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Stuppy v. World Gym International3/7/2003
This is a class action to recover damages for alleged fraud and unfair practices in connection with the selling of memberships to a proposed gym in Murrieta. The gym was never built and persons who bought memberships sought refund of the amounts they had paid for the memberships as well as damages under the Unfair Practices Act (Bus. & Prof. Code, § 17000 et seq.), the Civil Code sections dealing with contracts for health studio services (Civ. Code, § 1812.80 et seq.), and the Consumers Legal Remedies Act (Civ. Code, § 1770 et seq.).
The trial court granted World Gym's non-suit motion on the fraud cause of action and the claim for damages under the Consumer Legal Remedies Act.
The jury then found that (1) World Gym violated the Unfair Practices Act; (2) World Gym controlled its licensee, Murrieta Fitness, Inc., and Murrieta Fitness, Inc. was the agent of World Gym; (3) Murrieta Fitness, Inc. had failed to begin health studio services within six months from the date it first began selling memberships, and it failed to refund memberships within 30 days of notice of cancellation. The special verdict concludes that the class members were damaged in the sum of $225,679.17.
In posttrial proceedings, the trial court awarded treble damages pursuant to Civil Code section 1812.94, subdivision (a). The total judgment was $835,382.51, plus class counsel's attorney fees of $190,875, and costs.
World Gym appeals, contending that the trial court (1) abused its discretion in certifying the class; (2) based its treble damages award on an erroneous interpretation of the applicable statutes; (3) failed to apply due process safeguards in its award of treble damages, and (4) erroneously awarded more than treble plaintiffs' compensatory damages. Finding merit only in the last contention, we modify the damages award.
Plaintiffs cross-appeal, arguing the trial court erred (1) in granting a non-suit motion on the fraud cause of action; (2) in refusing to allow the jury to consider their request for punitive damages; and (3) in denying their application for an injunction. We reject each of these claims. Plaintiffs also seek an award of their attorney fees on appeal. We remand for determination of the amount of attorney fees to be awarded plaintiffs on this appeal.
FACTS
On June 19, 1998, defendant World Gym and Murrieta Fitness, Inc. entered into a license agreement which allowed Murrieta Fitness, Inc. to use the World Gym trademark for a proposed gym in Murrieta. The agreement provided that World Gym would approve the plans for the proposed gym. The agreement also provided certain standards of operation regarding signs, advertising, and other matters.
The president of World Gym testified that World Gym did not require Murrieta Fitness, Inc. to disclose the existence of the license arrangement to prospective members, nor did it require disclosure of the fact that Murrieta Fitness, Inc. was independently owned and operated, because World Gym wanted members of the public to believe they were dealing with World Gym.
The signs, advertising materials, and membership agreements all identified the gym as a World Gym. As noted above, the jury found that the license agreement gave World Gym the right of complete or substantial control over Murrieta Fitness, Inc., thereby making Murrieta Fitness Inc. the agent of World Gym.
In June 1998, when the license agreement was signed, the projected opening date of the gym was January 1999. World Gym specifically approved the presale of memberships, provided that the gym opened within 60 days of the first presale, and that the money collected from presales be dep
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