Dix v. American Bankers Life Assur. Co. of Florida

• Decision Date: 13 November 1987
• Docket Number: Docket No. 76382
• Citation: 415 N.W.2d 206,42 Ed. Law Rep. 1318,429 Mich. 410
• Parties: Gregory C. DIX, et al., Plaintiffs-Appellants, v. AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, et al., Defendants-Appellees. 429 Mich. 410, 415 N.W.2d 206, 42 Ed. Law Rep. 1318
• Court: Michigan Supreme Court

Page 206

415 N.W.2d 206

Gregory C. DIX, et al., Plaintiffs-Appellants, v. AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, et al Defendants-Appellees.

Docket No. 76382.

429 Mich. 410, 415 N.W.2d 206, 42 Ed. Law Rep. 1318

Supreme Court of Michigan.

Argued Oct. 9, 1986.

Decided Nov. 13, 1987.

Hiller, Larky and Hoekenga, P.C. by James A. Hiller, Gregory J. Bator, Southfield, for plaintiffs-appellants.

Miller, Canfield, Paddock and Stone, John D. Pirich, P.C., Kirk D. Messmer, Lansing, for defendant-appellee American Bankers Life Assur. Co. of Florida.

Michael H. Perry, Reid, Reid, Perry, Lasky, Hollander & Chalmers, P.C., Lansing, for defendant-appellee Sloan.

LaBarge, Dinning & Greve, P.C. by Ronald H. Greve, Roseville, for defendants-appellees, Richard Pawlowski's and Danny DeWolf.

LEVIN, Justice.

The named plaintiffs are thirty-nine school employees who purchased tax-shelter annuity policies from defendant American Bankers Life Assurance Company of Florida. The individual defendants, Richard Pawlowski, Danny G. DeWolf, and John D. Martin Sloan, are three of the agents through whom the annuities were secured. ¹

The plaintiffs commenced this action, alleging common-law fraud and deceit, breach of fiduciary duty, and violation of the Michigan Consumer Protection Act. ² They claimed that the defendants made material misrepresentations and omissions to persuade them to purchase the annuity policies. ³ They requested class certification, asserting that they would represent in this action the claims of over one thousand school employees in Michigan who had purchased annuity policies from American Bankers Life.

The circuit court denied the request for class certification and granted the defendants' motion for summary judgment. The request for class certification was heard before the effective date of the new Michigan Court Rules. The circuit court allowed the action to proceed ⁴ under the former rule governing class actions, GCR 1963, 208.

The provisions of GCR 1963, 208 were summarized and discussed in Grigg v. Michigan Nat'l Bank, 405 Mich. 148, 167, 184, 274 N.W.2d 752 (1979). ⁵ Grigg added that a class action could not be maintained unless the plaintiffs could show that a class action would promote the "convenient administration of justice."

The circuit court held that a class action would not promote the convenient administration of justice because a class action would raise too many practical problems. ⁶ Having denied the request for class certification, the circuit court dismissed the action because no individual plaintiff had a claim exceeding $10,000, the minimum amount for maintenance of an action in circuit court.

The circuit court, and the Court of Appeals, 141 Mich.App. 650, 367 N.W.2d 896, in affirming the decision of the circuit court, relied on this Court's decision in Freeman v. State-Wide Carpet Distributors, Inc., 365 Mich. 313, 112 N.W.2d 439 (1961), in holding that the plaintiffs' claims presented too many disparate issues of law and fact for a manageable class action.

We affirm the dismissal of the counts of the complaint alleging fraud and deceit and breach of fiduciary duty, reverse the dismissal of the count alleging violation of the Consumer Protection Act, and remand the cause to the circuit court for trial of that count as a class action because we are of the opinion that the claims alleged in that count are of a kind that are more appropriately heard as a class action than in separate trials and that a class action would promote the convenient administration of justice.

I

Defendants contend that the plaintiffs have not sought common relief. ⁷ In Grigg, this Court found that the "common relief" requirement was satisfied although the plaintiffs sought actual damages that varied from plaintiff to plaintiff. ⁸ Each of the plaintiffs in Grigg sought to recover double the amount of the finance charges wrongfully assessed--an amount that was different for each plaintiff. In the instant case, each of the plaintiffs seeks to recover what he would have obtained but for defendants' misrepresentations--an amount that will vary from plaintiff to plaintiff depending on the amount invested.

