Price v. FCC National Bank

Opinion

                               FIFTH DIVISION

                               November 22, 1996

No. 1-95-4210

GEORGE K. PRICE and HARRY L. SCHUMAN,     )    Appeal from the

                                         )    Circuit Court of

                Plaintiffs-Appellants,   )    Cook County.

                                         )

 v.                                      )

FCC NATIONAL BANK,                        )    Honorable

                                         )    Ellis E. Reid,

                Defendant-Appellee.      )    Judge Presiding.

    PRESIDING JUSTICE McNULTY delivered the opinion of the court:  

    Plaintiffs George K. Price and Harry Schuman appeal from the

dismissal of their action alleging violation of the Illinois Credit

Card Issuance Act(815 ILCS 140/6 (West 1994)), breach of contract

and common law fraud against FCC National Bank (FCC).  We affirm.

    FCC offers Visa and Mastercard bank credit cards under the

name "First Card."  Plaintiffs maintain bank credit cards with FCC.  

The privileges and obligations of holding a First Card are set

forth in the cardholder agreement (agreement).  Prior to April 1,

1991, the agreement provided that all cardholders had a "grace

period" of 25 days after receipt of a billing statement to pay an

outstanding balance without incurring a finance charge.  On April

1, 1991, the agreement was amended to provide that a finance charge

would accrue unless payment was made on or before the "payment due

date" printed on the billing statement.  The grace period was the

time between the billing date and the payment due date.

    FCC breaks its cardholders into two groups: cardholders who

have paid their previous month s balance in full, which is the

group plaintiffs seek to represent; and (2) cardholders who have

not paid the total amount due on their bill.  For those in category

one, previous month full payers, FCC inserts a Payment due date on

their next monthly billing statement that is 20 days from the

statements billing date.  However, FCC does not assess finance

charges against any customer who pays his balance within 25 days

after the billing date.  For those in category two, those who have

run a balance on their previous month s bill, FCC sets due dates on

these cardholders  statements that are 25 days from the billing

date, but because these cardholders have not paid their previous

month s balance in full, they are assessed finance charges until

that balance is paid in full.

    Plaintiffs originally filed suit on March 30, 1992, in federal

court, claiming that FCC s practice of inserting a payment due date

of 20 days after the billing date but not charging finance charges

until 25 days after the billing date violated the Truth In Lending

Act.  15 U.S.C. 1601 through 1693 (1988).  Plaintiffs' suit also

alleged that this practice violated the Illinois Credit Card

Issuance Act (815 ILCS 140/6 (West 1994), was a breach of the

Illinois Consumer Fraud and Deceptive Business Practices Act

(Consumer Fraud Act) (815 ILCS 505/1 (West 1994)), and a breach of

contract.  Plaintiffs also sought class certification.  The

district court dismissed plaintiffs  complaint, finding that FCC s

grace period was authorized by the disclosure requirements of the

Truth in Lending Act.  Price v. FCC National Bank, 92 C 2164 (N.D.

Ill. 1992). The court declined to exercise jurisdiction over

plaintiffs  state claims.  The seventh circuit affirmed.  Price v.

FCC National Bank, 4 F.3d 472(7th Cir. 1993).

    Plaintiffs then brought suit in state court alleging violation

of the Illinois Credit Card Issuance Act, breach of contract and

common law fraud.  Defendant moved to dismiss plaintiffs' complaint

pursuant to section 2-615 of the Code of Civil Procedure. 735 ILCS

5/2-615 (West 1994).  The trial court granted defendant's motion to

dismiss, finding that  plaintiffs' claim alleging violation of the

Credit Card Issuance Act failed to state a claim since the

agreement provides that Delaware law would apply, and plaintiffs'

breach of contract and fraud claims fail to state claims since

plaintiffs have not been damaged.  Plaintiffs appeal.

    Plaintiffs' complaint alleges the defendant violated section

6 of the Credit Card Issuance Act, which states, in pertinent part:

      "6. Disclosure to applicants.

      (a) Except as provided in Section 25 of the Retail

    Installment Sales Act, relating to sellers or holders

    under a retail charge agreement and in subsection (c),

    a credit card issuer shall disclose, either on an

    application for a credit card or on literature

    accompanying the application, on or with any credit card

    account solicitation, and on each periodic billing

    statement mailed to a card holder, the following:

                                      * * *    

      (3) the grace period, which is defined as the period

    within which any credit extended under such credit plan

    must be repaid to avoid incurring an interest charge

    represented in terms of an annual percentage rate of

    interest, and if no such period is offered such fact

    shall be clearly stated."  815 ILCS 140/6 (West 1994).

Plaintiffs contend that defendant violated section 6 of the Credit

Card Issuance Act, as well as committed common law fraud and

breach of contract, when it represented, by means of a false

payment due date, a period that is shorter than the period within

which any credit extended must be repaid to avoid incurring an

interest charge.   

    Credit card disclosure requirements are also addressed in the

federal Truth in Lending Act, which requires credit card issuers

to disclose in each periodic billing statement:

      "[t]he day by which or the period (if any) within which

    payment must be made to avoid additional finance charges,

    except that the creditor may, at his election and without

    disclosure, impose no such additional finance charge if

    payment is received after such date or expiration of such

    period."  15 U.S.C. 1637(b)(9)(1988).   

