Jarvis v. South Oak Dodge, Inc.
| Decision Date | 23 March 2001 |
| Docket Number | No. 2-99-1317.,2-99-1317. |
| Citation | 747 N.E.2d 383,254 Ill.Dec. 343,319 Ill. App.3d 509 |
| Parties | Richard JARVIS and Christine Jarvis, Plaintiffs-Appellants, v. SOUTH OAK DODGE, INC., Defendant (Chrysler Financial Corporation and Gold Key Lease, Inc., Defendants-Appellees). |
| Court | United States Appellate Court of Illinois |
Maureen Flaherty, Lehrer, Flaherty & Canavan, Wheaton, for Christine Jarvis, Richard Jarvis.
Maurice J. McCarthy, Jean M. Prendergast, Quinlan & Chrisham, Ltd., Chicago, for Chrysler Financial Corporation, Gold Key Lease, Inc.
At issue in this case is whether the lessee of a consumer lease agreement may state a cause of action for rescission against the holder of the lease agreement when the basis for the claim is not apparent on the face of the lease. The plaintiffs, Richard Jarvis and Christine Jarvis (the Jarvises), appeal from the August 27, 1999, order of the circuit court of Du Page County dismissing, with prejudice, count IV of their amended complaint against defendant Gold Key Lease, Inc. (Gold Key). The Jarvises seek rescission of a motor vehicle lease that they believe they were duped into signing. The Jarvises contend that they have sufficiently alleged a cause of action for rescission of a motor vehicle lease to survive Gold Key's motion to dismiss brought pursuant to section 2-615 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615 (West 1998)).
On April 16, 1999, the Jarvises filed their amended complaint against defendants South Oak Dodge, Inc. (South Oak), Chrysler Financial Corporation (CFC), and Gold Key, concerning a motor vehicle lease wherein South Oak was listed as the lessor and Gold Key as the holder. CFC was named in the suit because, according to the Jarvises, the lease provided that CFC is the agent of Gold Key with the power to act on Gold Key's behalf to administer and enforce the lease. Near the bottom of the lease appeared the following "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."
This language is mandated by section 70 of the Illinois Motor Vehicle Leasing Act (the Leasing Act) (815 ILCS 636/70 (West 1998)), which provides that no lessor shall take or receive a consumer lease that fails to contain the above-referenced notice.
Count I of the amended complaint was directed toward all three defendants and alleged a cause of action for violations of the Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/10a (West 1998)). In count I, the Jarvises alleged that South Oak orally represented that the purchase price of the vehicle would be $15,000 but that if the Jarvises executed a lease they would be able to immediately purchase the vehicle for $14,300, thereby saving $700. The Jarvises also alleged that South Oak's representation was false in that they were unable to purchase the vehicle for $14,300 after they executed the lease. The Jarvises further alleged that South Oak was acting as the agent of CFC and Gold Key and that CFC and Gold Key created the lease agreement forms and instructed South Oak on "how to persuade consumers to lease rather than purchase" motor vehicles.
Count II was directed toward all three defendants and alleged a cause of action for common-law fraud for money damages. Count III was directed toward South Oak and alleged a cause for revocation of acceptance of goods. Count IV was directed toward CFC and Gold Key and alleged a cause of action for rescission of the lease under a regulation promulgated by the Federal Trade Commission (the FTC Holder Rule). See 16 C.F.R. § 433.2 (2000).
Gold Key filed a motion to dismiss the amended complaint pursuant to section 2-615 of the Code. Most relevant to this appeal is Gold Key's argument concerning count IV. Citing the "Notice" provision in the lease, set forth above, Gold Key argued that the Jarvises could not state a cause of action for rescission because, as the holder of the lease, Gold Key is subject to the claims that the Jarvises could assert against South Oak only if such claims were apparent on the face of the lease. Because the basis for the Jarvises' claim for rescission is not apparent on the face of the lease, Gold Key reasoned, the Jarvises' cause of action could not lie against Gold Key.
On August 30, 1999, the trial court entered an order dismissing all counts of the amended complaint. Most relevant to this appeal are the trial court's findings as to count IV:
The trial court dismissed count IV as to Gold Key. In addition, the trial court also dismissed CFC from the suit entirely and further dismissed counts I and II as to Gold Key, without prejudice, for failure to plead an agency relationship between Gold Key and South Oak. As of the time the appeal was filed, certain counts were still pending against South Oak, which is not a party to this appeal. The Jarvises filed a timely notice of appeal.
