Walczak v. Onyx Acceptance Corporation ( 2006 )

No. 2--05--0979 filed 6/7/06
_________________________________________________________________________
_____
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________________
_____
CHRISTOPHER D. WALCZAK and ) Appeal from the Circuit Court of
JUDITH E. WALCZAK, on Behalf of ) Lake County.
Themselves and All Others Similarly Situated,)
)
Plaintiffs-Appellees, )
)
v. ) No. 03--CH--693
)
ONYX ACCEPTANCE CORPORATION, ) Honorable
) David M. Hall,
Defendants-Appellants. ) Judge, Presiding.
_________________________________________________________________________
_____
JUSTICE CALLUM delivered the opinion of the court:
I. INTRODUCTION
This court granted defendant's, Onyx Acceptance Corporation's, petition for leave to
appeal under Supreme Court Rule 306(a)(8) (Official Reports Advance Sheet No. 26
(December 24, 2003), R. 306(a)(8), eff. January 1, 2004) from the trial court's order
granting plaintiffs', Christopher D. and Judith E. Walczaks', motion for reconsideration and
class certification. See 735 ILCS 5/2--801 (West 2002). On appeal, Onyx argues that the
trial court abused its discretion in finding that the prerequisites for class certification were
met. We affirm.
II. BACKGROUND
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On April 30, 2003, plaintiffs sued Onyx in the form of a class action seeking
equitable and monetary relief for breach of contract and violations of the Uniform
Commercial Code (UCC) (810 ILCS 5/1--101 et seq. (West 2002)) and the Consumer
Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et
seq. (West 2002)). In their complaint, plaintiffs alleged that, on September 18, 2000, they
entered into a retail installment contract with Rockenbach Chevrolet to purchase a used
1993 GMC Jimmy Typhoon motor vehicle for $17,990. Plaintiffs made a down payment in
the amount of $4,500.60 and financed the remainder of the purchase price through Onyx.
They agreed to make 60 monthly payments of $338.56, or a total of $20,313.60 (the
$14,803.22 amount financed plus $5,510.38 in finance charges).
Onyx, a Delaware corporation with a Rosemont office, is an Illinois sales finance
agency that purchases motor vehicle retail installment contracts. Plaintiffs alleged that they
made monthly payments to Onyx under the terms of the contract for approximately nine
months, for a total of $3,245.58. They then fell behind in their payments, and Onyx
repossessed the vehicle on or about November 17, 2001.
Plaintiffs further alleged that, prior to the repossession, they paid an amount equal to
30% or more of the "deferred payment price" (815 ILCS 375/2.10 (West 2002)) under the
contract or an amount equal to 30% or more of the total of payments due under the
contract. Thus, under the Illinois Vehicle Code (Vehicle Code) (625 ILCS 5/1--100 et seq.
(West 2002)), they could tender "all unpaid amounts," plus certain expenses and costs,
"without acceleration." See 625 ILCS 5/3--114(f--7)(1) (West 2002). In plaintiffs' view, they
could pay only the past-due monthly payments, plus allowable expenses, to redeem the
motor vehicle and reinstate the contract.
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Plaintiffs also alleged that the Vehicle Code requires a lienholder to send to the
owner written notice of his or her motor vehicle redemption right. See 625 ILCS 5/3--114(f-
-7)(3) (West 2002). According to plaintiffs, on or about November 20, 2001, and after
having repossessed the vehicle, Onyx issued them a written notice that described their
rights to redeem their vehicle before it was sold. Onyx declared that the entire contract
amount was immediately due and payable. Specifically, Onyx demanded a total of
$14,435.82, representing $13,415.80 in unpaid balance, $420 in costs, $299.79 in interest,
and $300.23 in late charges. Plaintiffs alleged that Onyx unlawfully accelerated the
balance of the debt, gave faulty notice of plaintiffs' redemption right, and unlawfully sold
their motor vehicle. According to plaintiffs, as of the repossession date, the unpaid amount
due (without acceleration) was approximately $1,155.70. On March 21, 2002, Onyx sent
plaintiffs a "Deficiency/Surplus Statement" notifying them of the sale of their vehicle for
$500 and of a deficiency balance of $6,446.50. On March 18, 2003, Onyx sent plaintiffs a
letter demanding full payment of a $6,146.50 deficiency balance.
