United States District Court, N.D. Illinois, Eastern Division
CHARLES P. KOCORAS UNITED STATES DISTRICT JUDGE.
the Court is Defendant Northwest Premium Services’
(“Northwest”) motion to dismiss Counts X through
XIII of Plaintiffs Georgia Foster-Jenkins and Steve
Jenkins’s complaint under Federal Rule of Civil
Procedure 12(b)(6). For the following reasons, the Court will
grant the motion.
purposes of this motion, the Court accepts as true the
following facts from the amended complaint. Murphy v.
Walker, 51 F.3d 714, 717 (7th Cir. 1995). All reasonable
inferences are drawn in Plaintiffs’ favor. Tamayo
v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).
case arises out of a transaction for the sale and financing
of a car, insurance premium, and the wrongful repossession of
said car. Most parties and claims have been terminated, and
the only remaining claims are against Northwest, an insurance
premium financing corporation in Illinois.
relevant to this motion, Plaintiff Georgia Foster-Jenkins
(“Foster-Jenkins”) bought a 2014 Buick LaCrosse
from Rogers Auto Group (“Rogers Auto”) for $20,
163.00. Foster-Jenkins executed a Retail Installment Sales
Contract (“RISC”) and a Purchase Order with
Roger’s Auto on January 26, 2018. To obtain insurance
for her car, Foster-Jenkins made a down-payment and obtained
financing for the rest of her insurance policy from
Northwest. Plaintiffs allege Northwest set an Annual
Percentage Rate (“APR”) of 41.75% in the premium
financing agreement (“the Agreement”). The
insurance policy became effective on January 27, 2018.
Count X of the complaint, Plaintiffs claim Northwest violated
the Illinois Interest Act by charging an APR above 9% in the
Agreement. 815 ILCS § 205/4(1). They claim in Count XI
that Northwest violated Illinois’ criminal usury
statute by recklessly disregarding the fact that the interest
rate in its Agreement was above 20% per year. 720 ILCS §
17/59. In Count XII, Plaintiffs claim that Northwest violated
the Illinois Consumer Fraud Act (“ICFA”), 815
ILCS § 505/2, by not disclosing a “Broker
Fee” and a “Motor Club Fee” in the RISC.
They further allege that Northwest contracted for and
collected finance charges, interest, and fees in amounts more
than what is allowed under Illinois law, which also violated
the ICFA. Finally, in Count XIII, Plaintiffs claim that
Northwest violated the Truth in Lending Act
(“TILA”) by not disclosing the amount financed as
required by TILA. They further allege that the RISC did not
account for the Broker Fee and Motor Club Fee, which rendered
inaccurate the amounts disclosed in the “Amount
Financed, ” “Total Sale Price, ” and
“Total of Payments” provisions of the RISC.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) “tests the sufficiency of the complaint, not
the merits of the case.” McReynolds v. Merrill
Lynch & Co., 694 F.3d 873, 878 (7th Cir. 2012). The
allegations in the complaint must set forth a “short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Plaintiffs
need not provide detailed factual allegations but must
provide enough factual support to raise their right to relief
above a speculative level. Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
must be facially plausible, meaning that the pleadings must
“allow…the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). A complaint that has factual allegations that are
“merely consistent with a defendant’s liability
... stops short of the line between possibility and
plausibility of entitlement to relief.” Id. at
677 (internal quotations omitted). The claim must be
described “in sufficient detail to give the defendant
‘fair notice of what the…claim is and the
grounds upon which it rests.’” E.E.O.C. v.
Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th
Cir. 2007) (quoting Twombly, 550 U.S. at 555).
“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, ” are
insufficient to withstand a 12(b)(6) motion to dismiss.
Iqbal, 556 U.S. at 678.
argues that Plaintiffs do not state a claim under TILA
because their allegations are vague and conclusory. Northwest
further argues that premium financing agreements are governed
by Illinois’ Premium Financing Law, 215 ILCS §
5/513a10, which authorizes the interest rate set forth the
Agreement with Plaintiffs. Finally, Northwest argues
Plaintiffs have no private right of action under
Illinois’ criminal usury statute, 720 ILCS §
17/59, and the maximum interest rate found in the statute
does not apply to premium financing agreements.
Truth in Lending Act (“TILA”)
claim that Northwest violated TILA by not providing the
necessary disclosures required under 12 C.F.R. § 226.18.
Specifically, they allege that the Broker and Motor Club Fees
were not accounted for in the RISC,  and in doing so Northwest
failed to disclose the RISC’s “Amount
Financed” provision as required by TILA. Plaintiffs
further allege that Northwest’s failure to take those
fees into account rendered inaccurate the amounts disclosed
in the RISC’s “Total Sale Price” and
“Total of Payments” provisions. Northwest
contends that it was not a “creditor” under the
RISC and had no obligation to make any disclosures therein.
Northwest also argues that Plaintiffs do not sufficiently
allege that the fees are attributable to Northwest as a
creditor. Finally, Northwest argues that neither fee
qualifies as a finance charge under 12 C.F.R. §
226.4(a). The Court agrees with Northwest that it was not a
creditor under the RISC, and thus could not have made and was
not required to make any disclosures there.
creditors are bound by the disclosure requirements under
§ 226.18(h) of TILA. See 12 C.F.R. §
226.18(h). Under TILA, a “creditor” is defined as
“a person who both (1) regularly extends, whether in
connection with loans, sales of property, or otherwise,
consumer credit which is payable by agreement in more than
four installments or for which the payment of a finance
charge is or may be required, and (2) is the person to whom
the debt arising from the consumer credit transaction is
initially payable on the fact of the indebtedness.”
Griffin v. U.S. Bank Nat’l Ass’n, 2018
WL 1621024, at *3 (N.D. Ill. 2018).
is not a creditor under the Regulation’s definition.
The debt arising from the alleged fact-of-indebtedness,
i.e. the RISC, is not initially payable to
Northwest. Rather, that debt was payable to Rogers Auto, the
party that is specified as the Seller-Creditor in the RISC.
Accordingly, Plaintiffs have failed to adequately allege that
Northwest violated TILA by not disclosing the fees under the
RISC since Northwest had neither an obligation, nor the