Sosa v. CashCall, Inc. ( 2020 )

Filed 5/13/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ALEXIS MICHELE SOSA,
Plaintiff and Appellant, G056974
v. (Super. Ct. No. 30-2017-00919315)
CASHCALL, INC., et al., OPINION
Defendants and Respondents.
Appeal from a judgment of the Superior Court of Orange County, Walter P.
Schwarm, Judge. Reversed.
Lakeshore Law Center and Jeffrey N. Wilens for Plaintiff and Appellant.
Finlayson Toffer Roosevelt & Lilly, Michael R. Williams and Jared M.
Toffer for Defendants and Respondents.
* * *
Potential lenders are generally prohibited from accessing a consumer’s
credit report without the consumer’s consent. There is an exception for lenders who
intend to make a “firm offer of credit to the consumer.” (Civ. Code, § 1785.11, subd.
1
(b)(2).) A “firm offer of credit” is a term of art; essentially it means the lender intends to
make the loan if a consumer agrees to the proposed terms. If a consumer proves that a
potential lender accessed his or her credit report without the requisite intent, then the
consumer can recover civil penalties (up to $2,500) for each unauthorized access.
Defendants CashCall, Inc. and LoanMe, Inc. (collectively “the lenders”),
accessed thousands of credit reports and mailed loan offers to the consumers. Plaintiff
Alexis Michele Sosa was among those consumers. Sosa sued the lenders for accessing
her credit report. During discovery, Sosa asked the lenders: of the consumers who were
mailed offers, how many were actually given loans? The trial court found Sosa’s
interrogatory to be irrelevant and granted the lenders’ motion for summary judgment.
We disagree. There is a triable issue of material fact: whether the lenders
intended to honor the proposed loan terms if Sosa accepted the offers. Further, Sosa’s
interrogatory was relevant to the lenders’ intent. Indeed, the trial court’s rulings dealt a
“one-two punch” to her lawsuit: the court first prohibited Sosa from obtaining relevant
evidence; then the court dismissed her case, in part, for lack of relevant evidence. Thus,
we reverse the court’s granting of the lenders’ motion for summary judgment.
I
FACTS AND PROCEDURAL BACKGROUND
Through a marketing and solicitation vendor (Ralis), the lenders requested
from a credit reporting agency (Experian), a broad list of anonymous consumers who met
certain loan criteria. After the lenders screened the initial list, Experian sent the lenders a
1
Further undesignated statutory references are to the Civil Code.
2
second, narrower list which included the consumers’ names, addresses, partial social
security numbers, and credit information. Through a print vendor, the lenders then
mailed loan offers to the targeted consumers.
A typical offer stated: “You are Pre-Qualified for a Personal Loan of up to
2
$10,600.” The offers included a toll-free number: “Say ‘YES’ Now[.]” The offers
stated the proposed loan terms and conditions: “The APR ranges from 99.75% to
184.36%[.]” The offers included prescreen and opt-out notices: “This ‘prescreened’
offer of credit is based on information in your credit report indicating that you meet
certain criteria. This offer is not guaranteed if you do not meet our criteria. If you do not
want to receive prescreened offers of credit from this and other companies, call the
consumer reporting agencies toll-free . . . .”
In April 2015, LoanMe obtained a list of 369,025 consumer credit reports
from Experian, including Sosa’s credit report. Within 30 days, LoanMe mailed Sosa a
loan offer. LoanMe repeated this process in October 2015 (Sosa was among 250,000
consumers), and March 2016 (Sosa was among 519,848 consumers). In March 2017,
CashCall obtained a list of 598,816 consumer credit reports from Experian, including
Sosa’s consumer credit report.
Court Proceedings
Sosa filed a lawsuit alleging the lenders had violated the California
Consumer Reporting Agencies Act (CCRAA). (See § 1785.1 et seq.) Sosa brought the
action on behalf of herself. Sosa requested “two civil penalties of $2,500 each for each
occasion on which [the lenders] obtained data from [her] consumer’s file or her consumer
credit report without permission or an authorized purpose . . . .”
2
The lenders provided “exemplars” of the loan offers during discovery proceedings.
3
Later, Sosa filed a motion to compel responses to special interrogatories.
One interrogatory asked the lenders: “‘With respect to each firm offer of credit . . . state
what specific criteria was used to select [Sosa] for the offer . . . .’” The court granted the
motion in a written ruling because “there is an issue as to whether [the lenders] accessed
[Sosa’s] credit report for a permissible purpose . . . .” The second interrogatory asked the
lenders how many of the consumers who were mailed offers were actually given loans.
The court denied the motion in a written ruling because it “is beyond the scope of
relevant discovery (overbroad) as it does not pertain to the issue of whether a ‘firm offer
of credit’ was extended to [Sosa].”
The lenders filed a motion for summary judgment. The court found that
“it is undisputed that [the lenders] mailed offers of credit to [Sosa] as a result of the soft
inquir[ies] . . . made on [Sosa’s] credit. . . . Additionally, it is undisputed the offers of
credit ‘contained a minimum loan amount, the range of potential interest rates, and an
explanation of repayment terms.’ . . . The only reference to a possible denial of credit
included within the offers, referred specifically to circumstances where [Sosa] no long
met the standards used to send out the offer.”
The court ruled “the evidence offered to dispute the instant motion for
summary judgment is speculative and insufficient to support a finding in favor of [Sosa].
Consequently, the motion is granted.” (Boldfacing and capitalization omitted.)