In their complaint, plaintiffs asked the trial court to certify the action as a class action
with both plaintiffs as representative parties. They alleged that the class consisted of: (1)
plaintiffs and all other Illinois consumers; (2) who purchased motor vehicles in Illinois; (3)
who financed such purchases through Onyx; (4) by entering into motor vehicle retail
installment contracts; (5) which were then purchased by or assigned to Onyx; (6) who
thereafter made payments to Onyx under the contracts, paying an amount equal to 30% or
more of the deferred payment price under the contract or an amount equal to 30% or more
of the total of payments due under the contract; (7) who fell behind in their payments to
Onyx; (8) who had their motor vehicles repossessed for the first time by Onyx; (9) who then
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received a notice letter from Onyx; (10) which misinformed them and/or failed to inform
them of their rights to redeem their vehicles under the terms of the contract and the Vehicle
Code (625 ILCS 5/3--114(f--5), (f--7) (West 2002)).
In its answer, Onyx, inter alia, denied that a class action was appropriate and
asserted the defense of unclean hands. It further counterclaimed for conversion and
breach of contract, alleging that plaintiffs failed to make monthly payments nine months
after they entered into the contract and that they failed to keep the vehicle properly insured.
Further, it alleged that plaintiffs intentionally stripped the vehicle of valuable parts,
rendering it inoperable and, as a result, significantly diminished in value. Onyx further
alleged that it subsequently repossessed the vehicle and sold it at auction, realizing $500
from the sale. It alleged that the balance due from plaintiffs was $14,435.82 as of
November 20, 2001, and that it had demanded payment, but plaintiffs failed and refused to
pay.
On July 25, 2003, plaintiffs moved for class certification. The trial court denied their
motion on February 3, 2005, finding that only three of the four prerequisites for class
certification were satisfied. Specifically, it found that the class was so numerous that
joinder of all members was impracticable (735 ILCS 5/2--801(1) (West 2002)); that there
were questions of law or fact common to the class that predominated over any questions
affecting only individual members (735 ILCS 5/2--801(2) (West 2002)); and that plaintiffs as
representative parties would fairly and adequately protect the interest of the class (735
ILCS 5/2--801(3) (West 2002)). However, it found that the class action was not an
appropriate method for the fair and efficient adjudication of the controversy (735 ILCS 5/2--
801(4) (West 2002)) because Onyx had threatened to bring counterclaims for deficiency
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judgments against many members of the class if it were certified, because the threat was
credible, and because it was quite possible that putative class members would have a
judgment entered against them and that their liability would exceed their recovery. On
March 3, 2005, plaintiffs moved for reconsideration of their motion for class certification.
On August 30, 2005, the trial court granted plaintiffs' motion and certified the class.
Addressing the fourth prerequisite for class certification, the court found that it is unlikely
that Onyx may maintain any actions for deficiency judgments against any putative class
members and further found that any counterclaims may be addressed on a class basis.
On February 26, 2004, the trial court dismissed both counts of Onyx's counterclaim.
Onyx subsequently filed an amended counterclaim for conversion and a deficiency
judgment. It also amended its affirmative defense, alleging that Christopher Walczak
intentionally stripped the vehicle of many valuable parts. The trial court, on July 27, 2004,
struck Onyx's amended affirmative defense and dismissed the conversion count as to both
plaintiffs.
On September 29, 2005, Onyx petitioned for leave to appeal the trial court's August
30, 2005, order. On December 8, 2005, this court allowed Onyx's petition.
III. ANALYSIS
A. Motion Taken with Case
In a motion we ordered taken with the case, plaintiffs move to strike portions of
Onyx's brief. For the following reasons, we deny plaintiffs' motion in its entirety.
First, plaintiffs address the scope of our review. They assert that Onyx never
challenged the trial court's determination as to the first three elements required for class
certification and request that we strike those portions of Onyx's brief that address those
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elements, because they are not properly before this court. Plaintiffs point out that Onyx
appealed only the August 30, 2005, order and not the court's February 3, 2005, order,
which addressed the first three prerequisites for class certification. They reason that this
court does not have jurisdiction over those issues.
Several considerations lead us to conclude that Onyx has not waived its arguments.
The trial court's February 3, 2005, order denied class certification, thus deciding the issue
in Onyx's favor and precluding an appeal by Onyx. See Solimini v. Thomas, 293 Ill. App.
3d 430, 434 (1997) (a party may not complain of error that does not prejudicially affect it,
and one who has obtained by judgment all that has been asked for in the trial court cannot
appeal from the judgment). Prior to this order, Onyx had argued that class certification was
not appropriate. The trial court's articulated basis for its order was that, although the first
three requirements for certification were satisfied, the fourth was not. In their motion to
reconsider, plaintiffs addressed only the fourth element, and Onyx, in its response, did the
same. Onyx subsequently appealed the only order that granted class certification in this
case, i.e., the trial court's August 30, 2005, order. Rule 306(a)(8) states that appeals
pursuant to that section are from orders "denying or granting certification of a class action."
