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KEDZIORA v. CITICORP NATL. SERVS.

March 30, 1995

THOMAS AND MERRILOU KEDZIORA, Plaintiffs,
v.
CITICORP NATIONAL SERVICES, INC., CITICORP ACCEPTANCE COMPANY INC., and CITICORP, Defendants.



The opinion of the court was delivered by: RUBEN CASTILLO

 Thomas and Merrilou Kedziora ("Kedzioras" *fn1" ) have sued Citicorp National Services, Inc. ("Citicorp" *fn2" ), claiming that automobile leases issued by Citicorp have violated the Consumer Leasing Act, 15 U.S.C. §§ 1657-1667e (the "Act" *fn3" ) and its implementing regulations. *fn4" Jurisdiction is grounded both in 28 U.S.C. § 1331 and in Section 1667d(c).

 This Court *fn5" previously granted Citicorp's motion to dismiss much (though not all) of the Kedzioras' original Complaint. Portions of Counts I, IV and V survived. Counts II and III, the Kedzioras' class and individual disclosure violation claims under 15 U.S.C. section 1667a(11) and Regulation M §§ 213.4(a) and (g)(10), were dismissed in their entirety. The Kedzioras subsequently amended the remaining portions of the their Complaint twice and filed a motion for class certification pursuant to Fed. R. Civ. P. ("Rule") 23, which the Court granted. *fn6" Citicorp then filed a motion for summary judgment on the remaining claims in the Second Amended Complaint, contending that there was no genuine issue of material fact regarding the reasonableness of the Kedzioras' early termination charge under § 1667b(b) of the Act, because Citicorp reduced the stream of accelerated payments and unearned finance charges to present value. Citicorp also moved for summary judgment on its Counterclaim, which demands payment by the Kedzioras of the remaining amounts allegedly due under Citicorp's lease agreement with the Kedzioras (the "Lease"). On February 24, 1994, the Court denied both aspects of Citicorp's motion for summary judgment, holding that "material factual issues stand in the way. . . ." (Feb. Op. at 20). The Court identified the genuine issue as whether Citicorp included the entire residual value of $ 6,362 in the early termination charge, rather than a discounted present value of that amount. (Feb. Op. at 16-17, 20).

 This material factual issue is now the subject of a supplemental motion for summary judgment pending before this Court. In addition, the Kedzioras have filed a motion to reconsider the Court's dismissal of their disclosure claims in light of Highsmith v. Chrysler Credit Corp. 18 F.3d 434 (7th Cir. 1994). For the reasons which follow, the Court grants Citicorp's motion for summary judgment on the Kedzioras' Second Amended Complaint and on Citicorp's Counterclaim, as to liability only. However, this judgment must be stayed pursuant to Rule 62(h), because, although the Kedzioras' motion to reconsider is denied, the legal theory asserted has merit. Therefore, the Court is giving the Kedzioras twenty-eight (28) days from the date of this order to file a Third Amended Complaint (accompanied by the appropriate motion for leave to file, pursuant to Rule 15(a)) which raises, in specific terms, the disclosure claim asserted in the motion to reconsider. The amendment shall be limited to the Section 1667a(11) claim.