II
DISCUSSION
Sosa argues the trial court erred in granting the lenders’ motion for
summary judgment, in part, based on its discovery ruling. We agree.
4
A. Standards of Review
Summary judgment “provide[s] courts with a mechanism to cut through the
parties’ pleadings in order to determine whether, despite their allegations, trial is in fact
necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 844 (Aguilar).) The trial court properly grants the motion if all the papers submitted
establish there is no triable issue of material fact and the moving party is entitled to
judgment as a matter of law. (Id. at p. 843; Code Civ. Proc., § 437c, subd. (b).)
The moving party bears the initial burden to make a prima facie showing
that no triable issue of material fact exists. (Aguilar, supra, 25 Cal.4th at p. 843.) If this
burden is met, the party opposing the motion bears the burden of showing the existence
of disputed facts. (Ibid.) Courts “‘construe the moving party’s affidavits strictly,
construe the opponent’s affidavits liberally, and resolve doubts about the propriety of
granting the motion in favor of the party opposing it.’” (Seo v. All-Makes Overhead
Doors (2002) 97 Cal.App.4th 1193, 1201-1202, italics added.)
In a motion for summary judgment “the court shall consider all of the
evidence set forth in the papers . . . and all inferences reasonably deducible from the
evidence, . . . that raise a triable issue as to any material fact.” (Code Civ. Proc., § 437c,
subd. (c).) A motion for summary judgment ruling is reviewed de novo. (Johnson v. City
of Loma Linda (2000) 24 Cal.4th 61, 65, 67-68.)
A proponent of discovery must explain how the evidence sought is relevant
to a disputed material fact. (Code Civ. Proc., § 2031.310, subd. (b)(1).) We review a
court’s ruling on a motion to compel discovery for an abuse of discretion. (2,022 Ranch
v. Superior Court (2003) 113 Cal.App.4th 1377, 1387.) An abuse of discretion “arises if
the trial court based its decision on impermissible factors [citation] or on an incorrect
legal standard [citations].” (People v. Knoller (2007) 41 Cal.4th 139, 156.)
5
B. Legal Principles Regarding Access to Consumer Credit Reports
Generally, credit reporting agencies are prohibited from disclosing
confidential consumer credit information. (§ 1785.11, subd. (a).) “In addition to any
other remedy provided by law, a consumer may bring an action for a civil penalty, not to
exceed two thousand five hundred dollars ($2,500), against” a party who illegally obtains
access and/or acquires data from a consumer’s credit report. (§ 1785.19, subd. (a)(1) &
(2).) “If a plaintiff prevails in an action under subdivision (a) he or she shall be awarded
3
the civil penalty, costs, and reasonable attorney fees.” (§ 1785.19, subd. (b).)
Without a consumer’s consent, a potential lender may only access or obtain
data from a consumer credit report when the expected credit transaction “involves a firm
offer of credit to the consumer.” (§ 1785.11, subd. (b).) A “firm offer of credit” is
statutorily defined as “any offer of credit to a consumer that will be honored if, based on
information in a consumer credit report on the consumer and other information bearing
on the creditworthiness of the consumer, the consumer is determined to meet the criteria
used to select the consumer for the offer.” (§ 1785.3, subd. (h).)
“To determine whether the offer of credit comports with the statutory
definition, a court must consider the entire offer and the effect of all the material
conditions that comprise the credit product in question. If, after examining the entire
context, the court determines that the ‘offer’ was a guise for solicitation rather than a
legitimate credit product, the communication cannot be considered a firm offer of credit.”
3
The lenders have not argued that Sosa is required to show actual damages for the
alleged section 1785.19 violations. (See Olson v. Six Rivers National Bank (2003) 111
Cal.App.4th 1, 9, second italics added [“A person (or bank) who obtains a consumer
credit report for purposes other than those approved . . . may be held liable for damages
or a civil penalty”]; compare Trujillo v. First American Registry, Inc. (2007) 157
Cal.App.4th 628, 632-634 [plaintiffs were required to show actual damages in a
complaint alleging violations of sections 1785.14, 1786.20, 1786.29, and 1786.18].)
6
4
(Cole v. U.S. Capital Inc. (7th Cir. 2004) 389 F.3d 719, 727-728 (Cole).) “To decide
whether [a lender] has adhered to the statute, a court need only determine whether the
four corners of the offer satisfy the statutory definition (as elaborated in Cole), and
whether the terms are honored when consumers accept.” (Murray v. GMAC Mortg.
Corp. (7th Cir. 2006) 434 F.3d 948, 956 (Murray), italics added.)
C. Analysis
If we were to confine our review to the “four corners” of the lenders’ offers,
we would conclude that offers met the definition of a “firm offer of credit.” As the trial
court found, there is no dispute that the offers to Sosa included the minimum loan
amounts, the ranges of potential interest rates, and a required explanation of the proposed
repayment terms. (See Cole, supra, 389 F.3d at pp. 727-728.)
But what is, in fact, a triable issue of material fact is the second part of the
test for a “firm offer of credit.” That is, we do not know from the four corners of the loan
offers what was the lenders’ intent: whether the lenders would have honored the
proposed loan terms had Sosa accepted them. (See Murray, supra, 434 F.3d at p. 956.)
In other words, we do not know whether the lenders’ mailings were legitimate credit
products, or merely guises for solicitation. (See Cole, supra, 389 F.3d at pp. 727-728.)
Indeed, there are reasonable inferences on both sides of this material issue.
