The Illinois Appellate Court has ordered a plaintiffs' law firm in suburban Chicago to pay more than $30,000 as a sanction for knowingly filing a false complaint in a breach-of-warranty suit.
The firm of Lehrer, Flaherty & Canavan in Wheaton knew the court complaint against Volks-wagen of America Inc., Volks-wagen Credit Inc. and a dealership was false because Audi had offered repeatedly to replace its clients' defective 1990 Audi 90 Quattro, the three-judge panel said.
Edward and Rita Belfour bought the car new in January 1991. In May 1992, the car caught fire while Rita Belfour was driving with her two children along a freeway. No one was injured in the incident.
At the time of the fire, $32,346 remained outstanding on the loan.
The insurer's claim representative determined the car was totaled and contacted Audi of America.
The Belfours' law firm sent demand letters to Volkswagen of America, Volkswagen Credit and Schaumburg Auto in Schaumburg, Ill., demanding a refund of the purchase price and all money paid on the contract, plus compensation for damages.
The court said the law firm failed to return phones calls from Volks-wagen officials and waited more than five months before allowing Volkswagen to inspect the car.
Volkswagen then offered the Belfours a new 1993 Audi with similar credit terms, as well as use of a rental car and reimbursement of the Belfours' out-of-pocket expenses.
Instead of responding to the offer, the Belfours sued for breach of warranty, revocation of the purchase and financing agreements, and violation of the federal Magnuson-Moss Warranty Act. The suit accused the defendants of failing to replace the car as required by the warranties.
Du Page County Circuit Judge Richard Lucas dismissed the suit without trial and ordered the law firm, but not the Belfours, to pay $32,694 to the defense lawyers as a sanction.
In an opinion by Justice Lawrence Inglis, the appellate court said Volkswagen had fulfilled all its obligations under the warranty and law by offering the Belfours a 'substantially similar vehicle.'
The court found the sanction against the law firm to be appropriate: When Norman Lehrer, a partner in the law firm, signed the lawsuit, 'it is obvious that he knew the allegations were false because three letters had already been sent to him from Audi offering a replacement vehicle.'
A FRIVOLOUS APPEAL
The court also ruled that the defendants are entitled to additional sanctions from the Belfours and the law firm for pursuing a frivolous appeal, saying that their arguments on appeal 'are factually unfounded, lack merit and continue to raise false assertions.'
It ordered defense lawyers to submit a detailed statement of expenses and attorney fees for handling the appeal.
James Toohey, a Chicago lawyer for the defendants, said Volkswagen did not dispute the Belfours' right to a remedy for breach of warranty, but the appellate decision means the couple now gets nothing: 'They had their chance for a long period of time, but we have no further obligation at all.'
Maureen Flaherty, who represents the plaintiffs, said her clients and law firm have asked for a new hearing. She also said the Belfours' opposition to Volkswagen's offer of another Audi was reasonable in light of the circumstances of the fire. 'It burned because there was a defect in the wiring.'