FYI: 7th Cir Rules "Serious Doubt" Standard for Adequacy of Class Counsel Not Met, Despite Alleged Unethical Conduct

The U.S. Court of Appeals for the Seventh Circuit recently ruled that under the so-called "serious doubt" standard, misconduct on the part of plaintiff's counsel in a class-action lawsuit requires denial of class certification only where the alleged misconduct unfairly prejudices the putative class, creates a conflict of interest between the putative class and plaintiff's counsel, or undermines the court's ability to resolve the case, such as where counsel attempts to bribe witnesses or fails to correct false testimony. 

 

Under this standard here, the Court concluded that putative class counsel's alleged breach of a promise of confidentiality, failure to register a solicitation letter as required by Wisconsin's rules of ethics, and attempted payment of money to a third party's attorney, did not require denial of class certification.  A copy of the opinion is attached.

 

Allegedly in investigating a number of putative class action lawsuits under the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(1)(C), (b)(3) ("TCPA), a Chicago-area law firm ("Plaintiffs Law Firm") that specializes in representing plaintiffs in TCPA class action lawsuits contacted a third party, the owner ("Business Owner") of a so-called "fax-blasting" business ("Fax Business"), partly in order to identify the recipients of unsolicited advertisements in the putative class actions for purposes of obtaining class certification.  The Business Owner ultimately provided to Plaintiffs Law Firm information and documentation listing the recipients of the unsolicited advertisements.  Armed with this information, Plaintiffs Law Firm had proof of an identifiable class and was thus able to obtain class certification in those cases.  

 

Nevertheless, Plaintiffs Law Firm continued to seek additional information from Business Owner in order to obtain the names of potential clients for other putative class action lawsuits under the TCPA.  To that end and supposedly promising Business Owner that the information provided would be protected as confidential under a protective order in one of the pending class actions, Plaintiffs Law Firm was able to procure from the Fax Business additional information revealing the names of potential class-action plaintiffs and defendants.  

 

Based on this new information, Plaintiffs Law Firm sent out solicitation letters to the newly-identified recipients of unsolicited faxed advertisements, and was subsequently able to file over one hundred putative class action as a result.  Varying slightly in wording according to different putative plaintiffs, the solicitation letters generally read in part:  "we have determined that you are likely to be a class member in one or more cases we are pursuing. . . ."    The letters were stamped "advertising material" but were not registered with the Wisconsin Office of Lawyer Regulation, as required by state law.  See Wis. Sup. Ct. R.  20:7.3(c).  The recipient of one of the solicitation letters forwarded the letter to the party which eventually became the named plaintiff in this case ("Named Plaintiff").   

 

Finally, Plaintiffs Law Firm allegedly sent to Fax Business's attorney a check for $5,000 bearing a notation reading "document retrieval."  Fax Business's attorney voided and returned the check. 

 

The defendants in the various lawsuits arising from the data provided by Fax Business began challenging the propriety of class certification in those cases on grounds that Plaintiffs Law Firm had engaged in misconduct that disqualified Plaintiffs Law Firm as adequate class counsel.  As did the defendants in those cases, in this specific case, defendant argued that:  (1) Plaintiffs Law Firm breached a promise of confidentiality by using Fax Business's data to identify targets of additional lawsuits; (2) Plaintiffs Law Firm sent misleading solicitation letters; and (3) the $5,000 check to Fax Business's attorney was intended to influence the content of testimony.

 

Although agreeing that the behavior of plaintiff's counsel with respect to the breached promise of confidentiality, the solicitation letter, and the $5,000 payment "was not entirely on the up and up," the lower court certified the class, ultimately concluding that the "behavior does not create 'serious doubt' that class counsel will represent the class loyally."   Defendant petitioned for interlocutory review of the class certification order, which the Seventh circuit granted.  Named Plaintiff moved to dismiss the appeal, arguing that the need for interlocutory review no longer existed. 

 

Noting that the information provided to Plaintiffs Law Firm by Fax Business spawned over 100 lawsuits, many of which are still pending, the Seventh Circuit denied Named Plaintiff's motion to dismiss, citing in part the need for guidance in the application of the "serious doubt" standard to attorney misconduct within the context of class certification and the risk of inconsistent opinions in pending cases.   The Court of Appeals also affirmed the lower court's certification of the class.