The lenders asserted in the trial court: “On each of the occasions LoanMe
and CashCall conducted a prescreening inquiry into [Sosa’s] credit, they did so for the
sole purpose of extending to [Sosa] a firm offer of credit.” (Italics added.) In support,
the lenders offered a declaration from Andre Valenzuela, an employee of the lenders’
marketing vendor, Ralis. Valenzuela stated that: “[The lenders] regularly make
4
The CCRAA is substantially based on federal consumer credit laws; therefore, federal
authority is “entitled to substantial weight when interpreting the California provisions.”
(Olson v. Six Rivers National Bank (2003) 111 Cal.App.4th 1, 12.)
7
prescreened firm offers of credit to potential loan applicants. In order to accomplish this,
Ralis, on behalf [of the lenders], will request from Experian . . . a list of consumers that
meet certain criteria as specified by CashCall and/or LoanMe.” (Italics added.) This
appears to be a legal conclusion by the lenders’ vendor, rather than a statement of the
5
lenders’ intent. But in any event, the lenders’ purported factual assertion seems
reasonable. That is, it seems reasonable to assume that potential lenders would send
offers to only those consumers with whom they intend to actually make loans.
However, Sosa maintains in this court, as she did in the trial court: “[The
lenders’] ‘purpose’ or ‘intent’ is a triable issue of material fact.” Sosa argues:
“Significantly, [the lenders] did not provide a declaration from anyone employed by
LoanMe or CashCall who expressly stated that all qualified acceptances would have been
honored. In fact, there is no declaration from anyone . . . stating whether the lenders
actually did grant loans or intended to grant loans to all qualified recipients who accepted
the offer.” (Italics added.) To be clear, there is absolutely no evidence in the record to
substantiate whether any of the hundreds of thousands of loan offers mailed by the
lenders to the consumers were actually honored.
Sosa supports her argument by pointing out that a jury is instructed: “You
may consider the ability of each party to provide evidence. If a party provided weaker
evidence when it could have provided stronger evidence, you may distrust the weaker
evidence.” (CACI No. 203; Evid. Code, § 412 [“If weaker and less satisfactory evidence
is offered when it was within the power of a party to produce stronger and more
satisfactory evidence, the evidence offered should be viewed with distrust”].)
5
Sosa argued for the first time at oral argument that Valenzuela’s declaration constitutes
impermissible hearsay. “We do not consider arguments that are raised for the first time at
oral argument.” (Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010)
184 Cal.App.4th 1539, 1554, fn. 9.) Nonetheless, even if Sosa’s belated evidentiary
argument is correct, this does not alter our analysis or our conclusion that the lenders’
motion for summary judgment was erroneously granted.
8
Further, Sosa argues that based on the hundreds of thousands of loan offers
that the lenders mailed to consumers: “Several inferences arise from these facts. Maybe
[the lenders] knew the response rate would be extremely low and they would be able to
fund loans to all ‘takers.’ But a contrary inference is that [the lenders] intended to use the
credit pulls to identify many suitable candidates for loans while only extending loans to
the ‘cream of the crop’ of the responders.” (See Veera v. Banana Republic, LLC (2016)
6 Cal.App.5th 907, 921 [“‘“bait and switch” is a form of false advertising in which
advertisements may not be bona fide because what the merchant intends to sell is
significantly different from that which drew the potential customer in’”].)
Here, there are reasonable inferences on both sides of the only material
factual issue in dispute in this case: whether the lenders actually intended to honor the
loan terms if Sosa was currently eligible and accepted the mailed offers. Again, in a
motion for summary judgment, we must consider “all inferences reasonably deducible
from the evidence, . . . that raise a triable issue as to any material fact.” (Code Civ. Proc.,
§ 437c, subd. (c).) Further, we must “‘resolve doubts about the propriety of granting the
motion in favor of the party opposing it.’” (Seo v. All-Makes Overhead Doors, supra,
97 Cal.App.4th at pp. 1201-1202.) Given these legal standards, we find in Sosa’s favor
and reverse the trial court’s granting of the lenders’ motion for summary judgment.
The lenders argue “it was incumbent on [Sosa] to offer some evidence to
show that either (1) she applied for a loan from [the lenders] after receiving their offers of
credit and was denied a loan despite meeting [the lenders’] credit criteria, or (2) she
responded to [the lenders’] offers of credit and was diverted into some other . . . business
dealing (e.g., not a personal loan).” We disagree. The lenders do not cite any authority
for the proposition that a consumer must first apply for a loan in order to have standing to
sue under section 1785.19. Indeed, in a lawsuit seeking a civil penalty under section
1785.19, it is sufficient for a consumer to show that his or her credit report was accessed
without a permissible purpose. (See § 1785.19, subd. (a)(1) & (2).)
9
Our analysis is also supported by the consumer protection purposes of the
CCRAA: “The Legislature finds and declares as follows: [¶] . . . [¶] (b) Consumer
credit reporting agencies have assumed a vital role in assembling and evaluating
consumer credit . . . . [¶] (c) There is a need to insure that consumer credit reporting
agencies exercise their grave responsibilities with fairness, impartiality, and a respect for
the consumer’s right to privacy. [¶] (d) It is the purpose of this title to require that
consumer credit reporting agencies adopt reasonable procedures for meeting the needs of
. . . consumer credit . . . in a manner which is fair and equitable to the consumer, with
regard to the confidentiality . . . and proper utilization of such information in accordance
with the requirements of this title. [¶] (e) The Legislature hereby intends to regulate
consumer credit reporting agencies pursuant to this title in a manner which will best
protect the interests of the people . . . .” (§ 1785.1, subds. (b),(c),(d) & (e), italics added.)
