Summary
holding that " mere debtor-creditor relationship without more does not create a fiduciary relationship"
Summary of this case from Baughman v. State Farm Mut. Auto. Ins.Opinion
No. 90-3432.
Decided July 29, 1991.
Murray Murray, John T. Murray, Thomas J. Murray and Nancy Ogden, for plaintiffs.
Vorys, Sater, Seymour Pease, David S. Cupps, Michael G. Long and Anthony J. O'Malley, for National City Bank.
Spengler, Nathanson, Heyman, McCarthy Durfee, Theodore M. Rowen and Teresa L. Grigsby, for Fifth-Third Bank of Toledo, N.A.
Baker Hostetler and Paul P. Eyre, for Progressive Casualty Insurance Company.
This case is before the court upon the motion of plaintiff Lorraine Logsdon for certification of a class action against defendants Fifth-Third Bank of Toledo and Progressive Casualty Insurance Company ("Progressive"). Upon review of the memoranda of counsel, the evidence submitted by the parties, the applicable authorities and the pleadings, the court finds that Logsdon's motion must be granted, and that this case is maintainable as a class action pursuant to Civ.R. 23(B)(3).
The class action complaint herein was filed by plaintiffs Logsdon and Quedell Hayes against their respective lenders. Because the plaintiffs have filed a stipulation of dismissal of all claims against defendants National City Bank, Ohio Citizens Bank and National City Corporation, the institutions allegedly involved with a loan on which Hayes was a co-signer, the question of certification of a class containing borrowers of these three defendants shall be held in abeyance pending the August 8, 1991 hearing regarding the stipulation of dismissal.
I
On or about July 31, 1987, plaintiff Logsdon purchased an automobile and financed the purchase through Fifth-Third and its predecessor, First National Bank of Toledo (collectively referred to herein as "Fifth-Third"). Pursuant to the loan agreement between Fifth-Third and Logsdon, the purchased automobile secured Logsdon's debt.
The loan agreement required Logsdon to obtain automobile insurance that would protect both her own and Fifth-Third's interests in the automobile, and to provide Fifth-Third with proof of that insurance coverage within thirty days from the date of the agreement and within thirty days of any future lapse of existing insurance. Were Logsdon to fail to provide notice of insurance, the loan agreement authorized Fifth-Third to obtain insurance coverage on the automobile protecting either its own interest, alone, or protecting both Logsdon's and Fifth-Third's interests. In the event that Fifth-Third obtained insurance coverage for the automobile, the agreement required that Logsdon reimburse the bank for the cost of the insurance with interest.
At the time Logsdon purchased and financed her automobile, Fifth-Third had a Lender's Collateral Protection Policy in force through Progressive which protected Fifth-Third's interest in the automobiles it financed. The collateral protection insurance provided coverage for damage to the financed automobile limited to the lesser of the total cost of repair of the collateral or the net payoff of the loan. See Lender's Collateral Protection Policy, Limited Dual Interest Endorsement. The policy did permit Progressive to make payment directly to the borrower, so that the borrower could make the necessary repairs to the collateral. See Lender's Collateral Protection Policy, Summary of Insurance. The policy also contained various endorsements protecting Fifth-Third's interests against the failure to perfect a security agreement, the risk arising from repossession, and the loss resulting from conversion and confiscation, among others.
In the event that a borrower failed to provide the requisite proof of insurance, the defendants would send a notice of requirement which reminded the borrower of her obligation to provide proof of insurance and indicated that the alternative collateral protection insurance provided only limited coverage as described in the policy.
If a borrower failed to provide proof of other insurance after the notice of requirement was sent, collateral protection coverage was placed on her loan. Upon placement, the defendants would mail three documents to a borrower. The first was a cover letter indicating that the defendants had placed collateral protection insurance on the borrower's loan, that the insurance did not provide liability, bodily injury, or property damage coverage, that the premium, with interest, was added to the loan, but would be cancelled without charge upon proof of other insurance, and, finally, that the borrower should read the terms of the policy carefully. The second document was a "Memorandum of Insurance" which operated as an individualized declarations page, describing the collateral, the maximum coverage, the premium added to the loan, the coverage period and designating Fifth-Third as "the insured." The third document was a copy of the "Summary of Insurance" page from the Lender's Collateral Protection Policy. Among other items, the summary indicated that the policy might partially protect the borrower's interest, set forth a $200 deductible amount, described how the borrower could obtain lower payments and stated that the policy could be cancelled, retroactively, upon proof of other insurance. The summary failed to disclose any of the endorsements.
