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ILLINOIS ASS'N OF MORTG. BROKERS. v. BANKS & REAL ESTATE

December 4, 2001

ILLINOIS ASSOCIATION OF MORTGAGE BROKERS, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, PLAINTIFF,
V.
OFFICE OF BANKS AND REAL ESTATE, AN ILLINOIS STATE AGENCY, WILLIAM A. DARR, NOT PERSONALLY BUT IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF THE OFFICE OF BANKS AND REAL ESTATE, DEFENDANTS.



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

    ORDER AND OPINION

Before the court is Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for want of subject matter jurisdiction, and Defendant's motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim or, in the alternative for summary judgment pursuant to Rule 56. For the following reasons, Defendant's 12(b)(1) motion is denied, Defendant's motion for summary judgment pursuant to Rule 56 is granted.

I. BACKGROUND*fn1

On May 17, 2001, Defendant, the Office of Banks and Real Estate an Illinois State Agency, amended its regulations ("new OBRE regulations"), which now impose stricter terms on lenders regarding the origination of high risk home loans, in an attempt to limit predatory lending. Ill.Admin.Code tit. 38, § 1050.155(a). Plaintiff, the Illinois Association of Mortgage Brokers, claims the new OBRE regulations run contrary to a previously enacted federal statute, specifically the Alternative Mortgage Transaction Parity Act of 1982, Pub.L. No. 97-320, 96 Stat. 1469 (1982) ("AMTPA"). Plaintiff claims that AMTPA preempts the new OBRE regulations making the new OBRE regulations invalid. Plaintiff seeks to obtain a preliminary injunction of the new OBRE regulations, enjoining their enforcement. Defendant claims that even if Plaintiffs assertions have merit, Plaintiff is not the appropriate party to bring suit. The question of whether Plaintiff has standing to invoke federal subject matter jurisdiction in this case is the only disputed fact. All other claims are based on interpretation of the new OBRE regulations and federal statutes. Defendant claims that the new OBRE regulations are not pre-empted by AMTPA, but are consistent with the Home Ownership and Equity Protection Act of 1994, Pub.L. No. 103-325, 108 Stat. 2160 (1994) ("HOEPA"). The court addresses each point in turn.

II. DISCUSSION

A. Standing

The first issue the court addresses is standing. Defendant asserts that Plaintiff does not have proper standing to satisfy subject matter jurisdiction, and moves to dismiss the case accordingly under Rule 12(b)(1). For the purposes of a 12(b)(1) motion, the court accepts all well-pleaded allegations in the complaint as true and draws all reasonable inferences in favor of the plaintiff. Martin v. Shalala, 63 F.3d 497, 501 (7th Cir. 1995); Rueth v. United States Environmental Protection Agency, 13 F.3d 227, 227 (7th Cir. 1993). The court, when determining the validity of a motion to dismiss, may properly look beyond the jurisdictional allegations of the complaint and view all the evidence that has been submitted to determine if subject matter jurisdiction exists. Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995). When the party moving for dismissal under 12(b)(1) challenges the factual basis for jurisdiction, the non-moving party has the obligation to submit evidence demonstrating subject matter jurisdiction. Kontos v. United States Dept. of Labor, 826 F.2d 573, 576 (7th Cir. 1987).

Plaintiff, an association, must clear two hurdles in order to show that it has proper standing to invoke federal subject matter jurisdiction. First, Plaintiff must show that there is a case or controversy within the meaning of Article III. Krislov v. Rednour, 226 F.3d 851, 856 (7th Cir. 2000). Second, Plaintiff must show that it has associational standing to bring this claim for relief. Plotkin v. Ryan, 239 F.3d 882, 884 (7th Cir. 2001) Without standing, the court has no subject matter jurisdiction over the matter as prescribed by Article III of the Constitution. Standing is a question of federal law, and it falls to the party asserting jurisdiction to establish the right to judicial review. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); 691, 7 L.Ed.2d 663 (1962); Indemnified Capital Investments, S.A. v. R.J. O'Brien & Assoc., Inc., 12 F.3d 1406, 1408-09 (7th Cir. 1993).

Plaintiff, through affidavit, has successfully demonstrated that not only is there proper standing to invoke federal subject matter jurisdiction, but also that this particular association is the proper association to assert those claims.

1. Article III Standing

To establish Article III standing Plaintiff must demonstrate: (1) imminent or actual "injury in fact," that is, an "invasion of a legally protected interest" that is concrete and particularized rather than conjectural or hypothetical, Defenders of Wildlife, 504 U.S. at 560-61, 112 S.Ct. 2130; (2) a causal connection between its injury and the challenged conduct that is fairly traceable to Defendant rather than to the "independent action of some third party not before the court," Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 4142, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); and (3) the likelihood that its injury will be redressed by a favorable court decision, see, e.g., id. at 42-46, 96 S.Ct. 1917; Allen v. Wright, 468 U.S. 737, 753 n. 19, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984).

First, Plaintiff can show an imminent injury in fact. The new OBRE regulations will adversely affect the way that Plaintiffs members, mortgage brokers, conduct their lending practices and procedures. If the new OBRE regulations are determined to be valid, a new set of triggers will be imposed regarding the terms and conditions mortgage brokers must use in making high risk home loans, limiting the amount of revenue they would earn on the loans. Second, there appears to be no question that the injury complained of is traceable to Defendant. Defendant is responsible for promulgating the new OBRE regulations. Finally, Plaintiff can show that the injury will be redressed be the court's decision on this matter. The court's determination as to whether the new OBRE regulation is pre-empted by AMTPA or consistent with HOEPA will redress the situation.

2. Associational Standing

To establish associational standing Plaintiff must demonstrate that: (1) its members would otherwise have standing to sue in their own right, Friends of the Earth Inc. v. Laidlaw Environmental Services, 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)); (2) the interests at stake are germane to the organization's purpose, id.; and (3) ...


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