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Unfair Competition By statute, California prohibits the following types of unfair competition as (1) any unlawful, unfair or fraudulent business

act or practices; (2) any act prohibited by Business and Profession Code section 17500; or, (3) any unfair, deceptive, untrue or misleading advertising. This law is broad in scope. It is not confined to anticompetitive business practices, but is also directed toward the public’s right to protection from fraud, deceit and unlawful conduct. It is not a substitute for contract or tort actions, but provides an equitable means through which both public prosecutors and private individuals can bring suit to prevent unfair business practices and restore money or property to victims. Courts have repeatedly recognized the importance of private enforcement efforts. As noted below, it can be an effective tool with respect to claims arising from mortgage originations, predatory lending practice or foreclosure related actions. A plaintiff must have standing to assert a cause of action for unfair competition; the same requirements apply to causes of action under section 17200 and 17500. Plaintiff must show (a) injury in fact, (b) lost money or property and (c) causation. Where the alleged harm is economic injury, injury in fact and lost money or property are one and the same. There are innumerable ways in which economic injury may occur; a plaintiff may (1) surrender more or acquire less than he or she otherwise would have; (2) have a property interest diminished; (3) be deprived of money or property; or, (4) enter into an unnecessary transaction that costs money or property. First, an unfair business act or practice is broadly defined. The broad language enables courts to deal with the innumerable new schemes which the fertility of man’s invention would contrive. An unfair business act or practice need only meet one of the three statutory criteria: it can either be unlawful, unfair or fraudulent. Since 1992 even a

Violations of laws for which there is no direct private right of action be redressed as an unlawful business act or practice. Fair Housing Act [prohibits lending and other housing discrimination]. state or local law. unfair or fraudulent. A breach of contract may form the basis of an unfair practice only if it constitutes conduct that is also unlawful. Liability requires personal participation in the act. civil. In evaluating . however. there is a potential for federal preemption. however. but an employer is bound by the doctrine of respondeat superior. even if they are nonprofit entities. Governmental entities. are not included.single act may create liability. title companies. even it one never intends to enforce it satisfy the unlawful prong. Specific defenses available against a violation of the borrowed are applicable to the unlawful practice claim. including criminal. real estate agents. Possible federal violations arising in the origination. regulatory or common-law and court-made rules. Past and completed acts are included and it need only impact a single victim. cannot defeat such a claim. Lenders. and others involved in the origination. may engage in unfair competition. lending and foreclosure process would be covered. Where a federally regulated institution or a federal law is involved. Equitable defenses. An act or practice is unlawful if it violates any federal. and the Real Estate Settlement Procedures Act [regulates loan documentations and closing process and limits markups and kickbacks]. Assertion of a contract right one does not have or inclusion of an unlawful provision in a contract. All elements of the borrowed law must be established. Home Ownership and Equity Protection Act [regulates specific high cost loans]. lending and foreclosure process include: the Truth in Lending Act [mandates disclosures and requires a properly completed and delivered right to rescind notice]. Persons or entities that deal with the public.

provide for the action or prohibit the challenged conduct. justifications and motives of the alleged wrongdoers. No prior determination of unfairness is required and industry custom is no defense. Foreclosure Consultant Act [regulating persons who assist persons in foreclosure]. Some courts have adopted the test used by the Federal Trade Commission that requires (a) the injury to be substantial. (c) the injury could not have readily been avoided. some uncertainty about the appropriate definition in the consumer context. however. a law must actually bar the action or clearly permit the conduct. and. This safe harbor rule does not prohibit an action because some other statute on the subject does not. Given this uncertainty. however. State laws that may apply include Home Equity Sales Contract Act [regulating transfers of homes in foreclosure]. Falsifying loan application to qualify a borrower and .potential claims. This prong sweeps within its scope acts and practices not specifically proscribed by any other law. Some courts require that unfairness must be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition. federal preemption issues may arise. however. The unfairness prong is intentionally broad so as to allow courts maximum discretion to prohibit new scheme to defraud. Conduct that is lawful. Other courts adhere to a balancing test that weighs the unfair practice’s impact on its alleged victim against the reasons. There is. cannot be unfair. and Fair Employment and Housing Act [prohibits lending and other housing discrimination]. itself. (b) the injury to outweigh countervailing benefits to consumers or competition. courts may apply all three standards before dismissing a claim. Fair Debt Collection Practices Act [regulates manner in which debts are collected].

