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socrateaser
socrateaser, Lawyer
Category: Legal
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Experience:  Retired (mostly)
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The company is directv who have many class action suits against them for the same thing, t

Customer Question

The company is directv who have many class action suits against them for the same thing, they appear to be in court continually, I saw somewhere and I cant remember where that when service is terminated the company can no longer use my debit card unless they have my consent service was disconnected in feb. they wrote off the acct in march, then I paid on the balance using my checking acct, they did not get any info from me about my card so it had to still be on file, about 2 weeks after I paid 100.00 they took out 646.74 from my acct, My thought are that if they could have legally taken money from my acct then it would have never been written off they would had done it before that.
Submitted: 1 year ago.
Category: Legal
Expert:  socrateaser replied 1 year ago.
Hello,

You're correct that an early termination fee is generally unenforceable. You can sue in small claims court and try to recover against the vendor. However, due to the nature of this type of action, even if you win, collecting your judgment could be extremely difficult. Because of this, you may want to consider filing a complaint with the State Attorney General.

If you decide to sue in small claims, then please review the CELLPHONE FEE TERMINATION CASES, 193 Cal.App.4th 298 (2011). The case contains a detailed discussion of "liquidated damages" beginning at section entitled, "B. Section 1671."

The section describes a two-part test required to validate the early termination provisions of the contract. That's what the vendor must prove in court -- and it's what you must disprove. But, the vendor is required to go first, under the presumption of invalidity accorded to consumer liquidated damages provisions.

The issue of the use of your EFT withdrawal being revoked at contract termination is a much more difficult question. I have researched my legal data service for case law on the subject and I am not finding anything relevant to California. There are some "unreported" cases. But, such cases may not be cited in court -- they are merely for research purposes to get a sense of what a court may rule sometime in the future. As such, they are of little value. Moreover, I cannot link to the cases, because they are not published outside of my database.

You can certainly argue that the termination of your contract also terminates the vendors authority to draft your account via an EFT. If I were the judge in a small claims court action, I would have to think hard about whether or not that theory is viable. I can see arguments for and against: (for) termination may be a breach, but it's a termination nonetheless; (against) termination is not a breach, as long as the cancellation fee is paid, so vendor can draft the consumer's account to completely extinguish the contract).

Frankly, I think that the liquidated damages argument is stronger.

Please let me know if I can be of further assistance.
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 33914
Experience: Retired (mostly)
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Customer: replied 1 year ago.
I just read today that a judge ruled early termination fees were illegal, that on a case that was in the appeals court I believe, and it was on cell phone companies, but the same subject, termination fees, would I be able to use that case as a reference in a court case that file
Expert:  socrateaser replied 1 year ago.
The case that I cited in my original answer is the precedent California appellate court case that rules termination fees unenforceable ("illegal"). See, CELLPHONE FEE TERMINATION CASES, 193 Cal.App.4th 298 (2011).

Note that not every termination fee is illegal. The Cellphone case provides the two-part test of unenforceability:

(1) fixing the amount of actual damages must be impracticable or extremely difficult, and
(2) the amount selected must represent a reasonable endeavor to estimate fair compensation for the loss sustained. (Utility Consumers' Action Network, Inc. v. AT&T Broadband of Southern Cal., Inc. (2006) 135 Cal.App.4th 1023, 1029 [37 Cal.Rptr.3d 827] (Utility Consumers).) "Absent either of these elements, a liquidated damages provision is void . . . ." (Hitz, supra, 38 Cal.App.4th at p. 288, italics added.) A liquidated damages provision need not, however, be expressly negotiated by both parties to a form contract in order to be valid. (Utility Consumers, at p. 1035.).

So, the answer is "yes," you can use this test in small claims court to try to recover the termination fee. I can't promise that the court will give you your money back, but this is the means to try to accomplish your goal.

I hope this clarifies my original answer for you. Let me know if I can be of further assistance.

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