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Jarvis v. South Oak Dodge

June 20, 2002

RICHARD JARVIS ET AL., APPELLEES,
v.
SOUTH OAK DODGE, INC., ET AL. (GOLD KEY LEASE, INC., APPELLANT).



The opinion of the court was delivered by: Justice Fitzgerald

UNPUBLISHED

Docket No. 91354-Agenda 19-January 2002.

In this consumer fraud case, we examine the relationship between Illinois' Motor Vehicle Leasing Act (Leasing Act) (815 ILCS 636/1 et seq. (West 2000)) and the federal Truth in Lending Act (TILA) (15 U.S.C. §1601 et seq. (2000)). The question we consider is whether the holder of a consumer lease is subject to state law claims for misrepresentations made by the lessor to the consumer that are not apparent on the face of the lease. We answer this question in the negative.

BACKGROUND

In June 1997, plaintiffs, Richard and Christine Jarvis, leased a 1997 Dodge Stratus from defendant South Oak Dodge, Inc. (dealer). The lease identified the dealer as the "lessor" and defendant Gold Key Lease, Inc. (Gold Key) as the "holder" of the lease. In accordance with the mandatory notice provision contained in section 70 of the Leasing Act, the lease provided, in bold-faced type, that any holder of the lease "is subject to all claims and defenses which (1) the lessee could assert against the lessor *** and (2) are apparent on the face of the consumer lease." See 815 ILCS 636/70 (West 2000).

In October 1998, plaintiffs filed a complaint against both defendants in the circuit court of Du Page County. *fn1 In their amended complaint, filed the following year, plaintiffs claimed that the dealer's salesman fraudulently induced plaintiffs to enter into the lease by making certain oral misrepresentations. Plaintiffs alleged that the dealer's salesman falsely advised them that, immediately upon execution of the lease, plaintiffs could pay off the lease and purchase the vehicle at a certain price.

In counts I and II of the amended complaint, plaintiffs claimed that defendants violated the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)), and committed common law fraud, respectively. In count III, directed only against the dealer, plaintiffs sought revocation of their acceptance of the lease. In count IV, which is the subject of this appeal, plaintiffs sought rescission of the lease against Gold Key, "[p]ursuant [t]o Federal Regulation 16 C.F.R. Sec. 433.2." Plaintiffs claimed that, under this federal regulation, the holder of a consumer lease is subject to all claims and defenses which the lessee could assert against the lessor, and that Gold Key was thus subject to a claim for rescission based on the misrepresentations of the dealer/lessor.

Gold Key filed a motion to dismiss under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2000)). With respect to count IV, Gold Key argued that, based on the statutory notice provision in the lease, it was subject to claims which plaintiffs could assert against the dealer, only if such claims were "apparent on the face" of the lease. Gold Key maintained that plaintiffs' claim for rescission, based on alleged oral misrepresentations made by the dealer's salesman, was not a claim apparent on the face of the lease.

The circuit court granted Gold Key's motion, dismissing count IV with prejudice. The circuit court concluded that the legislature's use of the conjunctive "and" between the two elements of section 70 of the Leasing Act "necessarily must indicate that the legislature required both listed elements to be met," and 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." The circuit court entered a finding of appealability under Rule 304(a), and plaintiffs appealed. See 155 Ill. 2d R. 304(a). The appellate court reversed the dismissal of count IV. 319 Ill. App. 3d 509.

The appellate court agreed with plaintiffs that the conjunction "and," between the two elements of section 70, should not be read to limit the liability of the holder of a consumer lease to claims "apparent on the face"of the lease, and that a lessee could pursue whatever remedies were available to lessees prior to the adoption of the Leasing Act. 319 Ill. App. 3d at 516-18. The appellate court concluded, however, that plaintiffs could not seek rescission of the lease based on the federal regulation cited in the amended complaint and remanded the matter to the circuit court to allow plaintiffs an opportunity to replead count IV. 319 Ill. App. 3d at 519-20.

We allowed Gold Key's petition for leave to appeal (see 177 Ill. 2d R. 315), and now reverse the judgment of the appellate court reversing the dismissal of count IV.

ANALYSIS

A motion to dismiss under section 2-615 of the Code (735 ILCS 5/2-615 (West 2000)) challenges only the legal sufficiency of the complaint. Board of Directors of Bloomfield Club Recreation Ass'n v. The Hoffman Group, Inc., 186 Ill. 2d 419, 423 (1999). The critical inquiry is whether the allegations of the complaint, when considered in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief may be granted. Board of Directors of Bloomfield Club Recreation Ass'n, 186 Ill. 2d at 424; Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 490 (1996). All well-pleaded facts in the complaint must be taken as true, but conclusions of law will not be taken as true, unless supported by specific factual allegations. Ziemba v. Mierzwa, 142 Ill. 2d 42, 47 (1991). We review the dismissal of a complaint under section 2-615 de novo. Vernon v. Schuster, 179 Ill. 2d 338, 344 (1997).

Whether the well-pleaded allegations of plaintiffs' amended complaint are sufficient to withstand Gold Key's motion to dismiss turns principally on an issue of statutory construction, namely, the proper interpretation of the mandatory notice provision in section 70 of the Leasing Act (815 ILCS 636/70 (West 2000)). Issues of statutory construction are also reviewed de novo. In re Estate of Dierkes, 191 Ill. 2d 326, 330 (2000). Gold Key maintains that the appellate court's construction of section 70 fails to give effect to the plain language of the ...


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