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Court of Appeal, First District, Division 3, California.

BANK OF AMERICA, Plaintiff, Cross-Defendant and Respondent, v. Felisa V. LALLANA, Defendant, Cross-Complainant and Appellant.

No. A073066.

Decided: June 03, 1997

Andrew J. Ogilvie, San Francisco, Chimicles, Jacobsen & Tikellis, Patrick J. Grannan, Los Angeles, for Defendant, Cross-Complainant and Appellant. Lillick & Charles, L.L.P., Stephen Oroza, James S. Monroe, San Francisco, for Plaintiff, Cross-Defendant and Respondent.

This case of first impression arises out of an action for a deficiency judgment against the debtor, Felisa V. Lallana, following the sale of her repossessed automobile by the secured party, Bank of America (the Bank).   That part of the case has now settled, but Lallana appeals a judgment in favor of the Bank on her cross-complaint alleging business practices in violation of Business and Professions Code former section 17200 et seq. 1  We hold that, before a creditor may obtain a deficiency judgment following a collateral sale of an automobile, the notice of that sale must comply with both the provision for the sale of repossessed collateral found in the Rees-Levering Motor Vehicle Sales and Finance Act (Civ.Code, § 2981 et seq., hereinafter the Rees-Levering Act) and the more general provision for the sale of repossessed collateral found in California Uniform Commercial Code section 9504, subdivision (3).2  On the facts of this case, we further conclude the Bank conducted a public sale within the meaning of section 9504, subdivision (3), but only sent Lallana a notice of a private sale.   Thereafter, the Bank sought a deficiency judgment to which it was not entitled under section 9504.   Accordingly, we conclude the claim under section 17200 of the Business and Professions Code has been established and, therefore, reverse the judgment on the cross-complaint and remand for a determination of the proper relief to be awarded.

Factual And Procedural Background

Defendant Felisa V. Lallana and her son-in-law Sherden Williams 3 purchased a Mitsubishi Eclipse on credit pursuant to a conditional sales contract with the car dealer, and the dealer immediately assigned the contract and security agreement to the Bank. After Lallana and Williams defaulted on several car payments, the Bank repossessed the car.   As required by Civil Code section 2983.2 of the Rees-Levering Act, the Bank notified them of their rights to redeem the vehicle or to reinstate the contract within 15 days of the date of the notice, and also informed them that, if they did not cure the default within that time and any extension thereof, the Bank would sell the vehicle.4  The Bank concedes its notice never informed defendants when or where the sale would take place.   The Bank's uncontradicted evidence established that, in instances of a direct car loan from the Bank to the car buyer, the Bank provides notice of a private sale under section 9504, subdivision (3).   In cases of indirect loans, as this one, the Bank sends a “Notice of Intent to Sell Repossessed or Surrendered Vehicle” pursuant to the Rees-Levering Act. Throughout this litigation, the Bank maintained only that the Rees-Levering Act controls the sale in this case, and that the notice conformed to those requirements.   The Bank alternatively asserted this was a “private sale,” and the notice conformed to the “private sale” requirements under section 9504, subdivision (3).

On January 6, 1992, the Bank sold the vehicle through its vendor at a sealed bid auction.   The vendor explained he used a sealed bid auction, rather than a “live” auction, i.e., with an auctioneer and oral bidding, because he found the sealed bid auctions brought higher prices.   He testified the sales were open to any member of the public who was over 18 years old, possessed a valid California driver's license and paid the $5 entrance fee.   Weekly public sales of repossessed vehicles were held which were advertised in general circulation and specialized newspapers variously as a “public auto auction” or “open to the public sealed bid auto auctions.”   The vendor testified that prior to the publication of the ads around the time of the Lallana sale, he informed the newspapers to drop the word “public” from the advertising copy, but at least one of these newspapers, The San Jose Mercury News, did not make the change.

Lallana's car was first advertised on December 17, 1991, and the car was featured in four, 2-day auctions.   All sales were “with reserve,” meaning the car is sold to the highest bidder over the minimum set by the Bank. The Bank did not bid at this or other sales.   The car was eventually sold for $5,000 with the Bank's approval because it was below the Bank's minimum price, and was much less than the lowest Kelly Blue Book value of $10,000.   On November 24, 1992, the Bank sued Lallana and Williams for the amount of the deficiency, $11,249.84, plus interest, costs and attorney fees.

