{ "id": 411614, "name": "VANESSA JACKSON, Plaintiff-Appellant, v. SOUTH HOLLAND DODGE, INC., et al., Defendants-Appellees", "name_abbreviation": "Jackson v. South Holland Dodge, Inc.", "decision_date": "2000-03-15", "docket_number": "No. 1 \u2014 99 \u2014 1958", "first_page": "158", "last_page": "170", "citations": [ { "type": "official", "cite": "312 Ill. App. 3d 158" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "580 N.E.2d 191", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1991, "opinion_index": 0 }, { "cite": "219 Ill. App. 3d 530", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5802130 ], "year": 1991, "opinion_index": 0, "case_paths": [ "/ill-app-3d/219/0530-01" ] }, { "cite": "695 N.E.2d 853", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "182 Ill. 2d 359", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 864532 ], "year": 1998, "opinion_index": 0, "case_paths": [ "/ill-2d/182/0359-01" ] }, { "cite": "546 N.E.2d 580", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "131 Ill. 2d 428", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5569862 ], "year": 1989, "pin_cites": [ { "page": "457" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/131/0428-01" ] }, { "cite": "675 N.E.2d 584", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1996, "opinion_index": 0 }, { "cite": "174 Ill. 2d 482", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 223623 ], "weight": 2, "year": 1996, "pin_cites": [ { "page": "497" }, { "page": "501" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/174/0482-01" ] }, { "cite": "179 F.3d 286", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 844513 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/f3d/179/0286-01" ] }, { "cite": "683 N.E.2d 1194", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "288 Ill. App. 3d 984", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1596919 ], "weight": 2, "year": 1997, "pin_cites": [ { "page": "996-97", "parenthetical": "allegations that manufacturer, through a presale agreement with dealership, actively and directly participated in plan to defraud buyers were sufficient to state a cause of action for civil conspiracy" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/288/0984-01" ] }, { "cite": "97 C 1711", "category": "reporters:state", "reporter": "Cow.", "year": 1999, "opinion_index": 0 }, { "cite": "309 Ill. App. 3d 550", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 349579 ], "weight": 2, "year": 1999, "pin_cites": [ { "page": "559" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/309/0550-01" ] }, { "cite": "12 U.S.C. \u00a7 2601", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1994, "pin_cites": [ { "page": "et seq." } ], "opinion_index": 0 }, { "cite": "713 N.E.2d 543", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1999, "pin_cites": [ { "parenthetical": "reaffirming Lanier and finding compliance with federal requirements set forth in the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. \u00a7 2601 et seq. (1994)) precluded liability under the Fraud Act." } ], "opinion_index": 0 }, { "cite": "186 Ill. 2d 472", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 243943 ], "year": 1999, "pin_cites": [ { "parenthetical": "reaffirming Lanier and finding compliance with federal requirements set forth in the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. \u00a7 2601 et seq. (1994)) precluded liability under the Fraud Act." } ], "opinion_index": 0, "case_paths": [ "/ill-2d/186/0472-01" ] }, { "cite": "15 U.S.C. \u00a7 1604", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1981, "opinion_index": 0 }, { "cite": "714 N.E.2d 1033", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1999, "pin_cites": [ { "parenthetical": "disclosures sufficient under TILA were also sufficient under the Fraud Act" } ], "opinion_index": 0 }, { "cite": "306 Ill. App. 3d 381", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1336056 ], "year": 1999, "pin_cites": [ { "parenthetical": "disclosures sufficient under TILA were also sufficient under the Fraud Act" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/306/0381-01" ] }, { "cite": "673 N.E.2d 1068", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1996, "pin_cites": [ { "parenthetical": "principal's compliance with TILA meant compliance with the Illinois Credit Card Issuance Act (815 ILCS 140/0.01 et seq. (West 1996)) and precluded liability for common law fraud and breach of contract" } ], "opinion_index": 0 }, { "cite": "285 Ill. App. 3d 661", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1295575 ], "year": 1996, "pin_cites": [ { "parenthetical": "principal's compliance with TILA meant compliance with the Illinois Credit Card Issuance Act (815 ILCS 140/0.01 et seq. (West 1996)) and precluded liability for common law fraud and breach of contract" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/285/0661-01" ] }, { "cite": "97 C 908", "category": "reporters:state", "reporter": "Cow.", "year": 1999, "pin_cites": [ { "parenthetical": "only remaining claims were state law claims, over which the court refused