 Citicorp's Motion for Summary Judgment

 A. Standards

 Federal Rule 56(c) Summary Judgment is appropriate when there remains no genuine issue of material fact upon which a reasonable jury could find in favor of the non-moving party, or the moving party is entitled to judgment as a matter of law. "One of the principle purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses. . . ." Celotex Corp. v. Catrett, 477 U.S. 317, 322-27, 106 S. Ct. 2548, 2552-55, 91 L. Ed. 2d 265 (1986). Thus, although the moving party on a motion for summary judgment is responsible for demonstrating to the Court why there is no genuine issue of material fact, the non-moving party must go beyond the face of the pleadings, affidavits, depositions, answers to interrogatories, and admissions on file, to demonstrate through specific evidence, that there remains a genuine issue of material fact and show that a rational jury could return a verdict in the non-moving party's favor. Celotex Corp. v. Catrett, 477 U.S. 317, 322-27, 106 S. Ct. 2548, 2552-55, 91 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254-55, 106 S. Ct. 2505, 2513-14, 91 L. Ed. 2d 202 (1986); Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 1355-56, 89 L. Ed. 2d 538 (1986). Consequently, the inquiry on summary judgment is whether the evidence presents a sufficient disagreement to require submission to a jury, or whether the evidence is so one-sided that one party must prevail as a matter of law. Anderson, 477 U.S. at 251-52. Disputed facts are material when they might affect the outcome of the suit. First Ind. Bank v. Baker, 957 F.2d 506, 507-08 (7th Cir. 1992). A metaphysical doubt will not suffice. Matsushita, 475 U.S. at 586. Nonetheless, the Court must view all inferences to be drawn from the facts in the light most favorable to the opposing party. Anderson, 477 U.S. at 247-48; Beraha v. Baxter Health Corp., 956 F.2d 1436, 1440 (7th Cir. 1992). If the evidence is merely colorable, or is not significantly probative, or is no more than a scintilla, summary judgment may be granted. Id. at 249-250.

  B. Facts7

 On September 1, 1988, Thomas Kedziora entered into a 60-month Lease for a 1989 Pontiac Grand Prix (the "Car") with a car dealer (the "Dealer"), and the Lease was assigned to Citicorp immediately after its execution. That assignment was expressly contemplated in the Lease, which states that its disclosures are made on behalf of Citicorp and that the Dealer intends to assign the Lease to Citicorp as soon as it is signed by the lessee.

 The Dealer and the Kedzioras agreed on the selling price of the Car as $ 15,581.94, with Citicorp having no role in negotiating that amount. Under the Lease, the Kedzioras owed monthly lease payments that included both a depreciation component and an interest charge component. Each monthly payment amounted to $ 278.79--the sum of $ 175.35 (the depreciation component) and $ 103.44 (the interest charge).

 Citicorp paid the Dealer $ 15,929.21 for the Lease, a figure derived by subtracting the amounts that the Dealer received directly from the Kedzioras from the purchase price. If the Kedzioras had made all the payments required under the Lease, they would have paid a total of $ 16,727.40--$ 10,521 allocable to depreciation and $ 6,206.40 in interest charges. The Kedzioras never completed the 60-month term. On August 19, 1990, in the 24th month of the Lease, the Car was totally destroyed in an accident, an event that constituted a default and triggered the early termination of the Lease. Early termination of the Lease required the Kedzioras to pay an early termination charge made up of: (1) all past-due unpaid amounts; (2) all remaining monthly payments due on the Lease after the date of termination, reduced by both: (a) the unearned amount of interest calculated by the Rule of 78s, and (b) all sales, use and rental taxes due on those remaining monthly payments; (3) the disposition charge; (4) the estimated wholesale value of the Car at the end of the originally-agreed-upon Lease term (the "Residual Value"); and (5) any government fees and taxes due in connection with the early termination of the Lease.

 In the Kedzioras' case, Citicorp calculated a total early termination charge of $ 12,994.14. For that purpose, Citicorp used the actuarial method, and not the Rule of 78s, in determining the unearned portion of the interest charge, and it also did not include any mileage charges. Because the total insurance proceeds credited to the Kedzioras came to $ 10,306, according to Citicorp, the Kedzioras remained personally liable for $ 2,688.14.

 The additional undisputed facts necessary to resolve the remaining issue are as follows. Citicorp used "Payoff Method 3" to calculate the Kedzioras' payoff amount at the time of early termination. Under Payoff Method 3, the total payoff amount equals "the present value of the remaining rent and residual value discounted at the running rate in the lease. " The Kedzioras' payoff amount calculated under the present value formula of Payoff Method 3 equalled $ 12,984.14, which included a reduction to present value of the Residual Value of $ 6,362. The Kedzioras also owed a $ 10 late payment fee, which led to a total payoff amount of 412,994.14. Citicorp then credited the Kedzioras with the $ 10,306 in insurance proceeds, which they remitted to Citicorp. Paragraph 17 of the Lease ...


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