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Frahm v. Urkovich

OPINION FILED MARCH 31, 1983.

ERWIN BERNARD FRAHM, JR., ET AL., PLAINTIFFS-APPELLANTS,

v.

RONALD S. URKOVICH ET AL., DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Anthony J. Scotillo, Judge, presiding.

JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiffs brought this action for injunctive relief and damages arising out of a certain real estate transaction. Count III of the amended complaint is brought under the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261 et seq.) (the Act), and alleges that defendant Urkovich, while acting as plaintiffs' attorney, misrepresented certain facts and failed to disclose other material facts to them in conjunction with said transaction. The trial court dismissed count III for failure to state a cause of action under the Act and plaintiffs appeal. We affirm.

The essential factual allegations of plaintiffs' amended complaint, which are taken as true for the purposes of defendants' motion to dismiss and of this appeal, include the following:

In 1976 plaintiffs retained defendant Urkovich as their attorney to represent them in the purchase and development of certain real estate. Upon instructions from defendant, plaintiffs executed a trust which was to deal with the real estate. Plaintiffs were induced by Urkovich and another defendant unknowingly to direct the trust to enter into a certain purchase agreement which was unfavorable to them as purchasers. In addition, during the course of negotiations which preceded the execution of the agreement and the payment by plaintiffs of a substantial sum as "earnest money," Urkovich made numerous representations which he knew or should have known were incorrect or incomplete with regard to the financing and construction of certain buildings on the property and failed to inform plaintiffs of other material facts regarding his professional and business ties with the other defendants. Subsequently, without plaintiffs' knowledge, defendant prepared an additional agreement providing for the sale of the structures to a corporation set up by defendant and headed by plaintiffs' son. This agreement also gave substantial advantages to the seller and left plaintiffs with little or no recourse in the event of seller's default. Finally, in 1980 plaintiffs were induced to cosign a bank note in the amount of $100,000, pledging $52,000 of their own money as collateral for the loan. The money was used in part to finance the project and for the benefit of certain defendants. By July of 1980, although the sellers were in continuous default for failure to complete the buildings according to schedule, purported notices of default were mailed to plaintiffs. Plaintiffs allege that as a result of defendant's actions and misrepresentations they have lost their entire investment in the project.

Plaintiffs filed a seven-count amended complaint against defendant Urkovich and others. In addition to the count under the Act, plaintiffs filed counts against Urkovich for attorney malpractice, breach of fiduciary duty, fraudulent inducement and conspiracy.

• 1 On appeal, plaintiffs argue that they are "consumers" under the Act and that the legislatively mandated liberal construction of the Act favors the inclusion of legal services within its ambit. In essence, plaintiffs seek a broad interpretation of the Act which would impose statutory liability for misconduct amounting to professional malpractice. We do not believe, however, that even the most liberal statutory interpretation indicates the application of this consumer protection statute to the conduct of an attorney engaged in the actual practice of law and, accordingly, we find that plaintiffs do not fall within the class of "consumers" which the statute was designed to protect.

The stated purpose of the Act, as set forth in its preamble, is "to protect consumers and borrowers and businessmen against fraud, unfair * * * or deceptive acts or practices in the conduct of any trade or commerce * * *." (Emphasis added.) (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261 et seq.; see also Scott v. Association for Childbirth at Home, International (1981), 88 Ill.2d 279, 430 N.E.2d 1012.) "Trade and commerce" are defined in the Act to include "the advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this State." Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261(f).

Plaintiffs rely on additional definitions contained in the Act and rules of statutory construction which, they argue, bring them within the intent and meaning of the Act. We disagree.

A "consumer" under the Act includes: "any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household." (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261(e).) "Merchandise" is defined to include "any objects, wares, goods, commodities, intangibles, real estate situated outside the State of Illinois, or services." Ill. Rev. Stat. 1981, ch. 121 1/2, par. 261(b).

Plaintiffs assert their standing to bring a private action as "consumers" who purchased "services" under the Act. In addition, plaintiffs claim that defendant's misrepresentations and material omissions of fact, as alleged in count III of their amended complaint, constituted conduct of the type specifically prohibited by section 2 of the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 312), which is incorporated into the Act under section 2 of the Act (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 262), and which states in relevant part:

"A person engages in a deceptive trade practice when, in the course of his business, vocation or occupation, he:

(7) represents that goods or services are a particular standard, quality or grade or that goods are a particular style or model, if they are of another;

(12) engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding."

In order to provide the protection intended by the legislature, the Act is to be liberally construed. (Ill. Rev. Stat. 1981, ch. 121 1/2, par. 271a; Hurlbert v. Cottier (1978), 56 Ill. App.3d 893, 372 N.E.2d 734.) Plaintiffs argue that the liberal construction provision of the Act, combined with numerous Illinois decisions recognizing the need for a flexible interpretation of section 2 of the Act, mandates the inclusion of legal services. They further reason that since the language of the Act itself does not specifically exclude ...


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