Dekker v. Vivint Solar, Inc.

Background

Plaintiffs brought an action for unfair business practices against Vivint Solar, Inc. and other defendants. Vivint installs solar panels and sells customers the energy produced under twenty-year power purchase agreements. The complaint alleged that the agreements contained unlawful liquidated-damages provisions. The parties grouped the agreements into Older PPAs and Newer PPAs.

Vivint moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), which allows a party to seek judgment after the pleadings are closed. The court explained that this analysis is functionally the same as deciding whether a complaint states a legally sufficient claim. Vivint also sought to compel plaintiff Bautista to arbitrate or, alternatively, obtain judgment on the pleadings against his claims.

Liquidated-damages provisions

Under California law, liquidated-damages contracts are generally void, while a valid alternative-performance provision gives a party a realistic and rational choice of how to perform. A provision may still be an unenforceable penalty if it appears to offer alternatives but actually requires one definite performance and imposes additional charges when that performance is not completed.

The court held that judgment on the pleadings was premature because the validity of the provisions presented factual issues requiring judicial determination. The Older PPAs listed multiple remedies for customer default, including demanding a default payment, taking back or disconnecting the system, and pursuing other remedies. The agreements also stated that Vivint would transfer ownership after payment. The court found that these provisions could conflict and could allow Vivint to demand payment while pursuing additional remedies, suggesting a penalty or forfeiture.

The Newer PPAs likewise allowed multiple remedies and expressly stated that the remedies were cumulative and not exclusive. The court concluded that plaintiffs had sufficiently alleged that the termination provisions in both sets of agreements could impose invalid liquidated damages.

The court also found factual issues concerning provisions that applied when a customer sold a home or moved. The Older PPAs required payment if the new homeowner would not or could not assume the agreement. The Newer PPAs described several options, including assignment, prepayment, relocating the system, or early purchase. But the court concluded that, viewed in plaintiffs’ favor, these provisions could function as penalties for failing to maintain the twenty-year contract rather than as genuine alternatives to performance.

The court rejected Vivint’s argument that plaintiffs had not alleged a breach of contract. The complaint challenged the validity and enforceability of the termination provisions, and the court found that plaintiffs had adequately alleged provisions triggered by breach, fixed charges, and resulting injuries. The court therefore stated that the validity issue should wait for summary judgment or trial.

Limitations periods

Vivint argued that plaintiffs’ claims were untimely. The court rejected the argument, relying on reasoning from earlier orders concerning accrual, the discovery rule, and continuing violations. Judgment on the pleadings based on a statute of limitations is appropriate only when untimeliness appears on the face of the complaint. Viewing the facts in plaintiffs’ favor, the court found that the claims were not facially untimely.

Bautista’s arbitration request

The court refused to treat Vivint’s request to compel Bautista to arbitrate as a proper Rule 12(c) motion because it repeated an earlier argument and functioned as a request for reconsideration. The court also considered the substance of the request and stated that it still failed. The court relied on the allegation that Bautista had virtually no English proficiency and that the arbitration agreement arguably never formed because his conduct could not reasonably be understood as assent to it. The court stated that its reasoning rested on basic California contract-formation principles, not on the California Translation Act.

Bautista’s translation-based unfairness claim

Vivint separately challenged Bautista’s California Business and Professions Code section 17200 unfairness claim based on an alleged failure to provide a translation of the agreement. The court explained that an unfairness claim may be based on conduct that is not independently unlawful, but the complaint must allege unfairness beyond a violation of a statute when no separate, live claim based on that statute remains.

The court found that the second amended complaint focused only on alleged Translation Act violations and did not sufficiently explain how or why Vivint’s conduct was unfair under the unfairness prong of section 17200. The court therefore granted Vivint’s motion to the extent Bautista’s section 17200 claim alleged unfairness based on Translation Act violations.

Disposition

The court denied Vivint’s motion for judgment on the pleadings as to the liquidated-damages claims and the derivative California Legal Remedies Act and section 17200 claims. The court granted Vivint’s motion regarding Bautista’s section 17200 claim to the extent it alleged unfairness based on Translation Act violations. Plaintiffs had fourteen days from the order’s date to file a motion for leave to amend, accompanied by a proposed amended complaint and a redlined copy.