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A Pragmatic Approach to the Single Document Rule Cont’d

In a previous positing, I discussed the implications of the recent California Attorney General (“AG”) opinion on the California Automobile Sales Finance Act’s (CASFA) Single Document Rule for new car dealers.  I will now explore the legal reasoning behind the AG’s opinion and explain why I find it potentially problematic.   


In reaching his decision that all agreements between the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle need not be referenced on a single sheet of paper, the AG first applied well-established rules of statutory construction.  Looking to the usual and ordinary meaning of the words, the AG found that the term “single document” means “a separate or individual paper.”  The AG concluded that nothing in this definition requires that the entire document “be contained on one page or on one sheet of paper.”


The AG further supported his conclusion by appealing to the relevant case law.  In

Kroupa v. Sunrise Ford, the Court of Appeal held that three occurrences—consumer traded in two vehicles, consumers received a rebate from the dealer, consumer entered into a vehicle lease—constituted a single transaction that should have been memorialized in a single document.  Because the terms of the lease did not contain information about the rebate and the trade-ins, the Court found that the Single Document Rule had been violated.  The Court, however, failed to state that all the information relating to the three occurrences had to be contained on one sheet of paper.  In Morgan v. Reasor Corp., the California Supreme Court found a violation of the Single Document Rule where an installment contract and promissory note were not physically attached to each other.  The AG argued that this holding implies that separate pages physically attached to each other can constitute a single document.  Lastly, the Attorney General appealed to a recent California Supreme Court decision, Alan v. American Honda Motor Co., Inc.  While the Court’s decision did not directly involve the CAFSA, the Court interpreted a rule of court to include a single document requirement.  In interpreting the requirement, the Court stated that “[o]bviously a document can have multiple pages.”


The AG’s opening statements suggest that pragmatic considerations also played an instrumental role in informing his conclusion.  He notes that “taking all of the rules into account, an automobile sales contract must now be approximately 24 inches long (printed on both sides) in order to contain all required provisions in their required sizes.”  This is a gross understatement when viewed in the practical light of an automobile finance office on a Sunday afternoon.  Every closer must determine how far the law goes in regulating agreements that are silent as to the contract terms and amounts but might have some indirect affect on the total cost of the transaction.  These necessary agreements are frequently used by plaintiffs’ attorneys attempting to rescind auto sales contracts for violating the Single Document Rule.  I am referring, for example, to pay-off adjustments for trade-ins, damage indemnity agreements and GAP (guaranteed automobile protection) agreements. 


As I briefly mentioned in my previous posting, the AG’s opinion does not provide adequate justification for eliminating the requirement that all agreements between the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle be referenced on a single sheet of paper.  The AG relies merely on the absence of any such articulated requirement coupled with pragmatic considerations to support his rejection of the prevailing interpretation.  There is simply insufficient case law to determine with any degree of certainty how a court would rule on this issue. We are cautiously optimistic, however, that a court would reach a similar decision based on the same pragmatic considerations and lack of adverse authority.


Erica A. Stuckey