The premiums for the collateral protection insurance were paid through a balloon payment upon closure of an account. While many accounts of the putative class members are closed, many remain open, despite the fact that the insurance relationship between Fifth-Third and Progressive terminated in November 1989.
In early February 1988, the defendants made a review of all borrowers placed with Progressive to clarify and remedy some operational difficulties with the insurance placement program. This review project involved the over seventeen hundred Fifth-Third borrowers whose accounts had been placed with the Progressive insurance program. Through a series of letters and telephone contacts, the defendants reminded the placed borrowers of their obligation to either obtain insurance or be placed with collateral protection insurance, and requested information about the providers of other insurance from those who had obtained other insurance after initial placement with Progressive. One later correspondence advised placed borrowers that Progressive insurance may be costlier than otherwise available insurance coverage.
Logsdon claims that her account was placed with the Progressive insurance program. She does not recall whether or not she received all of the documents and notices sent by the defendants.
On behalf of other placed Fifth-Third borrowers and herself, Logsdon claims that:
1. The defendants failed to provide her with notice of her placement with the Progressive insurance program;
2. The defendants failed to notify her of the actual cost of insurance through Progressive and that such cost was added to her loan balance;
3. The defendants never provided her with a copy of the whole insurance policy or its actual declaration page, which would inform her of the true nature and the extent of the coverage provided by Progressive;
4. The placed insurance was excessive in cost in that Logsdon was charged the equivalent of a high risk premium, without any investigation by the defendants regarding her level of risk;
5. The defendants failed to notify Logsdon that her loan payments/balance could be reduced were she to obtain other insurance;
6. The insurance provided by the defendants operated for the sole benefit of Fifth-Third;
7. Progressive paid Fifth-Third an illegal rebate for the placement of Logsdon and each borrower;
8. Fifth-Third illegally tied Logsdon's ability to finance insurance premiums to placement in the Progressive insurance program and that the placement program was illegal, both courses of conduct allegedly being violations of Section 1971 et seq., Title 12, U.S. Code, the Bank Tying Act;
9. Because of their contractual relationship, the defendants owed a duty of reasonable care to Logsdon which they breached by the above alleged acts or omissions;
10. The alleged breach was willful and malicious;
11. Because of the relationship between the parties, the defendants owed Logsdon a duty of good faith, which they breached by the above alleged acts or omissions; and
12. Because of the special confidence inherently placed in insurance providers and because of the superior position and influence of the defendants, they owed Logsdon a fiduciary duty which they breached by the above alleged acts or omissions.
Logsdon prays for compensatory and punitive damages for the alleged wrongs, a declaration that Fifth-Third violated the Bank Tying Act, as well as an injunction against further violations of the Act.
Logsdon seeks certification of a class consisting of all customer-borrowers who financed automobiles through Fifth-Third and who were "forced-placed" in the Progressive insurance program, due to the borrower's failure to provide proof of other insurance within thirty days after either loan origination or the end of an individual borrower's own insurance policy period.
Logsdon claims that all Civ.R. 23(A) prerequisites to a class action are satisfied in this case. She asserts that this action is maintainable as a class action pursuant to both Civ.R. 23(B)(2) and 23(B)(3). She alleges that the defendants acted on grounds generally applicable to the putative class, making final injunctive relief proper with respect to the putative class as a whole. Civ.R. 23(B)(2). She further alleges that the putative class has in common questions of law and fact which predominate over individual issues. Civ.R. 23(B)(3).
II
Civ.R. 23(C)(1) provides that:
"As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits."
A trial court is afforded broad discretion in determining whether or not to permit a case to proceed as a class action. See Marks v. C.P. Chemical Co., Inc. (1987), 31 Ohio St.3d 200, 201, 31 OBR 398, 398, 509 N.E.2d 1249, 1252 (certification denied); Warner v. Waste Management, Inc. (1988), 36 Ohio St.3d 91, 99, 521 N.E.2d 1091, 1098 (certification granted). See, also, 7B Wright, Miller Kane, Federal Practice and Procedure (1986) 199, Section 1785. Such a determination is a procedural rather than substantive matter so that "whether a class action is proper does not depend on the merits of the litigation." 2 Newburg on Class Actions 2d (1985) 53, Section 7.27.
