Martin v. Heinold Commodities, Inc.

(No. 75013. On Own Behalf and MARTIN, On His R.

JOHN Situated, Similarly Appellee, of All Others Behalf COMMODITIES, INC., Appellant. v. HEINOLD Rehearing denied September Opinion 1994. filed 5, 1994. December McMORROW,J., part FREEMAN, concurring in J., joined by dissenting part. and Jr., Nissen, Joseph D. Cauley, J. Thomas K.

William Austin, Hatch, Sidley & Kearney and Robert M. Chicago, appellant. for Jacobs, Ltd., Harte, Ltd., & J. and Plotkin

William (William Jacobs, Harte, G. Or- J. John Jonah Chicago counsel), Karsh, appellee. for lofsky and Joshua opinion JUSTICE NICKELS delivered court: Commodities, Inc., from

Defendant, appeals affirming part decision appellate an court part judgment entered reversing against defendant. Plaintiff a complaint filed four-count against Heinold for fiduciary breach of and duty violation of the Consumer Fraud Deceptive and Busi (Consumer Act) (Ill. ness Practices Act Fraud Rev. Stat. 1211/2, ch. par. 261 et seq.). alleged suit Plaintiffs that Heinold misrepresentated had the nature of a "foreign service fee” in the sale of London Commodity (LCO’s) Options to September 12, class members from 1977, through May 1978. On remand from this court previous a appeal, the trial court found for the plaintiff (hereinafter, class plaintiffs) on both the breach of fiduciary counts and Consumer Fraud Act counts. The trial court plaintiffs punitive damages also awarded and prejudgment interest under both claims. The appellate court affirmed the of compensatory award damages, but punitive reversed the award damages under both appellate claims. The court also reversed the award of prejudgment interest under the Consumer (134 Fraud Act. We granted leave to appeal Ill. 2d R. 315).

BACKGROUND This is the second time this case has reached this Plaintiff, Martin, court. John originally filed a four- against complaint count Heinold for breach of fiduciary duty for violation of the Consumer Fraud Act in alleged 1980. Plaintiff that Heinold had intentionally misrepresented a "foreign the nature of service fee” charged in connection with the sale of LCO’s. action was subsequently certified as a class action. After initial discovery, plaintiff summаry judgment moved for on the fiduciary duty granted counts. The trial court plaintiffs’ motion, finding fiduciary a relationship between Hei- plaintiffs nold and as a matter of law and that Heinold had breached its duties to fiduciary plaintiffs.

The appellate court reversed the trial court’s deci- finding fiduciary sion relationship as matter of law. court, this affirmed court the appellate On from appeal question of fact a material matter, and found on that its whether, Heinold discussed the time at exist as fiduciary duty existed plaintiffs, with compensation a factual remanded for This court to breach. for Heinold fiduciary rela- a preagency as to whether determination between Heinold tionship existed Martin v. discussed. compensation was Heinold’s time Commodities, Ill. 67. 2d Inc. Findings Remand on Trial Court’s following remand, made the the trial court On findings of and law. fact Fact

Findings of in obtained option contracts commodity LCO’s were had the London, England. option The of such purchaser commodity obligation, buy to or sell a right, but the to This either price. contract at certain futures contract was of limited purchase or sell futures duration, expire and option after which time the would options such would become worthless. Purchasers of in only favorably if the market moved their profit direction, option plus to enough price offset time, could any purchasers costs. At that transaction commodity profit. at a buy or sell futures contract (Com- Commodity Trading Commission Futures regulate to mission), a commission established Federal the sale of trading, futures banned commodity and ban was The Commission’s June 1978. LCO’s effective overwhelming majority an the fact that by necessitated at that time were in the sale of LCO’s engaged of firms One of the practices. or unlawful employing fraudulent banning specific practices by cited the Commission "foreign of terms such the sale of LCO’s was the use The Commission noted: markups. fee” conceal service to by major- scruрulously concealed the vast "The fact most *** ity of firms is the full mark-ups. extent of fees and uniformly [The firms’ confirmation statements] avoid disclosure and in fact using conceal such fact various explanations Mark-ups frequently or definitions. are promotional defined in materials and customer confirma- *** 'foreign tions as [inter alia] service fees’ ***.”43 Fed. (1978). Reg. 16162 The trial following court made the specific findings LCO’s; concerning trading "[Trading extremely complex an undertaking was] investors, with little no information to available Amer- purchasers ican any from source other than from their options themselves, brokers. The mechanics workings exchanges, impact various London rates, currency conversion the lack of information concerning the underlying commodities and other factors investing exceedingly all complicated. made LCO Invest- *** ing in complicated LCOs was more and much less trading than understood of securities.

During period, difficult the relevant it was for custom- to compare potential through ers transactions effected causing different problems brokers. One of the such difficulty differing was that different brokers used termi- nology.

During period, potential the relevant customers were dependent completely upon the LCO broker for informa- charged tion fees about and commissions connection transactions; during period, with LCO the relevant the in- mercy vestor atwas of the broker to learn what the charged were, expenses rely upon London and had to very clearly compensation the broker state what the was, the broker since the customer had no other source for such information.

During period, virtually the relevant no investor America, regardless sophisticated, truly of how could commodity options trading understand London without *** During help period, of a broker. the relevant uniquely dependent upon, customers were at the and of, mercy obtaining their brokers in information relative tо such transactions.

The Plaintiff class has established clear and convine- period creation during the relevant ing evidence and relationship Heinold between of the customer-broker special a trust and confidence LCO customers involved its dealing subsequent fair part the customer on the of Heinold.” opening account, exe- class member an LCO each In signifying agreement and statement a cuted customer summary a and understood he or she had received regarding LCO’s. Heinold statement from disclosure summary were used statements forms of disclosure Two by during The first was a the relevant time. printed typewritten a form. and the second was form price an LCO the entire forms indicated that Both (1) premium components: for the a of three consisted (3) (2) foreign option; fee. commission; service summary typewritten disclosure The version foreign the commission service statement described fee as follows: 20% foreign equivalent adds service fee

"[Heinold] commodity premium as futures well x/2 normally charged rate on futures transac commission charges following to re purpose: tions. These have telex, bookkeeping, telephone, floor broker cover costs of fees, segregation age, clearing involved with costs pay for of Heinold funds to customer funds and use Commodity involved Options, London and research costs transactions; compensate [Hei options as well as to with registered representative services the nold] and the who conducting during options options the life of for customer such business.” type- printed virtually identical to the The was version foreign except form, that the service written disclosure changed premium $1,200. from 20% of the fee was foreign printed fee also that the service The form noted options would be smaller. with shorter lives could found that Heinold The trial court further by charging only operate profitably transactions on LCO price arrived at оf a standard commission. court by noting operate this that Heinold believed it could by profitably charging, only charged, and in fact a foreign commission, fee, and no on service London indistinguishable futures, the mechanics of which were from LCO’s. Because Heinold had determined it pay compensate registered represen- costs, could all the tative who serviced the customer’s account and still operate profitably by charging only a flat on commission position, charging a futures the trial court found the foreign by a service fee on LCO’s a means to which compensation already receive additional for services by covered the commission. The court further found explanation that Heinold offered no credible for the foreign foreign fact, assessment In service fee. internally service fee was treated a Heinold commission.

The court further found that word "commission” commonly meaning: has a pensation understood broker’s com- payment transaction as well as for the general However, broker’s overhead. commis- term usually sion is not meant to include a broker’s out-of- pocket expenses paid parties to third in connection with particular transaction. In to contrast the understood meaning commission, the court noted that the term foreign understanding. Thus, has service fee no common "foreign the court found that Heinold’s use of the term give, give, service fee” was intended and did impression normally that this fee not was what would but, instead, be as a known commission anwas addi- expense necessarily tional the broker incurred pay parties. transaction and had to to third The trial court found Heinold’s use of the term foreign misleading deceptive. service fee This infor- investor, found, mation was material to the the court and Heinold it be knew would material. The court also during period, sought found that the relevant Heinold conveying investing public by confidence to instill that, firms, it was unlike other customers its markups on exceedingly high commissions charging foreign fact, service through In the use its LCO’s. thing. fee, same accomplished very not investors would concluded that The trial court had through they Heinold trading in LCO engaged have foreign fee. The service purpose the true known sought by the the relief court then determined how monies determining class, which involved accounts was deposited by the class in their Heinold suffered, required equita- an what losses were used and parties’ stipula- accepted The accounting. ble court money plaintiffs amount of concerning tion the total LCO’s, $1,728,948.27, which paid to Heinold for the foreign $597,800 was service fees. payment Law Findings of fiduciary re- a preagency The trial court found that Thus, plaintiffs. and lationship existed between Heinold duty an affirmative to inform Heinold was under all at the time LCO’s were discussed material plaintiffs not dis- concerning compensation. its Heinold did facts concerning facts its and compensation close all material The court fiduciary duty plaintiffs. thus its violated misrepresentations, also that but for Heinold’s noted through LCO’s Hei- plaintiffs purchased would have sufficient causation to award The court found this nold. The their losses. court further plaintiffs full investment their full reason to found an additional award of causation: breaches irrespective investment losses duty malice. The court next fiduciary bad faith and with Fraud Act the Consumer found that Heinold violated damages. the same amount of awarded Next, prejudgment an award of the court found that fiduciary breach of was under both the proper interest The Fraud Act. court duty counts and Consumer damages also both claims. punitive awarded under appellate court affirmed the trial court’s deci- part, concerning puni- sion in and reversed the award of damages prejudgment tive and the award of interest under the Consumer Fraud Act.

ISSUES presents argues four for (1) issues review and appellate finding preagency that the fiduciary erred court in: (2)

duty; holding that Heinold violated the (3)upholding damages Act; Consumer Fraud award of proof investment losses where no of loss causation was (4) holding jury shown; and Heinold had no to a plaintiffs’ duty fiduciary on Consumer Fraud Act or requested arguing claims. cross-relief, Plaintiffs have (1) appellate reversing that the court erred in: the trial (2) punitive damages, reversing court’s award prejudgment trial court’s award of interest under Consumer Fraud Act.

