JAQUES v. MIDWAY AUTO PLAZA INC.

• Decision Date: 24 September 2010
• Docket Number: No. 20080985.,20080985.
• Citation: 240 P.3d 769,2010 UT 54
• Parties: Dalton JAQUES; Severo Rodriguez; Elisha Delagarza; Nicholas Rodarte; Jodi Poll Holbrook; Jennifer Torrance; Melissa Thomas; Gregory Heiner; Ryan McCormick; Jennifer McCormick; Kent Ballard; and Ronda Ballard, Plaintiffs and Appellees, v. MIDWAY AUTO PLAZA, INC.; and Mike Riddle Inc. dba Mike Riddle Mitsubishi, Defendants and Appellants.
• Court: Utah Supreme Court

240 P.3d 769

665 Utah Adv. Rep. 18

2010 UT 54

Dalton JAQUES; Severo Rodriguez; Elisha Delagarza; Nicholas Rodarte; Jodi Poll Holbrook; Jennifer Torrance; Melissa Thomas; Gregory Heiner; Ryan McCormick; Jennifer McCormick; Kent Ballard; and Ronda Ballard, Plaintiffs and Appellees, v. MIDWAY AUTO PLAZA, INC.; and Mike Riddle Inc. dba Mike Riddle Mitsubishi, Defendants and Appellants.

No. 20080985.

Supreme Court of Utah.

Sept. 24, 2010.

COPYRIGHT MATERIAL OMITTED.

Michael V. Houtz, Jack C. Helgesen, Ogden, for plaintiffs.

Scott Powers, Heinz J. Mahler, Salt Lake City, for defendants.

DURHAM, Chief Justice:

INTRODUCTION

¶ 1 This action was commenced by eleven purchasers of vehicles (Purchasers) from two car dealerships: Midway Auto Plaza and Mike Riddle Mitsubishi (Car Dealers). We granted interlocutory appeal to decide two issues. The first issue is whether section 31A-15-105(2) of the Utah Code provides a private right of action to purchasers of an insurance policy from an unauthorized insurer. This issue arose from a motion to dismiss filed by the Car Dealers arguing that the Purchasers had no such right. The district court denied the motion. The second issue is whether the district court abused its discretion in certifying several class actions. ¹ The Car Dealers argue that none of the certifications meet the requirements of rule 23 of the Utah Rules of Civil Procedure, and ask us to overrule the district court's order. They argue that the classes lack commonality, typicality, and adequacy of representation and that the claims lack predominance and superiority.

¶ 2 For the reasons described below, we hold that section 31A-15-105(2) provides a private right of action and that the district court did not abuse its discretion in certifying the class actions. We therefore affirm the district court's orders regarding both these issues.

BACKGROUND

¶ 3 On December 30, 2004, the Purchasers filed a complaint against the Car Dealers making a number of individual claims. The Purchasers later amended their complaint to include class action allegations based on three practices by the Car Dealers. These practices included charging Dealer Documentary Service Fees (doc fees), selling Vehicle Theft Protection (VTP) products, and selling Guaranteed Auto Protection (GAP) insurance. Pursuant to a stipulation between the parties, the district court ordered that the individual claims be severed from the class action claims. Thus, the only remaining claims in this case were the proposed class action claims based on the three practices of the Car Dealers. On November 14, 2005, the Purchasers filed a Class Action Second Amended Complaint including only these class action claims.

¶ 4 Five of the Purchasers' claims dealt with the Car Dealers' practice of charging doc fees. Doc fees are charged to vehicle buyers to cover the costs of securing financing, filing paperwork, licensing, and preparing documents. The Motor Vehicle Enforcement Division oversees the charging of doc fees, and has instituted several requirementsto ensure that the Car Dealers explain them to potential customers. The Purchasers' claims concerning the Car Dealers' practices in charging doc fees alleged (1) a violation of the Utah Unfair Practices Act, (2) a violation of the Utah Motor Vehicle Business Regulation Act, (3) a violation of the Uniform Commercial Code, (4) that the contracts were illegal and against public policy, and (5) unjust enrichment.

¶ 5 The Purchasers made four claims concerning the VTP products sold by the Car Dealers. These claims concerned two types of VTP products. The first, “Edge Guard,” was sold by both Car Dealers. It consisted of a number etched on the windows of the vehicle that is stored in a database that can be used to help identify stolen vehicles. The second type of VTP product consisted of a starter interrupt attached to the vehicle's electrical system. The interrupt could be used to prevent the engine of a stolen vehicle from starting. This product was sold only by Midway Auto Plaza. The contracts for both of these products promised a sum of money or, in some cases, credit toward the purchase of a new car if a stolen vehicle is not recovered in a specified amount of time. The Purchasers' VTP claims alleged (1) a violation of section 31A-15-105(2) of the Utah Code, (2) a violation of the Utah Unfair Practices Act, (3) that the contracts were against public policy, and (4) that the contracts contained illusory promises. The claim that is most pertinent to this appeal is the alleged violation of section 31A-15-105(2) of the Utah Code.

