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GREISZ v. HOUSEHOLD BANK

March 25, 1998

ELIZABETH GREISZ, Plaintiff,
v.
HOUSEHOLD BANK (ILLINOIS) and GOLDEN SEAL HEATING & AIR CONDITIONING, INC., Defendants.



The opinion of the court was delivered by: NORGLE

OPINION AND ORDER

 CHARLES R. KNORGLEK, SR., District Judge:

 Before the court is Defendant Household Bank's Motion for Partial Summary Judgment (Doc. No. 25-1). For the following reasons, the motion is granted in part, and denied in part.

 I. BACKGROUND

 In September 1995, Plaintiff Elizabeth Greisz ("Greisz") contacted Defendant Golden Seal Heating & Air Conditioning, Inc. ("Golden Seal") about purchasing a Carrier brand gas furnace and air conditioner (the "Carrier Equipment") for the rental property she owned. After comparing prices with two other companies, Greisz decided to purchase the Carrier Equipment from Golden Seal. On October 30, 1995, Golden Seal installed the Carrier Equipment at Greisz's rental property.

 To pay for the Carrier Equipment, Golden Seal invited Greisz to apply for a Carrier credit card issued by Defendant Household Bank ("Household"). By paying for the purchase on the Carrier card, Greisz would receive six months interest free. Though Greisz accepted Golden Seal's invitation, she allegedly never completed an application and did not receive the Cardholder Agreement until November 1995. On October 25, 1995, Golden Seal reported to Household a charge of $ 5,080 for Greisz's new account.

 In early November 1995, Household sent Greisz her first monthly statement ("the November Statement") reflecting her purchase of the Carrier Equipment. The November Statement showed a purchase amount of $ 5,080 for "Purchase Water Heating Equip" and a minimum payment due of $ 104. Greisz claims that she "almost fainted" when she saw this amount because she felt it was an overcharge of the contractual price of $ 4,010.

 Soon after receiving the November Statement from Household, Greisz telephoned Golden Seal. In the meantime, Greisz received another billing statement in December 1995. After attempting to contact Golden Seal, Greisz allegedly began to call Household's "1-800 number" listed on her billing statement. Greisz claims that Household did not tell her to dispute her bill in writing until her telephone call in February 1996.

 On March 7, 1996, more than four months after Golden Seal installed the Carrier Equipment, Greisz wrote to Household for the first time complaining about her account. In that letter, Greisz stated that "the work done by Golden Seal and charged [to her account] is unsatisfactory." (Rule 12(M), Ex. 8). On March 25, 1996, Greisz sent Household a second letter. Neither of these letters made any reference to having been overcharged. To date, Greisz has not paid any amount to Household or Golden Seal.

 On October 18, 1996, Greisz filed a six-count complaint on behalf of herself and others similarly situated against Golden Seal and Household in the Circuit Court of Cook County, Illinois. The complaint, as it relates to Household, alleges various violations of the Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., as well as two derivative state law claims for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS 505/1, et seq., and the Illinois Deceptive Trade Practices Act ("IDTPA"), 815 ILCS 510/1, et seq. On December 12, 1996, Household removed the case to federal court.

 Household now moves for summary judgment on Counts II, III(a), III(b), III(c), III(d), V(a), and VI(a); only Count I, alleging that Household violated 12 C.F.R. § 226.5(b) by failing to provide Greisz with an initial disclosure statement before a transaction was charged to her account, is omitted from Household's motion. In the meantime, Greisz has filed a motion for class certification, which is the basis for Count IV of her complaint.

 II. DISCUSSION

 A. Motion for Class Certification

 As a preliminary matter, the court acknowledges that Federal Rule of Civil Procedure 23(c)(1) requires a court to rule on motions for class certification "as soon as practicable." Fed. R. Civ. P. 23(c)(1). Nonetheless, the Seventh Circuit has said that, in certain circumstances, it might be appropriate to rule on a motion for summary judgment before ruling on a motion for class certification. See Cowen v. Bank United of Texas, FSB, 70 F.3d 937, 941 (7th Cir. 1995) ("It is true that Rule 23(c) of the civil rules requires certification as soon as practicable, which will usually be before the case is ripe for summary judgment. But 'usually' is not 'always,' and 'practicable' allows for wiggle room."); see also Allen v. Aronson Furniture Co., 971 F. Supp. 1259, 1261 (N.D. Ill. 1997) (collecting cases that support this proposition). Such an instance would include when there is sufficient doubt regarding the likelihood of success on the merits of a plaintiff's claims. See Allen, 971 F. Supp. at 1261 (stating that authoritative sources indicate "that summary judgment may properly precede before a motion for class certification" where a plaintiff's claims are without merit); see also Marx v. Centran Corp., 747 F.2d 1536, 1552 (6th Cir. 1984) (stating that certifying a class prematurely would "promote inefficiency"). After reviewing the pleadings in the instant case, the court concludes that judicial economy would be better served by initially ruling on Household's motion for partial summary judgment.