I. Preagency Fiduciary Duty We first address Heinold’s contention that appellate affirming court in erred the trial court’s finding plaintiffs preagency that Heinold owed a fidu- (1) ciary argues: duty. plaintiffs prove Heinold did not (2) duty; appellate creating a such and in court erred fiduciary duty a new basis the existence of a in focusing complexity on the of the LCD transactions any relationship parties. rather than on between the Martin, 67, In 2d Ill. this court remanded the cause to the trial to court make a factual determination plaintiffs preagency

to as whether owed a fidu- ciary duty compensa- at the time Heinold discussed its plaintiffs. doing so, tion with In this court noted general rule that 'agent subject fiduciary duty making

"an is to no agreement agent may which he and [an] becomes there- (Restatement with its terms.’ after act accordance ***.)” (1958) (Second) Agency comment b of sec. (Martin, Ill. 2d at to

However, adopted exception this this court also in the found Restatement: rule law, conclude, as a that a unwilling are matter "[W]e fiduciary duty imposed prospective a upon can never be agency relation- agent prior to the formal creation of an Thus, general governing preagency rule ship. while the pro- of a require contracts does not disclosure of the terms agent’s we that facts spective compensation, believe could support imposition would fidu- be established which agent pre- ciary duty upon apрlicable to prospective *** agency contracts. ^[***] that, very also note creation of the

We where special agency relationship involves trust and confidence dealing part principal subsequent of a in the fair on the may agent, agent prospective fiduciary an be under a agent. duty (Restatement (Second) employment to disclose the of his as an terms Agency sec. comment e (1958)***.)”Martin, 117 Ill. 2d at 78-79. Failed to Relevant

Whether Class Prove Plaintiff Factors argues prove Heinold first failed to factors which the could find an relevant from court general fiduciary to the rule that exception duty no negotiated agent’s compensation exists at the time an agency prior relationship. to the existence of the Hei- argues: nold fiduciary special relationship

"A exists where there is who, good reposed equity and con- confidence science, in one regard good faith is bound to act in and with due It reposing the interests of one the confidence. exists resulting reposed on where confidence is one side superiority [Citations.] is found on the other. influence relationship may as a law between exist matter of client, ward, attorney guardian principal and and and domestic, moral, social, like, may be agent, and the or it personal. relationship or even Where the does not exist as a sought by matter of law or parol be established ev- idence, clear, proof convincing, the must strong, be and so unequivocal, and unmistakable as to lead but one (Kolze 468.) (1952), 461, conclusion.” v. Fordtran 412 Ill. Heinold further notes factors the to be considered when determining whether a fiduciary relationship exists a where one does not exist matter as of law: fiduciary a relationship "When confidential or does not law, by proved exist as a matter of it must be clear and convincing order a evidence in to establish basis for raising a constructive trust. be Factors to taken into degree any, kinship, consideration are disparity if in hеalth, condition, age, mental education and business ex perience parties, between the and the to which extent the allegedly party handling servient entrusted the of his and reposed business financial affairs to the and other faith confidence in (Cunningham and him. [Citation.]” Cunningham 2d 20 Ill. argues none factors pertinent to a

showing fiduciary duty by plaintiffs. were shown

While Heinold cites correctly applicable the law fiduciary relationship instances where no exists as a facts, proven by matter of law and must be it does not here, focus on law a applicable where future principal agent discussing agency, are terms of the compensation, a specifically relationship will be (Second) fiduciary matter of law. Restatement e, Agency, adopted by section comment this court previous appeal, addresses this factual specific provides: situation and *** peculiar "If the creation of relation involves trust confidence, by upon principal with reliance fair dealing agent, may fiduciary it be found that re- so, prior employment and, agent lation to the exists if duty fairly principal is under to deal with the (Restatement arranging (Second) employment.” the terms of the (1958).) Agency 390, Comment e § to be a inquiry We find this different than factual general in- inquiry the relies. While Heinold on which relationship fiduciary exists quiry whether determines inquiry that re- time at what all, here determines the agent’s concerning lationship disclosures the attached argues compensation. Thus, Heinold while his about inquiry to the a determination must include that the already relationship relationship, known: parties’ is that agent’s discussing agent principal the and future argues evi- compensation. that the And, while Heinold accepted and the trust it not show that dence did inquiry placed plaintiffs not it, is this confidence required required is that All that is e. under comment relationship peculiar agency involve the creation principal by on confidence, reliance аnd with trust dealing by agent. a factual determi- This is the fair trial court court. The be made the trial nation to peculiar here, and to exist trust and confidence found finding manifestly say court’s was cannot that the we Findings on fact will not be overturned erroneous. appeal against weight palpably they are "unless might though find evidence, be inclined to even we Kolze, 412 Ill. at 468-69. otherwise.” any, few, if Plaintiffs’ evidence "demonstrated complexities understand the at the time could investors including transactions, mechanics involved of LCO trading purchase of such commodities. plaintiffs could this, found that Because of the trial court expenses would incur a broker have known what not pass subsequently toon transactions overseas plaintiffs found, were the trial court investors. As expenses mercy what the the broker to learn "at the rely upon charged the bro- were, and had to in London compensation clearly very to the what the ker to state plaintiffs Moreover, could not determine was.” broker brokers brokers because this information from other terminology Thus, for their fees. used different had a peculiar trust and confidence in during negotiations these and relied on Heinold to deal fairly. It should also be noted that Heinold failed to present any evidence to contradict plaintiffs’ evidence on this point.

Heinold relies heavily on Apple v. Apple Ill. where the issue was whether a fiduciary rela- tionship existed prior to one party’s granting another party the power of attorney, which resulted in a fidu- ciary relationship as a note, matter of law. however, We (1) Apple controlling here because: Apple did negotiations not involve compensation prior to an (2) agency relationship, this court yet had not adopted comment e to section 390 of the Restatement.

Whether the Appellate Court Erred in Affirming the

Trial Court argues Heinold also that appellate the court erred in holding that a fiduciary duty exists simply where the subject matter of a contract is complicated. Heinold’s argument is based on its belief that the traditional criteria for the existence of a fiduciary duty were not met here and that appellate the court created new. basis on which to find a fiduciary duty. appellate The court affirmed the trial court point, on this stating:

"The record indicates that members of the Class were uniquely dependant upon information obtained from de- soliciting fendant and its brokers in profit order to make a on LCO trading transactions. The during of LCO’s the rel- period evant exceedingly complicated was due to the mechanics of LCO’s exchanges, and the London volatility commodity market, of the options impact currency conversion differing terminology rates and the (240 among used offering public.” brokers LCO’s to the Ill. 3d App. appellate The opinion court’s merely summarizes findings court’s investors, that few including plaintiffs, could have understood the mechanics of LCO charges proper. were type of trading or known what fi- preagency that a finding is not court’s appellate complex, a transaction is when duty attaches duciary circumstances, where a unique these but that under discussing compensation, agent are principal future upon uniquely dependant were and where charges concerning proper information Heinold for transaction, was no error duty attached. There in the issue. court on this by appellate II. Act

Consumer Fraud court erred argues appellate that Heinold next Heinold finding that affirming the trial court’s its through Fraud Act the use of violated the Consumer statement. Heinold misleading summary disclosure with the Commission’s argues literally complied it regulations by disclosing the various elements disclosure LCO’s, and thus could not have violated Consumer Fraud Act. argues first the Consumer Fraud Act

Heinold apply specifically "[a]ctions does not or transactions body by any regulatory authorized laws administered acting of this State statutory authority or officer ‍​‌‌‌‌​​‌‌‌​​​​‌​​​​​‌‌​​‌​​‌‌​​‌‌​​​‌‌‌‌‌‌​​​​‌​‍under 1992).) (815 505/10b(l) (West or the United ILCS States.” Moreover, argues, this court has held that requirements with "compliance [Fed- the disclosure regulations] liability eral statutes and is defense to Lanier v. under the Illinois Consumer Fraud Act.” Finance, (1986), 114 Inc. Ill. 2d 18. Associates all arguing In addition to it listed the elements the LCO’s in its sum- comprising purchase price required by statement as the Commis- mary disclosure great lengths regulations, Heinold also notes the sion’s that all disclosures to which it went order to ensure asserts, Thus, it could not have were made. Act. violated the Consumer Fraud deception Heinold’s was neither specifically autho- rized by Commission, nor in compliance with the regulations. Commission’s The Commission has noted compliance literal with regulations disclosure will not necessarily ensure that a violation of the Commis- regulations sion’s has not occurred. In certain circum- stances, "a may customer be deceived about [material despite receipt facts] of the required information by [the (Hammond regulations].” Commission’s v. Smith Bar- ney, Upham Harris & Co. [1987-1990 Transfer Binder] (CCH) (C.F.T.C. 1990).) Comm. Fut. Rep. 24,617 L. par. Hammond, In the Commission noted that it had re- viewed "the overall message conveyed by” the solicita- question tion in in determining whether a violation of Commission regulations disclosure had occurred. It has also been noted: imparted

"[Dnformation just through is the use of in- gained dividual words—information is also from the context in which placed. those words are When determin- ing disclosed,therefore, what has been wrong it is to treat piece each individual separately, information ifas it had no pieces relation to the other which surround it.” Is- (5th quith Utilities, v. Middle South 1988), Inc. Cir. F.2d 201 n.9.

The pertinent regulations Commission are found at section 32.5 of the Regulations: Code of Federal

"(a) (b) Except provided paragraph section, of this prior entry to the commodity option transaction, into a option prospective each customer option or customer shall summary be furnished by disclosure statement person soliciting accepting the order therefor. The disclosure following: statement shall contain the (1) description A commodity option brief transac- being tions including: offered (ii) ^[***] A listing of the elements comprising purchase price charged, including premium, be mark-ups on costs, premium, charges, fees and other as well as the premium established; method which the (iii) separate provided be for The services to price 17 C.F.R. comprising purchase ***.” elements 32.5(a)(1)(1977). § found, Summary "Heinold’s the trial court As Statement, failed to dis- which concealed and Disclosure misleading using the by close an commission additional Fee,’ failed to ’Foreign term Service deceptive and labeling a commission a requirements.” By satisfy these an additional commis- foreign fee rather than service believing sion, class into plaintiff Heinold deceived the charge separate an additional foreign service fee was paid parties to third necessarily Heinold incurred in LCO transactions.

Moreover, regulation Commission 32.9 we note that provides: directly indirectly: any person shall be or

”It unlawful (a) attempt To cheat or defraud or to cheat or defraud any person; other

(b) any person To make or cause to be made to other any report false or statement thereof or cause to be thereof; any person any entered for false record (c) any person attempt To deceive or to deceive other whatsoever; by any an means connection with into, entry into, offer to enter or the confirmation of (17 of, any commodity option the execution transaction.” (1977).) 32.9 C.F.R. § noted,

Again, as the trial court "Heinold violated this cheated, it provision when defrauded and deceived the class.” by fact finding supported

We note that this the Commission banned the offer sale LCO’s, commodity including general pub- to the options, due, alia, lic effective June 1978. This ban was inter using "foreign to the fact that firms such terms as were fee” to conceal true extent of fees and service (1978). Reg. Fed. markups. 43 argues inspected Heinold also the Commission summary object its disclosure form and did not foreign Thus, service fee. argues, the disclosure was proper. argument merit, This is without as is seen following which required Heinold was to have printed summary on the disclosure form:

"THESE COMMODITY OPTIONS NOT HAVE BEEN APPROVED OR DISAPPROVEDBY THE COMMODITY FUTURES TRADING COMMISSION NOR HAS THE COMMISSION PASSED THE UPON ACCURACY OR ADEQUACYOF THIS STATEMENT. ANY REPRESEN- TATION TO THE CONTRARY AIS VIOLATION OF THE COMMODITYEXCHANGEACT AND THE REGU- added.) (Emphasis LATIONS.” argues Heinold also that the appellate court erred holding in that Heinold violated the Consumer Fraud summary Act "because [the disclosure statement] does not disclose the full compensation extent of [Heinold] (240 derived LCO App. transactions.” Ill. 3d at argues impossible that it was to know and dis- plaintiffs close at the time signed summary disclo- sure forms how much compensation Heinold would de- rive from the argues transaction. Heinold also that regulations Commission’s require do not that it state the full compensation. However, amount of its simply we that deception note Heinold’s in failing was not to dis- close the exact compensation, failing amount of its but foreign commission, to disclose that the service fee was a from which it would compensation. derive We further note the ease with which Heinold could have avoided deception. this Heinold could simply have informed the plaintiff foreign class that service fee was an commission, additional which is how it Heinold treated internally.