Official Reports Advance Sheet No. 26 (December 24, 2003), R. 306(a)(8), eff. January 1,
2004. The section contains no language otherwise limiting the scope of the appeal.
Further, we note that an "unspecified judgment is reviewable if it is a 'step in the procedural
progression leading' to the judgment specified in the notice of appeal." Burtell v. First
Charter Service Corp., 76 Ill. 2d 427, 435 (1979), quoting Elfman Motors, Inc. v. Chrysler
Corp., 567 F.2d 1252, 1254 (3d Cir. 1977); see also McGath v. Price, 342 Ill. App. 3d 19,
33 (2003).
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Plaintiffs point to certain language in Onyx's memorandum opposing plaintiffs'
motion to reconsider. They argue that the following excerpt amounts to a concession by
Onyx that the first three requirements for certification were met:
"Contrary to the facts of Steinberg and the cases cited by the plaintiffs as
applying the purported 'Steinberg test,' the facts in this case which established the
first three requirements for class certification did not serve to establish that the class
action is the appropriate or fair method for adjudicating the underlying controversy.
On the contrary, there are countervailing facts which render the class action
mechanism an inappropriate method for the fair adjudication of the plaintiffs' claims,
regardless of the existence of the other three elements for class certification.*** The
fourth prerequisite for class certification has not been rendered meaningless by
Steinberg and the Court was not required to hold that because the first three
requirements for class certification were satisfied, the class action mechanism was
necessarily 'appropriate' as required under the statute." (Emphasis added.)
We do not agree with plaintiffs that the foregoing provision contains language clearly
indicating that Onyx conceded below that the first three requirements were established.
Based on the foregoing considerations, we are reluctant to find Onyx's arguments
addressing the additional elements waived and we deny plaintiffs' request to strike those
portions of Onyx's brief.
Plaintiffs next address Onyx's statement of jurisdiction, arguing that it should be
stricken because it does not contain a statement of the basis for the appeal or a statement
of the relevant facts or dates. See Official Reports Advance Sheet No. 21 (October 17,
2001), R. 341(e)(4)(ii), eff. October 1, 2001. According to plaintiffs, the failure to include
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the required information will hinder our review. We decline plaintiffs' request because the
information that is missing from the statement of jurisdiction is located elsewhere in Onyx's
brief.
Plaintiffs also take issue with Onyx's use of footnotes, which they contend are
excessive and inappropriate and thus will hinder this court's review. Supreme Court Rule
341(a) limits an appellant's brief to 75 pages; it further prohibits the use of any devices to
evade the page limitation and instructs that footnotes be used sparingly. Official Reports
Advance Sheet No. 21 (October 17, 2001), R. 341(a), eff. October 1, 2001. Rule 344(b)
also provides that footnotes are discouraged. Official Reports Advance Sheet No. 22
(October 27, 2004), R. 344(b), eff. January 1, 2005. Plaintiffs contend that Onyx's
footnotes are lengthy and substantive. Further, they assert that the footnotes contain
argument, discussion, assertions of fact without reference or support, assertions of Onyx's
allegations as fact, threats against plaintiffs to seek attorney fees, positions on issues, and
characterizations. Plaintiffs also assert, without specification, that some of the footnotes
appear to be an attempt to use material not in the record. Onyx's brief is 41 pages long
and contains 18 single-spaced footnotes, 6 of which are in the statement of facts. Use of
footnotes that contain argument and citation of authority is a serious violation of Rule
341(a). See In re Marriage of King, 208 Ill. 2d 332, 338 (2003). Here, however, we find
that the footnotes generally contain relevant, supplementary information. Thus, upon
review and mindful of the complexity of this case and the numerous issues presented, we
conclude that sanctions are not necessary and deny plaintiffs' request to strike the
footnotes.
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Next, plaintiffs request that we strike or disregard certain portions of Onyx's
statement of facts. They list 26 passages that they assert lack references to the record, are
unsupported, are contradicted, or are inaccurate. We disagree with plaintiffs' assertions
and find that Onyx's statement of facts sufficiently complies with Supreme Court Rule
341(e)(6) (Official Reports Advance Sheet No. 21 (October 17, 2001), R. 341(e)(6), eff.
October 1, 2001 (statement shall contain facts necessary to an understanding of the case,
stated accurately and fairly without argument or comment, and with appropriate references
to the record)), and we note that even plaintiffs concede that certain citation omissions may
be inadvertent. Accordingly, we deny plaintiffs' request to strike or disregard part of Onyx's
statement of facts.
