King v. FIRST CAPITAL FINANCIAL SERVICES

• Decision Date: 21 April 2005
• Docket Number: No. 97263, No. 97761.
• Citation: 293 Ill.Dec. 657,828 N.E.2d 1155,215 Ill.2d 1
• Parties: Willard J. KING, Jr., et al., Appellants, v. FIRST CAPITAL FINANCIAL SERVICES CORPORATION, d/b/a FCF Funding, Appellee. Ricky Jenkins et al., Appellants, v. Concorde Acceptance Corporation et al., Appellees.
• Court: Illinois Supreme Court

828 N.E.2d 1155

215 Ill.2d 1

293 Ill.Dec. 657

Willard J. KING, Jr., et al., Appellants, v. FIRST CAPITAL FINANCIAL SERVICES CORPORATION, d/b/a FCF Funding, Appellee.

Ricky Jenkins et al., Appellants, v. Concorde Acceptance Corporation et al., Appellees.

Nos. 97263, 97761.

Supreme Court of Illinois.

April 21, 2005.

Daniel A. Edelman, Cathleen M. Combs, James O. Latturner and Danita Ivory, of Edelman, Combs, Latturner & Goodwin, L.L.C., Chicago, for appellants in Nos. 97263, 97761.

Steven A. Levy and Brian D. Fagel, of Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., Chicago, and Richard A. Davidson, of Lane & Waterman, Davenport, Iowa, for appellee in No. 97263.

Terrence J. Lavin, Mary T. McDermott and Melinda J. Bentley, Springfield, for amicus curiae Illinois State Bar Association in No. 97263.

Thomas M. Gordon, Washington, D.C., for amicus curiae HALT, Inc. in Nos. 97263, 97761.

Craig A. Varga and Joshua Davidson, of Varga, Berger, Ledsky, Hayes & Casey, Chicago, for amici curiae Illinois Bankers Association et al in Nos. 97263, 97761.

Julie L. Williams, Daniel P. Stipano, Horace G. Sneed, Ernest C. Barrett III, and Christopher G. Sablich, Washington, D.C., for amicus curiae the Office of the Comptroller of the Currency in Nos. 97263, 97761.

P. Stacy Powers, Chicago, and John E. Bowman, Thomas J. Segal and Elizabeth R. Moore, Washington, D.C., for amicus curiae the Office of Thrift Supervision in Nos. 97263, 97761.

Mark B. Blocker and Robert N. Hochman, of Sidley, Austin, Brown & Wood, L.L.P., Chicago, for appellee ABN/AMRO Mortgage Group, Inc. in No. 97761.

James P. Ziegler, of Stone, Pogrund & Korey, Chicago, for appellees Smith-Roth-child Financial Co. and Harbor Financial Group, Ltd. in No. 97761.

David M. Schultz and Timothy G. Shelton, of Hinshaw & Culbertson, Chicago, for appellees Alliance Financing Mortgage Corporation and American Fidelity Mortgage Services, Inc. in No. 97761.

Richard L. Fenton and Lisa M. Lilly, of Sonnenschein, Nath & Rosenthal, Chicago, for appellee American Home Mortgage Corporation in No. 97761.

Mark S. Bernstein and Peter B. Jurgeleit, of Barack, Ferrazzano, Kirschbaum, Perlman & Nagelberg, L.L.C., Chicago, for appellee Central Illinois Bank & Mortgage Services, Inc. in No. 97761.

David P. Sanders, Matthew M. Neumeier, Michael T. Brody and Jennifer L. Vance, of Jenner & Block, L.L.C., Chicago, for appellees Charter One Bank FSB et al. in No. 97761.

LeAnn Pedersen Pope and Jay S. Dobrutsky, of Burke, Warren, MacKay & Serritella, P.C., Chicago, for appellee Chase Manhattan Mortgage Corporation in No. 97761.

Scott C. Solberg, of Eimer, Stahl, Klevorn & Solberg, Chicago, for appellee Chicago United Mortgage Company in No. 97761.

Michele Odorizzi, Lucia Nale, Victoria R. Collado, Linda T. Coberly and Jennifer Rakstad, of Mayer, Brown, Rowe & Maw, L.L.P., Chicago, for appellee Citibank F.S.G. et al. in No. 97761.

Steven P. Handler and Benson K. Friedman, of McDermott, Will & Emery, Chicago, for appellee Cole Taylor Bank in No. 97761.

Raymond J. Ostler and John J. Lydon, of Gomberg, Sharfman, Gold & Ostler, P.C., Chicago, for appellees Comcor Mortgage Corporation et al. in No. 97761. David W. Inlander and Ronald D. Menna, Jr., of Fischel & Kahn, Ltd., Chicago, for appellee Concorde Acceptance Corporation in No. 97761.

Linda B. Dubnow, of McGuire Woods, L.L.P., and Howard L. Teplinsky, of Seidler & McErlean, Chicago, and Thomas M. Hefferon, of Goodwin Procter, L.L.P., Washington, D.C., for appellee Countrywide Home Loans, Inc. in No. 97761.

Daniel E. Compton, of Brittain & Ketcham, P.C., Elgin, for appellee Elgin Financial Savings Bank in No. 97761.

Konstantinos Armiros, of Arnstein & Lehr, Chicago, for appellee First Union Mortgage Corporation in No. 97761.

