Dreyfus v. Ameritech Mobile Communications

FIRST DIVISION
August 24, 1998

No. 1-97-1496

LARRY M. DREYFUS and RITA ) Appeal from the
PUN, Indiv. and as ) Circuit Court
Representatives of a Class of ) of Cook County.
Similarly Situated Persons, )
)
Plaintiffs-Appellants, )
)
v. )
)
AMERITECH MOBILE COMMUNICATIONS,)
INC., ) Honorable
) MICHAEL B. GETTY,
Defendant-Appellee. ) Judge Presiding.

PRESIDING JUSTICE BUCKLEY delivered the opinion of the
court:
Larry Dreyfus (plaintiff Dreyfus) and Rita Pun (plaintiff
Pun) each contracted with defendant Ameritech Mobile
Communications, Inc., for two years of cellular telephone
service. About one year into the contracts, defendant notified
plaintiffs that it was passing along a $0.02-per-minute
interconnect charge to its customers. On January 10, 1996, after
the charge was imposed, plaintiff Dreyfus filed a putative class
action complaint against defendant alleging that the imposition
of the interconnect charged constituted a breach of contract,
statutory consumer fraud and common law fraud. On June 4, 1996,
plaintiff Dreyfus filed an amended complaint that named plaintiff
Pun as an additional plaintiff.
In response to defendant's section 2-615 motion to dismiss
(735 ILCS 5/2-615 (West 1994)), the trial court dismissed
plaintiff Dreyfus' breach of contract claim, finding that his
service contract did not contain a price guarantee. The trial
court also dismissed the statutory and common law fraud claims,
finding that the amended complaint failed to allege an actionable
false statement or deceptive practice. However, the trial court
denied defendant's motion to dismiss plaintiff Pun's breach of
contract claim, finding that her contract did contain a price
guarantee. Thereafter, defendant filed a section 2-619 motion to
dismiss plaintiff Pun's claim based upon the voluntary payment
doctrine (735 ILCS 5/2-619 (West 1994)). The trial court granted
the motion. Plaintiffs filed a timely notice of appeal and raise
the following issues: (1) whether the trial court properly
dismissed plaintiff Pun's contract claim, finding it was barred
by the voluntary payment doctrine; (2) whether the trial court
properly dismissed plaintiffs' fraud claims; and (3) whether the
trial court properly dismissed plaintiff Dreyfus' contract claim
finding that his contract did not contain a price guarantee.
The relevant facts are as follows. On January 30, 1995,
plaintiff Dreyfus entered into two agreements with defendant, a
service agreement (Dreyfus Service Agreement) and a promotional
service agreement (Dreyfus Promotional Agreement). The contracts
provided that plaintiff Dreyfus would receive cellular telephone
service from defendant under a special promotional program that
was offered to employees of the Chicago Mercantile Exchange (CME
Value Plan). Plaintiff Dreyfus chose the CME Value Plan, which
was offered as part of the promotion, rather than one of the
standard plans listed on the service agreement.
Under the CME Value Plan, plaintiff Dreyfus was to pay a $10
monthly fee and additional charges of $0.24 per minute for peak
time calls and $0.11 per minute for off-peak calls. The Dreyfus
Service Agreement provided the following regarding rate changes
during the term of the contract:
"RATE CHANGES: If you select a Safe and
Smart, Convenience, Family Pack, Business
Value Pack, Discount Weekender Value Pack,
Extra Value Pack, Super Value Pack, or a
Discount Time Pack Service Plan, the Service
Rates and Charges in effect at the beginning
of your initial Minimum Term will remain in
effect until the end of that Minimum Term.
You are hereby informed, and you acknowledge,
that if you select any other Service Plan,
Service rates may go up or down during the
Minimum Term."
The Dreyfus Promotional Agreement contained a preprinted
list of various standard service plans available and their
respective price structures. Under this list was a box marked
"Promotion" in which the following statement was preprinted:
"I choose to participate in the ________
Promotion. I understand that all of the
conditions described in the Promotional
Information apply to me, and I acknowledge
that I received the Promotional Information
before signing this Agreement."
