Clark v. Alan Vester Auto Group, Inc., 2009 NCBC 17.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF VANCE 06 CVS 141
JOHN CLARK and MARY CARMON, ) Individually and on Behalf of ) a Class of All Those Similarly Situated, ) Plaintiffs ) ) v. ) ORDER ON CLASS ) CERTIFICATION ALAN VESTER AUTO GROUP, INC., d/b/a ) ALAN VESTER AUTO SALES, d/b/a ALAN ) VESTER AUTO OUTLET OF ROXBORO, ) d/b/a ALAN VESTER MITSUBISHI, and ) d/b/a ALAN VESTER AUTO MART OF ) KINSTON, INC.; ALAN VESTER MOTOR ) COMPANY, INC., d/b/a ALAN VESTER ) HONDA; ALAN VESTER NISSAN, INC., ) d/b/a ALAN VESTER AUTOMOTIVE OF ) GREENVILLE; ALAN VESTER AUTO ) MART, INC.; ALAN VESTER FORD ) LINCOLN MERCURY, INC., d/b/a ALAN ) VESTER AUTO OUTLET; ALAN VESTER ) AUTO MART OF KINSTON, INC.; ALAN ) VESTER MANAGEMENT CORPORATION; ) ALAN VESTER ENTERPRISES, LLC, d/b/a ) ALAN VESTER AUTO MART OF SELMA; ) UNIVERSAL UNDERWRITERS ) INSURANCE COMPANY AND WESTERN ) SURETY COMPANY, ) Defendants )
This Vance County civil action was designated exceptional and assigned to the
undersigned by Order of the Chief Justice of the North Carolina Supreme Court,
pursuant to Rule 2.1 of the General Rules of Practice for the Superior and District
Courts. It is before the court, among other things, for determination of Plaintiffs’ Motion
for Class Certification pursuant to Rule 23, North Carolina Rules of Civil Procedure (“Rule(s)”), filed August 18, 2008 (the “Motion”). For the reasons stated in this Order,
the court concludes that the Motion should be GRANTED in part and DENIED in part.
Wallace and Graham, PA by Mona Lisa Wallace, Esq.; John Hughes, Esq. and Mike Pross, Esq.; Lyons & Farrar, PA by Douglas S. Lyons, Esq.; and Hopper, Hicks & Wrenn, LLP by James C. Wrenn, Esq. for Plaintiffs John Clark and Mary Carmon, individually and on behalf of a class of all those similarly situated.
Teague, Rotenstreich, Stanaland, Fox & Holt, PLLC by Kenneth Rotenstreich, Esq.; Lyn K. Broom, Esq. and Paul A. Daniels, Esq. for Defendants Alan Vester Auto Group, Inc. d/b/a Alan Vester Auto Sales, d/b/a Alan Vester Auto Outlet of Roxboro, d/b/a Alan Vester Mitsubishi, and d/b/a Alan Vester Auto Mart of Kinston, Inc.; Alan Vester Motor Company, Inc., d/b/a Alan Vester Honda; Alan Vester Nissan, Inc., d/b/a Alan Vester Automotive of Greenville; Alan Vester Auto Mart, Inc.; Alan Vester Ford Lincoln Mercury, Inc., d/b/a/ Alan Vester Auto Outlet; Alan Vester Auto Mart of Kinston, Inc.; Alan Vester Management Corporation; Alan Vester Enterprises, LLC, d/b/a Alan Vester Auto Mart of Selma; Universal Underwriters Insurance Company and Western Surety Company.
Jolly, Judge.
THE COURT, having considered the Motion, the submissions and briefs of the
parties in support of and opposition to the Motion, arguments of counsel, appropriate
matters of record and the ends of justice, FINDS and CONCLUDES, only for the
purposes of the Motion, that:
I.
PROCEDURAL BACKGROUND
[1] On February 7, 2006, Plaintiffs John Clark (“Clark”) and Servietta Hameed
(“Hameed”) filed their Complaint on behalf of themselves and all others similarly
situated.
[2] On April 7, 2006, Plaintiffs filed a First Amended Complaint. [3] On August 29, 2006, by order of the court, Plaintiffs’ Second Amended
Complaint was deemed filed. In material part, the Second Amended Complaint added
Mary Carmon (“Carmon”) as a party Plaintiff.
[4] On September 25, 2006, Defendants filed their Answer to the Second
Amended Complaint.
[5] On October 17, 2006, Plaintiff Hameed dismissed her claims, leaving
Clark and Carmon as the remaining named Plaintiffs.
[6] On October 17, 2006, Plaintiffs moved for leave to file a Third Amended
Complaint in material part seeking to join Universal Underwriters Insurance Company
(“Universal Underwriters”) and Western Surety Company (“Western Surety”) as
Defendants.