Plaintiffs next request that we strike portions of Onyx's appendix. Under Supreme
Court Rule 342(a), an appellant's brief must include an appendix that contains "any
pleadings or other materials from the record which are the basis of the appeal or pertinent
to it." Official Reports Advance Sheet No. 22 (October 27, 2004), R. 342(a), eff. January 1,
2005. Generally, if the materials are not taken from the record, they may not be placed
before a reviewing court by way of an appendix. Hubeny v. Chairse, 305 Ill. App. 3d 1038,
1042 (1999). First, plaintiffs contend that we should strike the copy of the August 30, 2005,
order that Onyx has included in the appendix. They argue that there is no copy of this
order in the record. We decline plaintiffs' request, as a copy of the order is in the record
Onyx filed on September 29, 2005, to support its petition for leave to appeal to this court.
The supporting record filed with the petition for leave to appeal constitutes part of the
record on appeal. See Official Reports Advance Sheet No. 26 (December 24, 2003), R.
306(h), eff. January 1, 2004.
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Next, plaintiffs assert that three federal district court opinions that Onyx has included
in its appendix should be stricken. They note that none of the cases constitute material
from the record, that only two of the cases are cited in Onyx's brief, and that the third case
is not listed in Onyx's points and authorities section. Onyx responds that the cases were
included as a courtesy to the court and argues that plaintiffs have not established how their
inclusion hinders this court's review. We agree with Onyx that the cases' inclusion in the
appendix will not hinder our review of this case, and we deny plaintiffs' request to strike the
material.
Finally, plaintiffs argue that Onyx's statement of the case should be stricken because
it is both lengthy and detailed and because it fails to provide certain required information.
Also, plaintiffs assert that the statement is inaccurate and that the inaccuracies will hinder
our review. Supreme Court Rule 341(e)(2) requires the inclusion of an "introductory
paragraph stating (i) the nature of the action and of the judgment appealed from and
whether the judgment is based upon the verdict of a jury, and (ii) whether any question is
raised on the pleadings and, if so, the nature of the question." Official Reports Advance
Sheet No. 21 (October 17, 2001), R. 341(e)(2), eff. October 1, 2001. Onyx's statement of
the case section consists of one 17-line paragraph. Upon review, we do not find Onyx's
violations to be so serious as to warrant striking this section of its brief. See Neiman v.
Economy Preferred Insurance Co., 357 Ill. App. 3d 786, 790 (2005) (reviewing courts may
choose to waive strict compliance with Rule 341 upon their discretion).
B. Class Certification
Turning to the merits of this appeal, Onyx challenges the trial court's findings as to
the second through fourth prerequisites for class certification. To certify a class action, the
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trial court must find (1) numerosity (the class is so numerous that joining all members is
impracticable); (2) commonality (there are questions of fact or law common to the class,
and the common questions predominate over any questions affecting only individual
members); (3) adequacy of representation (the representative parties will fairly and
adequately protect the interests of the class); and (4) appropriateness (the class action is
an appropriate method for fairly and efficiently adjudicating the controversy). 735 ILCS 5/2-
-801 (West 2002); Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100,
125 (2005). "Whether to certify a class action is a matter within the sound discretion of the
trial court, and we will reverse the trial court's decision only upon a showing that the court
clearly abused its discretion or applied impermissible legal criteria." P.J.'s Concrete
Pumping Service, Inc. v. Nextel West Corp., 345 Ill. App. 3d 992, 1002 (2004). Generally,
the trial court should err in favor of maintaining class actions. Clark v. TAP Pharmaceutical
Products, Inc., 343 Ill. App. 3d 538, 545 (2003).
1. Commonality
First, Onyx argues that the trial court abused its discretion in finding that the
predominance prong of the commonality requirement for class certification was satisfied.
Again, the commonality requirement requires a showing that: (1) there are questions of fact
or law common to the class; and (2) the common questions predominate over any
questions affecting only individual members.
Preliminarily, we note that Onyx does not address the first prong--the common
questions presented here. We briefly review the questions, as did the trial court, to place
the issues in the proper context. The instant action is predicated on a series of
transactions during which Onyx is alleged to have acted wrongfully in the same basic
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manner toward the entire class. In these transactions, Onyx purchased or was assigned
retail installment contracts of Illinois customers who purchased automobiles from Illinois
dealers and financed their purchases. The customers paid at least 30% of the deferred
payment price of the vehicles and fell behind on their payments to Onyx. The vehicles
were repossessed by Onyx for the first time. The customers allegedly were not sent and
did not receive from Onyx a written notice of their right to redeem or recover their motor
vehicles and reinstate their contracts by paying the past-due amount, without acceleration,
plus repossession charges. The customers were sent and did receive from Onyx a letter
demanding the full, accelerated balance of the contract as a condition for the redemption of
their vehicles.