The words "CME Value Plan" were hand-written in the blank space
before the word Promotion. At the bottom of the contract, above
plaintiff Dreyfus' signature, the following provision was pre-
printed:
"EXTRA BONUS: If you purchase a Service Plan
listed above, the Service Rates and Charges
in effect at the beginning of your initial
Minimum Term will remain in effect until the
end of that Minimum Term."
On December 30, 1994, plaintiff Pun entered into a service
agreement (Pun Service Agreement) and a promotional value
agreement (Pun Promotional Agreement). Plaintiff Pun chose a
standard service plan which guaranteed that service rates and
charges would not change during the two-year contract term.
Defendant's promotional brochure provided the following:
"Ameritech cellular service saves you up
to 35% over the competition...and that's not
all!
With Ameritech pricing brochures, what
you see is what you get.
--Did you know there are additional
costs in the competitor's brochure? It
states that you will be charged an additional
$.02 per minute! Note that this cost is not
included in their time package prices or
their airtime list prices."
In December 1995, plaintiffs each received a letter from
defendant in which defendant announced that "effective January 1,
1996, a two-cent [per minute] interconnect charge will appear on
your bill as a line item called Interconnect Charge under the
Other Charges and Credits section." Plaintiffs were first
assessed interconnect charges in their monthly bills for January
1996. Thereafter, each monthly bill listed the $0.02-per-minute
charge in the "Other Charges and Credits" section of the bill.
Plaintiffs paid each bill in full.
On January 10, 1996, plaintiff Dreyfus filed a putative
class action complaint alleging that defendant's imposition of
the $0.02-per-minute interconnect charge constituted breach of
contract. Plaintiffs further alleged this charge violated the
Illinois Consumer Fraud and Deceptive Business Practices Act (815
ILCS 505/2 et seq. (West 1992)) and constituted common law fraud.
Five months later, plaintiff Dreyfus filed an amended complaint
adding plaintiff Pun as an additional plaintiff.
Defendant filed a motion to dismiss the amended complaint
pursuant to section 2-615 of the Code of Civil Procedure. 735
ILCS 5/2-615 (West 1994). On September 10, 1996, the trial court
granted defendant's motion to dismiss plaintiff Dreyfus' breach
of contract claim. The trial court's decision was primarily
based upon the fact that plaintiff Dreyfus chose a promotional
CME Value Plan. The court reasoned: "Because the extra bonus
provision and certain service plans were preprinted on the
contract whereas Dreyfus' CME plan was handwritten [on the
contract] this is a strong indication that the extra bonus
provision was meant to cover only the preprinted service plans."
The trial court found that since plaintiff Dreyfus did not choose
one of the listed plans, under the plain terms of the contract
his rate was not guaranteed.
The court then addressed plaintiff Pun's breach of contract
claim. Defendant did not argue that plaintiff Pun did not have a
fixed rate guarantee. Rather, defendant argued that the
interconnect fee was not part of the fixed-rate guarantee but was
a separate charge that could be increased by defendant during the
life of the contract. The court found that this was a "fact
question." The court stated that the increase "would appear to
be a rate increase which violates that guarantee" and refused to
"find as a matter of law that such an increase falls within an
auxiliary charge which may not have been subject to the
guarantee." Accordingly, the trial court found that plaintiff
Pun did state a cause of action for breach of contract.
The court also found that plaintiffs failed to state a cause
of action for either consumer fraud or common law fraud and
dismissed those claims. The trial court stated that plaintiffs
failed to allege that defendant lied in its advertising materials
or that defendant had planned to pass on the fee all along.