[7] On February 7, 2007, the court entered a Case Management Order,
granting in material part the Plaintiffs’ motion to amend and deeming the Third
Amended Complaint filed as of that date (unless otherwise indicated, the Third
Amended Complaint will be referred to in this Order as the “Complaint”).
[8] On February 27, 2007, Defendants filed their Answer to the Complaint.
[9] On August 18, 2008, Plaintiffs Clark and Carmon filed their Motion for
Class Certification (the “Motion”).
[10] On November 12, 2008, the court heard oral argument on the Motion.
II.
THE PARTIES
[11] Plaintiffs Clark and Carmon are citizens and residents of North Carolina. [12] The Complaint names as Defendants the following corporate entities
alleged to be organized and authorized to conduct business under the laws of the State
of North Carolina:
(a) Alan Vester Auto Group, Inc., d/b/a Alan Vester Auto Sales, d/b/a
Alan Vester Auto Outlet of Roxboro and d/b/a Alan Vester Mitsubishi;
(b) Alan Vester Motor Company, Inc., d/b/a Alan Vester Honda;
(c) Alan Vester Nissan, Inc., d/b/a Alan Vester Automotive of
Greenville;
(d) Alan Vester Auto Mart, Inc.;
(e) Alan Vester Ford Lincoln Mercury, Inc., d/b/a Alan Vester Auto
Outlet;
(f) Alan Vester Auto Mart of Kinston, Inc. (the “Kinston Dealership”); 1
(g) Alan Vester Management Corporation; and
(h) Alan Vester Enterprises, LLC, d/b/a Alan Vester Auto Mart of Selma
(collectively all of the above Defendant entities may be referred to in this Order
as “Vester” or the “Vester Defendants,” depending on context).
[13] Among other things, the Vester Defendants are in the retail business of
selling automobiles to the public.
1 On January 11, 2008, Defendants filed a Chapter 7 Petition of Bankruptcy for the Kinston Dealership. This triggered an automatic stay under the Bankruptcy Act. Plaintiffs have not dismissed their claims against the Kinston Dealership, but have not further litigated them either, in light of the stay. While the claim against the Kinston Dealership is stayed by the bankruptcy proceeding, it is the Plaintiffs’ contention that the claim against the sureties on the bond is viable since under the Dealer Act a consumer may sue “either the principal, the surety, or both,” Bernard v. Ohio Cas. Ins. Co., 79 N.C. App. 306, 310 (1986), and the purpose of the Act is to allow consumers recourse where dealers have gone out of business. The Vester dealerships had surety bonds chiefly through Universal Underwriters, a large surety and insurance carrier for car dealers. While Plaintiffs do not seek to certify a class that would recover against the Kinston Dealership, Plaintiffs contend that Universal Underwriters, as surety for that dealership, would stand in its stead should there be a recovery as to the Kinston dealership. [14] Defendant Universal Underwriters is a corporation duly organized and
authorized to conduct business under the laws of the State of Kansas.
[15] Defendant Western Surety is a corporation duly organized and authorized
to conduct business under the laws of the State of South Dakota.
III.
THE MOTION
[16] Clark. Plaintiff Clark seeks to have certified a class of vehicle purchasers
with regard to down payment practices under the Motor Vehicle Dealers and
Manufacturers Licensing Law, N.C. Gen. Stat. § 20-285, et seq. (the “Dealer Act”)
(henceforth in this Order, references to sections of the North Carolina General Statutes
will be to “G.S.”) and the Unfair and Deceptive Trade Practices Act, G.S. 75-1.1, et seq.
(“Chapter 75”) (collectively Clark’s “Claims” or the “Down Payment Claims”).
[17] Carmon. Plaintiff Carmon seeks certification of a class of consumers who
were sent mailers under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (the
“FCRA Claim”). However, by separate Order of even date herewith, the court has
granted Defendants’ Motion for Summary Judgment with regard to Carmon’s FCRA
Claim. Accordingly, the FCRA Claim has been dismissed and further discussion of it in
this Order is not necessary.
IV.
DISCUSSION
[18] In North Carolina, class actions are governed by Rule 23. [19] Rule 23(a) provides: “If persons constituting a class are so numerous as to
make it impracticable to bring them all before the court, such of them, one or more, as
will fairly insure the adequate representation of all may, on behalf of all, sue or be sued.”
[20] The party seeking to bring a class action under Rule 23(a) has the burden
of showing that the prerequisites for utilizing the class action mechanism are present.
Crow v. Citicorp Acceptance Co., 319 N.C. 274, 282 (1987).
