV naming plaintiff as the legal owner (i.e., lienholder) of the vehicle. Id., ¶15. The refusal and failure to defendants, Citibank, and BRP to cause plaintiff to be named as the legal owner deprived plaintiff of a “perfected” security interest in its collateral, i.e., the Can-Am was unlawful under Vehicle Code §5753. Id., ¶16. Defendants sent the Title to Efflandt. Id., ¶17. As a result of defendants sending the Title to Efflandt, they enabled him to sell the vehicle to a third party. Id., ¶18. Plaintiff sent a demand letter to defendant BRP on January 16, 2020. Plaintiff sent the same demand letter to Citibank and BRP on December 31, 2019.  Id., ¶19.

On September 17, 2020, the court overruled defendant Citibank’s demurrer to each of the causes of action.

On September 21, 2020, plaintiff filed an amendment correcting BRP US Inc.’s name to BRP US Inc. aka Bombardier Recreational Products US Inc.

On July 9, 2021, the court granted in part and denied in part plaintiff’s motion to compel further responses.

On December 17, 2021, the court denied plaintiff’s motion for terminating sanctions.

On September 7, 2022, the court denied without prejudice plaintiff’s motion for leave to amend complaint.  The court found that the declaration of plaintiff’s counsel is not based on personal knowledge and is thus insufficient and that plaintiff failed to comply with CRC 3.1324.

Trial is set for January 25, 2023.

LEGAL AUTHORITY

California Rules of Court (“CRC”), Rule 2.550(c) states:  “Unless confidentiality is required by law, court records are presumed to be open.”  But a party may move to seal records pursuant to Rules 2.550-2.551.  CRC Rule 2.551(b)(1) states:  “A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record.  The motion or application must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing.”  CRC Rule 2.550(d) states:  “The court may order that a record be filed under seal only if it expressly finds facts that establish: 

(1) There exists an overriding interest that overcomes the right of public access to the record;

(2) The overriding interest supports sealing the record;

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4) The proposed sealing is narrowly tailored; and

(5) No less restrictive means exist to achieve the overriding interest.”

DISCUSSION

            Defendant Citibank, N.A. requests that the court seal and maintain the confidentiality of documents as follows:

1.      Lodged documents by plaintiff on August 16, 2022, Exhs. 1-4. [Motion filed on August 29, 2022.]

2.      Lodged documents by plaintiff on September 14, 2022, which are referenced in A. Lysa Simon’s declaration as Exhibits 1-4 [same as under 1.] [Motion filed on September 26.]

3.      Lodged deposition transcripts by plaintiff on September 14, 2022:  Vol. I and II of Anne Hardin and Vol. I and II of Judy Delage.  [Motion filed on September 26.]

Defendant explains that on August 30, 2021, the parties stipulated and the court entered a Stipulated Protective Order. 

As for the above referenced documents, as to 1. and 2., Exhibits 1 (working payoff report to release title – Powersports), 2 (series of versions of written instructions entitled “Working the Pay Off Report to Release Title”), and 3 (written instructions provided to Excela by Citibank) were produced by Citibank to plaintiff and were designated as “Confidential.”  Defendant explains that Exhs. 1-3 state Citibank’s internal policies an procedures regarding certain matters.  Citibank argues that it derives economic value from those documents because the information contained therein is used in the course of its business, and that value is derived in part from the fact that the information is not available to Citibank’s competitors and could not be utilized by competitors.  Defendant contends that it takes measures to ensure that those documents are not made public and believes that those documents have never been made public.  Exhibit 4 (changes request documents produced by Excela) was produced by Excela Technologies Inc. relates to documents and matters that Citibank has designated as “Confidential” and its business dealings with Exela Technologies.  See Judy Delage decl.

As to the deposition transcripts, defendant contends that they include the documents above and statements that make reference to the contents of the documents.  Defendant suggests that the transcripts could have been redacted but that plaintiff did not do so.  Defendant also asserts that plaintiff is not hindered in any way if the documents remain designated as confidential and are maintained under seal.

The court makes the following findings of facts that establish the requirements set forth in CRC Rule 2.550(d):

(1)   There exists an overriding interest in protecting disclosure of Citibank’s internal business practices and commercially and competitively sensitive information.   

