Arriola v. Time Insurance Co.

No. 1-95-2071

RICHARD ARRIOLA, on Behalf of Himself ) Appeal from the
and All Others Similarly Situated, ) Circuit Court of
) Cook County
Plaintiff-Appellant, )
)
v. )
)
TIME INSURANCE COMPANY, ) Honorable
) Lester Forman,
Defendant-Appellee. ) Judge Presiding.


JUSTICE QUINN delivered the opinion of the court:

This case is brought on appeal from a June 12, 1995, order
entered by the circuit court of Cook County, dismissing plaintiff,
Richard Arriola's (Arriola) class action complaint with prejudice
pursuant to section 2-619 of the Illinois Code of Civil Procedure.
735 ILCS 5/2-619 (West 1994). On appeal, plaintiff contends that
the trial court erred in determining as a matter of law, that
plaintiff did not meet the numerosity prerequisite as defined in
section 2-801 of the Illinois Code of Civil Procedure (735 ILCS
5/2-801 (West 1994)), thereby precluding him from maintaining a
class action in Illinois. We conclude that a motion to dismiss
under section 2-619 may not be based on an asserted lack of
numerosity, and therefore we reverse.

The following are the pertinent facts contained in the record.
Plaintiff Richard Arriola (Arriola), an Illinois resident, was
injured in an auto accident in 1992. At the time of the accident,
Arriola was named as an insured on a policy issued by defendant,
Time Insurance Company (Time). Arriola recovered $554.40 for
medical expenses from Time under the aforementioned policy.
Arriola proceeded to file a complaint against the person
responsible for the accident. Time contemporaneously notified
Arriola of its subrogation lien for $554.40 with respect to any
judgment or any settlement arising from said action. Arriola
ultimately tendered a check to Time for the aforementioned $554.40.
On August 30, 1993, Arriola filed a complaint individually and
on behalf of a class of other similarly situated individuals
alleging that Time intentionally misrepresented its right of
subrogation in the absence of an express policy provision
establishing such a right. In its answer Time denied the
allegations of the subject complaint and denied that plaintiff was
entitled to an order certifying this case as a class action. The
record indicates that Time subsequently acknowledged that a medical
insurer has no right of subrogation in the absence of an express
policy provision allowing subrogation. This was the holding in
Schultz v. Gotlund, 138 Ill. 2d 171 (1990), decided September 26,
1990. Time proceeded to attempt to reimburse the 46 Illinois
policyholders from whom it had sought and received subrogation
payments since September 1990, including Arriola. Time obtained
releases from 44 out of the aforementioned 46 policyholders.
On November 4, 1994, Time filed a motion to dismiss Arriola's
class action complaint under section 2-619 of the Illinois Code of
Civil Procedure. 735 ILCS 5/2-619 (West 1994). Time asserted that
neither Arriola nor the court had moved for class certification and
that Arriola was unable to satisfy the prerequisites for class
certification pursuant to section 2-801 of the Illinois Code of
Civil Procedure (Code). 735 ILCS 5/2-801 (West 1994). Speci-
fically, Time argued that the trial court should dismiss the
subject complaint because the numerosity requirement could not be
met. In support of its motion, Time submitted the affidavit of a
Time employee which stated that Time reimbursed and obtained
releases from 44 of the 46 affected policyholders in the state of
Illinois. Therefore, Time asserted the class size in Illinois
could be no more than two policyholders.
Arriola pointed out that the trial court had restricted
discovery in this case to possible Illinois claimants. Arriola
asserted that this prevented plaintiff from moving for class
certification in a more timely manner. Arriola further asserted
that Time's actions in obtaining general releases from 44 of the 46
affected policyholders in Illinois were made in an effort to avoid
liability to the larger group of affected policyholders in other
states.
On May 15, 1995, the trial court granted Time's motion to
dismiss, finding that Arriola failed to satisfy the numerosity
prerequisites as defined by section 2-801 of the Code.
Specifically, the trial court found that Arriola could not maintain
a class action lawsuit where the prerequisites for an Illinois
class did not exist. Arriola appeals from this order.
The sole issue on appeal is whether counts I, II and III of
the subject complaint (breach of contact, unjust enrichment, and
consumer fraud, respectively) should be involuntarily dismissed
based upon the specific grounds, defects and/or defenses as
codified in section 2-619 of the Code.
Arriola contends that the trial court erred in determining, as
a matter of law, that plaintiff could not maintain a class action
in Illinois where he did not meet the numerosity prerequisite as
defined in section 2-801 of the Code. 735 ILCS 5/2-801 (West
1994). Time, on the other hand, asserts that the trial court
correctly dismissed plaintiff's class action complaint with
prejudice pursuant to section 2-619 of the Code where Arriola
failed to establish numerosity, which Time asserts is an essential
requirement for the maintenance of a class action lawsuit.
The purpose of a motion to dismiss under section 2-619 of the
Code is to dispose of issues of law and easily proved issues of
fact at the outset of a case. Zedella v. Gibson, 165 Ill. 2d 181,
185 (1995). In ruling on a section 2-619 motion to dismiss, a court
may consider pleadings, depositions, and affidavits. Zedella, 165 Ill. 2d at 185. A reviewing court will determine the propriety of
the granting of a motion to dismiss de novo. Spiegel v. Hollywood
Towers Condominium Ass'n, 283 Ill. App. 3d 992, 998 (1996). All
well-pleaded facts and reasonable inferences that can be drawn from
the complaint are accepted as true and are examined to determine if
a cause of action is stated. Arlt v. GreatAmerican Federal Savings
& Loan Ass'n, 213 Ill. App. 3d 584, 587 (1991). The question on
appeal is "whether the existence of a genuine issue of material
fact should have precluded the dismissal or, absent such an issue
of fact, whether dismissal is proper as a matter of law." Kedzie &
103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116-117
(1993).
Here, both Arriola and Time confuse an order dismissing a
complaint pursuant to section 2-619 of the Code with a finding by
the court with respect to class certification. A clear distinction
must be made between an express finding with respect to the
statutory prerequisites for class certification under section 2-802
of the Code and allegations pleaded in a complaint that properly
state a cause of action for breach of contract, unjust enrichment,
and consumer fraud. A motion to strike and dismiss the claim of a
representative plaintiff must be distinguished from a situation
where a motion to strike the class action allegations is made.
In Illinois, class certification is governed by section 2-801
of the Code. 735 ILCS 5/2-801 (West 1994). That section requires
that four elements be satisfied before an action may be maintained
as a class action: (1) the class is so numerous that joinder of all
members is impracticable; (2) there are questions of fact or law
common to the class, that predominate over individual questions;
(3) the representative parties will fairly and adequately protect
the interest of the class; and (4) the class action is an
appropriate method for the fair and efficient adjudication of the
controversy. Purcell & Wardrope Chartered v. Hertz Corp., 175 Ill.
App. 3d 1069, 1073 (1988).
Section 2-802 of the Illinois Code of Civil Procedure
provides:
"As soon as practicable after the commencement of an
action brought as a class action, the court shall
determine by order whether it may be so maintained and
describe those whom the court finds to be members of
the class. This order may be conditional and may be
amended before a decision on the merits." 735 ILCS
5/2-802(a)(West 1994).

