United States District Court, N.D. Illinois, Eastern Division
July 1, 2005.
MELISSA GARRETT, Plaintiff,
RENTGROW, INC. and APARTMENT INVESTMENT MANAGEMENT COMPANY, Defendants.
The opinion of the court was delivered by: GEORGE MAROVICH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Melissa Garrett ("Garrett") filed a three-count
complaint against defendants RentGrow, Inc. ("RentGrow") and
Apartment Investment and Management Company ("AIMCO"). In Counts
I and II of her complaint, Garrett asserts that RentGrow violated
the Fair Credit Reporting Act, 15 U.S.C. § 1681, and the Illinois
Consumer Fraud and Deceptive Business Practices Act ("Illinois
Consumer Fraud Act" or "ICFA"), 815 ILCS § 505/2. In Count III,
Garrett asserts that AIMCO violated the Illinois Consumer Fraud
Act. Defendant AIMCO moves pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure for an order dismissing
plaintiff's claim against it. For the reasons set forth below,
the Court grants AIMCO's motion to dismiss.
For purposes of this motion to dismiss, the Court takes as true
the allegations in the complaint. As alleged in the complaint,
the relevant facts are as follows. AIMCO, a corporation organized
as a real estate investment trust, is a substantial
owner/operator of apartment properties throughout the United
States. AIMCO managed, and may also have owned, a
federally-subsidized subsidized apartment complex commonly known as Continental Plaza
Apartments ("Continental"). Continental's management subscribed
to and utilized an information service provided by RentGrow, a
corporation engaged in tenant screening for owners and/or
managers of multifamily apartment buildings. RentGrow compiles
tenancy history data, including incidents, evictions, etc., on
individuals seeking apartments, at the request of owners and/or
managers of such apartments.
Garrett was interested in living in an apartment at the
Continental. It offered better living conditions, security and
maintenance than the apartment in which she was then living.
Also, because units at the Continental were federally subsidized,
living there would have reduced her rent and utility expenses.
Thus, in 2003, Garrett applied and was wait-listed for an
apartment at Continental.
In early August 2003, Continental's management pulled Garrett's
application from the waiting list and sent her a letter
indicating that she need only complete the application process at
Continental to secure an apartment. After Garrett completed her
application, Continental's management obtained a report from
RentGrow. The RentGrow report stated that an eviction judgment
had been entered against Garrett in Kankakee, Illinois in
December 2002. Continental's management then sent Garrett a
letter, dated August 20, 2003, rejecting her application for an
apartment in the building.
Garrett maintains that Continental's rejection of her
application was based solely on this RentGrow report. Garrett
alleges that Continental stated "previous landlord history" as
the cause for her denial in the August 20th letter, as well
as in a subsequent conversation she initiated with Continental's
management. According to Garrett, during this conversation, a
representative of Continental's management told her that the "previous landlord
history" consisted solely of the Kankakee eviction detailed in
the RentGrow report.
After receiving the August 20th rejection letter, Garrett
informed RentGrow that she never resided at the property listed
in the Kankakee case and was never sued for eviction from that
property. Garrett claims that she then provided RentGrow with
evidence supporting her position and contradicting the
information detailed in its report. This evidence indicated that
she resided in Chicago at the time in which she is claimed to
have been evicted from the Kankakee property. Garrett maintains
that RentGrow did not change its report on her and that
Continental's management continued to rely on the tenancy history
provided by RentGrow despite her objections to its accuracy.
Ultimately, Garrett was unable to obtain an apartment at the
Continental complex. Garrett asserts that AIMCO committed an
unfair practice, in violation of the Illinois Consumer Fraud Act,
by refusing to re-examine or reverse its denial of her
application after she had demonstrated that the basis for denial
II. Standard on a motion to dismiss
The Court may dismiss claims pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure where the plaintiff fails "to
state a claim upon which relief can be granted." Fed.R.Civ.P.
