The court is considering a request by CarMax, the California New Car Dealers Association, the American Financial Services Association and other groups to officially designate the ruling as binding precedent.
If that happens, it will dramatically reduce class-action suits seeking to rescind deals based on the finance law, said CarMax attorney Victor Danhi of Los Angeles.
That includes suits concerning deferred down payments, tire fees, backdated purchase contracts and document fees, Danhi said
But the plaintiff's lawyer, Hal Rosner of San Diego, said the appellate court was wrong and that if the decision becomes binding, his client will try to bring the case to the state Supreme Court.
The case arose from Tiffini Harrelson's purchase of a 2006 Saab 9-7X and trade-in of her 2006 Honda Civic at CarMax in Ontario, Calif., in 2008. She owed more on the Civic than the car was worth and her negative equity was part of the financing.
She wrote a $1,100 personal check toward the down payment and signed a "held check form" pending a transfer of funds to her checking account five days later, the decision said. However, the retail installment sales contract listed a $1,103.33 cash down payment and the separate vehicle purchase agreement said she "sold" the Honda to the store rather than traded it in.
Harrelson accused CarMax of failing to disclose the deferred down payment and failing to include all the agreements concerning the trade in a single document. She sought damages and rescission of the deal.
The class-action allegations applied to all CarMax buyers in the previous four years whose retail installment sales contracts didn't disclose a deferred down payment or who signed a separate vehicle purchase agreement when trading in a vehicle.
In legal papers, CarMax responded that the suit alleged "a few hyper-technical violations" in an "attempt to gain a windfall."
The company said: "Nowhere does Harrelson allege that she was deceived or tricked by CarMax or that she did not fully understand the terms and agreements of both the sale of her Honda and the purchase of her Saab. Harrelson also admits that she had the funds necessary to make her down payment, that she qualified for financing, that she completed both transactions and she has made all her payments."
A lower-court judge dismissed the case without trial and awarded CarMax $12,236 in attorney fees.
In upholding that ruling, the appeals court agreed with CarMax that Harrelson waited too long to sue -- more than 2½ years after the Saab developed mechanical problems -- thus missing the one-year deadline for claims under the finance law. She unsuccessfully contended that the statute of limitations is four years.
In an opinion by Justice Betty Richli, the appeals court also rejected her unfair competition claim because she offered no evidence that she "lost money or property as a result of the alleged wrongdoing." In addition, the court said it found "nothing that made this transaction deceitful or unfair."
It said Harrelson also must pay CarMax's attorney fees on appeal.