To be sure, rather than forcing Sosa to first apply for a loan, we think that
her disputed interrogatory would have provided relevant evidence that may have tended
to prove (or disprove) her cause of action. “‘Relevant evidence’ means evidence,
including evidence relevant to the credibility of a witness . . . , having any tendency in
reason to prove or disprove any disputed fact that is of consequence to the determination
of the action.” (Evid. Code, § 210.) Generally, a party’s intent is proven by
circumstantial evidence. (Locke v. Warner Bros., Inc. (1997) 57 Cal.App.4th 354, 368.)
Here, Sosa asked the lenders: of the consumers who were mailed offers,
how many were actually given loans? We think this interrogatory was highly relevant to
the lenders’ intent. That is, the answer would have provided circumstantial evidence
relevant to the issue of whether the lenders intended to honor the proposed loan terms if
consumers such as Sosa accepted the mailed offers. (See Murray, supra, 434 F.3d at
p. 956, italics added [“To decide whether [a lender] has adhered to the statute, a court
need only determine whether the four corners of the offer satisfy the statutory
definition . . . and whether the terms are honored when consumers accept”].)
10
The lenders cite a federal district court’s unpublished opinion for the
proposition that Sosa has engaged in “blind speculation” that the lenders did not intend to
honor the offers they had mailed to her. (See Derderian v. Southwestern & Pac.
Specialty Fin., Inc. (9th Cir. 2016) 673 Fed.Appx. 736, 738.) We disagree. An
unpublished federal trial court opinion is merely persuasive authority. (Futrell v. Payday
California, Inc. (2010) 190 Cal.App.4th 1419, 1432, fn. 6.) And when reviewing a trial
court’s ruling on a motion for summary judgment, we must examine “the entire context”
of the facts in each particular case. (See Cole, supra, 389 F.3d at pp. 727-728.)
In this case, because of the court’s erroneous discovery ruling, Sosa was
effectively prevented from discovering relevant evidence in order to effectively challenge
the lenders’ motion for summary judgment.
Our dissenting colleague cites four federal opinions for the legal
proposition that in a motion for summary judgment a lender can “rely solely on the terms
of the mailed offer to show it intended to honor the offered credit.” (Dis. opn., post, at p.
3.) We respectfully disagree.
Three of the federal court opinions are distinguishable; the fourth does not
hold that a lender can rely solely on the terms of its offer to prove its intent. (See Gelman
v. State Farm Mut. Auto. Ins. Co. (3d Cir. 2009) 583 F.3d 187, 192 [appellate court
analyzed the details of an insurer’s firm offer of insurance, rather than a lender’s firm
offer of credit]; Villagran v. Central Ford, Inc. (S.D. Tex. 2007) 524 F.Supp.2d 866, 871
[trial court analyzed a motion to dismiss for failure to state a claim (equivalent to a
demurrer), rather than a motion for summary judgment]; Dixon v. Shamrock Financial
Corp. (D. Mass. 2007) 482 F.Supp.2d 172, 176 [same]; Sullivan v. Greenwood Credit
Union (D. Mass. 2007) 499 F.Supp.2d 83, 87 [trial court held that a lender can rely on the
terms of an offer mailed to a consumer so “long as that loan is in fact available”].)
11
Our colleague states “it is difficult to decipher precisely how the majority
applied the sequential burden shifting procedure under Aguilar[, supra, 25 Cal.4th 826].”
(Dis. opn., post, at p. 8.) We shall attempt to clarify.
In a motion for summary judgment, the moving party bears the initial
burden to make a prima facie showing that no triable issue of material fact exists.
(Aguilar, supra, 25 Cal.4th at p. 845.) If this burden is met, the party opposing the
motion bears the burden of showing the existence of disputed facts. (Ibid.) “In
determining if . . . there is no triable issue as to any material fact, the court shall consider
all of the evidence . . . and all inferences reasonably deducible from the evidence, except
summary judgment shall not be granted by the court based on inferences reasonably
deducible from the evidence if contradicted by other inferences or evidence that raise a
triable issue as to any material fact.” (Code Civ. Proc., § 437c, subd. (c), italics added.)
Here, in the motion for summary judgment, the lenders attached a
declaration (from a vendor) averring that the lenders accessed consumer credit reports for
the purpose of making firm offers of credit. But as to the hundreds of thousands of credit
reports that were accessed, the lenders did not submit any evidence whatsoever that they
actually followed through on any of the loan offers mailed to the consumers.
So did the lenders meet their initial burden? Well, it is arguably a
reasonable inference that the lenders intended to honor the advertised loans if the
consumers had accepted the proposed loan terms. But given the hundreds of thousands
of mailed loan offers, and the complete absence of evidence regarding whether any of the
loan offers were actually honored (compounded by the court’s erroneous discovery
ruling), it is also a reasonable inference that the thousands of loan offers were not, in fact,
firm offers of credit. (See Murray, supra, 434 F.3d at p. 956, italics added [“a court need
only determine whether the four corners of the offer satisfy the statutory definition . . . ,
and whether the terms are honored when consumers accept”]; see also Los Angeles
Unified School Dist. v. Trustees of Southern California IBEW-NECA Pension Plan
12
(2010) 187 Cal.App.4th 621, 627-628 [“‘information is discoverable if it is unprivileged
and is either relevant to the subject matter of the action or reasonably calculated to reveal
admissible evidence’”].)