12(b)(6). The purpose of a motion to dismiss under this Rule is
to test the sufficiency of the complaint, not to rule on its
merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th
Cir. 1990). In considering a motion to dismiss, the Court accepts
as true all well-pleaded factual allegations and draws all
reasonable inferences in the plaintiff's favor. McCullah v.
Gadert, 344 F.3d 655, 657 (7th Cir. 2003). On a motion to
dismiss, the "issue is not whether a plaintiff will ultimately prevail but whether the claimant is
entitled to offer evidence to support the claims." Cole v. U.S.
Capital, Inc., 389 F.3d 719, 724 (7th Cir. 2004) (quoting
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
In support of its motion to dismiss, AIMCO first argues that
the plaintiff does not adequately plead an Illinois Consumer
Fraud Act claim in that she fails to allege an unfair practice.
Next, AIMCO argues that the plaintiff fails to allege intent.
The Illinois Consumer Fraud Act is a "regulatory and remedial
statute intended to protect consumers, borrowers, and business
persons against fraud, unfair methods of competition, and other
unfair and deceptive business practices." Robinson v. Toyota
Motor Credit Corp., 201 Ill. 2d 403, 416-417 (Ill. 2002).
Specifically, chapter two of the Act prohibits unfair methods of
competition and unfair or deceptive acts or practices used or
employed in the conduct of any trade or commerce.
815 ILCS § 505/2.
To successfully state a claim under the Illinois Consumer Fraud
Act, a plaintiff must allege: (1) a deceptive act or unfair
practice by the defendant; (2) that the defendant intended that
the plaintiff rely on that act or practice, or intent by the
defendant to deceive, defraud, or be unfair to the plaintiff; (3)
that the deception or unfair practice occurred in the course of
conduct involving trade and commerce; and (4) that the deceptive
act or unfair practice proximately caused the plaintiff's injury.
Jenkins v. Mercantile Mortgage Co., 231 F. Supp.2d 737, 747
(N.D. Ill. 2002); Krause v. GE Capital Mortgage Servs., Inc.,
314 Ill. App. 3d 376, 731 N.E.2d 302, 311 (2000). A. Failure to allege an unfair practice
An act or practice is "unfair" under the Illinois Consumer
Fraud Act if (1) the practice, without having been previously
considered unlawful, offends public policy as it has been
established by statutes, the common law, or otherwise; (2) it is
immoral, unethical, oppressive, or unscrupulous; (3) it causes
substantial injury to consumers ("Robinson factors"). Robinson
v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 417-18,
775 N.E.2d 951, 960-61 (2002). The Illinois Supreme Court has
explained that "all three criteria do not need to be satisfied to
support a finding of unfairness. A practice may be unfair because
of the degree to which it meets one of the criteria or to a
lesser extent it meets all three." Robinson, 201 Ill.2d at 418
(citing Cheshire Mortgage Services, Inc. v. Montes,
223 Conn. 80, 106, 612 A.2d 1130, 1143-44 (1992)).
In this case, Garrett asserts that AIMCO's conduct constituted
an unfair practice. Specifically, Garrett claims that the refusal
of Continental's management to re-examine or reverse its denial
of her application constituted such an unfair practice. Although
AIMCO, through Continental management, controlled the success of
Garrett's application, AIMCO's refusal to re-examine or reverse
its denial does not support an unfair practice claim because it
does not satisfy the Robinson factors for measuring unfairness.
1. Offends public policy
A practice, without having been previously considered unlawful,
offends public policy if it violates a standard of conduct set
out by an existing statute or common law doctrine that typically
governs such situations. See, e.g., Robinson,
201 Ill. 2d at 421 (finding no offense to public policy in Toyota's leasing
charge disclosure practices because they met the standards set
out by the Truth in Lending Act); Carroll v. Butterfield Health
Care, Inc., 2003 U.S. Dist. LEXIS 19287, at *9 (N.D. Ill. Oct. 29, 2003) (finding no offense
to public policy in nursing home's personal guarantee of payment
for admission requirement despite its prohibition by Medicaid Act
because Act did not provide for private right of action); Ekl v.