 B. Summary Judgment Standard

 Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). "An issue of fact is genuine only 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Smith v. Severn, 129 F.3d 419, 426 (7th Cir. 1997) (internal quotation marks and citation omitted). The court must "view the record and all reasonable inferences drawn from the record in the light most favorable to the non-moving party." Sample v. Aldi, Inc., 61 F.3d 544, 546 (7th Cir. 1995). "If the non-moving party bears the burden of proof on an issue, that party may not rest on the pleadings and must instead show that there is a genuine issue of material fact." Id. at 547. The non-moving party, therefore, will not survive summary judgment with merely a scintilla of evidence supporting its position. Essex v. United Parcel Serv. Inc., 111 F.3d 1304, 1308 (7th Cir. 1997). "The question is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it so one-sided that one party must prevail as a matter of law." Severn, 129 F.3d at 427.

 C. TILA Overview

 TILA "is not a general prohibition of fraud in consumer transactions or even in consumer credit transactions." Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 285 (7th Cir. 1997). Rather, the purpose of TILA is:

 
to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.

 15 U.S.C. § 1601(a); see also McGee v. Kerr-Hickman Chrysler Plymouth, 93 F.3d 380, 383 (7th Cir. 1996); Allen v. Beneficial Fin. Co. of Gary, 531 F.2d 797, 800 (7th Cir. 1976). At the same time, however, consumers should not misuse TILA "as an instrument of harassment and oppression against the lending industry." Rochon v. Citicorp Mortgage, Inc., 1996 U.S. Dist. LEXIS 4353, 94 C 3326, 1996 WL 167056, at *2 (N.D. Ill. Apr. 5, 1996) (citation omitted); see also Allen, 531 F.2d at 801 (TILA's disclosure "requirements should not unduly burden creditors who sincerely wish to provide customers with understandable disclosure statements."); Sharp v. Ford Motor Credit Co., 452 F. Supp. 465, 468 (N.D. Ill. 1978), aff'd, 615 F.2d 423 (7th Cir. 1980).

 "In implementing TILA, Congress 'delegated expansive authority to the Federal Reserve Board to elaborate and expand the legal framework governing commerce in credit.'" Alexander v. Continental Motor Werks, Inc., 1996 U.S. Dist. LEXIS 1849, 95 C 5828, 1996 WL 79403, at *2 (N.D. Ill. Feb. 16, 1996) (quoting Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559-60, 63 L. Ed. 2d 22, 100 S. Ct. 790 (1980)). Under this authority, "the Federal Reserve Board has issued governing regulations, commonly referred to as Regulation Z." Id. (citing 12 C.F.R. § 226.1, et. seq.). Additionally, "official staff opinions of the Federal Reserve Board construing TILA and Regulation Z are binding unless they are 'demonstrably irrational.'" McGee, 93 F.3d at 383 (citing Ford Motor Credit Co., 444 U.S. at 565); see also Alexander, 1996 WL 79403, at *4 ("It is well settled that the Federal Reserve Board's interpretation, construction, and application of TILA and Regulation Z are to be afforded great deference . . . .").

 In reviewing whether a creditor's disclosures comply with TILA and Regulation Z, "'strict adherence' is the rule and even the most technical disclosure violation is actionable." Alexander, 1996 WL 79403, at *3 (citing Smith v. No.2 Galesburg Crown Fin. Corp., 615 F.2d 407, 416-17 (7th Cir. 1980), overruled on other grounds, Pridegon v. Gates Credit Union, 683 F.2d 182, 194 (7th Cir. 1982)); accord Cowen v. Bank United of Texas, FSB, 70 F.3d 937, 941 (7th Cir. 1995) (stating that "hypertechnicality reigns"). Nonetheless, the court must balance "'competing considerations of complete disclosure . . . and the need to avoid . . . [informational overload].'" Ford Motor Credit Co., 444 U.S. at 568 (quoting S. Rep. 96-73, p. 3 (1979)) (brackets in original); see also Wiskup v. Liberty Buick Co., Inc., 953 F. Supp. 958, 965 (N.D. Ill. 1997). "The sufficiency of TILA-mandated disclosures is to be viewed from the standpoint of an ordinary consumer, not the perspective of a Federal Reserve Board member, federal judge, or English professor." Cemail v. Viking Dodge, Inc., 982 F. Supp. 1296, 1302 (N.D. Ill. 1997).

 To guide creditors in their compliance with TILA, the Federal Reserve Board issues model disclosure forms. See § 1604(b); 12 C.F.R. § 226, Appendices (A) - (K). A creditor using these model forms "shall be deemed in compliance with the disclosure provisions" of TILA. See §§ 1604(b), 1640(f); see also Gibson, 112 F.3d at 286 ("A disclosure that complies with the [model] form is not actionable.").

 With these principles in mind, the court examines, in turn, whether Household is entitled to summary judgment on each of the counts presently before the court.

 D. Household's Motion on the TILA Counts (Counts II, III(a), III(b), III(c), III(d))

 At the outset, the court notes that the gravamen of Greisz's complaint is Household's alleged failure to comply with the disclosure requirements of TILA and Regulation Z in its "Cardholder Agreement" and Monthly Billing Statement ("Monthly Statement"), respectively. While referring to Household's "Cardholder Agreement," the court will determine whether it contains the disclosures that TILA (through Regulation Z) *fn1" requires: (1) in credit card applications (see 12 C.F.R. § 226.5a); and (2) in the initial disclosure statement that consumers should receive before making their first credit transaction (see 12 C.F.R. § 226.6). TILA allows the application ...


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