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11/10/88 the People of the State of v. Datacom Systems

November 10, 1988

DALEY, STATE'S ATTORNEY OF COOK COUNTY, PLAINTIFF-APPELLANT

v.

DATACOM SYSTEMS CORPORATION ET AL., DEFENDANTS-APPELLEES (DATACOM SYSTEMS CORPORATION, THIRD-PARTY PLAINTIFF;



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

THE PEOPLE OF THE STATE OF ILLINOIS ex rel. RICHARD M.

The Department of Registration and Education et

al., Third-Party Defendants-Appellants)

531 N.E.2d 839, 176 Ill. App. 3d 697, 126 Ill. Dec. 212 1988.IL.1632

Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding.

APPELLATE Judges:

JUSTICE McMORROW delivered the opinion of the court. JIGANTI, P.J., and LINN, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCMORROW

Richard M. Daley, State's Attorney of Cook County, Illinois (the State's Attorney), brought an action on behalf of the People of the State of Illinois against the City of Chicago (the City) and Datacom Systems Corporation (Datacom). The complaint challenged certain aspects of the City's parking ticket collection program, whereby the City contracted with Datacom to aid in the City's efforts to collect fines allegedly due the City for individuals' asserted violations of the City's parking ordinances. The pleading alleged facts purporting to show that Datacom's actions with respect to the City's program violated the Illinois Collection Agency Act (Ill. Rev. Stat. 1987, ch. 111, par. 2001 et seq.), the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 261 et seq.) and the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 311 et seq.). The complaint also alleged facts purporting to demonstrate in quo warrantor that the actions of the City and Datacom with respect to the program exceeded their corporate authorities. (Ill. Rev. Stat. 1987, ch. 110, par. 18-101 et seq.) The trial court dismissed the State's Attorney's complaint against Datacom and the City for failure to state claims for which relief could be granted (Ill. Rev. Stat. 1987, ch. 110, par. 2-615(a)), and the State's Attorney appeals.

On the same day that the State's Attorney filed its complaint against Datacom and the City, the Illinois Department of Registration and Education initiated an administrative action to suspend or revoke Datacom's debt collection agency license, charging Datacom with violations of the Illinois Collection Agency Act. Thereafter, in the lawsuit commenced by the State's Attorney, Datacom was granted leave to file a third-party action against the DRE in which Datacom requested a declaratory judgment that Datacom's activities under the City's program were not governed by the Collection Agency Act and a temporary and permanent injunction to bar the DRE's administrative action against Datacom. The DRE filed a motion to dismiss the third-party complaint. The trial court denied the DRE's motion to dismiss, entered a declaratory judgment that Datacom's activities do not fall within the scope of the Collection Agency Act, and permanently enjoined the DRE from any administrative action to suspend or revoke Datacom's debt collection agency license. The DRE appeals.

We hold that: (1) Datacom's activities pursuant to its contract with the City amount to the sale of debt collection services governed by the Illinois Collection Agency Act; (2) Datacom's provision of debt collection services pursuant to its contract with the City is governed by the Consumer Fraud Act and the Uniform Deceptive Trade Practices Act; (3) Datacom's debt collection activities as an independent contractor for the City do not fall within the acts' exemptions for actions of public officials; (4) the factual allegations of the State's Attorney's complaint are sufficient to state claims that the notices sent by Datacom were misleading and thereby violated the acts; and (5) the State's Attorney's complaint is sufficient to state claims against Datacom and the City in quo warranto.

We recognize that the City's contract with Datacom to collect allegedly delinquent municipal parking ticket fines was instituted pursuant to lengthy study, and that the City's program was adopted to achieve the laudatory and important goals of collecting needed municipal revenues and improving perceived deficiencies in the City's parking ticket collection system. The City's power to employ agents or independent contractors to assist in its collection program is not challenged in this appeal. At issue in this case is, simply, the applicability of the Illinois Collection Agency Act, the Consumer Fraud Act, and the Uniform Deceptive Trade Practices Act to Datacom's activities pursuant to its contract with the City. We conclude that these acts do apply to Datacom's actions and that the City cannot enter into a contract with an independent contractor collection agency to collect municipal parking ticket fines, which are "debts" under the Illinois Collection Agency Act, and by said contract authorize the independent contractor collection agency's violations of the Collection Agency Act, the Consumer Fraud Act, and the Uniform Deceptive Trade Practices Act. Our determination that the acts are applicable does not negate the validity of a debt collection program, agreed to by a municipality and its agents or independent contractors, which is not violative of those acts.

Based upon our determinations, we find that the trial court should not have dismissed the Cook County State's Attorney's complaint for failure to state claims for which relief could be granted and should have dismissed Datacom's third-party complaint against the DRE. Accordingly, we reverse and remand.

Background

The State's Attorney's complaint states the following with regard to the City's contract with Datacom to recover fines allegedly due from persons with outstanding parking tickets. When a person has allegedly violated the City's parking ordinance, the police department of the City serves the individual with a citation that is placed or tied on his motor vehicle. This citation states, inter alia, "Notice -- this is a complaint for a parking violation." The issuance of this notice initiates a court case in the circuit court of Cook County against the owner of the vehicle corresponding to the number of the license plate listed on the citation. The citation contains a schedule of statutory minimum fines for various parking offenses, which the person can pay by mail if he chooses to plead guilty to the alleged ordinance violation.

If the ticket holder does not either plead guilty and pay the scheduled fine, or appear in court to contest the citation, notices setting a second court date are sent to the ticket holder by the clerk of the circuit court. If the ticket holder does not pay the scheduled fine or attend the second court hearing, he is listed by the clerk of the circuit court as being delinquent in paying the fine. According to the State's Attorney's complaint, "[no] judgment has ever been entered by a Judge of the Circuit Court of Cook County against persons who neither appear in court to contest the alleged parking violation nor plead guilty to the violation and paid the scheduled fine."

On January 30, 1985, Datacom and the City executed a contract pursuant to which Datacom agreed, according to the State's Attorney's complaint, to "perform all services necessary to attempt to effect collection of delinquent parking ticket fines where parking tickets were issued by the . . . City prior to September 30, 1984. Under said contract . ...


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