The common questions of fact or law in this case include: (1) whether Onyx violated
the Vehicle Code and the contract by accelerating the debt and failing to notify plaintiffs and
putative class members, who had paid an amount equal to 30% or more of the deferred
payment price or total of payments due, of their right to redeem or recover their
repossessed vehicles and to reinstate the contract by tendering all past-due amounts, plus
certain expenses, without acceleration; (2) whether Onyx breached its contract with
plaintiffs and class members when it sent a letter after repossession demanding payment of
the full, accelerated balance and failed to send notice of the parties' redemption and
recovery rights; (3) whether Onyx gave reasonable notification to plaintiffs and class
members and acted in a commercially reasonable manner; (4) whether Onyx engaged in
an unfair practice under the Consumer Fraud Act by failing to give plaintiffs and class
members the rights granted by the Vehicle Code to redeem or recover their vehicles and
reinstate their contracts; and (5) whether plaintiffs and class members were entitled to an
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injunction restraining Onyx from collecting or attempting to collect the accelerated contract
balances, based upon Onyx's acceleration of the contract balance without the opportunity
for redemption or vehicle recovery, its demand for full payment and an accelerated
balance, and its threat to file counterclaims seeking deficiency judgments.
We now turn to the predominance prong of the commonality requirement. As Onyx
correctly notes, to satisfy the commonality requirement, it must be shown that " 'successful
adjudication of the purported class representatives' individual claims will establish a right of
recovery in other class members.' " Avery, 216 Ill. 2d at 128, citing Goetz v. Village of
Hoffman Estates, 62 Ill. App. 3d 233, 236 (1978); see also Weiss v. Waterhouse Securities,
Inc., 208 Ill. 2d 439, 452 (2004). Further, so long as questions of fact or law common to the
class predominate over questions affecting only individual class members, the statutory
requisite is met. Clark, 343 Ill. App. 3d at 548. A class action may be properly pursued
where the defendant allegedly acted wrongfully in the same basic manner as to an entire
class, and, in such circumstances, the common class questions predominate the case and
the class action is not defeated. Clark, 343 Ill. App. 3d at 548.
Onyx argues that the trial court misinterpreted both the nature of plaintiffs' claims
and the relief sought and that it misinterpreted the law governing predominance. It asserts
that the trial court did not apply the successful adjudication test and that plaintiffs have not
established and cannot establish that the successful adjudication of their individual claims
will establish a common right of recovery for all class members. Onyx further argues that
the parties disagree as to the proper test to determine commonality. Onyx asserts that
plaintiffs characterize the proper test as follows: that they are required to demonstrate that
the successful adjudication of their claims will (a) establish a common right of recovery for
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all class members--the successful adjudication test--or (b) resolve a central issue. See
P.J.'s Concrete, 345 Ill. App. 3d at 1003; see also Lee v. Allstate Life Insurance Co., 361 Ill.
App. 3d 970, 975 (2005). While the trial court recited the test in the alternative proposed by
plaintiffs, it clearly applied only the successful adjudication test in announcing its findings.
Therefore, we do not address Onyx's argument at length.
Next, Onyx asserts that the trial court erred in finding that the successful
adjudication of plaintiffs' claims would establish a right to recovery for all class members.
Addressing plaintiffs' breach of contract claim, Onyx argues that plaintiffs' proof that they
were ready, willing, and able to timely reinstate their contracts by paying all required
amounts and curing all defaults will not establish that all other class members were similarly
ready. Rather, each class member would have to make a similar evidentiary showing and
Onyx would have a right to contest it. Turning to the causation and damages elements in
each of plaintiffs' claims, Onyx contends that all class members would be required to show
that, but for Onyx's alleged breach, they would have exercised their rights under the
contract and reinstated it by paying the total of all unpaid amounts, Onyx's costs of
repossession, and all other defaults under the agreement. In other words, to show
causation, all class members would have to prove that, but for Onyx's alleged failure to
provide required statutory notice, they would have timely exercised their alleged rights to
reinstate their retail installment contracts by paying all required amounts and curing all
defects, and would have recovered their vehicles. According to Onyx, such a showing
cannot be made on a class-wide basis because proof that plaintiffs were ready to reinstate
their contract and recover their vehicle will not establish that all other class members were
similarly ready. Thus, the causation element of plaintiffs' claims will not be established and,
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as a consequence, neither will a common right of recovery for all class members.
Moreover, Onyx asserts that the right to recover for an alleged breach of contract or alleged
violations of the UCC and Consumer Fraud Act requires a showing of both a breach or
violation and actual damages proximately caused by the alleged breach or violation. Thus,
Onyx argues that plaintiffs cannot merely assert contractual and statutory violations and
maintain that the unlawful conduct itself provides them and the class members the right to
recover. Rather, each asserted cause of action requires a showing of actual damages
caused by Onyx's offending conduct.
Plaintiffs respond that Onyx misapprehends the nature of the injury it has caused.
