People ex rel. Hartigan v. Knecht Services, Inc., s. 2-90-0697

• Decision Date: 26 July 1991
• Docket Number: Nos. 2-90-0697,2-90-0839,s. 2-90-0697
• Parties: , 159 Ill.Dec. 318 The PEOPLE ex rel. Neil F. HARTIGAN, Attorney General, Plaintiff and Counterdefendant-Appellee, v. KNECHT SERVICES, INC., a/k/a AAA Knecht, Inc., et al. Defendants and Counterplaintiffs-Appellants.
• Court: United States Appellate Court of Illinois

Page 1378

575 N.E.2d 1378

216 Ill.App.3d 843, 159 Ill.Dec. 318

The PEOPLE ex rel. Neil F. HARTIGAN, Attorney General Plaintiff and Counterdefendant-Appellee, v. KNECHT SERVICES, INC., a/k/a AAA Knecht, Inc., et al Defendants and Counterplaintiffs-Appellants.

Nos. 2-90-0697, 2-90-0839.

Appellate Court of Illinois Second District.

July 26, 1991.

Rehearing Denied Aug. 27, 1991.

Richard K. Wray (argued), Shari L. Friedman, Keck, Mahin & Cate, Chicago, for Knecht Services, Inc. aka AAA Knecht, Inc., James M. Knecht, Indiv. and as President of Knecht Services, Inc.

Roland W. Burris, Atty. Gen., Chicago, Colleen McLaughlin (argued), DuPage County Asst. State's Atty., Wheaton, for People ex rel. Neil F. Hartigan.

Patricia M. Kelly, Illinois Retail Merchants Assoc., Chicago, amicus curiae.

Justice INGLIS delivered the opinion of the court:

Plaintiff, the People of the State of Illinois ex rel. Neil F. Hartigan, Attorney General, filed a six-count complaint against defendants, Knecht Services, Inc., a/k/a AAA Knecht, Inc., and James M. Knecht individually, president of Knecht Services, Inc., seeking injunctive and other relief based on allegations that defendants violated the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (Ill.Rev.Stat.1987, ch. 121 1/2, par. 261 et seq.) by engaging in certain unfair or deceptive practices with respect to their advertising, servicing, and charging of customers in their plumbing, heating, and air- conditioning business. A counterclaim was filed by Knecht against Attorney General Neil Hartigan for defamation based on allegations that Hartigan made false and misleading statements about Knecht and Knecht Services, Inc.

After a six-week bench trial, the trial court entered judgment in favor of defendants on counts I through IV of the complaint, which were titled, respectively, as follows: "(I) Home Repair Fraud"; (II) "Misrepresentation as Plumber/False Advertisement"; (III) "Notice of Cancellation" (premised on section 2B of the Consumer Fraud Act (Ill.Rev.Stat.1987, ch. 121 1/2, par. 262B)); and (IV) "Used Parts" (installed instead of new parts). Judgment was entered against defendant Knecht Services, Inc., on count V of the complaint, entitled "Poor Workmanship" but in favor of Knecht, individually. Judgment was entered against both Knecht Services, Inc., and Knecht individually, on count VI of the complaint, entitled "Excessive Charges." Defendants' post-trial motion was denied, and they filed a timely notice of appeal. The trial court subsequently granted the Attorney General's motion to dismiss the counterclaim filed against him, and defendants appeal that order as well. The two appeals have been consolidated, and the Illinois Retail Merchants Association was permitted to file an amicus curiae brief.

The following issues are raised by the appeal: (1) whether the trial court was correct in finding that a contract implied in law was created; (2) whether the Consumer Fraud Act is applicable in the absence of a finding that little or no services were rendered; (3) whether the failure to call a former employee as a witness at trial can properly be considered in rendering judgment against the former employer; (4) whether the judgment of the court with regard to counts V and VI is against the manifest weight of the evidence; and (5) whether the trial court erred in finding the Attorney General absolutely immune from liability. We affirm.

Briefly, the record reveals the following facts. Knecht Services, Inc., is an Illinois corporation with its principal place of business at the residence of defendant James Knecht. Knecht has been in the business of performing home repairs, consisting primarily of repair or replacement of boilers, forced air furnaces, water heaters, central air-conditioners, and related equipment since 1962. He has worked full time as the proprietor of his own business since 1976. Knecht testified that as his business grew and he saw the need to employ helpers, he developed written checklists of the service items to be reviewed on each particular job. The company's practice was to be both methodical and thorough in diagnosing and repairing mechanical problems. According to Knecht, his methodical checklist approach to heating and cooling systems has resulted in his repeatedly finding and correcting systems failures.

