Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
CONSOLIDATED APPEALS from a judgment of the Superior Court of Orange County No. 03CC01709, Ronald L. Bauer, Judge.
McCONNELL, P. J.
This case pertains to California's home solicitation contract law (Civ. Code, § 1689.5 et seq.), which Aladdin violated by not including in its contracts for emergency and restoration services notice of the buyers' rights of cancellation. Brian and Lynn Chichi appeal a judgment in which the court decertified its initial class certification on their cross-complaint's cause of action for violation of California's unfair competition law (UCL) (Bus. & Prof. Code, § 17200), and dismissed the matter, as the Chichis suffered no loss of money or property in conjunction with Aladdin's violation of the law and thus lack standing to prosecute a UCL claim on behalf of themselves or others. Aladdin also appeals the judgment, contending the court improperly denied it contractual attorney fees on the cross-complaint. We affirm the judgment in all respects.
In addition to appealing the judgment, the Chichis purport to appeal the order decertifying the class. Aladdin purports to appeal postjudgment orders on attorneys fees and costs. All matters, however, are subsumed in the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
At around midnight on September 2, 2001, the Chichis returned home from an event and discovered their washing machine hose had burst. Water flooded a large portion of the home's downstairs. The Chichis called Aladdin, which provides emergency services of the type they needed, and it quickly responded. Workers vacuumed up the water, removed carpeting and furniture, and set up dryers. On September 3, Brian Chichi signed Aladdin's standard form contract for emergency services. The Chichis also needed restoration services, such as the tearing out and replacement of wood floors, baseboards and cabinetry. On September 5, Brian Chichi signed Aladdin's standard form contract for restoration services.
The contracts violated home solicitation contract law. For instance, the contracts did not include required notices of the buyers' cancellation rights. (Civ. Code, §§ 1689.7, subd. (a)(1) [buyer generally has three days to cancel home solicitation contract, 1689.7, subd. (a)(3) [buyer has seven days to cancel home solicitation contract for "repair or restoration of residential premises damaged by a disaster"].) Until the seller has complied with notification rules, the buyer may cancel a home solicitation contract. (Civ. Code, § 1689.7, subd. (g).) If the seller has performed services before a cancellation, the seller is entitled to no compensation. (Civ. Code, § 1689.11, subd. (c).)
Further, the restoration contract affirmatively misstated the law. The face of the contract read: "Cancellation of the restoration contract . . . is against the law and shall be reported to the insurance company who approved the disbursement of funds." It also stated, "Aladdin . . . as a state licensed contractor shall be allowed to make a reasonable profit on all subcontractable service trades, if there is a cancellation of any part of the insurance scope, Aladdin . . . shall be immediately paid by client for loss of income which shall be 10% profit and 10% overhead of any cancelled work." The back of the contract reportedly warned that the buyer could not cancel the contract without the written approval of the "general contractor," and if there was any cancellation the "general contractor shall immediately notify the client within 24 working hours, about all unpaid invoices from subcontractors, laborers, and material providers for which the client may be sued upon cancellation of the contract and non-payment of the contract in full by client." Aladdin also violated home solicitation contract law by not giving the Chichis oral notice of their cancellation rights.
The back page of the restoration services contract included in the record contains such fine print that we cannot read this language.
The Chichis subsequently became dissatisfied with the quality and pace of Aladdin's restoration work, and in a September 27, 2001 letter they notified it they were cancelling the restoration services contract, and that their attorney had advised them the contract was unenforceable because it violated home solicitation contract law. The letter stated, however, that the Chichis would nonetheless pay Aladdin for the emergency work performed the night their home was flooded, and they did fully pay Aladdin's $7,674.04 bill for those services.
In an October 3, 2001 invoice, Aladdin billed the Chichis $4,853.11 for restoration services. Although the Chichis had cancelled the restoration contract, they felt morally obligated to pay for the portion of the restoration work Aladdin performed. They sent it a check for $2,672.61, which they calculated was the reasonable value of the work.
Aladdin returned the $2,672.61 check to the Chichis, and sent them another bill for $9,682.61 as a cancellation fee on the restoration services contract per the contract terms. The Chichis paid nothing further, and on November 13, 2001, Aladdin recorded a mechanic's lien against their property. Aladdin claimed entitlement to $14,536.72, which was the balance on the contract and the cancellation penalty, with 18 percent interest. The Chichis hired a lawyer and demanded that Aladdin remove the lien, to no avail.
