Case 3:12-cv-01990-KI Document 50 Filed 09/20/13 Page 1 of 9 Page ID#: 400
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
DANIEL P. KLAHN, SR.;,
Civil Case No. 3:12-CV-01990-KI
OPINION AND ORDER
SANTANDER CONSUMER USA, INC.,
Daniel P. Klahn, Sr.
55 NE Bridgton Road
Portalnd, Oregon 97211
Pro Se Plaintiffs
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J. Owen Campbell
Severson & Werson
19100 Von Karman Avenue, Suite 700
Irvine, California 92612
Attorneys for Defendant
Pro se plaintiffs Daniel P. Klahn, Sr. and Laurie Klahn, a married couple, bring this case
against Santander Consumer USA, Inc. (“Santander”) for its actions while trying to collect the
debt incurred when the Klahns purchased a Winnebago recreational vehicle. This dispute has
traveled through numerous courthouses in two states. Before the court is Defendant Santander
Consumer USA, Inc.’s Motion for Summary Judgment . For the reasons below, I grant the
motion and dismiss this case with prejudice.
The Klahns bought a Winnebago in 2006 under an installment sales contract with the
dealer. The dealer assigned the contract and security interest to Thor Credit Corporation, which
subsequently assigned it to GEMB Lending, Inc. (“GEMB”). Laurie Klahn is the actual
purchaser of the Winnebago; Daniel Klahn is not a party to the sales contract. The Winnebago is
registered to Laurie Klahn alone.
GEMB repossessed the Winnebago in February 2011. The Klahns redeemed the loan on
March 6, 2011 and picked up the vehicle. They also allegedly made March and April payments
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Santander purchased the loan on March 1, 2011. According to its records, the loan has
been past due since April 1, 2011.
Santander telephoned the Klahns on March 26, 2011 to complain the loan was past due
45 days. The long-running dispute between Santander and the Klahns is based on whether the
Klahns made the March and April 2011 payments to GEMB and whether GEMB turned those
payments over to Santander.
On March 20, 2012, Santander sued Laurie Klahn for breach of contract in the Superior
Court of California for the County of Alameda. Santander Consumer USA, Inc. v. Laurie A.
Klahn, No. HG12622151 (“California Action”). On March 22, 2013, that Court entered a
Judgment by Default against Laurie Klahn for the principal of $64,632.55, attorney fees of
$48,713.25, interest of $11,506.31, and costs of $395.00.
The Klahns allege three claims for relief in this action. In the first claim, the Klahns
allege Santander is negligent by failing to use reasonable care in refusing to transfer the
Winnebago’s title from California to Oregon in August 2011 and in refusing to accept payments
or send monthly billing statements since then.
The Klahns’ second claim is for breach of a fiduciary and confidential relationship duty.
They allege Santander breached its duty by disclosing the status of the loan on the Winnebago to
noninterested third parties from April 2011 through January 2012.
In the third claim, the Klahns allege Santander breached the implied covenant of good
faith and fair dealing through its conduct alleged in the other two claims.
I dismissed a fourth claim alleged under the Fair Debt Collection Practices Act on
March 6, 2013.
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Summary judgment is appropriate when there is no genuine dispute as to any material fact
and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(a). The
initial burden is on the moving party to point out the absence of any genuine dispute of material
fact. Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate
through the production of probative evidence that there remains a fact dispute to be tried.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On a motion for summary judgment, the
court “must view the evidence on summary judgment in the light most favorable to the
non-moving party and draw all reasonable inferences in favor of that party.” Nicholson v.
Hyannis Air Serv., Inc., 580 F.3d 1116, 1122 n.1 (9th Cir. 2009) (internal quotation omitted).
The parties have not briefed whether California or Oregon law applies, and they cite to
both. The Klahns appear to have moved from California to Oregon in December 2011, see First
Amended Complaint at 12-13, but it is unclear. Because the Klahns bought the Winnebago in
California, and the payment dispute started when they were in California, I will apply California
Claims Alleged by Daniel Klahn
Santander notes Daniel Klahn is not a party to the sales contract and thus, has no
relationship with Santander. Santander argues Daniel Klahn does not have standing to allege any
of the claims in this action.
Daniel Klahn notes his 33 years of marriage to Laurie and maintains he can bring his
claims because he owes a debt through community property ownership.
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Under California’s community property laws, the “community estate is liable for a debt
incurred by either spouse before or during marriage, regardless of which spouse has the
management and control of the property and regardless of whether one or both spouses are
parties to the debt or to a judgment for the debt.” Cal. Fam. § 910(a). Although Daniel is liable
for the debt, he is still not a party to the contract.
Several California cases have refused to allow the spouse of an insured to sue an insurer
for failure to pay benefits to the insured spouse, even when the insurance premiums were paid
with community funds. “Whatever plaintiff’s property rights with respect to the policies and
their proceeds may be, the fact remains that she is not a party to the contracts.” Austero v. Nat’l
Cas. Co. of Detroit, Michigan, 62 Cal. App. 3d 511, 517 (Cal. Ct. App. 1976) (wife could not sue
health insurer for breach of the implied duty of good faith and fair dealing when the insurer
refused to pay benefits to the insured husband; the duty is tied to the underlying contractual
relationship); Hatchwell v. Blue Shield of Cal., 198 Cal. App. 3d 1027, 1036 (Cal. Ct. App.
