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Bonilla v. Trebol Motors

(Class Action US Dist Ct PR 1992) (Non-Tobacco Case) Citation: 1993 WL 138297 (D.Puerto Rico 30 Mar 1993); 913 F.Supp. 655 (19 Dec 1995); 150 F.3d 62; 150 F.3d 77 (28 Jul 1998); 150 F.3d 88 (28 Jul 1998 appealing assigned attorney fees)

This class action suit was brought by representative plaintiff Luis Bonilla, Carmen M. Ortiz, and their legal conjugal partnership; Miguel A. Mercado, Betsy Vazquez, and their legal conjugal partnership; Luis M. de Jesus; Pedro Umpierre, Nancy Torregrosa, and their legal partnership; 200 Fortaleza Jewelry, Inc., Jose M. Hernandez, his wife, Antonia Lopez C & ceres, their conjugal partnership, and Wanda I. Santiago, against Trebol Motors, Volvo, Showroom Auto Services, Conchita Navarro de Gonzalez, Ricardo Navarro de Gonzalez, and insurance companies, on June 16, 1992.
The class consisted of buyers and owners of Volvo 240 GLE automobiles from 1984 to the time of the complaint. The plaintiffs alleged that the defendants sold the plaintiffs Volvo 240DL automobiles when the plaintiffs believed they were buying Volvo 240GLE automobiles. The defendants engaged in mail and wire fraud to complete this fraudulent scheme. The plaintiffs claimed violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiffs sought monetary damages. The plaintiffs were represented by Ness Motley, Loadholt, Richardson & Poole, P.A.
The defendants counterclaimed for malicious prosecution on June 23, 1995. They alleged that the plaintiffs' case was malicious and without probable cause because prior RICO actions against the defendants by different plaintiffs had been dismissed for failure to state claims.
The case was heard in the United States District Court, District of Puerto Rico (Civ. No. 92-1795(JP)) before the Honorable Jamie Pieras, Jr. On March 30, 1993, the judge granted class certification. There were at least 15,000 members of the class, satisfying numerosity requirements. Several questions of law and fact were common to the class. The representative parties were typical because the plaintiffs alleged that each member was victim to the same conspiracy as the representatives, and suffered the same type of injury. Such representation did not conflict with any member's interest, so they could adequately represent the class. The judge ruled that the plaintiffs did not have to demonstrate individual reliance on the defendants' representations to maintain a RICO claim, so common questions predominated over individual issues. Class action was the superior mechanism for the case, since no other litigation was occurring and there were no foreseeable management difficulties.
On December 19, 1995, the judge (913 F.Supp. 655) dismissed the defendants' counterclaim of malicious prosecution. The counterclaim was subject to a one-year statute of limitations on tort actions, which accrued when the complaint filed without probable cause was dismissed. That previous action was dismissed on September 14, 1992. That statute was not tolled because the plaintiffs' actions did not amount to a continuing tort, so the counterclaim was barred by the statute of limitations. The defendants failed to show all elements of malicious prosecution: the plaintiffs in this suit were not the same as the plaintiffs in the previous suit, and the claim was not filed with malice or without probable cause, nor was the current claim the one that had to be filed with malice.
On June 24, 1996 defendants Trebol and Gonzalez consented to a default judgment against them. On October 10, 1996, the judge entered a final judgment against all defendants following a jury verdict, on August 1, 1996, in favor of the plaintiffs for treble damages against Volvo of $129,591,300. The judge ruled that Trebol and Gonzalez were liable for the same damages assessed against Volvo by the jury on the grounds of conspiracy. Both parties appealed.
The United States Court of Appeals, First Circuit (150 F.3d 62 and 150 F.3d 77) reversed the judgment and remanded the case on July 28, 1998. The court ruled that the plaintiffs' opposition to summary judgment would be treated as an amendment to the complaint's fraud allegations, because it provided the defendants with sufficient notice. The plaintiffs stated a valid cause of action against the defendant under RICO for failure to make truthful label disclosures. The defendants were not entitled to a jury trial on damages, but they were entitled to participate in any hearing held. The option was open to them to join in the trial for that part involving damages. The denial of defendants Trebol and Gonzalez's motion for continuance of damages was an abuse of discretion. The defaulting defendants should have been allowed to prepare and present evidence on damages. The damages against the defendants were likely overstated, since they were based on prices in the continental United States. The plaintiffs should have been allowed to present additional evidence regarding the damages against the defaulting defendants as well. The post-petition entry of judgment against the defendants violated the automatic stay put in place when Trebol filed for bankruptcy. Further proceedings against it were halted until the stay was lifted. The plaintiffs were not entitled to recover damages in the amount of the full price paid as a result of the fraudulent transactions. Such awards would result in an unjustifiable windfall since the plaintiffs have not offered to return the cars, all of which are now used, and some of which have since been sold.