FSLIC and Conservator of American Security. 12 U.S.C. § 1441a(b)(6).
The RTC argues that the FIRREA limitations period did not begin to run until March 15, 1989, the later of the date that the FSLIC became Conservator for American Security (March 15, 1989) and the date the causes of action accrued (April 29, 1988). Thus, under the RTC's analysis, the limitations period for the new defendants end on March 15, 1992 for the tort-based claims, and March 15, 1995 for the contract-based claims. As a result the second amended complaint, filed October 4, 1990, was timely.
We look first to the relatively sparse case law on this topic. The RTC cites only one case in support of its position -- FDIC v. Howse, 736 F. Supp. 1437, 1445-46 (S.D. Tex. 1990). The court in Howse held that FIRREA's statute of limitations period applies retroactively to causes of action owned by the FDIC or the FSLIC prior to FIRREA's enactment. Id. While the court's opinion in Howse is well-reasoned, it fails to analyze the legislative history of FIRREA, and does not address the issue of whether or not FIRREA can revive stale claims.
The new defendants cite only two cases in support of their position -- FDIC v. Hinkson, 848 F.2d 432, 434 (3rd Cir. 1988), and FDIC v. Cherry, Bekaert & Holland, 742 F. Supp. 612, 616 (M.D. Fla. 1990). In Hinkson, the Third Circuit held that a claim "accrues" when the FDIC first acquires it, not earlier, and that if the applicable State limitations period expires before the FDIC acquires the claim, such claims cannot be revived by a transfer to a federal agency. While Hinkson pre-dates the FIRREA statute of limitations amendments, it does stand for the reasonable proposition that a federal agency, be it the FDIC, FSLIC, or RTC, takes assignments of claims subject to the claims' "pre-existing infirmity", id., and if the limitations period expired before the assignment, the infirmity is complete. We completely agree with the holding in Hinkson. Were this not the law, then the FDIC, FSLIC, or RTC could, by the mere act of taking conservatorship of a bank, revive claims relating to acts done during the Great Depression. Such an allowance would defy logic, and would obliterate any sense of repose granted by long-expired limitations periods. The District Court in Cherry, Berkaert & Holland, supra at 617, also adopted in full the reasoning in Hinkson. For other cases not cited by new defendants but agreeing with the reasoning of Hinkson, see FDIC v. Former Officers and Directors of Metro. Bank, 884 F.2d 1304, 1309 n. 4 (9th Cir. 1989); FDIC v. Consolidated Mortgage & Finance Corp., 805 F.2d 14, 17-18 n. 4 (1st Cir. 1986).
While we agree with the reasoning and holding of the cases cited by the new defendants, we disagree with the new defendants' arguments about how we should apply them. According to the new defendants, the only relevant date is August 9, 1989, the date that the RTC officially replaced the FSLIC as Conservator of American Security. If that date is the relevant "transfer of interest to a federal agency" then the RTC's claims would be time-barred because the one year limitations period had already expired. However, we disagree with the new defendants' analysis. The word "Corporation" in 12 U.S.C. § 1821(d)(14) does not refer to the Resolution Trust Corporation, but to the Federal Deposit Insurance Corporation. 12 U.S.C. § 1811. Both the FSLIC and the RTC, while themselves "corporations", were and are merely umbrella organizations exclusively managed by the FDIC. See 12 U.S.C. § 1441a(b)(1)(C). Nothing magical happened on August 9, 1989. All that happened was that, under the terms of 12 U.S.C. § 1441a(b)(6), the RTC "succeeded" the FSLIC as Conservator of American Security. We find that the relevant transfer of interest from American Security to the "Corporation" occurred on March 15, 1989 when the FSLIC became Conservator of American Security. It makes no difference that the FSLIC never substituted as plaintiff in this case - the RTC did so within the relevant limitations period.
Overall, we find and hold as follows: First, the FSLIC became Conservator of American Security on March 15, 1989, within the contractual limitations period of one year. Second, the RTC eventually succeeded the FSLIC as Conservator, but that act alone did not affect the appropriate limitations period - whatever that period might be. Third, FIRREA's limitations period, set out in 12 U.S.C. § 1821(d)(14), applies retroactively to the FSLIC's assumption of conservatorship on March 15, 1989. Fourth, because that retroactive application revives no stale claims, the FIRREA limitations periods apply to this case. Fifth, and finally, the second amended complaint, which names the new defendants for the first time, was timely filed. The new defendants' motion for summary judgment on all counts on the ground that they are time-barred is denied.
2. The Motions to Dismiss.
A. Count Two.
Count Two attempts to allege a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"). Ill. Rev. Stat. ch. 121 1/2, para. 261, et seq. Count Two specifically alleges that the defendants' activities constituted deceptive practices, frauds, false pretenses, false promises and misrepresentations, concealment, suppression and omissions of material fact. (Second Am. Compl. para. 59). Defendants move to dismiss Count Two on the ground that the Consumer Fraud Act requires an allegation of general consumer injury in order to be actionable. It is undisputed that Count Two does not allege that the transactions in issue were consumer-oriented or that they affected consumers generally.
Illinois' state and federal courts were vehemently split on the issue of whether the Consumer Fraud Act required proof of a consumer or public injury. Compare, e.g., Frahm v. Urkovich, 113 Ill. App. 3d 580, 69 Ill. Dec. 572, 576, 447 N.E.2d 1007, 1011 (1st Dist. 1986) (requiring general consumer injury), with Warren v. LeMay, 142 Ill. App. 3d 550, 96 Ill. Dec. 418, 429, 491 N.E.2d 464, 475 (5th Dist. 1986) (no general injury required). In 1989, the Seventh Circuit, in First Comics, Inc. v. World Color Press, Inc., 884 F.2d 1033, 1038-41 (7th Cir. 1989), analyzed the split in authority and concluded that if the Illinois Supreme Court were to decide this issue, it "would likely require that some sort of public or consumer injury be demonstrated in order to recover under the Act." 884 F.2d at 1042.
After the Seventh Circuit's opinion in First Comics, the Illinois Supreme Court amended the Consumer Fraud Act by adding "Proof of a public injury, a pattern, or an effect on consumers generally shall not be required." Ill. Rev. Stat. (1990) ch. 121 1/2, para. 270a(a), as amended by P.A. 86-801, § 1. The amendment was effective on January 1, 1990. The defendants argue that the amendment is a substantive change in the law, and because there is no contrary legislative intent, it cannot be applied retroactively to this case. Zielnik v. Loyal Order of Moose, Lodge No. 265, 174 Ill. App. 3d 409, 410-11, 123 Ill. Dec. 839, 840-41, 528 N.E.2d 384, 385-86 (1st Dist. 1988). In addition, defendants argue that the Seventh Circuit "held", in Cange v. Stotler & Co., 913 F.2d 1204, 1211 n. 4 (7th Cir. 1990), that the amendment to the Consumer Fraud Act is prospective only.
We disagree with the new defendants' analysis. We find that there is enough legislative history on the amendment of the Act to conclude that the Illinois' legislature did intend that the amendment be applied retroactively, i.e. that the change in the law is not substantive but a mere clarification. The only relevant portion of the legislative history reads:
House Bill 612 provides that the proof of public injury is not required in order to collect damages under this Act. This legislation would clarify that there is no such requirement in order for a plaintiff to be protected under this Act.