Lallana cross-complained for an injunction and restitution for herself and the general public, alleging the Bank engaged in several unfair business practices in violation of Business and Professions Code section 17200, including its failure to notify her and other defaulting borrowers of the time and location of the public sales as required by section 9504, subdivision (3).   A bifurcated trial was held on her cross-complaint, at which Lallana did not testify.   She presented no evidence that the car should have commanded a higher price, nor did she suggest the Bank and Faulknor were guilty of colluding to sell the vehicle at a commercially unreasonable price.   It is undisputed neither she nor Williams requested the Bank tell them when and where the sale would be held.

The trial court found the sales price was commercially reasonable and the Bank did not engage in any of the alleged unfair business practices.   Judgment was entered in its favor on the cross-complaint.   In particular, the court held the specific notice provisions for the sale of a repossessed vehicle under the Rees-Levering Act controlled over the more general notice provisions for sales of any repossessed collateral contained in section 9504, subdivision (3).   Alternatively, the court held the sealed bid auction was a “private sale” under section 9504, subdivision (3), which does not require notice to the defaulting borrower of the time and place of the sale.

In her appeal from that judgment, Lallana argues only that this sale was a public sale and the Bank failed to comply with the requirements of section 9504, subdivision (3), as incorporated in Civil Code section 2983.8.


Whether the notice of sale was legally sufficient presents a pure question of law to which we apply our independent judgment.  (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 699, 170 Cal.Rptr. 817, 621 P.2d 856;  Public Utilities Com. v. Energy Resources Conservation & Dev. Com. (1984) 150 Cal.App.3d 437, 443, 197 Cal.Rptr. 866.)  “To determine the intent of legislation, we first consult the words themselves, giving them their usual and ordinary meaning.   When statutory language is clear and unambiguous there is no need for construction, and courts should not indulge in it.   The plain meaning of words in a statute may be disregarded only when that meaning is repugnant to the general purview of the act, or for some other compelling reason.”  (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 601, 7 Cal.Rptr.2d 238, 828 P.2d 140, internal quotation marks and citations omitted.)   Statutory provisions relating to the same scheme of law must be harmonized to the extent possible.  (Ford & Vlahos v. ITT Commercial Finance Corp. (1994) 8 Cal.4th 1220, 1234, 36 Cal.Rptr.2d 464, 885 P.2d 877 (Ford & Vlahos );  Title Ins. & Trust Co. v. County of Riverside (1989) 48 Cal.3d 84, 91, 255 Cal.Rptr. 670, 767 P.2d 1148.)

I. Notice Must Comply With Section 9504, Subdivision (3)

Civil Code section 2983.2 of the Rees-Levering Act, spells out the requirements for notifying the debtor before the sale of a repossessed vehicle may take place and provides that a debtor with notice may be held liable for any deficiency.   Liability for any deficiency will attach “[e ]xcept as otherwise provided in Section 2983.8 ․”  (Italics added.)   Lallana does not dispute the Bank's notice of intent to sell satisfied these statutory requirements.5  Likewise, the Bank concedes the Rees-Levering Act notices sent in this and other like instances did not disclose the time and location of the sale.

Civil Code section 2983.8, as amended in 1984, provides:  “Notwithstanding Section 2983.2 or any other provision of law, no deficiency judgment shall lie in any event in any of the following instances:  [¶] ․ [¶] (b) After any sale or other disposition of a motor vehicle unless the court has determined that the sale or other disposition was in conformity with the provisions of this chapter and the relevant provisions of Division 9 (commencing with Section 9101) of the Commercial Code, including Section 9504.”  (Stats.1984, ch. 1376, § 1, p. 4859, italics added.)

Section 9504, subdivision (2)(b) provides in relevant part:  “If the security interest secures an indebtedness, the debtor is liable for any deficiency ․ only (i) if the debtor was given notice, if and as required by subdivision (3), of the disposition of the collateral in accordance with subdivision (3), and the disposition of the collateral by the secured party pursuant to this section was conducted in good faith and in a commercially reasonable manner . ․” (Italics added.)

