Graham v. Hyundai Motor America

855 N.E.2d 562, 367 Ill. App. 3d 617, 305 Ill. Dec. 395, 2006 Ill. App. LEXIS 804
CourtAppellate Court of Illinois
DecidedSeptember 7, 2006
Docket1-03-0253, 1-03-0254 (Consolidated)
StatusPublished
Cited by2 cases

This text of 855 N.E.2d 562 (Graham v. Hyundai Motor America) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Graham v. Hyundai Motor America, 855 N.E.2d 562, 367 Ill. App. 3d 617, 305 Ill. Dec. 395, 2006 Ill. App. LEXIS 804 (Ill. Ct. App. 2006).

Opinion

JUSTICE NEVILLE

delivered the modified opinion of the court: In these consolidated interlocutory appeals, plaintiffs, Amy Graham, Kenneth Royal and Jeffrey Shoemaker, 1 filed complaints against defendant, Hyundai Motor America (Hyundai), and alleged that they were sold defective vehicles. Hyundai filed motions to dismiss the plaintiffs’ complaints predicated on section 2 — 619 of the Code of Civil Procedure (735 ILCS 5/2 — 619 (West 2002)), but the motions were denied. However, the trial court granted Hyundai’s request to certify the following question:

“Whether Hyundai’s informal dispute settlement procedure established through [the] Better Business Bureau (BBB) Auto Line Program, complies with the applicable [Federal Trade Commission (FTC)] rules codified at 16 C.F.R. §703.1 et seq. thereby requiring plaintiff to first resort to Hyundai’s procedure before commencing a civil action as required by [section 2310(a)(3)(C)(i) of the Magnuson-Moss Warranty — Federal Trade Commission Improvement Act (Act) (15 U.S.C. §2310(a)(3)(C)(i))].”

Hyundai sought leave to appeal to the appellate court, pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308). The appellate court denied Hyundai’s Supreme Court Rule 308 petition. 155 Ill. 2d R. 308. On April 28, 2003, Hyundai filed a petition for leave to appeal in the Illinois Supreme Court, pursuant to Supreme Court Rule 315. 177 Ill. 2d R. 315. The supreme court denied the motion for leave to appeal, but entered the following supervisory order:

“In the exercise of this Court’s supervisory authority, the Appellate Court, First District, is directed to vacate its order in Shoemaker v. Hyundai Motor America, Nos. 1 — 03—0252, 1 — 03—0253, 1 — 03—0254 cons., denying the petition for interlocutory appeal pursuant to Supreme Court Rule 308 and to answer the certified question.” Shoemaker v. Hyundai Motor America, 205 Ill. 2d 647 (2003).

In compliance with the supreme court’s supervisory order, we answer the certified question.

BACKGROUND

The plaintiffs, Graham and Royal, each purchased a Hyundai vehicle in 2002 that they characterize as defective. The purchase of each vehicle came with an express written warranty to repair or replace parts “found to be defective in material or workmanship under normal use and maintenance.” The express warranty provisions also provide for the buyer’s participation in nonbinding, alternative dispute resolution through the BBB Auto Line program. The warranty also provides that participation in the BBB Auto Line program must occur prior to pursuing court action. According to the warranty, “[i]f [a buyer] reject[s] the decision of the arbitrator [the buyer] may pursue other legal remedies under state or federal law.”

Graham and Royal each filed a complaint in the circuit court of Cook County claiming: (1) breach of written warranty; (2) breach of the implied warranty of merchantability; and (3) revocation of the acceptance of the vehicles. The plaintiffs alleged in their individual complaints that they each purchased a defective Hyundai vehicle. The plaintiffs also alleged that Hyundai’s authorized dealerships failed to repair the defects after a reasonable number of attempts. As a result of not having the defects in their Hyundais repaired, the plaintiffs attempted to revoke their acceptance of the vehicles, which Hyundai refused to honor.

Hyundai filed a section 2 — 619 motion to dismiss the plaintiffs’ complaints because neither Graham nor Royal submitted his or her individual claim to the BBB Auto Line process in advance of filing suit in the circuit court. The trial court denied the defendant’s motions and certified the aforementioned question. This court denied Hyundai’s application on March 24, 2003, but the supreme court issued a supervisory order that directed this court to answer the certified question.

ANALYSIS

The threshold question we must answer in this appeal is whether Hyundai’s informal dispute settlement procedure complies with the FTC’s rules codified in 16 C.F.R. pt. 703 (2006). Hyundai argues that the trial court erred in denying its motion to dismiss the plaintiffs’ complaints. Hyundai argues that its informal dispute resolution (IDR) procedure, established through the BBB Auto Line Program, facilitates the presuit resolution of consumer claims and implements the federal and Illinois policy favoring the settlement of claims. Hyundai also argues that Graham and Royal (plaintiffs, collectively) must first resort to the BBB Auto Line program before commencing a civil action. Accordingly, Hyundai argues that the trial court erred in denying its section 2 — 619 motion to dismiss. 735 ILCS 5/2 — 619 (West 2002). Hyundai also argues that the trial court erred in finding that Hyundai’s IDR procedure fails to comply with the requirements of the FTC.

According to Hyundai, its IDR procedure fully complies with the FTC’s rules. Hyundai argues that the BBB Auto Line is an annually audited program. According to an affidavit submitted by Alan L. Cohen, deputy general counsel of the Council of Better Business Bureaus, the BBB Auto Line is “an independently operated program of the Better Business Bureau system” established to provide car owners with an informal system under which to bring warranty complaints. Hyundai argues that it presented the results of annual outside audits of the BBB Auto Line program to the trial court. Hyundai maintains that the affidavit establishes compliance with the FTC rules. Hyundai argues that Graham and Royal failed to present evidence to rebut deputy general counsel Cohen’s conclusion that the BBB Auto Line program complied with the FTC rules.

The plaintiffs argue that the trial court was correct in refusing to dismiss their complaints because Hyundai failed to demonstrate that its IDR procedure complied with the Act. The plaintiffs also argue that they did not have to submit to Hyundai’s IDR procedure before filing the lawsuit. The plaintiffs also argue that Hyundai failed to present sufficient evidence that its IDR procedure complied with the FTC’s rules, specifically part 703 and all the subsections contained therein. 16 C.F.R. pt. 703 (2006). The plaintiffs argue that the FTC rules are binding on this court and must be strictly construed. The plaintiffs also argue that the burden is on Hyundai to demonstrate compliance, not on the plaintiffs to demonstrate noncompliance, with the rules.

Plaintiffs also argue that the BBB Auto Line program limits the available remedies by excluding the potential for the recovery of consequential damages and attorney fees. Plaintiffs argue that the BBB Auto Line program is defective in that it does not consider the Act or the chief measure of damages for breach of warranty in Illinois, diminution in value. Plaintiffs further argue that Hyundai’s IDE procedure does not comply with the disclosure requirements found in section 703.2. 16 C.F.E. §703.2 (2006).

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Bluebook (online)
855 N.E.2d 562, 367 Ill. App. 3d 617, 305 Ill. Dec. 395, 2006 Ill. App. LEXIS 804, Counsel Stack Legal Research, https://law.counselstack.com/opinion/graham-v-hyundai-motor-america-illappct-2006.