[21] The requirements for class certification are (a) commonality, in that the
named and unnamed members each have an interest in either the same issue of law or
of fact, and which issue predominates over issues affecting only individual class
members; (b) numerosity, in that the class must be so numerous as to make it
impracticable to bring each member of the class before the court; (c) the party
representing the class must fairly and adequately ensure the representation of all class
members, including those outside the jurisdiction of the court and (d) adequate notice
must be given to the class members. Id. at 280-84; see also Nobles v. First Carolina
Communications, 108 N.C. App. 127, 132-33 (1992); Faulkenbury v. Teachers’ and
State Employees’ Ret. Sys., 345 N.C. 683, 697 (1997).
[22] Where all the prerequisites are met, it is within the trial court’s discretion to
determine whether a class action is superior to other available methods for the
adjudication of the controversy. Id. at 284. Further, the trial court has broad discretion
in deciding whether a class action should be certified and is not limited to consideration
of matters expressly set forth in Rule 23 or in case law. Id.
[23] When making class certification decisions the trial court should not
prematurely determine the merits. Maffei v. Alert Cable TV of NC, Inc., 316 N.C. 615, 617-18 (1986) (citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974)).
Further, it is not for the court to determine at the time of class certification whether the
common questions guarantee a determination of liability. Tomlin v. Dylan Mortgage,
Inc., 2002 NCBC 1, ¶ 9.
A.
Clark’s Down Payment Claims.
[24] At times material in 2003, Plaintiff Clark purchased a used Mitsubishi
automobile from Alan Vester Enterprises, LLC, d/b/a Alan Vester Auto Mart of Selma.
The sales contract reflects a purported cash down payment of $2,000. Clark testified he
made no down payment.
[25] Clark contends that Vester (a) routinely marketed vehicles as “no money
down,” (b) inaccurately represented in bills of sale and other contract documents that
cash down payments were made when they were not and (c) internally accounted for
the false down payment practice on documents known in the trade as cover sheets
(“Cover Sheet(s)”) under the line item “CFA.” Plaintiff contends that if a customer
actually made a down payment, the dealership would provide the customer with a
written receipt.
[26] Clark further contends that Vester followed these practices so as to (a)
increase the likelihood that subprime loans would be funded and (b) obtain loan
approvals for higher amounts from lenders. He alleges that Vester would manipulate
the total selling price of such a vehicle to recoup any false down payment amount; and
that Vester accounted for the actual facts of the sale on the Cover Sheets, which were
deliberately hidden both from customers and lenders. Plaintiff contends that Vester did not put prices on used car window stickers so that it could more easily manipulate
ultimate prices. Clark further contends that Vester’s alleged failure to disclose or secure
customer approval when applying a “dealer rebate” as a down payment was unlawful.
[27] In Clark’s sales file (a “Deal File”), the bill of sale indicates a down
payment of $2,000 was made. However, there is no cash receipt, which is consistent
with Clark’s testimony that he did not pay $2,000 down. There is no Cover Sheet in
Clark’s Deal File.
[28] The Vester dealerships were licensed under the Dealer Act, which
provides a cause of action to an aggrieved consumer. G.S. 20-288(e). The Dealer Act
requires that at the time of delivery of a vehicle the dealer must provide a written
instrument describing “clearly” certain items, including “the cash paid down by the
buyer.” G.S. 20-303. Further, the North Carolina Dealer Regulations 2 provide that the
dealer must document in writing the cash paid down by the customer. The forecast of
evidence before the court supports Clark’s allegations that Vester violated this statute
by not delivering to him a written statement describing clearly the cash paid down by the
buyer. 3
[29] Clark contends that Vester’s unlawful practices with regard to such
automobile sales proximately damaged him and other purchasers by resulting in an
overstatement of the sales price, sales tax, finance charges, the amount financed and
total amount of payments as reflected in a particular purchaser’s retail installment sales
2 North Carolina Department of Transportation Division of Motor Vehicles License & Theft Bureau, Motor Vehicle Dealer and Manufacturer Regulation Manual, p. 59 (March 2009), available at http:www.ncdot.org/dmv/forms/licensetheft/download/dealerregulationmanual.pdf. 3 See generally Knapp v. Americredit, 245 F. Supp. 2d 841, 844-51 (S.D.W. Va. 2003) (denying summary judgment on claim alleging use of false down payment scheme to obtain financing); Order dated Jan. 26, 2004 (enjoining dealer from “[e]ntering into a financed vehicle transaction that discloses an amount as a cash down payment that in fact is not paid in cash at the time of consummation of the transaction”). contract. The forecast of evidence before the court supports Clark’s allegations of
damages in this regard.
