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Neese v. Lithia Chrysler Jeep of Anchorage, Inc.

Supreme Court of Alaska

July 10, 2009

Jackie Lee NEESE, Thomas David Dicus, Michelle Renee Enos, Cheryl Francis Grundman, Keith Allen Grundman, Shan Keoke Gull, on behalf of Genevieve Marguerite Gull, David Martin Rees, and Elizabeth Alden Rees, individually and on behalf of all others similarly situated, Appellants,
LITHIA CHRYSLER JEEP OF ANCHORAGE, INC., Lithia of Anchorage, Inc. d/b/a Lithia Dodge of South Anchorage, Lithia of Southcentral Alaska, Inc. d/b/a Chevrolet of South Anchorage, Chevrolet of Wasilla and Saab of South Anchorage, and Lithia Imports of Anchorage, Inc. d/b/a Lithia Hyundai of Anchorage, Appellees.

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[Copyrighted Material Omitted]

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Michael W. Flanigan, Walther & Flanigan, Anchorage, for Appellants.

Howard S. Trickey and Matthew Singer, Jermain, Dunnagan & Owens, P.C., Anchorage, for Appellees.





Consumers seeking to bring a class action alleged that four auto dealerships failed to make statutorily mandated disclosures when selling used vehicles. Two of the dealerships moved to dismiss the complaint against them because the consumers had not specifically alleged that class representatives purchased vehicles at those dealerships. The superior court dismissed the consumers' claims against those two dealerships and entered final judgment in favor of the two dealerships. Although the superior court did not err in concluding that the consumers lacked standing and failed to state a claim against the two dealerships, the superior court subsequently entered final judgment without a showing of hardship or good cause and without permitting the consumers to amend their complaint by adding new class representatives with standing against the dismissed dealerships. Because this was error, we reverse and remand for further proceedings consistent with this opinion.


A. Facts

This matter is on appeal from a motion to dismiss. Thus, we accept as true all allegations in the consumers' complaint.[1] Between June 2003 and July 2005, Cheryl and Keith Grundman, David and Elizabeth Rees, Stanley Welles, Thomas Dicus, Michelle Enos, and Shan Gull all purchased

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used vehicles from Lithia Chrysler Jeep of Anchorage (Lithia Chrysler). In February 2005 Jackie Neese purchased a used vehicle from Lithia Dodge of South Anchorage (Lithia Dodge). These consumers allege that the Lithia dealerships failed to disclose important information about the vehicles as required by AS 45.25.465(a). Specifically, the consumers allege that although the dealerships were aware that some of the vehicles they had purchased from individual owners had been in accidents or had mechanical problems, the dealerships did not provide the consumers an accurate disclosure of the accident and repair history. Further, the consumers allege that the dealerships purchased vehicles from individual owners without making " a reasonable inquiry into the condition of the vehicle[s], including the accident and repair history of the vehicle[s]" as required by AS 45.25.465(a)(1). The consumers also allege that the dealerships failed to disclose when they had purchased vehicles from another dealer or from an auction even though AS 45.25.465(a)(2) requires such a disclosure. The dealerships also allegedly failed to disclose that vehicles were originally manufactured for sale in Canada, as required by AS 45.25.470.

B. Proceedings

In January 2006 the consumers filed a class action complaint in the superior court against various Lithia dealerships. Neese, Dicus, Enos, the Grundmans, Gull, and the Reeses were all listed as plaintiffs, but Welles was not. Lithia Motors, Inc., the umbrella corporation encompassing the various Lithia dealerships, was not listed as a defendant. Listed as defendants were Lithia Chrysler and Lithia Dodge as well as Lithia of Southcentral Alaska (Lithia Chevrolet) [2] and Lithia Hyundai of Anchorage (Lithia Hyundai).

