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ILLINOIS EX REL. HARTIGAN v. COMMONWEALTH MORTG. C

September 13, 1989

PEOPLE OF THE STATE OF ILLINOIS ex rel. NEIL F. HARTIGAN, ATTORNEY GENERAL OF ILLINOIS, Plaintiff,
v.
COMMONWEALTH MORTGAGE CORPORATION OF AMERICA, et al., Defendants. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, etc., Intervenor


Milton I. Shadur, United States District Judge.


The opinion of the court was delivered by: SHADUR

MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 In this statutory enforcement action, Illinois Attorney General Neil Hartigan initially filed a two-count Complaint in the Circuit Court of Cook County on behalf of the People of the State of Illinois *fn1" against Commonwealth Mortgage Corporation of America ("Commonwealth") and certain of its officers, alleging violations of:

 
1. the Consumer Fraud and Deceptive Business Practices Act, Ill. Rev. Stat. ch. 121-1/2, paras. 261-272 (Count I) and
 
2. the Uniform Deceptive Trade Practices Act, id. P. 312 (Count II).

 Commonwealth is a wholly-owned subsidiary of Commonwealth Savings Association ("Association").

 On March 8, 1989 Federal Home Loan Bank Board appointed Federal Savings and Loan Insurance Corporation ("FSLIC") as Association's conservator and Federal Deposit Insurance Corporation ("FDIC") to provide management services for FSLIC's conversatorship. FSLIC then intervened to supplant Commonwealth as defendant in this action and removed it to this District Court.

 In part the Complaint seeks restitution of certain sums from the defendant -- originally Commonwealth but now FSLIC. In light of FDIC's entry into the case, this Court directed the parties' attention to the potential application of the doctrine announced in D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 86 L. Ed. 956, 62 S. Ct. 676 (1942). It therefore requested briefing pursuant to Fed.R.Civ.P. ("Rule") 16 to determine whether the issues might be simplified by eliminating any claims or defenses barred by the D'Oench doctrine. For the reasons stated in this memorandum opinion and order, this Court finds D'Oench indeed precludes any claim for recovery -- on any theory -- based on oral misrepresentations by Commonwealth or its agents or employees.

 Plaintiff's Claims

 
(1) representing that a specified interest rate and number of points would be locked in for a set period of time, when in fact they were not;
 
(2) representing that the consumers would receive their loans within a certain time period, while failing to provide the loans on that timetable;
 
(3) representing that loan applications would be processed within a certain period of time, when Commonwealth could not reasonably have expected to do so;
 
(4) furnishing a "Good Faith Estimate of Settlement Charges" and failing to advise that it ...

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