[30] G.S. 20-308.2(c) provides that “[a]ny provision of any agreement . . .
which is in violation of any section of this Article shall be deemed null and void and
without force and effect.” With regard to his Claims, Clark contends that the false
contract provision reflecting payment by him of a $2,000 cash down payment is null and
void and without force and effect; and that the court can reform the contract and order
refund of any overcharges by Vester. He further contends that he and putative class
members are entitled to refunds of any overcharge as a matter of damages or equitable
relief.
[31] Clark also contends that the violation of the Dealer Act may also constitute
a violation of Chapter 75. See Moretz v. Miller, 126 N.C. App. 514, 517 (1997) (noting
that “violation of a statutory provision designed to protect the consuming public may
constitute an unfair and deceptive practice as a matter of law”), rev. denied, 347 N.C.
137 (1997); Stanley v. Moore, 339 N.C. 717, 724 (1995); Pearce v. American Defender
Life Ins. Co., 316 N.C. 461, 470 (1986); Winston Realty Co. v. G.H.G., Inc., 314 N.C.
90, 98-99 (1985); Ellis v. Smith-Broadhurst, Inc., 48 N.C. App. 180 (1980); Edmisten v.
Zim Chemical Co., 45 N.C. App. 604 (1980).
[32] Clark asks the Court to define a class with regard to his Claims as follows:
“All individuals sold used motor vehicles by a North Carolina Vester dealership from
February 7, 2002, to present, 4 where (a) the sale was financed; (b) the bill of sale
4 The February 2002 starting date is four years before the complaint was filed, pursuant to the Chapter 75 statute of limitations. It is inclusive of the claim under the Dealer Act as well, which is subject to a three- year statute. reflects cash down; and either (i) there is a cover sheet reflecting a CFA entry or (ii)
there is no cash receipt for the down payment.”
[33] The Vester Defendants contend that the issues raised by Clark’s Claims
do not meet the requirements for a class action, and that any prospective claims by
either Clark or other potential plaintiffs are too disparate for class treatment and
therefore should be litigated individually and not collectively.
[34] The court is forced to agree with Plaintiff Clark that his Claims meet the
requirements for declaration of a class.
[35] Commonality. In this action, common issues predominate over
individualized issues. The central issue is whether Vester falsified a cash down
payment. The method of determining damages will not vary by class member. See
Tomlin, supra, 2002 NCBC 1 at ¶ 10 (noting that method of determining amount of class
member’s damages will not vary). Further, the facts alleged in this action present a
common question with regard to whether the false down payments alleged by Plaintiff
Clark were unfair and deceptive. Id. (noting that determination of whether company
practice was unfair was common to class).
[36] Numerosity. Clark contends that the exact size of the putative class is
likely to range in the thousands, given that the various Vester dealerships sold
thousands of used vehicles. Here, the members of the putative class with regard to
Clark’s Down Payment Claim are sufficiently numerous so as to certify a class.
[37] Adequacy of Representation. To represent the class members in this
case fairly and adequately, the Plaintiffs must have no conflict with the members, and
must have a genuine personal interest in the outcome of the case. Tomlin, 2002 NCBC at ¶¶ 19-29. Plaintiff Clark has no conflict with other potential class members and has
an interest in the outcome of the action. He has been sufficiently diligent in his
involvement in this case. He is represented by experienced and knowledgeable legal
counsel, has shown a basic knowledge of the basis of his Claims and is an adequate
class representative.
[38] Superiority of Class Vehicle. Here, (a) common issues predominate, (b)
the named representative will adequately protect the interests of the members of the
proposed class and (c) the class members are sufficiently numerous. Consequently,
the prerequisites for a class claim having been met, it is within the trial court’s discretion
to determine whether “a class action is superior to other available methods for the
adjudication of th[e] controversy.” Crow, 319 N.C. at 284. In the instant action, the
Claims involve alleged false down payments and improperly disclosed dealer rebates in
motor vehicle sales that were documented by forms with standardized language and
which are subject to uniform accounting practices and uniform damages. The court
concludes, in its discretion, that a class action is a superior method for adjudicating
Clark’s Claims.
[39] With regard to his Down Payment Claims, Clark therefore has
demonstrated the existence of a class pursuant to Rule 23.
[40] Exceptions to the Plaintiff Class. Defendants contend some customers
signed arbitration clauses barring class action participation. Further, Plaintiff asks the
court to exclude from the Plaintiff class any vehicle sales involving Lawrence Harris or
Jonathan Stokes, former Vester employees represented by one of the Plaintiffs’ law
firms. The court finds both requests reasonable. Accordingly, (a) the class shall not include any purchasers who signed arbitration agreements as part of their purchase
from a Vester entity, and (b) no sales shall be included in the class in which the sales
person was either Lawrence Harris or Jonathan Stokes.