The Chichis do not cite the record for this invoice, but Aladdin does not dispute Brian Chichi's trial testimony on this point.
On February 11, 2002, the statute of limitations for filing an action to foreclose on the mechanic's lien expired. Two days later, however, Aladdin sued the Chichis for breach of contract, common counts and to foreclose on the mechanic's lien. The following October the court disposed of the matter on summary judgment, with Aladdin raising no opposition. The court found the material terms of the restoration contract could not be ascertained, and in any event as a matter of law the Chichis properly cancelled the contract under home solicitation contract law. The court explained that "Aladdin is precluded by the terms of the home solicitation statute from any recovery on the contract." Further, the mechanic's lien count was untimely.
The litigation went on for several more years, however, as the Chichis had cross-complained against Aladdin and its principals, Cory Ennen and David Ennen. The operative cross-complaint, filed in April 2005, is the sixth amended version (hereafter cross-complaint). It included causes of action for slander of title (first), cancellation of cloud on title (second), and malicious prosecution (third), and proposed class claims for violation of the UCL (fourth) and fraudulent transfer (fifth). During discovery, the Chichis inspected about 10 percent of the roughly 3,000 files Aladdin had for residential customers between 1998 and 2002 and learned it used the same form contracts that violated home solicitation law.
The UCL cause of action alleged that during the previous four years Aladdin engaged in unfair competition by failing to disclose to its customers their cancellation rights and ignoring such rights, including unlawful provisions in its contracts, and retaliating against customers by recording mechanics liens against their properties. The UCL cause of action prayed for restitution and injunctive relief.
In February 2005 the court granted the Chichis' motion for certification of a class. According to the Chichis, the class "was defined as all persons who contracted for goods or services . . . to be delivered to or performed at their residential premises from Aladdin . . . any time between February 13, 1998, . . . up to and including December 2002."
Both sides have violated fundamental rules of appellate practice by not citing the record in support of all stated facts.
In May 2007 a court trial was held on the UCL cause of action. Aladdin was no longer doing business, and thus the Chichis waived the cross-complaint's prayer for an injunction, leaving only the prayer for restitution. The Chichis did not pursue any claim pertaining to the emergency services contract. As to the restoration services contract, Brian Chichi testified he and his wife did not pay Aladdin anything for restoration services or for Aladdin's purported cancellation penalty.
After the close of the Chichis' evidence, Aladdin made several related oral motions: to dismiss the case for lack of standing based on the absence of any evidence the contract violations caused the Chichis' or proposed class members to lose any money or property, required criteria for a UCL cause of action brought by individuals; to disqualify the Chichis as class representatives; to decertify the class; and for judgment based on the lack of any available remedy.
The court granted the motions to decertify the class and enter judgment for Aladdin on the Chichis' cross-complaint. The court explained the Chichis "lost not a penny" on the restoration contract, and thus there was no ground for restitution and they did not qualify as either class members or class representatives in a UCL action. The individual defendants, Cory Ennen and David Ennen, then made the same motions and the court granted them the same relief.
Before the court impaneled a jury on the first three causes of action, the parties settled them with Aladdin paying the Chichis $4,000 and the parties bearing their own costs and attorney fees. The court then dismissed the fifth cause of action as moot. In January 2008 judgment was entered, which included an award of $25,223.75 in contractual attorney fees to the Chichis for prevailing on Aladdin's breach of contract action against them.
The Chichis had also sued Aladdin's attorneys, and they settled the matter by paying the Chichis $25,000.
DISCUSSION
I
The Chichis' Appeal
The Chichis challenge the court's granting of Aladdin's motions to decertify the class and for judgment based on their lack of standing to prosecute a UCL cause of action on their own behalves or as class representatives.
A
The UCL does not proscribe specific acts, but broadly prohibits "unfair competition," meaning "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." (§ 17200.) The UCL "governs 'anti-competitive business practices' as well as injuries to consumers, and has as a major purpose 'the preservation of fair business competition.' " (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) "By proscribing 'any unlawful' business practice, 'section 17200 "borrows" violations of other laws and treats them as unlawful practices' that the [UCL] makes independently actionable." (Ibid.)