III. Proximate Cause argument We next address Heinold’s appellate affirming court erred the trial court’s award of loss causation proof where no investment losses of full plaintiffs to award finding In causation sufficient existed. (1) losses, trial court found: their full investment trading in LCO engaged not would have plaintiffs about the truth they had known through Heinold (2) fee; misrepresen- for but Heinold’s foreign service their losses. tations, would not have suffered plaintiffs full investment The court also awarded causation, bad- irrespеctive of due Heinold’s losses duty. fiduciary faith breach itsof affirmed proxi- and noted that appellate court the fidu- necessary is a element under mate causation appel- Fraud Act counts. The duty and Consumer ciary had been shown proximate late court found causation losses, in that class full plaintiffs’ investment through de- LCO’s purchased members would have foreign had known the truth about the ser- they fendant however, finding, appellate court also vice fee. In so " representations 'neither [defendant’s] noted concerning foreign nor its of that fee service fee use value, any profit potential had effect on the risk or of ” App. Ill. 3d 545. [LCO’s].’ Illinois, jurisdic- in argues Heinold that in as most " tions, tort a principle’ a ’fundamental of law” that plaintiff prove proximately must defendant’s actions plaintiff’s adopts the injury. caused the Federal proximate term ’’loss to refer to courts’ causation” in argues cases. Heinold further causation securities its failed to loss causation and that plaintiffs prove that plaintiffs’ damages. did proximately conduct not cause that causation is respond Plaintiffs Heinold’s version of of fidu- not the law in Illinois for intentional breaches Fraud ciary duty recovery or for under the Consumer that, Illinois, argue all that need be Act. Plaintiffs argue for” causation. Plaintiffs further shown is ’’but that, loss although required, they proven have causation. plaintiffs

We first note that requested both equitable legal and complaint. relief in their sought Plaintiffs imposition of a constructive trust an accounting duties, Heinold’s breach of its fiduciary and included a count in tort under the Consumer Fraud Act. Heinold argues that proximate a requirement cause is in tort law, but does not address plaintiffs’ equitable claims in their briefs. respond Plaintiffs argument Heinold’s regarding causation, proximate argue but further of law trusts as well the equitable as of re- remedy applicable scission are necessary here. We find it both equitable address legal issues in order to arrive at the proper plaintiffs’ recovery. amount As note, we will the distinction is important, as it deter- being sought mines the focus of what is recovery. Trust, Equitable Claims: Accounting, Constructive Rescission Plaintiffs’ two alleged first counts the breach of Hei- fiduciary sought nold’s duties and imposition of a foreign constructive on trust service fees plaintiffs paid an accounting to Heinold and in order to recover their full investment imposed losses. The trial court constructive over plaintiffs’) trust entire investment losses and also noted that plaintiffs were to an entitled accounting. The trial court found that under section 205 (Second) Trusts, the Restatement causation need plaintiffs not be shown for to recover their full invest- (Restatement (Second) ment losses. of Trusts § (1959).) The trial court further found sufficient causation that, breach, but for Heinold’s would not money. have their lost argue

Plaintiffs the trial court was correct (Second) on relying section 205 of the Restatement that, Restatement, Trusts and under proximate cause need not be shown for them to recover their full Instead, argue, investment losses. under applies: only test but trusts, a "but for” causation law of misrepresentation, plaintiffs would not for Heinold’s money. "[t]he Plaintiffs conclude lost their have liability for full investment to investors of fiduciaries proof any causation,’ is well losses, at all of loss without established.” making disagree. determination as to While no

We argument concerning accuracy plaintiffs’ causa- of (Second) of 205 of the Restatement tion and section Trusts, applicable is Restatement of Trusts we do note that the The trusts. Restatement to constructive (Second) specifically of states: Trusts ***are not applicable "The to constructive trusts rules Subject. These rules in the of this dealt with Restatement (Re- of dealt in the Restatement Restitution.” are with (1959).) (Second) Trusts at 5 of § statement by this this been noted court: The reason for has express upon "An trust is based intention distinctly while a trust is different parties, constructive intention, arises, concept. agreement It not out an (Swanson by operation of ***.” Randall but law Ill. 2d must look to the Restatement Restitution. We thus dealing Restitution, 9 of the Restatement of Section provides: causation, with

"(1) upon A a benefit another person who has conferred mistake, or not the mistake was because of whether misrepresentation, by fraud or is entitled induced conferring only if restitution the mistake caused the (Restatement (1937).) 9§ the benefit.” Restitution plaintiffs’ case, mistake, belief that In instant necessarily foreign charge service fee was commission, and not a incurred LCO transactions deception, plaintiffs Heinold’s caused induced confer a benefit on Heinold. specifies that a also of Restitution Restatement illegal any imposed to recover ben- trust

constructive duty may given fiduciary have fidu- efit a breach of clary. Section of the of Restatement Restitution provides: person holding "Where a property subject title to is to equitable duty

an convey ground to it to another on the that he unjustly would be permitted enriched if he were (Restatement it, to retain a constructive trust arises.” (1937).) Restitution 160§ Comment c to section 160 states: imposed "A upon person constructive trust is a in or- prevent unjust der to his prevent To enrichment. such unjust equitable duty an convey prop- to enrichment (Restatement erty to imposed upon is another him.” (1937).) Restitution Comment c § imposed prevent unjust Thus, a constructive trust is to by imposing duty person receiving enrichment a on the convey property person the benefit to back to the (See from whom it was Swanson, received. also 30 Ill. 2d plaintiffs We now must determine what benefit Heinold, on conferred or on what funds the constructive imposed. properly trust was (1) price

The of an LCO consisted of three items: a (2) (3) premium option; for commission; a foreign service fee. The benefit Heinold received from foreign was the commission service fee. profit, money benefit, Heinold received no from the paid actually party LCO, for the which to went acquiring plaintiffs. London Thus, LCO for under plaintiffs’ fiduciary duty seeking breach of claim plaintiffs may trust, constructive the amount recover is foreign the amount Heinold received commissions and service fees. sought

Plaintiffs also to recover their full investment through accounting losses an due to Heinold’s breaches fiduciary note, however, of its duties. We an action accounting impose an is similar to action to constructive trust in that the action seeks the return of any profit, upon breaching benefit, or conferred party. "Accounting holds the defendant liable for his is damages. ground liability of this

profits, not for (1 Dobbs, Law Remedies D. unjust enrichment.” 1993).) (2d has observed As this court 4.3(5), at 611 ed. § accounting: gain agent to the an "it in an action for triggers relationship from the abuse recover, principal.” City rather than loss 559, 565- 64 Ill. 2d rel. Cohen v. Keane ex Chicago 66. is liable for full argue that Heinold Plaintiffs also it in bad faith and self- because acted investment losses a in argue fiduciary when acts Plaintiffs that dealed. faith, benefit, ensuing all losses are bad or his own for recoverable, connection to the regardless of their causal instances, remedy The traditional such breach. plaintiffs argue, is to set aside the entire transaction. for is of their plaintiffs argue rescission

What fiduciary duty. with its breach of its contract Heinold for (1960), 20 Moehling In W.E. Construction Co. v. O’Neil 255, Ill. court stated: 2d this jurisdiction this that long has been the settled law in "It *** *** suspicion reasonable exists that [w]here abused, relation has been the contract confidential Ill. (Moehling, will be set aside ***.” 2d transaction 266-67.)

However, also stated: this court has " general rule, excep which are few 'It is to there but

tions, party against that the restoration of the whom him, sought, position relief is or the offer to restore to the complained occupied he before the transaction which right place, precedent to the to rescind. took is a condition only upon can be exercised the terms of received, or, returning perhaps, under the consideration ” circumstances, returning (Naugle its value.’ certain 365, (1900), 358, quoting Rigdon v. Walcott Yerkes 187 Ill. 661.) (1892), 649, 141 Ill.

This court has also stated: " sale, and at the party 'A cannot rescind contract of *** he received. time retain the consideration has same put He party good must the other in as a condition as he sale,

was by before the property a return of the pur ” Horney (1851), chased.’ Buchenau v. 12 Ill. 338. only Thus, rescission of a contract in Illinois will be parties place allowed where both are to able each side quo. in statu Plaintiffs are not entitled to a rescission of their contracts with Heinold. Plaintiffs have received bargained, they and used the for benefit which the use plaintiffs Thus, LCO’s. cannot return Heinold to good a condition as it was before the sale. There is nothing left to return.

ConsumerFraud Act equitable seeking imposition an Unlike suit aof accounting, constructive trust or an a suit in tort seeks damages, by profit measured not to the defendant necessary properly compensate but the amount (See plaintiff Dobbs, his loss. D. Law of Reme- (2d 1993); § 3.1, dies at 278 ed. Commercial National Deposit Corp. Bank v. Federal Insurance 131 Ill. App. plaintiffs 3d nowWe determine whether may recover their full investment losses tort under the Consumer Act. Fraud argues noted,

As were re- quired prove "loss causation” order to recover for damages. reply they required, Plaintiffs were not so especially brought since the action was under the Consumer Fraud Act. We first address issue what type plaintiffs of causation must show to recover for misrepresentation. previously This court has stated: principle applicable

"It is a fundamental alike to breaches torts, contract and in a to that order to found wrongful action there must be a act done a and loss resulting act; wrongful wrongful from that act must defendant, injury be the act of the by suffered plaintiff a merely must be natural and not remote (Town consequence of the defendant’s act.” Thornton v. 113, Winterhoff (1950), 406 Ill.