[41] The Defendant(s). Plaintiff Clark contends that the management and
control of the various Vester Defendants was sufficiently intermingled, and their
respective corporate structures sufficiently disregarded, that in this action they all should
be treated as one for liability and class action purposes; and that he has standing to
prosecute all such claims. He bases his contention on theories of corporate veil
piercing, joint venture, conspiracy, partnership and assignment; and he also argues that
there exists a sufficient “juridical link” between the respective Vester Defendants to
support a conclusion that they all should be defendants in the alleged class claims.
[42] Plaintiff cites a number of reported cases from other jurisdictions in
support of his position. Two of those certified classes against management companies
for the conduct of their chain of dealerships. See Galura v. Sonic Automotive, Inc.
(order granting plaintiffs’ motion for class certification, dated June 3, 2005, 13th Judicial
Circuit, Hillsborough County, aff’d in part, 961 So. 2d 961 (Fl. Ct. App. 2007)), where
plaintiffs had gone to particular automobile dealerships in Florida. There, the court found
that common issues existed regarding the parent entity’s ownership, control and
management of its other dealerships in Florida, and it certified a class against the parent
company with regard to every dealership it owned in Florida. See also Phillips v. Andy
Buick, Inc., 2006 WL 3183277 (Ohio Ct. App. Nov. 3, 2006) (certifying class against the
named defendants and against “any dealerships that they own, manage, direct and/or control” on a claim regarding allegedly unfair and deceptive fees added into automobile
sales deals).
[43] On the other hand, Defendants contend that Clark lacks standing to sue
any Defendant other than Alan Vester Enterprises, LLC, d/b/a Alan Vester Auto Mart of
Selma, the dealership from which Clark bought his used Mitsubishi automobile.
Consequently, they argue that that Clark’s Down Payment Claim may only be certified
as a class action against that entity. They contend that because Clark has not alleged
any dealings with any other Vester Defendant, he would have no personal claim against
the other Vester Defendants, and would have no standing to allege an injury arising
from their conduct. Accordingly, he would be unable to represent unnamed class
members against any of the Vester Defendants except Alan Vester Enterprises, LLC. In
support of their argument, Defendants cite Nixon v. Alan Vester Auto Group, Inc. 5 In
that matter, which also alleged class claims against a number of Vester automobile
dealerships, and other party defendants, the Court dismissed plaintiff’s claims against
all Vester dealerships except the one from which she purchased an automobile. 6 The
court there found no cases in which a subsidiary has been held liable for the actions of
another subsidiary operating at the same level of corporate structure. The plaintiff’s
attempts to avoid the standing problem through allegations of conspiracy between the
subsidiaries were not convincing to the court, and the court concluded that a sufficient
juridical link between the various defendants and the plaintiff’s class claims did not
5 1:07cv839, 2009 U.S. Dist. LEXIS 10870 (M.D.N.C. Feb. 12, 2009). 6 The court also allowed the claims to proceed against Alan Vester individually, apparently based on evidence that Alan Vester directed an alleged conspiracy involving all the dealerships “from the top down.” Id. at 88. He is not a party Defendant in the instant action. exist. 7 Rather, the court concluded that plaintiff failed to show that any dealership, other
than the one from which she purchased her automobile, took any action at all in regard
to her purchase. Consequently, reasoning that a subsidiary cannot be held liable for the
actions of another subsidiary, the court dismissed all claims against the non-selling
dealership defendants.
[44] Standing In General – Multiple Defendants. In the context of a class
action, and as argued by Defendants here, it often is said that a representative plaintiff
must have individual standing as to any defendant in order to assert a class claim
against that defendant. Consequently, as reflected in Nixon, supra, courts typically are
reluctant to certify a defendant class in the context of a plaintiff class. Id. Certainly, if
the class representative has standing to state an individual claim against each
defendant or if the respective defendants have exposure to joint and several liability, all
such defendants properly can remain in the case. Here, Plaintiff Clark contends the
evidence will support his standing to go forward with various claims against the Vester
Defendants. Those claims rest on various theories of civil conspiracy, joint venture,
partnership and insufficient corporate veil (Plaintiffs’ “Standing Theories”), each of which
would portend joint and several liability for the respective Vester Defendants should
Clark ultimately prevail. 8
[45] The Juridical Link. Plaintiff also argues that even if in the final analysis,
the evidence does not support the above Standing Theories, the facts of record support
7 Id. 8 In order to show standing with regard to such claims, a plaintiff ordinarily must show injury that is “fairly traceable to the challenged action of the defendant.” Neuse River Foundation, Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 114 (2002). application of the concept of a juridical link between all the Vester Defendants that
would allow this action to go forward as a class action against all the Vester entities.
