Court Opinion

ID: 9862312
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:06:30.995695+00
Date Added: 2024-06-11T11:25:01.836659
License: Public Domain

PRESIDING JUSTICE CAMPBELL, modified special concurrence and partial dissent: Although I join the modified majority opinion insofar as it affirms the trial court’s judgment in favor of the defendants on the Truth In Lending Act (TILA) claim, I disagree with this court’s award of attorney fees as Rule 137 sanctions against plaintiffs counsel personally. The decision of whether to award attorney fees will not be overturned absent an abuse of the trial court’s discretion, even if the decision would have been different had it been decided originally by this court. Edwards v. Estate of Harrison, 235 Ill. App. 3d 213, 221, 601 N.E.2d 862, 867 (1992). In this case, the majority reverses, “the discretion and kindness of the circuit court notwithstanding” (324 Ill. App. 3d at 949), which directly contravenes the standard of review. - The majority opinion imposes Rule 137 sanctions, asserting that counts II through XXIII of plaintiffs complaint were not well grounded in fact. However, the majority opinion does not identify any untrue statement of fact made without reasonable cause. The majority opinion also asserts that “plaintiffs attorney was aware that defendants could assert multiple defenses based upon the model disclosure forms and official comments.” 324 Ill. App. 3d at 946-47. The majority opinion cites Jurgensen v. Haslinger, 295 Ill. App. 3d 139, 692 N.E.2d 347 (1998), to claim that Rule 137 sanctions are warranted “where the record discloses that the attorney was aware that the defendants could assert an affirmative defense, but filed a complaint anyway.” 324 Ill. App. 3d at 946. My reading of Jurgensen suggests that sanctions are not warranted where the attorney could have entertained a reasonable belief that some exception or nuance in the law might apply to the affirmative defense. Jurgensen, 295 Ill. App. 3d at 144-45, 692 N.E.2d at 352.1 The issue is whether, in light of a possible defense, the claim is not warranted by existing law or a good-faith argument for the extension, modification or reversal of existing law. The majority opinion suggests that a creditor’s compliance with the disclosure requirements of TILA is always a defense to liability under the Illinois Consumer Fraud and Deceptive Business Practices Act. However, this is not always the case. See, e.g., Bernhauser v. Glen Ellyn Dodge, Inc., 288 Ill. App. 3d 984, 991-92, 683 N.E.2d 1194, 1200-01 (1997); Grimaldi v. Webb, 282 Ill. App. 3d 174, 180-81, 668 N.E.2d 39, 43 (1996). Thus, counsel had reason to argue that the defense would not apply. Regarding the application of the defense in this case, the majority opinion concludes that defendants complied with the TILA because the credit agreement and billing statement used language from Regulation Z, the Federal Reserve Board’s model disclosure forms and official comments. It is thus undisputed that the credit agreement and billing statement here did not mirror the model disclosure forms themselves, which is the basis of the claimed defense.2 Creditors are not required to use the exact language of the model forms to escape statutory liability. E.g., In re Porter, 961 F.2d 1066, 1076 (3d Cir. 1992). However, when a creditor departs from the model forms, the defense is not clear and thus not a basis for imposing sanctions. The majority opinion is also based “upon plaintiff’s inability to draft a complaint in compliance with section 2 — 603(b) of the Code of Civil Procedure.” 324 Ill. App. 3d at 946. The pleading at issue was undoubtedly prolix and poorly drafted. However, the imposition of Rule 137 sanctions on this ground is unprecedented. Moreover, defendants, the trial court and this court examined the legal sufficiency of each dismissed count, showing that the pleading, while poorly drafted^ was answerable. More significantly, the fact that a complaint is poorly drafted does not automatically mean that it is not well grounded in fact or not warranted by existing law or that there is no good-faith argument for the extension, modification or reversal of existing law. Indeed, the majority opinion does not attempt to show that plaintiff’s counsel had no good-faith argument for the extension, modification or reversal of existing law.3  The majority opinion refers to other similar cases filed by plaintiffs counsel that were ostensibly dismissed. This aspect of the majority opinion unjustifiably presupposes that the other cases are probative not only of whether such claims are warranted by existing law, but also of whether there is no good-faith argument for the extension, modification or reversal of existing law. Moreover, while the record on appeal contains various orders and transcripts from said cases, it does not include the complaints or the documents underlying them, precluding the conclusion that they are “essentially identical.” The record also shows that most of the orders cited did not address the merits of all of the claims presented in those cases or in this one.4  The petition for rehearing discusses Nazos & Griesz v. Montgomery Ward & Co., No. 92 — CH—8000 (Cir. Ct. Cook Co.), one of the cases defendant alleged was similar to this