Defendants' reliance on Bajorek v. Kurtz, 335 Mich. 58, 55 N.W.2d 727 (1952), and Hardware Dealers Mutual Ins. Co. v. R.H. Hidey, Inc., 349 Mich. 490, 84 N.W.2d 795 (1957), is misplaced. Those cases dealt with different elements of the former joinder rule. ⁹ Bajorek construed the "convenient administration of justice" requirement of that rule, and Hardware Dealers dealt with the requirement that the causes of action be joint. Neither dealt with the requirement that the plaintiffs in a class action (or in joinder, for that matter) must seek "common relief."

II

The court rule provided that a class action may be maintained only if "there are questions of law or fact common to the members of the class that predominate over questions affecting only individual members." ¹⁰

This Court in Grigg, supra, 405 Mich. p. 184, 274 N.W.2d 752, observed:

"[T]here is no requirement in the rule that all questions necessary for ultimate resolution be common to the members of the class--there need only be 'a common question of law or fact' to satisfy this portion of the rule. However, such matters as diversity of defenses, counterclaims, etc. may bear upon determination of whether this class action would promote the convenient administration of justice." (Emphasis added.)

All the plaintiffs allege a common scheme of misrepresentation, and all allege the same fraud and Consumer Protection Act claims. It thus appears that the common question of law or fact criterion is satisfied subject to meeting the "convenient administration of justice" criterion. This latter criterion poses an additional obstacle for plaintiffs seeking class certification if their claims--although sharing a common question of law or fact--involve disparate issues that would not be manageable in a class action.

III

The circuit court and the Court of Appeals denied plaintiffs' request for class certification because they found that a class action would not promote the "convenient administration of justice." They held that there were too many practical problems for a manageable class action.

Freeman is distinguishable from the instant case because it was based solely on a theory of common-law fraud, while the instant case is also brought under the Consumer Protection Act. We affirm the dismissal of the fraud and deceit and breach of fiduciary duty counts, but reverse the dismissal of the Consumer Protection Act count.

The plaintiffs in Freeman were several hundred consumers who had purchased carpet from defendant State-Wide Carpet. They alleged that State-Wide had made fraudulent misrepresentations to induce them to purchase defective carpet. This Court concluded that the request for class certification should be denied, stating that in a fraud action there were too many disparate issues of law and fact for there to be a manageable class action.

The Consumer Protection Act was enacted to provide an enlarged remedy for consumers who are mulcted by deceptive business practices, and it specifically provides for the maintenance of class actions. ¹¹ This remedial provision of the Consumer Protection Act should be construed liberally to broaden the consumers' remedy, especially in situations involving consumer frauds affecting a large number of persons. ¹²

We hold that members of a class proceeding under the Consumer Protection Act need not individually prove reliance on the alleged misrepresentations. ¹³ It is sufficient if the class can establish that a reasonable person would have relied on the representations. Further, a defendant's intent to deceive through a pattern of misrepresentations can be shown on a representative basis under the Consumer Protection Act. So construing the Consumer Protection Act should obviate some of the practical difficulties that Freeman envisioned when an action is brought on a common-law fraud theory.

While, as set forth in Freeman, a class action should not be allowed if practical problems would make it unmanageable, the issues of fact and law presented in the Consumer Protection Act count do not differ so much from claim to claim that a class action would not be manageable.

The plaintiffs allege a common scheme of misrepresentation involving a single type of policy. The alleged misrepresentations may differ somewhat from plaintiff to plaintiff, but, if the plaintiffs' allegations are true, they are all substantially similar and are all part of a common scheme, they all stem from the same pattern of misrepresentation, and they all are actionable under the Consumer Protection Act.

The "convenient administration of justice" criterion does not preclude the maintenance of a class action where the individual claims differ slightly with regard to such specifics as the time, place, and exact nature of the injury. No two claims are likely to be exactly similar. Almost all claims will involve disparate issues of law and fact to some degree. The relevant concern here is whether the issues are so disparate as to make a class action unmanageable. We conclude they are not. ¹⁴

IV

The defendants contend that the individual plaintiffs should be precluded from aggregating their claims to collectively meet the $10,000 jurisdictional limitation on circuit court jurisdiction. In Paley v. Coca Cola Co., 389 Mich. 583, 209 N.W.2d 232 (1973), a decision of the Court of Appeals holding that a class action can be maintained only in circuit court was affirmed by an equally divided court. The opinion for affirmance stated that a class action could be brought in a circuit court without regard to the amount in controversy, thus rendering aggregation unnecessary.

We conclude that the opinion for affirmance in Paley expresses the view that would best implement the legislative intent in providing for the maintenance of...