[46] In this regard, a number of jurisdictions have recognized an exception to
the literal standing requirement in a class action where defendant members are related
in what is characterized as a “juridical link,” which in substance is defined as the
existence of a legal relationship between two or more defendants in a way such that
resolution of the disputed claims in a single civil action is preferable to numerous
disparate, but similar actions. It has been defined as follows:
The “juridical-link doctrine” answers the question of whether two defendants are sufficiently linked so that a plaintiff with a cause of action against only one defendant can also sue the other defendant under the guise of class certification. The juridical-link doctrine is not relevant to the issue of standing, and is properly confined to an analysis of the prerequisites to class certification. A juridical link sufficient to confer standing generally must stem from an independent legal relationship. It must be some form of activity or association on the part of the defendants that warrants imposition of joint liability against the group even though the plaintiff may have dealt primarily with a single member. This link may be a conspiracy, partnership, joint enterprise, agreement, contract, or aiding and abetting which acts to standardize the factual underpinnings of the claims and to insure the assertion of defenses common to the class.
32B Am. Jur. 2d. § 1590 (2009).
[47] Except as argued but rejected by the federal district court in Nixon, supra,
the parties have not cited, and the court has not found, any reported North Carolina
cases dealing with the concept of the juridical link 9 in a manner relevant to the context
9 Not directly on point, but instructive are: Faircloth v. Fin. Asset Secs. Corp., et al, 87 Fed. Appx. 314, 318 (4th Cir. 2004); Dash v. Firstplus Home Loan Trust 1996-2, et al, 248 F. Supp. 2d. 489 (M.D.N.C. 2003). of this civil action; and the court deems this to be a matter of first impression for the
North Carolina courts.
[48] Here, with regard to Plaintiff’s juridical link argument, the Plaintiff in
substance claims that the conduct of the various Vester Defendants about which he
complains was dictated by Alan Vester and Defendant Alan Vester Management
Corporation, and that a juridical link exists between the Vester Defendants sufficient to
support Plaintiff’s class claims against each of them as a collective group. He contends
such a vehicle is the superior and most efficient mechanism for management of Clark’s
claims in behalf of the class.
[49] In this regard, Clark has proffered evidence, and the court FINDS, for
(a) Alan Vester Management Corporation managed the various Vester
dealerships. 10 It hired a compliance manager who supervised compliance for all
dealerships. 11 They all had the same president, Alan Vester. 12 They had
periodic managers’ meetings with Alan Vester. 13 Alan Vester set companywide
policies, and in his affidavit refers to all the stores together as the “Alan Vester
Company.” 14 The compliance policy itself is directed to every “employee of the
company.” 15 Vester transferred managers between stores and the stores made
loans to each other. 16 Customer deals that began at one store could be
10 Alan Vester Dep., pp. 29-30. 11 Williamson Dep., pp. 6 and Ex. 14, ¶ 1; Alan Vester Dep., pp. 30-31. 12 Id., Ex. 33. 13 Alan Vester Dep., p. 66. 14 Id., Ex. 37. 15 Id., Ex. 43. 16 Martin Dep., pp. 16, 357, 374-75. completed at another. 17 Vester represented that various stores were owned and
operated “under the same corporate structure” and thus one dealer agreement
could be used for all. 18
(b) All dealership stores were managed by Alan Vester Management
Corporation, of which Alan Vester was the president 19 . It was pursuant to his
instructions that “Alan Vester dealerships” engaged in relevant acts. 20 “[T]he
dealerships [were] managed by Alan Vester Management Company.” 21 Alan
Vester testified as to the “Alan Vester Company’s standard practice” regarding
cover sheets. 22 The Management Company “sits on top of these corporations to
try to manage them.” 23
(c) Mr. Williamson checked compliance “within the organization” and
“within the company.” 24 There was one compliance manual for all stores. 25 Mr.
