No. 3--00--0723

	_________________________________________________________________

	IN THE APPELLATE COURT OF ILLINOIS

	THIRD DISTRICT

	A.D., 2001

ROBERT D. MOSIMAN, 			)	Appeal from the Circuit Court

Indiv. and on Behalf of		)	for the 10th Judicial Circuit,

a Class of Similarly Situated	)	Peoria County, Illinois

Individuals,				)	

	Plaintiff-Appellant,	)	

						)	

	v.					)	

						)	

BMW FINANCIAL SERVICES NA, 	)

INC., a Delaware Corporation	)	No. 99--MR--278

Authorized to do Business in 	)

the State of Illinois; JOE	)

McCARTHY OLDS-GMC TRUCK, INC.,)	

an Illinois Corporation, d/b/a)	

Joe McCarthy Olds, Inc., and	)

d/b/a Joe McCarthy; and JOE	)	Honorable

McCARTHY, Indiv.,			) 	Richard E. Grawey

	Defendants-Appellees.	)	Judge, Presiding

_________________________________________________________________

	JUSTICE BRESLIN delivered the opinion of the court:

_________________________________________________________________

PROCEDURAL HISTORY

	Plaintiff Robert D. Mosiman entered into a three-year lease

with defendant Joe McCarthy Olds-GMC Truck, Inc. (McCarthy Olds)

for a new BMW roadster.  The lease was provided by defendant BMW

Financial Services NA, Inc. (BMW), and assigned all right, title

and interest in the vehicle to BMW.  

	One month later, Mosiman filed a five-count complaint

individually and as a class action against defendants BMW, McCarthy

Olds and Joe McCarthy individually (collectively BMW), alleging

that BMW violated the Illinois Consumer Fraud and Deceptive Business Practices Act, (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 1998)).  Additionally, Mosiman asserted claims of common law

fraud, conspiracy and unjust enrichment. 

	BMW filed a motion to dismiss pursuant to section 2-615 of the

Illinois Code of Civil Procedure (Civil Code) (735 ILCS 5/2-615

(West 1998)).  The trial court granted the motion and Mosiman

appealed.  We affirm and hold that an automobile lease is not

fraudulent or in violation of the Illinois Consumer Fraud Act when

it combines reimbursement of the use tax with other fees and taxes

assessed rather than identifying the use tax reimbursement

separately. 

FACTS   

	Most states impose a tax on the lease of a motor vehicle. 

Lessees typically pay the tax for each month the vehicle is leased. 

In Illinois, the tax is imposed on the "user" of the property. 35

ILCS 105/3 (West 1998).  Thus, it is called a use tax.  But, unlike

other states, Illinois law defines the term "user" as the owner-

lessor of the property. Continental Illinois Leasing Corp. v. Department of Revenue, 108 Ill. App. 3d 583, 439 N.E.2d 118 (1982).  Also unique to Illinois, the total use tax is commonly passed on to

the lessee at the time the lease is signed.

	On appeal, Mosiman suggests that use of the BMW lease

constituted an unfair and deceptive business practice under

Illinois’ Consumer Fraud Act because Illinois lessees pay far more

taxes than other states’ consumers leasing the same vehicle.  This

is because Illinois lessees pay the entire use tax, no matter how long their lease term, while other states’ residents pay a monthly

use tax fee only so long as the vehicle is leased. 

	The parties do not debate that in Illinois lessors may

contractually seek reimbursement from lessees for any use tax paid.

See Johnson v. Marshall Field & Co., 57 Ill. 2d 272, 312 N.E.2d 271 (1974).  Rather, the parties debate whether the lease utilized by

BMW sufficiently informs lessee that it is contracting to pay

lessor’s entire use tax no matter the length of its lease. 

Accordingly, a careful review of the lease at issue is necessary.1

	Within section 11 of the lease, Mosiman’s monthly payment is

calculated.  At line 11A, the "gross capitalized cost" of his

vehicle is listed and defined as "the agreed upon value of the

Vehicle [here $42,900] and any item you pay over the Lease Term

(such as service contracts, insurance, and any outstanding prior

credit or lease balance.)"  The gross capitalized cost of Mosiman’s

vehicle was listed as $46,573.76.  This figure includes the use tax

of $2,684.06.  Mosiman could have checked a box that appears below

the gross capitalized cost to receive an itemization of that cost,

but he did not. 	

	Section 14 lists the "OFFICIAL FEES AND TAXES," defined as the

"total estimated amount you will pay for official and license fees,

registration, title and taxes over the Lease Term, whether included

in the Monthly Payment or otherwise assessed."  The official fees

and taxes listed on Mosiman’s lease total $3,244.76.  The parties

agree that the use tax is also encompassed within that figure. 