to exercise supplemental jurisdiction" } ], "opinion_index": 0 }, { "cite": "96 C 2357", "category": "reporters:state", "reporter": "Cow.", "weight": 2, "year": 1999, "pin_cites": [ { "parenthetical": "once parties agreed no TILA violation could be asserted, court refused to exercise supplemental jurisdiction over state law claims" } ], "opinion_index": 0 }, { "cite": "95 C 6266", "category": "reporters:state", "reporter": "Cow.", "weight": 2, "year": 1999, "pin_cites": [ { "parenthetical": "regardless of the Holder Notice, assignees not liable under TILA cannot be held liable under the Fraud Act" }, { "parenthetical": "and the nine federal district court opinions it cites" } ], "opinion_index": 0 }, { "cite": "97 C 6006", "category": "reporters:state", "reporter": "Cow.", "weight": 3, "year": 1999, "pin_cites": [ { "parenthetical": "unless an assignee voluntarily accepts assignment of a contract with patently defective disclosures, it is in compliance with TILA and, hence, not liable under the Fraud Act" } ], "opinion_index": 0 }, { "cite": "97 C 4824", "category": "reporters:state", "reporter": "Cow.", "year": 1998, "pin_cites": [ { "parenthetical": "after finding no assignee liability under TILA, refused to exercise supplemental jurisdiction over state claims" } ], "opinion_index": 0 }, { "cite": "98 C 4104", "category": "reporters:state", "reporter": "Cow.", "year": 1998, "pin_cites": [ { "parenthetical": "assignee not liable under TILA is exempt from Fraud Act and Sales Act actions" } ], "opinion_index": 0 }, { "cite": "150 F.3d 689", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 1540567 ], "weight": 3, "year": 1998, "pin_cites": [ { "page": "693" } ], "opinion_index": 0, "case_paths": [ "/f3d/150/0689-01" ] }, { "cite": "155 F.3d 927", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 11705312 ], "weight": 3, "year": 1998, "pin_cites": [ { "page": "935" } ], "opinion_index": 0, "case_paths": [ "/f3d/155/0927-01" ] }, { "cite": "15 U.S.C. \u00a7 1638", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1994, "pin_cites": [ { "page": "(a)(2)(B)(iii)" } ], "opinion_index": 0 }, { "cite": "112 F.3d 283", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 854867 ], "year": 1997, "pin_cites": [ { "page": "284" } ], "opinion_index": 0, "case_paths": [ "/f3d/112/0283-01" ] }, { "cite": "688 N.E.2d 1172", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "179 Ill. 2d 338", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 801348 ], "year": 1997, "pin_cites": [ { "page": "344" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/179/0338-01" ] }, { "cite": "672 N.E.2d 1207", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1996, "opinion_index": 0 }, { "cite": "174 Ill. 2d 77", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 223609 ], "year": 1996, "pin_cites": [ { "page": "86-87" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/174/0077-01" ] }, { "cite": "575 N.E.2d 548", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1991, "opinion_index": 0 }, { "cite": "143 Ill. 2d 458", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5591400 ], "year": 1991, "opinion_index": 0, "case_paths": [ "/ill-2d/143/0458-01" ] }, { "cite": "710 N.E.2d 798", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1999, "opinion_index": 0 }, { "cite": "186 Ill. 2d 198", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 243955 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/ill-2d/186/0198-01" ] }, { "cite": "15 U.S.C. \u00a7 1641", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 5, "year": 1994, "pin_cites": [ { "page": "(a)" }, { "page": "(a)" }, { "page": "(a)" }, { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "15 U.S.C. \u00a7 1601", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 2, "year": 1994, "pin_cites": [ { "page": "et seq." }, { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "499 N.E.2d 440", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1986, "opinion_index": 0 }, { "cite": "114 Ill. 2d 1", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5542333 ], "weight": 4, "year": 1986, "pin_cites": [ { "page": "17" }, { "page": "17" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/114/0001-01" ] } ], "analysis": { "cardinality": 1187, "char_count": 30173, "ocr_confidence": 0.77, "pagerank": { "raw": 8.421888666105156e-08, "percentile": 0.48366526388218 }, "sha256": "5f2b416cbba4daf6e67bb7c8a2e843b75b72adaf11bc6e79135a23277122a59a", "simhash": "1:7bdf56cc2cde3e70", "word_count": 4882 }, "last_updated": "2023-07-14T15:51:04.567640+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "VANESSA JACKSON, Plaintiff-Appellant, v. SOUTH HOLLAND DODGE, INC., et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE WOLFSON\ndelivered the opinion of the court:\nConsumers, when buying a car on credit, often are encouraged by dealerships to agree to an extended service protection contract or \u201cextended warranty.\u201d Persuaded by the added protection these plans promise, consumers purchase the contracts and the cost is typically added to the amount being financed.