Disclosure of Right to Rescind
Tru-Link argues that plaintiff is incorrect in claiming that § 226.18 requires it to disclose a right of rescission arising from the mechanic's lien that Tru-Link allegedly obtained on plaintiff's home. Tru-Link asserts that the only lien established by the contract documents between these parties created a security interest in the fence and gate sold by defendant to plaintiff, an interest that was properly disclosed as required by § 226.18(m). Because the interest in plaintiff's home allegedly arises by operation of law, and interests arising by operation of law are excluded from the disclosures required under § 226.18 by § 226.2(a)(25)
, Tru-Link concludes that it is not required to provide such notice.
Tru-Link is correct in concluding that § 226.18 does not require disclosure of the right of rescission. Unfortunately for Tru-Link, § 226.23 requires such disclosure under the facts alleged. The same § 226.2(a)(25) that excludes security interests arising by operation of law from § 226.18, includes such interests for purposes of the right of rescission under § 226.23. Under the latter regulation, defendant must provide a separate, detailed notice of the right of rescission in credit transactions in which security interests are or will be retained or acquired in a consumer's principal dwelling. The Federal Reserve Board interprets this to include mechanic's liens. 12 C.F.R. 226, Supp. I, § 6(5), at 294.
Plaintiff's amended complaint, although it does not mention § 226.23, satisfies the liberal requirements of notice pleading under Fed. R. Civ. P. 8. Plaintiff alleges that Tru-Link obtained a mechanic's lien on her residence and has filed mechanic's liens on the residences of other customers. The amended complaint also alleges that defendant failed to provide notice of the right of rescission in violation of TILA. Under the regulations and interpretation discussed above, this is sufficient to plead a TILA violation.
Tru-Link argues that Count II should be dismissed for failure to specifically allege a violation of § 226.23. As this court held in Moore v. Fidelity Financial Services, Inc., 869 F. Supp. 557, 561 (N.D.Ill. 1994), a complaint need not specify the correct statute to defeat a Rule 12(b)(6) motion to dismiss. "It is a well-settled principle of law that a complaint should not be dismissed merely because a plaintiff's allegations do not support the particular legal theory [she] advances, for the court is under a duty to examine the complaint for relief on any possible theory." Id, quoting, Bowers v. Hardwick, 478 U.S. 186, 201, 92 L. Ed. 2d 140, 106 S. Ct. 2841 (dissenting opinion, Blackmun, 1986). As this court stated in Moore, however, the preferred practice by experienced counsel such as plaintiff's attorneys in the instant case (the same lawyers as in Moore) would be to provide the court and the defendant with sufficiently precise legal authority to avoid needless motion practice. If these lawyers, who know better, continue to file bare-bones complaints alleging violations of unspecified sections of TILA, perhaps the court will one day lose all patience. Today, however, is not the day.
Finally, Count II properly alleges a violation of 15 U.S.C. § 1638(a)(6) and 12 C.F.R. § 226.18 for failure to state a beginning date on which monthly payments are to be made. Tru-Link argues that "30 days from completion" was the best it could do, and that the regulations (12 C.F. 2 § 226.17(C)(2)) provide that "if any information necessary for an accurate disclosure is unknown to the creditor, it shall make the disclosure based on the best information reasonably available and shall state that the disclosure is an estimate." Tru-Link's argument defeats itself. To comply with the statute and the regulation, defendant must disclose when payments should begin or, if it cannot do so (as appears to be the case with respect to the installation of fences), it should provide an estimated date of completion and "state that the disclosure is an estimate." Rowland v. Magna Millikin Bank, 812 F. Supp. 875 (C.D. Ill. 1992). The Installment Contract signed by plaintiff thus does not appear to contain the proper disclosure.
Accordingly, the court finds that plaintiff has sufficiently alleged a TILA violation in Count II of her amended complaint and, denies Tru-Link's motion to dismiss that count.
ILLINOIS CONSUMER FRAUD ACT
Tru-Link moves to dismiss plaintiff's claim that Tru-Link violated the ICFA for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Tru-Link asserts that because the court lacks subject matter jurisdiction over plaintiff's state law claims plaintiff fails to state a claim in Counts I and II under TILA. As set forth above, the court finds that plaintiff has sufficiently alleged federal claims in Counts I and II against Tru-Link. In Count V plaintiff alleges that Tru-Link violated the ICFA act by, among other things, failing to provide the disclosures required by TILA prior to plaintiff having signed the Fencing Proposal and the Installment Contract. The court finds that it has supplemental jurisdiction over plaintiff's ICFA claims alleged in Count V pursuant to 28 U.S.C. § 1367 because the subject matter in Counts I, II and V are related claims that form part of the same action. Accordingly, the court denies Tru-Link's motion to dismiss Count V for lack of subject matter jurisdiction.
Tru-Link also moves to dismiss Count V for failure to state a claim under Rule 12(b)(6). Tru-Link argues that plaintiff fails to state a CFCA claim because: (1) the Fencing Proposal is not a binding contract and therefore not subject to TILA; and, (2) the Installment Contract complies with all of TILA's disclosure requirements. As stated above, the court finds that the Fencing Proposal constitutes the consummation of a credit transaction, and that plaintiff has stated a claim for a failure to make the required TILA disclosures prior to plaintiff having signed the Installment Contract. Accordingly, Tru-Link's motion to dismiss Count V for failure to state a claim is denied.
For the reasons as stated above, the court denies Tru-Link's motion to dismiss Counts I, II, and V of the amended complaint. Tru-Link shall file its answer to those counts on or before November 22, 1995. This case is set for status on November 8, 1995, at 9:15 a.m. The parties are to be prepared to discuss the status of the case at that time, including a schedule for a motion to certify the plaintiff class or classes.
ENTER: November 7, 1995
Robert W. Gettleman
United States District Judge