    Defendant urges us to uphold the trial court s dismissal of

plaintiffs  action on the basis that the federal court has

determined that defendant has complied with the federal Truth in

Lending Act and, according to defendant, compliance with the Truth

in Lending Act is complete compliance with Illinois law.  

Defendant claims that the court in Lanier v. Associates Finance,

Inc., 114 Ill. 2d 1, 499 N.E.2d 440 (1986), determined that

compliance with the Truth in Lending Act is compliance with the

Illinois Credit Card Issuance Act.  The court in Lanier actually

determined that compliance with the federal Truth In Lending Act

is a defense to liability under the Illinois Consumer Fraud Act.  

The court also noted that the disclosure requirements of certain

Illinois consumer credit statutes are met by compliance with the

federal Truth in Lending Act.  The consumer credit statutes

referred to by the court were the Consumer Installment Loan Act

(Ill. Rev. Stat. 1981, ch. 17, par. 5420), "An Act in relation to

the *** rates of interest" (Ill. Rev. Stat. 1981, ch, 17, par.

5410), the Retail Installment Sales Act (Ill. Rev. Stat. 1981, ch.

121, par. 505), and the Motor Vehicle Retail Installment Sales

Act (Ill. Rev. Stat. 1981, ch. 121 1/2 par. 565).  Each of these

statutes specifically states that compliance with the Truth in

Lending Act is compliance with the Illinois statute.  The court in

Lanier stated that "we perceive in the disclosure provisions of

Illinois' consumer credit statutes a consistent policy against

extending disclosure requirements under Illinois law beyond those

mandated by the Truth in Lending Act, in situations where both the

Act and the Illinois statutes apply."  Lanier, 114 Ill. 2d at 17.  

      Section 10b(1) of the Consumer Fraud Act provides that the  

Consumer Fraud Act does not apply to "[a]ctions or transactions

specifically authorized by laws administered by any regulatory

body or officer acting under statutory authority of this State or

the United States."  815 ILCS 505/10b (West 1994).  The Lanier

court determined that this section of the Consumer Fraud Act also

provides that compliance with the Truth in Lending Act is

compliance with the Illinois Consumer Fraud Act.  Lanier did not,

however, address whether compliance with the federal Truth in

Lending Act is compliance with the statute at issue here, the

Illinois Credit Card Issuance Act.   

    We do address this issue and find that compliance with the

federal Truth in Lending Act is indeed compliance with the

Illinois Credit Card Issuance Act.  When plaintiffs here filed

their original complaint in 1993, the Illinois Credit Card

Issuance Act provided in pertinent part:  

    "If a credit card issuer, as required pursuant to federal

  law, makes disclosures of all information required to be

  disclosed under subsection (a) of Section 6 of this Act in

  connection with *** periodic billing statements, the credit

  card issuer shall be deemed to have complied with the

  requirements of subsection (a) of Section 6 of this Act."

  815 ILCS 140/9 (West 1992).  

  In 1994, prior to the filing of plaintiffs' amended complaint, the

Illinois Credit Card Issuance Act had been amended to state in

pertinent part:  

      "A credit card issuer who complies with or is exempt from

    the applicable disclosure requirements of the Truth in

    Lending Act and the regulations promulgated under that Act

    shall be deemed to be in compliance with or exempt from all

    provisions of subsection (a) of Section 6 of this Act." 815

    ILCS 140/9(c)(West 1994).  

The parties disagree as to whether the former statute or the

amended statute is applicable to this case.  We find it unnecessary

to determine whether one statute or the other applies, since the

amended statute did not change the law but merely clarified the

law.  See Friedman v. Krupp Corp., 282 Ill. App. 3d 436 (1996);

Hyatt Corp. v. Sweet, 230 Ill. App. 3d 423, 594 N.E.2d 1243 (1992).

The former statute provided that a credit card issuer that makes

the disclosures required by federal law complies with the

disclosure requirements of section 6 of the credit card act.  The

amended version specifically states that compliance with the Truth

in Lending Act is compliance with the disclosure requirements of

section 6 the Credit Card Issuance Act.  Thus, regardless of which

statute applies, the fact that defendant s disclosure of the grace

period complies with the Truth in Lending Act automatically means

defendant s disclosure is in compliance with the Illinois Credit

Card Issuance Act.  Plaintiffs' claim based on the Credit Card

Issuance Act was therefore properly dismissed.       

   We also find that because defendant has complied with the

federal Truth in Lending Act, plaintiffs cannot state a claim for

either common law fraud or breach of contract. The court in Lanier

found that a disclosure in compliance with the Truth In Lending Act

could not state a claim for common law fraud.  The court reasoned

that to hold otherwise would put a creditor in the anomalous

position of being guilty of common law misrepresentation by

specifically complying with the mandates of the federal Truth In

Lending Act.  Lanier, 114 Ill. 2d at 10-11.  We reach the same

conclusion here and also hold that, because defendant complied with

the federal law, it could not have breached its contract with

plaintiffs.       

    Accordingly because defendant s disclosure of the grace period

complied with the federal Truth in Lending Act, and compliance with

that act is compliance with Illinois law, plaintiffs' complaint was

properly dismissed for failure to state a claim.   

    Affirmed.

    COUSINS and HOURIHANE, JJ., concur.