Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—NDIll: Car Purchaser States Illinois Deceptive Practices Claim Against Seller Despite Never Having Direct Contact with Seller, (Apr 18, 2013)

By Tobias J. Gillett, J.D., LL.M.

A purchaser of an automobile from a dealer that in turn bought the vehicle from an auction where the car was allegedly misleadingly designated as in "highest condition" despite accident damage known to the seller of the vehicle could state a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) against the seller of the vehicle, even though the purchaser never had direct contact with the seller, the federal district court in Chicago has ruled (Buonavolanto v. Fifth Third Bank, April 17, 2013, St. Eve, A.).

On March 31, 2008 an individual leased a 2009 Jaguar XF automobile. Fifth Third Bank was the lessor and lienholder of the vehicle. On November 25, 2008, the vehicle was involved in an accident resulting in body and frame damage, but was later repaired.

In 2011, the individual chose to return the car rather than purchase it. A Fifth Third inspector allegedly noticed the accident damage and commented to the individual about it. Fifth Third then chose to sell the car at an auction. The auction employed a display system under which four different colored lights indicated the condition of the vehicle, with green indicating a "highest condition," or "ride and drive," vehicle. The auction rules require sellers to "ensure that the vehicle sells under the correct light." An employee of M&I Imports, Inc. purchased the car through the website Online Vehicle Exchange, a website affiliated with the auction, which listed it as a "green light" vehicle. Joseph Buonavolanto later purchased the vehicle from M&I without knowledge of the accident damage.

Buonavolanto and M&I filed suit against Fifth Third, asserting claims for common law fraud and violations of the ICFA. Fifth Third moved to dismiss.

Buonavolanto alleged that Fifth Third violated the ICFA by "selling a leased vehicle at the Auction, knowing that there was a substantial likelihood that a used car dealer would purchase the Jaguar for re-sale to a consumer and that the Jaguar would be represented to the consumer as a good condition vehicle." The court explained that a plaintiff must allege "actual damage" occurring "as a result of" a deceptive act or practice to state a claim under ICFA. Moreover, a plaintiff alleging a claim based on fraudulent misrepresentation "must show that he or she was actually deceived by the misrepresentation in order to establish the elements of proximate causation."

The court rejected Fifth Third’s argument that Buonavolanto’s claims failed to sufficiently allege proximate causation because he did not have direct contact with Fifth Third. In Shannon v. Boise Cascade Corp., 208 Ill. 2d 517, 805 N.E.2d 213 (2004), the Illinois Supreme Court concluded that deception did not have to "always be direct between the defendant and the plaintiff to satisfy the requirement of proximate cause." The Shannon court concluded that a plaintiff claiming damages for defective siding on his home could satisfy the proximate cause requirement under ICFA if "the product literature had in fact deceived a particular builder, architect, or contractor, resulting in the installation of defective siding on a home," because the plaintiff was "deceived because of the deception of the builder, architect or contractor, who reasonably should have had correct knowledge."

In the present case, the court observed, the plaintiffs had alleged that the designation of the Jaguar as a "green light" vehicle had deceived both M&I and Buonavolanto. Since Buonavolanto alleged that the designation had in fact deceived M&I, resulting in the purchase of the damaged Jaguar, he had alleged facts that could establish proximate causation, according to the court.

The case is No. 12 C 6498.

Attorneys: William George Hutul (Norman H. Lehrer, P.C.) for Joseph Buonavolanto. Todd A. Rowden (Thompson Coburn LLP) for Fifth Third Bank.

Companies: M&I Imports, Inc.; Fifth Third Bank; Fifth Third Exchange Corp.

Cases: StateUnfairTradePractices IllinoisNews