Goree v. Northland Auto Ents. Inc.

2020 Ohio 3457
Ohio Court of Appeals·Decided June 25, 2020·No. 108881·Published·Cited by 4 cases

Opinion

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

SHANELL GOREE, :

Plaintiff-Appellee, :

No. 108881

v. :

NORTHLAND AUTO ENTERPRISES : INC., ET AL., :

Defendants-Appellants.

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED

RELEASED AND JOURNALIZED: June 25, 2020

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-11-758061

Appearances:

Frederick & Berler, L.L.C., Ronald I. Frederick, Michael L.

Berler, and Michael L. Fine, for appellee.

Gallagher Sharp L.L.P., Clark D. Rice, Richard C.O. Rezie, and Thomas G. Lobe, for appellants.

MARY EILEEN KILBANE, J.:

Defendants-appellants, Northland Auto Enterprises, Inc.

(“Northland”), North Coast Auto Sales, Inc. (“North Coast”), Al Lentsch (“Lentsch”), Joe Zawatski (“Zawatski”), and LTO Financial, L.L.C. (“LTO”) (collectively,

“Appellants”) appeal from the order of the trial court granting plaintiff-appellee Shanell Goree’s (“Goree”), motion for class certification. For the reasons that follow, we affirm. I. FACTUAL BACKGROUND A. The Parties Northland is a Minnesota corporation and Lentsch is its CEO.

Northland created the “Ren’T’Own®” and “Lease’T’Own™” programs and provides services to help auto dealers implement those programs. Cleveland-based North Coast is one such auto dealer that implemented Northland’s Ren’T’Own program. Zawatski owns North Coast. LTO is a Minnesota corporation, owned and operated by Lentsch. It provided financing to North Coast related to the Ren’T’Own program and sometimes would take title of vehicles under the Ren’T’Own program.

Goree was a North Coast customer who entered into an agreement to lease a 1999 Dodge Intrepid through Northland’s Ren’T’Own program.

B. The Ren’T’Own Program Northland founded the Ren’T’Own program in 1990. It describes the program in a promotional brochure as an “in-house option for customers with bruised credit or customers who are unable to obtain financing.”

Under the Ren’T’Own program, the dealer retains title to the vehicle, but customers’ payments go toward their purchase of the vehicle. When customers return their vehicle and obtain a new one under the Ren’T’Own program, they will likely incur new “origination fees,” which the lease documents attribute to processing the lease transaction. Northland instructs participating dealers to set the selling price of the vehicle by marking up the wholesale price between 2-2.4%; establish a weekly, biweekly, or monthly periodic payment on each vehicle to last at least 12 months; and establish a nonrefundable origination fee, recommended at 8- 10% of the customer’s total payments.

To incentivize dealer participation in the program, Northland provides participating auto dealers with contingent liability insurance per vehicle plus physical damage insurance. Northland also claims the program benefits dealers because it sets up a system that allows dealers to avoid repossession costs and increase customer loyalty. It claims to accomplish this by instructing customers to return the vehicle if they cannot pay when payment is due. In reality, because customers do not gain title to their car while renting under the Rent’T’Own program, they can only trade in their vehicles from the dealer who rented it to them.

Northland also offers certain options to dealers under the program that it claims can increase dealers’ profits. These options include purchasing digital GPS tracking devices and an engine-transmission warranty for vehicles sold through the Ren’T’Own program. The GPS tracking system allows dealers to remotely interrupt the starter of a vehicle if the customer fails to remit a timely payment. Goree alleges that this practice amounts to a repossession, while avoiding any of the formalities or expenses of repossession, because it effectively deprives the customer of the use of the vehicle.

The parties agree that Northland’s Ren’T’Own program was eventually discontinued in Ohio because Ohio’s Lease-Purchase Statute — R.C. 1351.01 — excludes automobiles. However, Goree alleges that Appellants nevertheless implemented the Ren’T’Own program in Ohio during the time relevant to the complaint.

C. Goree’s Agreement Goree executed several documents around July 30, 2009. The documents appear to be on forms created by Northland for its Ren’T’Own program. These documents include the following: (1) Consumer Lease Agreement (the “Agreement”); (2) a promissory note; (3) a payment book, detailing the amount due on each payment date; (4) an addendum authorizing North Coast to track the vehicle with a GPS device and disable the vehicle if Goree defaulted on her payments; and (5) an extended product warranty registration agreement.

Goree entered into the Agreement with North Coast on July 30, 2009, for a 1999 Dodge Intrepid with 77,213 miles. The cash price of the vehicle is listed at $12,790.36 on the Agreement. Attached as exhibits to the complaint are Kelley Blue Book estimates that list the suggested retail value of $5,275 for a 2001 Dodge Intrepid in excellent condition with the 77,213 miles. The difference between the Kelley Blue Book estimate and the cash price listed on the Agreement indicates that North Coast increased the retail value by about 2-2.4% to determine the selling price of Goree’s vehicle, which the Ren’T’Own program suggests dealers do.

The Agreement states, “You will make 82 bi-weekly payments of $155.98.”1 The “total of scheduled payments” is also listed as $12,790.36, but the Agreement notes, “This total does not include additional charges which might be made during the Agreement listed below, such as taxes, title transfer, and licensing fees.” The Agreement provided for a late payment charge and reinstatement fees. The late payment charge was $15 for each payment not received within one business day of the payment due date. The fee to reinstate the lease if it terminated was $225. The additional charges listed on the Agreement include an origination fee in the amount of $975, which is described as a nonrefundable fee “charged by us for processing the Lease transaction.” The Agreement also provides for the following additional charges: (1) $1,066.82 in sales tax payable to the state of Ohio; (2) $15 for title transfer; and (3) $55 for licensing.

Goree also executed a promissory note on July 30, 2009. The promissory note lists $1,288.63 as the total due at signing. It reflects a down payment in the amount of $800, leaving $488.63 due by September 28, 2009. Apparently, Goree would pay the $488.63 by adding about $81.44 to the first six bi- weekly payments. Pursuant to the promissory note, $12.09 was added to each bi- weekly payment to cover the sales tax. The promissory note also shows a charge of $10.78, but the reason for the charge is not identified. Goree alleges that the charge

1 As the trial court noted, $155.98 x 82 = $12,790.36.

reflects an additional undisclosed monthly fee for loaner car insurance. The payment book reflects that a $10 fee was added to each biweekly payment.

The payment book Goree received reflects that the charges for the car insurance (at or about $10.78) and the sales tax (at or about $12.09) were added to the biweekly base payment of $155.98 reflected on the Agreement, raising the actual total base biweekly payment to $178.84.2 In addition, for the first six payments, $81.44 was added to each payment to cover the remaining amount due at signing, temporarily raising the total due to $260.28 for those six payments.

Goree also executed an addendum to the Agreement. The addendum authorized North Coast to track the vehicle using a GPS device. In the event Goree defaulted on her payments, North Coast could use the GPS device to disable the starting system of the vehicle. The addendum further provided that the GPS device was “required as a condition of approving our extension of credit to you” but “is not being sold with the Vehicle.”

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Goree v. Northland Auto Ents. Inc., 2020 Ohio 3457 (Ohio Ct. App. 2020).

2020 Ohio 3457 (Goree v. Northland Auto Ents. Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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