the manner in which a third party guarantee in connection with a nursing home was found deceptive. misleading is based on a reasonable consumer standard. for purposes of standing the plaintiff. perform services. or enter into any other related obligation. Charging periodic inspection fees to delinquent residential borrowers is not an unfair practice.deceptively inducing a borrower into a loan with unfavorable terms has been found to be unfair and fraudulent. It encompasses not just false statement. actual deception or confusion is not required. Second. A borrower has an . Use of words that have double meaning cannot escape liability. but those statements that may be accurate on some level. whether in an individual case or class action. No specific intent to deceive is required. A statement is false or misleading if members of the public are likely to be deceived. Allegations that a lender placed borrowers into unsuitable mortgage product resulting in loss of equity may be an unfair practice. Unconscionable terms in a contract may constitute an unfair practice. Thus. however. In the absence of evidence that the advertising targeted particularly vulnerable consumers. An act is fraudulent if members of the public are likely to be deceived. causation and actual reliance. Statements made to individuals about a loan come within the meaning of section 17500. For purposes of standing. the standard is that of the ordinary consumer acting reasonably under the circumstances. rather than the least sophisticated consumer. must demonstrate injury. It does not require advertising or even a representation. The fraud prong has little resemblance to common law fraud. Unless the representations target a particularly vulnerable group. Business and Profession Code section 17500 prohibits the making of false or misleading statements intended to induce any person to dispose or real or personal property. but will nonetheless tend to mislead or deceive.

Since there is no specific statute of limitations that governs claims under section 17500. Such actions can be maintained as a representative or class action if the requirements of a class action are met and the representative plaintiff has standing. These statutes of limitations should run from the date of discovery. A systematic scheme by lenders to steer borrowers into loans that were the most lucrative to the lender on the secondary market by representing to borrowers that it was the best loan for the borrower. Unless the action is brought by a public prosecutor. The statute of limitations is four years under section 17200. it is assumed that it is governed by the shorter. a false advertising under section 17500 is also an unfair practice under section 17200. remedies are limited to equitable relief in the form of . Finally. A false or misleading statement that is actionable under the Landham Act is also actionable under section 17500. Standing to assert such a cause of action requires that the plaintiff have a transactional nexus with the underlying act or practice such that he or she has suffered injury in fact and has lost money or property as a result of the unfair competition. This result may be different if the borrowed statute is a federal statute which has a shorter limitations period then based on principles of preemption the shorter federal statute controls. without having performed any appropriate analysis is also actionable. False advertising to quote a certain interest rate and then compute it on 360-day year rather than a 365 day year even though TILA disclosure accurately reflected actual rate. These statutes of limitations generally govern over any shorter statute of limitations. general three-year statute of limitations provided in Code of Civil Procedure section 338(h).actionable claim against a lender for as hidden fees.

