Chandler v. Southwest Jeep-Eagle, Inc.,

Facts

P sued Southwest Jeep-Eagle, Inc. (D) and Calumet National Bank (D1) seeking redress for alleged misrepresentations and unfair and deceptive practices in connection with D's standard retail installment contract. D operates an automobile dealership. D1 is a nationally chartered bank. On May 23, 1994, P purchased from Southwest a used Chrysler automobile to be used for personal, family and household purposes. At the time he purchased the car, P signed D's standard motor vehicle retail installment sales contract, which was subsequently assigned to D1. P also informed D that he wished to purchase a full warranty from Chrysler that would be transferable to another authorized Chrysler dealership for the purpose of repairs. D informed P that the price for a full warranty was $1,780.40 and provided P with its standard service contract, on which the fee amount was listed under the subheading 'Amounts Paid to Others for You,' along with taxes, insurance premiums, and license, title, registration and filing fees, none of which were negotiable. P signed the contract and paid the $1,780.40 fee to D. Counts I and II of the complaint, the class claims, are alleged only against D. P alleges, D only transferred a small portion of the $1,780.40 to Chrysler, retaining the balance, and that the fee amount was actually unilaterally determined by D and therefore negotiable. P charges that the method by which the cost was listed on the contract is misleading, unfair and deceptive. He alleges that D intended him and other purchasers to rely on the misleading, unfair and deceptive representation and thus not attempt to negotiate the price of the service contract, allowing Southwest routinely to overcharge customers. He further alleges that had he known that the cost of the service contract was negotiable, neither he nor the average consumer would have paid as much. The developed substantial mechanical problems. P made numerous trips to repair the car for engine work and repairs to the radiator, tachometer, oil pressure, and temperature gauges, air condenser, power steering, transmission, front wheel drive, alignment, internal computers, and radio. D performed some repairs, but most of the problems remained uncorrected. D refused P's request to view the defective auto parts that D allegedly had replaced. P took the vehicle to another authorized Chrysler dealer and requested service under the Chrysler service contract that he had purchased through D. The dealer informed P that the Chrysler warranty computer showed no record of P's service contract, and refused to perform the necessary repairs. The dealer also informed P that the vehicle model that Chandler had purchased from D was the subject of several outstanding manufacturer's recalls with respect to which D had not made repairs prior to selling the vehicle to P. P returned to D for several more unsuccessful attempts to have the vehicle repaired. On September 13, 1994, P revoked his acceptance of the vehicle on the basis of unmerchantability. P claims that D failed to make the necessary repairs to the defective vehicle as promised under the service contract and then fraudulently evaded responsibility for the car's condition. Count I alleges that D made certain misrepresentations in its retail installment contracts in violation of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ('TILA'). Count II alleges that the misrepresentations amounted to deceptive practices under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. ('Consumer Fraud Act'). Pursuant to Federal Rule of Civil Procedure 23, Chandler moves for class certification with respect to counts I and II. P proposes that the class be defined as all persons who satisfy each of the following four criteria: (i) they purchased a service contract or extended warranty from D; (ii) their transaction was financed by a retail installment contract; (iii) their transaction was documented as a consumer transaction (i.e., TILA disclosures were made); and (iv) the retail installment contract states that an amount was paid to a third party on account of an extended warranty or service contract that is other than the amount actually collected by the third party.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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