Subdivision (3) of section 9504 provides:  “A sale or lease of collateral may be as a unit or in parcels, at wholesale or retail and at any time and place and on any terms, provided the secured party acts in good faith and in a commercially reasonable manner.   Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the secured party must give to the debtor, ․ a notice in writing of the time and place of any public sale or of the time on or after which any private sale or other intended disposition is to be made ․  Notice of the time and place of a public sale shall also be given at least five days before the date of sale by publication once in a newspaper of general circulation published in the county in which the sale is to be held․  The secured party may buy at any public sale and if the collateral is customarily sold in a recognized market or is the subject of widely or regularly distributed standard price quotations he or she may buy at private sale.   Any sale of which notice is delivered or mailed and published as herein provided and that is held as herein provided is a public sale.”  (Italics added.)

 Turning to the language of Civil Code section 2983.8, we find that it unambiguously requires the seller of the repossessed collateral to comply with the provisions under section 9504 before it may collect a deficiency judgment.  Section 9504 conditions the right to a deficiency judgment after a collateral sale upon the dual requirements of adequate notice and commercial reasonableness.  (Ford & Vlahos, supra, 8 Cal.4th at p. 1227, 36 Cal.Rptr.2d 464, 885 P.2d 877;  Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, 861, 270 Cal.Rptr. 699.)   The Legislature's intent to incorporate section 9504 is clear, and cannot rationally be construed to mean anything less that the entire statute.   Contrary to the Bank's argument, there is nothing in that language or the nature of subdivision (3) of section 9504 to permit us to conclude the Legislature intended only to incorporate the commercial reasonableness standard, but not the notice requirements contained therein.   In light of this unusually plain declaration of legislative intent, we need not look to any legislative history to aid in our interpretation.  (DaFonte v. Up-Right, Inc., supra, 2 Cal.4th at p. 601, 7 Cal.Rptr.2d 238, 828 P.2d 140.)

In its statement of decision, the trial court accepted the Bank's argument that Creditors Bureau v. De La Torre (1971) 16 Cal.App.3d 558, 94 Cal.Rptr. 145, controls and concluded the Bank needed to comply only with the requirements of Civil Code section 2983.2, the Rees-Levering Act. This was error.   In Creditors Bureau, the court rejected the debtor's argument that the notice of sale was deficient because it did not inform him of the time and place of the auto sale, holding that the Rees-Levering Act did not require this.  (16 Cal.App.3d at p. 562, 94 Cal.Rptr. 145.)   However, that case was decided in 1971, long before the 1984 amendment adding subdivision (b) to section 2983.8, which incorporates section 9504.   Obviously, the case is inapposite.

Noteworthy is the suggestion in Creditors Bureau that in order to give the debtor additional protection, “perhaps [the section] should be amended to require notice of the time and place of sale in addition to the notice requirements now specified.”  (16 Cal.App.3d at p. 562, 94 Cal.Rptr. 145.)   Evidently, the Legislature heard this plea and enacted the amendment to impose the additional requirements contained in section 9504, subdivision (3).   We conclude the trial court erred in holding section 9504, subdivision (3) does not apply to this sale.

II. Notice Requirements For A Sale of Collateral

 The trial court found that the sale was a private sale because the notice was a notice for a private sale.   The court rested its conclusion on the definition of a “public sale” contained in section 9504, subdivision (3).   The last sentence of that provision reads:  “Any sale of which notice is delivered or mailed and published as herein provided and which is held as herein provided is a public sale.” 6  From this, the court reasoned the Bank's failure to include the time and place of the sale in the notice to Lallana automatically made the sale a private one and, therefore, the notice was not deficient.   The distinction is significant since the Bank, as the creditor, is permitted to bid at a public sale, but it can bid only in limited circumstances at a private sale.  (J. White & R. Summers, Uniform Commercial Code (4th ed.1995) § 34-11, pp. 436-437;  e.g., Ford & Vlahos, supra, 8 Cal.4th at pp. 1224-1227, 36 Cal.Rptr.2d 464, 885 P.2d 877 [creditor was sole bidder for repossessed airplane advertised as a public sale];  Ford Motor Credit Co. v. Price (1985) 163 Cal.App.3d 745, 751, 210 Cal.Rptr. 17 [Ford was sole bidder for repossessed milling equipment at public sale, but notice was deficient and Ford was precluded from recovering deficiency judgment].)

 Lallana contends the court's logic is flawed and that a defective notice of a public sale does not immediately convert the subsequent sale into a private sale.   We agree.   The trial court's reasoning is circular.

