First Capital Mortgage Corp. v. Union Federal Bank

• Court: Appellate Court of Illinois
• Decided: June 29, 2007
• Docket: 1-06-0459 Rel
• Status: Published

Opinion

SIXTH DIVISION June 29, 2007

No. 1-06-0459

FIRST CAPITAL MORTGAGE CORPORATION, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County ) v. ) ) UNION FEDERAL BANK OF INDIANAPOLIS, ) Honorable ) James F. Henry, Defendant-Appellee. ) Judge Presiding

JUSTICE McNULTY delivered the opinion of the court:

Must Illinois courts allow a private right of action under a

federal statute that provides for such a right? The Telephone

Consumer Protection Act of 1991 (the Act) (47 U.S.C. §227(b)(3)

(2000)) establishes a private right of action for its violation

"if otherwise permitted" by state court rules. We hold that the

Act requires Illinois courts to allow a private right of action

unless a neutral rule of judicial administration bars the cause.

Because we find no applicable rule that bars the cause of action

here, we find that the plaintiff has a right to pursue a claim

under the Act.

In 2004 First Capital Mortgage Corporation sued Union

Federal Bank of Indianapolis, alleging that defendant sent

plaintiff hundreds of unsolicited faxes between July 2002 and

October 2004. In count I plaintiff sought to recover under the

Act, and in count II plaintiff sued for conversion of its ink and 1-06-0459

paper for the faxed advertisements.

Defendant moved to dismiss count I, arguing that Illinois

does not permit a private right of action under the Act. The

trial court granted the motion with prejudice pursuant to section

2-619 of the Code of Civil Procedure. 735 ILCS 5/2-619 (West

2004). The court expressly found no just reason to delay appeal.

Plaintiff filed a timely notice of appeal.

Supreme Court Rule 304(a) gives this court jurisdiction over

the appeal. 155 Ill. 2d R. 304(a). We review the dismissal de

novo. Klinkner v. County of Du Page, 331 Ill. App. 3d 48, 50

(2002).

The Act provides:

"It shall be unlawful for any person ***

* * *

*** to use any telephone facsimile

machine, computer, or other device to send an

unsolicited advertisement to a telephone

facsimile machine ***[.]

A person or entity may, if otherwise permitted by

the laws or rules of court of a State, bring in an

appropriate court of that State--

***

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*** an action to recover *** $500 in

damages for each *** violation [of the Act.]"

47 U.S.C.A. §227(b)(1)(C), (b)(3)(B) (2000).

Cases under the Act have focused on interpretation of the

phrase "if otherwise permitted." The parties agree that we

should interpret the phrase as an acknowledgment that state

courts need not change procedural rules to accommodate claims

under the Act. See Schulman v. Chase Manhattan Bank, 268 A.D.2d

174, 179, 710 N.Y.S.2d 368, 372 (2000); Accounting Outsourcing,

LLC v. Verizon Wireless Personal Communications, L.P., 329 F.

Supp. 2d 789, 798 (M.D. La. 2004). This approach comports with

the Supreme Court's reasoning in Howlett v. Rose, 496 U.S. 356,

110 L. Ed. 2d 332, 110 S. Ct. 2430 (1990), where the court said:

"Federal law is enforceable in state courts ***

because the Constitution and laws passed pursuant to it

are as much laws in the States as laws passed by the

state legislature. The Supremacy Clause *** charges

state courts with a coordinate responsibility to

enforce that law according to their regular modes of

procedure. * * *

*** A state court may not deny a federal right,

when the parties and controversy are properly before

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it, in the absence of 'valid excuse.' Douglas v. New

York, [New Haven & Hartford R.R. Co.], 279 U.S. 377,

387-388[, 73 L. Ed. 747, 752, 49 S. Ct. 355, 356]

(1929) (Holmes, J.). 'The existence of the jurisdiction

creates an implication of duty to exercise it.' Mondou

v. New York, [New Haven & Hartford R.R. Co.], 223 U.S.

1, 58[, 56 L. Ed. 327, 349, 32 S. Ct. 169, 178] (1912);

[citations].

*** When a state court refuses jurisdiction

because of a neutral state rule regarding the

administration of the courts, we must act with utmost

caution before deciding that it is obligated to

entertain the claim. [Citations.] The requirement that

a state court of competent jurisdiction treat federal

law as the law of the land does not necessarily include

within it a requirement that the State create a court

competent to hear the case in which the federal claim

is presented. * * * States may apply their own neutral

procedural rules to federal claims, unless those rules

are pre-empted by federal law." Howlett, 496 U.S. at

367-72, 110 L. Ed. 2d 347-51, 110 S. Ct. 2438-41.

Thus, the Act forms part of the law enforceable in Illinois

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courts. We use applicable rules of statutory interpretation to

determine whether the Act creates a private right of action. See

Sawyer Realty Group, Inc. v. Jarvis Corp., 89 Ill. 2d 379, 386

(1982). We look first to the language of the Act. See Krautsack

v. Anderson, 223 Ill. 2d 541, 553 (2006). The Act expressly

grants a private right of action, limited only by the

qualification that the action must be "otherwise permitted by the

laws or rules of court." 47 U.S.C. §227(b)(3) (2000).

The limitation allows state courts to apply "neutral rule[s]

of judicial administration" (Howlett, 496 U.S. at 374, 110 L. Ed.

2d at 352, 110 S. Ct. at 2442) to claims under the Act, and if

such rules bar a claim, the state court may dismiss it. Meehan

v. Illinois Power Co., 347 Ill. App. 3d 761, 766 (2004). The

court in Howlett gave three examples of such rules of judicial

administration. Thus, a state court appropriately applied forum

non conveniens to dismiss a federal claim where the doctrine

would also bar a similar state claim between the parties. See

State of Missouri ex rel. Southern Ry. Co. v. Mayfield, 340 U.S.

1, 95 L. Ed. 3, 71 S. Ct. 1 (1950). Where neither party involved

in a federal claim resided in the forum state, the state court

had authority to dismiss the claim. See Douglas, 279 U.S. 377,

73 L. Ed. 747, 49 S. Ct. 355 (1929). Similarly, the state court

correctly dismissed a federal claim that arose outside of the

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forum state. See Herb v. Pitcairn, 325 U.S. 77, 89 L. Ed. 1483,

65 S. Ct. 954 (1945).

Defendant claims that such a neutral rule of judicial

administration bars the claim here. It finds the rule in Reuben

H. Donnelly Corp. v. Brauer, 275 Ill. App. 3d 300 (1995).

According to Donnelly, Illinois courts will imply a private right

of action from a silent statute only if courts need such a cause

of action to achieve the purposes of the statute. Donnelly, 275

Ill. App. 3d at 311; see Parra v. Tarasco, Inc., 230 Ill. App. 3d

819, 824-25 (1992). Donnelly states a rule of statutory

construction (see Moore v. Lumpkin, 258 Ill. App. 3d 980, 989

(1994)), not a rule of judicial administration. Here we have no

need to look to rules for implying a private right of action.

The statute on its face expressly grants a private right of

action. Therefore Donnelly does not apply to interpretation of

the Act.

Defendant does not suggest that any rule of judicial

administration, like forum non conveniens, bars plaintiff's

claim.

The Act, including its express provision for a private right

of action, forms part of the law of Illinois. No neutral rule of

judicial administration bars plaintiff's cause of action against

defendant under the Act. Accordingly, we reverse the dismissal

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of count I of the complaint and we remand for further proceedings

in accord with this order.

Reversed and remanded.

FITZGERALD SMITH, P.J., and JOSEPH GORDON, J., concur.

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