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