We first must address waiver issues presented by CFC and Gold Key. First, CFC argues that the Jarvises have waived their right to appeal the dismissal of claims as to CFC, which the Jarvises admit in their reply brief. Next, Gold Key argues that the Jarvises waived their right to challenge the dismissal of counts I and II, for consumer fraud violations and common-law fraud, as to Gold Key. The Jarvises admit this also in their reply brief. Despite the Jarvises' admission that they waived their challenges on appeal to the dismissal of count I, they nevertheless set forth in their briefs arguments pertaining to the constitutionality of section 10a of the Consumer Fraud Act (815 ILCS 505/10a (West 1998)). Section 10a requires proof of a public injury from those attempting to state a cause of action under the Consumer Fraud Act against a motor vehicle dealer. In their reply brief, the Jarvises assert that one of the two issues they are addressing on appeal is "the constitutionality of section 815 ILCS 510a [sic] of the Consumer Fraud Act, as it pertains to Count IV."
This contention does not make any sense. The cited provision of the Consumer Fraud Act pertains solely to count I, which the Jarvises admit they have waived. It was only in response to Gold Key's motion to dismiss count I of the amended complaint that the Jarvises first raised the constitutionality of section 10a. The constitutionality of this statute is in no way relevant to count IV. Therefore, we will not consider any of the Jarvises' constitutional arguments, interesting as they may be.
With regard to count IV, Gold Key argues that the Jarvises have waived their argument concerning "the interplay" between section 70 of the Leasing Act and the FTC Holder Rule. Gold Key maintains that, at the trial level, the Jarvises did not argue that the Leasing Act was inconsistent with the FTC Holder Rule but argued only that certain language in section 70 should be disregarded. We disagree that the Jarvises have waived their argument concerning count IV. It is readily apparent from the trial record that several statutes and regulations were discussed by the parties and the trial judge in construing the meaning of section 70 and, ultimately, the language of the lease agreement. Therefore, we will consider the Jarvises' statutory construction argument pertaining to section 70 of the Leasing Act, and to the extent that such construction argument involves the consideration of applicable federal law, we believe that such arguments are properly before this court.
The Truth in Lending Act (TILA) (15 U.S.C. § 1601 et seq. (1994)) was enacted to mandate certain disclosures in financed consumer transactions. 15 U.S.C. § 1601 (1994). In 1976, Congress enacted Part E of TILA, known as the Consumer Leasing Act (CLA), to specifically provide for disclosures respecting consumer leases (15 U.S.C. § 1667 et seq. (1994)). The CLA contains a preemption provision providing that no state statute may be inconsistent with the terms of TILA. 15 U.S.C. § 1667e (1994). The Board of Governors of the Federal Reserve System (the Board) thereafter promulgated an extensive set of regulations (Regulation M) that govern the intricacies of the disclosures. 12 C.F.R. § 213.1 et seq. (2000). A disgruntled consumer may bring a cause of action under TILA for violations of the disclosure requirements. 15 U.S.C. § 1640 (1994).
Responding, in part, to the backlash associated with TILA suits brought against finance companies holding consumer installment agreements, Congress enacted an amendment to TILA in 1980 to specifically address the concerns of the assignees of such agreements. 15 U.S.C. § 1641 (1994). Specifically, section 1641(a) of TILA provides:
"[A]ny civil action for a violation of this subchapter or proceeding under section 1607 of this title which may be brought against a creditor may be maintained against any assignee of such creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement." 15 U.S.C. § 1641(a) (2000).
In the context of a suit brought under TILA against an assignee, section 1641(a) abrogated the FTC Holder Rule, which...
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Jarvis v. South Oak Dodge, Inc.
...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......
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...in such a manner, since such a construction would be neither logical, useful or reasonable. See Jarvis v. South Oak Dodge, Inc., 319 Ill.App.3d 509, 254 Ill.Dec. 343, 747 N.E.2d 383 (2001) (A statute should be given an interpretation that is reasonable and that will not produce absurd or un......