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Robinson v. Toyota Motor Credit Corporation

May 23, 2002

EMMA J. ROBINSON ET AL., APPELLANTS,
v.
TOYOTA MOTOR CREDIT CORPORATION ET AL., APPELLEES.



The opinion of the court was delivered by: Justice Kilbride

UNPUBLISHED

Docket No. 90242-Agenda 22-May 2001.

In this case, we review whether plaintiffs' federal Consumer Leasing Act (CLA) (15 U.S.C. §§1667a, 1667b (1994)) claims are precluded by the res judicata effect of a class action judgment rendered in another state. We also review whether plaintiffs' state claims for violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 1992)) were properly dismissed for failure to state a cause of action.

Plaintiff Emma Robinson leased an automobile from defendant River Oaks Toyota. Plaintiff Latanya Kemp entered into a similar lease agreement with defendant Point One Toyota. Both leases were assigned to defendant Toyota Motor Credit Corporation (Toyota). Plaintiffs then sued all three defendants, claiming that the lease agreements violated various federal and state consumer protection laws. They sought relief for themselves and for a class of persons similarly situated. Such a class was never certified by the court, and plaintiff's second amended complaint was dismissed with prejudice. The trial court found that plaintiffs' federal claims were precluded by the res judicata effect of a California judgment in a class action suit where plaintiffs were members of the class. The state and common law claims were dismissed for failure to state a cause of action.

The appellate court affirmed the dismissal of all of the state-law claims, except the common law breach of contract claim. 315 Ill. App. 3d 1086. The appellate court reversed as to that count and remanded the cause to the trial court. Toyota does not contest that ruling here. The appellate court affirmed the dismissal of two of the federal claims as barred by res judicata, but found the remaining federal claim to be an individual claim not included in the class action and, thus, not barred. 315 Ill. App. 3d at 1093.

We allowed plaintiffs' petition for leave to appeal (177 Ill. 2d R. 315). For the reasons that follow, we hold that the California judgment specifically reserved from the settlement certain CLA claims and that plaintiffs' CLA claims are not barred by the res judicata effect of the California judgment. We further hold that the appellate court properly sustained the dismissal of the state Consumer Fraud Act claims. We therefore affirm in part and reverse in part the judgments of the appellate and circuit courts and remand the cause to the circuit court for further proceedings.

I. BACKGROUND

On May 14, 1993, plaintiff Kemp entered into a 48-month, closed-end motor vehicle lease with defendant Point One Toyota. On July 6, 1993, plaintiff Robinson entered into a similar 42-month lease agreement with defendant River Oaks Toyota. Both leases were assigned to defendant Toyota Motor Credit Corporation.

At the time plaintiffs' leases were signed, a class action was pending in the circuit court of Cook County, where individual lessees of River Oaks Toyota sought relief against that company and Toyota for alleged violations of the CLA and the Consumer Fraud Act. Mortimer v. River Oaks Toyota, Inc., 278 Ill. App. 3d 597 (1996). On July 7, 1993, the Mortimer class of persons was certified. In September, 1993, the class was notified by mail and publication. Mortimer, 278 Ill. App. 3d at 599. Plaintiffs received the Mortimer notice and elected to opt out of that class action and settlement.

Plaintiffs then filed a 12-count complaint against defendants in August of 1995, alleging causes of action similar to those alleged in Mortimer. After their original complaint was dismissed, plaintiffs filed an amended complaint and, in June 1996, filed a motion seeking class certification. Toyota responded and asserted that plaintiffs' motion should be denied because a California trial court had already certified a nationwide class that included the plaintiffs (Ramirez v. Toyota Motor Credit Corp., No. 752044-8 (Alameda Co. Sup. Ct.)). The Ramirez class certification included all persons who leased a vehicle pursuant to a Toyota lease agreement in the United States after August 1, 1993, or who had opted out of the Mortimer class action. Plaintiffs were notified of the Ramirez certification and were given an opt-out deadline of September 2, 1996. They did not meet that deadline. Instead, plaintiffs sought leave from the California court to extend the opt-out period and to modify the class definition. Their motions were denied in December 1996.

In January 1997, our trial court granted Toyota's motion to dismiss plaintiffs' first amended complaint pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 1996)), finding that plaintiffs were Ramirez class members. The trial court dismissed without prejudice, stating that plaintiffs could petition to reinstate their action if the California appeals court reversed the Ramirez trial court decision denying plaintiffs' motion to extend the opt-out period. Plaintiffs' appeal of the Ramirez court's denial of their motion to extend the opt-out period and to enlarge the class definition was dismissed in an unpublished order by the California appellate court in June of 1997.