By including this language in the statute, the legislature was informing creditors of the requirements for notice both to the debtor and to the general public when a public sale is to be held.  (Ford & Vlahos, supra, 8 Cal.4th at p. 1233, 36 Cal.Rptr.2d 464, 885 P.2d 877.)   Read in context, the quoted passage of section 9504, subdivision (3) cannot be interpreted to mean a public sale is converted into a private sale simply because the notice of a public sale was deficient.   That would turn the statute on its head.   Failure fully to comply with the statutory notice is fatal to a claim of compliance with section 9504, subdivision (3), and does not convert the subsequent public sale into an enforceable private sale.  (Ibid.;  Hollander v. California Manufacturing Enterprises, Inc. (1996) 44 Cal.App.4th 561, 566-567, 51 Cal.Rptr.2d 694;  C.I.T. Corp. v. Anwright Corp. (1987) 191 Cal.App.3d 1420, 1422, 1424, 237 Cal.Rptr. 108;  Ford Motor Credit Co. v. Price, supra, 163 Cal.App.3d at p. 747, 750-751, 210 Cal.Rptr. 17;  Atlas Thrift Co. v. Horan (1972) 27 Cal.App.3d 999, 1009, 104 Cal.Rptr. 315;  see First Nat. Bank of Belen v. Jiron (1987) 106 N.M. 261, 741 P.2d 1382, 1384 [conducting a public sale but giving notice of a private sale violates the statute].)   The Bank has cited no case which holds that a defective notice of public sale creates a valid private sale.

Under the Bank's and the trial court's construction, the type of sale is defined by the notice, rather than the specific circumstances attending the conduct of the sale.   The statute cannot be read to permit that result.   Such a construction would nullify an entire body of law detailing the consequences of an invalid notice of a public sale and would foreclose the possibility of a defective public sale.   This interpretation not only violates common sense, it undermines the legislative purpose in requiring notice of the time and place of the public sale, post.

Indeed, if we pursue this reasoning to its logical conclusion, it makes equal sense to hold that an invalid notice of a private sale would automatically create a public sale.   Under this construction, we are placed back at the beginning no better able to define the attributes of a public sale.

The California Legislature adopted the specific notice requirements “to avoid controversy in each case as to whether the notice was reasonable by substituting a definite standard.”  (Cal.Code com., 23C West's Ann. Cal. U. Com.Code, § 9504 (1964 ed.) p. 602, quoting Sixth Progress Report to the Legislature by the Senate Fact Finding Committee on Judiciary (1959-1961) part 1, the Uniform Commercial Code, p. 587.)   The motive behind these changes is further described in Ford Motor Credit Co., supra, 163 Cal.App.3d 745, 210 Cal.Rptr. 17.   Quoting from page 426 of the Sixth Progress Report, the court stated:  “ ‘The Official Text requires that “reasonable notification of the time and place of any public sale must be given” and “reasonable notification” of the time on or after which a private sale will be made, but does not specify either the manner in which notice must be given or the time within which it must be given.   We think both the time and manner of giving notice should be specified, otherwise every sale is open to attack.   A public sale should be defined.   We believe that the requirement that every aspect of the sale be done in “a reasonably commercial” manner is too vague a requirement to be of any value and would only be an invitation to litigation.’  ․ Referring to the above recommendations, the Report on Proposed Amendments to the Uniform Commercial Code, concluded as follows:  ‘This subsection of the Code in effect tells a secured party that he may conduct a valid foreclosure sale of the collateral if he gives “reasonable notice” and acts in a “commercially reasonable” manner with regard to all aspects of the sale.   The California Bankers Committee believe that a secured party, when his debtor is in default, is entitled to more specific instructions as to how he may conduct a valid foreclosure sale, otherwise every sale would be subject to subsequent challenge.   We think so too․’ ” (Ford Motor Credit Co., supra, 163 Cal.App.3d at p. 750, 210 Cal.Rptr. 17, original italics, emphasis added.)

Read in light of the foregoing legislative history, and as part of the entire scheme governing sales of foreclosed collateral, we construe the last sentence of subdivision (3) of section 9504, defining a subsequent public sale, to reflect the legislative purpose to enumerate the steps the creditor must take to make a public sale valid.   Consequently, when a public sale is held and either the notice or commercial reasonableness requirements are not met, the creditor is barred from collecting a deficiency judgment.   The statute makes it clear a creditor may choose to hold a public or private sale.   But, once the choice is made, the notice to the debtor must conform to the requirements set forth in the statute.   We would stand the statute on its head if we were to adopt the Bank's and trial court's construction which defines the type of the sale by the notice given, regardless of the creditor's intention and other indicia of a public sale.   As we discuss immediately below, only after we first ascertain if the sale held was public or private, based on the surrounding circumstances, do we then analyze the adequacy of the notice, not the other way around.

