The Honorable Justice Heiple delivered the opinion of the court. Justice Harrison, concurring in part and dissenting in part. Justice McMORROW, also concurring in part and dissenting in part. Justice Freeman joins in this partial concurrence and partial dissent.
The opinion of the court was delivered by: Heiple
JUSTICE HEIPLE delivered the opinion of the court:
Plaintiffs, each of whom had purchased a new Suzuki Samurai sport utility vehicle, filed a class action lawsuit in the circuit court of Cook County against defendants Suzuki Motor Company and American Suzuki Motor Corporation (hereinafter referred to collectively as Suzuki). Plaintiffs alleged that the Samurai was unsafe due to its excessive roll-over risk and sought damages from Suzuki for breach of warranty, common law fraud, and violation of the Illinois and Pennsylvania consumer fraud statutes. The circuit court dismissed the entire complaint for failure to state a claim for which relief could be granted. The appellate court affirmed in part and reversed in part (No. 1-94-1275 (unpublished order under Supreme Court Rule 23)), reinstating the counts alleging breach of express and implied warranty under the Uniform Commercial Code (UCC) (810 ILCS 5/1-101 (West 1994)) and the count alleging violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Illinois Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 1994)). The appellate court affirmed the dismissal of the remaining counts. We allowed Suzuki's petition for leave to appeal (155 Ill. 2d R. 315) and, for the reasons that follow, we reverse the appellate court's decision to reinstate the UCC warranty counts, affirm the dismissal of the common law fraud count, and affirm the reinstatement of the Illinois consumer fraud count.
The named plaintiffs of this class action, residents of Illinois, Pennsylvania and New Jersey, each purchased a new Suzuki Samurai from an authorized Suzuki dealer. Some time after their purchases, Consumers Union, a consumer watchdog organization, gave the Samurai a "not acceptable" rating. According to Consumers Union, the Samurai was unsafe because it had an excessive risk of rolling over during sharp turns and accident avoidance maneuvers. Subsequently, plaintiffs filed the instant complaint against Suzuki. The class action, filed on behalf of all persons in the United States who purchased or leased a Samurai from Suzuki or an authorized Suzuki dealer, alleged that the Samurai's risk of roll over was due to a defect in either design or production. Significantly, plaintiffs did not allege that they had ever suffered a roll-over accident in a Samurai. Rather, they sought compensation for the diminution in the vehicles' resale value due to the perceived safety risk.
Plaintiffs filed an original complaint and three amended complaints in the circuit court of Cook County. The circuit court, upon Suzuki's successive section 2-615 motions (735 ILCS 5/2-615 (West 1994)), dismissed each of the complaints for failure to state a claim upon which relief may be granted. This appeal arises from the dismissal of the third amended complaint, which contained counts alleging breach of express and implied warranties, violation of consumer fraud statutes, and common law fraud.
On appeal, the appellate court first applied conflict of law principles to determine which law applied to the plaintiffs from Illinois, Pennsylvania and New Jersey. Using the most significant relationship test, the court found that Pennsylvania law applied to the claims of the Pennsylvania plaintiffs, and that Illinois law applied to the plaintiffs from Illinois and New Jersey.
The appellate court reinstated the express warranty count, finding that various statements of Suzuki could have been a "basis of the bargain." The court then affirmed the dismissal of the implied warranty count under Illinois law because the complaint failed to sufficiently allege facts constituting privity between plaintiffs and Suzuki. Observing that Pennsylvania law does not require privity for an action for breach of implied warranty, the court nevertheless held that the count based on breach of the implied warranty of fitness for a particular purpose was properly dismissed under Pennsylvania law because the complaint did not allege how the plaintiffs relied on Suzuki's skill or expertise in choosing to purchase a Samurai. In respect to the count alleging breach of the implied warranty of merchantability under Pennsylvania law, the appellate court found that the excessive safety risk made the vehicle unfit for its ordinary use and reinstated this count.