(2)   The overriding interest of protecting Citibank supports sealing the records because such information is commercially and competitively sensitive and has not been revealed publicly.

(3)   A substantial probability exists that the overriding interest of protecting Citibank’s internal business practices and confidential information will be prejudiced if the records are not sealed.

(4)   The proposed sealing is narrowly tailored to only include the documents referenced above.

(5)   No less restrictive means exist to achieve the overriding interest because of the nature of the records to be sealed.

Thus, the motions are GRANTED.

Defendant is ordered to give notice of ruling.

Hearing Date:                          October 28, 2022

Moving Parties:                      Plaintiff South Bay Credit Union

Responding Party:                  Defendant Citibank N.A.

Motion for Leave to File (Class Action) Second Amended Complaint

            The court considered the moving, opposition, and reply papers.

RULING

            The motion is DENIED.

BACKGROUND

On March 12, 2020, plaintiff South Bay Credit Union filed a complaint against Citibank US NA dba BRP Credit Card and BRP US Inc. for (1) breach of agreement, (2) conversion, and (3) deceptive business practices.

On July 10, 2020, plaintiff filed a FAC. The FAC alleges that it involves a vehicle 2018 Can-Am Mavrick Duane. FAC, ¶9. On March 22, 2018, Darrold Efflandt Jr. [now deceased] executed and delivered to plaintiff a written loan agreement, under which he agreed to repay all sums advanced by plaintiff.  Said agreement granted plaintiff a security interest in the vehicle.  Id., ¶10.  At the same time Efflandt entered into the loan agreement, he executed a written Authorization for Payoff and Demand for Termination Statement. Id., ¶11. The written instructions signed by Efflandt, the registered owner of the vehicle and borrower of defendant, Citibank, specifically instructed Citibank to do the following:  “Endorse and surrender to South Bay Credit Union any Documents of Title (including Certificate of Title in the case of motor vehicle, boat or trailer) which you may have in your possession.”  Id., ¶12.  On March 22, 2018, plaintiff issued a check made payable to BRP Credit Card in the sum of $17,926.69.  The check stated that it was in payment regarding “Darrold Efflandt Jr. 2016 Can Am Maverick 3JBVVAW24JKG00022.”  The restrictive endorsement on the back of the check stated: “Endorsement of this check acknowledges and guarantees the following: 1. Receipt of payment in full for the motor vehicle described below. 2. That South Bay CU – ELT#EXN is to be the legal owner. 3. That on the following listed person(s) shall be the registered owner(s) Owner Darrold Effandt.” Id., ¶13. The check was remitted to defendant BRP and endorsed and negotiated by Citibank US NA. Id., ¶14.

Plaintiff further alleges that defendants failed and refused to remit the title to the vehicle to plaintiff or to file anything with the DMV naming plaintiff as the legal owner (i.e., lienholder) of the vehicle. Id., ¶15. The refusal and failure to defendants, Citibank, and BRP to cause plaintiff to be named as the legal owner deprived plaintiff of a “perfected” security interest in its collateral, i.e., the Can-Am was unlawful under Vehicle Code §5753. Id., ¶16. Defendants sent the Title to Efflandt. Id., ¶17. As a result of defendants sending the Title to Efflandt, they enabled him to sell the vehicle to a third party. Id., ¶18. Plaintiff sent a demand letter to defendant BRP on January 16, 2020. Plaintiff sent the same demand letter to Citibank and BRP on December 31, 2019.  Id., ¶19.

On September 17, 2020, the court overruled defendant Citibank’s demurrer to each of the causes of action.

On September 21, 2020, plaintiff filed an amendment correcting BRP US Inc.’s name to BRP US Inc. aka Bombardier Recreational Products US Inc.

On July 9, 2021, the court granted in part and denied in part plaintiff’s motion to compel further responses.

On December 17, 2021, the court denied plaintiff’s motion for terminating sanctions.

On September 7, 2022, the court denied without prejudice plaintiff’s motion for leave to amend complaint.  The court found that the declaration of plaintiff’s counsel is not based on personal knowledge and is thus insufficient and that plaintiff failed to comply with CRC 3.1324.