The requirements of Civ.R. 23(A) and 23(B) must be satisfied before a court may certify a class action. Schmidt v. Avco Corp. (1984), 15 Ohio St.3d 310, 313, 15 OBR 439, 441, 473 N.E.2d 822, 824. Civ.R. 23(A) contains four explicit prerequisites to a class action and two implicit ones. Warner, supra, at 94, 521 N.E.2d at 1094. The explicit prerequisites are as follows:
"Prerequisites to a class action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class." Civ.R. 23(A).
Implied in Civ.R. 23(A) are the requirements that the putative class must be identifiable, Warner, supra, 36 Ohio St.3d at 96, 521 N.E.2d at 1096, and that the class representative must be members of the class. Id.
In order to be maintainable as a class action, the case must additionally fall within at least one of the three categories enumerated in Civ.R. 23(B). In this action, Logsdon alleges that this case may be maintained as a class action under Civ.R. 23(B)(2) and 23(B)(3).
A. Civ.R. 23(A) Prerequisites
1. Civ.R. 23(A)(1) Numerosity
Whether the numerosity requirement is satisfied is determined on a case-by-case basis. Warner, supra, at 97, 521 N.E.2d at 1097. Classes have been certified with as few as twenty-three members. Marks, supra, 31 Ohio St.3d at 202, 31 OBR at 399, 509 N.E.2d at 1252. Consumer classes have been certified as small as one hundred to four hundred persons, Miles v. N.J. Motors (1972), 32 Ohio App.2d 350, 355, 61 O.O.2d 518, 521, 291 N.E.2d 758, 764, and as large as well over six thousand, Marks, supra, 31 Ohio St.3d at 202, 31 OBR at 399, 509 N.E.2d at 1252.
In this action, the defendants indicate that there were at least seventeen hundred borrowers who had been placed with Progressive insurance program at the time the defendants undertook their review of the insurance placement program. Accordingly, the court finds that the numerosity requirement is satisfied.
2. Civ.R. 23(A)(2) Commonality
"Courts generally have given a permissive application to the commonality requirement in Civ.R. 23(A)(2)." Warner, supra, 36 Ohio St.3d at 97, 521 N.E.2d at 1097. The court is allowed broad discretion in making this determination. Marks, supra, 31 Ohio St.3d at 202, 31 OBR at 399, 509 N.E.2d at 1252.
To satisfy the commonality requirement, the basis for liability must be a common factor for all members of the putative class. Ojalvo v. Bd. of Trustees of Ohio State Univ. (1984), 12 Ohio St.3d 230, 235, 12 OBR 313, 317, 466 N.E.2d 875, 879. When legal theories and factual allegations upon which liability is based are shared by the class members, there are questions of law or fact common to the class. See Vinci v. American Can Co. (1984), 9 Ohio St.3d 98, 100, 9 OBR 326, 327, 459 N.E.2d 507, 509.
In this case, Logsdon argues that any and all of the defendants' liability to the class members will arise out of the "forced" placement program. She asserts several legal theories on behalf of all class members. Accordingly, the court finds that the commonality prerequisite is met.
3. Civ.R. 23(A)(3) Typicality
The purpose of this component is to protect the interests of absent class members. Marks, supra, 31 Ohio St.3d at 202, 31 OBR at 399, 509 N.E.2d at 1252. "The requirement is met where there is no express conflict between the representative party and the class." Id.
The defendants insist that Logsdon's claim is not typical of the class, because, among other things, she failed to respond to the defendants' notices as would have a majority of customers receiving such notice, and that she was unable to obtain anything but high risk insurance on her own. As will be discussed below, however, the claims which the court finds to be common do not rely on the documentary notice actually sent by the defendants to Logsdon. Notwithstanding this fact, the court finds that there is no evidence of express conflict between Logsdon and members of the putative class, so this requirement is satisfied. See Warner, supra, 36 Ohio St.3d at 98, 521 N.E.2d at 1097.