Subsequently, defendant filed a motion to dismiss plaintiff
Pun's breach of contract claim, pursuant to section 2-619 of the
Code of Civil Procedure (735 ILCS 5/2-619 (West 1994)), arguing
that plaintiff Pun's claim was barred by the voluntary payment
doctrine. The court granted defendant's motion and found that
plaintiff Pun's claims were barred under the doctrine since she
had voluntarily paid each of her monthly bills without protest
and with full knowledge of the facts. The court further found
that defendant had never threatened to terminate her service and,
further, that defendant had a policy of discontinuing service
only after sending written notice, which was never done here.
Thus, the court found that plaintiff Pun's payments were not made
under compulsion or duress. This appeal followed.
A. STANDARD OF REVIEW
We briefly note that in reviewing the trial court's orders
dismissing plaintiffs' claims, our standard of review is de novo.
Lockwood v. Standard & Poor's Corp., 289 Ill. App. 3d 194, 195
(1997); American National Bank & Trust Co. v. Thomas, 288 Ill.
App. 3d 343, 346 (1997).
B. VOLUNTARY PAYMENT DOCTRINE
Plaintiffs' first argument is that the voluntary payment
doctrine does not preclude plaintiffs' class action complaint.
Under the voluntary payment doctrine, "money voluntarily
paid under a claim of right to the payment, and with knowledge of
the facts by the person making the payment, cannot be recovered
by the payor solely because the claim was illegal." Smith v.
Prime Cable, 276 Ill. App. 3d 843, 847 (1995). A payment is
involuntary if (1) the payor lacked knowledge of the facts upon
which to protest the payment at the time of payment, or (2) the
payor paid under duress. Getto v. City of Chicago, 86 Ill. 2d 39, 48-49 (1981). In other words, to negate the applicability of
the doctrine, plaintiff must "not only show that the claim
asserted was unlawful but also that payment was not voluntary,
that there was some necessity which amounted to compulsion.
[Citations.]" Smith, 276 Ill. App. 3d at 848.
This court has recognized that today, the nature of the
duress sufficient to establish compulsion has broadened and that
recovery of a voluntary payment made under a claim of right can
occur "'[w]here a person, to prevent injury to himself, his
business or property, is compelled to make payment of money which
the party demanding has no right to receive and no adequate
opportunity is afforded the payor to effectively resist such
demand.'" Smith, 276 Ill. App. 3d at 849, quoting Schlossberg v.
E.L. Trendel & Associates, Inc., 63 Ill. App. 3d 939, 942 (1978).
Protest may also serve as evidence of compulsion and an
unwillingness to pay; however, it does not conclusively establish
compulsion where compulsion is disproved by other circumstances.
Smith, 276 Ill. App. 3d at 849. In determining whether plaintiff
Pun's payment was made under compulsion, this court must consider
all the facts and circumstances surrounding the transaction.
Smith, 276 Ill. App. 3d at 850.
Plaintiffs first argue that plaintiff Pun's use of her
cellular telephone is an economic necessity and, therefore,
plaintiff Pun's fear of losing her cellular phone service
constitutes sufficient compulsion to render the voluntary payment
doctrine inapplicable. In response, defendant argues that to
establish duress, plaintiff Pun must show that there was an
actual threat to deprive her of some product or service that was
a necessity for her business or personal life and relies
primarily on Smith v. Prime Cable, 276 Ill. App. 3d 843 (1995).
Defendant asserts that plaintiff Pun cannot allege either that
defendant actually threatened to cut off her cellular service or
that cellular phone service is a necessity.
Plaintiffs rely primarily on the following three cases in
support of their argument on this issue: Getto v. City of
Chicago, 86 Ill. 2d 39 (1981); Ross v. City of Geneva, 71 Ill. 2d 27 (1978); and Geary v. Dominick's Finer Foods, Inc., 129 Ill. 2d 389 (1989). We will briefly review each in turn.
In Getto, plaintiff filed a class action complaint against
Illinois Bell, four other telephone companies and several
municipalities challenging defendants' method in calculating the
municipal message tax. Getto, 86 Ill. 2d at 42-44. Defendants
argued that since plaintiff had paid his utility bill without
protest until suit was filed he was barred by the voluntary
payment doctrine. Getto, 86 Ill. 2d at 49. The Illinois Supreme
Court held that the voluntary payment doctrine was inapplicable
because plaintiff did not have full knowledge of the facts.
