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Rodriguez v. Credit Systems Specialists

FEBRUARY 8, 1974.

MANUEL RODRIGUEZ ET AL., PLAINTIFFS-APPELLANTS,

v.

CREDIT SYSTEMS SPECIALISTS, INC. ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. JAMES J. MEJDA, Judge, presiding.

MR. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT.

Plaintiffs Manuel Rodriguez, Elisa Rodriguez, Luis Rivera and Juan Abrego, individually and as class representatives, filed a lengthy twelve-count complaint against Credit Systems Specialists, Inc. (C.S.S.), and Juan Martin, an employee of that corporation. C.S.S. is engaged in the business of debt pooling and plaintiffs are Spanish-speaking persons having dealings with it. On defendant's motion, the trial court dismissed certain individual and class counts of plaintiffs' complaint: individual counts III, V and VII and class counts VIII, IX, X and XII. Upon the trial court's finding of no just reasons for delaying appeal, plaintiffs appeal from the trial court's order of dismissal.

Plaintiffs contend: (1) that plaintiffs adequately represent the classes in counts VIII, IX, X and XII, (2) that a sufficient community of interest exists in the instant class counts, and (3) that adequate joinder of parties and of causes of action exists among counts I, III, V and VII. The Consumer Federation of Illinois filed an amicus curiae brief supporting plaintiffs' class actions.

Count I of the complaint alleged that Manuel and Elisa Rodriguez, having only a limited understanding of English, visited the offices of C.S.S. where they met Juan Martin. Martin spoke to them in Spanish, assumed a fiduciary relationship with them, knowingly made certain false representations regarding C.S.S.'s services, knowingly failed to disclose certain material facts, induced them to rely upon him, and convinced them to sign a contract written in English. Martin's representations related to C.S.S.'s payments of plaintiffs' debts and to lower monthly payments to C.S.S. Martin's non-disclosures related to plaintiffs' ability to satisfy their debts, to their contractual obligations upon completion of the contract, to lower monthly payments, to delays in disbursements to creditors, and to the payment of a pro-rated monthly service charge in the absence of acceptance by their creditors of a plan of payment. Defendants presented no plan of payment and plaintiffs suffered injury from defendants' actions and omissions which violated the Consumer Fraud Act (Ill. Rev. Stat. 1969, ch. 121 1/2, par. 262), the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1969, ch. 121 1/2, par. 312) and the Financial Planning and Management Service Act (Ill. Rev. Stat. 1969, ch. 16 1/2, pars. 262 and 264) and its rules. Plaintiffs sought declarations of fraud, of statutory violations, and of rescission. They also sought an accounting of the amounts of the pro-rated monthly service charges and an injunction against collection and assignment.

Count III, on behalf of Luis Rivera, made allegations and requested relief comparable to count I. It also alleged that Rivera was induced to visit C.S.S. through a television advertisement and that he was persuaded to purchase an insurance policy. Martin's representations related to C.S.S. securing a loan in its own name for Rivera's benefit, to the length of time Rivera was required to make payments, and to the purchase of an insurance policy insuring payments. In addition to the non-disclosures included in count I, the complaint also alleged that Martin failed to inform Rivera regarding Rivera's obligations regarding refinancing and extensions of the contract which increased the amounts due C.S.S.

Count V, on behalf of Juan Abrego, made allegations and requested relief comparable to count III except that no insurance policy was involved. Martin's representations related to C.S.S.'s securing a loan in its name for Abrego's benefit, to lower monthly payments to C.S.S., to opening a savings account for Abrego, and to C.S.S.'s fee. In addition to those non-disclosures included in count III, Martin's non-disclosures to Abrego related to increasing his indebtedness by including non-creditors, such as his landlord, in his list of creditors. Upon discovering defendants' fraud, Abrego notified defendants of the cancellation of his contract.

