McCart v. Chief Executive Officer in Charge, Independent Federal Credit Union

• Decision Date: 14 June 1995
• Docket Number: No. 27A05-9311-CV-430,27A05-9311-CV-430
• Citation: 652 N.E.2d 80
• Parties: Ethel M. McCART, Aubrey C. Hamilton and Robert F. Hoover, on behalf of themselves and all others similarly situated, Appellants-Plaintiffs, v. CHIEF EXECUTIVE OFFICER IN CHARGE, INDEPENDENT FEDERAL CREDIT UNION, and its Board of Directors, Jan Truman, President, Robert Fesler, Chairman of the Board, Edward Combs, Vice Chairman of the Board, Mary Lou Aynes, Treasurer, Herbert J. Phelps, Secretary, Ralph May, Board Member, Ronald Russell, Board Member, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 80

652 N.E.2d 80

Ethel M. McCART, Aubrey C. Hamilton and Robert F. Hoover, on behalf of themselves and all others similarly situated, Appellants-Plaintiffs, v. CHIEF EXECUTIVE OFFICER IN CHARGE, INDEPENDENT FEDERAL CREDIT UNION, and its Board of Directors, Jan Truman President, Robert Fesler, Chairman of the Board, Edward Combs, Vice Chairman of the Board, Mary Lou Aynes Treasurer, Herbert J. Phelps, Secretary, Ralph May, Board Member, Ronald Russell, Board Member, Appellees-Defendants.

No. 27A05-9311-CV-430.

Court of Appeals of Indiana.

June 14, 1995.

Rehearing Denied Dec. 20, 1995.

James E. Freeman, Jr., Jonathan R. Builta, Sansberry, Dickmann, Freeman & Builta, James O. Anderson, E. Lee Handley, John Longnaker, Anderson, for appellants.

M. Kent Newton, Jeffrey C. McDermott, Courtney R. Tobin, Krieg DeVault Alexander & Capehart, Indianapolis, David L. Kiley, Kiley Osborn Kiley Harker Rogers Michael & Certain, Marion, for appellees.

OPINION

RUCKER, Judge.

In this consolidated appeal, Plaintiffs-Appellants Ethel M. McCart, Aubrey C. Hamilton, and Robert F. Hoover (collectively "Plaintiffs") challenge the trial court's grant of judgment on the evidence ¹ on their motion to certify class action. Plaintiffs also challenge the trial court's subsequent grant of summary judgment in favor of Defendants-Appellees Independent Federal Credit Union, the Union's Chief Executive Officer in Charge, and members of the Union's Board of Directors (collectively "Credit Union"). Plaintiffs present the following restated issues for our review:

1) Whether the trial court erred in granting involuntary dismissal based upon Plaintiffs' failure to satisfy the requisite elements of class certification?

2) Whether the trial court erred in granting Credit Union's motion for summary judgment on Plaintiffs' individual claims?

We affirm in part and reverse in part.

For several decades, Plaintiffs have been members and savings account depositors of Credit Union. Between the years of 1956 and 1988, Credit Union offered group term life insurance benefits to all qualified member depositors of Credit Union, based upon the insurable balance in each member's savings account. Under the most recent terms of the insurance plan, eligible Credit Union members between the ages of six months and fifty-five years were insured for the full amounts deposited in their savings accounts, with maximum coverage of $2,000.00. Amounts deposited by members between the ages of fifty-five and seventy were subject to decreasing percentages of coverage. After members reached the age of seventy, any money deposited into their savings accounts was excluded from coverage, and new members over the age of seventy were ineligible for insurance coverage. Over the years Credit Union procured the insurance from several different carriers and ultimately decided to discontinue the insurance plan altogether. Prior to the January 1, 1989 termination date, Credit Union offered all member-depositors the option of continuing the life insurance coverage at the members' own expense. Plaintiffs declined to exercise this conversion option and instead sued Credit Union seeking injunctive and declaratory relief as well as money damages for conversion, breach of contract, and wrongful termination. Pursuant to Ind.Trial Rule 23, Plaintiffs thereafter sought to certify the lawsuit as a class action with the named Plaintiffs acting as class representatives. Following Plaintiffs' presentation of evidence at the hearing on class certification, Credit Union moved for involuntary dismissal and the trial court granted the motion. In so doing the trial court entered written findings indicating, among other things: 1) the named Plaintiffs are each seventy years of age or older and are not representative of the class; 2) the named Plaintiffs have failed to identify with specificity the class or subclass sought to be certified; 3) Plaintiffs' claims do not require the joinder of any class; and 4) if Plaintiffs prevail on the merits of their claim then all Credit Union members and depositors would benefit, thus eliminating the need for a class action. In sum, according to the trial court, the named Plaintiffs failed to produce substantial evidence to satisfy the class certification requirements set forth in Ind.Trial Rule 23(A) and (B). The first appeal ensued.

