Title: MASQUAT v. DAIMLERCHRYSLER CORP.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

MASQUAT v. DAIMLERCHRYSLER CORP.  MASQUAT v. DAIMLERCHRYSLER CORP. 2008 OK 67 195 P.3d 48 Case Number: 104971 Decided: 07/01/2008 THE SUPREME COURT OF THE STATE OF OKLAHOMA Rhonda Masquat, Appellee, v. DaimlerChrysler Corporation, Appellant. APPEAL FROM THE DISTRICT COURT OF POTTAWATOMIE COUNTY Honorable Douglas L. Combs ¶0 An automobile owner brought breach of warranty claims against the manufacturer on behalf of herself and others similarly situated asserting a defect in the steering mechanism. The trial court granted class certification and the manufacturer appeals from that decision. AFFIRMED. Terry W. West, Bradley C. West, Gregg W. Luther; West Law Firm, Shawnee, Oklahoma, for Appellee. T. Christopher Tuck; Richardson, Patrick, Westbrook & Brickman, LLC, Mt. Pleasant, South Carolina, for Appellee. R. Douglas Gentile; Douthit, Frets, Rouse, Gentile & Rhodes, Kansas City, Missouri, for Appellee. George D. Davis; Walls Walker Harris & Wolfe, PLLC, Oklahoma City, Oklahoma, for Appellant. Raymond M. Kethledge; Bush Seyferth Kethledge & Paige, PLLC, Troy Michigan, for Appellant. James F. B. Daniels; McDowell Rice Smith & Buchanan, Kansas City, Missouri, for Appellant. COLBERT, J. ¶1 This interlocutory appeal challenges the trial court's certification of a class of plaintiffs who assert breach of warranty claims based on an alleged defect in the steering mechanism of certain vehicles manufactured by DaimlerChrysler Corporation (Defendant). The trial court's order certifying the class is affirmed. FACTS AND PROCEDURAL HISTORY ¶2 Plaintiff and class representative, Rhonda Masquat, brought this action asserting that LH platform vehicles contain a defect in the power rack and pinion steering system. These vehicles were sold as the Dodge Intrepid, the Eagle Vision, the Chrysler New Yorker, the Chrysler LHS, the Chrysler Concord, and the Chrysler 300M during model years 1993 through most of 2001. ¶3 Plaintiff alleges that shortly after production and sale of the LH vehicles began, Defendant began to receive reports from consumers of steering related problems with the entire LH family of vehicles. After unsuccessful attempts to remedy the problem, Defendant eventually introduced a newly designed bolt, which attached the inner tie rods to the rack and pinion steering gear, in late calendar year 2000 to keep the steering systems from failing. Plaintiff's theory is that the cure and repair to the problem developed by Defendant was never provided to already-produced LH platform vehicles, and consumers were not informed that the fix was available and that the repair should be made. ¶4 Plaintiff purchased a 1994 Dodge Intrepid on June 21, 1999. She replaced the attachment bolts and the inner tie rod bushings on October 11, 2000, shortly before the bolt change implemented by Defendant. Plaintiff filed this action on January 28, 2005, asserting that, by its failure to provide the bolt fix, Defendant breached its express and implied warranty obligations to the class consisting of Plaintiff and others similarly situated and that Defendant should be required to compensate the class for the cost of the bolt fix and steering-related repairs. ¶5 Defendant answered with a motion to dismiss asserting that the claim of Plaintiff and the claims of most of the proposed class members were time-barred. Plaintiff was ordered to amend her petition to address the defense. Plaintiff's amended petition asserted that the applicable statute of limitations was tolled based on "Defendant's active concealment" of the alleged defect in the steering system. ¶6 On May 22, 2007, the trial court held a hearing on Plaintiff's motion for class certification and certified the following class: All entities and adult persons domiciled or residing in the fifty (50) states of the United States of America and the District of Columbia who currently (as of May 21, 2007) own at least one model year 1993-2001 (through week 30 of model year 2001 production) automobile marketed by DAIMLERCHRYSLER Corporation as the Dodge Intrepid, the Eagle Vision, the Chrysler New Yorker, the Chrysler LHS, the Chrysler Concorde and the Chrysler 300M, or who have paid for repair costs to the steering system tie rods on any of the aforementioned vehicles. Excluded from the class are (a) defendant and all directors, officers, agents and employees of defendant; (b) judges and judicial personnel; (c) any entity or person who timely opts out of this proceeding; (d) any person who has suffered personal injury