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September 27, 2002


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


Richanner Jenkins sues Mercantile Mortgage Company ("Mercantile"); Provident Bank, doing business as PCFS Financial Services ("PCFS"); Equicredit Corporation of America ("Equicredit"); Victoria Mortgage Corporation of Illinois ("Victoria"); Bell Capital, Inc. ("Bell"), and its agent Mira Kostic ("Kostic"); City-Suburban Title Services Company ("CST"); Field's Windows, Doors & Construction Corp. ("Field's"), and its agent Mirjana Radojcic ("Radojcic"). Jenkins claims violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"), as amended by the Home Ownership and Equity Protection Act ("HOEPA"); the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA"); and Illinois law. Jenkins moves to certify a class action against CST. PCFS and CST each move separately to dismiss the claims against them under Fed.R.Civ.P. 12(b)(6). I deny Jenkins' motion to certify a class action against CST. I grant in part and deny in part PCFS' motion to dismiss the claims against it. I grant in part and deny in part CST's motion to dismiss the claims against it.

I. Facts

Jenkins is a 65-year-old African-American woman who resides in a home that she owns in Chicago. Am. Compl. ¶ 3. In November 1999, Jenkins signed a contract for home improvements with Field's, Am. Compl. ¶ 15, and retained Victoria as her mortgage broker, Am. Compl. ¶ 17. On December 27, 1999, Jenkins obtained a $101,250 sub-prime fixed rate mortgage loan from Mercantile, a mortgage broker and originator, for home improvements ("the 1999 mortgage"). Am. Compl. ¶¶ 4, 18. CST conducted the closing. Compl. ¶ 21. As part of the loan process, Jenkins signed standard forms including a Truth in Lending Disclosure statement, Ex. D, and a settlement statement on a HUD-1 form, Ex. E. Am. Compl. ¶ 22-23. According to the HUD-1, CST collected $37.50 for recording a mortgage and $55 for recording releases, which total $92.50. Am. Compl. ¶ 25. According to the Truth in Lending Disclosure statement, CST collected $116 for the mortgage recording and release services, but it disbursed only $33.50 for recording a mortgage and nothing for recording releases. Am. Compl. ¶ 26.

Prior to the closing, the loan was sold to PCFS and an assignment of the mortgage was prepared on December 27, 1999. Am. Comp. ¶ 27. The loan documents sent to PCFS pursuant to the assignment, including the Truth in Lending Disclosure Statement and HUD-1, were materially different from the original loan documents. Am. Compl. ¶¶ 28-31. Jenkins claims that Victoria received an illegal $759.37 "yield spread premium" in violation of RESPA. Am. Compl. ¶ 74. Jenkins also alleges that the 1999 mortgage violated TILA because it failed to make mandatory disclosures regarding interest and payments, Am. Compl. ¶ 38, and because it did not expressly exclude a prepayment penalty for refinancing by the same creditor, Am. Compl. ¶ 40.

Field's then approached Jenkins and convinced her that more money was required to complete the contracted work. Am. Compl. ¶ 44. On June 8, 2000, Jenkins obtained a $134,400 mortgage from Mercantile ("the 2000 mortgage"). Am. Compl. ¶¶ 45-48. The 2000 mortgage was used to pay off the 1999 mortgage. Am. Compl. ¶ 48. Jenkins alleges that the note for the 2000 mortgage included an unlawful prepayment penalty in violation of TILA regarding the 1999 mortgage. Am. Compl. ¶ 51.

The work that Field's contracted to perform was never completed. Am. Compl. ¶ 42. Jenkins alleges that Field's pocketed more than $70,000 after completing approximately $19,000 of work which will cost $17,000 to complete. Am. Compl. ¶ 42.

II. Class Certification

Jenkins moves to certify a class of all persons from whom CST collected money for disbursement to governmental agencies that was not in fact so disbursed on or after November 29, 1998 (Count V), November 29, 1996 (Count VI), or November 29, 2000 (Count VII).*fn1 A class action must satisfy all the requirements of Fed.R.Civ.P. 23(a) and at least one of the requirements of Rule 23(b). Burke v. Local 710 Pension Fund, No. 98 C 3723, 2000 WL 336518, at *2 (N.D.Ill. Mar.28, 2000) (Hibbler, J.). There are four Rule 23(a) requirements: (1) numerosity (the class must be so large "that joinder of all members is impracticable"); (2) commonality (there must exist "questions of law or fact common to the class"); (3) typicality (named parties' claims or defenses must be "typical . . . of the class"); and (4) adequacy of representation (the representative must be able to "fairly and adequately protect the interests of the class"). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). Each of these prerequisites must be met in order to maintain a class action suit. General Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). The party seeking class certification bears the burden of demonstrating that certification is appropriate. Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). I generally should "consider certifying a class or deny certification prior to any ruling on the merits." Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474 (7th Cir. 1997).