Plaintiff presented evidence indicating that from the mid-1970's to 1987, defendants placed the following advertisement in the Yellow Pages of the phone book: "HONESTY & MINIMUM CHARGE IS OUR POLICY." The advertisement was subsequently changed in 1987 to read: "HONESTY & HIGHEST QUALITY IS OUR POLICY." The advertisement was listed under the heading "plumbing contractors" at a time when no one at Knecht Services, Inc., had a plumber's or apprentice plumber's license.

While defendants presented testimony from satisfied customers, plaintiff presented testimony from numerous dissatisfied customers in an effort to support the six-count complaint. There was much testimony given on behalf of plaintiffs comparing defendants' business practices to customary practices. According to plaintiff's experts, at the time of trial, the prevailing hourly rate in the area for heating and air-conditioning repair services was $44 to $48 per hour, and for plumbers it was $52 per hour or less. When Knecht charged by the hour, as opposed to a flat rate, he charged $69 per hour, plus a one-hour minimum fee of $69 for a trip charge. Knecht had been in the policy of charging customers a "premium" for certain types of services, such as $120 per hour for work on a window air-conditioner and $30 per hour extra for service in a crawl space.

Contrary to industry custom, defendants failed to inform consumers when overtime rates were to be charged. Defendants also performed routine maintenance during overtime service calls without affording the customer the option of having the routine services performed during regular working hours. Even during regular working hours, defendants routinely performed or offered to perform unnecessary repairs or maintenance.

Plaintiff's experts indicated that defendants took two or three times longer than necessary to complete repair work and they consistently charged for parts at least three to four times more than a reasonable retail price or the manufacturer's suggested retail price. Defendants also utilized the services of a subcontractor and charged consumers three to four times more than what the subcontractor charged defendants for the services rendered.

There was also testimony presented indicating that defendants had refused to provide quotes. When Knecht and Robert Leo, an employee of defendants, did quote a price, they often charged the customer a substantially higher price. In addition, defendants frequently charged consumers for two servicemen when only one performed the work or when only one worker was necessary. Consumers were sometimes charged with tradesmen rates when the work was performed by apprentices or helpers.

Finally, there was testimony indicating that Knecht Services, Inc., utilized the services of untrained and unsupervised helpers who provided shoddy and unnecessary services. In addition to incidents involving other workers, there was testimony that Robert Leo installed a water heater for a consumer at a time when he was unlicensed, even as an apprentice plumber. His work was reportedly done in a totally unworkmanlike manner, and intimidation was used to collect payment. Subsequently the consumer had to hire a licensed plumber to redo the installation.

After the conclusion of the trial, the trial court entered judgment in favor of defendants on counts I through IV of the complaint. Judgment was entered against defendant Knecht Services, Inc., only, on count V of the complaint, which was entitled "Poor Workmanship." The court specifically found that the evidence did not establish that Knecht personally performed any shoddy or unworkmanlike services. However, the trial court entered judgment against both Knecht and Knecht Services, Inc., on count VI of the complaint, which alleged excessive charges. The court concluded, without argument in support from either side, that when defendants perform work for a customer without any preliminary discussion or agreement as to how the charges for work and materials are to be computed, a contract implied in law is created. In such a situation, the customer is only obligated to pay the "reasonable value" of the services rendered, and the court has the right to determine whether charges made in an implied contract are reasonable. The court concluded that defendants' charges were not reasonable, and judgment was entered against them.

The court then entered a permanent mandatory injunction allowing defendants to continue in business provided they comply with certain conditions, including informing customers in advance of the charge for a service call and, upon arriving at the customer's home, obtaining the customer's written approval of the diagnostic fee. Once the problem is diagnosed, defendants must provide a written estimate and have the customer acknowledge its receipt in writing. Defendants were further enjoined "from making any threats or other actions either express or implied intended to coerce the customer to pay." A civil fine of $10,000, as authorized by the Consumer Fraud Act (Ill.Rev.Stat.1987, ch. 121 1/2, par. 267), was imposed on defendants jointly.

The trial court dismissed the counterclaim filed by defendants against Attorney General Neil Hartigan. The court found the Attorney General to be absolutely immune from the claim of defamation. Defendants appeal not only from the dismissal of the counterclaim but also from the trial court's judgment on counts V and VI of the complaint as well.

Defendants first argue that the trial court erred in entering judgment in favor of plaintiff on count VI of the complaint, which alleged...