March 23, 2001

No. 2--99--1317

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

JUSTICE GEIGER delivered the opinion of the court:

At issue in this case is whether the lessee of a consumerlease agreement may state a cause of action for rescission against the holder ofthe lease agreement when the basis for the claim is not apparent on the face ofthe lease. The plaintiffs, Richard Jarvis and Christine Jarvis (the Jarvises),appeal from the August 27, 1999, order of the circuit court of Du Page Countydismissing, with prejudice, count IV of their amended complaint againstdefendant Gold Key Lease, Inc. (Gold Key). The Jarvises seek rescission of amotor vehicle lease that they believe they were duped into signing. The Jarvisescontend that they have sufficiently alleged a cause of action for rescission ofa motor vehicle lease to survive Gold Key's motion to dismiss brought

pursuant to section 2--615 of the Code of Civil Procedure(the Code) (735 ILCS 5/2--615 (West 1998)).

I. BACKGROUND

On April 16, 1999, the Jarvises filed their amended complaintagainst defendants South Oak Dodge, Inc. (South Oak), Chrysler FinancialCorporation (CFC), and Gold Key, concerning a motor vehicle lease wherein SouthOak was listed as the lessor and Gold Key as the holder. CFC was named in thesuit because, according to the Jarvises, the lease provided that CFC is theagent of Gold Key with the power to act on Gold Key's behalf to administer andenforce the lease. Near the bottom of the lease appeared the following"Notice":

"ANY HOLDER OF THIS CONSUMER LEASE IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH (1) THE LESSEE COULD ASSERT AGAINST THE LESSOR OF THE VEHICLE LEASED PURSUANT HERETO AND (2) ARE APPARENT ON THE FACE OF THE CONSUMER LEASE."

This language is mandated by section 70 of the Illinois MotorVehicle Leasing Act (the Leasing Act) (815 ILCS 636/70 (West 1998)), whichprovides that no lessor shall take or receive a consumer lease that fails tocontain the above-referenced notice.

Count I of the amended complaint was directed toward allthree defendants and alleged a cause of action for violations of the ConsumerFraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS505/10a (West 1998)). In count I, the Jarvises alleged that South Oak orallyrepresented that the purchase price of the vehicle would be $15,000 but that ifthe Jarvises executed a lease they would be able to immediately purchase thevehicle for $14,300, thereby saving $700. The Jarvises also alleged that SouthOak's representation was false in that they were unable to purchase the vehiclefor $14,300 after they executed the lease. The Jarvises further alleged thatSouth Oak was acting as the agent of CFC and Gold Key and that CFC and Gold Keycreated the lease agreement forms and instructed South Oak on "how topersuade consumers to lease rather than purchase" motor vehicles.

Count II was directed toward all three defendants and allegeda cause of action for common-law fraud for money damages. Count III was directedtoward South Oak and alleged a cause for revocation of acceptance of goods.Count IV was directed toward CFC and Gold Key and alleged a cause of action forrescission of the lease under a regulation promulgated by the Federal TradeCommission (the FTC Holder Rule). See 16 C.F.R.