Cobb v. Monarch Finance Corp.

• Decision Date: 29 November 1995
• Docket Number: No. 95 C 1007.,95 C 1007.
• Citation: 913 F. Supp. 1164
• Parties: Verlina COBB, on behalf of herself and all others similarly situated, Plaintiff, v. MONARCH FINANCE CORP.; Cole Taylor Bank; Sir Finance Corp.; Bank One, Chicago, N.A., Successor by Merger to Bank One, Evanston, N.A.; Brother Loan & Finance Corp.; Lakeside Bank; and John Does 1-10, Defendants.
• Court: U.S. District Court — Northern District of Illinois

913 F. Supp. 1164

Verlina COBB, on behalf of herself and all others similarly situated, Plaintiff, v. MONARCH FINANCE CORP.; Cole Taylor Bank; Sir Finance Corp.; Bank One, Chicago, N.A., Successor by Merger to Bank One, Evanston, N.A.; Brother Loan & Finance Corp.; Lakeside Bank; and John Does 1-10, Defendants.

No. 95 C 1007.

United States District Court, N.D. Illinois, Eastern Division.

November 29, 1995.

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Cathleen C. Cohen, Daniel A. Edelman, James O. Latturner, Tara Leigh Goodwin, James Eric Vander Arend, Michelle Ann Weinberg, O. Randolph Bragg, Danielle Renee Gomez, Rick D. Young, Edelman & Combs, Chicago, IL, for plaintiff.

Michael B. Hyman, Norman B. Newman, William Henry London, Much, Shelist, Freed, Denenberg, Ament & Eiger, P.C., Chicago, IL, for Monarch Finance Corp.

David J. Bradford, Darryl Mark Bradford, Paul T. Whitcombe, Jenner & Block, Chicago, IL, for Cole Taylor Bank.

Amy A. Hijjawi, Katten, Muchin & Zavis, Chicago, IL, Francis Xavier Grossi, Jr., Bates, Meckler, Bulger & Tilson, Chicago, IL, for Sir Finance Corp.

Richard F. Zehnle, Diane Marie Kehl, Vedder, Price, Kaufman & Kammholz, Chicago, IL, for Bank One Chicago, N.A.

Bernard Wiczer, Fred L. Berkovits, Elliot Scott Wiczer, Wiczer & Associates, Chtd., Northbrook, IL, for Brother Loan & Finance Corp.

MEMORANDUM OPINION AND ORDER

ASPEN, Chief Judge:

Plaintiff Verlina Cobb brings this proposed class action against three finance companies (the "Lender Defendants"), three banks (the "Bank Defendants"), and unknown corporate officers of the finance companies and banks (the "John Doe Defendants"). Cobb alleges that, in the making and handling of loans that she borrowed from the Lender Defendants, the defendants violated various federal lending and banking laws; in addition, Cobb's complaint adds several state law claims. Presently before this court are: (1) the plaintiff's motion for class certification; (2) the Bank Defendants' motion to dismiss; (3) the Lender Defendants' motion to dismiss; and (4) the plaintiff's motion to "strike" a motion for summary judgment filed by one of the Bank Defendants. For the reasons set forth below, we grant the motion for class certification, grant in part and deny in part the Bank Defendants' motion to dismiss, grant in part and deny in part the Lender Defendants' motion to dismiss, and deny the plaintiff's motion to "strike" the summary judgment motion.

I. Background

From November 1993 to November 1994, Cobb procured a total of ten separate loans from three finance companies (collectively, the Lender Defendants): (1) four loans from Sir Finance Corporation, each with a principal of $690, an annual percentage rate of 101%, and payable in 19 bi-weekly payments; (2) five loans from Brother Loan & Finance Company, each with a principal of $700, an annual percentage rate of 96.43%, and payable in 14 bi-weekly payments; and (3) one loan from Monarch Finance Corporation, with a principal of $500, an annual percentage rate of 57.22%, and payable in 15 bi-weekly payments.

Cobb alleges that the loan agreements she entered into with the Lender Defendants, although using different language, all created a similar payment mechanism. The bi-weekly loan repayment schedules corresponded to Cobb's employee pay schedule; at the time, she worked for the United States Department of Labor. Cobb maintains that each loan agreement purported to authorize the creation of a bank account on Cobb's behalf, to which an allotted portion of Cobb's pay-check was electronically and directly deposited. The allotment was then immediately transferred from Cobb's account to the finance company's account, held at the same bank. Each finance company designated a different bank at which the account would be created. The three banks (collectively, the Bank Defendants) were: (1) Bank One-Evanston,¹ designated by Sir Finance; (2) Lakeside Bank, designated by Brother Loan; and (3) Cole Taylor Bank, designated by Monarch Finance. Cobb also alleges that the agreements purported to waive her rights to receive "account statements or transaction reports" regarding the accounts.