According to plaintiffs, all class members had the contractual and statutory right to a 21-day
opportunity to cure their contract default. Class members were injured when they were
deprived of that opportunity by Onyx's acceleration, failure to give statutory notice, giving of
misleading notice, and selling of the vehicle without opportunity to cure. Plaintiffs argue
that Onyx misapplies the concept of proximate cause to their breach of contract and
statutory violation claims. They assert that the injury here was the deprivation of the right
to cure and that the damage was the loss of the vehicle and loss of the contract. They
further assert that the aforementioned injury was inflicted upon all class members and that
they were all damaged in the same manner. Plaintiffs also take issue with Onyx's assertion
that class members must show that they were financially able to exercise their right to cure.
Plaintiffs contend that no such showing of causation is required because the ability and
willingness of class members to exercise their right to cure is not related to the opportunity
to cure. Further, they point out that the opportunity to cure is a 21-day opportunity and is
not determined at the time of repossession. Finally, plaintiffs argue that Onyx's theory is
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not one of causation but is a theory of defense. They contend that whether individual
financial ability could be a defense is not appropriate for determination on a motion for class
certification. Its relevance, if any, is as a measurement of actual loss and damages;
specifically, as a setoff of the past-due amount against any recoverable damages. 1
1
The basic theory of damages for breach of contract requires that a claimant
"establish an actual loss or measurable damages resulting from the breach in order to
recover." (Emphasis added.) Avery, 216 Ill. 2d at 149. To establish a violation of the
Consumer Fraud Act, a plaintiff must prove (1) a deceptive act or practice by the defendant;
(2) the defendant's intent that the plaintiff rely on the deception; (3) the occurrence of the
deception in the course of conduct involving trade or commerce; and (4) actual damage to
the plaintiff; (5) proximately caused by the deception. Pappas v. Pella Corp., 363 Ill. App.
3d 795, 798-99, 844 N.E. 2D 995, 997 (2006). UCC section 9--625(b) provides, in relevant
part, that "a person is liable for damages in the amount of any loss caused by a failure to
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Addressing causation, the trial court found that plaintiffs need prove only that Onyx
failed to provide the required notice, not that they were able to redeem their vehicle and
reinstate the contract. It noted that the law does not require that notice be provided only
when the defaulting party can show that he or she was able to pay. See 625 ILCS 5/3--
114(f--7)(3) (West 2002). The court found that the defaulting party must be given proper
notice and opportunity to redeem his or her loan before the vehicle is sold. In the court's
view, Onyx's alleged failure to do so constitutes the injury and that injury is common to the
class.
We find Onyx's arguments unconvincing and conclude that the trial court here
reasonably found that there were common questions of law or fact and that these questions
predominate over any questions affecting only individual members. A class action is not
defeated solely because of some factual variations among class members' grievances.
See Clark, 343 Ill. App. 3d at 548. That some members are not entitled to relief because of
some particular factor will not bar the class action. Steinberg v. Chicago Medical School,
69 Ill. 2d 320, 338 (1977); see also Wenthold v. AT&T Technologies, Inc., 142 Ill. App. 3d
612, 618 (1986). After the litigation of common questions, questions that are peculiar to
individual class members may be determined in ancillary proceedings. Clark, 343 Ill. App.
3d at 548. Commonality is not destroyed even where class members may be differently
comply with this Article." (Emphasis added.) 810 ILCS 5/9--625(b) (West 2002).
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affected by the applicability of the statute of limitations, the doctrines of laches, good-faith
and unclean hands, exhaustion of contract, or other remedies. See Eshaghi v. Hanley
Dawson Cadillac Co., 214 Ill. App. 3d 995, 1003 (1991). Common questions may also
predominate where some claims might be barred by res judicata. Eshaghi, 214 Ill. App. 3d
at 1003; cf. Key v. Jewel Cos., 176 Ill. App. 3d 91, 98 (1988) (individual determinations of
proximate cause predominated over common questions where matter involved claims
concerning various documents and oral representations, as well as different financial and
operating expenses of numerous franchisees); Goetz, 62 Ill. App. 3d at 236-38 (common
questions did not predominate where case involved separate transactions that were not
identical and would require proof of the defendants' negligence or misconduct in selecting,
installing, and inspecting the wiring in each class member's home).
It was not unreasonable for the trial court to find that the injury Onyx allegedly
inflicted, which is common to the class, is the deprivation of the right to cure their defaults,
recover their vehicles, and reinstate their contracts and that Onyx's conduct (i.e.,
acceleration, failure to provide proper notice, and sale of vehicles without allowing the
opportunity to cure) caused such injuries. Onyx's arguments concerning the financial ability
of class members to reinstate their contracts bears not upon causation, but, rather,
constitutes a defense; specifically, as a measure of each class member's actual loss.