\nSome dealerships list the cost of the extended warranty/service contract on the financing statement of the installment contract as a fee paid to the warranty provider, usually the auto manufacturer. But that entire amount does not always go to the warranty provider. A large part of the extended service fee often is retained by the dealer. The consumer is not told that. The consumer accepts the dealership\u2019s inflated charge without question or negotiation.\nThe question before this court is whether an assignee of the motor vehicle retail sales installment contract can be held liable for the dealership\u2019s misrepresentations in the financing statements if the defect (overcharge for the service contract) is not apparent on the face of the document.\nIn this case, the trial court granted the assignee\u2019s motion to dismiss the consumer\u2019s complaint. We affirm the trial court.\nFACTS\nWe look to the plaintiffs amended complaint and exhibits attached to it for the facts of this case.\nOn May 17, 1995, Vanessa Jackson (Jackson) purchased a Dodge Stratus from the South Holland Dodge (SHD) dealership. She also agreed to purchase a service contract/extended warranty. Jackson entered into a motor vehicle retail sales installment contract with SHD. One of the forms completed by SHD was entitled \u201cItemization of Amount Financed\u201d and listed in section (4): \u201cOther Charges Including Amounts Paid to Others on Your Behalf.\u201d One of the blank spaces beneath this heading was filled in:\nThe $1,099 listed in the financing statement does not represent the actual amount SHD paid to Chrysler for the service contract. In fact, SHD paid only a portion of the $1,099 to Chrysler and retained the remainder for itself. SHD subsequently assigned the retail installment contract to Chrysler Finance Corporation (CFC).\nOn February 27, 1998, Jackson brought a class action against SHD and CFC for damages suffered by her and others similarly situated as a result of these alleged misrepresentations made by SHD on the financing statement. Jackson further alleged the manner in which these charges are listed on the form, i.e., in a section where nonnegotiable items such as filing fees and licensing fees are listed, leads consumers to believe the cost of the service contract/extended warranty is a nonnegotiable fee, which it is not. This, said Jackson, is a deceptive practice. Jackson claimed these deceptive practices and misrepresentations constituted violations of the Consumer Fraud and Deceptive Business Practices Act (Fraud Act) (815 ILCS 505/1 et seq. (West 1996)) and the Sales Finance Agency Act (Sales Act) (205 ILCS 660/1 et seq. (West 1996)), for which both SHD and CFC were liable.\nJackson contended CFC could be held liable because the retail installment contract contained a statement of the Federal Trade Commission\u2019s (FTC) holder rule (Holder Notice), which provides:\n\u201cAny holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant thereto or with the proceeds hereof.\u201d\nAlternatively, Jackson alleged CFC had actual knowledge the amounts listed in the retail installment contracts were a misrepresentation because of its \u201cextensive experience\u201d in the industry and because its predecessor (Chrysler Credit) had cooperated in a New York State Attorney General study on the practice of dealer overcharging.\nIn an amended complaint filed September 28, 1998, Jackson added no new counts but added to the allegations against CFC. Jackson contended:\n\u201cOn information and belief, for years prior to May 17, 1998, [szc] and continuously since that date, Chrysler [Financial Corp.] participated in a scheme and therefore acted in concert, uniformly, consistently, and regularly to exact monies from customers in amounts in excess of what the actual cost for extended warranties or service contracts were by misrepresenting that an amount was paid to the extended warranty or service contract provider that was in excess of the amount actually paid to the said provider.\u201d\nJackson did not allege CFC actively and directly participated in making the misrepresentations to the consumer. Rather, Jackson alleged CFC reviewed the retail installment contracts, forms provided to the dealers, before accepting the assignment and was \u201caware that contracts *** often contained] misleading disclosures regarding the amounts paid to third parties for a service contract.\u201d Jackson further alleged CFC \u201chad, from its expansive experience in financing used car transactions, actual knowledge *** and knew full well that the amount represented on the retail installment contract *** as having been disbursed to the issuer of [the] extended warranty or service contract *** was not in fact disbursed to those issuers.\u201d\nFinally, Jackson alleged CFC, \u201cas a major purchase [sic] of automobile retail installment contracts, was clearly aware of dealer retention of significant portions of the amount charged for an extended warranty\u201d because these practices were well known in the industry and because, in 1990, \u201cthe Attorney General of New York issued a report indicating the widespread overcharging by automobile dealers for extended warranties and service contracts.