case. Plaintiffs counsel has submitted an affidavit, along with a portion of the joint motion in support of final approval of a class settlement, showing that Nazos & Griesz settled TILA claims on terms providing for payments to the class representatives, attorney fees and donations to various public-interest agencies in an apparent total amount of $175,000. While not an admission of liability, the settlement may be probative of whether such class actions are unwarranted by existing law and whether plaintiffs counsel was acting in bad faith. Finally, defendants’ brief did not specifically argue that this court should impose Rule 137 sanctions upon plaintiffs counsel personally. Indeed, the record shows that defendants’ motion for attorney fees was premised almost entirely on section 10a(c) of the Illinois Consumer Fraud and Deceptive Business Practices Act; Rule 137 is mentioned once in passing without citations to authority. Although this court is not bound by the rules of waiver, they ought to be considered before overriding the discretion of the trial court. Given the record, plaintiffs counsel is not a particularly sympathetic figure, but that is not a basis for imposing Rule 137 sanctions. Consumer protection legislation exists to protect vulnerable consumers against unfair and deceptive practices, particularly in regard to credit and other financial transactions. The unsupported award of attorney fees, particularly when imposed as a sanction against counsel, will have a chilling effect on the filing of consumer actions and defeat the purpose of consumer protection legislation. See Casey v. Jerry Yusim Nissan, Inc., 296 Il. App. 3d 102, 107, 694 N.E.2d 206, 209 (1998). Indeed, one of the purposes of allowing attorney fees to be awarded for consumer actions is to encourage consumers to file actions to vindicate their rights; without such a provision it would be difficult for injured consumers to obtain counsel in light of the sums of money that are in dispute in most consumer litigation. Grove v. Huffman, 262 Ill. App. 3d 531, 539, 634 N.E.2d 1184, 1190 (1994). The trial court did not abuse its discretion in refusing to impose Rule 137 sanctions. For these reasons, I respectfully dissent in part.  See also Rein v. David A. Noyes & Co., 271 Ill. App. 3d 768, 649 N.E.2d 64 (1995), aff’d, 172 HI. 2d 325, 665 N.E.2d 1199 (1996) (trial court did not abuse discretion by denying sanctions, even though plaintiffs had filed some claims which were barred by res judicata or prohibition against splitting cause of action).   For example, the record shows that the language in the credit agreement and billing statements regarding the calculation of finance charges is significantly different and far less clear than the model clauses appearing in appendix G — 1 (12 C.F.R. § 226, opp. G — 1 (1999)). Indeed, the differences are such that it is debatable whether count IV should have been dismissed under section 2 — 615, let alone form the basis for Rule 137 sanctions.   Given the majority opinion’s reliance on defendants’ supposed compliance with the TILA as a basis for dismissing claims under the TILA and the Illinois Consumer Fraud and Deceptive Business Practices Act and ultimately imposing Rule 137 sanctions on plaintiffs counsel for filing them, it might be useful to examine plaintiffs counsel’s argument on this point. The record shows that plaintiffs counsel argued that the adequacy of the disclosures under the TILA should be judged by reference to the “unsophisticated consumer.” The trial court dismissed in part by applying the standard of the “average consumer” that appears in federal case law. E.g., Cemail v. Viking Dodge, Inc., 982 F. Supp. 1296 (N.D. Ill. 1997). Plaintiffs counsel cited cases decided under the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq. (1994)) (a related consumer protection law) that apply an unsophisticated consumer standard. E.g., Gammon v. GC Services Ltd. Partnership, 27 F.3d 1254 (7th Cir. 1994). Federal courts have often stated that the TILA was enacted primarily to aid the unsophisticated consumer. E.g., Thomka v. A.Z. Chevrolet, Inc., 619 F.2d 246 (3d Cir. 1980). In the absence of a Supreme Court ruling on the standard for evaluating TILA disclosures, plaintiffs counsel’s argument appears to have been in good faith. The majority opinion does not contend that the TILA and Illinois Consumer Fraud and Deceptive Business Practices Act would necessarily fail under the lower standard.   Green v. The Limited, No. 95 — M3—5136 (Cir. Ct. Cook Co., August 21, 1996), and Latona v. Service Merchandise Co., No. 96 — CH—2438 (Cir. Ct. Cook Co., November 8, 1996), were both transfers and partial dismissals of class allegations, based on the relationship between the putative class representative and counsel. The partial summary judgments in Latona v. Carson Pirie Scott & Co., No. 96 C 2119 (N.D. Ill., March 7, 1997), and Greisz v. Household Bank (Illinois), 8 F. Supp. 2d 1031 (N.D. Ill. 1998), aff’d, 176 E2d 1012 (7th Cir. 1999), did not encompass all of the types of claims asserted in this case. Campobasso v. Circuit City Stores, Inc., No. 95 — M—35135 (Cir. Ct. Cook Co., May 5, 1998), involved a dismissal based on section 2 — 603 which, as noted above, is not automatically sanctionable under Rule 137.