"It is elementary that a party asserting a claim must have standing to do so." (Berclain America Latina v. Baan Co. (1999) 74 Cal.App.4th 401, 405.) Formerly, the UCL authorized "any person acting for the interests of itself, its members or the general public" (former § 17204, as amended by Stats. 1993, ch. 926, § 2, p. 5198) to file a civil action for unfair competition, and standing did not hinge on a showing of injury or damage. (Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223, 228 (Mervyn's).) In 2004, however, voters approved Proposition 64, which amended section 17204 to provide that relief under the UCL shall be prosecuted exclusively by the state's Attorney General or other public prosecutors, "or by any person who has suffered injury in fact and has lost money or property as a result of the unfair competition." (§ 17204, as amended by Prop. 64, § 3, Gen. Elec. (Nov. 2, 2004), italics added.)
Proposition 64 also amended section 17203, to provide that a private individual "may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of Section 17204 and complies with Section 382 of the Code of Civil Procedure . . . ." (§ 17203, as amended by Prop. 64, § 2, italics added.) Under section 17203, the court may issue injunctive relief or make "such orders or judgments . . . as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of . . . unfair competition." A UCL action is equitable in nature, and actual damages are unavailable. (Korea Supply Co. v. Lockheed Martin Co. (2003) 29 Cal.4th 1134, 1144 (Korea Supply).)
"In effect, section 17203, as amended, withdraws the standing of persons who have not been harmed to represent those who have." (Mervyn's, supra, 39 Cal.4th at p. 232, italics added.) "For a lawsuit properly to be allowed to continue, standing must exist at all times until judgment is entered and not just on the date the complaint is filed. '[C]ontentions based on a lack of standing involve jurisdictional challenges and may be raised at any time in the proceeding.' " (Id. at pp. 232-233.)
Proposition 64 was intended to curtail frivolous lawsuits some private attorneys were bringing principally to generate attorney fees for themselves. (Mervyn's, supra, 39 Cal.4th at p. 228.) Our high court held in Mervyn's that Proposition 64 applies to cases pending at the time of its approval. (Id. at p. 227.)
Code of Civil Procedure section 382 authorizes a class action lawsuit "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." "A class action aggregates individual claims, which makes it appropriate 'when numerous parties suffer injury of insufficient size to warrant individual action and when denial of class relief would result in unjust advantage to the wrongdoer.' [Citation.] But class action status does not alter the parties' underlying substantive rights. [Citations.] If a specific form of relief is foreclosed to claimants as individuals, it remains unavailable to them even if they congregate into a class." (Feitelberg v. Credit Suisse First Bostos, LLC (2005) 134 Cal.App.4th 997, 1018.) " 'Each class member must have standing to bring the suit in his [or her] own right.' " (Collins v. Safeway Stores, Inc. (1986) 187 Cal.App.3d 62, 73.)
"The decision to certify a class rests squarely within the discretion of the trial court, and we afford that decision great deference on appeal, reversing only for a manifest abuse of discretion." (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089 (Fireside).) The court's ruling "generally will not be disturbed unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions." (Ibid.) We also review the trial court's ruling on a party's standing to prosecute a claim under a substantial evidence test. (Berclain America Latina v. Baan Co., supra, 74 Cal.App.4th at pp. 404-405.)
B
The Chichis criticize the trial court for not recognizing they suffered "injury in fact." The Chichis assert they detrimentally relied on misrepresentations in the illegal contract and were deprived of a "a fair opportunity to exercise a statutory right," and they were further injured by Aladdin's bill for a 20 percent cancellation penalty and its filing of a mechanic's lien against their home and a lawsuit to foreclose on it.
Under Proposition 64, however, "injury in fact" standing alone is insufficient to give the Chichis standing. Again, section 17204 now authorizes a private party to bring a UCL action only when he or she "has suffered injury in fact and has lost money or property as a result of the unfair competition." (§ 17204, italics added.) It is undisputed that the Chichis paid Aladdin nothing on the only contract at issue at trial, the restoration services contract, and there was no foreclosure on the mechanic's lien. We agree that Aladdin's conduct was egregious, but the Chichis had damages claims against it, which they pursued. An "action under the UCL 'is not an all-purpose substitute for a tort or contract action.' " (Korea Supply, supra, 29 Cal.4th at p. 1150.) The only issue here is whether the Chichis had standing to pursue restitution claims under the UCL.