 

As you may recall, the TCPA authorizes $500 in statutory damages for faxing unsolicited advertisement.  47 U.S.C. § 277(b)(1)(C), (b)(3).  The TCPA may be enforced by way of class actions, provides for treble damages in instances of willfulness, and each transmission is a separate violation.  Id. 

 

In addition, among other things, a court, in appointing class counsel as part of certifying a class, "may consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class."  Fed. R. Civ. P. 23(g)1)(B).

 

Reviewing prior opinions discussing the identical ethical issues presented in this case and similarly stemming from the information provided by Fax Business, the Seventh Circuit ultimately concluded that the alleged misconduct on the part of Law Firm in this case did not render Law Firm inadequate to represent the class.  In so doing, the Seventh Circuit applied the same "serious doubt" test it applied previously to conclude that Law Firm's conduct did not require denial of class certification.  See Creative Montessori Learning Ctrs. v. Ashford Gear, LLC, 662 F.3d 913, 919 (7th Cir. 2011)(concluding that "[m]isconduct by class counsel that creates a serious doubt that counsel will represent the class loyally requires denial of class certification.").  

 

In recognizing that class counsel serves as a fiduciary for unnamed plaintiffs, and that class actions present strong incentives for counsel "to sell out the class by agreeing with the defendant to recommend that the judge approve settlement involving a meager recovery for the class but generous compensation for the lawyers," the Court noted that in the various putative class action lawsuits involving Plaintiffs Law Firm, the district courts all agreed that Plaintiffs Law Firm's conduct did not require denial of class certification, because Plaintiffs Law Firm's conduct did not prejudice the class or create a direct conflict with the class.  The Court further pointed out that the defendant did not identify any conflict of interest or prejudice to the putative class arising from the alleged misconduct in this case.

 

Nevertheless, rejecting Named Plaintiff's assertion that only misconduct directly harmful to the class is relevant to the class certification decision, the Court stressed that even "serious" or "major" ethical violations, while not prejudicial to the class, may require the "grave option" of denial of class certification. 

 

Pointing out that mere "slight" or "harmless" breaches of ethics will not impugn the adequacy of class counsel, the Seventh Circuit noted that "unless the violation prejudices one of the parties or undermines the court's ability to resolve the case justly, state bar authorities – not a court – should enforce the rules and sanction the attorney."

 

Accordingly, the Court determined that unethical conduct that is not necessarily prejudicial to the class but which jeopardizes the integrity of judicial proceedings, "nevertheless raises a 'serious doubt' about the adequacy of class counsel when the misconduct jeopardizes the court's ability to reach a just and proper outcome in the case," such as where counsel attempts to bribe witnesses or fails to correct false testimony.  See Wagner v. Lehman Brothers Kuhn Loeb Inc., 646 F. Supp. 643, 659, 661-62 (N.D. Ill. 1986); Kaplan v. Pomerantz, 132 F.R.D. 504, 510-11 (N.D. Ill. 1990).

 

Turning to the alleged misconduct regarding the promise of confidentiality and the failure to register the solicitation letters as required by the Wisconsin rules of ethics, the Court concluded that, although the misconduct raised concerns about Plaintiffs Law Firm's professionalism, it did not raise serious doubts about its ability to represent the class faithfully as the misconduct did not prejudice the class, create a conflict of interest, or compromise the integrity of the lawsuit.

 

With respect to the alleged payment of $5,000 to Fax Business's attorney, noting that defendant never raised the issue before the lower court, the Seventh Circuit stated that if the purpose of the money was to influence Business Owner's testimony or the outcome of the case, such conduct would constitute a serious breach of the rules of ethics that would require denial of class certification. Noting the absence of evidence of such improper motive, the court concluded that it was powerless to impose sanctions or discipline.

 

Accordingly, the Court of Appeals denied Named Plaintiff's motion to dismiss and affirmed the lower court's class certification.

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
 

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FYI: Ill App Ct Upholds Judicial Sale, Despite Low Sales Price, Absent Fraud or Other Irregularity

The Illinois Appellate Court, First District, recently held that a forced judicial sale under the so-called "Illinois Levy Statute," which the Court noted enumerates virtually identical standards for the confirmation of judicial sales under the Illinois foreclosure statute, was neither unjust nor unconscionable to justify denying confirmation of the sale.  In so holding, the Court reiterated and applied the rule that a low sale price alone was not sufficient to conclude that the sale was unconscionable.

