nothing to convince this court that the Illinois legislature meant anything but that which is written in the plain meaning of the enforcement clause of the statute.
Lastly, this court must determine whether implying a private right of action is necessary to effectuate the purposes of the act. The act provides a criminal enforcement provision pursuant to which any officer or employee who fails to comply with the act will be guilty of a business offense and subject to a fine of up to $ 1000.00. 205 Ill. Comp. Stat. 5/48.1(e). A criminal penalty written into a statute weighs against the necessity of implying a private right of action to effectuate the purposes of an act; however, the fact that the act provides only a criminal penalty for its violation does not end the inquiry of whether a civil action is barred. Parra v. Tarasco, 230 Ill. App. 3d 819, 595 N.E.2d 1186. 172 Ill. Dec. 516 (1st Dist. 1992), quoting, Rhodes v. Mill Race Inn, Inc., 126 Ill. App. 3d 1024, 1027, 81 Ill. Dec. 793, 795, 467 N.E.2d 915, 917 (1984).
If the penalties to those who violate a statute are so minor that they provide no incentive for compliance, then a private right of action may be necessary. Moore v. Lumpkin, 258 Ill. App. 3d 980, 999, 630 N.E.2d 982, 996, 196 Ill. Dec. 817, 831. Bank officers or employees gain virtually no benefit, surely no benefit larger than $ 1000.00, for failing to comply with the CFRA. Further, the bank does not lose anything, because it may be reimbursed for the costs that have been incurred in reproducing records. See 205 Ill. Comp. Stat. 5/48.1(g). The only benefit worth more than $ 1000.00 that one might receive for disclosing customer's financial records would be improper compensation in the form of a bribe or a payoff. Obviously, those are separate matters, sufficiently addressed by existing criminal and tort law. This court concludes that a private right of action is not necessary to effectuate the purposes of the act. Accordingly, because plaintiffs cannot state a cause of action under the CFRA, Count II is dismissed with prejudice.
Count III: CONSUMER FRAUD ACT
Plaintiffs allege in Count III that defendant violated the Consumer Fraud Act, 815 Ill. Comp. Stat. 505/2 (West 1992), when it complied with the Subpoena, in violation of the Authorization. To allege a violation of the Consumer Fraud Act, plaintiffs must allege that: (1) defendant performed a deceptive act or practice; (2) defendant intended that the plaintiffs rely on the deception; and (3) the deception occurred in the course of conduct involving trade or commerce. 815 Ill. Comp. Stat. 505/2; Siegel v. Levy Organization Development Co., 153 Ill. 2d 534, 542, 180 Ill. Dec. 300, 304, 607 N.E.2d 194, 198 (1992). In order to violate the Consumer Fraud Act, the acts and practices must be capable of being interpreted in a misleading way. Kedziora v. Citibank National Services, Inc., 780 F. Supp. 516, 534 (N.D. Ill., 1991).
Defendant argues that the first element of the Consumer Fraud Act is not met because there was no act of deception: in the Authorization, plaintiffs agreed that defendant may disclose information that was required by law to be disclosed. Defendant, at the very least, was under the impression that the documents were to be disclosed by law and thus acted in compliance with the Subpoena.
To fit within the definition of a deceptive act or practice, the act must mislead and cannot merely constitute error. Stern v. Norwest Mortgage, Inc., 284 Ill. App. 3d 506, 513, 672 N.E.2d 296, 302, 219 Ill. Dec. 788, 794 (1st Dist. 1996)(a reasonable difference of opinion existed as to the meaning of an Illinois act and defendant's noncompliance with the act amounted to error rather than deception); Mackinac v. Arcadia National Life Insurance Co., 271 Ill. App. 3d 138, 207 Ill. Dec. 781, 648 N.E.2d 237 (1st Dist. 1995). In the instant case plaintiffs allege, at most, that defendant erroneously complied with a lawful subpoena.
Defendants argue that the second element of the Consumer Fraud Act is not met because defendant did not intend that plaintiffs rely on the alleged deceptive practice. The alleged deceptive practice consisted of defendant's claim that it would not release information unless it was required to by law and yet released information when it received the Subpoena.
