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LEON v. WASHINGTON MUTUAL BANK

October 2, 2001

TEOFILO LEON, SR, PLAINTIFF
v.
WASHINGTON MUTUAL BANK, FA., DEFENDANT.



The opinion of the court was delivered by: Alesia, Judge

MEMORANDUM OPINION AND ORDER

Currently before the court is defendant's motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) ("Rule 12 (c)"). For the following reasons, the court denies defendant's motion.

I. BACKGROUND

On November 7, 2000, Teofilo Leon ("Leon") boa owed money from Washington Mutual Bank ("Washington Mutual") to finance the purchase of his home. In connection with this transaction, Leon signed and received; a note, a mortgage, a 1-4 Family Rider/Assignment of Rents ("Rider"), a Truth in Lending Statement ("TILA Disclosure"), a HUD-1 Settlement Statement, and an Owner Occupancy Agreement. Leon brings this action alleging that Washington Mutual violated the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. and Federal Reserve Board Regulation Z, 12 C.F.R. § 226, because the TILA Disclosure does not accurately disclose the property interest that Washington Mutual acquired by the terms of the Rider.

The TILA Disclosure states that Leon gave Washington Mutual a security interest in "the goods or property being purchased." Leon claims the Disclosure was inadequate because it fails to reflect an extensive security interest that the Rider creates in Leon's personal property. The Rider states:

A. ADDITIONAL PROPERTY SUBJECT TO THE SECURITY INSTRUMENT. In addition to the Property described in the Security Instrument, the following items are added to the Property description, and shall also constitute the Property covered by the Security Instrument: building materials, appliances and goods of every nature whatsoever now or hereafter located in, on, or used, or intended to be used in connection with the Property, including, but not limited to, those for the purposes of supplying or distributing heating, cooling, electricity, gas, water, air and light, fire prevention and extinguishing apparatus, security and access control apparatus, plumbing, bath tubs, water heaters, water closets, sinks, ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers, awnings, storm windows, storm doors, screens, blinds, shades, curtains and curtain rods, attached mirrors, cabinets, paneling and attached floor coverings now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Property covered by the Security Instrument.

(Compl, Lx. C at 1.)

Washington Mutual is now moving for judgment on the pleadings, claiming: (1) the

TILA Disclosure's description of the security interest taken in the transaction was adequate as a matter of law because the Rider creates only incidental interests to the property, which are prohibited from disclosure under TILA; (2) Washington Mutual acted in good faith reliance upon Regulation Z; and (3) Washington Mutual's use of model forms protects it from liability under TILA.

II. DISCUSSION

A. Judgment on the Pleadings Standard

A motion for judgment on the pleadings pursuant to Rule 12(c) is subject to the same standard as a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6). Hentosh v. Herman Al Finch Univ. of Health Sci./The Chicago Med. Sch., 167 F.3d 1170, 1173 n.2 (7th Cir. 1999). Therefore, a court should not grant a motion for judgment on the pleadings unless "it appears beyond doubt that the plaintiff cannot prove any facts that would support his claim for relief" Craigs, Inc. v. Gen. Elec. Capital Corp., 12 F.3d 686, 688 (7th Cir. 1993). The court must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1019 (7th Cir. 1992).

Also, according to Federal Rule of Civil Procedure 10(c), "A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." FED. R. Civ. P. 10(c). The Seventh Circuit has extended the term "written instrument" under Rule 10(c) to loan documentation. See N. Ind. Gun & Outdoor Shows v. City of South Bend, 163 F.3d 449, 453 (7th Cir. 1998). Accordingly, in ruling on defendant's motion for judgment on the pleadings, it is proper for the court to consider the relevant mortgage documents, which Leon attached to ...


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