 

A copy of the opinion is available at:  http://www.state.il.us/court/Opinions/AppellateCourt/2013/1stDistrict/1121147.pdf.

 

Shortly after having summary judgment entered against her in a case involving a single-family home located in Chicago, Illinois, a judgment debtor ("Judgment Debtor") and her husband ("Spouse") executed a quitclaim deed conveying the property to themselves as tenants by the entirety.   Prior to executing the quitclaim deed, Judgment Debtor and Spouse had owned the parcel as tenants in common.

 

About five years later, the lower court entered a judgment against Judgment Debtor, now deceased, and in favor of the opposing party (the "Toms").  However, supposedly as a result of the tenancy by the entirety insulating Spouse from attempts to collect on the judgment, the judgment was never satisfied.

 

The Toms then filed an action to set aside the quitclaim deed, naming Spouse as a defendant.  In that case, the lower court set aside the quitclaim deed, ruling that it was fraudulent and done with the sole intent to avoid Judgment Debtor's judgment debt obligation to the Toms.   Accordingly, the lower court ruled that Judgment Debtor's estate and Spouse only held title to the subject property as tenants in common.

 

As part of the effort to collect on the judgment, a levy sale of Judgment Debtor's one-half interest in the property was conducted at which the Toms were the only bidders.  Their bid of $20,000 was thus the successful bid.  Before the Toms moved to confirm the sale, Spouse moved to set aside the sale, arguing that the sale price, supposedly far too low in relation to the appraisal, rendered the sale unconscionable and unjust. 

 

Finding in part that the low sale price stemmed from the fact that the winning bidder would only obtain an undivided one-half interest in the property, the lower court denied Spouse's motion and accordingly confirmed the sale.   Spouse appealed.  The Appellate Court affirmed.

 

As you may recall, the Illinois levy statute provides that a sale to satisfy a judgment shall be confirmed "[u]nless the court finds that (i) notice as required by law was not given, (ii) the terms of the sale were unconscionable, (iii) the sale was conducted fraudulently, or (iv) justice was otherwise not done. . . . In making these findings, the court shall take into account the purchase price at the sale in relation to the fair market value of the property less the value of any mortgages and liens."  735 ILCS  5/12-144.5(b) ("Levy Statute").

 

In addition, the Illinois Mortgage Foreclosure Law enumerates virtually identical standards for the confirmation of judicial sales following a mortgage foreclosure.  See 735 ILCS 5/15-1101 et seq. ("IMFL").

 

Noting that the Levy Statute's four enumerated standards for not confirming a sale are virtually identical to those set forth in the IMFL, and that there is little case law construing the Levy Statute, the Appellate Court relied on both the plain language of the Levy Statute and on case law interpreting the IMFL's sale confirmation provision to determine what constitutes an "unconscionable" or "unjust" property sale within the context of a sale to collect on a judgment debt.  

 

Analogizing to the IMFL, the Court observed that both the Levy Statute and the IMFL relate to the sale of defendants' property to satisfy a judgment against them, and that the first three enumerated standards constitute "normal defenses in a contract case."  The Court thus focused on the fourth enumerated "justice was not otherwise done" defense that gives a court some small measure of discretion in rejecting judicial sales. 

 

In so doing, the Court recognized that there is no bright-line definition of what may constitute an "unjust" judicial sale and that the unconscionability of the terms of a sale is another, separate basis on which a court may decline to confirm a sale.  See Aurora Loan Services, Inc. v. Craddieth, 442 F.3d 1018, 1023 (7th Cir. 2006)(reasoning that a court's discretion to reject a judicial sale based on the justice test is not "so open-ended as to make the interest conferred by a foreclosure-sale certificate illusory."); Graffam v. Burgess, 117 U.S. 180, 191-92 (1886)(stating that "a sale will not be set aside for inadequacy of price, unless the inadequacy is so great as to shock the conscience.").  The Court ultimately concluded that the "justice was not otherwise done" test did not apply in this case because Spouse had failed to allege serious defects in the actual sale process. 