Knecht, 223 Ill. App. 3d 234, 585 N.E.2d 156, 163 (1991)
(finding a plumber's practice of demanding unreasonable payments
and threatening to undo repairs after commencing work offended
common law doctrine governing contracts formed under duress and
In this case, AIMCO's conduct does not offend public policy.
Unlike Robinson and Carroll, Garrett fails to point to any
established statute or common law doctrine regarding the
evaluation of apartment rental applicants or the utilization of
information services in making rental determinations.
Accordingly, the alleged conduct does not satisfy the first of
the Robinson factors. Thus, AIMCO's practice does not offend
public policy as considered in measuring unfairness.
2. Is immoral, unethical, oppressive or unscrupulous
A practice may be considered immoral, unethical, oppressive, or
unscrupulous if it imposes a lack of meaningful choice or an
unreasonable burden on the consumer. See, e.g., Robinson,
201 Ill. 2d at 419-20 (finding no immoral or oppressive conduct based
on plaintiff's ability to lease a car from another provider and
the reasonableness of incremental fees included in pricing);
Ekl, 585 N.E.2d at 163 (finding that plumber's threats to stop
work, undo work already completed, and turn off plaintiffs' water
if not paid an "outrageous" fee was oppressive, unscrupulous and
coercive because of plaintiffs' lack of choice and the
unreasonableness of charges). In this case, AIMCO's conduct does not constitute immoral,
unethical, oppressive, or unscrupulous behavior. Like Robinson,
there is no oppressive or unscrupulous conduct involved because
Garrett could have sought subsidized housing elsewhere. Although
the Continental represented Garrett's ideal, Garrett does not
allege that there was an utter lack of meaningful choice or any
coercion which forced her to seek an apartment only in the
Continental. Thus, plaintiff fails to allege immoral, unethical,
oppressive, or unscrupulous conduct.
3. Causes substantial injury to consumers
A practice causes substantial injury to consumers if it causes
significant harm to the plaintiff and has the potential to cause
injury to a large number of consumers. See, e.g., Carroll,
2003 U.S. Dist. LEXIS 19287, at *9-10 (finding plaintiff's injury of
garnished wages to settle personal guarantee not substantial
enough); Ekl, 585 N.E.2d at 163 (plumber's threats to stop and
undo work if he was not paid a large fee caused plaintiffs
substantial injury because (a) they were deprived of bargaining
power and forced to pay an unreasonable incremental amount, and
(b) it could cause similar substantial injury to other
In this case, AIMCO's conduct does not and would not cause
substantial injury to consumers. AIMCO's reliance on information
provided by RentGrow and decision not to review candidates'
individual tenancy histories does not cause substantial injury to
consumers generally because it relates only to those few
consumers who have potentially errant information in their
reports. Unlike Ekl, where the plumber could extract excessive
fees in any similar situation, AIMCO's practice would only apply
to a small subset of applicants who disputed an entry in their
records. Thus, plaintiff has failed to allege conduct which
causes substantial injury to consumers. Because Garrett fails to allege an "unfair practice," the Court
concludes that Garrett does not state a claim under the Illinois
Consumer Fraud Act against AIMCO.
B. Failure to allege intent
Additionally, even if Garrett's allegations against AIMCO met
the criteria of an unfair practice, she must still allege the
second prong of an ICFA claim, intent. To satisfy this
requirement, a plaintiff must allege either intent by the
defendant that the plaintiff rely on that act or practice, or
intent by the defendant to deceive, defraud, or be unfair to the
plaintiff. Krause, 731 N.E.2d at 311.
In this case, Garrett fails to allege that AIMCO had an intent
to deceive, defraud, or be unfair to her. In fact, Garrett does
not even allege that AIMCO knew that the information contained in
the RentGrow report was inaccurate. Accordingly, Garrett fails to
state a claim under the Illinois Consumer Fraud Act.
For the reasons set forth above, the Court grants AIMCO's
motion to dismiss Count III, plaintiff's only claim against it.
Plaintiff's third count against defendant AIMCO is dismissed
without prejudice, and plaintiff is granted 28 days to file an
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