Thus, to clarify our analysis regarding burden shifting, when there is a
reasonable inference that is contradicted by another reasonable inference, the motion for
summary judgment “shall not be granted.” (See Code Civ. Proc., § 437c, subd. (c).)
III
DISPOSITION
The judgment is reversed. Sosa is entitled to recover her costs on appeal.
MOORE, J.
I CONCUR:
BEDSWORTH, ACTING P. J.
13
Aronson, J., Dissenting.
The majority concludes the trial court erred by granting summary judgment
because there exists a factual dispute whether the defendant lenders CashCall, Inc., and
LoanMe, Inc., intended to honor the proposed loan terms if plaintiff Alexis Michele Sosa
had accepted them. Based on my independent review of the evidence, I disagree. The
lenders met their initial burden on summary judgment to show they would have honored
the proposed terms, and in response Sosa failed to meet her burden to show the existence
of a disputed fact. I also conclude the trial court did not abuse its discretion in finding
Sosa’s proposed interrogatory would not have shed light on the issue of the lenders’
intent, and, in any event, any conceivable error in not compelling a response did not
prejudice Sosa. I therefore would affirm the trial court’s order granting the lenders’
motion for summary judgment.
“[T]he party moving for summary judgment bears an initial burden of
production to make a prima facie showing of the nonexistence of any triable issue of
material fact; if he carries his burden of production, he causes a shift, and the opposing
party is then subjected to a burden of production of [her] own to make a prima facie
showing of the existence of a triable issue of material fact.” (Aguilar v. Atlantic Richfield
Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) Thus, only if the moving party meets its
initial burden do we consider whether the opposition has raised a triable issue of material
fact. (Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 939-940.) “Responsive evidence
that ‘gives rise to no more than mere speculation’ is not sufficient to establish a triable
issue of material fact.” (Carlsen v. Koivumaki (2014) 227 Cal.App.4th 879, 889-890.)
Defendants Produced Evidence Satisfying Their Initial Burden
Here, the sole issue is whether the lenders made a “firm offer of credit” to
Sosa. Under the California Consumer Credit Reporting Agencies Act (CCRAA), Civil
Code, § 1785.1 et seq., a “firm offer of credit” is statutorily defined as “any offer of
1
credit to a consumer that will be honored if, based on the information in a consumer
credit report on the consumer and other information bearing on the creditworthiness of
the consumer, the consumer is determined to meet the criteria used to select the consumer
for the offer.” (Civ. Code, § 1785.3, subd. (h).) “Because the [CCRAA] is substantially
based on the Federal Fair Credit Reporting Act (15 U.S.C. §§ 1681-1681t) [FCRA],
judicial interpretation of the federal provisions is persuasive authority and entitled to
substantial weight when interpreting the California provisions.” (Olson v. Six Rivers
National Bank (2003) 111 Cal.App.4th 1, 12.) Indeed, it would be a daunting task for a
party to argue federal opinions should not definitively guide our interpretation. Congress
provided that the definition of a firm offer of credit “shall be construed to apply in the
enforcement and interpretation of the laws of any State governing consumer reports.”
(15 U.S.C., § 1681t(c).) Congress’s intent that a firm offer of credit have a uniform
meaning would be frustrated if the meaning varied from state to state. (Cole v. U.S.
Capital (7th Cir. 2004) 389 F.3d 719, 726, fn. 6 (Cole).) Following Congress’s intent,
the CCRAA’s definition of a “firm offer of credit” is substantively identical to the
FRCA’s definition; indeed, a consumer may not sue under the CCRAA if the consumer
has a pending suit or obtained a judgment under the FCRA based on the same act or
omission. (Civ. Code, § 1785.34.)
Under the FRCA, the term “firm offer of credit” is defined as “any offer of
credit or insurance to a consumer that will be honored if the consumer is determined,
based on information in a consumer report on the consumer, to meet the specific criteria
used to select the consumer for the offer.” (15 U.S.C. § 1681a(d)(l).) In Cole, supra,389 F.3d at p. 728, the federal appellate court construed a “firm offer of credit” as
requiring “[t]he terms of the offer, such as the rate of interest charged, the method of
computing interest and the length of the repayment period” to provide appreciable value
to the consumer, and that the lender would have honored the offer. (But see Murray v.
New Cingular Wireless Services, Inc. (7th Cir. 2008) 523 F.3d 719, 722 [“When credit
2
histories are used to offer credit (or insurance) and nothing but, the right question is
whether the offer is ‘firm’ rather than whether it is ‘valuable’”].)
To meet their initial burden on summary judgment to show they made firm
offers of credit, the lenders submitted exemplars of the credit offers made to Sosa. Sosa
does not dispute the lenders’ offers “contained a minimum loan amount, the range of
potential interest rates, and an explanation of repayment terms.”
Based on case law interpreting the FCRA, the lenders also asserted the
credit offers constituted evidence of their intent to honor the offers. A firm offer of
credit, by definition, is a credit offer that will be honored if the consumer continues to
meet the specified criteria used to identify the consumer’s eligibility for the offer. Case
law interpreting the FRCA allows a lender to rely solely on the terms of the mailed offer
to show it intended to honor the offered credit. (See, e.g., Sullivan v. Greenwood Credit
Union (D. Mass. 2007) 499 F.Supp.2d 83, 88 (Sullivan) [“nothing in the case law
indicates that a court should not focus on the four corners of the letter at the summary
judgment stage” to determine whether lender’s letter was a firm offer of credit].) For
example, in Gelman v. State Farm Mut. Auto. Ins. Co. (3d Cir. 2009) 583 F.3d 187, 192
(Gelman), the federal appellate court concluded the defendant had made a “firm offer”
that would be honored based solely on the court’s review of the mailer. There, the mailer
stated: “[t]his ‘prescreened’ offer . . . is based on the information in your consumer report
indicating that you meet certain eligibility criteria. This offer is not guaranteed if you do
not meet our criteria at the time of application and expires 60 days after you receive it.”
