Source: https://www.grayslakelaw.com/recovering-defendants-attorney-fees-consumer-fraud-act/
Timestamp: 2019-04-24 06:35:43+00:00

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Despite the Illinois Supreme Court’s admonition that not every cause of action for breach of contract gives rise to a corresponding cause of action under the Consumer Fraud and Deceptive Business Practices Act (the Act)1, there is no shortage of breach of contract cases including claims for relief based on the provisions of the Act. The motivation for the prevalence of attorneys bringing claims for consumer fraud is speculative at best. Perhaps the skillful attorneys bringing such claims are consistently able to find facts supporting a cause of action based on the Act. Maybe the relatively low pleading requirements for an action based on the Act2 are appealing to attorneys who feel as though their client’s situation neatly fits within the statute’s framework. Or, quite possibly, the allure of an award of attorney’s fees as part of a judgment is simply too compelling to a plaintiff’s attorney with a complaint on the drafting table.
Until the Supreme Court’s decision in Krautsack v. Anderson, 3 the provisions of the Consumer Fraud Act regarding the availability of attorney fees to the prevailing party remained somewhat of a mystery. Section 10a(c) of the Act provides that a court may award “reasonable attorney’s fees and costs to the prevailing party.”4 The issue of when a prevailing consumer fraud plaintiff may be awarded attorney fees has been well-settled for some time.5 However, the same cannot be said about a prevailing consumer fraud defendant. To be sure, there have been appellate court rulings on the availability of attorney fees to prevailing consumer fraud defendants.6 However, the Illinois appellate circuits have been split as to what must be shown before such fees may be awarded.7 This article reviews a sampling of Illinois appellate court cases in which the award of attorney fees to a prevailing consumer fraud defendant was at issue, and examines the ruling in Krautsack v. Anderson.
The dispute in Graunke arose from the plaintiff’s purchase of an automobile from the defendant. The plaintiff alleged that the defendant led him to believe that the automobile he was purchasing was a “brand new” 1987 Chrysler New Yorker. Later, the plaintiff discovered that the automobile was actually a used 1986 New Yorker. After weighing the evidence, including the plaintiff’s own testimony and a letter written by the plaintiff referring to his “1986” New Yorker, the trial court ruled in favor of the defendant. Subsequently, the defendant filed a petition for attorney’s fees. After a hearing, the trial court denied the request for attorney fees and awarded costs of $291.90. The defendant appealed the denial of attorney fees.
The importance of the bad faith factor was furthered by Casey v. Jerry Yusim Nissan, Inc.,33 which also arose out of the sale of a used car. The defendants requested more than $41,000 in attorney fees but were awarded $30,000 in fees. They appealed from that ruling.
Tracking the evolution of the bad faith factor from Haskell to Casey is quite startling. In Haskell, the court merely indicated that it had a hard time envisioning a situation where a defendant would be awarded attorney fees in the absence of a bad-faith finding on the part of the plaintiff.38 Though Haskell supported different standards for determining whether to award fees to defendants and plaintiffs,39 the court never stated that a defendant may only be awarded fees if the plaintiff acted in bad faith. Moreover, the fact that the Haskell court was unable to envision a situation where fees may be awarded to a defendant absent bad faith cannot be reasonable interpreted as an absolute bar to such an award.
In Graunke, the appellate court remanded the case because it felt that the court might have inappropriately based its ruling exclusively on whether the defendant had shown bad faith by the plaintiff.40 However, Casey incorrectly referenced Haskell and Graunke for the proposition that the award of fees to a defendant depended on a finding of bad faith by the plaintiff.41 Furthermore, Casey states that “a trial court must first determine whether the plaintiff acted in bad faith.”42 Thus, Casey at least implies that a court must find bad faith by the plaintiff before it may even examine the other factors used to determine whether to award attorney fees to a prevailing defendant.
An appellate court case that did not follow the developing trend of requiring a showing of bad faith before awarding fees to the defendant is Boeckenhauer.43 Boeckenhauer also arose from the sale of a used car. One of the defendants, the Ford Motor Co., successfully defeated the consumer fraud claim and filed a petition for attorney fees. The court denied Ford’s request for fees, relying on the Casey decision for the appropriate test for whether to award fees. On appeal, Ford argued that bad faith is not a prerequisite to an award of attorney fees to a prevailing defendant, and that different standards do not apply for prevailing plaintiffs and defendants.
During the pendency of Ford’s second appeal in Boeckenhauer,47 the Illinois Supreme Court decided Krautsack,48 which established a new precedent for awarding attorney fees to prevailing consumer fraud defendants. The allegations in Krautsack arose out of a contract for a two-week safari to East Africa. In support of his claim for consumer fraud, the plaintiff alleged that the defendant knowingly misrepresented to him that existing weather conditions in Africa would not interfere with the planned safari.
The court granted the defendants’ motion for summary judgment on the consumer fraud count. Defendants then filed a petition for attorney fees under section 10a(c) of the Consumer Fraud Act. The plaintiff appealed the grant of summary judgment on the consumer fraud count, and the appellate court reversed. Because the summary judgment entered for defendants was overturned, they were no longer a prevailing party, so they could no longer maintain a petition for their fees. On remand, the case went to a bench trial, and judgment was entered for the defendants on all counts, including the count for consumer fraud. Defendants, again, sought reimbursement for their fees. The court entered an order striking the defendants’ petition for fees, and the defendant subsequently appealed that order. The appellate court upheld the trial court’s decision, and the Illinois Supreme Court granted the defendants’ appeal.