Williamson was employed by Alan Vester Management. 26 He was an employee
of the management company when he and Alan Vester destroyed the Cover
Sheets. 27 The compliance policy did not differentiate between entities, but was
directed to every “employee of the company.” 28
17 Lowery Aff. 18 Pls.’ Br. Supp. Mot. Class Certif., Ex. 65. 19 Alan Vester Aff., ¶ 1. 20 Id., ¶ 2. 21 Id. 22 Id., ¶ 10. 23 Alan Vester Dep., pp. 29-30. 24 Williamson Dep., pp. 62-63. 25 Id. at 65. 26 Id. at 6. 27 Williamson Aff., ¶ 1. 28 Alan Vester Dep., Ex. 43. (d) Accounting was centralized at the Roanoke Rapids and Oxford
dealership stores. 29 Alan Vester was the president of every store.30 Ralph
Moore was outside accountant for all the stores. 31 All the stores had common
officers, consisting of Vester family members. 32
(e) Marie Johnston processed deals over the years for the Wilson,
Kinston, Selma and Greenville dealership stores as well as the franchise stores
(Alan Vester Ford, Honda and Nissan). 33 Tina Robinson processed deals for the
Mitsubishi store in Oxford, and the Henderson and Burlington stores. 34 The
controller for all the retail dealership was Alan Vester’s daughter, Kristin Martin,
who was employed by Alan Vester Management. 35
(f) The dealership stores made loans to each other. 36 Employees
would be moved from one store to another; for example finance manager David
Getty worked at the Wilson, Selma and Henderson stores. 37 The managers for
all the stores would meet at Alan Vester’s “lake house” or at a hotel once a
month. 38 Satellite store deal information was input into the “main computer
system” in Roanoke Rapids. 39 The normal sales process at the different Vester
stores was “essentially the same.” 40
29 Williamson Aff., ¶ 4; Alan Vester Dep., pp. 48-49. 30 Id. at 22-23. 31 Id. at 27-29. 32 Id., Ex. 33. 33 Johnston Dep., pp. 4-8, 22-24, 27-28, 36-37. 34 Robinson Dep., pp. 20-21, 80-82. 35 Martin Dep., pp. 14, 60-61, 87. 36 Id. at 373. 37 Getty Dep., pp. 7-10. 38 Id. at 11, 13-14. 39 Id. at 61. 40 Id. at 77. (g) A civil settlement agreement between the North Carolina Attorney
General and the Vester organization recites that “Alan Vester and Rodney
Vester, along with others, own, manage, and control the operations of the Vester
Dealerships.” 41 The dealerships “jointly and severally” paid a monetary
amount. 42
[50] The evidence here is disputed as to whether (a) Vester management
failed to maintain a separate corporate identity between the various Vester Defendants;
(b) one or more of the Vester Defendants at times material was acting as the alter ego
or as the “mere instrumentality” of Alan Vester Enterprises, LLC 43 or (c) there existed a
joint venture, conspiracy, partnership or assignment relationship between the various
Vester Defendants. However, notwithstanding traditional notions and requirements of
standing, the court concludes that the facts of record reflect a sufficient juridical link
between the Vester Defendants to support a determination that this action should
proceed as a class action against all the Vester Defendants.
[51] Consequently, in its discretion the court concludes that Plaintiff Clark has
demonstrated that a class exists with regard to his Down Payment Claims, and that
either he has standing to bring his class Claims against the Vester Defendants or there
exists a sufficient juridical link between his Claims and the Vester Defendants.
[52] The Plaintiff Class. Therefore, with regard to Clark’s Down Payment
Claims, a Plaintiff class should be certified to exist, and be defined as:
41 Settle. Agmt., ¶ 1. 42 Id. at ¶ 5. 43 One of these circumstances typically being necessary for Clark to have standing to sue Vester Defendants other than Alan Vester Enterprises, LLC. The B-W Acceptance Corp. v. Spencer, 268 N.C. 1, 8 (1966); Whitehurst v. FCX Fruit and Vegetable Service, 224 N.C. 628 (1944). (a) Any individuals who were sold used motor vehicles by either Alan Vester Auto Group, Inc., d/b/a Alan Vester Auto Sales, d/b/a Alan Vester Auto Outlet of Roxboro and d/b/a Alan Vester Mitsubishi; Alan Vester Motor Company, Inc., d/b/a Alan Vester Honda; Alan Vester Nissan, Inc., d/b/a Alan Vester Automotive of Greenville; Alan Vester Auto Mart, Inc.; Alan Vester Ford Lincoln Mercury, Inc., d/b/a Alan Vester Auto Outlet; Alan Vester Auto Mart of Kinston, Inc. 44 or Alan Vester Enterprises, LLC, d/b/a Alan Vester Auto Mart of Selma;
(b) From February 7, 2002, to the present;
(c) Which sale was financed;
(d) Where the bill of sale reflects cash paid down, and either (i) there is a cover sheet reflecting a CFA entry or (ii) there is no cash receipt for the down payment; 45
(e) Who did not sign arbitration agreements as part of their purchase from a Vester entity named in subparagraph (a) above; and
(f) Who did not have as their sales person either Lawrence Harris or Jonathan Stokes.
