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People Ex Rel.Lisa Madigan, Attorney State of Illinois v. United Construction of America

November 20, 2012

PEOPLE EX REL.LISA MADIGAN, ATTORNEY STATE OF ILLINOIS
PLAINTIFF-APPELLANT,
v.
UNITED CONSTRUCTION OF AMERICA, INC.; SKYWAY BUILDERS #1, INC.; UNITED RESIDENTIAL SERVICES, INC.; HARBOR
FINANCIAL GROUP, LTD.; MARK DIAMOND; UNITED RESIDENTIAL SERVICES & REAL ESTATE, INC.; AND OSI FINANCIAL SERVICES, DEFENDANTS-APPELLEES.



Appeal from the General of the Circuit Court of Cook County 09 CH 33398 Honorable Lee Preston, Judge Presiding.

The opinion of the court was delivered by: Justice Connors

JUSTICE CONNORS delivered the judgment of the court, with opinion. Presiding Justice Harris concurred in the judgment and opinion. Justice Quinn specially concurred, with opinion.

OPINION

¶ 1 This appeal presents two certified questions that deal with the pleading requirements for an action by the Attorney General under the Illinois Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 2010)). The first question concerns the pleading requirements for a claim under section 2 of the Act (815 ILCS 505/2 (West 2010)), and the second concerns the pleading requirements for obtaining injunctive and other relief under section 7 (815 ILCS 505/7 (West 2010).

¶ 2 We do not need to explain much about the background of this case in order to answer the certified questions. Defendants are all involved in some fashion with the mortgage and home repair industries in Illinois. The complaint alleges that defendants approach unsophisticated homeowners, usually elderly ones from predominantly African-American communities, and offer to provide home repair services and financing in order to pay for those services. If the homeowners decline, defendants instead offer to provide mortgage refinancing services. The problem with this business model, the complaint alleges, is that defendants then push the homeowners into high-risk and unaffordable financing arrangements and steer the resulting home-repair contracts to companies that, among other things, fail to complete the work in a professional manner, if at all. The complaint alleges that this is all accomplished through a variety of deceptive and unfair business practices.

¶ 3 To combat this, the Attorney General filed a two-count complaint against defendants in the circuit court. Count I (which is the only count that concerns us here) alleged that defendants' actions violated sections 2, 2B, and 2Q of the Act (815 ILCS 505/2, 2B, 2Q (West 2010)) and sought an injunction prohibiting them from future involvement in the mortgage and home-repair industries. The circuit court dismissed this count, citing among other things the Attorney General's failure to plead that defendants had misrepresented any material facts with the intent that homeowners rely on them, or that any allegedly unlawful act had proximately harmed homeowners. After several unsuccessful motions for reconsideration and clarification, the Attorney General asked to certify the two questions at issue here.

¶ 4 We review the issues presented by a certified question de novo. See Italia Foods, Inc. v. Sun Tours, Inc., 2011 IL 110350, ¶ 9. The scope of our review "is strictly limited to the certified question," and "our task is to answer the certified question rather than to rule on the propriety of any underlying order." P.J.'s Concrete Pumping Service Inc. v. Nextel West Corp., 345 Ill. App. 3d 992, 998 (2004). But see id. at 998-99 (noting that "[i]n the interests of judicial economy and reaching an equitable result, however, a reviewing court may go beyond the certified question and consider the appropriateness of the order giving rise to the appeal"). Both certified questions deal with statutory construction, and the rules of statutory construction are well known:

"The fundamental rule of statutory construction is to ascertain and give effect to the legislature's intent. [Citation.] The best indication of legislative intent is the statutory language, given its plain and ordinary meaning. [Citation.] Where the language is clear and unambiguous, we must apply the statute without resort to further aids of statutory construction. [Citation.] However, if the statutory language is ambiguous or unclear, this court may look beyond the act's language to ascertain its meaning. [Citation.] A statute is ambiguous if it is capable of more than one reasonable interpretation. [Citation.] The construction of a statute is a question of law that we review de novo." Nowak v. City of Country Club Hills, 2011 IL 111838, ¶ 11.

¶ 5 The first question is:

"Whether the Attorney General must plead that the defendant misrepresented a material fact with the intent that others rely on the misrepresentation to state a claim under [section 2], or does the [Act] require a showing of intended reliance only for allegations that the defendant concealed, suppressed, or omitted a material fact."

This question seeks to clarify the elements of a claim under section 2 of the Act (815 ILCS 505/2 (West 2010)), when that claim is based on a defendant's alleged misrepresentation of a material fact. Section 2 reads:

"Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, or the use or employment of any practice described in Section 2 of the 'Uniform Deceptive Trade Practices Act' [815 ILCS 510/2], approved August 5, 1965, in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby. In construing this section consideration shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to Section 5(a) of the Federal Trade Commission Act [15 U.S.C. § 45]." (Emphasis added.) 815 ILCS 505/2 (West 2010).

The emphasized language above is the portion of section 2 at issue.

¶ 6 The Attorney General's primary contention is that the grammatical structure of section 2 indicates that a claim based on misrepresentation of a material fact is distinct from, for example, a claim based on omission of a material fact. According to the Attorney General's interpretation, a section 2 claim that is premised on either the concealment, suppression, or omission of any material fact cannot succeed unless there is also evidence that a defendant intended for a consumer to rely on that material fact. In contrast, intent to induce reliance on a material fact would be irrelevant if a section 2 claim is based on deception, fraud, false pretense, false promise, or misrepresentation. Under the Attorney General's reading, section 2 essentially contains two different classes of unlawful deceptive practice: one where intent to induce reliance is an element of the claim, and one where it is not. Although not fully articulated in the Attorney General's brief, her position is based on the maxim expressio unius est exclusio alterius, which "is an aid of statutory interpretation meaning 'the expression of one thing is the exclusion of another.' [Citation.]" Metzger v. DaRosa, 209 Ill. 2d 30, 44 (2004) ("Where a statute lists the things to which it refers, there is an inference that all omissions should be understood as exclusions." (Internal quotation marks omitted.)). The Attorney General contends that because the "intent" provision of section 2 expressly refers to the "intent that others rely upon the concealment, suppression or omission of such material fact," then we should read the statute to mean that intent is not a necessary element when other types of deceptive practices such as misrepresentation are at issue.

ΒΆ 7 This is not, however, how the supreme court has interpreted the plain language of section 2. In dismissing this count of the complaint, the circuit court relied on People ex rel. Hartigan v. E&E Hauling, Inc., 153 Ill. 2d 473, 491 (1992), in which the supreme court stated that "[i]n order to state a claim under the [Act], a complaint must set forth specific facts which show that defendants misrepresented a material fact in the conduct of a trade or commerce, with the intent that others would rely on such misrepresentation." The Attorney General acknowledges that this ...


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