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JACKSON v. UNION NAT. BANK OF MACOMB

June 26, 1989

HARVEY JACKSON AND ROGER JACKSON, PLAINTIFFS,
v.
UNION NATIONAL BANK OF MACOMB, A NATIONAL BANKING ASSOCIATION, DEFENDANT.



The opinion of the court was delivered by: Mihm, District Judge.

ORDER

Presently before the Court is the Motion of Defendant, Union National Bank of Macomb (hereinafter "Union"), for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. The basis of Union's Motion is that this case was instituted after the expiration of the applicable statute of limitations. The Court concurs and hereby GRANTS Union's Motion.

FACTS

On March 31, 1989, Plaintiffs, Harvey Jackson and Roger Jackson, filed a Complaint in this case in which they sought damages for alleged violations of the Bank Holding Company Act Amendments of 1970, 12 U.S.C. § 1971 et seq. Plaintiffs, who are brothers, each owned an undivided one-half interest in a 40-acre tract of real estate. In their Complaint, the Jacksons assert that in or around July 1981, Union advised Harvey Jackson that, in order for him to receive renewals for two promissory notes held by Union, Roger Jackson would have to execute a mortgage and note to Union. The purpose of the mortgage was to have Roger Jackson provide his one-half interest in the real estate as security for the notes which his brother sought to renew. Plaintiffs further allege that Union's loan officer, Nye Bouslog, represented to them that only Harvey Jackson's acreage would be secured and that only Harvey Jackson would be liable on the promissory note. Harvey Jackson claims that he would not have had his brother execute the security documents had Harvey known that such action would encumber Roger's undivided one-half interest in the real estate.

In September 1983, Union began liquidating Harvey Jackson's assets in order to obtain repayment on the notes. On June 11, 1984, Harvey Jackson filed a Chapter 13 bankruptcy petition in which he named Union as a secured creditor. Pursuant to that petition, payments were made to Union until early 1986. The monies that Union received from Harvey Jackson did not, however, repay his entire debt to Union. As a result, Union instituted foreclosure proceedings against the Jackson brothers in the Circuit Court of McDonough County, Illinois. On December 11, 1986, that court entered a decree of foreclosure against the Jacksons.

According to Plaintiffs, prior to December 11, 1986, they were completely unaware of any potential personal liability that Roger Jackson might have with respect to the documents executed in July 1981. According to the Jacksons, Union made no attempts prior to December 1986 to collect from Roger Jackson any payments due and owing under the terms of the promissory notes executed in 1981.

DECISION

The applicable statute of limitations for violations of the Bank Holding Company Act Amendments of 1970 is found at 12 U.S.C. § 1977. That statute states as follows:

Limitations of Actions; Suspension of Limitations

  1. Subject to paragraph (2) of this section, any
  action to enforce any cause of action under this
  chapter shall be forever barred unless commenced
  within four years after the cause of action
  accrued.
  2. Whenever any enforcement action is instituted
  by or on behalf of the United States with respect
  to any matter which is or could be the subject of
  a private right of action under this chapter, the
  running of the statute of limitations in respect
  of every private right of action arising under
  this chapter and based in whole or in part on such
  matter shall be suspended during the pendency of
  the enforcement action so instituted and for one
  year thereafter: Provided, That whenever the
  running of the statute of limitations in respect of
  a cause of action arising under this chapter is
  suspended under this paragraph, any action to
  enforce such cause of action shall be forever
  barred unless commenced either within the period of
  suspension or within the four year period referred
  to in paragraph (1) of this section.

12 U.S.C. § 1977. There is no dispute between the parties to this case that, because no enforcement action by or on behalf of the United States has been instituted against Union, the provisions of 12 U.S.C. § 1977(2) have no application in this case. As a result, the focus of the Court's inquiry is whether the Jacksons' filing of this lawsuit on March 31, 1989 satisfies the four year statute of limitations provided in 12 U.S.C. § 1977(1). Union argues that the 1989 filing does not satisfy the four year limitations period and that the statute of limitations expired in July 1985 — four years after Roger Jackson executed the mortgage and note to Union. This Court agrees.

The United States Court of Appeals for the Seventh Circuit has not interpreted the statute of limitations applicable to the anti-tying provisions of the Bank Holding Company Act, but the Fourth Circuit, in Lancianese v. Bank of Mt. Hope, 783 F.2d 467 (4th Cir. 1986), held that the four year statute of limitation begins to run no later than the date on which a bank's alleged violations end. According to the Lancianese Court, the fact that the bank customers do not suffer the final harm caused by the bank's conduct until some later time is irrelevant to the determination of whether their claim against the bank is time barred. Id. at 470.

Although the Seventh Circuit has not directly addressed the statute of limitations question with respect to the anti-tying provisions of the Bank Holding Company Act, that Court has ruled that those provisions should be treated in a manner similar to the anti-tying provisions of the antitrust laws. In Exchange Nat'l ...


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