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11/21/96 RODNEY LEE ET AL. v. NATIONWIDE CASSEL

November 21, 1996

RODNEY LEE ET AL., APPELLEES,
v.
NATIONWIDE CASSEL, L.P., ET AL., APPELLANTS.



The Honorable Justice Heiple delivered the opinion of the court.

The opinion of the court was delivered by: Heiple

JUSTICE HEIPLE delivered the opinion of the court:

Plaintiff Rodney Lee and counterclaimant Edelmira Rivera (hereinafter plaintiffs) sought to enjoin the enforcement of certain motor vehicle installment sales contracts by defendant/counterdefendant Nationwide Cassel, L.P., d/b/a Nationwide Acceptance Corp. and N.A.C. Management Corp. (hereinafter defendant). Plaintiffs also sought compensatory and punitive damages under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 (West 1992)) and the Illinois Sales Finance Agency Act (205 ILCS 660/16 (West 1992)). The circuit court of Cook County consolidated the two cases and dismissed plaintiffs' claims on the pleadings. 735 ILCS 5/2-615 (West 1992). The appellate court reversed and remanded. 277 Ill. App. 3d 511, 660 N.E.2d 94, 213 Ill. Dec. 837. We allowed defendant's petition for leave to appeal. 155 Ill. 2d R. 315. For the reasons that follow, we affirm in part and reverse in part.

FACTUAL AND PROCEDURAL HISTORY

In August 1991, Lee's roommate, Dennis L. Davis, attempted to purchase a car from Tower Oldsmobile, Inc. Davis completed a credit application at the dealership in order to obtain financing for the vehicle. Defendant, a sales finance agency which purchases installment contracts from dealerships, was notified of Davis' application and ordered a credit report. Based on the credit information, the dealership refused to approve Davis' application unless he provided a co-signer for the purchase of the vehicle.

At Davis' request, Lee agreed to act as co-signer. Lee completed a credit application at the dealership which identified him as a "co-signer for Davis." Defendant obtained a credit report on Lee, after which the dealership approved financing of the vehicle. Both Davis and Lee signed the sales contract on lines marked "buyer," even though the contract contained a separate line marked "guarantor."

The facts of Rivera's claim are similar. Her friend, Rommel Gonzalez, attempted to purchase a vehicle at Olympic Hyundai. When Gonzalez applied for financing at the dealership, defendant requested credit information on him. The dealership refused to approve the loan unless Gonzalez provided a co-signer. Rivera agreed to act as co-signer, and furnished credit information to defendant. The financing was then approved. Gonzalez and Rivera signed the contract on lines marked "buyer," leaving blank the line entitled "guarantor."

Sometime after Davis and Gonzalez took delivery of the vehicles, each of them failed to make scheduled loan payments to defendant. Without instituting legal proceedings against Davis, defendant demanded that Lee pay the debt, and attempted to enforce a wage assignment against him. Defendant also demanded payment from Rivera and instituted a collection action against her and Gonzalez.

Lee then filed a complaint seeking to enjoin defendant's enforcement of the contract against him. Lee alleged that section 18 of the Motor Vehicle Retail Installment Sales Act (815 ILCS 375/18 (West 1992)) prevents defendant from holding him liable under the contract because he did not actually receive the vehicle and he was not the parent or spouse of a person who actually received the vehicle. Lee also sought compensatory and punitive damages under the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1992)) and the Sales Finance Agency Act (205 ILCS 660/1 et seq. (West 1992)) for defendant's alleged attempts to create and enforce liability on his part for the debt when section 18 of the Motor Vehicle Retail Installment Sales Act precludes such liability. In the collection suit brought against her, Rivera filed a counterclaim containing substantially the same allegations as those in Lee's complaint.

After consolidating the two actions, the circuit court granted defendant's motion to dismiss based on section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)). The court found that under Magna Bank v. Comer, 274 Ill. App. 3d 788, 175 Ill. Dec. 612, 600 N.E.2d 855 (1992), the plaintiffs' signatures on the contracts as buyers made them jointly liable with their friends who also signed as buyers, notwithstanding the allegations that plaintiffs, unlike their friends, never actually received the vehicles. The court stated in its memorandum of opinion that it was obligated to "follow the decision of the Fourth District [of the] Appellate Court [in Comer ] if it applies since there is no First District decision on this issue." The circuit court also dismissed the counts based on the Consumer Fraud and Deceptive Business Practices Act and the Sales Finance Agency Act because plaintiffs failed to allege any fraud or misrepresentation by defendant.

The appellate court reversed and remanded. 277 Ill. App. 3d 511, 660 N.E.2d 94, 213 Ill. Dec. 837. It noted that since the time of the trial court's dismissal of plaintiffs' claims, two appellate court opinions from the First District had departed from Comer by holding that section 18 of the Motor Vehicle Retail Installment Sales Act limits primary liability under an automobile installment contract to those consumers who take physical possession of the vehicle. See Arca v. Colonial Bank & Trust Co., 265 Ill. App. 3d 498, 202 Ill. Dec. 148, 637 N.E.2d 687 (1994); Taylor v. Trans Acceptance Corp., 267 Ill. App. 3d 562, 204 Ill. Dec. 477, 641 N.E.2d 907 (1994). The instant appellate court panel likewise rejected Comer and followed Arca and Taylor by holding that plaintiffs were not liable under the contracts because they did not actually receive the vehicles. In addition, the court held that plaintiffs had set out facts with sufficient particularity to state a claim under the Consumer Fraud and Deceptive Business Practices Act by alleging that defendant attempted to create and enforce liability against them when it knew they could not legally be held liable under the contracts.

ANALYSIS

I. Co-Signer Liability

In considering a motion to dismiss, we accept as true all well-pleaded facts and draw all inferences from those facts in favor of the nonmovant. Meerbrey v. Marshall Field & Co., 139 Ill. 2d 455, 473, 151 Ill. Dec. 560, 564 N.E.2d 1222 (1990). We will sustain a dismissal for failure to state a claim only if it clearly appears that no set of facts could be proved ...


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