59 negligence for to actions principle applicable This torts, as fraud: such as intentional well regard in to false principle ais well settled "[I]t damage is neither without representations, that fraud law, ground for an at nor a support action sufficient to furnish injury must concur equity. Fraud and relief in an fraudulent judicial ‍​‌‌‌‌​​‌‌‌​​​​‌​​​​​‌‌​​‌​​‌‌​​‌‌​​​‌‌‌‌‌‌​​​​‌​‍In action for ground for action. show, only that the plaintiff must not representations, the made, they false and were representations were and that fraudulent, affirmatively that he but must also show he injured Jones v. Foster thereby. [Citations.]” has been (1898), 459, Ill. 469. 175 by appellate our recently been more noted

As has tort, an fraud: "dam in an action for intentional court *** remote, conse be a and not ages proximate, must (Brown Broadway Perryville the fraud.” v. quence of 16, 25; (1987), also App. 156 Ill. 3d see W. Lumber Co. 1971) ("the (4th Prosser, 110, damage Torts ed. § rests must have been which deceit action upon It by misrepresentation”).) caused’ has 'proximately proximate also been noted our court that by appellate misrepre for cause must be shown actions intentional sentations, Key even where are involved. See fiduciaries (suit (1988), 91, alleging App. 176 Ill. 3d Jewel Cos. fiduciary duty intentional breaches of violation of Act); Trust the Consumer Fraud Vermeil v. & Jefferson (1988), 563; Martin v. App. Bank 176 Ill. 3d Savings App. Allstate Insurance Co. 92 Ill. 3d (suit duty against agent breaching his insurance fraud). plaintiff and prove must

We conclude injuries proximately actions caused their defendant’s tort, in instances of they can recover even before are involved. We torts where fiduciaries intentional however, note, the term "loss adopts that Heinold Federal argument, in its a term used causation” cause in dealing proximate the issue of courts with security argue Federal сases. Plaintiffs that loss causa- tion has never been the law in Illinois.

In order to understand Heinold’s use of the term briefly causation, loss we discuss Federal decisions 10(b) involving Exchange Rule of the Securities and —5 (17 § Act 1934 and loss causation. C.F.R. 240.10b—5 (1993).) pertinent analysis Such decisions are to our misrepresentations because Rule 10b—5 involves in the right Moreover, sale securities. since a of action under implied action, Rule 10b—5 is an with no statutory guidance damages, as to Federal courts have developed through this area of law reliance on common principles proximate law of fraud and cause. See Bas (7th 1990), tian v. Petren Resources Corp. Cir. 892 F.2d 680, 683. plaintiff

In for order to recover for a violation 10(b) great majority 5, Rule require plaintiffs of Federal courts — (1) types to show two of causation: (2) causation; transaction loss causation. (Bastian, 685.) 892 F.2d at Transaction causation has defined been meaning engaged as that "the investor not would have party in the transaction had the other made truthful required.” (LHLC at the statements time Cluett, Corp (7th 931.) 1988), Cir. 842 F.2d Peabody & Loss Co. causation, hand, on the other has been defined mean ing "that the investor would not if have suffered loss (LHLC the facts were what he believed them to be.” regard, 842 F.2d at In this loss causation is Corp., analogous proximate It cause. has thus been noted: plaintiff prove that,

"The only must had he known truth, acted, he would not have but in addition that direct, proximate, reasonably the untruth was in some way responsible his & for loss.” Huddleston v. Herman (5th 1981), MacLean Cir. 640 F.2d 549. analysis We find Illinois law be similar to the used require these Federal courts which both transaction mis- causation loss causation in order to recover Thus, plaintiffs here cases. securities representation loss courts have termed the Federal prove what must damages. recovery to of any prior causation Deception Whether Heinold’s Loss Causation: Losses Proximately Caused Plaintiffs’ that Heinold allеged proven Plaintiffs have fee. The foreign its service the nature of misrepresented pur- not have plaintiffs would trial court found that they had had known the LCO’s from Heinold chased correctly found the fee. the trial court truth about "While causation, causation, or it not find loss transaction did cause, plaintiffs to recover their full proximate awarding erred in losses. The trial court thus investment find, however, We plaintiffs their full investment losses. paid are the amount plaintiffs that entitled to recover foreign damages fee as due to Heinold’s for the service misrepresentation, deception proximately as the caused paid had plaintiffs pay they to a fee would not have However, misrepresen- they known the truth. Heinold’s concerning proxi- fee did not foreign tation service losses. mately plaintiffs’ cause entire investment may has that transaction have Prosser noted while by misrepresentation, proximate causa been induced might recovery damages tion limits to "those which fore seeably expected to from character of the be follow added.) (W. Prosser, misrepresentation (Emphasis itself.” (4th 1971).) 110, at must thus Torts ed. We § misrepresentation. of determine the character Heinold’s deception is note Heinold’s did important It that believing their LCO’s plaintiffs induce into that were were, they they profitable actually more than or also did not misrepresentations risk free. Heinold’s were Instead, foreign service fee. Hei- concern the size of the concerned the use misrepresentations nold’s noted, court Hei- foreign appellate service fee. As the value, had no effect on the misrepresentations nold’s profit potential plaintiffs’ risk, or LCO’s. Plaintiffs money they were aware amount risked and enough price that the market had to move offset option as well as the transaction costs in order to profit. plaintiffs willingly make a This was a risk price charged undertook at the Heinold for the transac- tions. Plaintiffs made market decision and either won or lost because the market or did did not move their misrepresenta- Thus, favor. the character of Heinold’s plaintiffs’ options tion had effect no on whether made money. As lost Prosser has also noted: plaintiff’s

"Would the decline investment have occurred even if misrepresentation defendant’s If had been true? question yes,’ answer to plaintiff this has failed to prove misrepresentation proximately caused the (4th Prosser, 1971). decline.” W. Torts at 732 § ed. agreeWe with Heinold that even if had used foreign plaintiffs service believed, fee as would have suffered same losses. Plaintiffs have not proven proximate causation, cause, loss or for invest- ment losses. argue, however,

Plaintiffs that loss causation is against public policy wrongdoer. because it favors the argue leniency, Plaintiffs that loss a call causation is for letting wrongdoers escape by simply their crime return ing money they plaintiffs. note, took from We however, defendants, that loss causation that ensures committed, even an where intentional tort is do not plaintiffs become insurers of who make unwise invest requirement, ments. Without a such the law would plan every security become an insurance for the cost purchased upon in reliance a material misstatement (Huddleston, policy omission.” 640 F.2d at This is strong especially plaintiffs voluntarily here where regard, undertook known market risks and lost. In this respects loss causation the individual investor’s market assuming decision. Plaintiffs were in content risk deception if had even Heinold’s options, purchasing been true. misrepresenta- argue that Heinold’s

Plaintiffs next their loss because cause proximately tions did argue that if Heinold’s Plaintiffs uniqueness options. of secu- type a different misrepresentations concerned lost its stock, that stock thereafter such as rity, fluctuation, misrepresenta- such to market due value decline in value. not have the stock’s would caused tions are different from However, argue options plaintiffs life in which to have a much shorter they in that stock they after become worthless. profit, realize a which misrepresentations Plaintiffs claim that Heinold’s profitable exercising them from otherwise prevented that much point the break-even was options because Thus, argue, they their entire higher. lost plaintiffs investment, an simply paying rather than additional fee. are options different agree

We with stock, argument persuasive. from but do not find their Investing undertaking necessitates risk in securities securities, selecting attempt an to make In profit. he willing of risk type investor must determine what chooses price, For minimal the investor who to take. to enter the volatile options to invest is allowed the risks associated with futures market without If the market moves in futures contract. purchasing favor, enter option may profitably an holder’s the holder If market the futures market. does move favor, knowing security he has the the exact holder’s lose, money possibly price paid he can amount of Through option plus any transaction costs. the use the risk, escapes any options, the holder avoids the if loss, potentially great, market could have caused the Thus, a futures contract. for purchased he would have obligation, security having right, but not the option market, to enter the futures holder knows may very that he well lose his entire investment. Those courageous enough options to enter the commodities knowingly market assume this risk. purchase

The stock, investor who choosesto on other hand, has entered not-so-volatile market. What the gives up, potential reap stockholder however, to great profits option may investor make from one single leveraged transaction. undertaking

Thus, the issue is the of risk. Plaintiffs stock, futures, could have invested in but instead options. They chosе to invest did with this the knowl- edge they possibly that could lose their entire invest- they profit greatly ment, but with the chance that could single leveraged misrepresenta- aon transaction. The plaintiffs purchase type tions here did not induce security, only pay LCO’s, but induced them to an deception additional fee. While Heinold’s made the price option higher, plaintiffs break-even were willing to assume risk of the volatile futures market price. at that argue deception

Plaintiffs that next Heinold’s was intentional, and that even remote causation will be (Shades found in intentional torts. Holding Co. Ridge (Ala. 1980), Cobbs,Allen & Hall Mortgage Co. 390 So. 2d 609.) 601, note Plaintiffs that intentional tortfea- commonly sors are liable even for unforeseeable conse- quences of their conduct. See Smith v. Moran (doctrine intent). App. Ill. 2d 373 of transferred believe, however, We fact willingly any assumed known market risks defeats such argument. Moreover, even intentional tortfeasors do wronged safety plaintiffs. become the insurers of (See (5th 1973), Cir. 477 F.2d Johnson v. Greer plaintiffs’ willingness assume risks a volatile market the more was direct cause of their investment misrepresentation. losses than Heinold’s

65 the prop- decisions for several further cite Plaintiffs breach that fiduciary defense for it no osition (Merchants market risks. been due to losses have 191; In (1946), Ill. re App. 329 v. Frazier National Bank 500.) deci- (1937), These Busby App. 288 Ill. Estate of however, they trustees sions, involve inapposite, are cases deal fiduciary duties. These their who breached trusts, here. not applicable which is with the law one of this from rely language on Plaintiffs also decisions: court’s by recovery proposed on a

"The limitation fiduciary his could violate mean that a defendants would any if incurring risk. For his misconduct duty without profit be the he could lose would the most were discovered venture; have gained illegal the law would from his (Vendo Stoner only him ***.” Co. v. operated to restore 305-06.) 289, (1974), Ill. 2d argu- plaintiffs’ language support this seems to While reveal otherwise. ment, the facts involved Stoner plaintiff who violated employee an Stoner involved by helping fund agency principles his contract and his against employer. company compete and launch a develop a better helped company Defendant this new machine, damaged business. issue plaintiff’s which while argued profits for its lost damages. was Plaintiff argued machine made. money for the their defendants damages to amount of appropriate This court found the proven had plaintiff lost because plaintiff’s profits be actually, or caused proximately, that defendant’s actions case, misrepresen- In the instant Heinold’s those losses. losses. We plaintiffs’ cause proximately tation did not in which to way there does exist further note that merely not operate that the law does punish Heinold so damages Punitive previous position. it to its restore Heinold, which we discuss punish may be assessed to later. the United States argue

Plaintiffs further Supreme Court has damage held that measures Federal may securities fraud cases do more simply than plaintiff make the whole for proxi- the economic loss (Randall mately caused the defendant’s fraud. Loftsgaarden 478 U.S. 92 L. Ed. 2d note, however, S. Ct. We that this decision did not proximate mean that required causation need not be every Moreover, under set of facts. the Loftsgaarden de- cision addressed the issue whether section 28 of the Securities Act of 1934 limited to "rescissory recovery plaintiff’s net economic harm.” (Loftsgaarden, 478 662, 3152.) 541, U.S. at 92 L. 2d Ed. 106 S. Ct. at 28(a) Court found section Act Securities did impose rigid not "a requirement that every recovery on an express implied right or of action under the 1934 Act must be by limited to the net economic harm suffered plaintiff.” 663, (Loftsgaarden, 478 U.S. at L. Ed. 92 3153.) 541, 2d at 106 S. atCt. The Court thus allowed rescission of contract from plaintiffs which had al- ready benefits, tax though received even defendants argued that plaintiffs should have to reimburse defen- dants of the value the tax benefits.

