RV, Boat, Motorcycle and Auto Dealer Fraud
The Illinois Consumer Fraud and Deceptive Business Practices Act (“IFCA”) allows consumers who were deceived into purchasing defective RVs, cars, boats or motorcycles that were rebuilt wrecks or flood vehicles or have had the odometer rolled back to sue for their damages and to recover attorneys’ fees and costs, aggravation and inconvenience damages and in the right case punitive damages.
The ICFA requires disclosure of all material facts known to Respondent including frame damage or structural damage. Id. To the extent Respondent claims that by selling the car “as is” it was free to misrepresent and conceal the truth then such defense would be contrary to law. Eisenberg v. Goldstein, 29 Ill. 2d 617, 621 (1963); Napcor Corp. v. JP Morgan Chase Bank, NA, 406 Ill. App. 3d 146, 149, 152-53 (2nd Dist. 2010); Bauer v. Giannis, 359 Ill. App. 3d 897, 908 (2nd Dist. 2005) (“as is” clause is not a defense to fraud).
The ICFA generally does not require deceptive intent or scienter. Priebe v. Autobarn, Ltd., 240 F.3d 584, 589 (7th Cir. 200) held:
In most cases under the ICFA, including this one, the seller’s knowledge or ignorance about the falsity of its representations is irrelevant.
Innocent misrepresentations give rise to ICFA claims. Chow v. Aegis Mortg. Corp., 286 F.Supp.2d 956, 963 (N.D.Ill.2003) (“To satisfy [the ICFA's] intent requirement, plaintiff need not show that defendant intended to deceive the plaintiff, but only that the defendant intended the plaintiff to rely on the (intentionally or unintentionally) deceptive information given.”); Capiccioni v. Brennan Naperville, Inc., 339 Ill.App.3d 927, 933 (2003) (“A defendant need not have intended to deceive the plaintiff; innocent misrepresentations or omissions intended to induce the plaintiff's reliance are actionable under [the ICFA].”); Grove v. Huffman, 262 Ill.App.3d 531, 536 (1994) (“Courts of this State have consistently held that [the ICFA] applies to innocent misrepresentations.”); Duran v. Leslie Oldsmobile, Inc., 229 Ill.App.3d 1032, 1039 (1992) (“The Consumer Fraud Act eliminated the requirement of scienter, and innocent misrepresentations are actionable as statutory fraud.”); Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 575 (7th Cir. 2012) (same).
The ICFA requires disclosure of all material facts known to a car, RV, motor cycle or boat dealer, including flood, frame or structural damage. Id. To the extent a dealer claims that by selling the car, boat, RV or motorcycle “as is” it was free to misrepresent and conceal the truth then such defense would be contrary to law. Section 10c of the ICFA, 815 ILCS 505/10c, provides: “[a]ny waiver or modification of the rights, provisions, or remedies of this Act shall be void and unenforceable.” See Tortoriello v. Gerald Nissan of N. Aurora, Inc., 379 Ill. App. 3d 214, 238 (2d Dist. 2008) (contractual waiver of punitive damages void under ICFA anti-waiver provision since the Act provides for punitive damages).
"As is" clauses have long been ineffective in fraud claims under the common law as well. Napcor Corp. v. JP Morgan Chase Bank, NA, 406 Ill. App. 3d 146, 149, 152-53 (2nd Dist. 2010); Bauer v. Giannis, 359 Ill. App. 3d 897, 908 (2nd Dist. 2005) (“as is” clause is not a defense to fraud). Any type of contractual disclaimer of fraud, as Mother Earth, Ltd. v. Strawberry Camel, Ltd., 72 Ill.App.3d 37, 52 (1st. Dist. 1979) holds is ineffective:
[I]t is well established that the terms of any written contract executed in conjunction with fraud are irrelevant to a cause of action grounded not in contract but in tort (citations omitted). Likewise, we see no particular evidentiary significance in plaintiffs’ having signed a contract disclaiming any additional representations, when they have produced evidence that such representations were in fact made to them.
Eisenberg v. Goldstein , 29 Ill. 2d 617, 621 (1963); Napcor Corp. v. JP Morgan Chase Bank, NA, 406 Ill. App. 3d 146, 149, 152-53 (2nd Dist. 2010); Bauer v. Giannis, 359 Ill. App. 3d 897, 908 (2nd Dist. 2005) (“as is” clause is not a defense to fraud).
The Court in Hanson-Suminski v. Rohrman Midwest Motors, Inc., 386 Ill. App. 3d 585, 592-94 (1st Dist. 2008) rejected the car dealer defendant’s incredible claim that it did not know about the accident finding that “[d]efendant had access to such information, but did not provide it for plaintiff.” Id. at 594. It also rejected defendant’s “blame the victim” defense. Id. at 593. “[U]nder the Consumer Fraud Act, plaintiff was under no obligation to ascertain the accuracy of [defendant’s] statement claiming the car had not been in any accidents.” Id. at 593.
