State ex rel. Gen. Credit Acceptance Co. v. Vincent

• Decision Date: 02 April 2019
• Docket Number: No. SC 97175,SC 97175
• Parties: STATE EX REL. GENERAL CREDIT ACCEPTANCE COMPANY, LLC, Relator, v. The Honorable David L. VINCENT III, Respondent.
• Court: Missouri Supreme Court

570 S.W.3d 42

STATE EX REL. GENERAL CREDIT ACCEPTANCE COMPANY, LLC, Relator,

v.The Honorable David L. VINCENT III, Respondent.

No. SC 97175

Supreme Court of Missouri, en banc.

Opinion issued April 2, 2019

General Credit Acceptance was represented by William Ray Price Jr. of Armstrong Teasdale LLP in St. Louis, (314) 621-5070; Timothy J. Wolf and Russel F. Watters of Brown & James PC in St. Louis, (314) 421-3400; and James F. Monafo of Husch Blackwell LLP in St. Louis, (573) 635-9118.

Weatherspoon was represented by Jesse B. Rochman, James R. Dowd and Martin L. Daesch of OnderLaw LLC in St. Louis, (314) 963-9000; G. Keith Phoenix and Timothy C. Sansone of Sandberg Phoenix & von Gontard PC in St. Louis, (314) 231-3332.

ORIGINAL PROCEEDING IN PROHIBITION

Zel M. Fischer, Chief Justice

General Credit Acceptance Company, LLC, (GCAC) filed a petition for a writ of prohibition barring the circuit court from taking any further action other than vacating the order granting class certification in whole or in part. The circuit court abused its discretion by certifying an overly broad class. The circuit court is directed to withdraw its certification of the class as presently defined because it includes large numbers of individual claims precluded by final deficiency judgments or estopped by their failure to disclose the claims in bankruptcy.

Further, the named plaintiff is not typical of the class because she voluntarily surrendered her vehicle and because GCAC has no deficiency judgment against her. Each class and subclass must have a representative whose claims are typical of the claims of members of that class and subclass. Either the class must be redefined to include only those for whom the named class representative is typical or a new or additional class representative must be named so each class or subclass has a representative whose claims are typical of the claims of the class. The preliminary writ is made permanent.

Factual and Procedural Background

Helena Weatherspoon defaulted on payments owed to Car Credit Acceptance Company pursuant to a consumer credit contract requiring her to make installment payments. Car Credit sent Weatherspoon notices informing her of the default and how to cure it. Weatherspoon did not cure the default. Car Credit assigned Weatherspoon's credit contract to GCAC. GCAC repossessed the vehicle, but Weatherspoon regained possession.

Weatherspoon defaulted again, and GCAC again notified her of the default and how to cure it. Weatherspoon did not cure the default and voluntarily surrendered her vehicle to GCAC. GCAC mailed a presale notice informing Weatherspoon her vehicle would be sold in compliance with the Missouri Uniform Commercial Code (UCC). GCAC sold the vehicle and mailed Weatherspoon a post-sale notice of her deficiency balance.

Weatherspoon filed the underlying class action "on behalf of all other similarly situated Missouri consumers" alleging GCAC, and its predecessors or successors, violated statutory notice requirements relating to the repossession and disposition of collateral and collected unlawful interest following default and repossession of the collateral.¹ Weatherspoon alleged the deficient notices caused her and all class members to suffer harm to their credit, character, and general reputation. Weatherspoon requested "damages equal to the amount of any judgment wrongfully obtained by GCAC" and "a mandatory injunction compelling GCAC to return any money collected for deficiency judgments, time price differential, delinquency and collection charges from Plaintiff and the classes." She also requested statutory damages, an injunction preventing GCAC from collecting deficiency judgments from the class, and a declaration that GCAC's form right to cure, presale, and post-sale notices violate Missouri law.

GCAC introduced evidence of statistical sampling showing approximately 87 percent of potential class members' claims against GCAC were resolved by final deficiency judgments or were extinguished in bankruptcy. GCAC argued this evidence showed the proposed class was overbroad because the vast majority of potential class members' claims were resolved in prior judicial proceedings. GCAC has no deficiency judgment against Weatherspoon, and she did not declare bankruptcy.