Thus, whether individual members were ready, willing, and able to exercise their right to
cure and reinstate their contracts will ultimately come into play as a setoff against any
recoverable damages. See Haynes v. Logan Furniture Mart, Inc., 503 F.2d 1161, 1165 n.4
(7th Cir. 1974) (addressing appropriateness of a class action under Rule 23 of the Federal
Rules of Civil Procedure (Fed. R. Civ. P. 23) in a suit brought under a federal consumer
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credit protection statute and noting that successful counterclaims would only reduce
damage awards and not affect liability finding).
We further disagree with Onyx's contention that the trial court erred in finding that
the predominance requirement was met because individual issues will arise in determining
whether class members sustained actual damages pursuant to Onyx's allegedly unlawful
conduct. "Individual questions of injury and damages do not defeat class certification."
Clark, 343 Ill. App. 3d at 549.
2. Adequacy of Representation
Turning to the adequacy of representation requirement, Onyx argues that the trial
court erred in finding that this requirement was met. It contends that the fact that it can and
will pursue deficiency judgments against the putative class members demonstrates that
plaintiffs are inadequate class representatives because their pursuit of class claims will
expose absent class members to deficiency claims and potential judgments. According to
Onyx, plaintiffs' interest in pursuing their claims on behalf of a class conflicts directly with
the interests of class members who do not wish to be exposed to litigation or deficiency
judgments as a direct result of plaintiffs' actions.
"The purpose of the adequate representation requirement is to ensure that all class
members will receive proper, efficient, and appropriate protection of their interests in the
presentation of the claim." P.J.'s Concrete, 345 Ill. App. 3d at 1004. "The test to determine
the adequacy of representation is whether the interests of those who are parties are the
same as those who are not joined." P.J.'s Concrete, 345 Ill. App. 3d at 1004. Also, the
named plaintiff's interest must not appear collusive. Miner v. Gillette Co., 87 Ill. 2d 7, 14
(1981). Additional factors courts consider include the extent to which the class's interests
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and those of existing parties converge or diverge, the commonality of legal and factual
positions, the practical abilities of existing parties in terms of resources and expertise, and
the vigor with which existing parties represent the class's interests. City of Chicago v. John
Hancock Mutual Life Insurance Co., 127 Ill. App. 3d 140, 145 (1984).
We conclude that the trial court did not abuse its discretion in finding that plaintiffs
would adequately represent the class. Assuming that Onyx may pursue deficiency
judgments, its argument that class litigation will expose members to such judgments as a
direct result of plaintiffs' actions is partly belied by the fact that class members are liable for
deficiency judgments due to their contract defaults and not primarily because of plaintiffs'
actions. Plaintiffs' claims are not antagonistic to the class, because plaintiffs are in the
same position as all putative class members--they defaulted on their contracts. Moreover,
we note that, generally, individual counterclaims or defenses do not render a case
unsuitable for class action. See Haynes, 503 F.2d at 1165 n.4 (successful counterclaims
will only reduce damage awards and not affect liability finding); see also P.J.'s Concrete,
345 Ill. App. 3d at 1004 (presence of individual defenses will not interfere with plaintiff's
ability to adequately represent class); Purcell & Wardrope Chartered v. Hertz Corp., 175 Ill.
App. 3d 1069, 1078 (1988) (defendant's individual defenses and its filing of a counterclaim
against class representative not sufficient to defeat class certification on the basis that the
class representative is not adequate). The fact that Onyx has threatened to pursue such
claims against only individuals who join in the class action does not convince us that the
trial court's finding was unreasonable, as class members have the right to opt out of a class
action suit. See 735 ILCS 5/2--804 (West 2002) (addressing exclusion of class members).
3. Appropriateness
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Onyx's final argument addresses the fourth requirement for class certification--that
the class action is an appropriate method for fairly and efficiently adjudicating the
controversy. In deciding whether the fourth requirement for class certification is met, a
court considers whether a class action can best secure economies of time, effort, and
expense or accomplish the other ends of equity and justice that class actions seek to
obtain. P.J.'s Concrete, 345 Ill. App. 3d at 1004. Where the first three requirements for
class certification have been satisfied, the fourth requirement may be considered fulfilled as
well. P.J.'s Concrete, 345 Ill. App. 3d at 1004; see also Steinberg, 69 Ill. 2d at 339; Clark,
343 Ill. App. 3d at 552. Also, class actions are often the last barricade of consumer
protection. Clark, 343 Ill. App. 3d at 552. Consumer class actions provide restitution to the
injured and deterrence to the wrongdoer, thus attaining the ends of equity and justice.
Clark, 343 Ill. App. 3d at 552.