Cobb filed for Chapter 7 bankruptcy on February 3, 1995. At the time, she had not repaid in full her final loans from Sir Finance and Brother Loan, and had not repaid in full her one loan from Monarch Finance. After filing for bankruptcy, the plaintiff filed three separate actions, which have been reassigned and consolidated on relatedness grounds, and named as defendants the Bank Defendants, the Lender Defendants, and unknown corporate officers (collectively, the "John Doe Defendants") of the banks and finance companies.

The plaintiff's consolidated complaint asserts seven counts: (1) the Lender Defendants and the Bank Defendants violated disclosure requirements and other provisions of the Electronic Fund Transfers Act (EFTA), 15 U.S.C. §§ 1693-1693r, and its implementing regulations, 12 C.F.R. part 205; (2) the Lender Defendants failed to inform Cobb that they had obtained a security interest in Cobb's bank accounts as required by 12 C.F.R. § 226.18(m), promulgated pursuant to the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667e; (3) the Bank Defendants failed to meet the disclosure requirements of 12 C.F.R. §§ 230.4-230.6, promulgated pursuant to the Truth in Savings Act (TISA), 12 U.S.C. §§ 4301-4313; (4) the Bank Defendants, Lender Defendants, and John Doe Defendants obtained a wage assignment from Cobb without providing her with proper notice and opportunity to object, a violation of the Illinois Wage Assignment Act (IWAA), 740 ILCS 170/1-170/11; (5) the Bank Defendants and Lender Defendants entered into loan agreements with the plaintiff that were unconscionable under Illinois law; (6) the Bank Defendants, Lender Defendants, and John Doe Defendants violated a fiduciary duty owed to the plaintiff under 31 C.F.R. § 209.8; and (7) the Bank Defendants, Lender Defendants, and John Doe Defendants committed a deceptive practice under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/1-505/12.

The plaintiff moves to certify three classes, labelled as the Sir Finance/Bank One class, the Brother Loan/Lakeside class, and the Monarch/Cole Taylor class. In general, the proposed members of the respective classes consist of all persons who entered into finance agreements with the named finance companies and into account authorizations with the named banks using the same forms that Cobb signed. More specifically, the class members for Counts I-III would be limited to those persons who signed the documents within one year of this suit's filing date; the class members for Counts IV and VI would be limited to those persons who signed the documents within five years of this suit's filing date. Furthermore, the class members for Counts V and VII would be limited to those persons whose loans called for greater than a 40% annual percentage rate, and would be further limited to those persons who signed within five years for Count V and three years for Count VII. The defendants oppose class certification, arguing that the claims of the named plaintiff are atypical of the class's claims, and that the named plaintiff would serve as an inadequate class representative. We discuss the class certification issue first, then turn to the defendants' motions addressing the merits. See Hudson v. Chicago Teachers Union, Local No. 1, 922 F.2d 1306, 1316-17 (7th Cir.), cert. denied, 501 U.S. 1230, 111 S.Ct. 2852, 115 L.Ed.2d 1020 (1991).

II. Motion for Class Certification

A. Requirements for Class Certification

Federal Rule of Civil Procedure 23(a) specifies four preliminary requirements that any proposed class must meet:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed.R.Civ.P. 23(a). If the "numerosity, commonality, typicality, and adequacy" requirements are satisfied, Harriston v. Chicago Tribune Co., 992 F.2d 697, 703 (7th Cir.1993) (citations omitted), then we must also decide whether the class qualifies under one of the three subsections of Rule 23(b). In the instant case, the plaintiff seeks certification under Rule 23(b)(3), which authorizes class actions where the "questions of law or fact common to the members of the class predominate over any questions affecting individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Fed. R.Civ.P. 23(b)(3). The plaintiff bears the burden of showing that the proposed class meets the requirements for certification. Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir.1993).

In evaluating a motion for class certification, the allegations made in support of certification are taken as true, Hardin v. Harshbarger, 814 F.Supp. 703, 706 (N.D.Ill. 1993), and as a general matter, we do not examine the merits of the case, Retired Chicago Police Ass'n, 7 F.3d at 598. However, the "`boundary between a class determination and the merits may not always be easily discernible,'" id. at 599 (quoting Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130, 657 F.2d 890, 895 (7th Cir.1981), cert. denied, 455 U.S. 1017, 102 S.Ct. 1710, 72 L.Ed.2d 134 (1982)), because determining the propriety of class certification generally depends on factors "`enmeshed in the factual and legal issues comprising the plaintiff's cause of action,'" id. at 598 (quoting General Tel. Co. v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 2372, 72...