(Id. at p. 189.) The mailer also stated: “‘By getting to know you personally, I can offer:
Competitive rates that help you save up to $356 or more.’” (Id. at p. 195.) The Gelman
court concluded this was sufficient because “[t]he mailer thus stated that the offer . . .
contained therein would be honored if Gelman met certain criteria.” (Ibid.)
Similarly, in Villagran v. Central Ford, Inc. (S.D. Tex. 2007)
524 F.Supp.2d 866, the district court concluded a loan offer was a firm offer of credit
3
where the offer “stated that [the plaintiff] was prequalified to receive a loan and that if
she met certain criteria, she was ‘guaranteed to receive a loan for the purchase of a 2003
or newer vehicle from MDA Capital.’ [Citation.] The mailing [further] stated that ‘[t]his
offer is not guaranteed if you do not meet our criteria (including providing acceptable
property as collateral).’” (Id. at p. 881.) The court granted the lender’s motion for
summary judgment because “[t]he record does not show that Villagran took action to
accept the loan offer. Nor is there evidence that Central Ford failed to honor the loan
offered to Villagran or other customers meeting the criteria.” (Ibid.)
In Sullivan, supra, 499 F.Supp.2d 83, the district court concluded a lender’s
letter was a firm offer of credit under the FRCA where the letter stated (1) the consumer
was “pre-approved” for a home loan; (2) the offer was a “prescreened offer of credit
based on information in your credit report indicating that you met certain criteria. This
offer of credit is not guaranteed if you do not meet our criteria including providing
acceptable property as collateral”; and (3) it was a “[l]imited time offer,” “[r]ates and
terms [were] subject to change without notice” and specified, “If at time of offer you no
longer meet initial criteria, offer may be revoked.” (Id. at pp. 84 & 88.) The court
granted the lender’s motion for summary judgment “[b]ecause the letter sent to Plaintiff
was a firm offer of credit under FCRA and because Plaintiff has no evidence in the record
that could genuinely dispute the proposition that these letters were not shams, but instead
enticements to enter into a legitimate credit transaction.” (Id. at p. 88.)
Thus, a mailed offer guaranteeing an offer of credit if a consumer continues
to meet prescreening criteria is sufficient to demonstrate the existence of a firm offer of
credit. (Id. at p. 87; see also Dixon v. Shamrock Financial Corp. (D. Mass. 2007) 482
F.Supp.2d 172, 176 (Dixon) [lender’s letter satisfied the statutory definition of “firm offer
of credit” where “the letter assured Dixon that he had been ‘prescreened’ for a loan, in
other words, that he was guaranteed to receive one if the information in his consumer
report remained accurate.”].)
4
Here, the offers stated Sosa was prequalified for a personal loan in a
specific amount and that “[u]pon approval” verification, the specified amount will “be
electronically deposited into your account in as fast as 24 hours.” They further provided:
“This prescreened offer of credit is based on information in your credit report indicating
that you meet certain criteria. This offer is not guaranteed if you do not meet our
criteria.” Sosa does not dispute the offers informed her she met the credit criteria to
receive a loan. But the offer also constituted evidence the lenders intended to honor the
credit terms offered to Sosa and therefore satisfied the lenders’ initial summary judgment
burden.
Sosa contends the lenders cannot meet their initial burden to show they
would have honored the offers had she accepted them by relying on “the contents of the
written offers,” but the only authority cited for this proposition is the following language
in Murray v. GMAC Mortgage Corp. (7th Cir. 2006) 434 F.3d 948, 956 (Murray): “To
decide whether [a lender] has adhered to the statute, a court need only determine whether
the four corners of the offer satisfy the statutory definition (as elaborated in Cole), and
whether terms are honored when consumers accept.”) Murray is simply inapt; the
opinion addressed an order denying class certification, not a dispositive order granting
summary judgment or dismissal. More important, Murray says nothing about how a
lender may satisfy its initial burden on summary judgment. Sosa offers no other
authority to support her assertion a lender may not rely on the contents of its mailed offer
1
to support the inference it would honor that offer.
1
The majority rejects reliance on Gelman because it analyzed an insurer’s offer of
insurance rather than a lender’s offer of credit. But the FCRA expressly applies to “a
firm offer of credit or insurance.” (15 U.S.C. § 1681t(c); see also 15 U.S.C. 1681a(1).)
The majority’s distinction makes no difference; cases employ the same analysis to decide
whether a lender or insurer made a firm credit offer.
5
The lenders expressly guaranteed they would honor the credit offers if Sosa
continued to meet the prescreening qualifications. The mailed offers stated the loan
amount “will be electronically deposited” upon approval verification. The mailed offers
“thus stated that the offer of [credit] contained therein would be honored if [Sosa] met
certain criteria.” (Gelman, supra, 583 F.3d at p. 195.) In sum, based solely on the mailed
offers, the lenders met their initial burden to show they would have honored the offer if
Sosa had accepted and remained qualified.