Onyx argues that the trial court erred in finding, upon reconsideration, that the
appropriateness requirement was met. According to Onyx, the court incorrectly interpreted
Illinois law regarding whether a creditor may maintain an action for a deficiency judgment
against a debtor where the creditor has failed to provide proper statutory notice in
connection with the disposition of collateral. Asserting that it is not barred from pursuing
deficiency judgments against absent class members, Onyx contends that the court abused
its discretion in determining that the class action would allow for the fair and efficient
adjudication of the underlying claims.
In its February 3, 2005, ruling the trial court expressed concern about the possibility
that Onyx may bring counterclaims against the class members for deficiency judgments
and, thus, found that class certification could not be viewed as accomplishing the ends of
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equity and justice since class members would be subjected to increased liability as a result
of the suit. The court denied certification, finding that putative class members would likely
have little or nothing to gain, and potentially much to lose, from class membership. Upon
reconsideration, the trial court reversed its earlier ruling and certified the class. Relying on
First National Bank of Decatur v. Wolfe, 137 Ill. App. 3d 929 (1985), the court determined
that it is "unlikely" that Onyx may pursue deficiency judgments against class members and
found that, nevertheless, any potential counterclaims may be addressed on a class-wide
basis. Accordingly, it found that the fourth requirement for class certification was met and it
certified the class. 2
2
Wolfe instructs that a creditor bears the burden of proving compliance with the
notice requirements of section 9--504(3) of the UCC (Ill. Rev. Stat. 1983, ch. 26, par. 9--
504(3) (now 810 ILCS 5/9--611(b) (West 2002))) (addressing notice of disposition of
collateral) before recovering a deficiency judgment. Wolfe, 137 Ill. App. 3d at 932. The
failure to provide adequate notice, however, does not necessarily bar a deficiency
judgment; rather, it puts an additional burden on the creditor to rebut a presumption that the
secured collateral is worth at least the amount of the debt and to prove that the amount
actually collected at the sale of the collateral was commercially reasonable. Wolfe, 137 Ill.
App. 3d at 932; see also General Foods Corp. v. Hall, 39 Ill. App. 3d 147, 153 (1976). In
the UCC context, our supreme court has observed that none of the statute's provisions
provide that a lack of notice bars a deficiency judgment. First Galesburg National Bank &
Trust Co. v. Joannides, 103 Ill. 2d 294, 299 (1984). The court has rejected an absolute-bar
view, under which a secured creditor is precluded from bringing a deficiency action against
the debtor unless the debtor was given notice of the proposed sale of collateral. First
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Galesburg, 103 Ill. 2d at 299-301. In the court's view, the absolute-bar rule, by barring a
deficiency action regardless of whether the debtor has suffered damage from the lack of
notice, provides a windfall to the debtor and arbitrarily penalizes the creditor. First
Galesburg, 103 Ill. 2d at 300. First Galesburg, however, did not involve a notice of a right
to cure under the Vehicle Code.
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Onyx notes that plaintiffs and the putative class members all defaulted on their
underlying retail installment contracts and that plaintiffs have alleged a claim for damages
pursuant to Onyx's failure to provide sufficient notice of their reinstatement right under the
Vehicle Code. According to Onyx, it intends to respond to any claims asserted against it on
behalf of the absent class members by initiating its own claims to recover deficiency
balances owed on each member's underlying contract. Onyx argues that a defaulting
debtor should not be permitted to avoid liability on the underlying contract and seek
damages on the basis of the creditor's alleged breach of any notice requirement. Onyx
contends that any bar to its pursuit of deficiency judgments against the defaulting debtors
would allow the debtors an impermissible windfall.
Our inquiry here is limited to determining whether the trial court abused its discretion
in certifying the class. We are not presented with, and do not decide, the question whether
Onyx may bring deficiency claims against the class members. Indeed, the trial court did
not decide this issue, but was swayed by the fact that, according to its interpretation of the
law, it is "unlikely" that Onyx may bring such actions and that, if it may, they likely may be
dealt with on a class-wide basis. Assuming that Onyx's deficiency claims are not barred, we
noted above that the mere threat or even the filing of such claims does not defeat
certification. See, e.g., Hertz, 175 Ill. App. 3d at 1078. Further, we have also pointed out
that class members have the right to opt out of a class action. See 735 ILCS 5/2--804
(West 2002). In addition, we observe that the first requirement for class certification--
numerosity--is not at issue in this case and we have upheld the trial court's findings
addressing the second and third requirements. Therefore, we may consider the fourth
requirement fulfilled. P.J.'s Concrete, 345 Ill. App. 3d at 1004. Accordingly, we conclude
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that the trial court did not abuse its discretion in finding that the appropriateness
requirement was met.
IV. CONCLUSION
For the foregoing reasons, the judgment of the circuit court of Lake County is
affirmed.
Affirmed.
McLAREN and BYRNE, JJ., concur.
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