\u201d Jackson contended CFC \u201cacquiesced in and approved of the representations\u201d used by SHD and other car dealerships because it benefitted from them \u2014 the inflated price of the service contract meant an increased amount was financed by the consumer.\nCFC filed a section 2 \u2014 615 of the Code of Civil Procedure motion to dismiss (735 ILCS 5/2 \u2014 615 (West 1996)). Citing Lanier v. Associates Finance, Inc., 114 Ill. 2d 1, 499 N.E.2d 440 (1986), CFC said it could not be held liable for a violation of the Fraud Act based on SHD\u2019s misrepresentations because, as an assignee, it could not be held liable under the federal Truth In Lending Act (TILA) (15 U.S.C. \u00a7 1601 et seq. (1994)). Under TILA, an assignee can be held liable only if the misrepresentation is \u201capparent on the face\u201d of the document. See 15 U.S.C. \u00a7 1641(a) (1994). The Holder Notice didn\u2019t change this, said CFC.\nFurthermore, CFC said, because it never made any representations directly to Jackson, Jackson would not be able to prove CFC violated the Motor Vehicle Retail Installment Sales Act (815 ILCS 375/1 et seq. (West 1996)) and, therefore, there was no liability under the Fraud Act or the Sales Act.\nThe trial court granted CFC\u2019s motion, dismissing Jackson\u2019s complaint against CFC with prejudice on April 29, 1999. Language was added pursuant to Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)), making the order final and appealable.\nNow on appeal, Jackson contends the trial court should not have dismissed the Fraud Act claim or the Sales Act claim against CFC.\nDECISION\nStandard of Review\nA section 2 \u2014 615 motion to dismiss attacks the legal sufficiency of a complaint. Lewis E. v. Spagnolo, 186 Ill. 2d 198, 710 N.E.2d 798 (1999). In ruling on the motion, a court must accept as true all wellpled facts in the complaint and all reasonable inferences that may be drawn from the facts. The question to resolve is whether the allegations of the complaint, when viewed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Urbaitis v. Commonwealth Edison, 143 Ill. 2d 458, 575 N.E.2d 548 (1991). A cause of action will not be dismissed on the pleadings unless it clearly appears no set of facts can be proved that will entitle the plaintiff to recover. Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 86-87, 672 N.E.2d 1207 (1996). Review is de novo. Vernon v. Schuster, 179 Ill. 2d 338, 344, 688 N.E.2d 1172 (1997).\nThe Truth In Lending Act\nJackson never has claimed CFG violated TILA. A violation of TILA is not one of the charges against CFG. In fact, Jackson concedes CFG cannot be held liable under TILA for the dealer\u2019s misrepresentations because the misrepresentations do not appear on the face of the assigned documents. Instead, Jackson contends CFG can be held liable for violations of the Fraud Act despite its exemption from liability under TILA.\nThis court must decide, then, whether CFC\u2019s exemption from liability under TILA insulates it from state law claims. Before addressing this issue, some background is helpful.\nIn May 1990, the office of the New York State Attorney General, Bureau of Consumer Frauds & Protection, issued a report entitled: Dealer Pricing Practices in the Sale of Automobile Extended Service Contracts: Consumers Are Paying Too Much. The New York Attorney General asked several car manufacturers to provide pricing data on dealer sales of service contracts for a six-month period in 1989. Based on the compiled statistics, the report concluded in 54% of the cases new car buyers paid in excess of the manufacturers\u2019 suggested retail price (MSRP) for the service contracts. In fact, on an average the markup was 76% over the MSRP. Since two independent sources determined nearly half of new car buyers purchased extended warranty contracts, the problem was serious \u2014 nationwide an estimated 2 million consumers had been overcharged in excess of $300 million.\nCases soon began to appear in the courts. In Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 284 (7th Cir. 1997), the court reviewed the consolidated appeals in three class action suits of \u201csome fifteen almost identical class actions filed by the same law firm against such dealers.\u201d In these federal actions car dealerships were charged with violating TILA. Misrepresenting the actual cost of the service contracts, plaintiffs said, violated the purpose of TILA, which is \u201cto assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair billing practices.\u201d 15 U.S.C. \u00a7 1601(a) (1994).\nAdditionally, plaintiffs alleged the markups on the cost of extended warranties, which were incorrectly listed in the financing statements as payments \u201cmade on your behalf,\u201d violated section 1638(a)(2)(B)(iii) of TILA, which requires a lender to provide a written itemization of the amount financed, including amounts paid to third parties. 