Price v. FCC National Bank

                                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.