Walczak v. Onyx Acceptance Corp.

• Decision Date: 07 June 2006
• Docket Number: No. 2-05-0979.,2-05-0979.
• Citation: 850 N.E.2d 357
• Parties: Christopher D. WALCZAK and Judith E. Walczak, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellees, v. ONYX ACCEPTANCE CORPORATION, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

850 N.E.2d 357

Christopher D. WALCZAK and Judith E. Walczak, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellees, v. ONYX ACCEPTANCE CORPORATION, Defendants-Appellants.

No. 2-05-0979.

Appellate Court of Illinois, Second District.

June 7, 2006.

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Michael H. Moirano, Claire E. Gorman, Nisen & Elliott, Chicago, for Onyx Acceptance Corporation.

Chris Marder, Waukegan, Donald L.F. Metzger, Metzger & Associates, Ltd., Chicago, for Christopher D. Walczak, Judith E. Walczak.

Justice CALLUM delivered the opinion of the court:

I. INTRODUCTION

This court granted defendant's, Onyx Acceptance Corporation's, petition for leave to appeal under Supreme Court Rule 306(a)(8) (Official Reports Advance Sheet No. 26 (December 24, 2003), R. 306(a)(8), eff. January 1, 2004) from the trial court's order granting plaintiffs', Christopher D. and Judith E. Walczaks', motion for reconsideration and class certification. See 735 ILCS 5/2-801 (West 2002). On appeal, Onyx argues that the trial court abused its discretion in finding that the prerequisites for class certification were met. We affirm.

II. BACKGROUND

On April 30, 2003, plaintiffs sued Onyx in the form of a class action seeking equitable and monetary relief for breach of contract and violations of the Uniform Commercial Code (UCC) (810 ILCS 5/1-101 et seq. (West 2002)) and the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2002)). In their complaint, plaintiffs alleged that, on September 18, 2000, they entered into a retail installment contract with Rockenbach Chevrolet to purchase a used 1993 GMC Jimmy Typhoon motor vehicle for $17,990. Plaintiffs made a down payment in the amount of $4,500.60 and financed the remainder of the purchase price through Onyx. They agreed to make 60 monthly payments of $338.56, or a total of $20,313.60 (the $14,803.22 amount financed plus $5,510.38 in finance charges).

Onyx, a Delaware corporation with a Rosemont office, is an Illinois sales finance agency that purchases motor vehicle retail installment contracts. Plaintiffs alleged that they made monthly payments to Onyx under the terms of the contract for approximately nine months, for a total of $3,245.58. They then fell behind in their payments, and Onyx repossessed the vehicle on or about November 17, 2001.

Plaintiffs further alleged that, prior to the repossession, they paid an amount equal to 30% or more of the "deferred payment price" (815 ILCS 375/2.10 (West 2002)) under the contract or an amount equal to 30% or more of the total of payments due under the contract. Thus, under the Illinois Vehicle Code (Vehicle Code) (625 ILCS 5/1-100 et seq. (West 2002)), they could tender "all unpaid amounts," plus certain expenses and costs, "without acceleration." See 625 ILCS 5/3-114(f-7)(1) (West 2002). In plaintiffs' view, they could pay only the past-due monthly payments, plus allowable expenses, to redeem the motor vehicle and reinstate the contract.

Plaintiffs also alleged that the Vehicle Code requires a lienholder to send to the owner written notice of his or her motor vehicle redemption right. See 625 ILCS 5/3-114(f-7)(3) (West 2002). According to plaintiffs, on or about November 20, 2001, and after having repossessed the vehicle, Onyx issued them a written notice that described their rights to redeem their vehicle before it was sold. Onyx declared that the entire contract amount was immediately due and payable. Specifically, Onyx demanded a total of $14,435.82, representing $13,415.80 in unpaid balance, $420 in costs, $299.79 in interest, and $300.23 in late charges. Plaintiffs alleged that Onyx unlawfully accelerated the balance of the debt, gave faulty notice of plaintiffs' redemption right, and unlawfully sold their motor vehicle. According to plaintiffs, as of the repossession date, the unpaid amount due (without acceleration) was approximately $1,155.70. On March 21, 2002, Onyx sent plaintiffs a "Deficiency/Surplus Statement" notifying them of the sale of their vehicle for $500 and of a deficiency balance of $6,446.50. On March 18, 2003, Onyx sent plaintiffs a letter demanding full payment of a $6,146.50 deficiency balance.

