New UCL "unlawful" prong decision: SC Manufactured Homes, Inc. v. Canyon View Estates, Inc.

This case came down shortly before all the excitement surrounding In re Tobacco and Pfizer. In SC Manufactured Homes, Inc. v. Canyon View Estates, Inc., ___ Cal.App.4th ___ (Oct. 27, 2006), the plaintiff's UCL "unlawful" prong claim was predicated on an alleged violation of the Mobilehome Residency Law ("MRL") (Civ. Code §§ 798 et seq.). After filing suit, the plaintiff voluntarily dismissed some of the defendants from the action. Slip op. at 9. Those defendants moved for attorneys' fees under the MRL, which has an attorneys' fees provision. Id. The trial court denied the motion, and the Court of Appeal (Second Appellate District, Division Three) affirmed. Id. at 10.

The Court of Appeal expended a great deal of energy examining whether the action "arose out of" the MRL. Id. at 10-21. However, the case could have been resolved much more simply. The UCL's "unlawful" prong "borrows" the underlying statute's liability provisions; it does not "borrow" the underlying statute's remedies. UCL remedies are limited to restitution and injunctive relief. Attorneys' fees are unrecoverable in this action because the UCL has no attorneys' fees provision, even if the underlying, "borrowed" statute does. The reasoning is similar to that employed by federal courts when they hold that a UCL "unlawful" prong claim predicated on an alleged violation of federal law does not "arise under" federal law and is therefore not removable to federal court.

Comments

[ron]

Are there citations to the liabilities not remedies doctrine? It's important and I did not know that. I sometimes sue under both the 17200 and consumer acts containing attorney's fee provisions available to either party (in the case of bad faith). Seems like that might be unwise, although since a finding of public interest is required for 17200, it seems both may be necessary. Would a court infer public interest if a consumer protection statute is borrowed in a 17200 case?

[Kimberly A. Kralowec]

I can't provide a citation to a specific case that says that explicitly. However, the conclusion is compelled by myriad cases that say that UCL remedies are limited to restitution and injunctive relief, coupled with the myriad cases that state that the UCL's "unlawful" prong may "borrow" any other law, including those for which a private right of action is available. Plaintiffs often "borrow" laws with attorneys' fees clauses, for example, but that part of the law is not also "borrowed." The only area of practice that I'm aware of in which part of the remedy might be "borrowed" is in the context of penalty provisions.

In answer to your question, if you are seeking fees under the private attorney general doctrine of Code of Civil Procedure section 1021.5, then I don't see why the court would analyze the public interest question differently if the complaint alleged a UCL claim but not a direct statutory claim. Perhaps the court might be more likely to find the public interest element satisfied if the underlying statute has an explicit consumer protection purpose.