In the complaint the consumers stated that the lawsuit was " a class action on behalf of all persons, other than defendants, their officers, directors, employees, and family members, who, since July 1, 2002, have purchased from defendants a used motor vehicle." The complaint alleged that " defendants have routinely breached the disclosure requirements set forth in AS 45.25.465 [disclosure of accident, repair, and purchase history] and AS 45.25.470 [disclosure that vehicle was manufactured for sale in foreign country] which in turn violate [AS 45.50.471(b)(43) and AS 45.50.471(b)(11) and (12)] [" unfair methods of competition" and " unfair and deceptive acts or practices"]." In addition to their statutory claims, the consumers alleged that the dealerships' failures to disclose the history of the vehicles being purchased " were intentional, wanton, reckless[,] fraudulent and in disregard for the rights or safety of the plaintiffs and other similarly situated purchasers" and thus represented a breach of the dealerships' common law duties. The consumers also requested " equitable relief requiring defendants to disgorge all monies obtained due to violations of AS 45.25.465, .470 and 45.50.471 (11, 12 and 43) and requiring defendants to cease and desist from further violations of AS 45.25.465, .470 and 45.50.471 (11, 12 and 43) and to post notices of their duty of disclosure pursuant to those statutes in a place and manner selected to best advise the consumer of their rights under those statutes."

In July 2006 Lithia Chevrolet and Lithia Hyundai filed a motion to dismiss for lack of jurisdiction (Alaska Civil Rule 12(b)(1)) and failure to state a claim (Rule 12(b)(6)). They argued that " the plaintiffs lack standing to sue [them] and the complaint fails to state a claim against them" because " none of the plaintiffs purchased a used vehicle at [Lithia Chevrolet or Lithia Hyundai]" and " [n]either do any of the plaintiffs allege any wrongdoing by Lithia Chevrolet or Lithia Hyundai."

The consumers filed an opposition to the motion to dismiss, arguing that their complaint was " sufficient to state a class action claim and to provide a sufficient basis for standing of the class." Specifically, the consumers contended that " as a class action, the class has sufficient standing to bring this suit against all the named defendants because the common ownership of the defendants ... provides the ‘ juridical link[]’ between all of the defendants sufficient to provide standing

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to the class." They urged the court to address class certification Before considering whether the named class representatives had adequate standing. The consumers also requested oral argument on the motion to dismiss.

Without holding oral argument, the superior court granted the motion to dismiss pursuant to Civil Rule 12(b)(1) and (b)(6). The consumers then moved for reconsideration, arguing that the court overlooked their request for oral argument. The superior court granted the consumers' motion and set oral argument. After argument, however, the court again granted the dealerships' motion to dismiss. The consumers then filed a petition for review, which we denied.

Lithia Chevrolet and Lithia Hyundai then moved for entry of final judgment in the superior court. The consumers opposed the motion, arguing that " the entry of a final judgment as against two of the Lithia defendants would result in the possible filing of piecemeal appeals, as the claims against the remaining Lithia defendants have not been resolved." The consumers also requested that any judgment entered be " without prejudice" so that " customers who purchased used vehicles from the dismissed Lithia dealerships and who were not furnished the disclosures required by law [could] be allowed to bring claims against the dismissed dealerships." After the dealerships filed their reply brief, the superior court granted the motion for entry of final judgment and entered final judgment in favor of Lithia Chevrolet and Lithia Hyundai. [3]

A few days after final judgment was entered, the consumers filed a motion to amend accompanied by their proposed amended complaint, which named additional class representatives who allegedly purchased vehicles without receiving statutorily required disclosures from Lithia Hyundai and Lithia Chevrolet. The consumers then filed a motion for reconsideration of the court's entry of final judgment because they had included the individuals who had purchased vehicles from the dismissed dealerships. The superior court denied the motion for reconsideration and affirmed its entry of final judgment.[4]

The consumers now appeal the superior court's order granting the dealerships' motion to dismiss and the entry of final judgment.


We review de novo an order dismissing a complaint for failure to state a claim under Civil Rule 12(b)(6).[5] Motions to dismiss under Rule 12(b)(6) are " viewed with disfavor and should rarely be granted." [6] To survive a motion to dismiss for failure to state a claim, the consumers' complaint need only " set forth allegations of fact consistent with and appropriate to some enforceable cause of action." [7] When considering the appeal of a motion to dismiss we " presume ...

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