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Court of Appeal:
Debtor May Sue for Statutory Damages Absent Actual Damages
Justices Say Provision of Civil Code Allows Award of $100-$1,000 Where Purchaser of Past-Due Obligation Sends Letter Demanding Payment Which Does Not Conform to Legal Requirements, Even Though No Harm Is Caused
By a MetNews Staff Writer
The Sixth District Court of Appeal held Friday that where a purchaser of a debt sends a dunning letter that does not meet the statutory requirements, the recipient of that communication has a cause of action for statutory damages even in the absence of any actual damages.
Justice Cynthia C. Lie authored the opinion which reverses a judgment on the pleadings granted by Santa Clara County Superior Court Judge Theodore C. Zayner in favor of defendant Velocity Investments, LLC, in a class action brought by debtor David Chai. Zayner determined that Chai lacked standing because, although he had received a non-conforming letter, he had incurred no harm.
At issue is whether statutory damages are available under Civil Code §1788.62 in the absence of actual damages. The statute says, in part:
“(a) In the case of an action brought by an individual or individuals, a debt buyer that violates any provision of this title with respect to any person shall be liable to that person in an amount equal to the sum of the following:
“(1) Any actual damages sustained by that person as a result of the violation, including, but not limited to, the amount of any judgment obtained by the debt buyer as a result of a time-barred suit to collect a debt from that person.
“(2) Statutory damages in an amount as the court may allow, which shall not be less than one hundred dollars ($100) nor greater than one thousand dollars ($1,000).”
Lie’s Opinion
Lie wrote:
“The meaning and math of this provision are plain.”
She said that under subd. (q)(1), there’s a right “to actual damages if ‘[a]ny’—and without limitation.”
Continuing, the jurist declared:
“But ‘the sum of’ actual and statutory damages signifies that actual damages only add to a debt buyer’s liability under the Act, not that the absence of actual damages negates it. The Legislature could have set statutory damages as a percentage or product of actual damages, leaving zero entitlement to statutory damages when actual damages were nonexistent. It did not: Instead, the Legislature left the court discretion to award statutory damages within the prescribed range of $100 to $1,000, without requiring or even suggesting the court factor the actual damages in deciding what statutory damages to allow.”
Legislature’s Intent
Velocity argued that if the Legislature had intended to authorize suits under §1788.62 in the absence of actual damages, it would have referred to “statutory penalties” rather than “statutory damages.” Lie responded:
“The Act expressly authorizes consumers who receive noncompliant collection letters to sue for the violation of their statutory rights, and nothing in the statute suggests that any injury beyond the noncompliance is required to impose civil liability per named plaintiff. Because the statute is unambiguous, its plain meaning controls.”
Velocity’s letter to Chai allegedly failed to conform to the requirements of Civil Code §1788.52(d)(1) which provides that “[a] debt buyer shall include with its first written communication with the debtor in no smaller than 12-point type, a separate prominent notice an advisement” of the right to request records containing certain information.
The case is Chai v. Velocity Investments, LLC, 2025 S.O.S. 344.
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