Jarvis v. South Oak Dodge, Inc.

• Decision Date: 20 June 2002
• Docket Number: No. 91354.,91354.
• Citation: 773 N.E.2d 641,265 Ill.Dec. 877,201 Ill.2d 81
• Parties: Richard JARVIS et al., Appellees, v. SOUTH OAK DODGE, INC., et al. (Gold Key Lease, Inc., Appellant).
• Court: Illinois Supreme Court

773 N.E.2d 641

201 Ill.2d 81

265 Ill.Dec. 877

Richard JARVIS et al., Appellees, v. SOUTH OAK DODGE, INC., et al. (Gold Key Lease, Inc., Appellant).

No. 91354.

Supreme Court of Illinois.

June 20, 2002.

Howard J. Roin, Demetrios G. Metropoulos, of Mayer, Brown & Platt, Maurice J. McCarthy, Jean M. Prendergast, Chicago, for appellant.

Norman H. Lehrer, R. Lawrence Canavan, of Lehrer, Flaherty & Canavan P.C., Wheaton, for appellees.

Justice FITZGERALD delivered the opinion of the court:

In this consumer fraud case, we examine the relationship between Illinois' Motor Vehicle Leasing Act (Leasing Act) (815 ILCS 636/1 et seq. (West 2000)) and the federal Truth in Lending Act (TILA) (15 U.S.C. § 1601 et seq. (2000)). The question we consider is whether the holder of a consumer lease is subject to state law claims for misrepresentations made by the lessor to the consumer that are not apparent on the face of the lease. We answer this question in the negative.

BACKGROUND

In June 1997, plaintiffs, Richard and Christine Jarvis, leased a 1997 Dodge Stratus from defendant South Oak Dodge, Inc. (dealer). The lease identified the dealer as the "lessor" and defendant Gold Key Lease, Inc. (Gold Key) as the "holder" of the lease. In accordance with the mandatory notice provision contained in section 70 of the Leasing Act, the lease provided, in bold-faced type, that any holder of the lease "is subject to all claims and defenses which (1) the lessee could assert against the lessor * * * and (2) are apparent on the face of the consumer lease." See 815 ILCS 636/70 (West 2000).

In October 1998, plaintiffs filed a complaint against both defendants in the circuit court of Du Page County.¹ In their amended complaint, filed the following year, plaintiffs claimed that the dealer's salesman fraudulently induced plaintiffs to enter into the lease by making certain oral misrepresentations. Plaintiffs alleged that the dealer's salesman falsely advised them that, immediately upon execution of the lease, plaintiffs could pay off the lease and purchase the vehicle at a certain price.

In counts I and II of the amended complaint, plaintiffs claimed that defendants violated the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)), and committed common law fraud, respectively. In count III, directed only against the dealer, plaintiffs sought revocation of their acceptance of the lease. In count IV, which is the subject of this appeal, plaintiffs sought rescission of the lease against Gold Key, "[p]ursuant [t]o Federal Regulation 16 C.F.R. Sec. 433.2." Plaintiffs claimed that, under this federal regulation, the holder of a consumer lease is subject to all claims and defenses which the lessee could assert against the lessor, and that Gold Key was thus subject to a claim for rescission based on the misrepresentations of the dealer/lessor.

Gold Key filed a motion to dismiss under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2000)). With respect to count IV, Gold Key argued that, based on the statutory notice provision in the lease, it was subject to claims which plaintiffs could assert against the dealer, only if such claims were "apparent on the face" of the lease. Gold Key maintained that plaintiffs' claim for rescission, based on alleged oral misrepresentations made by the dealer's salesman, was not a claim apparent on the face of the lease.

The circuit court granted Gold Key's motion, dismissing count IV with prejudice. The circuit court concluded that the legislature's use of the conjunctive "and" between the two elements of section 70 of the Leasing Act "necessarily must indicate that the legislature required both listed elements to be met," and that "the holder of a consumer lease is subject to the claims and defenses which the lessee could assert against the lessor if, and only if, those claims and defenses are apparent on the face of the lease." The circuit court entered a finding of appealability under Rule 304(a), and plaintiffs appealed. See 155 Ill.2d R. 304(a). The appellate court reversed the dismissal of count IV. 319 Ill. App.3d 509, 254 Ill.Dec. 343, 747 N.E.2d 383.

The appellate court agreed with plaintiffs that the conjunction "and," between the two elements of section 70, should not be read to limit the liability of the holder of a consumer lease to claims "apparent on the face" of the lease, and that a lessee could pursue whatever remedies were available to lessees prior to the adoption of the Leasing Act. 319 Ill.App.3d at 516-18, 254 Ill.Dec. 343, 747 N.E.2d 383. The appellate court concluded, however, that plaintiffs could not seek rescission of the lease based on the federal regulation cited in the amended complaint and remanded the matter to the circuit court to allow plaintiffs an opportunity to replead count IV. 319 Ill.App.3d at 519-20, 254 Ill.Dec. 343, 747 N.E.2d 383.

