Plaintiff Patrick Kealy cosigned an automobile lease for a friend who had moved to Massachusetts. The friend defaulted on her lease, and when she turned in the vehicle she had far exceeded the mileage limit of the lease. Ford Credit sued Kealy to recover the lease-end charges of over $9,000. Kealy then counter-claimed against Ford Credit on several theories.
The only claim that went to trial was Kealy’s claim for inaccurate credit reporting under Civil Code section 1785, et seq. Although Kealy alleged several instances of inaccurate reporting, his case boiled down to his assertion that Ford Credit misreported that a new payment occurred on the account in 2013 (several years after Kealy had defaulted and no additional payments were being made), which Kealy asserted caused his credit score to drop, which in turn prevented him from refinancing when interest rates were purportedly at historic lows. His expert said that because he missed his one and only opportunity to refinance at historic lows, he suffered several hundreds of thousands of dollars of economic damages. The jury found that Kealy suffered $325,000 in economic damages, $25,000 in noneconomic damages and $9,212.92 in punitive damages (the precise amount the court had already determined Kealy owed under the lease). The judge then additionally awarded over $325,000 in attorney fees.
Horvitz & Levy was retained to represented Ford Credit on appeal. We argued that the economic damage award was not supported by substantial evidence because (1) Kealy’s brokers told him that he needed a credit score of 700 to refinance in 2013, but his credit score was already below 700 when Ford Credit misreported the new payment and there was no evidence Kealy would have exceeded that score absent Ford Credit’s conduct; (2) the misreporting of the new payment on a dormant account could not possibly have caused his credit score to drop and (3) there was no evidence of any damages because long term interest rates were just as low or lower in 2015 when the Ford Credit account was removed from Kealy’s credit report, meaning that even assuming he could not refinance in 2013 because of Ford Credit, Kealy could have refinanced in 2015 or anytime up to the date of trial without suffering any harm. Ford Credit also argued that there was no evidence to support the noneconomic or punitive damages awards.
Kealy cross-appealed arguing that his dismissed UCL claim should be revived because Ford Credit failed to comply with California’s “notice to cosigner” statute, and that the trial court erred in reducing his attorney fee award. Ford Credit responded that the trial court’s dismissal of the UCL claim was correct because the leased vehicle was subject to registration only in Massachusetts, and the trial court did not abuse its discretion in reducing the claimed fees.
The California Court of Appeal reversed the economic damages award, agreeing with our argument that there was no evidence Kealy would have achieved the threshold 700 credit score Kealy claimed he needed to refinance in 2013 had Ford Credit not misreported a new payment on the credit account. Although the court affirmed the economic and punitive damage awards (totaling about $35,000), it reversed the attorney fee award to be reconsidered in light of the court’s elimination of the bulk of the damage award. The court affirmed the dismissal of the UCL claim.