Johnson v. Advanced Air Solutions Inc.

Background

Charlene Johnson purchased a Kirby vacuum cleaner on credit in August 2017. In February 2018, salesperson Eric Garcia allegedly offered to sell her a Rainbow vacuum cleaner and promised that Advanced Air Solutions, Inc. would pay the remaining Kirby balance. Johnson surrendered the Kirby vacuum and signed a purchase agreement for the Rainbow vacuum, but she alleged that Advanced Air never paid the Kirby balance.

Johnson alleged that the Rainbow purchase agreement violated the federal Truth in Lending Act (TILA), California’s Home Solicitation Sales Act (HSSA), and California’s Consumers Legal Remedies Act (CLRA). She sued Advanced Air and Castle Credit Co. Holdings, LLC. Johnson and Castle Credit later stipulated to dismissal with prejudice, so Castle Credit’s liability was not at issue in this motion.

Advanced Air was served but did not respond or appear. The clerk entered default against Advanced Air, and Johnson then requested default judgment. A default judgment is a judgment entered against a party that failed to defend the case.

Jurisdiction and Default Judgment

The court found that it had federal-question jurisdiction over the TILA claim and supplemental jurisdiction over the related state-law claims. It also found that Advanced Air was subject to general personal jurisdiction in California because it was incorporated there and had its principal place of business there. The court determined that service through the California Secretary of State was proper.

Applying the factors used to decide whether default judgment is appropriate, the court found that Johnson had adequately pleaded all three claims. Because Advanced Air had defaulted, the court treated the well-pleaded allegations about liability as true, but Johnson still had to provide evidence supporting the amount of damages. The court concluded that the factors supporting default judgment outweighed the general policy favoring decisions after a contested hearing.

Claims

For the TILA claim, the court found that Johnson adequately alleged that Advanced Air failed to disclose the required finance charge. The court did not decide her alternative allegations concerning disclosure of the annual percentage rate, total of payments, or payment schedule because the finance-charge allegation was sufficient. The court also noted that Johnson sought only statutory damages for this claim.

For the HSSA claim, the court found that Johnson adequately alleged that the cancellation notice used type smaller than the required 10-point size and listed an incorrect seller address. The court accepted Johnson’s allegations that she canceled the contract and that Advanced Air failed to respond as required. It granted her request for a declaration that she could keep the Rainbow vacuum without further obligation to pay Advanced Air.

For the CLRA claim, the court found that Johnson adequately alleged that Garcia falsely promised Advanced Air would pay the Kirby balance. The court concluded that those allegations stated claims based on misleading statements about an economic benefit and the salesperson’s authority to negotiate the transaction.

Relief Awarded

The court awarded $2,459.76 in actual damages for the unpaid Kirby balance. It awarded $2,000.00 in statutory damages under TILA, applying the statutory cap for an individual action. It awarded $2,088.00 in attorney’s fees after excluding one hour of paralegal time for lack of supporting information about the requested rate. It also awarded $551.27 in service-related costs.

The total monetary award was $7,099.03. The court also declared that Johnson could retain the Rainbow vacuum without further obligation to pay Advanced Air. The court granted Johnson’s motion for default judgment against Advanced Air.