Lafferty v. Wells Fargo Bank
213 Cal. App. 4th 545
Cal. Ct. App.2013Background
- Laffertys bought a Fleetwood motor home from Geweke and financed via an installment contract; Geweke assigned the contract to Wells Fargo under a dealer agreement.
- Laffertys alleged the motor home was defective and stopped making payments; they revoked ownership and sued Geweke and Wells Fargo.
- Holder Rule required notice and provides that a lender/holder is subject to all claims and defenses the debtor could assert against the seller, with recovery limited to amounts paid by the debtor.
- Trial court granted Wells Fargo summary judgment, holding Holder Rule allows claims against a lender only to the extent the debtor paid under the contract and that the lender did not assume seller warranties.
- Laffertys asserted CLRA, Song-Beverly Act, Tanner Act, negligence, and other claims; some were dismissed or limited; the court found negligent credit defamation preempted by the FCRA and that declaratory relief lacked standing.
- Appellate court reversed in part: Holder Rule applies against Wells Fargo but only up to what was paid; CLRA and negligence claims deemed viable against Wells Fargo; negligent defamation and declaratory relief were handled differently on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Holder Rule permit an assignee to face the debtor’s claims against the seller against the assignee? | Lafferty | Wells Fargo | Yes, but recovery limited to amounts paid by the debtor |
| Are the CLRA and negligence claims against Wells Fargo viable after the Holder Rule analysis? | Lafferty | Wells Fargo | CLRA and negligence viable; demurrers improper |
| Is the negligent credit defamation claim preempted by the FCRA? | Lafferty | Wells Fargo | Preempted by the FCRA |
| Does the Laffertys’ declaratory/injunctive relief claim have standing against the dealer Wells Fargo under the dealer agreement? | Lafferty | Wells Fargo | Lack of standing; relief denied |
Key Cases Cited
- Music Acceptance Corp. v. Lofing, 32 Cal.App.4th 610 (Cal. Ct. App. 1995) (Holder Rule plain meaning; lender subject to claims and defenses but not new causes of action)
- Sanai v. Saltz, 170 Cal.App.4th 746 (Cal. Ct. App. 2009) (FCRA preemption of state common-law claims against furnishers of credit information)
- Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450 (Cal. 1962) (binding authority on superior and lower courts; standing and implied limitations)