The ICFA expressly allows for punitive damages in the right circumstances where the conduct is willful and wanton. Twyman v. S&M Auto Brokers, 16 C 4182, 2016 WL 6082357, at *3 (N.D. Ill. Oct. 18, 2016) (“[p]unitive damages are available under both the common law of fraud and the Illinois Consumer Fraud and Deceptive Business Practices Act”). The ICFA’s separate anti-waiver provision prohibits waiver of punitive damages in arbitration, as held by the Court in Tortoriello v. Gerald Nissan of N. Aurora, Inc., 379 Ill. App. 3d 214, 238 (2d Dist. 2008):
Section 10a(a) of the Consumer Fraud Act (815 ILCS 505/10a(a) (West 2004)) provides that the trial court “in its discretion may award actual economic damages or any other relief which the court deems proper.” Such relief may include punitive damages. See Smith v. Prime Cable of Chicago, 276 Ill.App.3d 843, 858 (1995). Section 10(c) of the Consumer Fraud Act (815 ILCS 505/10(c) (West 2004)) provides: “Any waiver or modification of the rights, provisions, or remedies of this Act shall be void and unenforceable.” As an attempt to categorically exclude a form of relief authorized by the Consumer Fraud Act, the punitive damages disclaimer in the arbitration clause is void and unenforceable.
Punitive damages may be awarded where the wrongful act committed by a defendant is characterized by wantonness, malice, or other circumstances of oppressiveness and aggravation. Los Amigos Supermarket, Inc. v. Metro. Bank & Trust Co., 306 Ill. App. 3d 115, 128 (1st Dist. 1999). Punitive damages are also proper where there is a reckless indifference to the rights of others “to punish the offender and to deter that party and others from committing similar acts of wrongdoing in the future.” Loitz v. Remington Arms Co., 138 Ill.2d 404, 414-415 (1990).
Illinois appellate courts have routinely approved punitive damage awards in car or RV fraud cases. The Court in Ciampi v. Ogden Chrysler Plymouth, Inc., 262 Ill. App. 3d 94, 113 (2nd Dist. 1994) held:
We conclude that punitive damages were appropriate, given Ogden [Chrysler’s] reckless disregard of Ciampi’s rights. … [T]he amount of punitive damages is not excessive. Relevant circumstances in reviewing an award of punitive damages include, among other things, the nature and the enormity of the wrong, the financial status of the defendant … As to the nature and enormity of the wrong, Ogden’s statements were clearly intended to induce Ciampi to purchase the LeBaron at a price considerably more than the car’s worth. Ciampi paid even more for the LeBaron than the manufacturer’s suggested retail price for the vehicle without 13,000 miles of usage. We conclude that the award of $100,000 [in punitive damages with a $5,000 actual damage award] is both appropriate and proportionate to the nature and the enormity of the wrong.
See also, Gehrett v. Chrysler Corp., 379 Ill. App. 3d 162, 179 (2 nd Dist. 2008) ($59,695.79 punitive damage award for misrepresentation of a four-wheel availability, where plaintiff obtained $8,500 in actual damages); Totz v. Cont'l Du Page Acura, 236 Ill. App. 3d 891, 904 (2nd Dist. 1992) ($5,000 in punitive damages for concealing rebuilt wreck with $400 in actual damages); Crowder v. Bob Oberling Enterprises Inc., 148 Ill. App. 3d 313, 318–19 (4th Dist. 1986) ($9,000 in punitive damages for hidden accident and frame damage arising out of a $5,500 actual damages award).
It is obvious that using fraudulent means to knowingly or recklessly sell a rebuilt wreck or flood vehicle warrants entry of a large punitive damages award. As the Court in Crowder held, concealing the accident history of a used car is exactly the type of misconduct that calls for a punitive damages award:
Our review of the record thus far illustrates clearly the egregious scheme of deceit and fraud perpetrated by [car salesmen] Oberling and Fierge against plaintiff and against the public generally. Their false representations and omissions of material fact were made wantonly and by design. The trial court acted wisely in recognizing this to be a proper case in which to award punitive damages in order to punish Oberling and Fierge and to deter others from similar conduct. Id. at 318–19.
See Twyman v. S&M Auto Brokers, 16 C 4182, 2016 WL 6082357, at *3 (N.D. Ill. Oct. 18, 2016) (fraudulent sale of a rebuilt wreck in violation of the ICFA could result in a substantial punitive damages award and thus the potential for such damages meets the $75,000 threshold needed to create federal diversity jurisdiction.)
Falsely feigning ignorance and pretending it didn’t know the car was a rebuilt wreck “illuminates [a used car dealer’s] culpability” thus justifying an enhanced punitive damage award. Crowder, 148 Ill. App. 3d at 317; Totz, 236 Ill. App. 3d at 904 (“a cursory inspection would have revealed to one experienced in the automobile business that the Accord had been extensively damaged in an accident. The trial judge could reasonably have concluded that Buonauro was aware of this fact at the time he and Delvin sold the car to the Totzes despite his denial.”) Evidence of recidivist conduct such as car or RV dealer with a history of defrauding many consumers would justify a larger punitive damages award. BMW of North America v. Gore, 517 U.S 559, 576-577 (1996) (“Our holdings that a recidivist may be punished more severely than a first offender recognize that repeated misconduct is more reprehensible than an individual instance of malfeasance.); Tully v. McLean, 409 Ill. App. 3d 659, 676 (1st Dist. 2011); O’Neill v. Gallant Ins. Co., 329 IllApp3d 1166, 1182 (5th Dist. 2002).
The attorneys at Lubin Austermuehle have over thirty years of experience prosecuting RV and auto fraud claims. We are knowledgeable regarding the changes and complexities RV and autofraud law. We are committed to fighting for our clients' rights in the courtroom and at the negotiating table. Conveniently located in Chicago, Elmhurst and Wilmette, Illinois, we have successfully litigated consumer fraud and certified used RV, boat and car fraud cases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call at 630-333-0333.