In deciding whether to certify a class, the court may consider
any matters of law or fact properly presented by the record
including pleadings, depositions, affidavits, answers to
interrogatories, and any evidence that may be adduced at hearings.
Brown v. Murphy, 278 Ill. App. 3d 981, 989 (1996).
The class action statute makes no reference to any requirement
that the facts establishing the class action prerequisites be
pleaded; it speaks only to the required finding with respect to the
prerequisites of class certification. McCarthy v. La Salle
National Bank & Trust Co., 230 Ill. App. 3d 628, 633 (1992).
A motion to dismiss for failure to state a cause of action may
be acted upon in a class action before determination of
certification issues. Schlessinger v. Olsen, 86 Ill. 2d 314, 320
(1981). This rule recognizes that the important interests of time
and efficiency are served better by a prompt determination of a
motion to dismiss than by deferring a decision until after the
certification issue has been decided. Schlessinger, 86 Ill. 2d at
321.
In McCarthy, the appeal was from the grant of the defendant's
motion to dismiss under section 2-615 of the Code. This court held
that in such circumstances, the appellate court can only review the
allegations of a plaintiff's complaint to determine whether they
adequately pled the prerequisites of a class action. McCarthy v.
La Salle National Bank & Trust Co., 230 Ill. App. 3d at 633. It is
important to note that the plaintiff in McCarthy appealed under
Supreme Court Rule 308 (134 Ill. 2d R. 308).
Here, plaintiff has appealed the granting of defendant's
section 2-619 motion to dismiss under Supreme Court Rule 301 (134
Ill. 2d R. 301). A section 2-619 motion to dismiss allows for an
involuntary dismissal of a claim based on certain defects or
defenses. The basis of the motion must go to an entire claim or
demand. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 485
(1994). Section 2-619(a) additionally provides that if the grounds
for the motion do not appear on the face of the pleading attached,
the motion shall be supported by affidavit. 735 ILCS 5/2-
619(a)(West 1994). Here, defendant supported its motion to dismiss
with an affidavit of an employee stating that there were only two
possible members of the class remaining in Illinois.
One of the enumerated grounds for a section 2-619 motion to
dismiss is "[t]hat the claim asserted against defendant is barred
by other affirmative matter avoiding the legal effect of or
defeating the claim." 735 ILCS 5/2-619(a)(9)(West 1994). This is
the only ground in section 2-619 of the Code upon which defendant's
motion to dismiss could possibly be based. However, "[a]ffirmative
matter in a section 2-619(a)(9) motion, is something in the nature
of a defense which negates the cause of action completely or
refutes crucial conclusions of law or conclusions of material fact
contained in or inferred from the complaint." Illinois Graphics
Co., 159 Ill. 2d at 486.
Here, Time's section 2-619 motion to dismiss was based solely
on the asserted lack of numerosity. The order granting the motion
to dismiss based on a lack of numerosity had the effect of
dismissing the class action allegations. The dismissal of class
action allegations does not terminate the entire litigation because
the plaintiff is free to proceed on his individual claims. Coopers
& Lybrand v. Livesay, 437 U.S. 463, 57 L. Ed. 2d 351, 98 S. Ct. 2454, 2457 (1978); Schlessinger, 86 Ill. 2d at 318. A section 2-
619 motion to dismiss based on numerosity cannot dispose of the
named plaintiff's cause of action. The basis of a 2-619 motion to
dismiss must go to an entire claim or demand. Illinois Graphics
Co., 159 Ill. 2d at 485. Therefore, a section 2-619 motion to
dismiss may not be based on an asserted lack of numerosity.
In the instant case, the trial court dismissed Arriola's
individual complaint as well as the class allegations of his
complaint. The court stated no reason for its dismissal of
Arriola's individual complaint. Defendant concedes that its motion
to dismiss based on lack of numerosity would not provide a basis to
dismiss Arriola's individual complaint. Even though this issue has
not been raised by the parties, we are obligated to determine
whether plaintiff's complaint stated a valid cause of action.
Landesman v. General Motors Corp., 72 Ill. 2d 44, 49 (1978). A
review of the complaint and record in this case shows that Arriola
stated a valid independent cause of action. The trial court's
dismissal of Arriola's individual complaint was in error. This
error provided the basis for Arriola to appeal all aspects of the
dismissal under Supreme Court Rule 301.
This is contrary to the holding in Levy v. Metropolitan
Sanitary District of Greater Chicago, 92 Ill. 2d 80, 83 (1982):
"[N]either an order denying class certification or decertifying a
class nor an order dismissing class action allegations is final and
*** such orders may be appealed from prior to the termination of
the litigation only under the interlocutory appeal provisions of
the Supreme Court Rules."
The court in Levy further stated that such orders must be
appealed pursuant to Supreme Court Rule 308. Supreme Court Rule
308(a) provides:
"Rule 308. Interlocutory Appeals by Permission

