The opinion of the court was delivered by: ROBERT W. GETTLEMAN
Plaintiff, Julius V. Moore, Jr., both as an individual and the representative of a putative class, brings this action against defendant Fidelity Financial Services, Inc. asserting claims under the Truth in Lending Act (15 U.S.C. §§ 1601, et seq.) and Federal Reserve Board Regulation Z (12 C.F.R. part 226) (Count I), for breach of contract (Count II), and under section 9-504 of the Uniform Commercial Code (Count III). Defendant has filed a motion to dismiss Count III under Fed.R.Civ.P. 12(b)(6), and for a more definite statement of Counts I and II under Fed. R.Civ.P. 12(e). For the reasons stated below, the Court denies these motions.
Defendant finances vehicle purchases using standard printed forms, including promissory note/ security agreements ("Agreement"), Truth in Lending Act ("TILA") disclosure statements, borrower copies of insurance statements retained by defendant, and repossession notices.
Under defendant's standard agreement, a borrower can use a security interest in his or her vehicle as collateral for the loan.
Defendant's Agreement requires borrowers to obtain insurance against "loss by fire, theft and collision." The Agreement further stipulates that if the borrower fails to obtain the necessary insurance, defendant can insure the vehicle and "advance the premium on required or authorized insurance," in which event the insurance premium is added to the original note and carried at the same interest rate.
Plaintiff terms such insurance purchased by defendant "force placed insurance."
Plaintiff purchased a Nissan from Mid City Nissan in May 1992, and was referred to defendant to obtain financing. Based on Mid City's recommendation, plaintiff obtained a loan from defendant to finance $ 9,769.83 at an annual percentage interest rate of 23.43%. Plaintiff secured defendant's loan with the new Nissan. Plaintiff's agreement and TILA disclosure statement were prepared on standard forms.
Plaintiff did not obtain insurance, and on November 15, 1993, defendant "force placed" insurance on plaintiff's Nissan. Defendant added $ 1,090.00 to plaintiff's loan balance as premium for the insurance policy and charged the increase at the same 23.43% interest rate. Plaintiff alleges that the insurance defendant obtained included coverage that was not required under the Agreement. Defendant failed to send the plaintiff a new credit disclosure.
In January, 1994, defendant told plaintiff that if he paid defendant $ 430.00 towards the insurance premium, the balance of the premium would be added to the end of his contract. Plaintiff paid the $ 430.00 in compliance with defendant's demand. Plaintiff alleges that defendant then demanded further payment prior to the end of the contract. Plaintiff refused to pay the additional sum. On April 13, 1994, defendant repossessed plaintiff's Nissan. On April 14, 1994, defendant sent plaintiff a repossession notice. The repossession notice was a form document that plaintiff alleges defendant regularly uses in conjunction with repossessions. The statement notes the date after which the auto will be offered for sale and describes the redemption procedures.
2. Motion For More Definite Statement of Counts I and II
Defendant requests this Court to order the plaintiff to provide a more definite statement under Rule 12(e) for Counts I and II. Rule 12(e) motions are generally disfavored, and courts should grant such motions only if the complaint is so unintelligible that the defendant cannot draft a responsive pleading. U.S. for Use of Argyle Cut Stone Co., Inc. v. Paschen Contractors, Inc. 664 F. Supp. 298, 303 (N.D. Ill., E.D. Jan. 6, 1987).
Moreover, Rule 12(e) motions are not to be used as substitutions for discovery. Id. at 304; citing, Garza v. Chicago Health Clubs, Inc., 329 F. Supp. 936, 942 (N.D.Ill. 1971); 5 C.Wright & A. Miller, Federal Practice & Procedure § 1376 at 737-741 (1969).
Count I alleges that defendant violated TILA and Federal Reserve Board Regulation Z by obtaining the "force placed" insurance without issuing to plaintiff a new credit disclosure that included the insurance premium. Defendant argues that Count I lacks the necessary specificity required by Rule 8 because it does not specify the exact statute defendant allegedly violated.
Defendant also argues that plaintiff must specify the exact details of the "force placed" insurance that plaintiff alleges constitute "unauthorized coverage," which is discussed below.
Count I of the complaint merely claims that defendant's practice of not issuing a new credit disclosure at the time it "force places" insurance on vehicles "violates TILA and Regulation Z." Even if the preferred practice dictates that the complaint should have cited the exact provision of TILA and Regulation Z defendant allegedly violated, the Court concludes that plaintiff's precise contention can easily be determined through discovery. Accordingly, defendant's motion for a more definite statement based on this alleged defect is denied.
Count II is a breach of contract claim. Plaintiff contends that defendant has an obligation of good faith and fair dealing when exercising the right to place insurance on borrowers' vehicles. Plaintiff alleges that the "additional and unauthorized" insurance coverage defendant charges its borrowers is a breach of the express terms of the contracts.
Defendant argues that plaintiff's allegation in Count II of "additional and unauthorized" coverage is unnecessarily vague and forces the defendant to speculate which provisions of the insurance violate the Agreement. Plaintiff claims that he lacks the necessary documentation to specify each potential claim of "unauthorized coverage" and will not have this ...