On September 14, 2022, plaintiff re-filed the motion for leave to amend.

Trial is set for January 25, 2023.

LEGAL AUTHORITY

CCP § 473(a)(1) provides, in relevant part:  “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer.  The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.”

 “This discretion should be exercised liberally in favor of amendments, for judicial policy favors resolution of all disputed matters in the same lawsuit.”  Kittredge Sports Co. v. Superior Court (1989) 213 Cal. App. 3d 1045, 1047.

Under CRC Rule 3.1324(a), a motion to amend a pleading shall (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located.

Under CRC Rule 3.1324(b), a separate declaration must accompany the motion and must specify (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier.

Even if a good amendment is proposed in proper form, a long, unwarranted and unexcused delay in presenting it may be a good reason for denial.  In most cases, the factors for timeliness are:  (1) lack of diligence in discovering the facts or in offering the amendment after knowledge of them; and (2) the effect of the delay on the adverse party.  If the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party, the judge has discretion to deny leave to amend.  Hirsa v. Superior Court (1981) 118 Cal. App. 3d 486, 490.  Prejudice exists where the amendment would require delaying the trial, resulting in loss of critical evidence, or added costs of preparation such as an increased burden of discovery.  Magpali v. Farmers Group, Inc. (1996) 48 Cal. App. 4th 471, 486-488.

DISCUSSION

            Plaintiff South Bay Credit Union (“SBCU”) requests an order granting it leave to file a Class Action Second Amended Complaint against Citibank N.A. “as a result of Citibank willfully and intentionally refusing to send Certificates of Title to new lenders, dealerships, and purchasers of vehicles, when the new lenders, dealerships, and others send Citibank written instructions signed by the registered owner of the vehicle instructing Citibank to send the Certificate of Title or electronically transfer the Title to the new lien holder or purchaser and/or when there is a condition written on the back of the check paying Citibank in full, requiring Citibank to send the Certificate of Title to the new lender or purchaser of the vehicle, if Citibank accepts the payment.”  Plaintiff asserts that according to the depositions of Citibank employees, it is against Citibank policy to send titles on paid off vehicle secured debt to third party lenders, or competing dealerships and that plaintiff’s counsel discovered “that it is Citibank’s policy to refuse to comply with VC §5753 and payments conditionally tendered, and was not harming the Credit Union but all of its competing lenders and dealerships that have tendered conditional payments and/or VC §5753 directives.”   Plaintiff contends that Citibank “hid the fact it is its policy to refuse to send Titles to third party lenders or dealerships that are not participating in its credit card programs” and that it uses a third party as its agent to open envelopes with checks and other documents remitted to it and Citibank’s instructions are that payments are to be separated from all other documents and sent to Citibank separately from the payments.

            In opposition, defendant argues that the motion is made after undue delay and the proposed amendment would cause prejudice to defendants.  The case has been pending for over two and a half years and the hearing on defendant’s motion for summary judgment is set for November 22, 2022.  Defendant contends that SBCU acknowledges that its proposed SAC is “based upon the same factual occurrences as the original Amended Complaint.”  Also, defendant argues, although SBCU claims it learned of the facts that purportedly warrant a class action during depositions in June and July 2022, SBCU had the information in question long before deposition were taken and that it waited until 2021 to begin discovery, then repeatedly scheduled, rescheduled, and cancelled the depositions of defendant’s respective PMKs.  As to prejudice, defendant argues that it has incurred significant costs to conduct discovery and prepare the MSJ and that it would have to start from the beginning if the motion is granted.  Defendant asserts that class allegations would also affect the complexity of the case, “which would have to be transferred” and “be deemed complex,” which would further delay and substantially increase defendants’ costs.

Defendant also contends that the motion is improper and unsupported because despite SBCU’s filing “extensive evidence,” its memorandum of points and authorities is devoid of references or citations to its evidence.  Defendant points out that plaintiff lodged transcripts without citing to relevant portions, which renders them “useless as evidence.”  As to plaintiff’s counsel’s declaration, defendant asserts numerous objections, including that it “focuses largely on irrelevant matters and offers extensive hearsay.”

Defendant also argues that the proposed SAC does not properly state a cause of action, including any claim based on Vehicle Code §5753, breach of contract, conversion, or class action. 