 

Turning to Spouse's specific argument that the sale was unconscionable and thus invalid because the sale price of the undivided one-half interest was over $100,000 less than its appraised value, the Court stressed that factors such as the likelihood of further litigation between the parties, the potential risk of properties being "snatched back" from successful bidders, and the fact that the auction was merely for the undivided one half-interest in the property all contributed to the low sale price in this case.    

 

The Court further pointed out that "[i]nadequacy of sale price is not a sufficient reason, standing alone, to deny confirmation of a judicial sale" and that absent fraud or other irregularity, the sale price is the conclusive measure of a property's value.  The Court also observed that Spouse never came forward to purchase the one-half interest and thus had forfeited his redemption right.

 

Accordingly, ruling that the judicial sale process under the Levy Statute was just and that the sale price was not unconscionable, the Appellate Court concluded that the lower court properly confirmed the sale.

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
 

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FYI: Cal Sup Ct Removes Bar on Parol Evidence Contradicting Written Agreement, Allows Borrower to Sue for Fraud as to Content of Loan Docs

Overruling long-standing precedent, the California Supreme Court recently held that parol evidence may be admissible to show that a written contract was fraudulently procured.   In so ruling, the Court overturned the so-called Pendergrass rule, partly because Pendergrass contradicted a California statute expressly allowing evidence to establish fraud and the resulting invalidity of a written agreement.

 

A copy of the opinion is available at:  http://www.courts.ca.gov/opinions/documents/S190581.PDF.

 

Plaintiffs borrowers ("Borrowers") fell behind on mortgage payments to defendant lender ("Lender"). Lender and Borrowers later entered into a loan restructuring agreement according to which Lender would take no enforcement action for three months as long as Borrowers kept up with the new payment plan.  According to the contract, Borrowers pledged additional collateral consisting of eight parcels of land.  In executing the new loan agreement, Borrowers initialed the pages containing the legal descriptions of the parcels and signed the agreement without first reading the contract.

 

Borrowers failed to make the required payments under the loan restructuring agreement, and Lender commenced a foreclosure action against them.  Borrowers eventually repaid the loan, and the foreclosure proceedings were accordingly dismissed.

 

Nevertheless, Borrowers filed a lawsuit asserting causes of action for contract rescission and reformation of the loan restructuring agreement, seeking damages for fraud and negligent misrepresentation.   Borrowers' complaint alleged that Lender had verbally promised that the loan would be extended for two years in exchange for additional collateral consisting of only two pieces of real estate rather than the eight parcels indicated in the written agreement.

 

Lender moved for summary judgment, arguing that Borrowers could not prove their claims because the parol evidence ruled barred evidence of any representations contradicting the written agreement.  In response, Borrowers asserted that Lender's supposed misrepresentations were admissible under the fraud exception to the parol evidence rule.

 

Relying on Bank of America Etc. Assn. v. Pendergrass, 4 Cal.2d 258, 263 (1935) ("Pendergrass"), a 75-year old opinion, the lower court granted summary judgment, ruling that the fraud exception did not permit parol evidence of promises contradicting a written agreement. 

 

The Court of Appeal reversed, reasoning that Pendergrass applied only to cases of promissory fraud rather than instances of factual misrepresentations consisting of false statements about the contents of the agreement itself.  Lender petitioned the California Supreme Court for review, which affirmed.

 

As you may recall, the codified parol evidence rule in California provides that "[t]erms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement" and, further, that "[w]here the validity of the agreement is the fact in dispute, this section does not exclude evidence relevant to that issue." Cal. Code Civ. Proc.  § 1856, subdivisions (a), (f).  See also Cal. Code Civ. Proc. § 1625 ("[t]he execution of a contract in writing, whether the law requires it to be written or not, supersedes all the negotiations or stipulations concerning its matter which  preceded or accompanied the execution of the instrument.").

 

In addition, California law expressly allows for the admission of evidence to establish fraud in the procurement of a written contract.  See Cal. Civ. Civ. Proc. § 1856, subdiv. (g).

