United States District Court, N.D. Illinois, Eastern Division
WALTER ASCHER, TRUSTEE, COOKIE FAMILY TRUST, an Illinois Trust Organized under the Laws of the State of Illinois, Plaintiffs,
GRAND BANK FOR SAVINGS, FSB, a Federal Savings Bank Incorporated in Mississippi, Defendant.
MEMORANDUM OPINION AND ORDER
THOMAS M. DURKIN, District Judge.
Plaintiffs Walter Ascher, Trustee, and the Cookie Family Trust (the "Trust") filed this action against Defendant Grand Bank for Savings, FSB, ("Grand Bank") in the Circuit Court for the Eighteenth Judicial Circuit, DuPage County, Illinois. Grand Bank subsequently removed the case to this Court pursuant to 28 U.S.C. § 1331. Plaintiffs have moved for leave to amend their complaint pursuant to Federal Rule of Civil Procedure 15(a) and for an order remanding the case back to the Illinois state court. For the following reasons, the motion for leave to amend, R. 12, is granted, and the motion to remand is denied.
On November 6, 2008, the Trust sold a property located in DuPage County, Illinois, to Dr. Robert Williamson for $480, 000. R. 15 at 2. The Trust financed the purchase of the property for Dr. Williamson, and the parties entered into an agreement called "Articles of Agreement for Deed, " which required Dr. Williamson to make various payments to the Trust over the course of five years, including a down payment of $24, 000, fifty-eight monthly installments of $3, 000, and a final balloon payment of approximately $282, 000, plus unpaid interest accruing at 6.5%. R. 15-2 at 2-3. On July 31, 2009, the Trust sold Grand Bank the right to collect the remaining payments Dr. Williamson owed to the Trust, and the parties signed a Mortgage Purchase Agreement ("MPA") which detailed the parties' respective rights. R. 15-2 ¶ 5. The agreement provided that Grand Bank was to collect $266, 661 from Dr. Williamson over time in exchange for the $180, 161.50 it paid to the Trust. R. 15-2 ¶ 6.
Shortly after the parties entered into the MPA and after two additional payments by Dr. Williamson, the Trust became aware that Dr. Williamson would be unable to continue paying off the mortgage. R. 15-2 ¶ 7. The Trust then made the $3, 000 payment to Grand Bank for the next twenty-two months. R. 15-2 ¶ 8. At some point thereafter, the Trust sold the property to a third party who obtained outside funding. R. 15-2 ¶ 9. At closing, the Trust paid $245, 685. to pay off the MPA. R. 15-2 ¶ 10. In total, Grand Bank received $317, 685.00 (i.e., twenty-four $3, 000 payments ($72, 000) plus the $245, 685 closing payoff amount), representing an amount $137, 523.50 greater than the principal amount of the mortgage loan and $51, 024.00 greater than the amount Grand Bank would have received over the life of the loan. R. 15-2 ¶¶ 9-10.
Plaintiffs originally filed suit against Grand Bank in Illinois state court alleging only an unjust enrichment claim. R. 1-1. Plaintiffs amended their complaint on September 28, 2013, to include common law claims for unconscionability and unjust enrichment (Count I); a declaratory judgment under the Illinois Mortgage Act, 765 ILCS 905/1, et seq. (Count II); violations of the Home Ownership Equity Protection Act ("HOEPA"), 15 U.S.C. §§ 1639, et. seq. (Count III); violations of the Illinois High Risk Home Loan Act, 815 ILCS 137/1, et seq. (Count IV); and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 765 ILCS 505/1, et seq. (Count V). R. 15-2. On October 28, 2013, Grand Bank removed the action to this Court because Count III of the amended complaint presented a federal question.
Plaintiffs want the case back in state court. They seek leave to amend their complaint pursuant to Federal Rule of Civil Procedure 15(a) in order to dismiss Count III, their HOEPA claim. They contend this would eliminate this Court's jurisdiction, as the HOEPA claim is what originally provided the basis to have the case heard in federal court. R. 12. Assuming the Court allows the amended complaint to be filed without the federal claim, Plaintiffs also seek an order remanding the case back to state court. R. 12 ¶¶ 10, 12. Grand Bank opposes the dual motion, arguing (1) that leave to amend should not be granted, and alternatively, (2) that by federal law, this Court has jurisdiction because Counts I, II, IV, and V are entirely preempted by the field of federal lending regulation and, thus, are actually federal claims disguised as state law claims. R. 15 at 7-11.
I. Leave to Amend
A party may move to amend its complaint under the Federal Rules of Civil Procedure, which provide that leave to amend should be "freely given when justice so requires." Fed.R.Civ.P. 15(a); Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 666 (7th Cir. 2007). Leave to amend is "inappropriate where there is undue delay, bad faith, dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, or futility of the amendment." Foman v. Davis, 371 U.S. 178, 181 (1962); Perrian v. O'Grady, 958 F.2d 192, 194 (7th Cir. 1992). A party may be granted leave to amend even when the amendment will dismiss the federal claims and ultimately require a federal court to remand the case to state court. Millar v. Bay Area Rapid Transit Dist., 236 F.Supp.2d 1110, 1113-21 (N.D. Cal. 2002).
In this case, there are no competing considerations that compel the Court to deny Plaintiffs' motion for leave to amend. This is Plaintiffs' first attempt in this Court to amend their complaint, there has been no undue delay by Plaintiffs, and this is not a futile attempt to cure a deficiency that the Court previously identified. Cf. Airborne Beepers & Video, Inc., 499 F.3d at 666-67. Accordingly, Plaintiffs' request for leave to amend is granted.
II. Order for Remand
When the case was initially removed, the Court possessed original jurisdiction because Plaintiffs' complaint "[arose] under the... laws... of the United States, " s ee 28 U.S.C. § 1331, because of the HOEPA claim in Count III. Given Plaintiffs' request to remand, the Court must determine whether there is another basis (aside from the federal claim in Count III) for the Court to retain jurisdiction. Grand Bank suggests that the Home Owners' Loan Act ("HOLA"), 12 U.S.C. §§ 1461, et seq., and HOEPA preempt Plaintiffs' state claims, which if true, would provide that basis.
"In all preemption cases, "[the Court] start[s] with the assumption that the historic police powers of the States were not to be superseded by [a federal statute] unless that was the clear and manifest purpose of Congress." Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 576 (7th Cir. 2012) (quoting Wyeth v. Levine, 555 U.S. 555, 565 (2009)). Pursuant to the Supremacy Clause, however, Congress has the authority to preempt state law. La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 368 (1986); Time Warner Cable v. Doyle, 66 F.3d 867, 874 (7th Cir. 1995). Federal preemption of state law can occur in three circumstances: (1) express preemption, where Congress explicitly preempts state law; (2) implied preemption, where Congress has occupied the entire field (field preemption); and (3) implied preemption, where there is an actual conflict between federal and state law (conflict preemption). English v. Gen. Elec. Co., 496 U.S. 72, 78-79 (1990); Am. Agric. Movement, Inc. v. Bd. of Trade of Chi., 977 F.2d 1147, 1154 (7th Cir. 1992). Field preemption applies to state law "if ...