Rptr.Rptr. v. 112. (2009) 171 Cal. 180. Inc. 131 Cal. Injunctive relief is not available to wrongs that have been completed.injunction. 83 Cal. 325.App. Kraus v.3d 543. UFW v. Inc. one is not entitled to a jury trial. 101 Cal. Id. (2003) 29 Cal. disgorgement of moneys received and/or restitution. AT&T Wireless. 66 Cal. 1345.App. (1007) 54 Cal. Buckland v.4th 939. (2007) 155 Cal.2d 548. damages are not recoverable.2d 485.Rptr.3d 94.App. Kasky v. 99 Cal. Ca. 120 Cal.4th 1134. Bronco Wine Co. Attorney fees are not recoverable unless they are otherwise authorized by contract or a statute. (2009) 177 Cal. Nike.App. Squaw Valley Ski Corp. 1163-1164. the goal of restitution is to restore plaintiff to the status quo ante. 119 Cal.4th 1146. Hewlett v. Farmers Group.Rptr.3d 432.Rptr.Rptr. 520.Rptr. While the distinction between damages and restitution can be elusive. Trinity Management Services (2000) 23 Cal. Bus. v. Merchants Collection Assn (1972) 7 Cal. Cellular (1999) 20 Cal. Code §17200.App. Morgan v. Allied Grape Growers v. Lockheed Martin Corp.3d 118.Rptr. 1150.. absent a showing that past violations will probably reoccur.4th 499. Barquis v. & Prof. 100 Cal.4th 116. 453. 949. 63 Cal. Since these private remedies are not punitive. 249 Cal.3d 296.3d 74.Rptr. 872. The remedies are cumulative to those impose under other laws.4th 1235. L.App.A. statutory penalties and punitive damages are not recoverable by a private party. Korea Supply Co.4th 310. Cel-Tech Communications v. Inc.Rptr. Superior Court (2011) 51 Cal. Troyk v. As these actions are equitable in nature. (2002) 27 Cal. 96 Cal.Rptr. 819. (1988) 203 Cal. Dutra Farms (2000) 83 Cal.4th 798.4th 163. Threshold Enterprises Ltd. Code §17203. & Prof. 1254.3d 768. 125. Ca. Kwikset Corp.2d 251. 745.4th 1305. 90 Cal.Rptr.3d 589. Bus.2d 29. .

Amparan v. Countrywide Home Loans. 12 U.2d 419. Ca. 1068.2d 301. 11711172. Ca.App. People v. et seq.Rptr.A. 155. et seq.Rtpr. 878-879.App. Inc.Supp.4th 654. 203 Cal. (1999) 72 Cal.C.3d 1164. 473474. Wells Fargo Home Mortg.V.S. et seq.App..Rptr. Ca.4.Puentes v. Wells Fargo Home Mortg.3d 370. Podolsky v. 1010. 2008) 531 F.3d 653.Supp.. 918. Inc. 642.D. (2008)160 Cal.App. Crawford v.App. Inline Inc. 15 U. General Motors Acceptance Corp. 943. Inc. Smith v. (N. Milk Producers Advisory Bd. 77 Cal. Tomson (1984) 160 Cal.Rptr. 543. Ca. 1996) 933 F. (2008) 160 Cal. 728. Home Savings of Amer.3d 1.D. Ins.4th 1453.App. 1226. 838-839. v. McKale (1975) 23 Cal. Civ. Inc.Rptr.Rptr. Conder v. 811.Rptr. 58 . 2010) 680 F. 1480. et seq. Ca. (1998) 19 Cal. 80 Cal. Velazquez v.S. et seq. 207 Cal. Plaza Home Mortg.4th 632. Civ.D. Holding Co.Rptr.App.4th 26. Co. 43. 870. (9th Cir. A. Blue Shield of Cal. §1601. § 2601.4th 871.App. Ca.3d 900.2d 709. v Stewart Title Guaranty Co. 159 Cal.3d 216 Saunders v. Ticconi v. 635.3d 1007. Grimes v. Ca. Morales v.Supp. Inc.3d 626. First Healthcare Corp.Supp.App. L.. (C.4th 528. v. 673.C. Civ. People v. 1175 [national savings and loan]. 22 Cal. (C.D.C. 72 Cal. 23 Cal. People v.App. Summit Tech. 42 U.3d 459. v. §1639. Martinez v.Rptr.D.3d 888.2d 1225. Cal. Code §2945.2d 438. 186 Cal.Supp. 554-556 [national bank].4th 861.Rptr.App. (C.3d 903. National Ass’n of Realtors (1981) 120 Cal. 976 [TILA violations not preempted but conduct lawful under TILA is preempted].2d 1044.Rptr. 33 Cal.4th 895. 386. Quelimane Co. Ca. 645. (1984) 160 Cal. 866 [Christian Yellow Pages]. Pines v. GMAC Mortg. (2005) 125 Cal. Gov. 2008) 605 F.3d 549. 206 Cal.App. 15 U. 2010) 598 F. High-Line Medical Instruments.4th 832.. Wells Fargo Bank. Superior Court (1994) 27 Cal. (2005) 125 Cal. et seq. South Bay Chevrolet v. (1966) 50 Cal. 2003) 340 F. Toomey (1984) 157 Cal.App. 647.. Code §1788. N. Ca. People v. 15. Inc. (C.2d 1168. 85 Cal. 72 Cal. Corp. §3601. People for Ethical Treatment of Animals.Rtpr. New Century Mortgage (9th Cir.Rptr. 2008) 678 F. Code §1695. Code §12955.C. (2006) 135 Cal. Farmers Group.S.2d 961.4th 638.Rptr.S. Duz-Mor Diagnostic Laboratory (1998) 68 Cal. 36 Cal. Co. 902.

