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Nebel v. City of Chicago

OPINION FILED SEPTEMBER 27, 1977.

JOHN R. NEBEL, JR., ET AL., PLAINTIFFS-APPELLANTS,

v.

THE CITY OF CHICAGO, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. FRANCIS T. DELANEY, Judge, presiding.

MR. PRESIDING JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 21, 1977.

Plaintiff John R. Nebel, Jr. (Nebel), seeks to represent the class of all persons owning judgments outstanding against defendant, the City of Chicago (City). Plaintiff Lucy Kyle (Kyle) seeks to represent the class of all persons compelled to incur a factor's fee or to pay a discount to recover the amounts of their judgments against the City. These suits arise from an alleged policy of the City to delay payment of judgments rendered against it for 2 to 2 1/2 years from the date of entry. The trial court granted the City's motion to dismiss plaintiffs' complaint. The issue on appeal is whether the complaint contains sufficient allegations of the existence of a community of interest among the members of the respective classes in the subject matter of the suits and in the remedies sought to sustain a class action under Illinois law.

Count I of plaintiffs' two-count complaint alleged that Nebel obtained a judgment for $1,800 in the circuit court against the City on November 15, 1974. In spite of demands upon the City, Nebel has been unable to recover the amount of his judgment. Nebel contends that the City, relying on the doctrine of municipal governmental immunity (repudiated in Molitor v. Kaneland Community Unit District No. 302 (1959), 18 Ill.2d 11, 163 N.E.2d 89), has had a policy in existence since at least 1959 whereby it refuses to pay judgments against it for a period of 2 to 2 1/2 years after entry.

Nebel prays, among other relief, for a declaratory judgment that the City's policy is, and has been, wrongful since the Molitor decision in 1959; for an injunction against the enforcement of the policy; for an accounting of all sums presently held by the City which are owed as judgments; for an injunction against any future actions by other individual members of the class Nebel seeks to represent; for an order that the City pay all outstanding judgments (plus 6% interest); that the City be compelled under section 2 of the Interest Act (Ill. Rev. Stat. 1973, ch. 74, par. 2) to pay an additional 5% interest on all sums of money "unreasonably and vexatiously withheld" since 1959 under the City's policy; and for an order compelling the City to segregate all funds owed as judgments in a trust fund for the benefit of the plaintiff class.

Nebel seeks to represent the class of all natural persons, firms, partnerships, associations, joint stock companies, joint venturers, public corporations, private corporations, receivers, executors, trustees, conservators, or other court-appointed representatives who have obtained, and who presently hold, judgments against the City.

Count I also alleges that the issues involved present common issues of law and fact; that there is a community of interest among the members of the class in both the subject matter of the suit and in the remedies sought; that Nebel is able to fairly and adequately represent the other members of the class; that the number of members of the plaintiff class is so numerous that their joinder as plaintiffs is impractical; that a class action is preferable to individual actions to avoid a multiplicity of suits and inconsistent judgments; that, because of the small amounts of the individual judgments, a class action is the most desirable and efficient means of resolving the entire controversy; that the remedy at law is inadequate; that the City maintains a fund from which it pays judgments rendered against it, and that the members of the class have a common interest in that fund; that records which would identify all of the members of the class are readily available and easily obtainable from the City and from the records of the circuit court; and that the relief sought by each member of the class is identical.

Count II of the complaint sets forth basically the same allegations. It is brought by Kyle, who obtained a judgment for $3,100 against the City on August 24, 1974, on her own behalf, and on behalf of all those who have been compelled by the City's policy since 1959, to pay a discount or incur a factor's fee to recover the amount of their judgments. In addition to the relief sought in count I, count II prays that the City be ordered to pay the amounts of all discounts or factor's fees (plus interest) on all judgments since 1959 which were factored or discounted as a result of the City's policy of delay.