15 U.S.C. \u00a7 1638(a)(2)(B)(iii) (1994).\nThe Gibson court, resolving conflicting determinations by the district courts, held a cause of action for violation of TILA was stated when plaintiffs alleged dealerships misrepresented the actual cost of extended warranties on the financing forms.\nAfter Gibson, attempts were made to expand liability beyond the dealerships to include assignees of motor vehicle retail sales credit contracts. See Walker v. Wallace Auto Sales, Inc., 155 F.3d 927 (7th Cir. 1998); Taylor v. Quality Hyundai, Inc., 150 F.3d 689 (7th Cir. 1998). Assignee liability was premised on (1) the FTC\u2019s Holder Notice, and (2) the assignee\u2019s \u201cknowledge\u201d of the dealers\u2019 fraudulent practices. Because assignees were aware of the dealers\u2019 fraud, the plaintiffs claimed, the defect became \u201capparent on the face of the document\u201d and the assignees were then directly liable under TILA.\nBoth the Taylor and Walker courts declined to extend liability to subsequent assignees under the facts alleged. Section 131 of TILA (15 U.S.C. \u00a7 1641 (1994)) limits the liability of subsequent assignees to instances where the TILA violation is \u201capparent on the face of the disclosure statement.\u201d To be \u201capparent\u201d there must be: \u201c(1) a disclosure which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (2) a disclosure which does not use the terms required to be used by this subchapter.\u201d 15 U.S.C. \u00a7 1641(a) (1994).\nThe fact that assignees might be aware of certain creditor practices, said Taylor, did not equate to actual knowledge that a particular item on a TILA form was inaccurate or incomplete. The court refused to impose a duty of additional inquiry on the assignees.\nFurthermore, the FTC Holder Notice could not override the specific limitations on assignee liability set forth in section 1641. In Taylor the court said:\n\u201cThe Holder Notice, even though contained within the contract, was not the subject of bargaining between the parties, and indeed could not have been. It is part of the contract by force of law, and it must be read in light of other laws that modify its reach.\u201d Taylor, 150 F.3d at 693.\nWalker agreed:\n\u201c[T]he inclusion of the FTC\u2019S Holder Notice in a retail installment contract did not trump the clear command of \u00a7 131 that subsequent assignees can be held liable under TILA only when the violation is apparent on the face of the disclosure statement.\u201d Walker, 155 F.3d at 935.\nApplication of Lanier\nIn a number of federal cases, plaintiffs supplemented their TILA claims with allegations of state common and statutory law violations. When confronted with state law claims against the assignees in factual circumstances nearly identical to the ones in our case, judges in the United States District Court for the Northern District of Illinois took one of two approaches: (1) they declined to exercise supplemental jurisdiction once the federal claims were disposed of, or (2) they dismissed the state claims in reliance on Lanier v. Associates Finance, Inc., 114 Ill. 2d 1, 499 N.E.2d 440 (1986). See Agpawa v. Peter Levin Pontiac, Inc., No. 98 C 4104 (N.D. Ill. November 3, 1998) (assignee not liable under TILA is exempt from Fraud Act and Sales Act actions); Young v. Ford Motor Co., No. 97 C 4824 (N.D. Ill. September 23, 1998) (after finding no assignee liability under TILA, refused to exercise supplemental jurisdiction over state claims); Brownlee v. Joe Cotton Ford, Inc., No. 97 C 6006 (N.D. Ill. February 5, 1999) (unless an assignee voluntarily accepts assignment of a contract with patently defective disclosures, it is in compliance with TILA and, hence, not liable under the Fraud Act); Franks v. Rockenbach Chevrolet Sales, Inc., No. 95 C 6266 (N.D. Ill. December 30, 1999) (regardless of the Holder Notice, assignees not liable under TILA cannot be held liable under the Fraud Act); Fillinger v. Willowbrook Ford, Inc., No. 96 C 2357 (N.D. Ill. March 26, 1999) (once parties agreed no TILA violation could be asserted, court refused to exercise supplemental jurisdiction over state law claims); Cemail v. Viking Dodge, Inc., No. 97 C 908 (N.D. Ill. September 14, 1999) (only remaining claims were state law claims, over which the court refused to exercise supplemental jurisdiction).\nWhen resolving the state law claims, the \u201coverwhelming consensus\u201d was that compliance with TILA is an absolute bar to liability under the Fraud Act. See Franks v. Rockenbach Chevrolet Sales, Inc., No. 95 C 6266 (N.D. Ill. December 30, 1999) (and the nine federal district court opinions it cites). In fact, we have been unable to find any federal court decision holding to the contrary, though some courts have declined to exercise jurisdiction over state claims after dismissing TILA claims.\nThose courts that refused to exercise supplemental jurisdiction did so because they believed an assignee\u2019s liability for state law claims \u201cturns on how expansively or how narrowly one reads Lanier,\u201d an issue \u201cnot free from doubt\u201d and best left to the state courts, which have \u201cgreater expertise in applying state law.