III. Evidence Of A Public Sale

 The question whether a sale of collateral constitutes a public sale is a question of law, based on facts as found by the trial court.   (John Deery Motors, Inc. v. Steinbronn (Iowa 1986) 383 N.W.2d 553, 554.) Whether a sale is public or private is fact intensive and depends on the surrounding circumstances.  (Ford & Vlahos, supra, 8 Cal.4th at p. 1235, 36 Cal.Rptr.2d 464, 885 P.2d 877.)   The Bank argues an auction which is open to the public and by sealed bids is a private, not a public sale, for purposes of section 9504, subdivision (3).   We disagree.

Neither the language of, nor the comments to the official text of Uniform Commercial Code section 9-504, nor the California version thereof shed light on how the bidding must be conducted in order for a sale to qualify as a “public sale.”   The legislative history to section 9504 is also silent on this issue.   No published opinion in this state has addressed the issue whether a sealed-bid auction to which the public is invited is either a public or private sale in the meaning of the statute.   We note, however, comment 1 to Uniform Commercial Code section 9-504 directs us to section 2-706 of the Uniform Commercial Code, which was adopted without change as section 2706.

Comment 4 to the official text of Uniform Commercial Code section 2-706 reads in part:  “By ‘public’ sale is meant a sale by auction.   A ‘private’ sale may be effected by solicitation and negotiation conducted either directly or through a broker.   In choosing between a public and private sale the character of the goods must be considered and relevant trade practices and usages must be observed.”  (Comment, 23A West's Ann. Cal. U. Com.Code (1964 ed.) § 2706, p. 580, italics added;  see Robinson v. Ford Motor Credit Co. (N.D.Ill.1989) 706 F.Supp. 606, 608 [interpreting Illinois' version of U. Com.Code, §§ 9-504 and 2-706 in the same manner].)

 Unfortunately, the comments do not further describe what is meant by an “auction.”   As we discuss below, we conclude that where, as here, a sale is made after competitive bidding to the highest bidder, and where the public was invited and did bid, it is a public sale for purposes of section 9504, subdivision (3).

Other sister-state cases that have addressed the issue have determined that an auction for repossessed autos, where the public attended and was able to bid, was a public sale under the official Uniform Commercial Code section 9-504.   In Beard v. Ford Motor Credit Co. (1993) 41 Ark.App. 174, 850 S.W.2d 23, the court ruled that an auction to which only auto dealers were invited was a “private sale.”   In reaching this conclusion the court relied on the fact that the auction was open only to a certain segment of the car-buying public.   (Id. 850 S.W.2d at pp. 27-28.)   The court defined the elements of a public sale as follows:  “ ‘A sale of collateral is ‘public’ when it is publicly advertised, the sale is open to the public, and the sale is made, after competitive bidding, to the highest genuine bidder;  as at an auction.  [¶] The opportunity of the public to bid at the sale is the essential criterion that determines that the sale is a public sale․' ” (Ibid., quoting 9 Ronald A. Anderson (3d ed.   1985) Uniform Commercial Code, § 9-504:32 at p. 733;  Garden Nat. Bank of Garden City v. Cada (1987) 241 Kan. 494, 738 P.2d 429, 431 [dealers-only auto auction is a private sale];  John Deery Motors, Inc. v. Steinbronn, supra, 383 N.W.2d at p. 555 [same].)

In Bank of Houston v. Milam (Mo.App.1992) 839 S.W.2d 705, the court found a public auction by the sheriff to be a valid public sale.   It defined a public sale as requiring “notice or an invitation to the public to bid, allows the public to engage in competitive bidding, and occurs at a public place or a place accessible to the public.”  (Id. at p. 708.)