Having determined that fees should be awarded to the defendants only when bad faith by the plaintiff is shown, the court went on to examine the standard that governs a bad-faith finding.67 Previous appellate court cases had ruled that Supreme Court Rule 137 provided theappropriate standard upon which to judge bad faith.68 On this issue, however, the court agreed with the defendant and held that a defendant should not be limited by Rule 137 in proving a plaintiff’s bad faith.69 Though the court found Rule 137 and its case law to be instructive, it ruled that the failure to prove bad faith under Rule 137 is not fatal to a defendant’s claim for attorney fees.
The conclusion stemming from these cases is that a plaintiff’s counsel need not worry too much about the scenario in which his or her client may be held liable for the defendant’s attorney’s fees. While the award of attorney fees to defendants is still discretionary, it seems unlikely that circuit courts will be willing to assess fees against a plaintiff who has survived the initial round of dispositive motions.
1 815 ILCS 505/1 et seq. Avery v. State Farm, 216 Ill. 2d100, 169, 835 N.E.2d 801, 844 (2005) (stating that “it is settled that the Consumer Fraud Act was not intended to apply to every contract dispute or to supplement every breach of contract claim with a redundant remedy.”) (quoting Zankle v. Queen Anne Landscaping, 311Ill. App. 3d 308, 312, 724, N>E>2d 988 (2d Dist. 2000)).
3 223 Ill. 2d 541, 861, N.E.2d 633 (2006).
5 See Majcher v. Laurel Motors, Inc., 287 Ill. App. 3d 719, 680 N. E.2d 416 (2d Dist. 1997).
8 204 Ill. App. 3d 596, 561, N.E.2d 1315 (4 th Dist. 1990).
9 Id.at 599, 561 N.E.2d at 1317.
10 Id.; R. Friedman, Private Right of Action Under the Illinois Consumer Fraud and Deceptive Business Practices Act, 76 Ill. B.J. 748 (1987).
11 Haskell, 204 Ill. App. 3d at 600, 561 N.E.2d at 1317.
13 Id., 561 N.E.2d at 1317-18.
14 Id., 561 N.E.2d at 1318.
15 Id., at 601, 561 N.E.2d at 1318 (quoting Hummel v S.E. Rykoff & Co., 634 F.2d 446, 453 (9 th Cir. 1980)).
17 Id. at 602, 561 N.E.2d at 1319.
18 Id. at 601, 561 N.E.2d at 1318.
19 Id. at 602, 561 N.E.2d at 1318.
20 Id. 561 N.E.2d at 1318-19.
21 247 Ill. App. 3d 1015, 617 N.E.2d 858 (2d Dist. 1993).
22 296 Ill. App. 3d 102, 694 N.E.2d 206 (3d Dist. 1998).
23 Graunke, 247 Ill. App. 3d at 1020, 617 N.E.2d at 862.
27 Id. at 1021, 617 N.E.2d at 862.
28 Id. at 1022, 617 N.E.2d at 863.
32 Id. at 1023, 617 N.E.2d at 864.
33 296 Ill. App. 3d 102, 694 N.E.2d 206 (3d Dist. 1998).
34 Id. at 108, 694 N.E.2d at 210.
35 Id. at 107, 694 N.E.2d at 209.
36 Id. at 108, 694 N.E.2d at 210.
38 Haskell, 204 Ill. App. 3d at 602, 561 N.E.2d at 1319.
40 247 Ill. App. 3d at 1021, 617 N.E.2d at 863.
42 Casey, 296 Ill. App. 3d at 108, 694 N.E.2d at 210.
43 361 Ill. App. 3d 470, 837 N.E.2d 443 (2d Dist. 1005).
44 Id. at 474-75, 837 N.E.2d at 447.
45 Id. at 475, 837 N.E.2d 447.
47 Boeckenhauer v. Joe Rizza Lincoln Mercury, 2-06- 0604, slip op.at 3 (Ill. App, 2d Dist., April 11, 2007).
48 223 Ill. 2d 541, 555, 861 N.E.2d 633, 644 (2006).
49 Krautsack, 223 Ill. 2d at 552, 861 N.E.2d at 642.
50 Id. at 552-53, 861 N.E.2d at 643.
51 Id. at 553-54, 861 N.E.2d at 643.
52 Id. at 556, 861 N.E.2d at 645.
54 179 Ill. 2d 271, 688 N.E.2d 653 (1997).
55 Krautsack, 223 Ill. 2d at 557, 861 N.E.2d at 645.
57 Id. 861 N.E.2d at 646.
N.E.2d 858 (2d Dist. 1993); Casey v Jerry Yusim Nissan, Inc., 296 Ill. App. 3d 102, 694 N.E.2d 206 (3d Dist. 1998).
60 Id. at 557-58, 861 N.E.2d at 646.
61 Id. at 558, 861 N.E.2d at 646.
64 Id. at 559, 861 N.E.2d at 646.
66 Id., 861 N.E.2d at 646-47.
67 Id. at 560, 861 N.E.2d at 647.
68 See Haskell, 204 Ill. App. 3d at 602-603, 561 N.E.2d at 1319; Casey, 296 Ill. App. 3d at 108, 694 N.E.2d at 210.
69 Krautsack, 223 Ill. 2d at 562, 861 N.E.2d at 649.

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