Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

DIEHL v. ACRI CO.

September 26, 1995

DONALD D. DIEHL AND LAURIE S. DIEHL, PLAINTIFFS,
v.
THE ACRI COMPANY, METROBANK, AND SHIRLEY A. HOLMBERG, DEFENDANTS. SHIRLEY A. HOLMBERG, COUNTER-PLAINTIFF, V. DONALD D. DIEHL AND LAURIE S. DIEHL, COUNTER-DEFENDANTS.



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

  ORDER

Magistrate Judge Kauffman made a Report and Recommendation [Doc. # 95] denying two separate motions by Defendants to dismiss this case for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Before the Court are Defendant ACRI's Objection to Magistrate's Report and Recommendation [Doc. # 96] and Defendant Holmberg's Objection to Magistrate's Report and Recommendations Regarding Defendant Holmberg's Motion to Dismiss for Lack of Subject Matter Jurisdiction [Doc. # 99]. The Court, pursuant to 28 U.S.C. § 636(b)(1)(C), shall undertake a de novo determination of those portions of the recommendation to which objections were made.

BACKGROUND*fn1

On May 8, 1989, Plaintiffs Donald D. Diehl and Laurie S. Diehl ("Diehl") entered into an agreement with Defendant the ACRI Company ("ACRI") to purchase windows for their home. Two contracts, both dated May 8, 1989, were signed by the parties. One of the contracts was handwritten and stated that Plaintiffs were giving ACRI a security interest only in the windows purchased from ACRI. The other contract was typed and stated that Plaintiffs were giving ACRI a security interest in both the windows purchased from ACRI and in Plaintiff's residence (i.e. a second mortgage). Plaintiffs' signatures on the real estate mortgage were certified by Defendant Shirley A. Holmberg ("Holmberg"), a notary public and an employee of ACRI.

While all of the parties agree that Plaintiffs' true signatures appear on both contracts and on the mortgage, they sharply disagree on precisely how the contracts and mortgage were signed and whether Plaintiffs understood that a mortgage was being taken on their residence. Plaintiffs claim that they just signed a group of papers without reading them and that ACRI never gave them a copy of the mortgage or the typed contract. Thus, it was not until Plaintiffs filed for bankruptcy that they first learned of ACRI's mortgage interest in their residence. Defendants assert that they did give Plaintiffs a typed version of the contract along with all the required notices and statements.

Plaintiffs filed a four-count Complaint against Defendants on May 8, 1992. pursuant to the Truth In Lending Act (TILA), 15 U.S.C. § 1635(b) [Count I]; the Illinois Consumer Fraud and Deceptive Business Practices Act, Ill.Rev.Stat. 1987, ch. 121 1/2, § 261 et. seq. [Count II]; the Illinois Commercial Code, Ill.Rev.Stat. 1987, ch. 26, § 3-407(2) [Count III]; and the Illinois Notary Public Act, Ill.Rev.Stat. 1987, ch. 102, § 201-101 et. seq. Plaintiffs moved for summary judgment, but the Court denied that motion in an Order dated December 3, 1993. Defendants now move to dismiss Plaintiffs' TILA claim pursuant to Fed.R.Civ.P. 12(b)(1) based upon the running of the statute of limitations period.

ANALYSIS

Defendants seek to dismiss Plaintiffs' rescission claim under TILA for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). On such a motion, Plaintiffs have the burden of proof that jurisdiction does in fact exist. Kontos v. United States Dept. of Labor, 826 F.2d 573, 576 (7th Cir. 1987); Western Transp. Co. v. Couzens Warehouse & Dist., Inc., 695 F.2d 1033, 1038 (7th Cir. 1982) quoting Mortensen v. First Federal Savings and Loan Ass'n., 549 F.2d 884, 891 (3d Cir. 1977). Moreover. it is proper for the district court to look beyond the jurisdictional allegations in the Complaint and to view whatever evidence has been submitted in determining whether it has subject matter jurisdiction over the case. Roman v. United States Postal Serv., 821 F.2d 382, 385 (7th Cir. 1987).

