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September 7, 1989


Marvin E. Aspen, United States District Judge.

The opinion of the court was delivered by: ASPEN


 The two remaining defendants, Community Bank of Greater Peoria and Community Financial Services, Inc. (collectively, "Community Bank"), originally moved to dismiss Count III of the complaint for failure to state a claim upon which relief could be granted. In response, the plaintiff Rosetta Heastie moved for summary judgment on liability for Count III. However, Mrs. Heastie also moved to certify her claim as a class action, and we were required to consider that motion first. In an opinion dated May 22, 1989, we granted the motion for class certification. 125 F.R.D. 669 (N.D.Ill. 1989). After we did so, Mrs. Heastie amended her complaint, but the amended complaint did not materially change Count III. Therefore, the motion to dismiss and the motion for summary judgment remain for our decision. For the reasons set forth below, we treat Community Bank's motion to dismiss as a motion for summary judgment and deny it. We grant Mrs. Heastie's motion for summary judgment on the issue of liability.

 Procedural Background

 In their briefs on Community Bank's motion to dismiss, both sides cited to facts outside the face of the complaint. In its reply brief, Community Bank objected to Mrs. Heastie's use of such facts, even though it had itself gone outside of the complaint in its memorandum in support. Despite Community Bank's objections, we conclude that it is appropriate to treat the motion to dismiss as a motion for summary judgment, as permitted by Rule 12(b). Both sides agree on the material facts improperly raised in briefing the motion to dismiss, namely, the cash sales contract between U.S. Satellite and Mrs. Heastie and the promissory note between Mrs. Heastie and Community Bank. (We discuss these two documents below.) As might be expected, however, they disagree on the legal consequences of those facts.

 Factual Background

 The parties agree that in late 1985, Leonard Kraman, a representative of U.S. Satellite Systems, Inc., convinced Mrs. Heastie to buy a satellite dish antenna for her home on the south side of Chicago. On December 4, 1985, Mrs. Heastie signed a cash sales contract with U. S. Satellite, setting a purchase price of $ 4,000. See Exh. A, Def's Motion to Dismiss Count III. Mrs. Heastie did not have $ 4,000, so Kraman told Mrs. Heastie that U.S. Satellite would find financing for her. It did not have to look far; it had previously entered into an agreement with Community Bank in which Community Bank agreed to provide credit for approved U.S. Satellite customers. See Exh. E, Pltf's Statement of Material Facts. Under the terms of the agreement, Community Bank agreed to provide U.S. Satellite with loan application forms, which U.S. Satellite would in turn provide to those consumers "who inquire[d] as to the availability of a loan to finance their prospective purchase." Id. para. 1. Community Bank would then review the application, id. para. 2, and if it approved the loan, it could, if it chose, forward the documents to U.S. Satellite to obtain the consumer's signature, id. para. 3. Once it received the executed documents, U.S. Satellite would return them to Community Bank. Id. para. 4.

 It is not clear whether Mrs. Heastie filled out an application for a loan, but on December 19, 1985, she received a promissory note and a "Completion Certificate," both prepared by Community Bank. See Exhs. C & D, Pltf's Response to Def's Motion to Dismiss. *fn1" As required by 16 C.F.R. part 433 (1988) ("part 433"), a Federal Trade Commission ("FTC") regulation that we discuss at length below, the promissory note included the following notice:

Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained with the proceeds thereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.

 However, the completion certificate included the following at least somewhat contradictory provision, which we shall refer to as the non-responsibility provision:

In accordance with my (our) credit application dated December 19, 1985.
I (We) understand that the selection of the dealer and the acceptance of the materials used and the work performed is my (our) responsibility and that the financial institution does not guarantee the material or workmanship or inspect the work performed.

 Mrs. Heastie signed both documents, and the loan proceeds were used to pay U.S. Satellite. She believes, and we agree, that the facts we have already described are sufficient to impose liability; accordingly, she does not document anything more. However, because it is helpful to place these facts in context, we will set out some of the allegations of her complaint. We will not rely on these allegations in our decision here.

 After Mrs. Heastie signed the loan documents, U.S. Satellite installed the dish. The dish, however, proved to be defective, and even worse, the U.S. Satellite workers damaged Mrs. Heastie's roof while installing it. Accordingly, Mrs. Heastie, after making some payments, notified Community Bank that she refused to make further payments for the defective dish. According to Mrs. Heastie, Community Bank insisted that she pay and ...

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