Finally, section 32 on the reverse side of the lease provides in part: "32. TAXES, REGISTRATION AND TITLING. You must pay when due

all registration, title, license, inspection fees and other

official fees and taxes (other than our income taxes) in connection

with this Vehicle."

ANALYSIS

	The sole issue on appeal is whether the trial court erred when it granted BMW’s motion to dismiss Mosiman’s complaint pursuant to

section 2-615 of the Civil Code.

	When a complaint is dismissed pursuant to section 2-615 of the Civil Code (735 ILCS 5/2-615 (West 1998)), the standard of review

is de novo. Vernon v. Schuster, 179 Ill. 2d 338, 688 N.E.2d 1172 (1997).  The question presented in a section 2-615 motion 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. Vernon, 179 Ill. 2d at 344, 688 N.E.2d at 1175.

	BMW argued in the trial court that Mosiman failed to state a

cause of action because (1) there was nothing deceptive about the

lease; (2) BMW had no duty to disclose any of the facts Mosiman

contended were important; and (3) Mosiman failed to allege critical

elements of the causes of action he pled.  On appeal, Mosiman first attacks BMW’s contention that BMW cannot have committed common law

fraud nor violated Illinois’ Consumer Fraud Act because it complied

with federal law.  Specifically Mosiman suggests that federal law

is inapplicable because Mosiman’s lease price exceeds the $25,000

price cap in the federal Consumer Leasing Act (see 15 U.S.C. §1667(1) (1994)) and, even assuming its application, BMW did not

properly disclose the use tax in compliance with federal law.     

	Congress has enacted requirements for consumer leases codified

in the Consumer Leasing Act (15 U.S.C. §1667 (1994)) and in Federal

Reserve Regulation M (Regulation M) (12 C.F.R. pt. 213 (2000)).  A

defendant’s compliance with the Consumer Leasing Act is a defense

to a plaintiff’s Consumer Fraud Act claims. See Robinson v. Toyota Motor Credit Corp., 315 Ill. App. 3d 1086, 735 N.E.2d 724 (2000). 

	The Consumer Leasing Act applies to various types of consumer

leases with a total contractual obligation not exceeding $25,000. 

As Mosiman contends, the Consumer Leasing Act does not technically

apply because Mosiman’s lease price of $25,292 slightly exceeds the

Leasing Act’s cap of $25,000.  But, BMW’s compliance with the

Consumer Leasing Act, despite being exempt from it, would

constitute persuasive evidence that Mosiman received sufficient

disclosure.  Accordingly, we review the relevant provisions of the

Consumer Leasing Act and Regulation M to determine whether BMW

substantially complied with federal law.

	Regulation M permits lessors to include taxes as part of the

"items" in the gross capitalized cost calculation. 12 C.F.R.

§213.2(f) (2000).  BMW included the use tax within the gross

capitalized cost listed on Mosiman’s lease at line 11A.  Though

Regulation M includes a list of items lessors must disclose as part

of the gross capitalized cost, taxes are not part of that list. 12

C.F.R. §213.4(f)(1) (2000).  Still, Regulation M requires that a

tax, which is payable by lessor but passed on to the consumer and which is reflected in the lease documentation, be disclosed under

section 213.4(n). 12 C.F.R. pt. 213, Supp. I(4)(n)(1)(iii) (2000). 

	Section 213.4(n) requires disclosure of "fees and taxes" which

are described as "the total dollar amount for all official and

license fees, registration, title, or taxes required to be paid in

connection with the lease." 12 C.F.R. §213.4(n) (2000).  Section 14

of BMW’s lease lists "official fees and taxes" which are described

using nearly the same language utilized by section 213.4(n).  This

is a second place where BMW included the use tax within Mosiman’s

lease. 

	Finally, federal law creates a model form for lessors to use.

See 12 C.F.R. pt. 213. App. A-2 (2000).  BWM used substantially the

same language as that found in the federal model form to describe

its official fees and taxes and the gross capitalized cost. 

Therefore, considering that BMW listed the use tax in two places in

its lease and used substantially the same language as the model

form, we find Mosiman’s contention that BMW did not comply with

federal law to be without merit.

	In light of BMW’s compliance with federal law despite being

exempt from it, Mosiman can prevail only if he can show that

Illinois law requires lessors to inform lessees that they are

paying lessor’s use tax in a more direct manner than was done in

the BMW lease.  Mosiman relies primarily upon Illinois’ Consumer

Fraud Act. 