4. Civ.R. 23(A)(4) Adequacy of Representation
A representative is deemed adequate so long as her interest is not antagonistic to that of other class members. Warner, supra, at 98, 521 N.E.2d at 1097. The court finds, based on the evidence before it, that Logsdon has the desire and financial ability to represent the class and, thus, that she will fairly and adequately protect the interests of the putative class.
Additionally, the court finds that legal counsel for Logsdon has sufficient experience, skill and competency to handle the class action. See, e.g., Warner, supra; Biechele v. Norfolk Western Ry. Co. (N.D.Ohio 1969), 309 F. Supp. 354. The defendants have not challenged the experience or ability of plaintiff's counsel, nor have they suggested that any collusion was likely. See Vinci, supra, 9 Ohio St.3d at 101, 9 OBR at 328, 459 N.E.2d at 510.
5. Implied requirements that the putative class be identifiable, and that Logsdon be a class member
The court finds that the putative class is readily identifiable and that Logsdon is a member. The claimed class is all persons who financed their automobiles through Fifth-Third and who were "forced placed" in the Progressive insurance program because of their failure to provide proof of other insurance. Defendants do not challenge that Logsdon falls within that category of Fifth-Third borrower. Thus, the implied Civ.R. 23(A) prerequisites, identified in Warner, are also satisfied.
B. Civ.R. 23(B) Maintainability
Logsdon asserts that this action is maintainable as a class action pursuant to both Civ.R. 23(B)(2) and 23(B)(3).
Civ.R. 23(B) provides in pertinent part as follows:
"(B) Class actions maintainable. An action may be maintained as a class action if the prerequisites of subdivision (A) are satisfied, and in addition:
"* * *
"(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
"(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (a) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (b) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (c) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (d) the difficulties likely to be encountered in the management of a class action."
1. Civ.R. 23(B)(2)
In this action Logsdon prays for a declaration that Fifth-Third's involvement within the Progressive placement program and the tying of the privilege to finance insurance premiums with the placement of insurance through the Progressive program violate Section 1971 et seq., Title 12, U.S. Code, the Bank Tying Act. She also seeks an injunction against Fifth-Third's alleged continuing violations of the Bank Tying Act.
"Class action treatment is particularly useful in [a Civ.R. 23(B)(2)] * * * situation because it will determine the propriety of the behavior of the party opposing the class in a single action." 7A Wright, Miller Kane, supra, at 447. While it is desirable to adjudicate the propriety of the defendants' behavior in a single action, where the primary relief requested by the plaintiff class is in the form of damages, certification pursuant to Civ.R. 23(B)(2) is improper. Marks, supra, 31 Ohio St.3d at 203-204, 31 OBR at 401, 509 N.E.2d at 1254; Schmidt v. Avco Corp. (1984), 15 Ohio App.3d 81, 86-87, 15 OBR 111, 116-117, 472 N.E.2d 721, 727-728.
Because Logsdon seeks injunctive and declaratory relief against Fifth-Third as just one portion of the remedy sought under the Bank Tying Act cause of action, the court finds that Logsdon is primarily requesting relief in the form of damages. Thus, this case is not maintainable as a class action under Civ.R. 23(B)(2).
2. Civ.R. 23(B)(3)
In order for this case to be maintainable as a class action under Civ.R. 23(B)(3), the court must find "that the common questions predominate over questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Professor Miller states, `[t]he key should be whether the efficiency and economy of common adjudication outweigh the difficulties and complexity of individual treatment of class members' claims.'" (Footnote omitted.) Warner, supra, 36 Ohio St.3d at 96, 521 N.E.2d at 1095-1096.
The determination of whether common questions predominate "involves an attempt to achieve a balance between the value of allowing individual actions to be instituted so that each person can protect his own interests and the economy that can be achieved by allowing a multiple party dispute to be resolved on a class action basis." 7A Wright, Miller Kane, supra, 519, Section 1777.
The court must assess "the relative importance of the individual versus the common issues because it is only where the common issues predominate that the economies can be achieved by means of the class action device." Schmidt v. Avco Corp., 15 Ohio App.3d at 87, 15 OBR at 117, 472 N.E.2d at 728. Where the claims of putative class members are based upon a "common nucleus of operative facts," such that "[t]he success of each individual claim will depend to a great extent upon a favorable disposition of the questions common to all members of the class," the common questions may be said to predominate. Miles, supra, 32 Ohio App.2d at 358, 61 O.O.2d at 523, 291 N.E.2d at 764. The fact that separate transactions are involved fails to preclude class certification when the right of the putative class to recover is not dependent upon scrutinization of each individual transaction. See Portman v. Akron S. L. Co. (1975), 47 Ohio App.2d 216, 219, 1 O.O.3d 287, 288, 353 N.E.2d 634, 636.
