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Jarvis v. South Oak Dodge

March 23, 2001

RICHARD JARVIS AND CHRISTINE JARVIS, PLAINTIFFS-APPELLANTS,
v.
SOUTH OAK DODGE, INC., DEFENDANT
(CHRYSLER FINANCIAL CORPORATION AND GOLD KEY LEASE, INC., DEFENDANTS-APPELLEES).



Appeal from the Circuit Court of Du Page County. No. 98-L-1108 Honorable Hollis L. Webster, Judge, Presiding.

The opinion of the court was delivered by: Justice Geiger

Not Released For Publication

RICHARD JARVIS AND CHRISTINE JARVIS, PLAINTIFFS-APPELLANTS,
v.
SOUTH OAK DODGE, INC., DEFENDANT
(CHRYSLER FINANCIAL CORPORATION AND GOLD KEY LEASE, INC., DEFENDANTS-APPELLEES).

Appeal from the Circuit Court of Du Page County. No. 98-L-1108 Honorable Hollis L. Webster, Judge, Presiding.

The opinion of the court was delivered by: Justice Geiger

At issue in this case is whether the lessee of a consumer lease agreement may state a cause of action for rescission against the holder of the lease agreement when the basis for the claim is not apparent on the face of the lease. The plaintiffs, Richard Jarvis and Christine Jarvis (the Jarvises), appeal from the August 27, 1999, order of the circuit court of Du Page County dismissing, with prejudice, count IV of their amended complaint against defendant Gold Key Lease, Inc. (Gold Key). The Jarvises seek rescission of a motor vehicle lease that they believe they were duped into signing. The Jarvises contend that they have sufficiently alleged a cause of action for rescission of a motor vehicle lease to survive Gold Key's motion to dismiss brought pursuant to section 2--615 of the Code of Civil Procedure (the Code) (735 ILCS 5/2--615 (West 1998)).

 I. BACKGROUND

On April 16, 1999, the Jarvises filed their amended complaint against defendants South Oak Dodge, Inc. (South Oak), Chrysler Financial Corporation (CFC), and Gold Key, concerning a motor vehicle lease wherein South Oak was listed as the lessor and Gold Key as the holder. CFC was named in the suit because, according to the Jarvises, the lease provided that CFC is the agent of Gold Key with the power to act on Gold Key's behalf to administer and enforce the lease. Near the bottom of the lease appeared the following "Notice":

"ANY HOLDER OF THIS CONSUMER LEASE IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH (1) THE LESSEE COULD ASSERT AGAINST THE LESSOR OF THE VEHICLE LEASED PURSUANT HERETO AND (2) ARE APPARENT ON THE FACE OF THE CONSUMER LEASE."

This language is mandated by section 70 of the Illinois Motor Vehicle Leasing Act (the Leasing Act) (815 ILCS 636/70 (West 1998)), which provides that no lessor shall take or receive a consumer lease that fails to contain the above-referenced notice.

Count I of the amended complaint was directed toward all three defendants and alleged a cause of action for violations of the Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/10a (West 1998)). In count I, the Jarvises alleged that South Oak orally represented that the purchase price of the vehicle would be $15,000 but that if the Jarvises executed a lease they would be able to immediately purchase the vehicle for $14,300, thereby saving $700. The Jarvises also alleged that South Oak's representation was false in that they were unable to purchase the vehicle for $14,300 after they executed the lease. The Jarvises further alleged that South Oak was acting as the agent of CFC and Gold Key and that CFC and Gold Key created the lease agreement forms and instructed South Oak on "how to persuade consumers to lease rather than purchase" motor vehicles.

Count II was directed toward all three defendants and alleged a cause of action for common-law fraud for money damages. Count III was directed toward South Oak and alleged a cause for revocation of acceptance of goods. Count IV was directed toward CFC and Gold Key and alleged a cause of action for rescission of the lease under a regulation promulgated by the Federal Trade Commission (the FTC Holder Rule). See 16 C.F.R. §433.2 (2000).

Gold Key filed a motion to dismiss the amended complaint pursuant to section 2--615 of the Code. Most relevant to this appeal is Gold Key's argument concerning count IV. Citing the "Notice" provision in the lease, set forth above, Gold Key argued that the Jarvises could not state a cause of action for rescission because, as the holder of the lease, Gold Key is subject to the claims that the Jarvises could assert against South Oak only if such claims were apparent on the face of the lease. Because the basis for the Jarvises' claim for rescission is not apparent on the face of the lease, Gold Key reasoned, the Jarvises' cause of action could not lie against Gold Key.

On August 30, 1999, the trial court entered an order dismissing all counts of the amended complaint. Most relevant to this appeal are the trial court's findings as to count IV:

"This Court construes the plain language of the lease and [the FTC Holder Rule] to mean that the holder of a consumer lease is subject to the claims and defenses which the lessee could assert against the lessor if, and only if, those claims and defenses are apparent on the face of the lease. Use of the conjunctive 'and' necessarily must indicate that the legislature required both listed elements to be met. While such a construction appears harsh, and treats lessors [sic] differently from purchasers, this Court cannot rewrite the statutory language. Its meaning is not inoperable or questionable."

The trial court dismissed count IV as to Gold Key. In addition, the trial court also dismissed CFC from the suit entirely and further dismissed counts I and II as to Gold Key, without prejudice, for failure to plead an agency relationship between Gold Key and South Oak. As of the time the appeal was filed, certain counts were still pending against South Oak, which is not a party to this appeal. The Jarvises filed a timely notice of appeal.

II. DISCUSSION

A. Waiver

We first must address waiver issues presented by CFC and Gold Key. First, CFC argues that the Jarvises have waived their right to appeal the dismissal of claims as to CFC, which the Jarvises admit in their reply brief. Next, Gold Key argues that the Jarvises waived their right to challenge the dismissal of counts I and II, for consumer fraud ...


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