Highsmith v. Chrysler Credit Corp.
| Decision Date | 08 March 1994 |
| Docket Number | No. 93-1402,93-1402 |
| Citation | 18 F.3d 434 |
| Parties | Kelvin HIGHSMITH, Marcita Highsmith, and Joseph Villasenor, Plaintiffs-Appellants, v. CHRYSLER CREDIT CORPORATION, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Francine Schwartz, Michael B. Hyman, Much, Shelist, Freed, Denenberg & Ament, Robert J. Adams, Daniel A. Edelman (argued), Cathleen M. Combs, Tara G. Redmond, J. Eric Vander Arend, Edelman & Combs, Chicago, IL, for plaintiffs-appellants.
Dawn L. Haghighi, Hinshaw & Culbertson, Chicago, IL, Daniel F. Gosch, Detroit, MI, Robert E. Kinchen, Dickinson, Wright, Moon, Van Dusen & Freeman, James C. Schroeder, Lynne M. Raimondo (argued), Victoria R. Collado, Mayer, Brown & Platt, Chicago, IL, for defendant-appellee.
Before WOOD, Jr., CUDAHY, and EASTERBROOK, Circuit Judges.
The plaintiffs in this case entered into consumer automobile leases with the defendant, Chrysler Credit Corporation ("Chrysler"). The leases specified that in the event of default or early termination the lessees would be liable for early termination charges calculated in accordance with the provisions in the leases. The plaintiffs filed suit against Chrysler alleging that the early termination charges were unenforceable under the federal Consumer Leasing Act, various state statutes, and state common law. They also claimed that the leases violated the disclosure requirements of the Consumer Leasing Act. The district court dismissed the claims and this appeal followed.
This case involves two leases with nearly identical provisions. Kelvin and Marcita Highsmith are the lessees under the first lease and Joseph Villasenor is the lessee under the second. The factual background and current status of the two leases are rather different and merit separate discussion.
The Highsmiths entered into a four-year lease for a Plymouth Sundance on March 10, 1987. The lease contained a provision setting forth charges for early termination or default. Eighteen months later, on September 21, 1988, the Highsmiths filed a Chapter 13 bankruptcy petition naming Chrysler as a creditor. The bankruptcy court entered an agreed order rejecting the 1987 lease. It also modified the automatic stay so that Chrysler could repossess the car. On April 25, 1989, after selling the car, Chrysler determined that because the Highsmiths had terminated the lease early, they were liable for an additional $5,400 under the early termination or default provisions of the lease. Chrysler filed a proof of claim in the bankruptcy court for this amount. Shortly thereafter, however, the bankruptcy court dismissed the Highsmiths' petition for material default under 11 U.S.C. Sec. 1307(c)(6) (1988).
Chrysler then filed a suit in state court to recover the $5,400 deficiency. After learning that the Highsmiths had refiled their Chapter 13 petition, Chrysler dismissed its state court action in order to comply with the automatic stay of 11 U.S.C. Sec. 362 (1988). Chrysler never filed a proof of claim in this new bankruptcy proceeding. Rather, the Highsmiths themselves filed a claim on behalf of Chrysler, objected to that claim, then filed an adversary proceeding claiming that the Chrysler lease violated both federal and state law. The bankruptcy court determined this to be a noncore proceeding and the case then moved to the district court. Ultimately the Highsmiths filed an amended complaint adding Joseph Villasenor as a plaintiff.
Mr. Villasenor entered into a four-year lease with Chrysler on December 17, 1990 which required him to make 48 monthly payments of roughly $360. The other terms of the lease are nearly identical to the Highsmith lease. Villasenor has not yet terminated his lease, nor has he alleged that he wishes to terminate his lease. In the amended complaint he is seeking a declaration of the consequences of early termination.
Under the amended complaint the Highsmiths allege the following: 1) the lease violates provisions of the federal Consumer Leasing Act () (Counts I, II, & III); 2) the early termination provisions of the lease are unenforceable penalties under Illinois common law (Count IV); and 3) the lease violates the Illinois Consumer Fraud Act and its Michigan counterpart (Count V). Upon motion by Chrysler, the district court dismissed Counts I, II, III, and V because the Highsmiths were time-barred. Having dismissed all federal claims, the court used its discretion to dismiss the remaining state law claim (Count IV) without prejudice. The Highsmiths challenge only the dismissal of their claim under the Illinois Consumer Fraud Act (Count V).
Mr. Villasenor makes the following similar allegations: 1) the early termination provision in his lease violates the Consumer Leasing Act under 15 U.S.C. Sec. 1667b(b) (1988) (Count I); 2) the lease violates the disclosure requirements of the Consumer Leasing Act under 15 U.S.C. Sec. 1667a (1988) (Count II); 3) the early termination provision is an unenforceable penalty under Illinois law (Count IV); and 4) the lease violates the Illinois Consumer Fraud Act and its Michigan counterpart (Count V). Chrysler moved to dismiss these counts as well. The court held that Villasenor lacked standing to raise Counts I and IV, and dismissed them accordingly. Next it held that Villasenor had failed to state a claim for disclosure violations under the Consumer Leasing Act (Count II) and dismissed that claim pursuant to Fed.R.Civ.P. 12(b)(6). Finally the district court dismissed Villasenor's remaining state law claim because all of the federal claims were dismissed. Villasenor challenges the dismissal of Counts I, II, & IV.