Rescission Claim

Plaintiffs claim an action for rescission under 15 U.S.C. § 1635. Regulation Z, which interprets this section, requires that a consumer exercise his right to rescission within three business days from either the date of consummation, delivery of notice of the right to rescind, or delivery of all material disclosures, whichever occurs last. 12 C.F.R. § 226.23(a). However, if the notice of right to rescind or material disclosures are not delivered, then the consumer has three years after consummation to bring a rescission action. 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a).

In its previous Order of December 3, 1993, this Court made clear that the three-year period of limitations found in 15 U.S.C. § 1635(f) does not apply to the instant case because the term "material disclosure," as defined in 12 C.F.R. § 226.23(a)(3) n. 48, does not include disclosure of a security interest. Diehl v. The Acri Co., 92-1224, 1993 WL 818766 (Dec. 3, 1993), at 9-10. Plaintiff has not convinced the Court that its previous holding was improper.*fn2 Thus, Plaintiff can only premise jurisdiction in this Court on the three day statute of limitations found in Regulation Z.

Of course, Plaintiffs' TILA claims do not literally fall within the three-day statute of limitations because they were brought on May 8, 1992, a full three years after consummation of the transaction on May 8, 1989.*fn3 However, Plaintiffs assert that the doctrine of equitable tolling should be applied to this case in order to toll the statute of limitations in their favor. TILA is subject to equitable tolling in cases where fraudulent concealment is alleged. King v. California 784 F.2d 910 (9th Cir. 1986), cert. denied, 484 U.S. 802, 108 S.Ct. 47, 98 L.Ed.2d 11 (1987); Jones v. TransOhio Sav. Ass'n., 747 F.2d 1037 (6th Cir. 1984); Bokros v. Assoc. Finance, Inc., 607 F. Supp. 869 (N.D.Ill. 1984). In our previous Order, the Court found that issues of disputed fact existed so as to preclude summary judgment for Plaintiff on the rescission issue. Diehl v. The Acri Co., 92-1224, 1993 WL 818766 (Dec. 3, 1993), at 11-12.

Nevertheless, the case stands in a very different procedural posture at this stage of the litigation. Unlike a motion for summary judgment, where the Court must leave issues of disputed material fact for the jury, Fed.R.Civ.P. 56, a 12(b)(1) motion to dismiss allows the Court to itself decide issues of disputed material fact. Crawford v. United States, 796 F.2d 924, 927-28 (7th Cir. 1986). The Seventh Circuit has presented a strong preference for district courts to resolve all jurisdictional issues prior to trial on the basis that "no case can properly go to trial if the court is not satisfied that it has jurisdiction." Id. at 928. No format is specified by statute or rule for evidentiary hearings on jurisdiction; any rational mode of inquiry will do. Id. at 929. The Seventh Circuit suggests that the district court look to the documents submitted by the parties and, "treating the summary judgment procedures in Fed.R.Civ.P. 56 loosely as a form of trial by affidavit, the court may look to those procedures for guidance in organizing a documentary inquiry into jurisdiction."*fn4 Id. at 928.

The Court finds that under the jurisdictional standard of Rule 12(b)(1), Plaintiffs' equitable tolling claim must fail. Even if equitable tolling did apply in this case, it would only toll the three day statute of limitations until Plaintiffs discovered ACRI's second mortgage on their home. As noted in the Court's previous Order, "Plaintiffs were aware of the existence of ACRI's security interest in their residence at least as early as February 4, 1992." Diehl v. Acri, 92-1224 (Dec. 3, 1993), at 12 n. 6. In a letter to ACRI dated February 4, 1992, from the Diehls' attorney, Richard E. Barber, Barber stated, "I represent Don and Laurie Diehl. You claim ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.