from the steering system failures alleged herein; and (e) any entity or person who has given a valid release of the claims asserted in this suit. The trial court decided against including former owners who did not incur any repair costs related to the steering system tie rods. The trial court also decided there should be a cap on the amount of compensation paid to class members. That court later determined that "[t]he cap for the bolt fix remedy for current owners shall be $310.00 and the cap for repairs to the steering system by reason of the absence of a bolt remedy shall be $400.00." ANALYSIS ¶7 Class action is a procedural device governed by title 12, section 2023, of the Oklahoma Statutes. ¶8 "A trial court's class certification order is reviewed for abuse of discretion." Ysbrand v. DaimlerChrysler Corp., ¶9 "The party who seeks certification has the burden of proving each of the requisite elements for class action." Harvell, ¶10 In considering a motion to certify a class, the trial court is not to resolve the merits of the claims or defenses asserted. See Harvell, ¶11 Defendant's challenge to the trial court's class certification order centers on whether issues common to the class predominate or whether a lack of uniform law and factual variations in the claims of individual class members preclude class certification. Defendant urges that individual questions of the applicable law and factual variations in the claims of class members will "overwhelm the court and jury, making class-wide determinations of the claims impracticable." Plaintiff counters stating that common class-wide issues predominate because one state's law applies to the breach of warranty claims of the class and one state's law applies to the statute of limitations defense to those claims. She also urges that the issues and evidence concerning the claims and defenses in this litigation are essentially uniform across the class. ¶12 There is no dispute that this Court's decision in Ysbrand requires the application of the substantive law of Michigan to the breach of warranty claims in this matter. See Ysbrand, ¶13 The hotly contested issue in this matter is whether common issues predominate over individual issues in regard to Defendant's statute of limitations defense. Defendant asserts that the breach of warranty claims of most of the class members are facially time-barred by the statute of limitations found at section 2-725(2) of the Uniform Commercial Code. ¶14 Plaintiff asserts that the statute of limitations was tolled because Defendant actively concealed information regarding the steering system tie rods from the class. Plaintiff emphasizes that she is not pursuing a common law fraud claim, nor is she bringing an independent tort claim for fraudulent concealment. In Ysbrand, the choice of law analysis on a common law fraud claim determined that it would require that the "law of 51 jurisdictions" be applied, "an overwhelming burden which would make the class unmanageable and a class action determination of that claim inappropriate." ¶15 Defendant, on the other hand, asserts that the choice of law rule applicable to this Court's determination of the proper limitation period, and thus the appropriate requirements for tolling that provision, must be found in Oklahoma's "borrowing statute" which provides that "[t]he period of limitation applicable to a claim accruing outside of this state shall be that prescribed either by the law of the place where the claim accrued or by the law of this state, whichever last bars the claim." Okla. Stat. tit. 12, § 105 (2001). Defendant argues that application of the borrowing statute will require the comparison of Oklahoma's limitation period for a warranty claim to the warranty limitation period of each state in which a class member resides. Defendant further argues that variations in the tolling requirements for the warranty limitation periods of each state will make class treatment of its statute of limitations defense completely unmanageable because common issues of law will not predominate. ¶16 The issue of the applicable statute of limitations is controlled by the choice of law provision found in Oklahoma's borrowing statute found at section 105 of title 12 of the Oklahoma Statutes. This provision was adopted in 1965 as part of the Uniform Statutes of Limitations on Foreign Claims Act, 1965 Okla. Sess. Laws 102-103 (codified as amended at Okla. Stat. tit. 12, §§ 104, 105, 107, & 108 (2001 & Supp. 2007)). ¶17 Michigan adopted the uniform version of section 2-725 of the Uniform Commercial Code and therefore "An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. . . ." Mich. Comp. Laws § 440.2725(1). Oklahoma's provision is identical except that Oklahoma substituted the word "five" for the word "four." See Okla Stat. tit. 12A § 2-725(1) (2001). Thus, Oklahoma's provision "last bars" the warranty claims. Because the Oklahoma limitation period and the tolling provisions of Oklahoma law apply to the warranty claims of each class member, there will be no need to address the law of each state to determine whether the limitation period has been tolled. However, this Court must examine the legal and factual issues surrounding the limitation period, not to determine whether the limitation period has been tolled, but rather, to determine whether common questions of law and fact predominate. ¶18 Oklahoma's statute of limitations for warranty claims provides that it does not displace the common law concerning tolling of the statute. See Okla. Stat. tit. 12A, § 2-725(4) ("This section does not alter the law on tolling of the statute of limitations . . ..). As Oklahoma law has long recognized: Fraudulent concealment constitutes an implied exception to the statute of limitations, and a party who wrongfully conceals material facts and thereby prevents a discovery of his wrong, or the fact that a cause of action has accrued against him, is not allowed to take advantage of his own wrong by pleading the statute, the purpose of which is to prevent wrong and fraud. Waugh v. Guthrie Gas, Light, Fuel & Improvement Co. The mere failure to disclose such material facts is not sufficient to prevent the running of the statute; but when there is something more than mere failure to disclose, when there is some actual artifice or some affirmative act of concealment, or some misrepresentation which induces the other party to inaction, or to forgo inquiry, the guilty party may not cover up the harm he has thus wrought by aid of the statute of limitations. Loyal Protective Ins. Co. v. Shoemaker ¶19 Defendant argues that predominance is defeated by the asserted need to question each class member individually as to whether the class member exercised reasonable diligence in learning of the allegedly concealed defect. Defendant speculates that some class members "might well have been more diligent than others" and that "[s]ome class members may have known more about the alleged defect than others, based on their own experience, or the experience of people they know, or conversations with dealer personnel . . .." This Court's decision in KMC Leasing v. Rockwell-Standard Corp., ¶20 In KMC, this Court affirmed the trial court's refusal to certify a proposed class of aircraft owners who asserted products liability and other claims including a claim of fraud. This Court determined that common questions did not predominate over the need for individual fact finding because the differing terms of hundreds of non-uniform sales contracts would "require the trial court to analyze fraud issues under differing laws of numerous jurisdictions." Id. ¶ 26, 9 P.3d at 691. Thus, it was the need to apply the law of numerous jurisdictions which defeated predominance in KMC just as that same need defeated predominance as to the fraud claim asserted in Ysbrand. See Ysbrand, ¶21 As discussed, the need to apply the law of numerous jurisdictions is not found in this matter. However, the question remains as to whether Defendant's alleged concealment of the defect from the class members and their asserted lack of knowledge concerning the alleged defect are issues susceptible to determination as a common class-wide issue. ¶22 This Court has not been presented with the opportunity to address the class action predominance requirement in the context of an asserted fraudulent concealment exception to the statute of limitations. However, this Court has acknowledged that "[t]he essence of fraudulent concealment is knowledge in possession of the person committing the fraud." Karriman v. Orthopedic Clinic, ¶23 "When representations are made or actions are taken on an individual basis, common questions will usually not predominate." 