1988) (wife could not bring claims of breach of contract, bad faith conduct by an insurer, breach
of fiduciary duties, breach of implied warranty, and negligence against health insurer for its
failure to pay benefits to her insured husband).
Daniel Klahn’s situation is no different. Because he is not a party to the contract, he
cannot sue to enforce it and cannot sue for any damages caused by Santander in its attempts to
collect the debt.
Daniel Klahn alternatively argues he can bring his claims because Laurie Klahn gave him
full power of attorney to act on her behalf for all matters related to the Winnebago. Although
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this would give Daniel Klahn the right to step into the shoes of Laurie Klahn, the power of
attorney does not enlarge the claims belonging to Daniel Klahn.
Moreover, the reasons I explain below for dismissing Laurie Klahn’s claims also apply to
Daniel Klahn’s claims, even if he was a party to the sales contract and had standing to bring
In sum, I grant summary judgment and dismiss all of Daniel Klahn’s claims.
Claims Alleged by Laurie Klahn
To prove a negligence claim in California, a plaintiff must show the “defendant had a
duty to use due care, that he breached that duty, and that the breach was the proximate or legal
cause of the resulting injury.” Hayes v. Cnty. of San Diego, 57 Cal. 4th 622, 688 (Cal. 2013).
Klahn alleges Santander is negligent by failing to use reasonable care in refusing to
transfer the Winnebago’s title, refusing to accept payments, and refusing to send monthly billing
statements. Any duty Santander owed Klahn to do these things was a contractual duty only.
Thus, Klahn could allege a breach of contract claim if Santander failed to take an action the
contract required it to take, but not a negligence claim. Accordingly, I grant summary judgment
and dismiss Klahn’s negligence claim.
Breach of a Fiduciary and Confidential Relationship Duty
Klahn alleges Santander breached this duty by disclosing the status of the loan to
noninterested third parties.
“[B]efore a person can be charged with a fiduciary obligation, he must either knowingly
undertake to act on behalf and for the benefit of another, or must enter into a relationship which
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imposes that undertaking as a matter of law.” City of Hope Nat’l Med. Ctr. v. Genentech, Inc.,
43 Cal. 4th 375, 386 (Cal. 2008). Examples of fiduciary relationships include joint ventures,
partnerships, guardian and ward, trustee and beneficiary, principal and agent, or attorney and
client. Id.; Richelle L. v. Roman Catholic Archbishop, 106 Cal. App. 4th 257, 271 (Cal. Ct. App.
2003). A confidential relationship can be founded on a moral, social, domestic, or personal
relationship “where a confidence is reposed by one person in the integrity of another, and in such
a relation the party in whom the confidence is reposed, if he [or she] voluntarily accepts or
assumes to accept the confidence, can take no advantage from his [or her] acts relating to the
interest of the other party without the latter’s knowledge or consent[.]” Richelle L., 106 Cal.
App. 4th at 270-71 (internal quotation omitted).
There are limits, however. The special relationship doctrine does not extend to
“commercial contractual relationships[.]” Girard v. Delta Towers Joint Venture, 20 Cal. App.
4th 1741, 1749 (Cal. Ct. App. 1993). More specifically, the relationship between a lending
institution and its borrower is not a fiduciary one. Nymark v. Heart Fed. Sav. & Loan Ass’n, 231
Cal. App. 3d 1089, 1093 n.1 (Cal. Ct. App. 1991). Klahn’s relationship with Santander is a
garden variety lender/borrower relationship, and no fiduciary duties arise from it.
Consequently, I grant summary judgment and dismiss Klahn’s breach of fiduciary duty
Breach of the Implied Covenant of Good Faith and Fair Dealing
On March 20, 2012, Santander sued Klahn in the California Action for breach of contract.
Klahn filed this federal action on November 6, 2012. On March 22, 2013, the California court
entered a Judgment by Default against Klahn. Santander argues claim preclusion bars Klahn’s
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claim for breach of the implied covenant of good faith and fair dealing alleged in the federal
Claim preclusion bars relitigating the same cause of action in a second suit between the
same parties or parties in privity. Planning and Conservation League v. Castaic Lake Water
Agency, 180 Cal. App. 4th 210, 226 (Cal. Ct. App. 2009).
Claim preclusion applies when (1) the decision in the prior proceeding is
final and on the merits; (2) the present proceeding is on the same cause of action
as the prior proceeding; and (3) the parties in the present proceeding or parties in
privity with them were parties to the prior proceeding. Upon satisfaction of these
conditions, claim preclusion bars not only issues that were actually litigated but
also issues that could have been litigated.
Id. (internal quotation and citation omitted).
The elements are all satisfied. The decision is considered final and on the merits because
a default judgment is given preclusive effect. Martin v. Gen. Fin. Co., 239 Cal. App. 2d 438, 443
(Cal. Ct. App. 1966). The parties are the same. The cause of action is the same–a dispute over
the debt and its collection. Klahn could have raised this claim in the California Action but chose
not to do so. Consequently, she is barred from raising it now. I grant summary judgment and
dismiss the claim for breach of the implied covenant of good faith and fair dealing.
Additionally, claim preclusion would bar Klahn’s two claims discussed above, if they did
not have other fatal flaws.
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Defendant Santander Consumer USA, Inc.’s Motion for Summary Judgment  is
granted. This action is dismissed with prejudice.
IT IS SO ORDERED.
Dated this 19th day of September, 2013.
/s/ Garr M. King
Garr M. King
United States District Judge
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