The City's motion to dismiss alleged that plaintiffs have failed to state a proper case for equitable relief in that a judgment creditor, absent allegation of fraud or coercion, or violation of trust, may not resort to chancery to collect the judgment; and that plaintiffs failed to allege any legal relationship between themselves and defendant which would sustain a suit in equity. It further alleges that plaintiffs' complaint does not allege a class action because it lacks many of the criteria requisite under Illinois law: there is no community of interest in the subject matter because the judgments are separate and arose from separate and diverse lawsuits; there are no common issues of law and fact between the individual plaintiffs and the other members of the respective classes because some plaintiffs obtained their own judgments, while others bought them at discount; plaintiffs cannot adequately represent the absent class members because many of them may be willing to accept the statutory rate of interest; and that there is no common fund from which relief may be given. The motion also alleges that the supreme court requires that all members of a plaintiff class must be notified of the class action. The motion prayed for dismissal of the complaint, for judgment on the pleadings, and costs.

The trial judge entered an order dismissing the complaint and awarding costs to defendant. The order recited that after considering the written motion of the City, written briefs submitted by the parties, and arguments of counsel, it had sustained defendant's motion to dismiss, and allowed plaintiffs 28 days in which to file an amended complaint. It further recited that the plaintiffs had not filed an amended complaint, electing to stand on their original complaint, and that the complaint failed to support a class action or a case for equitable relief.

I.

In this appeal, plaintiffs have argued three points. They have argued, at length, the well-settled rule that for purposes of a motion to dismiss, all well-pleaded facts of a complaint are presumed to be true. They also argue that the allegations of a class action are, per se, sufficient to invoke the jurisdiction of equity. The City does not dispute either of these points. The dispute centers around plaintiffs' third argument — that their complaint alleges sufficient facts to establish a class action under Illinois law.

In this regard, plaintiffs' arguments before this court respond to the points raised by the City in its motion to dismiss, and anticipate the arguments expected to be raised by the City in this appeal. Thus, plaintiffs argue that there are five "factors" indicative, but not conclusive, of a community of interest in the subject matter and in the remedy sought, the clear requisites of a valid class action in Illinois: whether the claims of all the members of the class share a common question of law or fact, such as the existence of a common fund from which relief may be given; whether the causes of action of the members of the class arise from the same transaction; whether the individual plaintiff will adequately represent the rights and interests of the absent members of the class; whether the number of members in the class renders separate litigation impossible or impractical; and whether there exists a purely equitable cause of action. Plaintiffs maintain that a community of interest in the subject matter and in the remedy sought is established by allegations that there is a common grievance that would otherwise go unredressed, and where a common question of law or fact so predominated the controversy that it becomes practicable to dispose of the whole controversy in a single suit. While they do not actually so state, plaintiffs infer that the common issue uniting the members of the classes is the unjust enrichment of the City resulting from its unlawful policy. Once this issue has been resolved, plaintiffs maintain, there are few, if any, subsidiary issues remaining to be resolved. In addition, the plaintiffs argue that their complaint sufficiently alleges that the members of the classes are numerous, their joinder impractical; that the individual claims of members of the classes are small, making individual litigation impractical; that the City is solvent; that the names, addresses, and amount of damages to each member of the class are readily obtainable from the City's records; that the class action is the superior method of disposing of the entire controversy; and that unless the class action is allowed, the City will be unjustly enriched. Anticipating the City's arguments, plaintiffs argue at length that there is no requirement that the rights of all class members arise from the same transaction, and that there is no requirement that an identifiable common fund be in existence from which recovery may be had.

Defendant argues that there is no community of interest among the members of the classes in either the subject matter of the suit or in the remedies sought. Defendant points to several factors as evidence of this: plaintiffs' complaint seeks to enjoin other members of the classes from taking independent action to collect their judgments and from accepting a voluntary satisfaction from the City; each judgment was obtained in a separate and individual transaction, and came into the possession of the present owners in various ways (some following a trial, some by agreed order following settlement negotiations); and plaintiffs' suit would prevent a member of the class from obtaining satisfaction of his judgment (assuming the existence of the policy as alleged) whether his payment date was ...


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