¶ 6 The Purchasers made four claims concerning the GAP insurance policies sold by the Car Dealers. Similar to the VTP claims, the GAP claims included (1) a violation of section 31A-15-105(2) of the Utah Code, (2) a violation of the Utah Unfair Practices Act, (3) that the contracts were against public policy, and (4) that the contracts contained illusory promises.

¶ 7 The Purchasers filed three separate motions seeking class certification for each of the doc fee claims and several of the VTP and GAP claims. The Purchasers did not move to certify the VTP and GAP claims made under the Utah Fair Practices Act. However, they did move to certify the remainder of their claims.

¶ 8 The Car Dealers filed memoranda in opposition to class certification, as well as a motion to dismiss all the VTP and GAP claims. In their motion, the Car Dealers argued that (1) each of the Purchasers' VTP and GAP claims asserted a violation of section 31A-15-105(2) of the Utah Code, (2) section 31A-15-105(2) does not grant a private right of action, and (3) enforcement of this section falls to the Insurance Commissioner. ² The motion to dismiss did not include the doc fee claims.

¶ 9 The district court issued an order denying the Car Dealers' motion to dismiss. It determined that section 31A-15-105(2) grants a private right of action to a policyholder. The district court also granted the Purchasers' motions for class certification. However, the class action certification order did not address every VTP and GAP claim made by the Purchasers. Instead, it addressed only the question of whether the products were sold in violation of section 31A-15-105(2). Additionally, the order did not address the doc fee claims individually. Rather, it combined them into the broader question of whether the Car Dealers' methods of charging the doc fees violated the law.

¶ 10 The Car Dealers challenge the district court's interpretation of section 31A-15-105(2) and ask for reversal of the district court's denial of the motion to dismiss. They also appeal the district court's certification of the three class actions.

STANDARD OF REVIEW

¶ 11 The interpretation of a statute is a question of law that we review for correctnesswithout any deference to the legal conclusions of the district court. Green River Canal Co. v. Olds, 2004 UT 106, ¶ 16, 110 P.3d 666.

¶ 12 The decision to certify a claim as a class action is “ ‘within the sound discretion of the district court.’ ” Houghton v. Dep't. of Health, 2008 UT 86, ¶ 15, 206 P.3d 287 (quoting Richardson v. Ariz. Fuels Corp., 614 P.2d 636, 639 (Utah 1980)). A trial court's decision on class action status will be reversed “only when it is shown that the trial court misapplied the law or abused its discretion.” Call v. City of West Jordan, 727 P.2d 180, 183 (Utah 1986).

ANALYSIS

I. THE INSURANCE CODE GRANTS A PRIVATE RIGHT OF ACTION

¶ 13 The Purchasers have brought their claims at issue in this appeal under section 31A-15-105(2) of the Utah Code. These claims survive only if section 31A-15-105(2) grants a private right of action to the Purchasers as policyholders.

¶ 14 The primary purpose of interpreting a statute “ ‘is to give effect to the legislature's intent.’ ” LPI Servs. v. McGee, 2009 UT 41, ¶ 11, 215 P.3d 135 (quoting Savage v. Utah Youth Vill., 2004 UT 102, ¶ 18, 104 P.3d 1242). The best evidence of that intent is found in the plain language of the statute. Davis v. Provo City Corp., 2008 UT 59, ¶ 13, 193 P.3d 86. To determine the meaning of the plain language, we examine the statute “ ‘in harmony with other statutes in the same chapter and related chapters.’ ” LPI Servs., 2009 UT 41, ¶ 11 (quoting Miller v. Weaver, 2003 UT 12, ¶ 17, 66 P.3d 592); see also R & R Indus. Park, L.L.C. v. Utah Prop. & Cas. Ins. Guar. Ass'n, 2008 UT 80, ¶ 23, 199 P.3d 917 (“If the plain language is unambiguous then we need not look beyond it and no other interpretive tools are needed in analyzing the statute.” (citation omitted)).

¶ 15 Section 31A-15-105(2) provides: “An insurance policy entered into in violation of this chapter is voidable by the policyholder who entered into the transaction without knowing it was illegal. The policyholder may avoid the contract by notice to the insurer ... and may recover any consideration paid under the contract.” (Supp. 2010 (emphases added).) ³ This text plainly shows that the legislature intended to render a policy entered into in violation of Chapter 15 “voidable” by the policyholder. Voidable means the contract is “capable of being affirmed or rejected at the option of one of the parties.” Black's Law Dictionary 1709 (9th ed. 2009). Section 31A-15-105(2) allows the policyholder to affirm or reject the contract if the insurance contract was “entered into in violation of [Chapter 15].” Thus, if policyholders find that they have entered into a contract with an unauthorized insurer, they may, “by notice to the insurer,” void the contract and “recover any consideration paid under the contract.” Utah Code Ann. § 31A-15-105(2). Having been given a right to recover the consideration paid, policyholders may enforce this right by bringing an action against the insurer in court. Thus, section 31A-15-105(2) vests in the policyholder a private right of action.

¶ 16 The foregoing conclusion is strengthened when we consider the purposes of Chapter 15 as a whole. One of the...