The Chichis also say they suffered sufficient injury because they incurred attorney fees in defending against Aladdin's lawsuit. It is established, however, that in approving Proposition 64 "the People are presumed to have intended that the 'loss of money or property' they required for standing would be interpreted in accordance with the construction already given to the 'lost money or property' required to seek restitution under section 17203." (Walker v. USAA Cas. Ins. Co. (E.D.Cal. 2007) 474 F.Supp.2d 1168, 1172.) "Consistent construction of the UCL's provisions will . . . avoid the anomalous situation where a plaintiff could suffer 'loss of money or property' for section 17204 purposes but simultaneously not have 'lost money or property' for section 17203 purposes." (Ibid.) The Chichis' attorney fees do not qualify as "lost money or property" within the meaning of section 17204 because Aladdin never possessed the fees and cannot restore them under restitution principles. An order for restitution is "one 'compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is, to persons who had an ownership interest in the property or those claiming through that person.' " (Korea Supply, supra, 29 Cal.4th at pp. 1144-1145, italics added.)
Moreover, the Chichis' reliance on Fireside, supra, 40 Cal.4th 1069, for the proposition they had standing is misplaced. In Fireside, the defendant bank, the lender's assignee, repossessed a van plaintiff Gonzalez purchased when payments became past due, and then notified her she could redeem the van by paying an overstated amount due on the contract. The bank sued Gonzalez for a deficiency judgment and she raised as an affirmative defense that recovery was barred by the bank's violation of the Rees-Levering Motor Vehicle Sales and Finance Act. Further, she filed a putative class cross-complaint against the bank that included a cause of action for violation of the UCL. The bank conceded it also sent inaccurate notices to 3,000 other borrowers. (Id. at pp. 1075-1076.)
The Supreme Court affirmed a class certification, rejecting the bank's challenge to the sufficiency of Gonzalez's proof she suffered injury typical of that of other class members. The court concluded Gonzalez had standing because, like other class members, she suffered "deprivation of a fair opportunity to redeem the financed vehicle, followed by an unlawful demand for payment. . . . She thus has standing to seek a declaration that Fireside Bank is unlawfully asserting a debt against her, as well as an injunction against all further collection efforts. The record further shows Gonzalez (or someone on her behalf) made a postrepossession payment against the alleged deficiency; upon proof she made that payment, Gonzalez also has standing to seek restitution." (Fireside, supra, 40 Cal.4th at p. 1090.) In contrast, the Chichis lost no property, sought no injunction, and made no payment subject to restitution.
The Chichis also assert the trial court erred by relying on the lack of evidence Aladdin made any "profits" on their contract or the contracts of putative class members. Aladdin asserts the UCL "does not condition . . . protection on whether the wrongdoer actually made a profitable return on its unlawful dealings." The Chichis, however, argued throughout the trial that their remedy was Aladdin's disgorgement of "profits" on its contracts. Likewise, Aladdin argued the "standard is unfairly obtained profits," based on the Mervyn's case, and "we have no evidence of that whatsoever in this case." In response, the court stated, "there is nothing to be restored here because there was nothing paid. And then the amount paid wouldn't even be the standard, I understand; it would be some profits. And there is not one whimper of evidence about the profits that were obtained from the Chichis." On appeal, Aladdin persists in arguing there can be no restitution unless the UCL defendant enjoyed a profit from its unfair business practice.
Mervyn's states that a UCL plaintiff "may recover restitution only of those profits that the defendant has unfairly obtained from such person or in which such person has an ownership interest." (Mervyn's, supra, 39 Cal.4th at p. 232, italics added.) In support, the court cited Korea Supply, supra, 29 Cal.4th 1134, in which the court held the nonrestitutionary disgorgement of profits is not a remedy under the UCL. (Id. at p. 1152.) A UCL plaintiff may obtain business profits only to the extent they represent funds in which he or she had an ownership interest. The parties cite us to no authority that suggests restitution is unavailable in a UCL action when the defendant did not earn a profit from its wrongdoing, and section 17203 belies that notion.
Even if the court erred by referring in its ruling to "profits," however, its decertification of the class, and disposal of the Chichis' individual UCL claim, was proper. The profit issue was immaterial as the court also found the Chichis were not entitled to restitution since they paid Aladdin nothing on the restoration contract. (Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 655.) "Any valid pertinent reason stated will be sufficient to uphold" the ruling. (Id. at p. 656.)
The court's rulings are supported by substantial evidence, and it properly exercised its discretion. The Chichis' reliance on opinions decided before Proposition 64 changed the standing requirements for a UCL action is improper. Further, even if some or all of the putative class members actually lost money or property because of Aladdin's wrongdoing, a class UCL action may not proceed without a proper class representative. Neither the Chichis nor their legal counsel argued the Chichis could be replaced by other persons who met the standing requirements. Accordingly, the award of judgment to Aladdin on the cross-complaint's UCL cause of action was proper.
