Chicago Business Litigation Lawyer Blog
An Illinois Appellate Court recently considered a putative class action lawsuit alleging that a senior housing community operator violated several consumer protection statutes in connection with its contracts with residents. The First District affirmed the trial court’s dismissal of the claims finding that the trial court properly concluded that the contracts did not violate the statutes and granted summary judgment to senior housing community operator.
The defendant is an Illinois not for profit corporation that operates an independent living senior housing community for persons 55 years and older in Glenview, Illinois. The plaintiff filed the lawsuit as the executor of the estate of Marjorie Hamilton and sought to represent a class of other similarly situated individuals. Hamilton entered into a “Residency and Services Agreement” with the defendant for an apartment at the senior living facility Chestnut Square. The Agreement provided for an initial deposit that was to be paid by Hamilton to reserve a residence in Chestnut Square which would bear interest at the passbook savings rate established by Bank One.
In February 2013, Hamilton notified the defendant of her intent to terminate her residency. The defendant did not refund her entrance fee until July 2014. When it did, Hamilton did not receive any interest with her entrance fee refund. Even before the refund, the plaintiff filed a class action complaint against the defendant asserting claims of unconscionability; breach of contract; and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, the Security Deposit Interest Act and the Security Deposit Return Act. The trial court subsequently dismissed the unconscionability claim with prejudice, dismissed the Consumer Fraud Act claim without prejudice, and denied the defendant’s motion to dismiss the Deposit Return Act and Interest Act claims.
The trial court ultimately granted class certification for the Deposit Return Act and Interest Act claims but denied class certification for the Consumer Fraud Act and breach of contract claims. After class notice had been provided to the class members, the defendant filed for summary judgment as to all claims and plaintiff filed a cross-motion for partial summary judgment on liability under the Interest Act and Deposit Return Act claims. After hearing the arguments of both parties, the trial court granted summary judgment in favor of the defendant on both the class claims and the plaintiff’s individual claims. The plaintiff subsequently appealed these rulings to the First District Appellate Court.
As the Court noted, the crux of the plaintiff’s case depended on whether the Court found the Agreement to be a lease or a services agreement. A secondary issue in the case was whether the entrance fee could constitute a security deposit. Turning to the first question, the Court identified the requisite elements for an agreement to be considered a lease: (1) it must delineate the extent and bounds of the property; (2) it must identify a rental price and time and manner of payment; and (3) must set forth the term of the lease. After reviewing the terms of the Agreement, the Court determined that it could not be considered a lease under Illinois law. Continue reading ›