Page 8 - John Hundley 2009

Moreover, the court approvingly stated that “the term ‘unfair practice’ remain[s] flexible
and defined on a case-by-case basis ‘“in view of the futility of attempting to enumerate all
the (unfair) methods” and practices that fertile minds might devise’” (quoting Scott v. Ass’n
for Childbirth at Home, 88 Ill.2d 279, 430 N.E.2d 1012 (1981)). Whether conduct is
unfair, it said, should be based on “whether the practice offends public policy,
whether it is oppressive, and whether it causes consumers substantial injury.”
Conduct may be deemed unfair based on all of those factors, or because of a strong
showing on only one, the court said.

In Demitro, the court found GMAC’s demand for full payment, after having previously agreed not to
seize the vehicle if the account was merely brought current, oppressive. The use of this approach is
significant because it appeared undisputed that GMAC made the offer of a seven-day stand-still period
intending to obey same, and that the seizure during that period was made due to a misunderstanding
between the company and its repo agent. Hence, the seven-day agreement was not fraudulently made.
Moreover, GMAC argued, its demanding full payment after promising to accept the account just being
brought current was a mere breach of contract, and numerous courts have held that an action under the
Act cannot be based on mere breach of contract. More than legal theory was at
issue in this argument: while the confessed breach of contract was unlawful,
contract theory would not have permitted recovery of the $53,101 in attorney
fees that had been awarded under the Act.

While mere failure to carry out an agreement usually is insufficient to constitute a
violation of the Act, the appellate panel unanimously said that principle did not apply
in this case because “GMAC’s actions sufficiently implicated consumer protection
concerns.” Once it had gained possession of the vehicle, albeit by mistake, GMAC demanded full
payment, not a catch-up of arrears, which the court felt was an abuse of GMAC’s superior bargaining
position. The court analogized this to a business using its superior bargaining position to charge and
attempt to collect excessive prices, which it said was also an “unfair practice” under prior case law.

So Demitro teaches two important things often overlooked by those who regard the
Act as simply a “Consumer Fraud Act”. First, the “I was just breaching a contract”
argument is not always a defense, and second, an action under the Act need not be
based on any intentionally false or misleading representation (the classic test for fraud).

In fact, Demitro also contains a third important lesson: remedies
under the Act can greatly exceed those which would apply in other legal
actions. The appellate panel upheld the $53,101 in attorney fees
awarded by the lower court (seven times actuals), based in part on the
view that “GMAC vigorously contested all issues” (except, ironically, in
failing to rebut some aspects of the fee application) and “never proffered settlement with
respect to” the claim under the Act. Moreover, the appellate court also remanded the
case to the circuit court “for consideration of plaintiff’s attorney fees and costs
incurred in defending this appeal”!

John\SharpThinking\#19.doc.

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