A consumer class action case, generally, arises out of alleged wrongful business practices of one or more defendants. 7B Wright, Miller Kane, supra, at 55, Section 1782. "[T]he question whether defendant engaged in an improper course of conduct typically will be the same for all class members; as a result, common questions will predominate * * *." Id. at 55-56.
In this consumer action, the defendants assert that individual factual and legal issues predominate. They argue that the actual notice received and claims made by each borrower, and the eligibility of each borrower for other than high risk insurance, as well as whether a borrower's account is now closed and when it closed, all affect the liability of the defendants and the individual borrower's right to recovery. The defendants also argue that Logsdon's breach of fiduciary duty and Bank Tying Act claims require individual inquiries, and that her bad faith cause of action fails to state a claim. Logsdon counters that while some individual questions exist, common questions of law and fact predominate.
The court, initially, notes that the defendants' challenge to the sufficiency of Logsdon's bad faith claim implicates the merits of that claim. As discussed earlier, however, a class action determination, pursuant to Civ.R. 23(C)(1), is a procedural rather than a substantive matter. Newburg, supra, at 53, Section 7.27. There are other avenues provided by the Civil Rules to challenge the sufficiency of a claim, which may be employed both prior and subsequent to a decision on class certification. See, generally, 7B Wright, Miller Kane, supra, at 127, Section 1785. Hence, the instant challenge to the bad faith claim is improper at this stage.
The defendants assert that to bring a claim based on Section 1971 et seq., Title 12, U.S. Code, the Bank Tying Act, each class member must individually prove coercion on the part of the defendants. Coercion, however, is not an element of a claim made pursuant to Section 1972, Title 12, U.S. Code. Dibidale of Louisiana, Inc. v. American Bank Trust Co. (C.A.5, 1990), 916 F.2d 300, 305-307.
The defendants also assert that Logsdon's claim for breach of fiduciary duty may not be maintained on a class-wide basis because such a claim requires an analysis of the unique individual circumstances existing between the defendants and each individual placed borrower. The court, however, disagrees.
A fiduciary duty arises from a relationship "in which special confidence and trust is reposed in the integrity and fidelity of another and there is a resulting position of superiority or influence, acquired by virtue of this special trust." Stone v. Davis (1981), 66 Ohio St.2d 74, 78, 20 O.O.3d 64, 66-67, 419 N.E.2d 1094, 1097-1098, citing In re Termination of Employment (1974), 40 Ohio St.2d 107, 115, 69 O.O.2d 512, 517, 321 N.E.2d 603, 609.
Such a relationship may be specifically created by contract, Stone supra, or it "may * * * arise out of an informal relationship where both parties to a transaction understand that a special trust or confidence has been reposed." Blon v. Bank One, Akron, N.A. (1988), 35 Ohio St.3d 98, 101, 519 N.E.2d 363, 367. A mere debtor-creditor relationship without more does not create a fiduciary relationship. Umbaugh Pole Bldg. v. Scott (1979), 58 Ohio St.2d 282, 12 O.O.3d 279, 390 N.E.2d 320, paragraph one of the syllabus.
In Stone, supra, 66 Ohio St.2d at 78-79, 20 O.O.3d at 67, 419 N.E.2d at 1098, the court said:
"[W]hile a bank and its customer may be said to stand at arm's length in negotiating the terms and conditions of a * * * loan, it is unrealistic to believe that this equality of position carries over into the area of loan processing, which customarily includes advising the customer as to the benefits of procuring * * * insurance on the property which secures the bank's loan."
The Stone court held that a fiduciary duty existed between a mortgagor couple and the mortgagee bank. The duty arose when the bank broached the subject of mortgage insurance and subsequently failed to inform the mortgagors how to obtain such insurance, after the mortgagors expressed interest in such insurance. One of the mortgagors later died, causing a foreclosure action against the survivor. In imposing the fiduciary duty upon the bank, the court reasoned that banks are interested experts when it comes to insuring collateral. The bank derives benefit from collateral protection, and frequently is, at the least, a collection agent for the insurer. Id., 66 Ohio St.2d at 80, 20 O.O.3d at 67, 419 N.E.2d at 1098.