Similarly the court in Chrysler Dodge Country v. Curley (Utah App.1989) 782 P.2d 536, recognized that a public sale “ ‘has traditionally meant “a sale in which the public, upon proper notice, is invited to participate and given full opportunity to bid upon a competitive basis for the property placed on sale, which is sold to the highest bidder.” ’․ The requirement of a public invitation is essential for a public sale under the Uniform Commercial Code.” (Id. at p. 539, italics added;  accord Contois Motor Co. v. Saltz (1977) 198 Neb. 455, 253 N.W.2d 290, 295 [auction by sealed bid is a competitive auction];  Liberty Nat. Bank of Fremont v. Greiner (1978) 62 Ohio App.2d 125, 405 N.E.2d 317, 321 [sale by auction with reserve, to which public was invited and allowed to bid, is a public auction].)

The undisputed evidence establishes that this sale contained all the elements appellate courts have found necessary to constitute a valid public sale:  advertisements, widely published in general circulation newspapers inviting all segments of the public to attend;  the sale was by auction to the highest bidder following competitive bidding;  and the sale was held during business hours, at a place to which the public has easy access.   Based on this record, we conclude as a matter of law the sale of Lallana's automobile by sealed bid auction was a public sale within the meaning of section 9504, subdivision (3), and the notice of sale sent to her was deficient since it did not inform her of the date, time and place of the sale as required by the statute.

Relying on Boatmen's Nat. Bank v. Eidson (Mo.App.1990) 796 S.W.2d 920, the Bank ignores the fact that the public-at-large was invited by Faulknor and argues the sale by sealed bid is a private sale within the context of the statute.   There, the advertisement for the repossessed farm equipment indicated that sealed bids would be accepted during the next two weeks, rather than over the course of two days as in our case.   Also, it does not appear that the advertisements informed the public that they may view the machinery prior to the bidding.  (Id. at p. 921.)   We think these differences are sufficient to distinguish our case from Boatmen's.   In any event, we plainly disagree with that court's view that a sealed bid auction is necessarily a private sale, and we decline to follow that case.

Because we hold Lallana should have received a notice of public sale as provided in the statute, but did not, the Bank was barred from recovering any deficiency against her.  (Ford & Vlahos, supra, 8 Cal.4th at p. 1233, 36 Cal.Rptr.2d 464, 885 P.2d 877;  Crocker Nat. Bank v. Emerald, supra, 221 Cal.App.3d at p. 861, 270 Cal.Rptr. 699;  Ford Motor Credit Co. v. Price, supra, 163 Cal.App.3d at pp. 750-751, 210 Cal.Rptr. 17.)

IV. Does The Failure To Give Notice Constitute A Violation Of The Unfair Competition Act?

 We next address the issue of whether the Bank's failure to give the notice required by subdivision (3) of section 9504 to Lallana constitutes an unlawful business practice under section 17200 et seq. of the Business and Professions Code, The Unfair Competition Act (UCA).   The UCA prohibits any act or practice of a business which is “unlawful, unfair or fraudulent.”  (Bus. & Prof.Code, § 17200.)   An “unlawful” business act or practice is one which is “forbidden by law.”  (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 113, 101 Cal.Rptr. 745, 496 P.2d 817.) 7  It is not necessary that the conduct be an anti-competitive business practice.  (Hudgins v. Neiman Marcus Group, Inc. (1995) 34 Cal.App.4th 1109, 1126, 41 Cal.Rptr.2d 46.)   The UCA “․ ‘borrows' violations of other laws and treats them as unlawful practices independently actionable under the UCA.” (State Farm Fire & Casualty Co. v. Superior Court, supra, 45 Cal.App.4th at p. 1103, 53 Cal.Rptr.2d 229.)   The UCA imposes strict liability and, thus, it is not necessary the defendant intend to injure anyone.  (Id. at p. 1102, 53 Cal.Rptr.2d 229.)

 From their briefs, Lallana and the Bank appear to assume that, if we were to conclude as we have, the Bank was required to give Lallana individual notice of the time and place of sale, an unlawful business practice or act has occurred.   We do not agree.   To be actionable under Business and Professions Code section 17200, the business conduct must be “unlawful”-that is, something which is “forbidden by law.”  (Barquis v. Merchants Collection Assn., supra, 7 Cal.3d at p. 113, 101 Cal.Rptr. 745, 496 P.2d 817.)   We do not regard the mere failure to perform an act required by law to be the commission of an “unlawful” act within the meaning of section 17200.8  (Cf. Lee v. Interinsurance Exchange (1996) 50 Cal.App.4th 694, 713-714, 57 Cal.Rptr.2d 798 [actions which are reasonable exercises of business judgment and not forbidden by law cannot constitute unlawful business practices].)   Standing alone, there is no legal sanction which attaches to such an act or failure to act.   This conclusion, however, does not end the inquiry.