Intent was established in Dwyer v. American Express Co., 273 Ill. App. 3d 742, 750, 652 N.E.2d 1351, 1357, 210 Ill. Dec. 375, 380 (1st Dist. 1995), where credit card holders sued the issuer for disclosing information about the customers' spending patterns to third party marketing firms. The Dwyer court explained that the issuer had a strong incentive to keep its practice of disclosing cardholder information to third parties a secret because disclosure would have resulted in fewer cardholders desiring cards. Id.
In Dwyer the defendant knew at the time of contracting that the information would be disclosed (without a subpoena) to third parties and yet did not tell that to its customers. Noticeably absent from the complaint in the instant case is any allegation that defendant entered into the Authorization intending to violate it whenever served with a subpoena. It defies logic to argue that defendant entered into the Authorization with the intent that it would receive a subpoena and with the intent of disclosing information in good faith pursuant to a subpoena. Plaintiffs have not alleged the second element of the Consumer Fraud Act.
Further, the Consumer Fraud Act does not apply to the instant case. The Consumer Fraud Act has been properly applied in cases where a defendant made affirmative misrepresentations to the plaintiffs. See Crowder v. Bob Oberling Enterprises, Inc., 148 Ill. App. 3d 313, 101 Ill. Dec. 748, 499 N.E.2d 115 (4th Dist. 1986) (car salesman lied to customer about quality of used car), Lane v. Fabert, 178 Ill. App. 3d 698, 127 Ill. Dec. 674, 533 N.E.2d 546 (4th Dist. 1989) (broker told customer it would hold collateral, then sold it). Yet, in the instant case, as in Bankier v. First Federal Savings and Loan Association of Champaign, 225 Ill. App. 3d 864, 875, 588 N.E.2d 391, 398, 167 Ill. Dec. 750, 757 (4th Dist. 1992), the plaintiffs and defendant merely disagree on the interpretation of a contract between them. In Bankier, where the parties disputed whether they agreed to a prepayment penalty under a construction loan, the court explained that that was a mere breach of contract issue to which the Consumer Fraud act does not apply. The Consumer Fraud Act was not intended to provide a remedy for ordinary common law breach of contract actions. Id. at 874, 588 N.E.2d at 398, 167 Ill. Dec. at 757.
The parties dispute whether under the Authorization the bank could release documents pursuant to the Subpoena. This is a mere breach of contract issue, to which the Consumer Fraud Act does not apply. Accordingly, because plaintiffs have not alleged a violation of the Consumer Fraud Act, Count III is dismissed with prejudice.
Count IV: Breach of Fiduciary Duty
Plaintiffs allege in Count IV that defendant breached a fiduciary duty when defendant released plaintiffs' information pursuant to the Subpoena. Plaintiffs allege that because defendant had confidential information relating to the plaintiffs, and plaintiffs did not have confidential information relating to defendant, defendant was in a dominant position with respect to plaintiffs and a fiduciary relationship existed as a matter of law.
To state a cause of action for breach of fiduciary relationship, plaintiffs must at least allege a fiduciary duty, and a fiduciary duty must exist between the parties as a matter of law. Mid-America National Bank of Chicago, 161 Ill. App. 3d 531, 537, 515 N.E.2d 176, 181, 113 Ill. Dec. 367, 372 (1st Dist. 1976).