[53] Plaintiff Clark’s class Claims shall proceed against (a) the Vester
Defendants named in the foregoing class definition, (b) Defendant Alan Vester
Management Corporation, (c) Defendant Universal Underwriters Insurance Company
and (d) Defendant Western Surety Company.
[54] Caveat. The class action vehicle is one that seeks a balance between
justice for the litigants and efficiency in resolution of class disputes. In this action, the
court concludes that occasional and inevitable individual issues, such as the potential
discrete liability of a Vester Defendant as to a particular class member, or as to
damages of various class members, are outweighed by the interests of efficiency, 44 See fn. 1, supra. 45 Consistent with the court’s Order of even date herewith relative to Plaintiffs’ Motion for Discovery and Spoliation Sanctions, Plaintiffs will be entitled to the benefit of a limited spoliation inference for purposes of trial. Consequently, where Deal Files show cash down payments on the bill of sale, but lack a cash receipt, the jury will be allowed to draw an inference that a CFA previously existed and that no down payment in fact was made. judicial economy and the ends of justice. However, the parties should bear in mind that
it is the duty of the trial court to attempt a fair and reasonable balance of those
potentially competing interests; and that it is within the inherent power and authority of
the court – indeed, is the duty of the court – when appropriate, to reconsider, alter,
amend or withdraw class rulings sua sponte. 46 This court will undertake to discharge
that duty as this action moves forward toward resolution.
COSTS OF CLASS NOTICE
[55] The trial court has broad discretion in determining which party properly
bears the costs of identifying and notifying class members of the existence of this
matter. Frost v. Mazda Motor of America, Inc., 353 N.C. 188, 198 (2000).
[56] The general rule is that the plaintiff should bear such costs, since it is the
plaintiff who has the burden of proof, is bringing the suit, seeks to maintain it as a class
action and intends to represent the members of the class in prosecuting the action Id.
at 197. However, exceptions of this general rule exist. One of those exceptions has
grown out of matters in which there has been abuse of discovery or other pre-trial
process by the defendant. See e.g., Six Mexican Workers v. Arizona Citrus Growers,
641 F. Supp. 259 (D. Ariz. 1986) (requiring defendants to pay costs of notice where
there had been intentional failure to maintain proper records).
[57] By separate Order of even date herewith, the court has determined that
one or more of the Vester Defendants acted improperly in this action with regard to
issues of spoliation and destruction of documents. Among other things, those issues go
directly to the existence and identity of class members. Accordingly, in the exercise of 46 Newberg on Class Actions, § 7:47 (Fourth Edition). its discretion, the court determines that the Vester Defendants should bear the costs
identifying and notifying class members of this matter.
[58] The form and mechanics of identify and notifying class members will be
determined by the court at a later date.
V.
CONCLUSION
NOW THEREFORE, based upon the foregoing FINDINGS and CONCLUSIONS,
it hereby is ORDERED that:
[59] The Plaintiffs’ Motion for Class Certification should be, and hereby is,
GRANTED with regard to the Down Payment Claims alleged by Plaintiff John Clark.
[60] As to the Down Payment Claims, the certified class shall include:
(a) Any individuals who were sold used motor vehicles by either Alan Vester Auto Group, Inc., d/b/a Alan Vester Auto Sales, d/b/a Alan Vester Auto Outlet of Roxboro and d/b/a Alan Vester Mitsubishi; Alan Vester Motor Company, Inc., d/b/a Alan Vester Honda; Alan Vester Nissan, Inc., d/b/a Alan Vester Automotive of Greenville; Alan Vester Auto Mart, Inc.; Alan Vester Ford Lincoln Mercury, Inc., d/b/a Alan Vester Auto Outlet; Alan Vester Auto Mart of Kinston, Inc. or Alan Vester Enterprises, LLC, d/b/a Alan Vester Auto Mart of Selma;
(d) Where the bill of sale reflects cash paid down, and either (i) there is a cover sheet reflecting a CFA entry or (ii) there is no cash receipt for the down payment;”
(e) Who did not sign arbitration agreements as part of their purchase from a Vester entity named in subparagraph (a) above; and
(f) Who did not have as their sales person either Lawrence Harris or Jonathan Stokes. [61] The Vester Defendants shall bear the costs of identifying and notifying
class members of the Down Payment Claims.
[62] Carmon’s FCRA Claim has been dismissed by separate Order of the
court. Consequently, as to the FCRA Claim, the Motion is DENIED.
[63] The court will conduct a status conference in this matter at 12:00 noon on
August 12, 2009, at the North Carolina Business Court at 227 Fayetteville Street, Fourth
Floor, Raleigh, North Carolina. At that time the parties shall be prepared to discuss
class management issues, including class notice mechanics and procedures.
This the 17th day of July, 2009.