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Yu v. Signet Bank/Virginia, et al.

Alameda County Superior CourtCase No. H-184674-8

Case Type:  Consumer Rights

A proposed statewide consumer class action alleging that defendant Signet Bank/Virginia and its successor engaged in a long-term unlawful business practice of filing collection actions against California consumer credit card customers in municipal courts in the State of Virginia, knowing such practice to be illegal, for the purpose of obtaining unconstitutional default judgments and wage garnishment orders in Virginia which were then enforced against California consumers without having been domesticated in the courts of this State.  Defendants’ motion for summary judgment was granted on February 18, 1997.  In February 1999, the Court of Appeal reversed.  Yu v. Signet Bank (1999) 69 Cal.App.4th 1377.  It held that the complaint properly alleged abuse of process for an out-of-state credit card issuer to sue California residents in the municipal court in Richmond, Virginia without obtaining personal jurisdiction and then seeking to garnish the wages of the California resident through a Virginia office of the California employer.

On remand, the trial court sustained a demurrer to an amended complaint on the ground that defendants’ distant forum abuse policies and practices were protected by the litigation privilege, Civil Code § 47(b), and that Barquis v. Merchants Collection Association (1972) 7 Cal.3d 94, on which the Yu I court ruled, had been sharply limited by subsequent cases.  The trial court deemed as moot defendants’ motion under the anti-SLAPP statute, Code of Civil Procedure § 425.16, based upon the litigation privilege and the First Amendment.  The parties filed separate appeals.

On October 30, 2002, the Court issued an opinion reversing the judgment sustaining the demurrer based on law of the case and affirming denial of the special motion to strike under the anti-SLAPP statute.  Yu v. Signet Bank/Virginia (2002) 103 Cal.App.4th 298, 126 Cal.Rptr.2d 516 (Yu II).  In sweeping language, the Court held that plaintiffs have a cause of action under Barquis for abuse of process based on the banks’ practice of distant forum abuse and also for violation of the Unfair Competition Law, Bus. & Prof. Code § 17200.  Separately, the Court held that plaintiffs met the “minimal merit” prong of the standard relative to the plaintiffs’ possibility of success on the merits, citing Navellier v. Sletten (2002) 29 Cal.4th 82, 89.  At trial, the Court of Appeal held that, in addition to their economic damages, plaintiffs could recover damages for emotional distress and punitive damages “if their allegations of malice or oppression are credited.”  126 Cal.Rptr.2d at 533.  Independently, it held that plaintiffs had demonstrated a probability of success on their underlying claim, as they had presented triable issues of fact on their abuse of process and Unfair Competition Law claims previously.  After remand, the case settled for nearly $15 million.

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