Sosa Failed to Present Evidence Establishing a Triable Issue of Material Fact
Because the lenders met their initial burden, the burden shifts to Sosa to
present evidence establishing the existence of a disputed fact. (See Karle v. Capital One
Bank (D. Mass. 2016) 2016 WL 8118178, at *4 [“In the face of [the lenders’] evidence,
The majority suggests the Villagran and Dixon cases are inapposite because they
were the equivalent of a demurrer rather than a summary judgment. The majority is
simply wrong about Villagran – it is a summary judgment case. As the Villagran court
explained, “[B]ecause this court considers materials beyond the pleadings, Central Ford’s
motion to dismiss is converted into a summary judgment motion.” (Villgran, supra,
524 F.Supp.2d at p. 880.)
The Dixon court granted the lender’s dismissal motion because the plaintiff’s
pleadings showed a firm offer of credit, which by definition, includes an intent to honor
the offer, and the plaintiff made no allegation in his complaint that offer was a “sham.”
(Dixon, supra, 428 F.Supp.2d at pp. 176-177.) The point is that the plaintiff in Dixon had
the burden to allege the offer was a sham. Had the plaintiff survived the demurrer, the
plaintiff would have the burden in a summary judgment motion to produce evidence the
offer was a sham. I fail to see why Dixon’s discussion of a plaintiff’s burden under the
FCRA should be ignored because the plaintiff lost on a demurrer rather than summary
judgment.
Finally, the majority misinterprets the Sullivan decision. The majority concludes
Sullivan does not hold a lender can rely on a firm offer of credit to prove its intent. But
the definition of a firm offer of credit necessarily includes an intent to honor the offer;
otherwise, the firm offer is not firm. The majority misapplies this basic proposition.
Sullivan expressly held a mailed offer constitutes a firm offer of credit “if the letter
assures the consumer that he is guaranteed to receive credit if he meets certain conditions,
and there is no evidence that the letter is a sham ‘intended to lure [recipients] into
something other than a bone fide credit transaction.’”
6
the plaintiff might still avoid summary judgment by putting on some evidence to show
that the defendants’ firm offers were shams ‘in the sense that [they] would not have been
honored by [the defendants] if [the plaintiff] had accepted,’” quoting Dixon, supra,482 F. Supp. 2d at pp. 176-177].) Sosa argues circumstantial evidence suggests the
lenders did not intend to honor all accepted credit offers because the lenders made offers
to hundreds of thousands of consumers annually whereas the total number of loans made
by more than 2,500 California lenders did not exceed 306,000 in any one year. Because
Sosa seeks only an individual recovery, the proper inquiry is not whether the lenders
would have honored all the credit offers, but whether they would honor the offers made
to Sosa. Although Sosa did not accept the lenders credit offer, the lenders’ response to
similarly situated consumers who did accept the offers may show whether the lenders
intended to honor their offers to Sosa had she accepted.
I cannot agree with the majority’s conclusion it could infer the lenders did
not intend to honor their offers of credit solely on the number of loan offers they sent to
targeted consumers. The mere fact the lenders made a large number of credit offers does
not, by itself, raise a triable issue of material fact on their intent to honor the credit offers
extended to Sosa. The number of credit offers sheds no light on the number of responses
the lenders received, whether those who responded continued to meet the prescreening
criteria, accepted loan offers from competing lenders, or ultimately decided not to take
out a loan. As a federal appellate court has noted, “most consumers who receive credit
solicitations do not apply for the offered credit card, regardless of how attractive the
terms of the offer are.” (Perry v. First National Bank (7th Cir. 2006) 459 F.3d 816, 826.)
Consequently, a lender may intend to honor all qualifying accepted credit offers because
it has data showing it would receive a low response rate and even responsive consumers
may no longer meet the qualifications to receive a loan. It was Sosa’s burden to produce
evidence of the response rate because the lenders made their prima facie case, but Sosa,
7
in relying solely on the number of offers, failed to show the lenders did not honor the
other responses they may have received from similarly situated consumers.
Of course, Sosa could have established the existence of a triable issue of
fact if she had accepted the offer and been denied credit by the lenders. But Sosa
acknowledged in her complaint the lenders never denied her credit because she never
accepted their offer. Nor has Sosa submitted any evidence of any other similarly situated
consumer who applied for but was denied credit after accepting the lenders’ credit offer.
There simply is no basis to conclude there is a triable issue on whether the lenders would
have honored their mailed offer when Sosa presented no evidence she or anyone else
accepted the offer but were rejected by the lenders. (Cf. Gelman, supra, 583 F.3d at
p. 195 [court has no obligation to consider whether the lender’s firm offer of credit would
have been honored because plaintiff “did not allege that he responded to the . . . mailing
and was denied . . . even though he satisfied the pre-screening criteria”]; Dixon, supra,482 F.Supp.2d at p. 177 [plaintiff failed to show a firm offer of credit was a “‘sham’”
because “no allegation was made in the complaint that [plaintiff] – or anyone else – had
ever responded to Shamrock’s solicitation and then been denied credit despite meeting
creditworthiness requirements or had been diverted to some other type of business
dealing”].)