As to a class action claim, defendant also asserts that plaintiff does not allege an ascertainable and sufficiently numerous class or a well-defined community of interest or claims that are typical of the purported class or that plaintiff could adequately represent the class.  Defendant contends that to be part of the first class category (based on plaintiff’s “incorrect interpretation of Section 5753”), a party must establish it was a designated transferee under the law; it submitted funds to Citibank; the funds paid off a vehicle secured debt; it submitted instructions signed by the registered owner of the vehicle that directed Citibank to send the certificate of title to the class member; Citibank received the instructions; and Citibank ignored the instructions. See SAC, ¶17.a.  Defendant argues that all of these matters must be individually litigated and outnumber the one alleged question of whether Citibank’s procedures violate section 5753.  Defendant asserts with respect to the second class category (based on plaintiff’s “incorrect contention that terms on a check or on ‘separate pieces of paper’ create a contract”), a different analysis would be required for each class member because each individual member would necessarily rely on different “terms” and facts regarding whether Citibank complied with those terms.  See SAC, ¶17.b.  Defendant further argues that plaintiff cannot show that its claims are typical because it defines its class based on an alleged violation of Vehicle Code §5753 but does not allege a claim under that statute on its own behalf and each individual class member’s written “contract terms” would necessarily be different from those of other members.  Defendant also argues that plaintiff does not allege benefits that render a class action superior because individual issues of fact predominate over common issues.

In reply, plaintiff argues that the timing of the motion is reasonable under the circumstances and not due to bad faith.  Plaintiff contends that it took several motions and the depositions in June and July 2022 to obtain the information as to Citibank’s policies.  Plaintiff also contends that depositions were properly marked and submitted as evidence.  Plaintiff asserts that it has stated proper causes of action under Vehicle Code §5753.  Plaintiff argues that the proposed class action complaint is sufficient to get to the certification process.

The court finds that amendment would be futile as to a class action claim.  “[L]eave to amend should not be granted where, in all probability, amendment would be futile.”  Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal. App. 4^th 680, 685. 

CCP §382 provides:  “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.” 

Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. The community-of-interest requirement is comprised of three factors: (i) a class representative who can adequately represent the class, (ii) predominant common questions of law or fact; and (iii) class representative with claims or defenses typical of the class.  Brinker Rest. Corp. v. Super. Ct. (2012) 53 Cal.4th 1004, 1021; Morgan v. Wet Seal, Inc. (2012) 210 Cal. App. 4th 1341, 1354.  The requirements to meet class certification are “difficult to meet and represent meaningful obstacles to inappropriate class suits.”  Linder v. Thrifty Oil Co. (2000) 23 Cal. 4^th 429, 441. 

For the reasons argued by defendant, plaintiff would not be able to meet the requisites, including ascertainable class, fair and adequate representation, and community of interest.  Even if a “class member” gave to Citibank a payment that was conditioned upon Citibank agreeing to send the “class member” the titles on the vehicles secured loans that the company is paying off, and/or if they gave Citibank a written instruction signed by their and Citibank’s mutual borrowers designating the “class member” as the transferee to whom Citibank needed to send the title on the vehicle referenced in the directive, not all were “injured” by Citibank purportedly ignoring VC §5753 directives and written conditions on checks.  In any event, each individual “class member” would have to prove its damages and thus, proceeding as a class is not superior.  Further, “class treatment is not appropriate if every member of the alleged class would be required to litigate numerous and substantial questions determining his individual right to recover following the ‘class judgment’ on common issues.”  Duran v. US Bank N.A. (2014) 59 Cal. 4^th 1, 28.  Also, plaintiff has not suffered the same injury as the purported “class members.” A plaintiff is not entitled to class certification merely because he alleges an unlawful policy or practice. Rather, the plaintiff “must present substantial evidence proving both the existence of the defendant's uniform policy or practice, and the alleged illegal effects of that policy or practice.”  Cruz v. Sun World Int'l, LLC (2015) 243 Cal. App. 4th 367, 384 (citation omitted).  The court also finds that defendant will be prejudiced.

            Accordingly, the motion is DENIED.

Defendant is to give notice of the ruling.