 

In reviewing the history and purpose of the parol evidence rule, the California Supreme Court noted that Section 1856 broadly permits evidence relevant to the validity of an agreement itself, rather than the terms of the written contract, and, further, that Section 1856 specifically allows evidence of fraud in challenging the enforceability of a written agreement.  The Court also opined that Pendergrass was inconsistent with the principle, incorporated in numerous Restatements and espoused by a majority of other jurisdictions, that evidence of fraud is not affected by the parol evidence rule.    

 

Pointing out, among other things, that the Pendergrass limitation on evidence of fraud is in this Court's view bad public policy, as it may actually further fraudulent practices by turning the parol evidence rule into a means to protect such conduct, the Court stressed that the 1977 proposed modifications to the statutory formulation of the parol evidence rule completely omitted references to Pendergrass and its non-statutory limitation on the fraud exception.  The Court observed that, significantly, those modifications made no substantive changes to the statutory language allowing evidence that goes to the validity of an agreement, particularly evidence of fraud.  See Coast Bank v. Holmes, 19 Cal. App.3d, 581, 591 (1971).

 

The Court further noted that the Pendergrass restriction on the fraud exception was not only inconsistent with the parol evidence statute, but also with California case law at the time and legal scholarship, as the opinion failed to take into consideration "the fundamental principle that fraud undermines the essential validity of the parties' agreement.  When fraud is proven, it cannot be maintained that the parties freely entered into an agreement reflecting a meeting of the minds."

 

Noting that "[t]he distinction between promises deemed consistent with the writing and those considered inconsistent has been described as 'tenuous,'" and stressing that Section 1856 represents what this Court saw as better public policy, the Court overruled Pendergrass and its progeny, and further pointed out that Borrowers would still have to show justifiable reliance on Lender's misrepresentations in order to prove promissory fraud in their case. 

 

Accordingly, the Court affirmed the judgment of the Court of Appeal, but on different grounds.

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
 

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FYI: Cal App Ct Holds No Actual Damages Required Under Rees-Levering Act, "Substantial Compliance" Not Enough

The California Court of Appeal, Second District, recently ruled that a car purchaser need not suffer actual damages as a result of a car dealer's alleged mischaracterization of the down payment toward a car purchase, in order to state a cause of action under California's Rees-Levering Act.  The Court also noted that the disclosure statute had been amended to specifically reject the "substantial compliance" rule in favor of the current detailed scheme requiring itemization of certain costs associated with automobile purchases. 

 

A copy of the opinion is available at:  http://www.courts.ca.gov/opinions/documents/B235956.PDF.

 

Plaintiff consumer ("Consumer") purchased a car from defendant car dealership ("Dealer"), financing the purchase and making a deferred down payment consisting of four payments totaling $2,000 rather than a cash payment at the time of sale.  Consumer made the deferred down payment over three months, with the first three payments all being made prior to the second scheduled payment on the car loan.

 

In the retail installment sales contract, however, Dealer supposedly erroneously entered information about Consumer's deferred down payment on a line reserved for a so-called "Remaining Cash Down Payment" to indicate Consumer had actually made a $2,000 cash payment at the time of sale.  

 

Consumer later filed a lawsuit against Dealer, the financing company, as well as the company that issued a surety bond to Dealer (collectively, "Defendants"), alleging in part that Dealer had mischaracterized the down payment in violation of California's Rees-Levering Motor Vehicle Sales and Finance Act ("Rees-Levering").  Consumer further alleged that Dealer's supposed mischaracterization of the down payment violated California's Consumers Legal Remedies Act and constituted an unfair business practice under California's Business and Professions Code.

 

The Defendants demurred to the complaint, arguing that Consumer had failed to allege that Dealer had misstated essential terms of the sale, such as the purchase price or the terms of the car loan and that they had substantially complied with the statute.  Dealer also asserted that its entering the $2,000 figure on the wrong line of the sales contract was a mere technical violation that did not support a cause of action.

 

The lower court sustained the demurrers without leave to amend, concluding that Dealer's mischaracterization of the down payment was not actionable because Consumer had suffered no actual loss from the mischaracterization and Defendants had substantially complied with statutory disclosure requirements.   Consumer appealed.

 

The Court of Appeal reversed and remanded as to Dealer and the financing company, ruling that Consumer stated a cause of action under the Rees-Levering Act because Consumer need not have suffered actual damages from Dealer's mischaracterization of the down payment  and the substantial compliance rule has been statutorily removed.  The Court affirmed as to the remaining surety defendant.