On August 27, 1997, the Ramirez class action was settled subject to final approval by the trial court. The settlement agreement defined with particularity the causes of action released by non-California settlement class members. Toyota settled for a release of liability from certain claims as follows:

"any violation of (1) any California or federal statutory or common law or regulation which was or could have been asserted relating to [Toyota's] disclosures, formula, methodology and charges for auction, transportation and/or reconditioning fees or the collection of such charges; (2) any statutory or common law, regulation, or any other allegation or claim based on California law which was or could have been asserted in the action relating to disclosure of the capitalized cost or initial value of leased vehicles; (3) any statutory or common law, regulation or any other allegation or claim based on California law which was or could have been asserted in the action relating to [ Toyota's] early termination/default disclosure, formula, methodology, and charges."

Furthermore, with regard to non-California class members, the settlement specifically excluded from release certain claims as follows:

"any other statutory or common law claims, including but not limited to claims such as (i) claims brought under the laws of states other than California to the extent that such claims exist and are not barred by the laws of such states or by any order of the court in that action; (ii) claims brought under the Federal Consumer Leasing Act and Regulation M (12 C.F.R. part 2213) arising out of matters other than Toyota's disclosure of, and charges for, auction, transportation and/or reconditioning fees or the collection or attempted collection of such charges."

The settlement required the filing of a second amended complaint with a motion for approval of the settlement. The second amended complaint was filed September 9, 1997, and included two counts alleging violation of the CLA and Regulation M (12 C.F.R. §213.4(g) (2001)). Those counts contained allegations accusing Toyota of a failure to disclose in a meaningful sequence its early termination or default methodology and charges for auction, transportation, and reconditioning.

The settlement further reserved to Toyota its right to argue, under applicable law, that its payment of the statutory penalty under the CLA for California class members "constitutes the full amount of statutory damages available under the CLA for `any class action or series of class actions arising out of the same failure to comply.' " Non-California class members also reserved their right to argue to the contrary under applicable law.

On December 10, 1997, the settlement was approved by the California trial court, and it was incorporated in a final order and judgment. The final judgment provided that it applied to all claims and causes of action settled under its terms and it was made binding on all members of the plaintiff settlement class who had not opted out of the action. The judgment further directed dismissal of the second amended complaint with prejudice. Plaintiffs' counsel participated in the final judgment hearing and did not object to the approval of the settlement or to the terms of the final judgment.

On December 30, 1997, plaintiffs filed a motion to decertify in Ramirez. The California trial court denied that motion on February 6, 1998, but entered the following order:

"IT IS HEREBY ORDERED that the motion to Decertify Ms. Robinson and Ms. Kemp is DENIED. However, based on the Court's ruling re: Motion for Summary Adjudication of Issues dated January 27, 1997, the court hereby orders that each of the petitioners herein, i.e., Robinson and Kemp, may continue or file his or her own lawsuit against Toyota Motor Credit Corporation in the State of Illinois based upon violations of Illinois law. This court does not address any right to pursue claims under Federal law."

Following the entry of the Ramirez settlement judgment, the circuit court below granted plaintiffs' motion to reinstate. Plaintiffs then filed a second amended complaint, alleging violations of the CLA, the Consumer Fraud Act, the Uniform Deceptive Trade Practices Act (815 ILCS 510/1 et seq. (West 1994)), and a common law breach of contract. Plaintiffs also sought class action certification in addition to their claims for individual relief. The CLA claims asserted that Toyota: (1) failed either to allow early termination or to disclose penalties for early termination in violation of Regulation M; (2) failed to disclose Illinois sales, excise, use or rental taxes in the Kemp lease; and (3) failed to disclose in a meaningful sequence penalties for early termination or default so that the unsophisticated consumer could understand the requirements of the lease. Toyota filed a motion pursuant to section 2-619 of the Code of Civil Procedure to dismiss those claims as barred by the res judicata effect of the Ramirez judgment and moved to dismiss the state and common law claims pursuant to section 2-615 of the Code for failure to state a cause of action (735 ILCS 5/2-619, 2-615 (West 1996)). Those motions were granted and the cause dismissed with prejudice. No plaintiff class was certified. Plaintiffs appealed.

The appellate court held that all of plaintiffs' CLA claims except the individual claim of Kemp relating to undisclosed taxes were barred by res judicata. 315 Ill. App. 3d at 1093. The appellate court affirmed the findings of the trial court that the Consumer Fraud Act claim and the Uniform Deceptive Trade Practices Act claim failed to state a cause of action, but it reversed the trial court's dismissal of the breach of contract claim. The latter holding was not challenged by Toyota. Plaintiffs appeal to this court, arguing that res ...


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