Given our holding, we are not required to consider the Chichis' contention the court erred by granting judgment for Cory Ennen and David Ennen on the UCL cause of action given their alleged personal liability for Aladdin's unfair business practices. Further, we are not required to discuss Aladdin's assertion a class action was improper because individual questions regarding restitution predominated.
II
Aladdin's Appeal
Aladdin contends the court erred by denying its motion for contractual attorney fees incurred in defending against the cross-complaint's UCL cause of action. Aladdin asserts the UCL claim was "nothing more than a contractually based action seeking to recover classically contractual (rescission) damages." Aladdin asserts it was the prevailing party entitled to contractual fees because it served the Chichis with a statutory offer of compromise (Code Civ. Proc., § 998) on the cross-complaint, and they did not accept the offer and failed to achieve a better result at trial. Further, Aladdin asserts that even if the UCL cause of action did not arise from the contract and Civil Code section 1717 is inapplicable, it is entitled to attorney fees on the UCL claim under Code of Civil Procedure section 1021 because the contract's fee clause is broad and not confined to contract claims.
To the extent any of the above theories may have merit, Aladdin is not entitled to any relief on appeal. Accordingly, we do not reach them. As an alternative basis for denying Aladdin attorney fees, the court determined that "any fair and reasonable award of fees would be impossible on the basis of [Aladdin's] motion, because the fees claimed were not apportioned . . . to eliminate work on the original complaint (where Aladdin clearly lost) and to list only work done on the claim successfully defended [the UCL claim]." The parties were to pay their own attorney fees and costs incurred in conjunction with the cross-complaint's first three causes of action, for slander of title, cancellation of cloud on title and malicious prosecution, and thus Aladdin could not obtain any fees pertaining to those matters.
" ' "Attorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed." [Citation.] "Attorney fees need not be apportioned between distinct causes of action where plaintiff's various claims involve a common core of facts or are based on related legal theories." [Citation.] Apportionment is not required when the issues in the fee and nonfee claims are so inextricably intertwined that it would be impractical or impossible to separate the attorney's time into compensable and noncompensable units.' " (Harman v. City and County of San Francisco (2007) 158 Cal.App.4th 407, 417.) The apportionment issue, however, is also subject to the court's broad discretion. "A court may apportion fees even where the issues are connected, related or intertwined." (El Escorial Owners' Assn v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1365.)
Aladdin cursorily asserts there was "no need" for any apportionment here. Aladdin cites no supporting authority and develops no particular argument on the matter. It does not discuss the elements of the various causes of action in the cross-complaint or the billings it presented to the trial court. It does not show that the total attorney hours were not divisible or that an apportionment requirement was unreasonable. " ' "Contentions supported neither by argument nor by citation of authority are deemed to be without foundation, and to have been abandoned." [Citation.]' [Citation.] Nor is an appellate court required to consider alleged error whether the appellant merely complains of it without pertinent argument." (Rossiter v. Benoit (1979) 88 Cal.App.3d 706, 710-711.)
Aladdin claims "the fact is that an apportionment was provided along with all bills." It cites more than 50 pages of time entries from the attorney who represented it between December 2002 and 2004, but they contain no allocation of fees. It is not the trial court's or the appellate court's duty to comb through time entries to support a party's fee request. Aladdin complains that the billings it presented from its successor law firm do not appear to be in the voluminous appellate record. It was Aladdin's burden as an appellant, however, to present an adequate record. (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 136.) In their opposition to Aladdin's motion for attorney fees the Chichis pointed out that Aladdin had not allocated fees to the UCL cause of action, but in reply Aladdin made no attempt to rectify the problem. Under all the circumstances, we find no abuse of discretion.
III
Attorney Fees on Appeal
In one sentence, the Chichis request attorney fees as the prevailing parties on Aladdin's appeal. We deny the request because the Chichis have not developed any argument or analysis on the subject, which is complicated by their lack of success on their own appeal. The denial is without prejudice to the Chichis to seek such fees in the trial court. (Banning v. Newdow (2004) 119 Cal.App.4th 438, 459; Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2007) ¶ 14:119, p. 14-28 ["a 'passing' request for appellate attorney fees in a brief, without authority, argument or analysis, will most likely be denied"].)
DISPOSITION
The judgment is affirmed. The parties are to bear their own costs on appeal.
WE CONCUR: HALLER, J., McDONALD, J.