As you may recall, Rees-Levering provides that, except in cases of bona fide error, a car dealer's misstatement or concealment of the terms of a car sale renders the contract unenforceable and allows the buyer to recover the total amount paid to the seller.  Rees-Levering also requires car dealers to disclose in a retail sales installment contract all the terms and conditions of sale, including an itemization of the purchaser's down payment reflecting "[t]he amount of any portion of the down payment to be deferred until not later than the due date of the second regularly scheduled installment under the contract  . . . ." and "[t]he remaining amount paid or to be paid by the buyer as a down payment."  See Cal. Civ. Code §§ 2981.9, 2982, 2983.

 

Further, Rees-Levering defines a down payment as "a payment that the buyer pays or agrees to pay to the seller . . . at or prior to delivery by the seller to the buyer of the motor vehicle . . . The term shall also include the amount of any portion of the down payment the payment of which is deferred until not later than the due date of the second otherwise scheduled payment."  Cal. Civ. Code § 2981 subdivision (f).

In addition, California's Consumers Legal Remedies Act provides a right of action to any "consumer who suffers any damage as a result of the use or employment by any person of a method, act or practice declared to be unlawful" such as "[r]epresenting that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law."  Cal. Civ. Code §§ 1770, subd. (a), 1780 subd. (a).

 

In addressing whether Consumer stated a cause of action under Rees-Levering, the Appellate Court concluded that Dealer violated Rees-Levering both in mislabeling the nature of the down payment as a cash-down payment tendered at the time of sale, and in misstating the actual amount of the down payment.  In so doing, the Court stressed that Rees-Levering specifically created separate categories for cash put down at the time of sale and for a deferred payment amount.  The Court also noted that Consumer had made three of his four payments prior the second scheduled loan payment date, which payments thus fell within Rees-Levering's definition of  a down payment and amounted to less than that indicated in the sales contract.   See Cal. Civ. Code § 2982 subd. (a)(6)(A). 

 

Faulting the lower court for focusing on whether Dealer had substantially complied with consumer disclosure requirements and whether Consumer had suffered actual injury, the Court of Appeal pointed out that Rees-Levering specifically rejected the substantial compliance defense.  See Cal. Civ. Code § 2983(b)(sales contract remains enforceable if erroneous nondisclosure pertains to certain governmental fees, but may be rescinded for noncompliance with other disclosure requirements such as accurate disclosure of down payment). 

 

Relying in part on Rees-Levering's legislative history, the Appellate Court thus reasoned that a buyer need not suffer economic damage to rescind a sales contract that fails to comply with Rees-Levering's specific and detailed disclosure requirements.  Cf.  Stasher v. Harger-Haldeman, 58 Cal.2d 23 (1962)(applying a substantial compliance standard under prior statutory disclosure scheme). 

 

With respect to Consumer's allegation that Dealer had violated California's Consumers Legal Remedies Act, the Court, noting that a "tangible increased cost or benefit to the consumer" satisfies the damages requirement,  observed that Consumer had asserted that Dealer's supposedly false statements about Consumer's down payment exposed him to potential liability for deceiving the lender and that Dealer's misstatement may have made Consumer eligible for a loan for which he would not otherwise have qualified without the misstatement. 

 

Nevertheless, ruling that Consumer's vague allegations of injury as presented in his complaint did not support a cause of action under the Consumers Legal Remedies Act, the Court remanded to allow Consumer to amend.

 

Finally, as to the allegation that Dealer had committed unfair business practices by mischaracterizing the down payment and burdening Consumer with a loan for which he was otherwise not qualified, the Court similarly ruled that, although the complaint had not stated a cause of action for unfair business practices, remand with leave to amend was appropriate in this case.

 

Accordingly, the Court concluded that:  (1)  the lower court erred in sustaining the demurrers of Dealer and the financing company without leave to amend with respect to the cause of action for violation of Rees-Levering; (2)  Consumer could amend his complaint to state causes of action under the Consumer Legal Remedies Act and for unfair business practices against Dealer and the financing company; and (3) the lower court properly sustained the demurrer of the remaining defendant that issued the surety bond to Dealer. 

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
 

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