Getto, 86 Ill. 2d at 51. However, the supreme court went on to
state:
"Even were it to be held that the
plaintiff had sufficient knowledge of the
facts to permit a conclusion that all
payments prior to 1977 were voluntary, we
judge that the implicit and real threat that
phone service would be shut off for
nonpayment of charges amounted to compulsion
that would forbid application of the
voluntary-payment doctrine." Getto, 86 Ill. 2d at 51.
In Ross, plaintiff filed suit against the City of Geneva
challenging the imposition of a 10% surcharge on his electric
bill. Ross, 71 Ill. 2d at 30. Plaintiff paid the surcharge
separately and marked "protest" on his bill. Ross, 71 Ill. 2d at
30-31. The court found plaintiff was not precluded by the
voluntary payment doctrine from asserting the claim. Ross, 71 Ill. 2d at 33. In so holding, the supreme court noted:
"The record shows that it was defendant's
policy to terminate service to users in the
event of nonpayment of imposed charges and
that in many instances such service had in
fact been terminated. *** Confronted with
the choice of payment of the surcharge or
termination of service, plaintiff, in making
the payment, acted with prudence and is not
barred from recovery of the sums paid."
Ross, 71 Ill. 2d at 33-34.
In Geary, the plaintiffs challenged a sales tax imposed on
tampons and sanitary napkins. Geary, 129 Ill. 2d at 392. The
supreme court, relying on Getto and Ross, found that since
tampons and sanitary napkins were necessities which could not be
purchased without paying the tax imposed, plaintiffs sufficiently
pled duress. Geary, 129 Ill. 2d at 402. The supreme court
rejected defendant's argument that plaintiffs should be required
to plead and prove that defendants actually threatened or coerced
them to pay the extra tax. Geary, 129 Ill. 2d at 399-401.
We find that these cases do not aid plaintiffs' argument as
they are distinguishable in one very important respect, they all
involved necessities. Plaintiffs attempt to convince this court
that cellular telephone service is an economic necessity. They
argue that "the use of cellular telephones has become common and
has become a seamless part of our modern telephone system."
Plaintiff Pun sells new and used cars at a dealership and asserts
that "the loss, or even threat of loss, of her cellular telephone
service would do significant harm to her business." Plaintiffs
also assert that the fact that defendant has the ability to
temporarily or permanently interrupt service for failure to pay
also precludes application of the voluntary payment doctrine.
We cannot accept plaintiffs' arguments. The Geary court, in
analogizing the purchase of tampons and sanitary napkins to the
use of telephone and electric service, stated:
"The plaintiffs in Getto and Ross had no other
reasonable source from which to obtain telephone
and electric service ***. Similarly, plaintiffs
in the case at bar had no other reasonable source
from which to obtain tampons and sanitary napkins
without paying the taxes because all retail stores
had to comply with the various sales tax laws."
Geary, 129 Ill. 2d at 400.
Based on the court's reason in Geary, the existence of a
reasonable alternative source precludes any arguments about
whether a particular product or service constitutes a necessity.
In the instant case, plaintiff Pun has not alleged a lack of
access to land-line phones at her work or anywhere else. Indeed,
that would be a difficult argument to formulate as reasonable
alternatives to cellular phone service unquestionably exist,
whether at plaintiff Pun's place of business, her home, or a
payphone. Thus, we find that cellular phone service is not a
necessity and, therefore, plaintiff Pun cannot establish that
payments were made under compulsion or duress. See Geary, 129 Ill. 2d at 398 (recognizing that if the service is not a
necessity there can be no duress).
Accordingly, we find that the trial court properly concluded
that plaintiff Pun's cause of action was precluded by the
voluntary payment doctrine.