It should further be noted that while the United Supreme States allowing plaintiffs Court found that recover more their net than economic harm a de- serves effect, terrent damages, which punitive may serve that Illinois, same permissible effect in are not under (See (3d Federal securities act. Straub v. Vaisman & Co. (4th 1976), 591, 599; Cir. F.2d v. Carras Burns Cir. 1975), 259; (1968), v. 516 F.2d Green Corp. Wolf 302.) F.2d We find the dam- imposition punitive ages, justified, where to more properly serve a deter- awarding rent than in plaintiffs full investment losses by where those losses were not proximately caused misrepresentations. defendant’s argue that Plaintiffs next loss causation need not be fiduciary fraud. involving broker and in cases proven involving brokers on decisions rely Plaintiffs Federal of loss damages proof without recovery which allow (2d (See Smith, Co. Cir. Barney & v. causation. Chasins Investors, 1167; 1970), v. John Lamula 438 F.2d Clark (2d are of a 1978), Those courts 583 F.2d Inc. Cir. law in view, however, is not the and this minority noted, courts, be do it should Illinois. Most Federal recognize causation and do require general loss to the exception as an parties existence between See, In Catenella e.g., 10b—5 re rule in actions. 1388, 1417. Supp. 583 F. which further note that the cases on

We argument. These decisions rely support do not their fraudulently induced investors involve brokers who their intrinsic misrepresenting securities purchase (Barthe value, or risk profit potential such as their (S.D.N.Y. 1063), 1974), who Supp. 384 F. or Rizzo (Board trading engaged churing or unauthorized Chicago Pension Fund v. Fighters’ Trustees the Fire (N.D. 1989), 1499; Hatrock v. Supp Ill. 708 F. Corp. (9th 767). 1984), Jones & Co. Cir. 750 F.2d Edward D. a fiduciary have noted in these cases that if rela Courts buyer and tionship privity does not exist between If, however, either seller, causation must be shown. loss exists, what type court must determine relationship the misrepresentation occurred. If the consisted of fraud security, then purchase inducement to fraudulent however, If, be the evil proven. loss causation nеed not causation security, for the then loss only price paid (See Energy In Letterman Brothers must be shown. re 972.) (5th 1986), 799 F.2d Litigation Securities Cir. has noted: As one of these courts where plaintiff prove not to loss causation "A 'should have security, price paid the investor for the evil is not of the investor fraudulent inducement but broker’s However, loss purchase security.’ [Citation.] plaintiff causation complains is relevant when a that a misrepresentations price defendant’s paid inflated the for security. In [Citation.] case defendant would if be liable the decline in value was caused an event occurring subsequent any misrepresentation.” Kafton (D.C. Center, v. Baptist Nursing Park 1985), Inc. Ariz. F. Supp. 350. purchase The harm here was not the inducement to pay LCO, but the inducement to an fee, additional foreign price the fraudulent service fee. The evil was the paid. analysis Thus, even under the used in the deci- plaintiffs rely, they sions on which would not recover their full investment losses. argue damages

Plaintiffs next for investment losses due to broker fraud are available under the showing Fraud Consumer Act without of loss causa- correctly tion. Plaintiffs note that the Consumer Fraud range protection Act was intended to afford a broader (See than the common law. Kellerman v. Mar-Rue Realty App. Builders, & Inc. 132 Ill. 3d argue then Plaintiffs that remedies under the Consumer proximate Fraud Act should thus be broader and that cause need not be shown.

However, while the intent of the Consumer Fraud proof Act was to lessen the burden of in a claim misrepresentations, suggestion certain there is no in the damages any Act that are to be determined in manner customary different than is in our State. While 10a(a) note that section of the Act states that may damages "in court any its discretion award actual (815 proper” other relief which the court deems 505/10a(a) (West 1992)), agree ILCS we cannot with plaintiffs that this section allows the court free rein to any damages damages awаrd amount of it chooses. The "proper.” appellate "[a] noted, must be our As court has plaintiff damages can recover under the Consumer only injury proximate Fraud Act when his is a direct and (Emphasis the Act.” alleged an violation result of (1992), Goods, (Stehl Inc. Sporting v. Brown’s original.) v. Wex 976, 981, citing Petrauskas App. 3d 236 Ill. (1989), App. 186 Ill. Inc. Management, Realty enthaller Group, 832; ACF Properties v. 820, Fitzpatrick see also 3d 711-12.) note 690, further We (1992), App. Ill. 3d Inc. damages, appropriate, where punitive an award of that absolute plaintiffs wish purpose serves properly more in this case. to serve liability (1986), 142 LeMay v. finally cite Warren Plaintiffs that under proposition for the 3d App. Ill. was a foresee- Act market fluctuation Fraud Consumer intervening force: able intervening an assessing proximate cause where

"In only question of concern alleged present, force is to be intervening force is without or this is 'whether or not probabil- range anticipation and of reasonable within facts. Each must turn on its own ity.’ case [Citation.] (Warren LeMay App. 142 Ill. 3d [Citation.]” market fluctuation was a argue Plaintiffs that because force, was intervening deception Heinold’s foreseeable losses. the direct cause of its investment However, must turn on its own facts. each case risk, investors, Plaintiffs, necessarily assumed market would not possibility that risk was knowingly assumed Where move their favor. offered, Heinold this price the market at the the risk of did not deception merit. Heinold’s argument has no market risk. affect the known

IV. Jury Trial Right to jury to a argues next it had Consumer for plaintiffs’ trial on claims violation The trial court fiduciary ‍​‌‌‌‌​​‌‌‌​​​​‌​​​​​‌‌​​‌​​‌‌​​‌‌​​​‌‌‌‌‌‌​​​​‌​‍breach of duties. Fraud Act and trial, jury and the request Heinold’s denied appellate court affirmed that decision. We affirm those courts’ decisions.

Waiver Before we address contentions, Heinold’s we first plaintiffs’ argument address that Heinold has waived right jury argue to a trial on both claims. Plaintiffs any right jury by waiting Heinold waived to a trial eight years request. Although plaintiffs to effectuate its acknowledge jury that Heinold filed a demand when it plaintiffs’ complaint, plaintiffs answered note that this originally assigned always case was to, and in, remained chancery the argue division of the circuit court. Plaintiffs eight years,

that Heinold waited until the case was on the eve of trial in October to move to Although transfer plaintiffs this action to the law division. dealing directly have found no cases with this they issue, delays do cite several where much shorter right change resulted in waiver of a to seek a in venue. Wagner Horn v. Rincker 139; 84 Ill. 2d v. David (1966),35 Ill. 2d 494. argument

Plaintiffs’ has no merit. Heinold did not jury waive the issue of its to a trial under either 1105(a) claim. Section of the Code of Civil Procedure 2— provides: plaintiff

"A by jury desirous of a trial must file a demand therefor with the clerk at the time the action is commenced. A' defendant by jury desirous of a trial must file a filing demand therefor not later than the of his or Otherwise, her answer. party jury. waives If an seeking equitable action is filed relief and the court there- after determines that parties one or more of the is or are by jury, entitled to trial plaintiff, days within 3 from entry court, of such by defendant, order or the days entry within 6 from court, of such order may by jury file his or her demand for trial with the clerk (735 1105(a) (West 1992).) of the court.” ILCS 5/2 — jury plaintiffs’ Heinold filed a demand when it answered required complaint. to do under was This is all Heinold Procedure. Code of Civil of the section 2—1105 argue, however, until that Heinold waited Plaintiffs case to to transfer the to file a motion of trial the eve however, note, that the law We the law division. separate chancery from which courts are not divisions change 9 of article VI Section of venue. one must seek provides: "Circuit Courts Illinois Constitution justiciable original jurisdiction matters of all shall have added.) (Ill. § (Emphasis VI, art. Const. ***.” Heinold filed a motion Moreover, the record shows prior from this court after the remand asking the cause to the law trial court to transfer argument motion, Heinold noted At oral on the division. reaffirming jury simply it its demand which that it was plaintiffs’ complaint when it answered some had filed merely asking eight years the trial before. Heinold was long jury. ago: impanel a As this court noted court to excluding "Conferring jurisdiction chancery is not trial by jury. chancery may submit issues of fact to Courts of discretionary by jury, although it is to do so in trial ordinary yet practice, course of where there comes their jurisdiction in a upon such a court case where bestowal constitution, existed, adoption before the of the there right by jury, presumed trial it is to be that there would be, case, trial, jury in such allowance of there would —that injunction right be obedience to the constitutional by jury, enjoyed adoption at the time of the of trial as constitution, (Gage Ewing should remain inviolate.” v. 15.) (1883), 11, 107Ill. Heinold has not waived this issue review. Consumer Fraud Act right jury argues Heinold first that it had argues trial under the Consumer Fraud Act. Heinold in Illinois that that "it is well settled constitutional law legal including statutory actions, relief, are actions for right.” right juries finds Illinois’ triable to as of jury to a trial similar right to that under the seventh amendment of the Federal constitution in that both look to whether the remedy sought legal equitable (U.S. Const., VII; nature. amend. see Chauffeurs, Teamsters & Helpers, (1990), Local No. 391 v. Terry 558, 565, 519, U.S. 528, 108 L. Ed. 2d 1339, 110 S. Ct. sought Plaintiffs money damages, Heinold argues, which is the traditional damages form of in a case at Thus, law. it had right to a jury trial. Heinold also notes that Consumer Fraud Act claims have routinely been juries. tried to Although the appellate court has right jury found no to a trial under the Consumer Fraud Act, Heinold insists that those decisions are in error.