The circuit court certified two classes and designated Weatherspoon as the sole class representative. The first class included "all persons who are named as borrowers or buyers with a Missouri address on a loan or financing agreement with GCAC, assigned to GCAC or owned by GCAC; whose loan or financing agreement was secured by collateral; and who had the possession of their collateral taken by GCAC, voluntarily or involuntarily, from May 12, 2008 to present." The second class included "all persons from Class 1 who had the possession of their collateral taken by GCAC involuntarily."

GCAC filed a petition for permission to appeal the certification order pursuant to Rule 84.035. The court of appeals denied the petition. GCAC filed the underlying petition for a writ of prohibition asserting the circuit court abused its discretion by certifying the class. This Court issued a preliminary writ of prohibition.

Standard of Review

This Court has jurisdiction to issue original remedial writs. Mo. Const. art. V, § 4.1. A writ petition is the appropriate procedure for obtaining review of the court of appeals' denial of a petition for permission to appeal from an order granting class certification. State ex rel. Coca-Cola Co. v. Nixon , 249 S.W.3d 855, 859-60 (Mo. banc 2008).

Determining whether a claim should proceed as a class action "ultimately rests with the sound discretion of the trial court." Id. at 860 (internal quotation omitted). The circuit court abuses its discretion "if its order is clearly against the logic of the circumstance, is arbitrary and unreasonable, and indicates a lack of careful consideration." Id. (internal quotation omitted).

Class Certification

"[T]he underlying question in any class action certification is whether the class action device provides the most efficient and just method to resolve the controversy at hand, all things considered." Id. at 860-61. Rule 52.08(a) provides all class actions must satisfy the following four elements:

(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.

If the Rule 52.08(a) prerequisites are met, a class action may be maintained only if the plaintiff shows the class satisfies one of the three additional standards set forth in Rule 52.08(b). The circuit court determined Weatherspoon's putative class satisfied Rule 52.08(b)(3), which provides certification is proper if "the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy."

GCAC asserts the circuit court abused its discretion in certifying the class because individual issues predominate. As to liability, however, the class claims are based on an interpretation of the form UCC notices regarding the right to cure the default and rights to presale and post-sale notice of disposition of the collateral. A central aspect of Weatherspoon's putative class action is a determination of whether GCAC violated any statutory provisions governing its form UCC notices. Claims involving the interpretation of form contracts often present a "classic case for treatment as a class action." McKeage v. TMBC, LLC , 847 F.3d 992, 999 (8th Cir. 2017) (internal quotation omitted). GCAC has not established the circuit court abused its discretion by concluding common liability issues predominate. This Court expresses no opinion about whether the issue of damages will be suitable for class treatment if a class is certified consistent with this opinion.

Class Definition

When class certification is appropriate, Rule 52.08 presupposes a properly defined class that is ascertainable and not overbroad. Coca-Cola , 249 S.W.3d at 861-62. A properly defined class "is necessary to realize both the protections and benefits for which the class action device was created." Id. at 861. A class definition encompassing "more than a relatively small number of uninjured putative members is overly broad and improper." Id.

As a threshold matter, Weatherspoon incorrectly argues that considering the preclusive effect of final deficiency judgments or bankruptcy proceedings improperly resolves the merits of the class action at the certification stage. "Although the class certification decision is independent of the ultimate merits of the lawsuit, the applicable substantive law is relevant to a meaningful determination of the certification issues." Green v. Fred Weber, Inc. , 254 S.W.3d 874, 880 (Mo. banc 2008) ; Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds , 568 U.S. 455, 466, 133 S.Ct. 1184, 185 L.Ed.2d 308 (2013) ("Merits questions may be considered to the extent—but only to the extent—that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.").

Further, the Rule 52.08(b)(3) predominance and superiority analysis requires consideration of "the extent and nature of any litigation concerning the controversy already commenced by or against members of the class." Rule 52.08(b)(3)(B). Considering the "nature and extent" of prior litigation involving individual class members is necessary to determine whether the Rule 52.08 class certification requirements are satisfied and does not improperly resolve the merits of the claims of the class as a whole.² In this case, the "extent and nature" of the litigation "already commenced ......