In this case, the Bank did more than simply fail to give Lallana specific notice of the time and place of sale.   It then sold the car and sought a deficiency judgment to which it was not entitled under the law. (§ 9504, subd. (2)(b);  Ford & Vlahos, supra, 8 Cal.4th at p. 1233, 36 Cal.Rptr.2d 464, 885 P.2d 877;  Hollander v. California Manufacturing Enterprises, Inc., supra, 44 Cal.App.4th at pp. 567-568, 51 Cal.Rptr.2d 694.)   That conduct, we hold, is an unlawful business act or practice under the UCA.   The Bank's apparent good faith effort to obtain the highest sale price for plaintiff's vehicle by offering it for sale using the sealed bid process on four separate occasions has not gone unnoticed.   Nevertheless, we are compelled by well settled law to conclude that prosecuting an action for a deficiency judgment after a public sale of collateral, without the individual notice being given as required, is an unlawful business practice.   Accordingly, we conclude Lallana has established her claim under Business and Professions Code section 17200, reverse the judgment on Lallana's cross-complaint, and remand with directions for the trial court to enter judgment in Lallana's favor on the unlawful business act or practice cause of action.

This does not end the matter however, since the trial court must still rule on Lallana's prayer for injunctive and restitutionary relief.   We reject Lallana's request that we direct the trial court to grant her and other borrowers specific relief.   What remedy is appropriate is left to the sound discretion of the trial court in the exercise of its general power to grant equitable relief.  (Bus. & Prof.Code, § 17203;  see Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266, 10 Cal.Rptr.2d 538, 833 P.2d 545;  Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758, 773-774, 259 Cal.Rptr. 789.)


The judgment in favor of Bank of America on the cross-complaint is reversed, and the matter is remanded to the trial court with directions to enter judgment in favor of Lallana on her claim alleging an unlawful business act or practice, and to conduct a hearing on the proper remedy consistent with the views expressed herein.


1.   At the time of the sale, that section read:  “As used in this chapter, unfair competition shall mean and include unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by [Business and Professions Code section 17500 et seq.]”

2.   All statutory references are to the California Uniform Commercial Code unless otherwise specified.

3.   Williams was later dismissed from the lawsuit after declaring bankruptcy and is not a party to this appeal.

4.   In pertinent part the notice stated:  “If you have not reinstated the contract or redeemed the vehicle within the time shown above, including the extended period (if properly requested) the vehicle will be sold after that period;  ․”

5.   The notice of intent to sell must notify the borrower of:  (1) the right to redeem the vehicle within 15 days, and supply an itemized statement of the balance of the contract and other charges;  (2) the right to reinstate the loan contract or the reason why reinstatement is unavailable;  (3) the right to extend the redemption and reinstatement periods for 10 days upon request;  (4) the place where the vehicle may be picked upon redemption or reinstatement;  (5) the address of the person to whom payments are to be made;  (6) the holder's intent to sell the vehicle in the absence of a timely redemption or reinstatement;  (7) the right to request an accounting of the sale;  and (8) a statement in 10-point bold type that the borrower may be sued for a deficiency if the vehicle's sale price is “insufficient to pay the contract balance and any other amounts due.”  (Civ.Code, § 2983.2, subd. (a)(1-8).)

6.   In adopting its version of the Uniform Commercial Code in 1963, California's Legislature rejected the official text of section 9-504, subdivision (3), which requires only “reasonable notification of the time and place of any public sale.”   Instead, the Legislature set out specific requirements for notice to both the debtor and the general public for a public sale.  (See comment, 23C West's Ann. Cal. U. Com.Code, § 9504 (1990 ed.) pp. 596-597;  see also Ford Motor Credit Co. v. Price, supra, 163 Cal.App.3d at pp. 749-750, 210 Cal.Rptr. 17.)

7.   The “unfair” and “fraudulent” prongs of Business and Professions Code section 17200 provide an independent basis for relief.   (State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal.App.4th 1093, 1103-1105, 53 Cal.Rptr.2d 229.)

8.   However, such a failure could constitute an “unfair” business practice under appropriate circumstances.

PHELAN, Presiding Justice.

PARRILLI and WALKER, JJ., concur.

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