Sallie G. Smylie, James J. Boland and Stacey L. Robinson, of Kirkland and Ellis, Chicago, for appellee GMAC Mortgage Corporation in No. 97761.

James V. Noonan, of Noonan & Lieberman, Chicago (Michael J. Weik, of counsel), for appellee Mortgage Lenders Network in No. 97761.

Marta A. Stein, of McGuire Woods, L.L.P., Chicago, and William K. Holmes and Molly E. McFarlane, of Warner, Norcross & Judd, Grand Rapids, Michigan, for appellee Old Kent Mortgage Company in No. 97761.

Dianne E. Rist and S. Todd Sipe, of Chapman & Cutler, Chicago, for appellee RBC Mortgage Company in No. 97761.

Frank J. Saibert and James R. Pittacora, of Ungaretti & Harris, Chicago, for appellee Ryland Mortgage Company in No. 97761.

J. Steven Butkus, John J. Pcolinski, Jr., and Mark J. Carroll, of Guerard, Kalina & Butkus, Wheaton, for appellee Tamayo Financial Services, Inc. in No. 97761.

Michael A. Kraft, Oak Brook, for appellee United Financial Mortgage Corporation in No. 97761.

David B. Goroff and Miki Vucic, of Foley & Lardner, Chicago, for appellee World Savings Bank FSB in No. 97761.

Justice GARMAN delivered the opinion of the court:

In these consolidated appeals from Cook County and Rock Island County, plaintiff mortgagors brought actions against defendant mortgagees alleging that defendants had engaged in the unauthorized practice of law. Plaintiffs alleged that defendants had prepared notes, mortgages, and other documents in connection with plaintiffs' mortgage loan transactions and had unlawfully charged plaintiffs fees for those services. Plaintiffs also alleged claims for money had and received and for violations of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/2 (West 2002)). The circuit court in the King case granted First Capital's section 2-615 motion to dismiss (735 ILCS 5/2-615 (West 2002)) the claim for unauthorized practice of law, but denied the motion as to the other counts of the complaint. Defendants in the consolidated cases (hereafter, the Jenkins case) filed motions to dismiss under section 2-615 and section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2002)). The motions were heard by one judge, who dismissed the complaints after hearing on the motions.

BACKGROUND

In No. 97263, the King case, all but one of the four counts of the complaint contained class action claims. Count I, the individual claim, alleged that First Capital violated the federal Truth in Lending Act (15 U.S.C. § 1638 (2000)) and regulations thereunder by failing to accurately disclose the finance charge and amount financed. Count I prayed for statutory damages, attorney fees and costs. Count II alleged a cause of action for the unauthorized practice of law based upon First Capital's preparation of the loan documents for a fee. Count III alleged that First Capital had violated the Consumer Fraud Act by failing to disclose to the Kings and the class members the material fact that the document preparation services for which it charged a fee constituted the practice of law, but were not performed by an attorney. Count IV alleged a claim for money had and received. It alleged that First Capital had obtained money through inequitable conduct in charging the document preparation fees and was obligated to make restitution. Counts II and III prayed for compensatory and punitive damages, in addition to attorney fees and costs. Count IV prayed for restitution and costs.

First Capital moved to dismiss counts II, III, and IV of the complaint. The motion alleged that there is no private right of action for the unauthorized practice of law absent allegations of negligence or misrepresentation, allegations not made by the Kings in their complaint. In addition, the motion alleged that because First Capital's preparation of the loan documents was incidental to its business, it did not constitute the unauthorized practice of law. With regard to the complaint's claims under the Consumer Fraud Act and for money had and received, the motion alleged that these claims were insufficient because they relied on the unauthorized practice of law claim.

The circuit court of Rock Island County granted First Capital's motion to dismiss count II of the complaint, but denied the motion as to counts III and IV. The court granted First Capital's request for a finding under Supreme Court Rule 308(a) (155 Ill.2d R. 308(a)). The court certified the following questions: (1) whether a lender that prepares documents for use in loan transactions in which the lender is involved and charges the borrower for the preparation of those documents is engaged in the unauthorized practice of law, and (2) assuming arguendo that the answer to the first issue is "yes," whether a private cause of action exists for the lender's unauthorized practice of law. The appellate court concluded that First Capital's preparation of documents and the charging of a fee to the Kings did not constitute the unauthorized practice of law. Accordingly, the court did not reach the second certified question. 343 Ill.App.3d 404, 278 Ill.Dec. 271, 798 N.E.2d 118. We granted plaintiffs' petition for leave to appeal. 177 Ill.2d R. 315.

No. 97761, the Jenkins case, involved 37 class action cases consolidated for appeal. The allegations in 35 of the 37 Jenkins complaints were similar to those in the King case. They alleged unauthorized practice of law and violations of the Consumer Fraud Act, and included claims for money had and received. In two of the consolidated cases, the defendant lending institutions were alleged to have used the services of an independent document preparation service in preparing the loan documents. In addition to restitution, the complaints contained prayers for compensatory and punitive damages, and recovery of attorney fees and costs. Defendants filed section 2-615 motions to dismiss the complaints, alleging that (1) plaintiffs did not have a private right of action to sue for damages for the unauthorized practice of law, (2) defendants had not engaged in the unauthorized practice of law, (3) plaintiffs' claims were barred by the voluntary payment doctrine, (4) the Consumer Fraud Act does not allow claims for...