As in Stone, Logsdon alleges that the defendants' improper conduct arose not with the loan negotiations, but with the subsequent process of placing borrowers with Progressive insurance. She alleges that all contracts executed with putative class members indicate that insurance will be placed unless proof of other insurance is provided. The defendants, not the members of the putative class, were contractually conferred with the power to determine what insurance protection would be placed and at what cost.
In securities violation class action cases the United States Supreme Court has dispensed with individual inquiries into the reliance of plaintiffs on the representations made by the defendants in circumstances when a reasonable investor would have thought the representations material. Affiliated Ute Citizens of Utah v. United States (1972), 406 U.S. 128, 153-154, 92 S.Ct. 1456, 1472, 31 L.Ed.2d 741, 761. Such reliance can be presumed absent contradictory circumstances. Similarly, the court finds that, as a matter of law, a trier of fact may presume an understanding that special trust and confidence has been reposed in the defendants when a reasonable person would have so understood based on positions of the contracting parties and the documents used by the defendants.
Thus, based on the loan agreement language, all placed borrowers could be found to have, as a class, placed special trust and confidence in the defendants, leaving the defendants in positions of superiority as to qualities and cost of the insurance selected for placement. Accordingly, the court finds answers to the questions of whether the defendants owed a fiduciary duty to the putative class members and whether that duty was breached involve questions of fact common to the prospective class.
A fiduciary relationship is determined upon a preponderance of the evidence standard. See 49 Ohio Jurisprudence 3d (1984), Fiduciaries, Section 1, at 46-47.
When evaluating the factual issues in a potential class action, it must be kept in mind that Civ.R. 23(C)(4)(a) permits a court to certify a class with respect to just certain issues raised in the complaint. Marks, supra, 31 Ohio St.3d at 204, 31 OBR at 401, 509 N.E.2d at 1254.
" Civ.R. 23(C)(4) was designed to give trial courts maximum flexibility in handling class actions. It enables courts to restructure complex cases to meet the other requirements for maintaining a class action. See, generally, 7B Wright, Miller Kane, supra, at 268-285, Section 1790. Thus, the advantages and economies of adjudicating issues that are common to the entire class on a representative basis can be secured even though other issues may have to be litigated separately by individual class members. Id. at 271. The effect of applying subdivision (C)(4) may be to make the common issues in the recast class action predominate for purposes of Civ.R. 23(B)(3). 7A Wright, Miller Kane, supra, at 546, Section 1778." (Emphasis added.) Marks, supra, 31 Ohio St.3d at 205, 31 OBR at 402, 509 N.E.2d at 1254-1255.
A determination of whether or not to certify certain issues, pursuant to Civ.R. 23(C)(4), is within the sound discretion of the trial court. Id.
Because the evidence before the court indicates that notice of placement with Progressive insurance, premium costs, and information that loan payments/balances could be reduced by obtaining other insurance were items regularly mailed by the defendants to the placed borrowers after placement, whether or not each class member received actual notice of these items is an individual factual question which would be best separated from the class action. Similarly, whether Progressive premiums were excessive, based solely on the defendants' alleged failure to investigate whether a placed borrower was or was not a high risk, involves individual inquiries.
Common questions asserted here by Logsdon are:
1. Whether the defendants provided borrowers with a copy of the whole insurance policy or its actual declaration page, which would inform the borrower of the true nature and extent of the coverage provided;
2. Whether the defendants' insurance program was excessive in cost, based on factors other than the individual borrower's risk;
3. Whether the insurance program operated for the sole benefit of the defendants;
4. Whether illegal rebates were exchanged by the defendants;
5. Whether, as a part of their regular course of business, the defendants notified borrowers of the cost, actual or approximate, of placed insurance;
6. Whether the placement program violates Section 1971 et seq., Title 12, U.S. Code, the Bank Tying Act, either by financing the cost of insurance only when the insurance was that provided by Progressive or otherwise;
7. Whether the defendants owed a duty of reasonable care to the placed borrowers, and whether the defendants negligently or willfully breached such duty by the above alleged acts or omissions;
8. Whether the relationship between the defendants, on the one hand, and the placed borrowers, on the other, created a duty of good faith, and whether the defendants breached such a duty by the above alleged acts or omissions; and
9. Whether the defendants were in superior positions of confidence and influence as to the placed borrowers such that the defendants owed the placed borrowers a fiduciary duty, and whether that duty was breached by the above alleged acts or omissions.
