Two car dealer groups could not convince the Court of Appeals of Indiana to order the dismissal of class action lawsuits brought against them by angry customers.
Customers in 14 consolidated class action causes had purchased or leased a vehicle from a group of Indiana automobile dealers and a second group described as “alter ego dealers,” named as defendants under the alter ego doctrine.
During various transactions that took place between 2013 and 2020, the dealers charged consumers a document preparation fee of less than $200. The dealers listed the document preparation fee as an itemized expense in the sales contracts, but neither included the fee in the advertised price of the vehicle nor negotiated it with the consumers.
In their class action complaints, the consumers raised three claims, including a violation of the Deceptive Consumer Sales Act, constructive fraud and unjust enrichment. Their claims were based on the allegation that, between the years at issue, the dealers had charged a document preparation fee that was contrary to the Motor Vehicle Dealer Services Act under Indiana Code § 9-32-13-7.
Members of the Indiana Legislature amended the statute in May 2019, making the effective date of the amended statute retroactive to July 1, 2013.
The consumers’ cases were consolidated, and both the dealers and the alter ego dealers filed motions to dismiss.
The alter ego dealers argued the consumers’ claims against them should be dismissed because they had not charged a document preparation fee to any of the consumers because their names were not on the sales contracts. For their part, the dealers primarily argued that the consumers’ DCSA claims should be dismissed because the 2019 document preparation fee amendment should be applied retroactively. It also maintained that the amendment expressly permitted a document preparation fee under $200, which the dealers asserted made the fees they charged “per se” lawful.
“Despite arguing that the 2019 Doc Fee Amendment applied retroactively, Dealers argued that Consumers could not use that retroactive amendment to prove their DCSA claim that Dealers had failed to include the Doc Fee in the advertised sale price,” Judge Rudolph Pyle wrote for the COA, adding that the consumers responded by asserting their DCSA claims were not precluded by the 2019 amendment.
The dealers also acknowledged that Gasbi LLC v. Sanders, 120 N.E.3d 614 (Ind. Ct. App. 2019), trans. denied, provided that a consumer could raise a claim under the DCSA by alleging a dealer had violated the MVDSA document preparation fee statute.
“Dealers, however, argued that Gasbi predated the 2019 Doc Fee Amendment and applied only to the pre-amendment version of the Doc Fee Statute,” the COA wrote.
The Marion Superior Court ultimately denied both motions to dismiss in two interlocutory orders.
As to the dealers’ motion, it concluded the consumers’ DCSA claims were not subject to dismissal because the 2019 amendment applied retroactively and did not expressly authorize the dealers to charge a document preparation fee under $200. Additionally, the trial court found the consumers’ complaints would survive the alter ego dealers’ motion to dismiss because the consumers had sufficiently demonstrated a claim under the alter ego doctrine and had standing.
After the trial court granted the defendants’ motion to certify the orders and stay the proceedings, the Court of Appeals affirmed in a unanimous 42-page decision in Butler Motors, Inc., et al. v. Michael Benosky, et al., 20A-PL-1871.
As to the dealers’ challenge to the trial court’s denial of its consolidated motion to dismiss, the COA concluded that because the 2019 amendment did not expressly authorize the charging of the document preparation fee of $200 or less, “there is no preclusive effect under Indiana Code § 24-5-0.5-6(2),” and the DCSA was applicable to the consumers’ related claims.
“Because Consumers’ complaints, in relation to their DCSA claims, set forth allegations upon which relief could be granted, the trial court did not err by denying Dealers’ Consolidated MTD in regard to Consumers’ DCSA claims,” it concluded.
The appellate court also found the consumers’ complaint sufficiently raised fraudulent concealment that may toll the statute of limitations to survive the motion to dismiss stage. The COA also determined the trial court did not err by concluding that the common law claims were not precluded by the 2019 amendment.
Next, it concluded that the consumers pleaded the operative facts necessary to establish a claim of constructive fraud, and that the trial court did not err by denying the dealers’ motion to dismiss the consumers’ unjust enrichment claim.
Finally, the COA concluded the trial court did not err by denying the alter ego dealers’ motion to dismiss for lack of standing under the alter ego doctrine “(b)ecause Consumers’ allegations are sufficient to establish circumstances under which they could be entitled to relief if they are able to prove their claim … .”