Unfortunately, it is difficult to decipher precisely how the majority applied
the sequential burden shifting procedure required under Aguilar. The majority initially
appears to accept Sosa’s argument the lenders could not rely on the credit terms they
offered Sosa to show they would have honored their offers, stating they could not discern
the lenders’ intent “from the four corners of the loan offers.” (Maj. opn. at p. 7.) This
statement suggests the lenders could not rely on their offers to meet their initial summary
judgment burden. But later in the opinion, the majority states it reasonably could be
inferred “potential lenders would send offers to only those customers with whom they
intend to actually make loans.” (Maj. opn. at p. 8.) Later still, the majority concludes
8
there are “reasonable inferences on both sides” concerning whether the lenders would
have honored the loan terms extended to Sosa. (Maj. opn. at p. 9.) These statements
suggest the lenders met their initial burden.
The majority attempts to clarify matters, but in doing so never directly
states whether the lenders met their initial burden. One might infer the lenders did so
because the majority considers Sosa’s claim the sheer number of offers created a triable
issue of fact. The majority, of course, could not consider Sosa’s claim unless they
initially found the lenders satisfied their burden. But if this is so, no reason appears why
the majority also would attempt to distinguish the cases I cited to demonstrate the lenders
met their initial burden. The majority could clear matters up if they simply would declare
the lenders either did, or did not, meet their initial burden.
Yet another fundamental problem surfaces when attempting to discern the
majority’s analysis. Assuming the majority found the lenders satisfied their initial
burden, the majority concludes there is a triable issue of fact based on the number of
offers the lenders sent to consumers and “the complete absence of evidence regarding
whether any of the loan offers were actually honored [makes it] a reasonable inference
that the thousands of loan offers were not, in fact, firm offers of credit.” (Maj. opn. at
p. 12.) But at this stage it was Sosa’s burden to produce evidence showing a triable issue,
not the lenders. In other words, Sosa must show other similarly situated consumers did
not have their offers honored. Sosa, however, produced no evidence the lenders failed to
honor other offers. Instead, Sosa relied solely on the number of offers made, an argument
which has been rejected by several cases. By requiring the lenders to show it accepted
other offers, the majority either mistakenly conflates the burden shifting process or
ignores it altogether.
9
Sosa Failed to Show the Trial Court’s Discretionary Discovery Ruling Requires Reversal
of the Judgment
The majority concludes the trial court erred in not ordering the lenders to
answer Sosa’s special interrogatory asking “how many of the consumers were actually
given loans.” The trial court found the interrogatory was overbroad and irrelevant. The
majority, however, believes the court abused its discretion and thereby prevented Sosa
2
from effectively challenging the summary judgment. (Maj. opn. at p. 11.) I do not agree
the court abused its broad discretion and, in any event, I cannot see how the answer to
this one interrogatory would have aided Sosa in opposing the merits of the summary
judgment motion.
Sosa’s burden on appeal is to show the trial court abused its wide discretion
in not ordering the lenders to respond to Sosa’s interrogatory. (John B. v. Superior Court
(2006) 38 Cal.4th 1177, 1186.) To meet that burden, Sosa must show the court lacked
any legal justification for its ruling. (See MacQuiddy v. Mercedes-Benz USA, LLC
(2015) 233 Cal.App.4th 1036, 1045 [“‘“‘The trial court’s determination will be set aside
only when it has been demonstrated that there was “no legal justification” for the
order’”’”].) Finally, Sosa must “‘show not only that the trial court erred, but also that the
error was prejudicial’; i.e., the plaintiff must show that it is reasonably probable the
ultimate outcome would have been more favorable to the plaintiff had the trial court not
erred in the discovery rulings.” (Ibid.)
Sosa argues the interrogatory would have allowed her to show “there was a
triable issue of fact regarding whether Defendants intended to honor all loan
acceptances.” She notes a “dismal loan granting rate” would show “the lender never
2
Again, the majority’s analysis is not entirely clear. The majority’s conclusion the
trial court’s discovery ruling prevented Sosa from effectively opposing summary
judgment seems to conflict with its conclusion Sosa had in fact presented sufficient
information to show a triable issue of material fact.
10
really intended to grant loans to many or even most of those persons offered the loans.”
By itself, the proposed interrogatory shows no such thing.
In rejecting a similar argument, a federal appellate court has explained that
even if a minimal number of consumers actually obtained a loan, this fact alone does not
raise a triable issue on the lender’s intent where there is no “breakdown of those who
have applied, but did not qualify, or the number of consumers who qualified . . . , but
simply elected to choose a different loan offer.” (Cavin v. Home Loan Center (7th Cir.
2008) 531 F.3d 526, 530 [affirming district court’s order granting lender’s motion for
summary judgment because “[i]n the absence of such evidence and also in light of the
limited response to such solicitations, we conclude that the number of consumers
obtaining the [loan] does not demonstrate that [defendant’s] offer did not comply with the
FCRA”].) Accordingly, the trial court did not err in concluding the interrogatory was
overbroad and irrelevant because a response would not show the lenders did not make a
bona fide offer of credit to Sosa. (See Perry, supra, 459 F.3d at pp. 825-826 [affirming
district court’s order granting summary judgment and its ruling to deny discovery on the
percentage of consumers who received credit cards from the lender].) The foregoing case
law demonstrates the trial court was legally justified in declining to order a response to
Sosa’s proposed interrogatory. Moreover, any conceivable error would not have aided
Sosa in opposing summary judgment, as explained above.
In sum, the lenders showed they were entitled to summary judgment and
Sosa failed to show the existence of a triable issue of fact. Sosa also failed to show the
trial court abused its discretion or committed prejudicial error in denying a response to
her interrogatory. Because the majority concludes otherwise, I respectfully dissent and
would affirm the trial court’s order granting summary judgment.
ARONSON, J.
11