129 .D.R.2d 89.Rptr. Hauk v. See American Philatelic Soc.App. Walker v.3d 296 Cal-Tech Communications. Co.2d 135.3d 913.Inc.Rptr. Cal. Bd. Automobile Club of S. Toomey (1984) 157 Cal. 48 Cal. Similia v. Ca. 55. Crocker Nat’l Bank (1985) 38 Cal. Corp. (2002) 104 Cal. 203 Cal. 519.3d 46. (9th Cir.Rptr. Los Angeles Cellular Tel. (2002) 27 Cal. 2010) 2010 U. Cal. 127 Cal.4th 163.3d 1.3d 1114. Albertson’s Inc. First Healthcare Corp. (2002) 104 Cal. v. Sanchez v. 504. General Foods Corp. 2009) 263 F. Automobile Club of S. 312-314. 31 Cal.4th 496.S. of Chiropractic Examiners (1963) 216 Cal. 38 Cal.App.4th 1158 1175-1178. 58 Cal.Rptr.4th 845.Rptr. Nike. 642. 345. Dist. Camacho v. 876. In re Tobacco II Cases (2009) 46 Cal.Rptr. Stewart Title Guar. 586. 128 Cal. 216 Cal. Dist. Claibourne (1935) 3 Cal.3d 36.Cal. v. Drum v. Procter & Gamble Co. San Fernando Valley Bar Ass’n (2010) 182 Cal. (2002) 98 Cal. 679. Podolsky v.3d 559.2d 389.Rptr.Rptr. (2006) 142 Cal. Colgan v. Perdue v. Indymac Federal Bank (E. Inc.3d 197. v.Rptr. 781.2d 79.App. (1996) 50 Cal. 1403.2d 89. Bank of America (976) 15 Cal. Walker v. (2003) (1998) 19 Cal. 106 Cal. JP Morgan Chase Bank.4th 508. 77 Cal.App. Ca. Inc.2d 79.4th 247. 709.Rptr. 1122.Rtpr. 121 Cal. 110. Ca.Rptr. Countrywide Home Loans. 591. LEXIS 108440 *14-16 [dismissed because not sufficient allegations that misconduct tethered to underlying law]. American Sterling Bank (S. (1999) 20 Cal. Co. 187.Rptr. 16.3d 770. 2010) 2010 U.4th 1394.App.App. Committee on Children’s Television v. 197 Cal.Rptr. 48 Cal. 2009) 552 F. 46 P.D. LEXIS 46043 *16-17 [unfair if can be tether to any underlying law]. (2006) 142 Cal. 256-257. People v. Countrywide Home Loans. People v. Fremont Life Ins. 110. (S. 83 Cal.App.Rptr. 949.4th 26. Hardy v. 379.Rptr.App. 119 Cal. (2006) 135 Cal. Garvai v. 93 Cal.3d 866. Gregory v. 211.2d 548.Rptr. Bear Stearns Residential Mortg. (1983) 35 Cal.D. Inc.App.4th 1158 1170. Chern v. Camacho v. Lavie v. (2003) 105 Cal. Quelimane Co. (2002) 98 Cal.Rptr. 121 Cal.4th 663. 927-928. 854.4th 298.3d 25.3d 770. 128 Cal. Leathern Tool Group.2d 374.D.Inc. 1400. Kasky v. 53-36.Rptr.App.2d 689. 182. Co.4th 632. James (1981) 122 Cal.S.App. 696699.App. People v. 649.App. 177 Cal.Rptr.4th 1394.2d 463.4th 939.