The appellate court next addressed plaintiffs' allegations of fraud. The court reinstated the Illinois consumer fraud counts, though it did rule that the consumer fraud count could not be based on certain statements by Suzuki that it deemed mere "puffery." In addition, the appellate court found that the complaint failed to state a claim under the Pennsylvania consumer fraud statute because it did not allege that the plaintiffs purchased or leased the Samurai "primarily for personal, family or household" use, as required by statute. 73 Pa. Cons. Stat. § 201-9.2(a) (1993).
The appellate court affirmed the dismissal of all common law fraud counts, under both Pennsylvania and Illinois law, finding that most of the allegedly fraudulent statements were not pled with sufficient specificity and particularity. The court additionally ruled that while the statements made by local Suzuki dealers were alleged with sufficient specificity and particularity, the complaint failed to adequately plead an agency relationship between Suzuki and the local dealers and thus the statements could not be attributed to Suzuki.
When the legal sufficiency of a complaint is challenged by a section 2-615 motion to dismiss, all well-pleaded facts in the complaint are taken as true and a reviewing court must determine whether the allegations of the complaint, when interpreted in the light most favorable to the plaintiff, are sufficient to establish a cause of action upon which relief may be granted. DiBenedetto v. Flora Township, 153 Ill. 2d 66, 69-70, 178 Ill. Dec. 777, 605 N.E.2d 571 (1992). Since plaintiffs chose to amend each previously dismissed complaint, any error regarding their dismissal is waived and we consider only the sufficiency of the third and final amended complaint. Foxcroft Townhome Owners Ass'n v. Hoffman Rosner Corp., 96 Ill. 2d 150, 155, 70 Ill. Dec. 251, 449 N.E.2d 125 (1983). In this appeal we thus address whether plaintiffs' third amended complaint adequately stated: (1) a claim for UCC breach of express or implied warranty under Illinois or Pennsylvania law; (2) a claim of common law fraud under Illinois or Pennsylvania law; and (3) a claim under the Illinois Consumer Fraud Act. Neither party has appealed the appellate court's determination of the applicable law or the appellate court's decision to affirm the dismissal of the Pennsylvania consumer fraud count. Therefore those issues are waived. 155 Ill. 2d R. 341(e)(7); Meyers v. Kissner, 149 Ill. 2d 1, 8, 171 Ill. Dec. 484, 594 N.E.2d 336 (1992).
In applying Pennsylvania law to the UCC breach of warranty count, we will cite to Pennsylvania's interpretation of the UCC wherever possible. However, Pennsylvania courts have not ruled on some of the UCC section 2-607 issues raised in this appeal. Section 1-102 of the UCC states that one of the underlying purposes and policies of the Act is "to make uniform the law among the various jurisdictions." 810 ILCS 5/1-102(2)(c) (West 1994); 13 Pa. Cons. Stat. § 1102(2)(c) (1984). In keeping with this policy, both Illinois and Pennsylvania have primarily followed the majority interpretation of the UCC. See, e.g., Collins Co. v. Carboline Co., 125 Ill. 2d 498, 508, 127 Ill. Dec. 5, 532 N.E.2d 834 (1988); Cucchi v. Rollins Protective Services Co., 377 Pa. Super. 9, 546 A.2d 1131 (1988). We will accordingly rely on Illinois decisions consistent with majority UCC interpretations where Pennsylvania courts have remained silent respecting section 2-607.
Suzuki argues that plaintiffs cannot recover for a breach of warranty under the UCC because the complaint did not adequately allege that plaintiffs notified Suzuki of the breach as required by article II, section 2-607, of the Uniform Commercial Code. 810 ILCS 5/2-607(3)(a) (West 1994); 13 Pa. Cons. Stat. § 2607 (1984). Plaintiffs counter that they were excused from giving direct notice of breach of warranty because Suzuki had actual knowledge of the breach and because notice was given by the filing of plaintiffs' breach of warranty complaint.