	To state a cause of action under the Consumer Fraud Act, a

plaintiff must plead (1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the plaintiff rely on

the deception; and (3) that the deception occurred in the course of

trade or commerce. Robinson, 315 Ill. App. 3d at 1095, 735 N.E.2d at 732.  A plaintiff may allege that conduct is unfair under the

Consumer Fraud Act without alleging that the conduct is deceptive. Saunders v. Michigan Avenue National Bank, 278 Ill. App. 3d 307, 662 N.E.2d 602 (1996).  To be unfair, the defendant’s conduct must

(1) offend public policy; (2) be so oppressive that the consumer

has little alternative but to submit; and (3) cause consumers

substantial injury. Saunders, 278 Ill. App. 3d at 313, 662 N.E.2d at 608.

	Mosiman suggests that use of BMW’s lease is both unfair and

deceptive.  For this proposition, Mosiman relies upon a private

letter ruling issued September 20, 1991, from the Illinois

Department of Revenue.  It provides that parties to a lease may

agree that lessee will reimburse lessor for the use tax which

lessor paid; however, lessor must make clear to lessee that the

charge is a reimbursement and not a tax on the lease. Dept. of

Revenue, Private Letter Ruling No. 91-0701 (September 20, 1991).  

	Mosiman contends that section 32 of the lease, which BMW did

not obtain from the federal model form, does not make clear that 

Mosiman is reimbursing BMW for its payment of use tax but, rather,

is worded in such a way that it would appear the tax was imposed

upon himself rather than BMW. 

	Section 32 provides in relevant part:

"32. TAXES, REGISTRATION AND TITLING. You must pay when due all registration, title, license, inspection fees and

other official fees and taxes (other than our income

taxes) in connection with the Vehicle."  

	While we agree with Mosiman that section 32 would not alert a

lessee that (s)he is actually reimbursing BMW for its use tax paid,

the private letter ruling upon which Mosiman relies is not

controlling authority. See Union Electric Co. v. Department of Revenue, 136 Ill. 2d 385, 556 N.E.2d 236 (1990) (private letter rulings have no precedential effect).  Additionally, the Illinois

Motor Vehicle Leasing Act (Vehicle Leasing Act) (815 ILCS 636/1 et seq. (West 1998)), enacted subsequent to the private letter ruling, does not require disclosure of use tax reimbursements or an

explanation of how the use tax operates.  Rather, like the federal

Consumer Leasing Act, Illinois’ Vehicle Leasing Act allows lessors

to aggregate taxes in the gross capitalized cost (815 ILCS

636/10.25, 25(e)(2) (West 1998)) rather than itemize them

separately. 

	Additionally, we find it persuasive that Mosiman could have

received an itemization of the fees and taxes he was contracting to

pay by checking a box under the listing of the gross capitalized

cost of the vehicle at line 11A.  This method for disclosing fees

and taxes is similarly utilized by the federal model form.  Mosiman

failed to check the box.  Had Mosiman taken greater care in

reviewing the lease prior to signing it, he would have been alerted

to the presence of the use tax. 

	Finally, there is nothing novel about the shifting of a tax burden to the consumer.  Merchants have a contractual right to

reimburse themselves for tax payments as a condition of sale. See Johnson, 57 Ill. 2d at 276, 312 N.E.2d at 274.  Common knowledge tells us that such is customary practice.

	Mosiman cites to no law in Illinois and, indeed, we find none,

whichthat requires lessors to separately and specifically disclose the

inclusion of the use tax in their leases.  Accordingly, we cannot

agree with Mosiman that BMW engaged in fraud through the use of its

lease, or that it deceived Mosiman into contracting to pay its use

tax.

	We do not dispute the perceived inequality in Illinois lessees

paying the whole of a lessor’s use tax no matter the length of

their lease, while other states’ residents only pay use tax

proportionate to the length of the lease.  But, the effect of

Illinois’ somewhat unique use tax law, which Mosiman does not

assert is unconstitutional, is a matter best reserved to the

legislature and not this court.  In the meantime, lessees are free

to negotiate with lessors for a more advantageous lease price or to

lease their vehicles from some other dealer or manufacturer.

	Having determined that BMW did not engage in fraud or

unfairness, we need not address Mosiman’s remaining claims that he

sufficiently alleged that BMW’s claimed misrepresentations were

material and sufficiently alleged causes of action for conspiracy

and unjust enrichment.

	For the foregoing reasons, the judgment of the circuit court

of Peoria County is affirmed.

	Affirmed.

	LYTTON and SLATER , JJ. concur.