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Belfour v. Schaumburg Auto

July 07, 1999


Appeal from the Circuit Court of Du Page County. No. 98--L--287 Honorable Richard A. Lucas, Judge, Presiding.

The opinion of the court was delivered by: Justice Inglis

JUSTICE INGLIS delivered the opinion of the court:

Plaintiffs, Edward and Rita Belfour, appeal the judgment of the trial court of Du Page County granting summary judgment in favor of defendants, Schaumburg Auto (dealership), Volkswagen of America, Inc. (Audi), and Volkswagen Credit, Inc. (VCI). Lehrer, Flaherty & Canavan (Lehrer, Flaherty) appeals the judgment of the trial court granting defendants' motion for sanctions pursuant to Supreme Court Rule 137 (155 Ill. 2d R. 137). Defendants cross-appeal, challenging the amount of the award of sanctions. We affirm.

In January 1991, plaintiffs purchased a 1990 Audi for $41,090. The majority of the purchase was financed by VCI. Pursuant to the loan agreement, VCI held a lien on the vehicle which was secured by an insurance policy issued by State Farm. In the event of a loss, the insurance proceeds were to be used first to satisfy any outstanding balance on the loan. Audi provided a limited new car warranty to repair defective parts or replace the parts with new or remanufactured genuine Audi parts for three years or 50,000 miles, whichever came first. The warranty expressly excluded incidental or consequential damages, including loss of value of the vehicle, lost profits or earnings, and out-of-pocket expenses for substitute transportation or lodging.

On May 2, 1992, Rita Belfour noticed smoke coming from the motor while she was driving the car with her two children. She pulled the car over, took her children out of the car, and summoned help. No one was injured.

Rita called State Farm to report the loss. On May 4, 1992, Laura Dukes, a senior claim representative for State Farm, advised plaintiffs that the car was a total loss. At that time, $32,346 remained outstanding on the car loan. The car was towed on Edward Belfour's direction to Elmhurst Ford. Dukes and another State Farm employee, John Kessler, inspected the auto. Kessler spoke with Edward and explained both State Farm's subrogation policy and Audi's policy regarding fire claim warranties.

State Farm contacted Audi on May 13, 1992. Shortly after, Dan Anderson, product liaison engineer employed by Audi assigned to investigate the fire loss, contacted Kessler and asked if they could meet and inspect the car together. Thereafter, Kessler informed Frank Taheny at Elmhurst Ford that he and Anderson were going to meet at Elmhurst Ford to inspect the car on May 15, 1992. However, before the meeting took place, Edward advised Dukes that he did not want Audi to inspect the car. Dukes then told Kessler, who, in turn, told Anderson.

On May 15, 1992, Dukes explained to Rita that State Farm had a potential subrogation interest and that Audi needed to look at the car if State Farm was to pay the claim to plaintiffs. Edward informed Dukes that they were going to sue Audi exclusively and that they did not want State Farm involved at this point.

On August 31, 1992, plaintiffs' counsel, Norman Lehrer, sent a letter to each defendant demanding that the purchase price and all amounts paid on the contract for the car be returned to plaintiffs. In addition, he demanded that defendants compensate plaintiffs for their damages.

On September 11, 1992, Audi's general counsel, Joseph Folz, responded to Lehrer, advising that Robert Cameron, the product liaison for Audi, would be contacting Lehrer. Cameron called Lehrer three times between September 11 and October 7, 1992, but Lehrer was never available to take the calls and did not return them. On October 7, Cameron wrote to Lehrer, asking that Lehrer return his phone calls so that Audi could conduct an inspection of the car and have an opportunity to honor its warranty obligation. On October 15, 1992, Lehrer responded by threatening to file suit within seven days unless Audi honored plaintiffs' revocation of acceptance and compensated them for their damages.

On October 23, 1992, after two more attempts to reach Lehrer, Cameron finally spoke with Lehrer. On October 27, Lehrer wrote that the car would be available for inspection from November 3-5. On November 5, Dan Anderson, Audi's product liaison engineer, inspected the fire damage to the car and sent a report to Cameron.

Lehrer did not respond to Cameron's letter. Instead, on February 16, 1993, plaintiffs filed suit. Counts I and II alleged that the dealership and Audi were liable for breaches of express and implied warranties, respectively, under the Magnuson-Moss Warranty Act (Magnuson-Moss) (15 U.S.C.A. §2301 et seq. (West 1982)). Count III sought the revocation of the contract between the dealership and plaintiffs. Count IV sought to revoke the retail installment loan agreement with VCI and the return of all installment payments previously made.

In particular, counts I through III alleged the following:

"12. Plaintiffs have provided Defendants sufficient opportunity to replace the automobile."

"13. Plaintiffs have met all of their obligations and preconditions as provided in the written warranties."

"14.Defendants have failed to replace the automobile, as provided in the written warranties, and the ...

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