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09/30/96 STEPHEN STERN AND CATHERINE HARTH v.

September 30, 1996

STEPHEN STERN AND CATHERINE HARTH, PLAINTIFFS-APPELLANTS,
v.
NORWEST MORTGAGE, INC., DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Albert Green, Judge Presiding.

The Honorable Justice Greiman delivered the opinion of the court: Tully, P.j., and Gallagher, J., concur.

The opinion of the court was delivered by: Greiman

JUSTICE GREIMAN delivered the opinion of the court:

Plaintiffs, Stephen Stern and his wife Catherine Harth, (plaintiffs or Stern), filed a class action against defendant, Norwest Mortgage, Inc. (defendant or Norwest), in the circuit court of Cook County. Plaintiffs allege that defendant (1) violated the Illinois Mortgage Escrow Account Act (Act) (765 ILCS 910/1 et seq. (West 1992)) by charging them and others similarly situated an "escrow waiver fee," and (2) misrepresented the provisions of the Act in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act). 815 ILCS 505/2 (West 1992).

Defendant filed a motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)) in which it maintained that plaintiffs' complaint failed to state a cause of action, because (1) the "escrow waiver fee" was permitted by the Act, or, alternatively, (2) the Act was preempted by federal law, and (3) plaintiffs' construction of the Act renders it unconstitutionally vague.

The trial court granted defendant's motion to dismiss and plaintiffs appeal, raising issues as to whether: (1) the Act permits a lender to charge an "escrow waiver fee" if a borrower elects to post an interest-bearing time deposit (certificate of deposit) with the lender instead of establishing a tax escrow account; (2) Norwest violated the Consumer Fraud Act by representing to plaintiffs that they were required to pay the escrow waiver fee; (3) the Act is preempted by the federal Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) (12 U.S.C. sec. 1735f (1994)); and (4) plaintiffs' construction of the Act renders it unconstitutionally vague.

We reverse as to the defendant's right to impose an escrow waiver fee and affirm on the failure to state a cause of action under the Consumer Fraud Act.

The Act provides in relevant part:

"When the mortgage is reduced to 65% of its original amount by payments of the borrower, timely made according to the provisions of the loan agreement secured by the mortgage, and the borrower is otherwise not in default on the loan agreement, the mortgage lender must notify the borrower that he may terminate such escrow account or that he may elect to continue it until he requests a termination thereof, or until the mortgage is paid in full, whichever occurs first." 765 ILCS 910/5 (West 1992).

The Act further provides that at any time during the term of the loan "in lieu of the mortgage lender establishing an escrow account or an escrow-like arrangement, a borrower may pledge an interest bearing time deposit with the mortgage lender in an amount sufficient to secure the payment of anticipated taxes." 765 ILCS 910/6 (West 1992).

In July of 1992, plaintiffs obtained a mortgage loan from Norwest in order to purchase a single-family home in Chicago. Plaintiffs chose to exercise the option of pledging a certificate of deposit sufficient to cover the anticipated taxes.

Norwest, however, informed plaintiffs that they would be charged a "one-time service fee" equal to .25% of the principal amount of the loan ($492.50) should they exercise this option. Plaintiffs paid this charge and closed the transaction. Soon thereafter they brought a class action against Norwest.

In reviewing motions to dismiss, this court determines the matter de novo. Crespo v. Weber Stephen Products Co., 275 Ill. App. 3d 638, 212 Ill. Dec. 1, 656 N.E.2d 154 (1995). The complaint may only be dismissed if there are no set of facts that can be proven that state a cause of action. Doe v. Calumet City, 161 Ill. 2d 374, 385, 204 Ill. Dec. 274, 641 N.E.2d 498 (1994).

The question before us is one of statutory interpretation. The fundamental canon of construction is to ascertain and give effect to the intention of the legislature. Varelis v. Northwestern Memorial Hospital, 167 Ill. 2d 449, 454, 212 Ill. Dec. 652, 657 N.E.2d 997 (1995). Courts will look first to the words of the statute; the language used by the legislature being the best indication of legislative intent. Kirwan v. Welch, 133 Ill. 2d 163, 165, 139 Ill. Dec. 836, 549 N.E.2d 348 (1989). To determine the meaning of the statute, it must be read in its entirety and should not be construed so as to render any of its parts superfluous or meaningless. Kraft, Inc. v. Edgar, 138 Ill. 2d 178, 149 Ill. Dec. 286, 561 N.E.2d 656 (1990). When the statutory language is clear, no resort to other tools of interpretation is necessary. Henry v. St. John's Hospital, 138 Ill. 2d 533, 541, 150 Ill. Dec. 523, 563 N.E.2d 410 (1990). Moreover, courts should not, ...


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