4 Alba Conte & Herbert Newberg, Newberg on Class Actions § 13:10, at 405 (4th ed. 2002). However, "[w]here plaintiffs in a class action allege similar representations, the reliance issues may be presumed similar as well." Allapattah Servs., Inc. v. Exxon Corp., 188 F.R.D. 667, 674 (S.D. Fla. 1999) citing Town of New Castle v. Yonkers Contracting Co., Inc., 131 F.R.D. 38, 43 (S.D.N.Y. 1990) (common questions pervade fraudulent concealment inquiry); Fisher Bros. v. Mueller Brass Co., 102 F.R.D. 570, 579 (E.D. Pa. 1984) ("The key question on the issue of fraudulent concealment will relate to whether the defendants successfully concealed the existence of the alleged conspiracy, and the proof of this contention will necessarily be common among the class members."); In re Screws Antitrust Litig., 91 F.R.D. 52, 58 (D. Mass. 1981) (question of fraudulent concealment common to class); In re Indep. Gasoline Antitrust Litig., 79 F.R.D. 552, 559 (D. Md. 1978) ("whether defendants attempted to conceal the alleged conspiracy is clearly a substantial question common to all class members" and because "common questions predominate over individual questions, . . . proof of the subjective elements of fraudulent concealment will not present significant manageability problems"). ¶24 In Allapattah, gasoline service station franchisees sought class certification in a breach of contract action against franchisor/seller based on the seller's promise that its wholesale price for fuel would be adjusted to offset a three per cent credit card processing charge it assessed. 188 F.R.D. at 675 n.14. The question was whether seller's alleged fraudulent concealment of its breach of contract tolled the limitation period found at section 2-725 of the Uniform Commercial Code and whether the common issue regarding seller's actions predominated over issues of individual reliance. The Allapattah court certified the class noting that "[b]oth the evidence of [seller's] acts of concealment and the circumstances that would have triggered [buyers'] duty of due diligence would be common to the class." Id. at 675. ¶25 In this matter, the common questions arising from Plaintiff's assertion of fraudulent concealment are (1) whether Defendant affirmatively concealed the alleged defect, and thus concealed a breach of warranty, and (2) whether the class members, by exercising due diligence, could have determined that a breach had occurred. Common to the class are both the evidence of the alleged acts of concealment and the evidence of whether knowledge of the alleged defect was readily available so as to put an ordinary prudent class member on inquiry. ¶26 Predominance does not require that there be no individual issues. It requires that the issues which can be answered as to all class members have more significance and weight than individual issues. Here, any question of variation in individual reliance is eclipsed by the common questions surrounding the allegation of fraudulent concealment. The critical inquiry will be whether Defendant actively and successfully concealed the existence of the alleged defect from the class. The proof of the active concealment which Plaintiff alleges will be common to each class member. ¶27 Again, the mere presence of individual issues does not defeat predominance. For example, "[t]here is a consensus . . . that the need for individual damages calculations does not diminish the appropriateness of class action certification where common questions as to liability predominate." Newberg, supra § 13:10, at 404 (footnote omitted); See, e.g., Burgess, ¶28 Common issues predominate in this matter as to the warranty claims and as to the alleged fraudulent concealment asserted in response to Defendant's statute of limitations defense. The primary issues to be resolved are common to each class member and Plaintiff's claim has the essential characteristics common to the claims of the class. Therefore, the class action requirements of commonality and typicality are satisfied. The class is made up of current and some past owners of certain LH platform vehicles, over two million of which were sold. There is no doubt the class is so numerous as to make joinder impracticable and therefore the numerosity requirement is met. Certification of the class in this matter is also superior to countless individual suits with the inevitable "inconsistent results" for parties similarly situated and the likely prospect that most claims will be left unpressed because the individual "claims are not substantial enough to support individual litigation." Ysbrand, ¶29 This Court's review of the trial court's decision to certify the class reveals no abuse of discretion and no error in the legal standard applied in granting certification. The parties are reminded that the trial court's class certification order is "conditional and may be altered or amended before the decision on the merits." Okla Stat. tit. 12, § 2023 (C)(1). AFFIRMED. CONCUR: Winchester, C.J.; Edmondson, V.C.J.; Hargrave, Kauger, Watt, Taylor, Colbert, JJ. CONCURS IN PART: Opala, J. FOOT