In their complaint, plaintiffs asked the trial court to certify the action as a class action with both plaintiffs as representative parties. They alleged that the class consisted of: (1) plaintiffs and all other Illinois consumers; (2) who purchased motor vehicles in Illinois; (3) who financed such purchases through Onyx; (4) by entering into motor vehicle retail installment contracts; (5) which were then purchased by or assigned to Onyx; (6) who thereafter made payments to Onyx under the contracts, paying an amount equal to 30% or more of the deferred payment price under the contract or an amount equal to 30% or more of the total of payments due under the contract; (7) who fell behind in their payments to Onyx; (8) who had their motor vehicles repossessed for the first time by Onyx; (9) who then received a notice letter from Onyx; (10) which misinformed them and/or failed to inform them of their rights to redeem their vehicles under the terms of the contract and the Vehicle Code (625 ILCS 5/3-114(f-5), (f-7) (West 2002)).

In its answer, Onyx, inter alia, denied that a class action was appropriate and asserted the defense of unclean hands. It further counterclaimed for conversion and breach of contract, alleging that plaintiffs failed to make monthly payments nine months after they entered into the contract and that they failed to keep the vehicle properly insured. Further, it alleged that plaintiffs intentionally stripped the vehicle of valuable parts, rendering it inoperable and, as a result, significantly diminished in value. Onyx further alleged that it subsequently repossessed the vehicle and sold it at auction, realizing $500 from the sale. It alleged that the balance due from plaintiffs was $14,435.82 as of November 20, 2001, and that it had demanded payment, but plaintiffs failed and refused to pay.

On July 25, 2003, plaintiffs moved for class certification. The trial court denied their motion on February 3, 2005, finding that only three of the four prerequisites for class certification were satisfied. Specifically, it found that the class was so numerous that joinder of all members was impracticable (735 ILCS 5/2-801(1) (West 2002)); that there were questions of law or fact common to the class that predominated over any questions affecting only individual members (735 ILCS 5/2-801(2) (West 2002)); and that plaintiffs as representative parties would fairly and adequately protect the interest of the class (735 ILCS 5/2-801(3) (West 2002)). However, it found that the class action was not an appropriate method for the fair and efficient adjudication of the controversy (735 ILCS 5/2-801(4) (West 2002)) because Onyx had threatened to bring counterclaims for deficiency judgments against many members of the class if it were certified, because the threat was credible, and because it was quite possible that putative class members would have a judgment entered against them and that their liability would exceed their recovery. On March 3, 2005, plaintiffs moved for reconsideration of their motion for class certification. On August 30, 2005, the trial court granted plaintiffs' motion and certified the class. Addressing the fourth prerequisite for class certification, the court found that it is unlikely that Onyx may maintain any actions for deficiency judgments against any putative class members and further found that any counterclaims may be addressed on a class basis.

On February 26, 2004, the trial court dismissed both counts of Onyx's counterclaim. Onyx subsequently filed an amended counterclaim for conversion and a deficiency judgment. It also amended its affirmative defense, alleging that Christopher Walczak intentionally stripped the vehicle of many valuable parts. The trial court, on July 27, 2004, struck Onyx's amended affirmative defense and dismissed the conversion count as to both plaintiffs.

On September 29, 2005, Onyx petitioned for leave to appeal the trial court's August 30, 2005, order. On December 8, 2005, this court allowed Onyx's petition.

III. ANALYSIS

A. Motion Taken with Case

In a motion we ordered taken with the case, plaintiffs move to strike portions of Onyx's brief. For the following reasons, we deny plaintiffs' motion in its entirety.

First, plaintiffs address the scope of our review. They assert that Onyx never challenged the trial court's determination as to the first three elements required for class certification and request that we strike those portions of Onyx's brief that address those elements, because they are not properly before this court. Plaintiffs point out that Onyx appealed only the August 30, 2005, order and not the court's February 3, 2005, order, which addressed the first three prerequisites for class certification. They reason that this court does not have jurisdiction over those issues.

Several considerations lead us to conclude that Onyx has not waived its arguments. The trial court's February 3, 2005, order denied class certification, thus deciding the issue in Onyx's favor and precluding an appeal by Onyx. See Solimini v. Thomas, 293 Ill.App.3d 430, 434, 227 Ill.Dec. 875, 688 N.E.2d 356 (1997) (a party may not complain of error that does not prejudicially affect it, and one who has obtained by judgment all that has been asked for in the trial court cannot appeal from the judgment). Prior to this order, Onyx had argued that class certification was not appropriate. The trial court's articulated basis for its order was that, although the first three requirements for certification were satisfied, the fourth was not. In their motion to reconsider, plaintiffs addressed only the fourth element, and Onyx, in its response, did the same. Onyx...