Generally, a lender is not considered a fiduciary of its borrower. K Town, Inc. v. Metropolitan Bank & Trust Company, 171 Bankr. 313 (Bankr. N.D. Ill. 1994); In re Aluminum Mills Corp., 132 Bankr. 869, 876 (Bankr. N.D. Ill. 1991). However, such a relationship may occur where one party, due to a close relationship, relies heavily on the judgment of another. Mid-America National Bank of Chicago, 161 Ill. App. 3d 531, 537, 515 N.E.2d 176, 180, 113 Ill. Dec. 367, 371, citing, Gary-Wheaton Bank v. Burt, 104 Ill. App. 3d 767, 774, 60 Ill. Dec. 518, 525, 433 N.E.2d 315, 322. Yet, a slightly dominant business position will not transform a formal, contractual relationship into a confidential or fiduciary relationship. Id. quoting, Gary-Wheaton Bank v. Burt, 104 Ill. App. 3d 767, 774, 60 Ill. Dec. 518, 525, 433 N.E.2d 315, 322. Further, the conventional mortgagor-mortgagee relationship, standing alone, is insufficient to sustain an allegation of a fiduciary or special relationship. Id. at 538, 515 N.E.2d 176, 181, 113 Ill. Dec. 367, 372. Plaintiffs have not alleged anything to suggest that the relationship between them and defendant was anything other than a typical mortgagee-mortgagor relationship.
Defendants argue that a fiduciary relationship does not exist as a matter of law because defendant has no dominant business position in this conventional mortgagor-mortgagee contractual relationship. The court agrees.
It is surely within the conventional mortgagor-mortgagee relationship for a lender to know a borrower's financial affairs so that the lender may evaluate the degree of risk involved in entering into the transaction.
Plaintiffs have alleged nothing to indicate that defendant has any dominance greater than that of a conventional mortgagor. Plaintiffs are not in a fiduciary relationship with defendant. Accordingly, because plaintiffs have not stated a cause of action for breach of fiduciary duty, Count IV is dismissed with prejudice.
Count V: Breach of Covenant of Good Faith and Fair Dealing
Finally, plaintiffs allege in Count V that defendant violated the so-called "covenant of good faith and fair dealing" when it complied with the Subpoena after signing the Authorization in which it promised to keep the information confidential. In Illinois, the covenant of good faith and fair dealing is not an independent source of duties for the parties to a contract. Beraha v. Baxter Healthcare Corp., 956 F.2d 1436, 1443 (7th Cir. 1992). The lack of good faith alone does not create a cause of action. 956 F.2d at 1443; Williams v. Jader Fuel Co., Inc., 944 F.2d 1388, 1394 (7th Cir. 1991), cert. denied, 504 U.S. 957, 119 L. Ed. 2d 228, 112 S. Ct. 2306 (1992). The covenant of good faith and fair dealing is simply implied within the terms of contracts under Illinois law. 956 F.2d at 1443; Martindell v. Lake Shore Nat'l Bank, 15 Ill. 2d 272, 154 N.E.2d 683, 690 (1958).
Plaintiffs cite to Pommier v. Peoples Bank Marycrest, 967 F.2d 1115 (7th Cir. 1992), for the proposition that there is a cause of action for breach of the covenant of good faith. They are mistaken. The Pommier court did not analyze such a cause of action, but merely stated that in order to imply a covenant, a contract must first exist between the parties. 967 F.2d at 1120-1. Pommier does not provide a separate cause of action for an implied covenant of good faith under Illinois law. Plaintiffs cite to no other case in support of their assertion that such a cause of action may be maintained, or is adequately plead under Illinois law.
The court concludes that under Illinois law the implied covenant of good faith and fair dealing is not a separate obligation upon which a cause of action may be based. Beraha v. Baxter Healthcare Corp., 956 F.2d 1436, 1443 (7th Cir. 1992); Williams v. Jader Fuel Co. Inc., 944 F.2d 1388, 1394 (7th Cir. 1991); Martindell v. Lake Shore Nat'l Bank, 15 Ill. 2d 272, 154 N.E.2d 683, 690 (1958). Accordingly, because plaintiffs have not stated a claim for a so-called breach of implied covenant of good faith, Count V is dismissed with prejudice.
For the reasons set forth above, this court grants defendant's motion to dismiss on all counts.
ENTER: March 10, 1997
Robert W. Gettleman
United States District Judge
JUDGMENT IN A CIVIL CASE
Decision by Court. This action came to a hearing before the Court. The issues have been heard and a decision has been rendered.
IT IS ORDERED AND ADJUDGED that defendant's motion to dismiss on all counts is granted.
March 10, 1997