Heinold is mistaken in its belief that all actions for legal relief are triable in juries right. Illinois to as of Heinold is further mistaken in analogizing right Illinois’ jury to a right with the under the Federal Consti- tution. Section 13 of article I of the 1970 Illinois Consti- provides: right tution "The by of trial jury as heretofore (Ill. enjoyed shall remain I, inviolate.” Const. art. 13.) A provision similar was included in the § constitu- 1818, 1848, tions of and 1870. As this court has noted: "We do any not think there is substantial difference bе- provisions incorporated tween the in the three constitu- right by jury tions. of trial was the same under one right protected by constitution under the other. The each jury constitution was the of trial as it existed George People common láw.” 167 Ill. 455. As this court has more recently noted: "for the true meaning guarantee necessary it was to examine (Grace English common (1972), law.” v. Howlett 51 509.) 478, Thus, Ill. 2d guaran- our constitution does not tee the right jury to a trial in any action nonexistent at law, common even if such action in legal nature: provision right by "The constitutional 'the of trial jury enjoyed inviolate,’ as heretofore shall remain means right jury to a trial shall continue in all cases right existed at common law at the time where such adopted, provision was but that constitutional constitution prohibit legislature has never been held to from and creating rights new unknown to the common law jury. [Citation.]” provide their determination without added.) (1912), Chicago Rys. (Emphasis (Standidge v. Co. 532.) 524, 254 Ill. " *** provision '[t]he Moreover, was not constitutional guarantee jury special in intended to trial ” statutory proceedings unknown to the common law.’ (1967), People 408, 405, ex rel. Keith v. Keith 38 Ill. 2d (1934), quoting People 322, v. Niesman 356 Ill. 327. pro- hand, On the other the Federal Constitution law, vides: "In Suits at common where the value controversy twenty right dollars, shall exceed (U.S. VII.) preserved Const., trial shall be ***.” amend. constitution, Unlike Illinois’ the Federal Constitution interpreted beyond "extend[ ] has been the common- recognized law forms of action at” the time the bill of (Curtis rights adopted. was v. Loether 415 U.S. 189, 193, 260, 265, 1005, 39 L. Ed. 2d 94 S. Ct. In Supreme fact, the Court has stated: " law, 'By common Framers of the [the amendment] meant suits, merely recognized ... not which the common law among proceedings, its old and settled but suits in which determined, legal rights were to be ascertained and equitable rights contradistinction to those where alone ‘ recognized, equitable were remedies adminis- were just sense, may tered. ... In a the amendment then be well equity construed to embrace аll suits which are not admiralty jurisdiction, might peculiar whatever be the they may legal rights.’ form which assume to settle (1830) Bedford, (emphasis Parsons Pet. 446-447 Curtis, 265-66, original).” 415 U.S. at 39 L. Ed. 2d at at S. Ct. 1008. right jury seen, As can be Illinois’ constitutional to a trial is not the same as that found in the Federal Con- right jury Illinois, stitution. In at- does not every only Instead, tach to action law. such at- right in taches those actions where such existed under English common law at the time the constitution adopted. Constitution, was Under the United States any equity however, law, action at or one not of or admiralty jurisdiction, right jury confers the to a trial. argue It should be noted that Heinold does not that the right applies Federal here. proposition

Heinold cites several cases for the right jury depends upon sought. ato trial the relief (See Raymark Industries, Zurich Insurance Co. v. Inc. (1987), Village 23; 118 Ill. 2d v. Lazarus Northbrook 146.) (1964), inapposite, 31 Ill. 2d These decisions are they declaratory judg- however, as involve actions for right jury depends ment. The to a on the relief sought declaratory judgment, in an action for but this is declaratory judgment. due to the nature While statutory, declaratory law, and unknown to a common judgment strictly "is remedial and does not create new rights duties, new, but affords a additional and added.) (Berk procedure.” (Emphasis cumulative v. 591.) (1966), County 588, Thus, Will Ill. 2d an action declaratory judgment merely provides procedure a bring existing actions which either confer or do not right jury provides: confer the ato trial. As the statute proceeding "If a under this Section involves the deter- by they jury, mination of of fact issues triable shall be tried and determined the same manner as issues of fact are tried and determined other civil actions.” 701(d)(West 1992). 735 ILCS 5/2— Flaherty Murphy Heinold also relies on 291 Ill. where this court stated: right byjury "[T]he test whether or not the to trial exists given depends controversy in a case on the nature of the right action[;] rather than the formofthe trial there was no byjury by on or on suchissueas raised section analogous provided thereto, one the lawsofthis for under adoption prior State (Flaherty, to the of the constitution of 1870.” 291Ill. argues controversy that the nature of the under money damages, legal Fraud Act is the Consumer issue, analogous and the Consumer Fraud Act is to the However, action of fraud. we find an action common law statutory under the Consumer Fraud Act to be new and, such, right legislature created does not jury confer the to a trial.

This issue was first discussed Richard/Allen/ Winter, (1987), App. Ltd. v. 156 Ill. 3d 717. Waldorf There, right jury the no to a trial appellate court found All subsequent appel under the Consumer Fraud Act. See, addressing agreed. late decisions this issue have (1992), e.g., Rubin v. Marshall Field & Co. 232 Ill. App. 522; (1989), 3d App. Wheeler v. Sunbelt Tool Co. 181 Ill. 3d 1088. find, as

We did the court that the Waldorf, Consumer Fraud Act a "created new cause of action different from the traditional common law tort of 721.) (Waldorf, fraud.” 156 Ill. 3d at App. As this court Siegel Levy noted in v. Organization Development Co. (1992), 153 Ill. 2d 542-43: order to a

"[I]n establish claim for common law fraud (1) Illinois, plaintiff allege prove: a must a and false (2) fact; party making statement of material the the (3) untrue; statement party knew or believed it to be the rely to the whom statement was made had a to on (4) statement; party the to whom the statement was (5) statement; rely made did on the the statement was inducing act; purpose party made for the other (6) by person the reliance to whom the statement person’s injury.” was made led to that (Siegel, 153 Ill. 2d 542-43.) However, Act, to recover under the Consumer Fraud a plaintiff only need show:

"(1) (2) deceptive practice, act or intent on the part rely plaintiff deception, defendant’s that on the (3) deception occurred the course of conduct involving (Siegel, trade or commerce.” 153 Ill. 2d at require note, Of the Consumer Fraud Act does not actual regarding reliance, fact, an untrue statement a material knowledge party making or belief the state- appellate ment that the statement was untrue. As one decision has noted of the Consumer Fraud Act: good "[T]heintention ofthe seller—his or had faith—is important. upon Rather,

not we focusour attention might effectthat that conduct have on the consumer***.” Vernon,Illinois, Buyers American Club v. Mt. Inc. Hon (1977), App. 252, 46 Ill. 3d 259. ecker find that the Consumer- Act is a We thus Fraud statutory proceeding unknown to the common law. this, Because of right our constitution does not confer the jury for claim under the Consumer Fraud Act. further note that the Consumer Fraud Act does

We wording provide jury fact, In trials. legislative history, statute, and its indicate that legislature intended the action to be tried without a jury. App. See 156 Ill. 3d at 722-25. Waldorf, argues, many however, Consumer (See juries. Fraud Act claims have been tried before App. 550; Ill. 3d LeMay Tague Warren v. (1985), App. 313; 139 Ill. 3d Molitor Motor Co. v. Gent (1983), App. 116 Ill. 3d Inc. Volkswagen, Collinsville 496.) may true, be the issue of whether a While this right jury to a trial existed was never addressed in those prior also all decided to the Wal- cases. These cases were argues that if this court decision. Heinold further dorf right jury no to a trial in actions under the finds making open Act, Consumer Fraud we the door to such findings instances, in such as the Structural Work other However, Act. that issue is not now before the court. noting that the drafters of our con- We conclude legislature stitution were aware that the could create right statutory right subject that is not to the of new by jury. fact, at the 1970 Constitu- trial In it was noted right tional Convention that "a to recover a personal [in injury regard without might regarded action] to fault be by action, courts as a new cause of distinctively different from the right common law to recover (3 negligence.” Proceedings, Record of Sixth Illinois Constitutional Convention The drafters chose not change to this area of the constitution.

Breach Fiduciary Duty Claim of Heinoid argues also the trial court erred denying it a jury trial on plaintiffs’ breach fiduciary of duty appeal, claims. On Heinoid attacks appellate finding court’s on this matter: "While the Illinois provides Constitution right that the jury inviolate, to trial shall remain right this is not absolute right and there is jury no to a equity actions. [Citations.] It is well established that a breach of fiduciary duty equitable claim is an action. [Citation.] Moreover, consistently this court has right held that no jury trial exists equitable accounting where an sought in a breach fiduciary duty action. [Citations.] Defendant argues, however, that fiduciary the breach of duty claim here equitable lost its parties nature when stipulated to the numerical calculations accounting. involved We find fiduciary that a breach duty claim remains an equitable jury action triable irrespective without a of how damages are App. calculated.” 240 Ill. 3d at 540. again Heinoid argues that whether to a jury trial exists depends upon the nature of the contro- versy (Turnes rather than on the form of the action. 403-04.) Brenckle 249 Ill. According to Hei- noid, plaintiffs sought only money damages, which con- legal stituted Thus, relief. according Heinoid, it had the right to a jury trial on plaintiffs’ breach fiduciary duty claims.

Without addressing appellate finding court’s all actions for breach fiduciary equitable, duties are we note that plaintiffs’ claims for a fiduciary breach of

78 duty sought imposition a trust and of constructive plaintiffs’ accounting. circumstances, Under these an clearly equitable. claims were Trust

Constructive damages concerning money argument Heinold’s imposition warrants little a constructive trust of fiduciary that a breach of is no doubt discussion. There duty seeking imposition a constructive trust of claim equitable claim, triable is an funds on account on jury. right trust a "A constructive to without chancery solely and is a of court the creature (Miller grounds.” equitable upon purely v. established 531.) (1915), "is 522, A trust Ill. constructive Miller imposed person equity prevent by a from to a court of advantage holding which he has an for his own benefit by. fiduciary relationship gained fraud.” reason of a 232.) (Anderson (1958), Lybeck While 15 Ill. 2d remedy money, sought was the return damages, money Hei in the form of but rеstitution sought impose unjust a to Plaintiffs enrichment. nold’s plaintiffs’ specific fund, accounts on a constructive trust any suit in which believes with Heinold. While money law, at triable an action constitutes is recovered right, jury this has never been as a matter to in Illinois. law

Accounting accounting an an action for note that We next equitable fiduciary duty action, with is also an breach of previously jury noted This court has trial. no to *** fiduciary equity "jurisdiction where exists respondent duty upon rests exists and a relation (Miller Ill. v. Russell render an account.” " '[cjourts equity held that been further It has accounting, although compel jurisdiction an have remedy adequate law, fi- complainant where an has ” (Mayr v. Nel- duciary [Citations.]’ relations exist ***. App. son & Co. 195 Ill. This is Chesman traditionally] recog- fact that "[e]quity [has due to the duties, fiduciary naturally enforced nized and so it [gives] remedy against 1 D. accounting an fiduciaries.” (2d 2.6(3), 1993); Dobbs, of Law Remedies at 158 ed. see § Eichengrun, Remedying Remedy Accounting, also the of (1985). Ind. L.J. however, argues, that the it stipu- Heinold fact that money lated to the amount an issue makes this money damages, action for and thus an at law. action addressing argument, Without that this we note an only plaintiffs accounting were entitled to as to how money much unjustly Heinold was enriched their deception, plaintiffs accounting were also entitled an to what actually foreign determine did the with service fee. note