During preparation of the first appeal, proceedings in the trial court continued, with both sides filing motions for summary judgment on Plaintiffs' individual claims. Following a hearing, the trial court granted Credit Union's motion for summary judgment and correspondingly denied Plaintiffs' motion. Plaintiffs then pursued a second appeal, which included a motion with this court to consolidate the two appeals pursuant to Ind.Appellate Rule 5(B). The motion was granted and the consolidated appeal ensued.

I.

Plaintiffs first contend the trial court erred in denying their motion for class certification. According to Plaintiffs, sufficient evidence was presented to the trial court to satisfy the requirements of impracticable joinder, commonality, typicality, and adequate representation as set forth in T.R. 23(A) and at least one element contained in T.R. 23(B).

Ind.Trial Rule 23 establishes a two-step procedure for determining the propriety of class action certification. The trial court must first determine whether the class meets the four preliminary requirements of T.R. 23(A):

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Additionally, a class action that satisfies all four of the T.R. 23(A) requirements must also satisfy at least one of the three subsections of T.R. 23(B). The burden of proving the conditions precedent to class certification rests with Plaintiffs and Plaintiffs' failure to meet any one of the mandated prerequisites in T.R. 23(A) results in the denial of class certification. ConAgra, Inc. v. Farrington (1994), Ind.App., 635 N.E.2d 1137, 1140, reh'g denied. A trial court has broad discretion in determining whether an action is maintainable as a class action. CSX Transp., Inc. v. Clark (1995), Ind.App., 646 N.E.2d 1003, 1006; Skalbania v. Simmons (1982), Ind.App., 443 N.E.2d 352, 356, trans. denied. On appeal, we neither reweigh evidence nor judge witness credibility. We affirm if the evidence most favorable to the judgment and all reasonable inferences to be drawn therefrom support the trial court's determination. American Cyanamid Co. v. Stephen (1993), Ind.App., 623 N.E.2d 1065, 1070.

In order to satisfy the first requirement of T.R. 23(A), the party moving for class certification must demonstrate that the proposed class is so numerous that joinder of all members is impracticable. T.R. 23(A)(1); CSX, 646 N.E.2d at 1007. Pertinent to this issue, the trial court found that "plaintiffs have failed to specifically identify any number of any class or subclass other than that approximately 20,000 depositors existed with the defendant on December 31st, 1988." Record at 330. According to Plaintiffs, the trial court erred because their good faith estimation of the number of class members is sufficient to comply with the dictates of T.R. 23(A)(1).

The party maintaining a class action bears the burden of demonstrating the impracticability of joinder. Roe v. Town of Highland, 909 F.2d 1097, 1100, n. 4 (7th Cir.1990). ² This determination is not simply a test of numbers, but rather requires an examination of the specific facts and circumstances of each case. General Tel. Co. v. E.E.O.C., 446 U.S. 318, 100 S.Ct. 1698, 64 L.Ed.2d 319 (1980). Plaintiffs are not required to specify the identities nor exact number of persons included in the proposed class, Marcial v. Coronet Ins. Co., 880 F.2d 954, 957 (7th Cir.1989), and the fact that the number of class members cannot be determined with precision does not defeat certification. Vergara v. Hampton, 581 F.2d 1281, 1284 (7th Cir.1978), cert. denied, 441 U.S. 905, 99 S.Ct. 1993, 60 L.Ed.2d 373 (1979). However, a party moving for class certification may not rely on conclusory allegations that joinder is impractical or upon speculation as to the size of the class in order to satisfy T.R. 23(A)(1). Marcial, 880 F.2d at 957; Valentino v. Howlett, 528 F.2d 975, 978 (7th Cir.1976). Rather, Plaintiffs must supply facts or demonstrate circumstances which provide support for a reasonable estimate of the number of class members. Jones v. Blinziner, 536 F.Supp. 1181, 1189 (N.D.Ind.1982) quoting 3B Moore's Federal Practice p 23.05(3) (2d ed. 1978); see Marcial, 880 F.2d at 957 (in RICO action against automobile insurer and adjustor stemming from insurer's improper use of polygraph tests, lack of numerosity existed among class of plaintiff policyholders where class certification proposal assumed each plaintiff's claim had been rejected solely on basis of polygraph test results).

Here Plaintiffs sought to certify the following subclasses:

SUBCLASS I--That class of persons who are beneficiaries of life insurance policies of decedent depositors of the Defendant whose policies where [sic] terminated on or about December 31, 1988.

SUBCLASS II--That class of persons who are currently members of the Defendant credit union whose life insurance policies where [sic] terminated on or about December 31, 1988.

SUBCLASS III--That class of persons who are no longer members of the Defendant credit union whose insurance policies were terminated on or about December 31, 1988.

Record at 32. ³ In their Complaint and Motion to Certify Class, Plaintiffs assert that although each subclass is "unknown in number," Record at 12-13, the entire proposed class size exceeds 20,000 persons and, as such, renders joinder...