Count VII, on behalf of all four plaintiffs individually, incorporated by reference the allegations of counts I, III and V and further alleged a great many legal deficiencies in the form contracts which plaintiffs signed. These deficiencies related to violations of various statutes and of the rules of the Department of Financial Institutions, to ambiguities in terms, to lack of mutuality and to unconscionability. Plaintiffs sought rescission of their contracts, declarations of unconscionability, and injunctions against collection and assignment.

Count VIII is the first class count of the complaint. The four named plaintiffs seek to represent the class of persons living in Cook County who are presently indebted to C.S.S. and who contracted with C.S.S. using the same form contract they had signed. Plaintiffs, in addition to incorporating by reference portions of Count VII regarding the legal deficiencies of the form contracts signed by them, alleged that the members of the instant class were so numerous that a class action was required to avoid a multiplicity of law suits, that common questions of law and fact were involved, and that separate actions could result in inconsistent adjudications. Plaintiffs seek injunctions against collection and assignment and a declaration that C.S.S.'s form contracts are null, void and unconscionable.

In count IX, the four named plaintiffs seek to represent the class of persons who live in Cook County, who speak Spanish and do not understand English, who are indebted to C.S.S., and who signed contracts with C.S.S. which were written in English but negotiated in Spanish. Plaintiffs' other allegations are comparable to those of count VIII relating to the necessity of bringing a class action. Plaintiffs seek injunctions against collection and assignment and a declaration that soliciting and negotiating in Spanish and executing contracts in English is unconscionable.

In count X all the plaintiffs except Juan Abrego seek to represent the class of persons residing in Cook County who entered contracts with C.S.S. and who paid more than one month's service charge to C.S.S. without C.S.S. having prepared a plan of payment acceptable to their creditors. In addition to those allegations comparable to those of count VIII relating to the need for a class action, plaintiffs alleged that C.S.S. violated section 262 of the Financial Planning and Management Service Act (Ill. Rev. Stat. 1969, ch. 16 1/2, par. 262) by taking services fees from the members of the class beyond the period of one month without presenting a plan of payment acceptable to the creditors of the respective class members. Plaintiffs seek an accounting for those service fees, a judgment for the amount of those overpayments together with interest, costs, and attorneys' fees, and injunctions against collection and assignment.

In count XII, all four plaintiffs seek to represent the class of persons residing in Cook County who entered contracts with C.S.S. but because of C.S.S.'s common scheme and design will be unable to satisfy their obligations and therefore will be required to pay C.S.S. certain other undisclosed service charges. In addition to those allegations comparable to those of count VIII relating to the need for a class action, plaintiffs alleged that C.S.S. purposefully prepared payment schedules which would require plaintiffs and the members of the class to continue to make payments to C.S.S. and to permit C.S.S. to extract additional fees in violation of various statutes. Plaintiffs seek declarations that C.S.S. violated its fiduciary obligations and various statutes, injunctions restraining collection and assignments, and awards of costs and attorneys' fees.

Defendants filed a motion to dismiss counts II through XII of the complaint. Essentially they alleged that the individual counts were improperly joined, that the class counts were not properly class actions, and that plaintiffs could not adequately represent the classes involved. Attached to the motion were copies of plaintiffs' notices of cancellation of their contracts with C.S.S. Also, both parties filed lengthy briefs in the trial court supporting their respective positions and examining various cases. Subsequently, plaintiffs agreed to withdraw counts II, IV, VI and XI of their complaint.

Upon hearing arguments of counsel, the trial court in a written opinion dismissed without prejudice counts III, V and VII as being improperly joined with count I and also dismissed counts VIII, IX, X and XII. The basis of the trial court's dismissal of the class counts was that each member of the class entered into a separate contract with C.S.S. under various circumstances, that the members of the class have no interests in the contracts of the other members of the class, that the court would be required to examine the individual circumstances of each contract, and that no community of interest exists among the members of the class. Furthermore, all of the members of the class cannot be forced to rescind their ...


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