CST argues that Jenkins is not an adequate class representative and that her claims fail to fulfill the commonality and typicality requirements, but fails to address the numerosity requirement. Although defenses not brought in response to a motion are ordinarily waived, I address the issue of numerosity because it is dispositive.

I may rely on common sense assumptions or reasonable inferences in determining numerosity. Ringswald v. County of DuPage, 196 F.R.D. 509, 512 (N.D.Ill. 2000) (Bucklo, J.). A plaintiff must "provide some evidence or reasonable estimate of the number of class members, however, if the plaintiff is unable to provide the exact numbers, a good faith effort is sufficient to establish the number of class members." Burke, 2000 WL 336518, at *2 (citing Long v. Thornton Township High Sch. Dist. 205, 82 F.R.D. 186, 189 (N.D.Ill. 1979)). The plaintiff's good faith estimate must be more than mere speculation. Marcial v. Coronet Ins. Co., 880 F.2d 954, 957 (7th Cir. 1989); Burke, 2000 WL 336518, at *2.

Jenkins argues that CST is a business of substantial size that uses printed form documents to engage in the practice of retaining funds for government distribution, and that this use of forms allows me to infer the existence of a sufficiently large class of plaintiff's. See Swiggett v. Watson, 441 F. Supp. 254, 256 (D.Del. 1977) (establishing numerosity in a case challenging the constitutionality of a state vehicle title transfer statute on the basis of the state's use of printed forms to facilitate the transfers). However, the Swiggett plaintiff challenged the constitutionality of a law authorizing the use of a form, thereby effectively challenging every instance a printed form was used to complete a transfer. Jenkins, on the other hand, argues that because CST, in a single instance, used a printed form to collect funds from her and then improperly retained those funds, and because it used the same form with other customers, a sufficient number of plaintiff's in her proposed class must exist. She does not challenge the form itself; unlike Swiggett, there is no necessary connection between the use of a form and Jenkins' claim.

Jenkins' argument amounts to a conclusory allegation that, because she was harmed and CST had many other customers, other class members must exist. "Such speculation cannot support class certification." Burke, 2000 WL 336518, at *2 (internal quotation marks omitted); see also Roe v. Town of Highland, 909 F.2d 1097, 1100 (7th Cir. 1990). Furthermore, Jenkins cannot satisfy the numerosity requirement without showing that other persons besides herself, whether identifiable or not, are similarly situated. Burke, 2000 WL 336518, at *2 (holding that "membership in a class [will not be presumed] on the mere theoretical possibility that such members exist"). Because there is insufficient evidence of numerosity, I need not consider the other requirements of Rule 23.*fn2

III. PCFS' Motion to Dismiss

Jenkins' amended complaint names PCFS as a defendant in three counts, all of which PCFS moves to dismiss. On a motion to dismiss, I accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. City Nat'l Bank of Fla. v. Checkers, Simon & Rosner, 32 F.3d 277, 281 (7th Cir. 1994). Dismissal is proper only where it appears beyond doubt that the plaintiff can prove no set of facts in support of her claims that would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A plaintiff need not put all of the essential facts in the complaint and may add them by affidavit or brief "in order to defeat a motion to dismiss if these facts are consistent with the allegations in the complaint." Hentosh v. Herman M. Finch Univ., 167 F.3d 1170, 1173 (7th Cir. 1999). Additionally, documents attached to the pleadings as exhibits are considered part of the pleadings. Fed.R.Civ.P. 10(c).


In Count I, Jenkins alleges four separate violations of TILA.*fn3 First, she alleges that the 1999 mortgage improperly calculated points and fees which unlawfully placed the mortgage outside of TILA protection. Second, she alleges the 1999 mortgage failed to disclose a balloon payment as required by TILA and its implementing regulation, 12 C.F.R. ยง 226 ("Regulation Z"). Third, she alleges that the 1999 mortgage violated TILA as amended by HOEPA by not explicitly excluding a prepayment penalty for ...

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