\u201d See Cemail, slip op. at 1.\nLanier stands for the proposition that compliance with TILA disclosure requirements precludes liability on state law claims. It has been cited by courts for that point on a number of occasions. See, for example, Price v. FCC National Bank, 285 Ill. App. 3d 661, 673 N.E.2d 1068 (1996) (principal\u2019s compliance with TILA meant compliance with the Illinois Credit Card Issuance Act (815 ILCS 140/0.01 et seq. (West 1996)) and precluded liability for common law fraud and breach of contract); Beckett v. H&R Block, Inc., 306 Ill. App. 3d 381, 714 N.E.2d 1033 (1999) (disclosures sufficient under TILA were also sufficient under the Fraud Act).\nLanier was a class action suit brought against a financing agency whose loan documents provided that interest would be computed \u201cusing the Rule of 78\u2019s method\u201d if the borrower prepaid the outstanding balance. The use of the term \u201cRule of 78\u2019s,\u201d without explanation, was alleged to be deceptive to the typical consumer and fraudulent misrepresentation of the finance charge during the early months of the credit transaction. Common law fraud and violations of the Fraud Act were charged.\nSection 10(b)(1) of the Fraud Act (815 ILCS 505/10b(l) (West 1996)) provides :\n\u201cNothing in this Act shall apply to any of the following:\n(1) Actions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States.\u201d\nSince the Federal Reserve Board, granted authority by Congress to prescribe regulations to carry out the purposes of the Truth in Lending Act (15 U.S.C. \u00a7 1604 (1981)), already had concluded that simple reference by name to the Rule of 78\u2019s satisfied TILA\u2019s requirements, Lanier held compliance with disclosure requirements of TILA was a defense to liability under the Fraud Act.\nThe court said:\n\u201cBecause the Illinois consumer credit statutes requiring specific disclosures are met by compliance with the Truth in Lending Act, we believe that the Consumer Fraud Act\u2019s general prohibition of fraud and misrepresentation in consumer transactions did not require more extensive disclosure in the plaintiffs loan agreement than the disclosure required by the comprehensive provisions of the Truth in Lending Act.\u201d Lanier, 114 Ill. 2d at 17.\nSee also Weatherman v. Gary-Wheaton Bank of Fox Valley, N.A., 186 Ill. 2d 472, 713 N.E.2d 543 (1999) (reaffirming Lanier and finding compliance with federal requirements set forth in the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. \u00a7 2601 et seq. (1994)) precluded liability under the Fraud Act.)\nWhen applying Lanier to assignees, federal courts recognized the distinction between \u201ccomplying with a statute\u201d and \u201cnot being liable for someone else\u2019s failure to comply,\u201d but found the distinction unavailing. A subsequent assignee, they said, \u201ccomplies\u201d with TILA when it does not commit an act forbidden by the Act. Brownlee v. Joe Cotton Ford, No. 97 C 6006 (N.D. Ill. February 5, 1999).\nThe only way a subsequent assignee can violate TILA is by voluntarily accepting from a creditor assignments that contain disclosures which \u201ccan be determined to be incomplete or inaccurate from the face of the disclosure statement\u201d or \u201cwhich do[ ] not use the terms required to be used by [TILA].\u201d 15 U.S.C. \u00a7 1641(a) (1994).\nBy accepting an assignment without patent defects, a subsequent assignee is \u201cin compliance\u201d with TILA, or, put another way, the \u201ctransaction\u201d (assignee acceptance of an assignment without facial defects) is \u201cauthorized\u201d by TILA. Under these conditions, there can be no Fraud Act liability. Brownlee v. Joe Cotton Ford, No. 97 C 6006 (N.D. Ill. February 5, 1999).\nDespite the \u201coverwhelming consensus\u201d of federal courts on the application of Lanier to subsequent assignees exempted from TILA liability, an Illinois Second District Appellate Court recently decided an assignee\u2019s exemption from TILA liability was not a defense to Fraud Act liability. See Pawlikowski v. Toyota Motor Credit Corp., 309 Ill. App. 3d 550 (1999).\nThe court said:\n\u201cIn this case, TMCC\u2019s [the assignee] argument that it is not liable under TILA does nothing to support its position that the plaintiff cannot state a cause of action against TMCC under the Consumer Fraud Act. At the outset, we note that the plaintiff cannot assert a claim under TILA against TMCC in this case because section 1641(a) of TILA limits the circumstances under which an assignee may be liable for the acts of the original creditor. 15 U.S.C. \u00a7 1641(a) (1994). Moreover, TMCC\u2019s conduct was not \u2018authorized by\u2019 TILA so as to bring it within the mandates of the holding in Lanier. Indeed, TMCC did nothing that was affirmatively condoned by TILA. The fact that TMCC is not liable under TILA cannot automatically translate into a finding that TMCC did not engage in an unfair and deceptive practice under the Consumer Fraud Act. For this reason, we are persuaded by the reasoning in Bernhauser, Fillinger, and Rizza, and we conclude that TMCC\u2019s escape from liability under TILA does not serve as an affirmative defense to the plaintiffs Consumer Fraud Act cause of action.