Section 2-607 of the UCC mandates that a "buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy." 810 ILCS 5/2-607(3)(a) (West 1994); 13 Pa. Cons. Stat. § 2607 (1984). A notification of breach of warranty is sufficient if it lets the seller know that the particular "transaction is still troublesome and must be watched." 810 ILCS Ann. 5/2-607, Uniform Commercial Code Comment 4 (Smith-Hurd 1993); 13 Pa. Cons. Stat. § 2607, Uniform Commercial Code Comment 4 (1984).
In general, buyers such as the instant plaintiffs must directly notify the seller of the troublesome nature of the transaction or be barred from recovering for a breach of warranty. See 810 ILCS 5/1-201(26) (West 1994); 13 Pa. Cons. Stat. § 1201(26) (1984). There are instances, however, when a buyer can fulfill the notice requirement without giving direct notice to the seller. Direct notice is not required when (1) the seller has actual knowledge of the defect of the particular product ( Malawy v. Richards Manufacturing Co., 150 Ill. App. 3d 549, 103 Ill. Dec. 355, 501 N.E.2d 376 (1986)); or (2) the seller is deemed to have been reasonably notified by the filing of the buyer's complaint alleging breach of UCC warranty ( Perona v. Volkswagen of America. Inc., 276 Ill. App. 3d 609, 213 Ill. Dec. 328, 658 N.E.2d 1349 (1995)). Plaintiffs argue that they properly alleged notice under either of these two exceptions. In their complaint, plaintiffs alleged:
"Any notice of breach of warranty that may have been required was provided to defendants or excused by each of the following separately and cumulatively:
a. The June 2, 1988 Consumers Union report of the Samurai's 'not acceptable' rating;
b. The June, 1988 investigation by seven states attorneys general resulting in defendants' agreement as set forth in paragraphs 34-36 above;
c. The commencement of the Pennsylvania action; and
d. The commencement of this action."
We first consider plaintiffs' contention that they were excused from giving direct notice of the breach of warranty because Suzuki had actual knowledge of the Samurai's alleged safety risks. It is uncontroverted that Suzuki was aware of the safety concerns regarding the Samurai. Suzuki knew of the unfavorable report about the Samurai issued by Consumers Union, as evidenced by its attempts to counter that report with its own publicity. Moreover, Suzuki entered settlement agreements with several states following attorney general investigations of the Samurai's safety risks.
However, Suzuki's generalized knowledge about the safety concerns of third parties is insufficient to fulfill plaintiffs' UCC notice requirement. While it is unnecessary to list specific claims of breach of warranty in giving notice under section 2-607 (810 ILCS Ann. 5/2-607, Uniform Commercial Code Comment 4 (Smith-Hurd 1993); 13 Pa. Cons. Stat. § 2607, Uniform Commercial Code Comment 4 (1984)), it is essential that the seller be notified that this particular transaction is "troublesome and must be watched." See, e.g., Malawy, 150 Ill. App. 3d 549, 103 Ill. Dec. 355, 501 N.E.2d 376. As Judge Learned Hand stated regarding section 2-607's predecessor:
"The notice 'of the breach' required is not of the facts, which the seller presumably knows quite as well as, if not better than, the buyer, but of buyer's claim that they constitute a breach." (Emphasis added.) American Manufacturing Co. v. United States Shipping Board Emergency Fleet Corp., 7 F.2d 565, 566 (2d Cir. 1925).
Thus, even if a manufacturer is aware of problems with a particular product line, the notice requirement of section 2-607 is satisfied only where the manufacturer is somehow apprised of the trouble with the particular product purchased by a particular buyer See Malawy, 150 Ill. App. 3d 549, 103 Ill. Dec. 355, 501 N.E.2d 376 (actual knowledge satisfied notice requirement where seller hospital removed defective medical device from plaintiff); Crest Container Corp. v. R.H. Bishop Co., 111 Ill. App. 3d 1068, 67 Ill. Dec. 727, 445 N.E.2d 19 (1982) (actual knowledge satisfied notice requirement where seller's employee visited plaintiff to "get to the bottom of why" the product was malfunctioning); Overland Bond & Investment Corp. v. Howard, 9 Ill. App. 3d 348, 2 ...