We do that asked their full for action, investment losses accounting under the which is legal However, damages. measure in their com- plaint, court, trial at the and on appeal, plaintiffs have argued an accounting based on the breach fidu- ciary request duties. Plaintiffs’ failure to the proper recovery accounting amount of for an complaint their does pursue equitable not affect their an 603(c) accounting. Section of the Civil Practice Law 2— provides pleadings that are to be liberally construed. (West 1992). 735 ILCS 5/2 —603 PLAINTIFFS’ CROSS-RELIEF

I. Damages Punitive argue appellate Plaintiffs that еrred in court reversing the trial of punitive damages. court’s award We agree and reinstate of puni- court’s award tive damages. damages punitive

The trial under court awarded $500,000. so, doing in the In both counts amount of court stated: intentionally misleading

"Mindful of bad faith matter, deceptive nature of Heinold’s conduct in this conducting and mindful of the need to deter others busi- affecting aspect Illinois our ness in vital nation’s commerce, $500,000 that an award of Court concludes and exemplary punitive damages shall be assessed Defendant, among against amount to be divided class such pro proportion to the members on rata basis amount any individual class member’s losses bear to total awarded losses the class.” dam- appellate punitive court reversed award of stated:

ages and damages clearly at law and "Punitive are disfavored will only outrageous awarded either be for conduct malice, the acts with an evil motive or because are done a they performed are with reckless indifference because rights the [Citations.] toward the of others. While record finding supports the trial court’s that defendant’s conduct misleading deceptive, and intentionally we cannot was say it rises the level of malice or reckless indiffer- that to rights justify an towards the of others so as to award ence App. punitive damages.” Ill. 3d at 545-46. of argue appellate that the court erred Plaintiffs damages punitive award is the decision to because the discretion court and such decision within of against it appeal be disturbed on unless is will not (See Black v. Iovino weight of the evidence. manifest 378.) (1991), replies 219 Ill. 3d App. is the evidence

correct standard of review whether (Loitz v. damages Rem- punitive the award of supports (1990), 404), which is a Arms Co. 138 Ill. 2d ington (1986), 142 Ill. question of law. See Parsons Winter 354. App. 3d Motorola, (1978), Ill. 2d this Kelsay v. Inc.

In court stated: puni- long in this State that

"It has been established damages exemplary may tive or awarded be when torts fraud, maliсe, are committed with actual deliberate oppression, violence or or when the defendant acts willfully, gross negligence such a or with to indicate disregard rights wanton of [Citation.] others. Where punitive may assessed, they damages be are allowed warning punishment example nature of and as a and like committing deter the defendant and others from And, offenses in the while the [Citation.] future. measure- damages punitive jury question, prelimi- ment of ais nary question particular of whether the of a facts case justify punitive damages imposition properly of is one (Kelsay, of law. [Citation.]” 74 Ill. 2d at This court has also noted: damages permissible duty

"Punitive are a where based on gross, violated, a relationship trust is the fraud is shown; malice or willfulness are an such award is not (Emphasis original.) automatic.” re Marriage In Pa- gano 154 Ill. 2d 190. alleged Plaintiffs’ suit intentional breaches of fidu- ciary duty and Consumer willful violations of the Fraud The trial Act. court found Heinold breached its fidu- ciary duties its conduct was deceptive. intentional court appellate agreed. in Pagano, As punitive damages permissible are where duty a based on a relationship of trust violated and where the violation has been willful. We find that justify facts this case punitive claim for damages. We next find the trial of punitive court’s award dam- ages against was not weight manifest the evi- dence. Heinold intentionally plaintiff class, misled the group to which owed duty, it fiduciary order to higher obtain commissions. The trial court found that malice,” "cheated, Heinold acted "with that Heinold class,” defrauded and deceived the and that Heinold’s breaches were "intentional and in bad faith.” The trial findings court noted that its on were based the evidence in presented addition to the of the demeanor witnesses damages at trial. The of purpose punitive punish is to fiduciary wrongdoer. Heinold would have such as A in a fraudulent its business not to conduct little reason pay required to to bе if the most it would manner gains, here. is the case be Heinold’s would "[t]here argues, however, is no evidence that involving finding support of 'conduct in this case to usually outrage that found similar to some element legal be met that must crime,’ is the standard in which citing damages punitive support award,” Loitz Remington Heinold also 138 Ill. 2d 404. Co. Arms lengths great it went in order to which notes the summary was disclosure statement ensure complied complete with the the statement and that previously, regulations. applicable noted As Commission deception agree Heinold’s however, we do not regulations. complied Heinold’s Commission with deception, found was trial court which the intentional outrage malice, an element did involve with done usually in found crime. to that similar

II. Prejudgment Interest argue appellate erred court that the next Plaintiffs compounded reversing award the trial court’s in prejudgment Fraud Act. Consumer under the interest ‍​‌‌‌‌​​‌‌‌​​​​‌​​​​​‌‌​​‌​​‌‌​​‌‌​​​‌‌‌‌‌‌​​​​‌​‍prejudg- awarded court also However, the trial because duty fiduciary count, the breach interest on ment appealed, need not discuss we been award has not which this issue.

CONCLUSION judgment foregoing of the reasons, For the part. part appellate in and reversed is affirmed court part judgment is affirmed circuit court part, to the is remanded cause and the reversed entry judgment court for in accordance with circuit opinion. this court

Appellate affirmed in and reversed in part part; circuit court in part affirmed and reversed in part; cause remanded. concurring part FREEMAN, JUSTICE and dis- senting part: disagree part today’s

I with that decision which right jury holds no to a trial under this exists State’s legal constitution for Consumer claims Fraud Act (163 71-77.) damages. holding Ill. 2d at The owes much perceived I, 13, difference between article section our constitution and the seventh amendment of the (163 71-74.) holding Federal Constitution. Ill. 2d at The grounded is also on the view that Consumer Fraud Act singular in claims are nature. 2d at 163 Ill. 74-77. majority wrong respects. еxpres- The is in both The right jury sion trial in this State’s constitu- tion is the same as that of the seventh amendment. No respective scopes basis exists to construe the clauses’ differently. Thus, the conclusion that the seventh right operates statutory applies amendment actions any I, for article section as well. The concern for particular statutory right claim whether remedied resembles one for which the law also common afforded recovery. jury right operates

The for a Consumer Fraud recovery recognized Act claim similar because was merely expands common law. The Consumer Fraud Act rights previously entirely enforceable; it does create Rights statutorily new ones. now actionable are similar protected theory to ones at common law under fraud. reasons, below, I

For more explained fully those dissent. Right Trial Jury

The Illinois Constitutional and the Seventh Amendment guarantees "This State’s Constitution of 1970 jury shall enjoyed of trial as heretofore "[t]he (Ill. I, ma- Const. art. remain inviolate.” § found in each of this jority notes that similar clauses the State’s constitutions have been construed earlier (163 72, v. citing George same Ill. 2d at substance. 455.) (1897), 447, enough. Ill. True But People 167 the phraseology by respective has used different been As expressing right. drafters time in the clauses over right, the different express are construed to the same right’s much scope. reveals about the phraseology pertaining to phrase The "shall remain inviolate” trial four of jury right is found all preservation of However, of the clauses this State’s constitutions. did not also contain 1818 1848 constitutions pertaining to what phrase enjoyed” heretofore "as (Ill. 1818, VIII, 6; art. Ill. exactly Const. preserved. was § 6.) XIII, 1848, jury right trial Const. art. What § was defined as one "hereto- inviolate” first "remain[ed] (Ill. 1870, enjoyed” in the 1870 constitution. Const. fore Cohn, R. The II, Braden & 5; generally art. see G. § An Comparative Annotated and Illinois Constitution: (1969).) Our constitution retains present Analysis 24-27 point. as reference рhrase enjoyed” "as heretofore an precludes phrase enjoyed” The "as heretofore trial exists jury right of what construction expansive was not intended this constitution. It under State’s change right expression of the would the constitutional is, what "remain[s] That scope nature it. or I, 13, right jury is a trial article section inviolate” under 18th during law English common enjoyed as was 478, Ill. 509. 2d century. Grace Howlett See phraseology jury right The trial clause of the provides point. 1848 constitution a second reference jury right That clause defined the trial as one which (Ill. "shall all extend to cases at law.” Const. art. 6.) jury right §XIII, The trial was thus also limited to legal, money, damages distinguished claims for equitable from relief. significant, again,

That is because the substance of right expressed has been held to be "the same under (See one constitution as under the other.” George, present constitution, too, Ill. at guish Our must distin- legal damage

between common law claims—for right operates which the common law claims for —and equitable relief—for which it does not. operate provide I, Article section thus must jury right trial as existed for actions at common law for legal damages. majority here seems to understand point. jury It observes that this State’s operate any does not claim "nonexistent” at or "un- legal damages known” to the common law even if are (163 71-73.) sought. majority ignores, Ill. 2d at What the Supreme however, that, virtue of the Court’s scope construction, the seventh amendment’s is identi- cal. expressions

The amendment, seventh unlike the jury right trial clauses of constitutions, this State’s operation (U.S. directs its to "suits at common law.” VII.) phrase Const., amend. But the "suits at common long interpreted law” has been to mean more than the body English predating decisional law the amend- adoption. phrase ment’s The is read to mean suits at rights common law "in which legal were to be ascer- determined, tained and in contradistinction to those *** equitable rights (Empha- where were administered.” added.) (3 Pet.) (1830), sis Parsons v. 28 U.S. Bedford 433, 446-47,7 732, L. Ed. 737. 13, amend- I, and the seventh Both article section right trial only jury such a preserve ment therefore damage claims. The legal law for existed at common includes claims for is whether question central a statute. legal damages based on scope includes amendment’s That the seventh Court a Supreme statutory claims is considered ” " (Curtis v. Loether to be doubted.’ 'too obvious point 260, 266, 189, 193, 94 S. Ct. (1974), 39 L. Ed. 2d 415 U.S. (7th 1972), Cir. 1005, 1008, v. Loether quoting Rogers of cases” 1110, (listing an "unbroken line 467 F.2d acknowledged the seventh has so in which the Court But, though majority operation).) amendment’s amendment, article that, see like the seventh seems to 13, trial as existed I, jury preserves section claims, it finds the same damage legal law for common cites, It as reasons here. apply does conclusion 13, I, two of this article section narrowly construe more right. trial jury about the observations passing court’s question. beg the central merely The observations jury this State’s is that The first observation " ' "in special operate intended to right was not ”’ unknown law.” to the common proceedings statutory (163 v. Keith 73, ex rel. Keith quoting People Ill. 2d at v. Niesman 405, 408, People (1967), quoting 2d 38 Ill. 327.) point, that. The (1934), agree I with 356 Ill. "nonexistent” meaning here. Actions however, has no fall outside plainly law to the common at or "unknown” right. constitutionally expressed the reach of nothing in that second observation The " legislature 'prohibits] expression constitutional law to the common rights unknown creating new from ” jury.’ without their determination provide (163 Co. Rys. 73; Standidge Chicago 2d at Ill. than the less evident is no point 254 Ill. un- at or nonexistent truly rights first. New —those

87 known to the common law —are beyond express protections of the constitutional expression. Given such right, guaranteed a new trial could be jury only legislative prerogative. matter of Ironically, majority misses what aid the second provides observation on the The quoted issue. statement refers, quite accurately, rights actions —nonexis- —not tent at or unknown to the common law. type The action immaterial in determining what be could said to be nonexistent at or unknown to the common law. (See (3 Pet.) Parsons, 445-46, 28 U.S. at 7 L. Ed. at 737 (noting right that the Federal extends to all suits "what- may ever be the peculiar form which they may assume legal rights”).) to settle actions, course, Statutory did not exist at any common law in literal sense. The simply concern is whether the substantive giving legal rise to recovery resembles one for which recovery could be had at common law. That a right ac- formerly tionable or enforceable at common law is now the subject of codification is immaterial. See Rogers, 467 F.2d at 1117.