\u201d Pawlikowski, 309 Ill. App. 3d at 559.\nWe disagree with the path taken in Pawlikowski. Nothing in Lanier requires the assignee\u2019s conduct be \u201caffirmatively condoned\u201d by TILA. Compliance is enough.\nThe cases Pawlikowski found persuasive do not provide support for its decision. Pawlikowski cites Fillinger and Rizza \u2014 two federal cases in which the courts refused to exercise supplemental jurisdiction over state law claims (Fillinger v. Willowbrook Ford, Inc., No. 96 C 2357 (N.D. Ill. March 26, 1999) and Cheng v. Rizza Chevrolet, No. 97 C 1711 (N.D. Ill. April 7, 1999)) \u2014 while ignoring the majority of federal cases which actually considered the state law claims and found Lanier to control.\nPawlikowski also cites Bernhauser v. Glen Ellyn Dodge, Inc., 288 Ill. App. 3d 984, 683 N.E.2d 1194 (1997), which provides no greater support for its decision. In Bernhauser the court ruled on three consolidated appeals. No assignee was a party to any of the appeals. Bernhauser had alleged Chrysler Corporation, the manufacturer, not the finance company, conspired with the dealer to make false representations about the actual cost of the extended-service contract he was induced to buy. Chrysler never contended TILA\u2019s section 1641 exempted it from liability. Bernhauser sheds no light on the question of whether exemption from TILA liability should bar state law claims against an assignee.\nWe see no reason why Lanier\u2019s reach should not extend to instances where, as here, an assignee is free from liability under federal law because of a TILA exemption. As our supreme court said in Lanier, there is a \u201cconsistent policy\u201d throughout Illinois law against extending disclosure requirements beyond what is mandated by federal law. Lanier, 114 Ill. 2d at 17. If an assignee were liable under the Fraud Act, though exempt from liability under TILA, we would be imposing disclosure requirements on a subsequent assignee beyond those mandated by federal law.\nThe practice of overcharging for extended warranties/service contracts, even if as rampant as projected by the New York State Attorney General in its 1990 report, can be expected to occur only in a little more than half of the cases. That being the case, an assignee would be under a constant duty to police dealerships to determine whether charges cited on the financing documents were correct.\nThe Federal Reserve Board understood this and refused to place such an onus on assignees. Weighing the benefit against the cost of having assignees liable for misrepresentations made in retail sales contracts, the balance tipped in favor of assignees being liable only when the defect could be discovered by looking at the documents. We are unwilling to upset that balance unless there are more than mere inferences of collusion between the original maker and a subsequent assignee. A subsequent assignee simply is not legally responsible for the misrepresentations made by the dealer to the consumer. There is no duty of inquiry or investigation placed on an assignee. See Green v. Levis Motors, Inc., 179 F.3d 286 (5th Cir. 1999).\nOur decision should not be interpreted as a blanket immunization of assignees, no matter their conduct. We reject CFC\u2019s contention that section 1641(a) protects an assignee from any claim of fraud by a consumer, even where the assignee\u2019s fraud is active and direct.\nIf a plaintiff were to allege specific facts showing the assignee sat down with the car dealer and concocted a scheme to put false statements into the \u201cPaid to\u201d box of the finance contract section entitled \u201cOther Charges Including Amounts Paid to Others on Your Behalf,\u201d CFG would say the assignee is exempt from state fraud actions filed against it by the duped buyer. We cannot agree. We do not believe Congress intended to shield assignee finance companies from their own active and direct fraud. Nor do we believe Lanier intended to extend that kind of blanket immunity.\nIf factual allegations exist from which one could conclude an assignee actively and directly participated in the fraud \u2014 i.e., facts, pled with particularity and specificity, from which fraud is the necessary and probable inference, including the exact misrepresentations made, when they were made, who made them and to whom (Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 497 (1996)) \u2014 such an assignee would be liable for its own pre-assignment fraud. See, for example, Bernhauser, 288 Ill. App. 3d at 996-97 (allegations that manufacturer, through a presale agreement with dealership, actively and directly participated in plan to defraud buyers were sufficient to state a cause of action for civil conspiracy). The liability would be independent of and separate from the TILA assignee exemption.