Validity of the Early Termination Charge
under State law
The early termination clause in Mr. Villasenor's lease provides that if the lessee terminates the lease prior to its scheduled expiration he will be liable for "liquidated damages" in an amount equal to:
minus
5. the net amount Chrysler receives from the sale of the car and any insurance payments that are not used to repair or replace the car.
Among other things, Villasenor objects to the provision calling for an immediate acceleration of all monthly payments due without any discount to present value (i.e. a reduction by the amount of the unearned finance charge). Specifically, Villasenor claims that such an early termination charge amounts to an unenforceable penalty under Illinois law. Although Villasenor has not yet terminated his lease and has not alleged that he intends to terminate it, he nevertheless seeks a "declaration as to the consequences of early termination and of his potential liability under the termination clause." We conclude that Villasenor lacks standing to assert this claim.
Article III of the Constitution dictates that federal courts may only adjudicate actual "cases" or "controversies." Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). 1 In this case Villasenor is seeking a declaratory judgement that the early termination provision violates Illinois law. "The case-or-controversy requirement of Article III applies with equal force to actions for declaratory judgements as it does to actions seeking traditional coercive relief." Foster v. Center Township of LaPorte County, 798 F.2d 237, 242 (7th Cir.1986). Thus, "to demonstrate standing for a declaratory judgement, [Villasenor] must [allege] ... that [he] has sustained, or is in immediate danger of sustaining, a direct injury as a result of the defendant['s] conduct...." Id. Furthermore "the alleged harm must be actual or imminent, not 'conjectural' or 'hypothetical.' " Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 1723, 109 L.Ed.2d 135 (1990) (emphasis added).
Even a brief review of the facts of this case demonstrates that Villasenor has not met the Article III requirements of presenting a justiciable case or controversy. He has not terminated his lease; therefore, the early termination clause has not been applied to him and he has suffered no harm from it. Furthermore, and more damaging to his case, he has not even alleged that he now has, or will ever have, any desire whatsoever to terminate his lease. The absence of an allegation that Villasenor at least intends to terminate his lease deprives him of standing. The Supreme Court has recently reached a similar result in Lewis v. Continental Bank Corp., 494 U.S. 472, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990). In that case, Continental sought to challenge the constitutionality of a Florida statute as it applied to uninsured banks. Continental had not applied for an uninsured bank, and had not even alleged that it intended to apply for one. Therefore, the court held that Continental's challenge to the constitutionality of the statute "amount[ed] to a request for advice as to 'what the law would be upon a hypothetical state of facts[.]' " Id. at 479, 110 S.Ct. at 1254-55 (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 464, 81 L.Ed. 617 (1937)). Villasenor is in the same position as Continental. He has merely asked this court to determine what would happen to him if he did decide to terminate his lease at some unknown time in the future. He has not alleged a direct injury, nor has he alleged any threatened injury. See Foster, 798 F.2d at 242. He has presented a case about a pure hypothetical injury " 'that may not occur as anticipated, or indeed may not occur at all.' " Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 580-81, 105 S.Ct. 3325, 3332-33, 87 L.Ed.2d 409 (1985). Because he has not even established a threat of imminent...
To continue reading
Request your trial
-
Winklevoss Consultants, Inc. v. Federal Ins. Co., 97 C 1621.
...who fails to raise an argument until his reply brief will be deemed to have waived that argument.") (quoting Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 439 (7th Cir.1994)). Because Federal's summary judgment papers assert the absence of these offenses, however, Winklevoss' contentions......
-
In re Bridgestone/Firestone, Inc. Tires Products
...brief in opposition to the motion to dismiss,14 as long as they are consistent with the Master Complaint. Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 439-40 (7th Cir.1994). III. Sufficiency of Plaintiffs' Allegations of Defendants contend that the state law claims of all but three of t......
-
Daniels v. Bursey
...of fact, properly reserved for a motion for summary judgment." Daniels, 2003 WL 22053580, at *5 (citing Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 441-442 (7th Cir.1994)). We stated that, "[t]hough defendants provide some evidence that the tax status of plaintiffs' STEP Plan was known......
-
Chavez v. IL State Police
...the first time on appeal provided they are consistent with the complaint.'" Veazey, 194 F.3d at 861 (quoting Highsmith v. Chrysler Credit Corp., 18 F. 3d 434, 439 (7th Cir. 1994)). The allegation, however, is rife with First, the allegation that Chavez was stopped because he had an out of s......