The court finds that these nine questions are based upon a common nucleus of operative facts. These are components of the central issue in this case. That issue is the propriety of the placement program operated by Fifth-Third and Progressive. The ability of any individual placed borrower to recover will depend on a favorable disposition of questions common to all putative class members.
The fact that individual members may be entitled to varying amounts in damages does not preclude a class action. Miles, supra, 32 Ohio App.2d at 356, 61 O.O.2d at 521, 291 N.E.2d at 763; Vinci, supra, 9 Ohio St.3d at 101-102, 9 OBR at 329, 459 N.E.2d at 511. Bifurcated trials, Warner, supra, 36 Ohio St.3d at 99, 521 N.E.2d at 1098, as well as other alternatives may be employed to address remaining individual questions. See, generally, 7B Wright, Miller Kane, supra, Section 1784; 1 Newburg, supra, 321-322, Section 4.26. Accordingly, the court finds that common questions predominate as to the nine questions which are based on the common nucleus of operative facts.
Class actions are generally viewed as a superior procedural alternative to individual or consolidated actions when the number of interested parties is so large that joinder and intervention would burden the court. 7A Wright, Miller Kane, supra, at 553, Section 1779. When a putative class is composed of consumers there is a possibility that the costs of individual actions would exceed individual recovery, thereby precluding relief other than on a class basis. Id. at 556-557. In Miles, supra, another consumer case brought to obtain class relief, the court held that class action was preferable to joinder and intervention due to the size of class; there were between one hundred and four hundred people in the Miles putative class. Id., 32 Ohio App.2d at 355, 61 O.O.2d at 521, 291 N.E.2d at 764.
In this consumer action there are over seventeen hundred members of the putative class. Because of this large number and the potential for low individual recoveries were individual actions to be required, the court finds that the interest of members of the class in individually controlling separate actions to be low, Civ.R. 23(B)(3)(a), while the desirability of concentrating the litigation in this forum to be high, Civ.R. 23(B)(3)(c). The court, further, finds that the difficulties inherent in managing this case as a class action are outweighed by the economies which the procedure will foster, Civ.R. 23(B)(3)(d), and, thus, a class action would be the superior method for resolving this controversy. Accordingly, the court finds that a class action is maintainable under Civ.R. 23(B)(3) as to the above set forth nine questions which are based upon a common nucleus of operative facts.
Because those seeking injunctive and declaratory relief against Fifth-Third are also seeking damages, no subclass is required. Warner, supra, 36 Ohio St.3d at 95, 521 N.E.2d at 1095.
JUDGMENT ENTRY
It is ORDERED that plaintiff Lorraine Logsdon's motion for class certification is granted in part, a class action being maintainable under Civ.R. 23(B)(3), there being no just reason for delay.
It is further ORDERED that the class shall be defined as all persons who financed automobile purchases through defendant Fifth-Third Bank of Toledo and/or First National Bank of Toledo, and whose automobile loans were placed in a collateral protection insurance program operated by defendant Progressive Casualty Insurance Company solely because the borrowers failed to provide defendant Fifth-Third Bank of Toledo or First National Bank of Toledo proof of other insurance within thirty days of either loan origination or the end of an individual borrower's own policy period.
It is further ORDERED that on or before the 30th day of August 1991, the plaintiff submit for approval by this court a notice to class members of this determination which shall contain such information as required in Civ.R. 23(C)(2).
It is further ORDERED that said notice be sent by ordinary mail to all class members who can be identified through reasonable effort.
It is further ORDERED that notice by publication shall be employed for those class members who cannot be identified through reasonable effort.
It is further ORDERED that on or before the 30th day of August 1991, the plaintiff submit for approval by this court a workable plan for identifying the individual names and addresses of all class members as well as a workable plan for publication of said notice.
It is further ORDERED that upon completion of service of notice, plaintiffs shall file affidavits attesting to compliance with the terms of this order.
So ordered.