\nFor this reason, though we disagree with Pawlikowski on the application of Lanier, our decision does not conflict with Pawlikowski in the long run. In Pawlikowski the court found the plaintiffs complaint lacked facts concerning the nature of the alleged concealment and TMCC\u2019s involvement in it. The court said the complaint lacked any allegations that the inflated charge for an extended warranty was a \u201cmaterial fact\u201d on which TMCC intended the plaintiffs to rely. The Pawlikowski court rejected, as insufficient, conclusory allegations of \u201cconcert of action\u201d and \u201cconspiracy\u201d similar to the allegations in our case.\nBased on the Pawlikowski court\u2019s comments, nothing short of substantiated allegations that an assignee, before the assignment, actively and directly participated with the dealer in the fraudulent misrepresentations to the buyer would be enough to hold an assignee liable under state law. TILA would provide no protection.\nHere, by accepting documents without patent defects, CFG acted in a manner consistent with TILA requirements. It is \u201cin compliance\u201d with TILA. This being the case, CFG, as an assignee, is exempt from Fraud Act liability. But that is not the end of the inquiry.\nWe have scoured the amended complaint for the existence of factual assertions that would satisfy the pleading standard established in Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 501, 675 N.E.2d 584 (1996), and Board of Education of City of Chicago v. A, C & S, Inc., 131 Ill. 2d 428, 457, 546 N.E.2d 580 (1989). We found none.\nJackson provides vague conclusions. There is no suggestion CFG, before the assignments took place, actively and directly participated in misrepresenting facts to the plaintiffs. Jackson\u2019s allegations of \u201cconcert of action\u201d are nothing more than a claim that by accepting assignments after the extended service contracts were sold CFG knowingly received the benefit of another\u2019s fraud, an allegation held insufficient to state a cause of action under the Fraud Act in Zekman v. Direct American Marketers, Inc., 182 Ill. 2d 359, 695 N.E.2d 853 (1998).\nThe closest Jackson came to a fact allegation was the claim that CFG supplied SHD with the blank forms the dealer used in the finance transaction with Jackson. We do not see fraud in that. There was nothing deceptive per se about the forms. The forms did not promote the deceptive practice of the dealers \u2014 no more than the Internal Revenue Service could be said to promote fraud when it supplies blank forms to tax cheaters. The allegations, singly or together, do not even add up to a near miss.\nFinally, we agree with the federal courts that have decided the FTC\u2019s Holder Notice cannot be used to \u201ctrump\u201d the exemption from liability granted by operation of TILA. If an assignee is exempt from liability under TILA, the FTC Holder Notice cannot be used to alter that finding. See Walker v. Wallace Auto Sales, Inc., 155 F.3d 927 (7th Cir. 1998); Taylor v. Quality Hyundai, Inc., 150 F.3d 689 (7th Cir. 1998). Nor is the TILA violation \u2014 overcharging for extended service contracts \u2014 the kind of substantial nonperformance or substantial breach by a seller that would permit Jackson to seek rescission of the credit contract. See Felde v. Chrysler Credit Corp., 219 Ill. App. 3d 530, 580 N.E.2d 191 (1991).\nSince the allegations in this case do not suggest CFG, before accepting any assignments, actively and directly participated in the dealer\u2019s misrepresentations about the cost of the extended warranties, there is no basis for holding CFG liable for a violation of TILA or Fraud Act or Sales Act. Nor can there be a claim for \u201crestitution.\u201d\nGiven the barrage of similar lawsuits in this federal circuit and around the country, we assume plaintiff is not able to form better factual allegations of fraud by CFG. Remanding for more pleadings would serve no useful purpose. The trial court properly dismissed the complaint against CFG.\nCONCLUSION\nWe affirm the order of the trial court granting CFC\u2019s section 2- \u2014 615 motion for dismissal of the claims lodged against it.\nAffirmed.\nCERDA and BURKE, JJ., concur.", "type": "majority", "author": "JUSTICE WOLFSON" } ], "attorneys": [ "Daniel A. Edelman, Cathleen M. Combs, James O. Latturner, Tara L. Goodwin, and Jeffrey S. Sell, all of Edelman, Combs & Latturner, of Chicago, for appellant.", "Howard J. Roin and Stephen A. Miller, both of Mayer, Brown & Platt, of Chicago, for appellees." ], "corrections": "", "head_matter": "VANESSA JACKSON, Plaintiff-Appellant, v. SOUTH HOLLAND DODGE, INC., et al., Defendants-Appellees.\nFirst District (3rd Division)\nNo. 1 \u2014 99 \u2014 1958\nOpinion filed March 15, 2000.\nDaniel A. Edelman, Cathleen M. Combs, James O. Latturner, Tara L. Goodwin, and Jeffrey S. Sell, all of Edelman, Combs & Latturner, of Chicago, for appellant.\nHoward J. Roin and Stephen A. Miller, both of Mayer, Brown & Platt, of Chicago, for appellees." }, "file_name": "0158-01", "first_page_order": 178, "last_page_order": 190 }