C. DREYFUS' BREACH OF CONTRACT CLAIM
Plaintiffs next argue that there is an issue of fact as to
whether the CME Value Plan chosen by plaintiff Dreyfus is subject
to the rate guarantee. We find that the record does not support
such a position.
Plaintiff Dreyfus' contract explicitly lists the service
plans that include a "service rates and charges" guarantee; the
CME Value Plan selected by plaintiff Dreyfus is not on the list.
The contract further states that, if a customer selects a plan
other than a "Safe and Smart," "Convenience," "Family Pack,"
"Business Value Pack," "Discount Weekender," "Value Pack," "Extra
Value Pack," "Super Value Pack," or "Discount Time Pack Service
Plan," "service rates may go up or down during the minimum term."
It is clear that the CME Value Plan is not a time-pack. As
defendant notes, the nature of a time-pack is such that it
provides a customer with a set amount of monthly air time at a
specified price. The CME Value Plan does not; it provides only
for a monthly charge of $10 plus additional per-minute rates.
There are five time-pack service plans listed on the attachment
to the Dreyfus Promotional Agreement with each explicitly labeled
a time-pack. The CME Value Plan is not referred to as a time-
pack. The plain language of the contract refutes plaintiffs'
assertion that the CME Value Plan falls within the definition of
"Discount Time Pack Service Plan" and, therefore, plaintiff
Dreyfus' rates were not guaranteed.
Accordingly, we find that the trial court properly dismissed
plaintiff Dreyfus' breach of contract claim.
D. STATUTORY FRAUD CLAIMS
Plaintiffs' final argument is that the amended complaint
sufficiently alleged a violation of the Illinois Consumer Fraud
and Deceptive Business Practices Act (Consumer Fraud Act) (815
ILCS 505/2 et seq. (West 1992)).
The Consumer Fraud Act prohibits "[u]nfair methods of
competition and unfair or deceptive acts or practices." 815 ILCS
505/2 (West 1992). To state a claim under the Consumer Fraud
Act, a complaint must set forth specific facts that show: (1) a
deceptive act or practice; (2) an intent by the defendant that
plaintiff rely on the deception; and (3) that the deception
occurred in the course of conduct involving a trade or commerce.
People ex rel. Hartigan v. E&E Hauling, Inc., 153 Ill. 2d 473,
492 (1992).
Plaintiffs' amended complaint alleges that defendant "made
false statements or omissions that it would not charge for the
interconnect cost and not raise subscriber rates during the
contract period *** with the intent that consumers would rely on
then [sic], and induce consumers to become subscribers of
[defendant]." The amended complaint further alleges that
defendant "made false statements or omissions to plaintiffs by
advising that [defendant] would not separately charge its
subscribers for the interconnect cost, and not raise subscriber
rates during the initial Minimum Term of the contract."
We find that plaintiffs have failed to allege the necessary
false statement of material fact. As the circuit court noted:
"[P]laintiffs have not alleged nor have they
argued that [defendant] lied in its
advertising materials in 1993 or 1994 by
stating that it did not pass the 2 cent per
minute fee on to its customers. In fact
plaintiffs readily admit that [defendant] did
not pass this fee on to its customers at the
time it so advertised, and continued this
practice for a year after circulating the
promotional materials.
Further plaintiffs have not alleged that
when [defendant] advertised that it did not
pass this fee on to its customers it had
already planned on doing so in the near
future. *** Instead plaintiff has alleged
in effect that [defendant] did not charge the
fee in order to induce people to become
customers then later made a decision that it
would start charging the fee.
Such an allegation and the letter from
[defendant] *** indicate that [defendant]
made a business decision that it could no
longer absorb the interconnect charge
itself."
Accordingly, as plaintiffs have failed to allege a deceptive
practice, we conclude that the trial court properly dismissed
plaintiffs' claim of statutory fraud.
For the aforementioned reasons, the judgment of the circuit
court of Cook County is hereby affirmed.
Affirmed.
O'BRIEN and GALLAGHER, JJ., concur.