The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Central Illinois Savings & Loan Association ("Central")
originally launched this multiparty litigation by filing a
ten-count Complaint (the "Central Complaint") against DuPage
County Bank of Glendale Heights ("Bank") and several of Bank's
directors, officers and employees, as well as two other
banks.*fn1 Central charges Bank with:
1. a "pattern of racketeering activity" in
violation of the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), 18 U.S.C. § 1961-1968
2. breach of contract (Count VIII); and
3. common law fraud (Count IX);
all arising out of Bank's sale to Central of a group of
promissory notes secured by real estate mortgages. Bank has in
turn filed an amended Third-Party Complaint (the "Bank
Complaint")*fn2 under Fed.R. Civ.P. ("Rule") 14(a) against
Gloria Andrews Leskovisek ("Leskovisek"), Joan Otten
("Otten"), W. Jeanne Powers ("Powers") and three other
individuals,*fn3 seeking recovery via implied indemnity.
Leskovisek, Otten and Powers now move under Rule 12(b)(6) to
dismiss the DuPage Complaint. For the reasons stated in this
memorandum opinion and order, those motions are granted.
Central's loan policy required it to examine the mortgage
documents before acquiring them for its loan portfolio (Bank
Complaint ¶ 13). Hence before assigning the 16 notes and
mortgages to Central, Bank turned each loan file over to
Central to allow Central to check the borrower's payment
history (id.). Those files contained receipts indicating some
borrowers had made delinquent payments (id.). Nevertheless
Central purchased the 16 notes and mortgages.
In April 1985 Central filed this action, advancing a melange
of claims. Bank contends any liability it might owe to Central
would spring not from its own actions but rather from the
failure of Leskovisek, Otten and Powers*fn5 to exercise due
care in examining the loan file. That negligence, says Bank,
entitles it to indemnification.
Leskovisek, Otten and Powers counter with three arguments:
1. Implied indemnity in Illinois has been
extinguished by the Illinois Contribution Among
Joint Tortfeasors Act (the "Act," Ill.Rev.Stat.
ch. 70, ¶¶ 301-305).
2. No intentional tortfeasor can obtain
3. RICO's comprehensive character indicates
Congress intended to preclude a right to
This opinion will first treat briefly with the choice-of-law
issue, then consider each of those contentions in turn.
Bank seeks indemnity from the third-party defendants on two
of Central's claims — the RICO claim (Count I) and the
common-law fraud claim (Count IX).*fn6 Central's RICO claim
confers federal-question jurisdiction on this Court under
28 U.S.C. § 1331. Central's common-law claim is properly before
this Court under the doctrine of pendent jurisdiction because
it "derive from a common nucleus of operative fact" with the
RICO claim (which also sounds in fraud). United Mine Workers of
America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16
L.Ed.2d 218 (1966).
Bank's right to indemnity on Central's RICO claim (if it
exists at all) must be grounded in federal law. Cf.
Northwest Airlines, Inc. v. Transport Workers Union of America,
AFL-CIO, 451 U.S. 77, 90, 101 S.Ct. 1571, 1580, 67 L.Ed.2d 750
(1981) (employer's asserted right to contribution from union
based on liability for Title VII violation derived either from
the federal statute or from federal common law). But despite
the "common nucleus" involved in the common-law claim, United
States ex rel. Hoover v. Franzen, 669 F.2d 433, 437 (7th Cir.
1982) (footnote omitted) explains state law — here Illinois
law*fn7 — controls that claim:
[T]his crucial choice-of-law issue  is implicit
in the exercise of pendent jurisdiction. The
pendent state law claim is governed in all
respects by state law. . . . Merely because the
state law claim is in federal court does not lead
to the application of federal law. As Erie Railroad
Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82
L.Ed. 1188 (1938) and its offspring make clear,
absent a valid and controlling federal law, state
law governs a state law claim (even in nondiversity
Even though the parties have been inattentive to that
distinction, citing federal and state precedents
indiscriminately, this opinion will analyze Bank's ...