We allowed Gold Key's petition for leave to appeal (see 177 Ill.2d R. 315), and now reverse the judgment of the appellate court reversing the dismissal of count IV.

ANALYSIS

A motion to dismiss under section 2-615 of the Code (735 ILCS 5/2-615 (West 2000)) challenges only the legal sufficiency of the complaint. Board of Directors of Bloomfield Club Recreation Ass'n v. The Hoffman Group, Inc., 186 Ill.2d 419, 423, 238 Ill.Dec. 608, 712 N.E.2d 330 (1999). The critical inquiry is whether the allegations of the complaint, when considered in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief may be granted. Board of Directors of Bloomfield Club Recreation Ass'n,186 Ill.2d at 424,238 Ill. Dec. 608,712 N.E.2d 330; Connick v. Suzuki Motor Co., 174 Ill.2d 482, 490, 221 Ill.Dec. 389, 675 N.E.2d 584 (1996). All well-pleaded facts in the complaint must be taken as true, but conclusions of law will not be taken as true, unless supported by specific factual allegations. Ziemba v. Mierzwa, 142 Ill.2d 42, 47, 153 Ill.Dec. 259, 566 N.E.2d 1365 (1991). We review the dismissal of a complaint under section 2-615 de novo. Vernon v. Schuster, 179 Ill.2d 338, 344, 228 Ill.Dec. 195, 688 N.E.2d 1172 (1997).

Whether the well-pleaded allegations of plaintiffs' amended complaint are sufficient to withstand Gold Key's motion to dismiss turns principally on an issue of statutory construction, namely, the proper interpretation of the mandatory notice provision in section 70 of the Leasing Act (815 ILCS 636/70 (West 2000)). Issues of statutory construction are also reviewed de novo. In re Estate of Dierkes, 191 Ill.2d 326, 330, 246 Ill.Dec. 636, 730 N.E.2d 1101 (2000). Gold Key maintains that the appellate court's construction of section 70 fails to give effect to the plain language of the Leasing Act and is contrary to this state's policy against extending consumer disclosure requirements beyond that mandated by federal law. We agree.

The purpose of the Leasing Act, effective January 1, 1997, is to "promote the understanding of vehicle leasing in this State by providing for the disclosure of lease obligations to consumer lessees." 815 ILCS 636/5 (West 2000). To this end, section 25 of the statute sets forth detailed requirements regarding both the form and content of consumer leases. 815 ILCS 636/25 (West 2000). Among other things, a consumer lease must contain "[a]ll items required to be disclosed by the Consumer Leasing Act [15 U.S.C. § 1667 et seq. (2000)]." 815 ILCS 636/25(e)(1) (West 2000). The Consumer Leasing Act, adopted by Congress in 1976 as an amendment to subchapter I of TILA, requires the lessor to provide the consumer certain information, including a statement as to "whether or not the lessee has the option to purchase the leased property and at what price and time." 15 U.S.C. § 1667a(5) (2000). Thus, the dealer's alleged misrepresentations in this case—that plaintiffs could purchase the vehicle immediately upon execution of the lease and at a specified price-concern details of the lease transaction that must be disclosed under both federal and state law.

Section 70 of the Leasing Act, at issue in this appeal, states:

"No lessor shall take or receive a consumer lease which fails to contain the following provision in at least 10 point, bold-faced type:

NOTICE

ANY HOLDER OF THIS CONSUMER LEASE IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH (1) THE LESSEE COULD ASSERT AGAINST THE LESSOR OF THE VEHICLE LEASED PURSUANT HERETO AND (2) ARE APPARENT ON THE FACE OF THE CONSUMER LEASE. RECOVERY BY THE LESSEE SHALL NOT EXCEED AMOUNTS PAID BY THE LESSEE HEREUNDER.'" 815 ILCS 636/70 (West 2000).

Section 70 contains two elements which define the claims and defenses to which the holder of a consumer lease is subject. These elements are joined by the word "and." Generally, use of the conjunctive "and" between two or more statutory elements indicates that the legislature intended that all of the elements must be satisfied in order to comply with the statute. See 1A N. Singer, Sutherland on Statutory Construction § 21:14 (6th ed.2002); see also AFM Messenger Service, Inc. v. Department of Employment Security, 198 Ill.2d 380, 397, 261 Ill.Dec. 302, 763 N.E.2d 272 (2001) (because the three conditions for statutory exemption were phrased in the conjunctive, all three conditions must be satisfied for the exemption to apply). Thus, giving effect to the word "and" in its ordinary, conjunctive sense means that a claim against the holder must be one that satisfies both elements of section 70. The claim must be one that "the lessee could assert against the lessor" and one that is "apparent on the face" of the lease. 815 ILCS 636/70 (West 2000).

This construction of section 70 is consistent with the stated purpose of the Leasing Act: "to promote the understanding of vehicle leasing." 815 ILCS 636/5 (West 2000). The disclosures required under the statute, including the notice provision of section 70, can only promote understanding of vehicle leasing when the...