(a) Requests. When the trial court, in making
an interlocutory order not otherwise appealable, finds
that the order involves a question of law as to which
there is substantial ground for difference of opinion
and that an immediate appeal from the order may mat-
erially advance the ultimate termination of the liti-
gation, the court shall so state in writing, identifying
the question of law involved. Such a statement may be
made at the time of the entry of the order or thereafter
on the court's own motion or on motion of any party. The
Appellate Court may thereupon in its discretion allow an
appeal from the order." 134 Ill. 2d R. 308(a).

In its ruling, the trial court said that it understood that
its holding might appear to be premature on review, but that after
allowing lengthy and expensive discovery, the court would still be
faced with the fact that there would never be more than two members
of the class in Illinois. The court held that this being true, it
would deny class certification no matter how many potential members
of the class were present elsewhere in the nation.
On appeal both parties have framed the issue before us as
whether, under the facts of this case, a national class action suit
may be maintained in Illinois when there are only two members of
the class in Illinois. The trial court held that it could not. We
cannot reach this issue for the reasons stated herein. The trial
court's concerns as to the expense and effort that would need to be
expended should discovery continue are valid. These concerns are
best addressed under Supreme Court Rule 308. It is settled that a
trial court may use Rule 308 as a means of reviewing an order
concerning class certification at an early stage of the litigation.
Gordon v. Boden, 224 Ill. App. 3d 195, 198 (1991); Eshaghi v.
Hanley Dawson Cadillac Co., 214 Ill. App. 3d 995 (1991).
For the foregoing reasons the trial court's dismissal of
plaintiff's class action complaint is reversed and the cause is
remanded to the circuit court for further proceedings consistent
with this opinion.
Reversed and remanded.
GREIMAN, P.J., and THEIS, J., concur.