771. 84 Cal. L.975-976. Jefferson v.Rptr.App.2d 518 [wage claim not subject to shorter Labor Code statute of limitations].Rptr. 23 Cal.App. aff’d (9th Cir. 2006) 421 F.Cal. Guardian Life Ins. 107 Cal. High-Line Medical Instruments.4th 1054. Perot Systems Corp.4th 986. 127 Cal.2d Supp. (S. Inc. (2010) 183 Cal. but see Salenga v.2d 486.3d 925.3d 532.2d 1315. 173. Cellular (1999) 20 Cal. 119 Cal. 2007) 2007 US Dist. Pineda v.3d 216. (2008) 167 Cal.Rptr.App. 2009) 601 F. Bank of America Corp.Rptr. Korea Supply Co. compare People v.D. Inline. (S. 30 Cal. (2000) 23 Cal. Madrid v. People v. 178-179. Chern v. 121. Co.Rptr.4th 939.D.Rptr.14.3d 377. (C. 1146-1147. 90 Cal. 104 Cal.Rptr. Co. 10 Cal. Inc.4th 1134. 1220. Ca. 614-615.Rptr. Inc.Supp. 876.Rptr.2d 548. 465. 117 Cal.3d 1001.4th 895. Troyk v.4th 605. 1996) 933 F.4th 1305. 996. 1007 n.D. Bus.Rptr2d 29. 918. Lockhead Martin Corp. 112 Cal. Cel-Tech Communications v. 920-921. . 950. (2005) 125 Cal.App. Orange County Charitable Services (1999) 73 Cal.4th 163.Supp. Co. 1122. (C. (2005) 130 Cal.2d 253 [public prosecutor can recover statutory penalties]. Cortez v.L. Bank of America (1976) 15 Cal. 903. 24 Hour Fitness. 2008) 514 F. Holding Co. Broberg v. (2009) 171 Cal.App. 2009) 609 F. 83 Cal.A. Silvas v.A. Clark v. E*Trade Mortgage Corp. 110. 131 Cal. Purolator Air Filtration Products Co.2d 296. Bank of the West v.3d 866. 2005) 2005 US Dist LEXIS 39222 *40 n 17 [conceding 3 year statute applies]. Inc.Supp. People v. Superior Court (2010) 50 Cal. (2010) 50 Cal. Chase Home Financial (N.3d 386 [no discovery rule]. & Prof. Brewer v.Rptr. 90 Cal. v. Farmers Group.2d 538. 943. 87 Cal.V. Bank of America.2d 1104. 773. 1401-1402 n..2d 1201.4th 966. 1076.4th 1389. (2002) 27 Cal.4th 163. Kasky v. Bus.App. Ca. Mitsubishi Motors Credit of America.Rptr. (2003) 29 Cal. Corp. & Prof. Ca.Rptr. Inc. v. 13451350. supra. Code §17205. of America (2009) 171 Cal.3d 876.D.App. Cazares v.Rptr.D.Supp. v.App.3d 210.4th 912. Code §17208. Leyvas v.App.Rptr. Summit Technology. Inc.3d 589. Ca. Household Fin. LEXIS 94652 *50.4th 1254. Indymac Bank (E.4th at 532.D. Ca. Nike. Harper v. 1266. Fremont Life Ins. N.Rptr.4th 440. 96 Cal. Superior Court (1992) 2 Cal. A. Ca. Wahl (1940) 39 Cal.App. 3.

. 284-285.Rptr.3d 519. Superior Court (2006) 145 Cal.4th 278. 51 Cal.App.Hodge v.