Beyond misapprehending what has been noted in the past about this State’s jury right, constitutional the majority does not explain why I, 13, article section and the seventh amendment should similarly not be construed. The analysis regarding the seventh amend- ment was expounded first Curtis v. Loether 189, 415 U.S. 260, 39 L. 1005, Ed. 2d 94 S. Ct. which involved an action Rights under the Civil Act of 1968. But the basic principle actually had been established (3 Pet.) Parsons, 28 446-47, U.S. at There, L. Ed. at 737. Justice Story had concluded that the amendment " *** all 'embrace[d] suits equity not of admiralty jurisdiction, might whatever peculiar be the form which ” they may legal assume to settle rights.’ (Curtis, 415 193, U.S. at 39 L. Ed. 2d at 94 S. Ct. at citing Pet.) (3 Parsons, 446-47, U.S. 7 L. Ed. at right operated amendment therefore even for seventh legal long create[d] as the "statute statutory claim so an dam- rights and enforceable in action for remedies[ ] (Curtis, 415 U.S. at ages ordinary in the courts of law.” 1008.) sense, 266, In 194, L. Ed. 2d at 94 S. Ct. at 39 remarked, the seventh amendment the Court had of action.” Cur- beyond the common law forms "extends 193, 265, at tis, L. Ed. 2d at 94 S. Ct. 415 U.S. at 1007. remark, finds, quoted here in that last majority being made to a more to believe allusion was

reason than that for the seventh amendment expansive scope 73.) (See That I, 13. 163 Ill. 2d at of article section holding plain makes reading is inaccurate. The Court’s common beyond amendment "extends the seventh it in only operates of action” to the extent law forms Brennan has ex- actions at all. As Justice statutory plained: *** *** expounded in v. Loether test Curtis "The compare right at issue to requires a

[citation] court English 18th-century forms of action to determine right historically analogous was vindicated whether whether equity, in and to examine in an action at law or legal nature.” remedy sought equitable in Terry Helpers, & Local No. 391 (Chauffeurs, Teamsters 574,108 519, 534,110 558, S. Ct. L. Ed. 2d 494 U.S. 1339, (Brennan, J., concurring part 1349-50 concurring judgment).) in the go beyond the common amendment does The seventh English Eighteenth-century any respect. law in other operation of the remain the basis for forms of action I, See article section 13. they do for right just— Howlett, Ill. 2d at 509. doubt, today majority’s decision be no

Let there right in a jury trial constitutional limits this State’s failing apply By drafters. envisioned its way never amendment, given the seventh analysis same I, majority precludes operation 13, of article section every statutory misreading claim. Its law re- case duces concerns about what actions existed at or were exercise; known to the common law to a literal only which, fact, type actions of a existed at or known were to the common law would reach the scope come within I, of article section 13. any Abandoned is notion of the jury object constitutional as "an of deep every interest solicitude” about which encroach- (Parsons, ment has been great jealousy.” "watched with (3 Pet.) 28 U.S. 7 L. Ed. at It is too obvious that, amendment, to me statutory like the seventh legal damages involving rights claims for enforceable at I, common law come within the protection article section of this State’s constitution.

The Consumer Fraud Act I, 13, Whether article section affords a jury right specifically for Consumer Fraud Act claims is a matter of two legal, considerations: the claim must seek not equitable, damages; the claim must be based on similar to one enforceable at common law. The second of those concerns is the important more here. That concern directs a comparison of Consumer Fraud Act claims to 18th-century brought actions in the courts England prior of merger of the courts of law and (See equity. Chauffeurs, Teamsters & Helpers, Local No. 391, 565, 528, 494 U.S. at 108 L. Ed. 2d at at 110 S. Ct. 1345; (1920), 595, see also Flaherty Murphy v. 291 Ill. (stating 598 that the claim must be "analogous” at least "provided to one for under the laws of this State prior constitution]”).) adoption to the Again, [this State’s material analysis action, to the is not simply type but it "rights whether involves and remedies of sort [a] typically enforced in an action at law.” Cur- [common] tis, 195, 415 U.S. 267, at 39 L. Ed. 2d at 94 S. Ct. at 1009. argument that a claim majority rejects

The here analogous at under the Consumer Fraud Act is to one ad law for fraud. That conclusion is based on common analysis court’s aptation appellate Richard/ (1987), Winter, App. 156 Ill. 3d Ltd. v. Allen/ Waldorf (163 75.) analysis Ill. 2d at The that case makes 717. affording purpose much of the Consumer Fraud Act’s at broader than that afforded protection consumers 75; law. 163 Ill. 2d at see common Richard/Allen/ Winter, Ltd., App. 156 Ill. 3d at 721-22. protection no about the broad question

There is only Fraud Act. Not are afforded under the Consumer the elements of common law fraud satisfying claims it, to reach subsumed the Act relaxes those elements (Siegal Levy Organiza claims. types other of related 543.) 534, 2d Nei Co. 153 Ill. Development tion a scheme to showing of an intent to deceive nor ther a under the Act. It is therefore required defraud is (Ill. misrepresentations. innocent possible to recover for 1211/2, 262; McDonald, 1979, see B. par. Stat. ch. Rev. Consumer Fraud and the Illinois Applicability Wrongs, Private Practices Act to Deceptive Business 95, (1989); 163 Ill. 2d at 75- Rev. see also DePaul L. reliance. necessary to actionable prove It is not even (Ill. 262; 121V2, see 163 Ill. 2d par. Stat. ch. Rev. 75-76.) Ill. Remedies, too, are extended under the Act. 270a(c) 1211/2, (providing par. Rev. Stat. ch. fees). recovery attorney pursuing met in eliminating various hurdles In so actions, is satisfied that majority fraud common lаw rights "unknown to Fraud Act creates the Consumer (163 76.) I I am not. do Ill. 2d at the common law.” legal right for which broadening of a the mere believe right new. may be had makes recovery Circuit Court is the Seventh point Instructive on the Supreme adopted Appeals’ analysis Rogers, Curtis, 195, 267, at Court 415 U.S. at 39 L. Ed. 2d there, right S. Ct. at 1009. The trial jury issue arose earlier, noted pursuant statutory to a Federal civil rights specifically alleged action. The claim racial against refusing discrimination a landlord for to let an apartment. right The protected, nature of the the court concluded, analogous was to ones protected common Rogers, law. 467 F.2d at 1117. actions, however,

Those were hardly identical to the protections breadth of afforded under section 812 of the Rights 1968, Civil Act of allegedly section violated. The against actions cited included innkeepers ones refusing justification room to travellers without and a species of against defamation available landlords who refused to let citing rooms a tenant’s unfitness when 1117.) race was the (Rogers, reason. 467 F.2d at The comparison to common law actions was stretched even further. The court noted common law claims for inten- tional infliction of emotional distress possible reflected aspects of a Rights Civil Act (Rogers, claim. 467 F.2d at 1117.) point is simple: statutory legal claims for damages do not have to be identical to common law actions for the jury attach, they only need be similar.

Given its view of Act, our Consumer Fraud the ma- jority, certain, I am would view the Federal Rights Civil Act of 1968 to provide rights new beyond remedies those which existed at or were known to the common law. expanded, That act way, no small the manner and type of actionable Citing discrimination. the court of appeals analysis, Supreme Court determined statutory pursuant claims Rights to the Federal Civil analogous Act were (Curtis, to common law actions. U.S. at 39 L. Ed. 2d at 94 S. atCt. Unfortunately, the majority appreciate fails to import of that analysis. logic applied by Supreme applies

The same Court analogous that the Fraud Act is here show Consumer requisite to actions based on fraud at common law. The of a Act are irrelevant. elements Consumer Fraud claim analogous A claim under the Act is to one at common simply underlying right protected, law if the not what is necessary enforcement, to its is new.

The Consumer Fraud Act does not create fundamen- tally rights previously Instead, it new enforceable. protect in continues to consumers’ interests the market- protection place. same interests found similar at Those theory may common law under a of fraud. The Act more comprehensively protect by expanding, interests those Rights type Act, similar to the Civil the manner and underlying pro- But the interests actionable conduct. tected the Consumer Fraud Act are not dissimilar to long rights, protected at common law. Those now those analogous statutorily enforceable, are no to common less Rights Act law fraud actions than are Federal Civil to the common law ‍​‌‌‌‌​​‌‌‌​​​​‌​​​​​‌‌​​‌​​‌‌​​‌‌​​​‌‌‌‌‌‌​​​​‌​‍actions noted above. claims majority The also notes that the Consumer Fraud (163 jury provides for trials. Ill. 2d at Act nowhere reasoning appellate again persuaded by the court’s It is appellate Winter, court there Ltd. The Richard/ Allen/ only provides noted that the Consumer Fraud Act damages may provide its discretion.” "court” 724-25.) (Richard/Allen/ App. Winter, Ltd., Ill. 3d at "judge” Noting synonymous be with "court” to Assembly "judges,” that the General it was determined by "jury” participation in a Consumer no envisioned Winter, Ltd., 156 Ill. Fraud Act claim. Richard/Allen/ App. 3d at 724-25. correct, and I have serious if that

Even conclusion jury consequence. point it, The as to is of no doubt of constitutional here is a matter issue authority legislature legitimate grace. has no encroach it. Given that Consumer Fraud Act upon legal damages rights, claims for create no new the Gen- not, intended, eral Assembly preclude could even if it so I, of article operation section 13. JUSTICE joins partial McMORROW this concur- partial rence and dissent.

(No. 75279. THE PEOPLE OF THE STATE OF ILLINOIS, Appel-

lee, NOVAK, Appellant. CHESTER

Opinion September Rehearing denied filed 1994. December 1994.

Case Details

Case Name: Martin v. Heinold Commodities, Inc.

Court Name: Illinois Supreme Court

Date Published: Sep 22, 1994

Citation: 643 N.E.2d 734

Docket Number: 75013

Court Abbreviation: Ill.