Opinion
No. 99 C 735
February 8, 2001
ORDER
Plaintiff Morequity, Inc. brought a state court mortgage foreclosure action against, among others, defendants Abdul and Sally S. Naeem and Fremont Mortgage Investment and Loan. The Naeems removed the action to this court and, among other things, filed a counter-claim against Morequity and a cross-claim against Fremont alleging various violations including violations of the Illinois Interest Act, 815 ILCS 205/4.1. On January 12, 2000, the Court dismissed many of the Naeem's claims, some for substantive reasons, others for procedural defects, but gave the Naeems leave to replead and gave them specific instructions on how to do so properly. The Naeems did replead, and on October 26, 2000, the court again dismissed many of their claims including their claims that Morequity and Fremont violated the Illinois Interest Act. Morequity, Inc. v. Naeem, 118 F. Supp.2d 885 (N.D. Ill. 2000). The Naeems have now moved for reconsideration of the dismissal of their Interest Act claims or, in the alternative, for leave to replead those claims.
In its October 26, 2000, Memorandum Opinion, the court held that the Naeems' Interest Act claims were preempted by § 521 of the Depository Institution Deregulation and Monetary Control Act ("DIDMCA"), 12 U.S.C. § 1831 (d), which allowed Fremont to export the more favorable usury laws of its home state. Specifically, the court applied the "non-ministerial function" test adopted in the FDIC-issued General Counsel Opinion No. 11, Interstate Charges by Interstate Banks, and held that the Naeems had failed to allege that any of the three required non-ministerial functions were performed by Fremont in Illinois. In particular, the clerk concluded that the Naeems had failed to allege that Fremont had a branch office in Illinois that made the loan in question.
The Naeems now argue that DIDMCA preemption is an affirmative defense to be pled and proved by the defendants, and that the Court erred in deciding DIDMCA preemption in a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). According to the Naeem's, by holding as it did the court shifted the burden of proof and pleading to them.
The Naeems are incorrect. First, as Fremont and Morequity point out, courts have decided DIDMCA preemption on motions to dismiss where, as here, the allegations of the complaint raise the issue. See Gora v. Banc One Financial Services, Inc., 1995 WL 613131 (N.D. Ill. October 17, 1995). Moreover, and more importantly, in its opinion, this court held that "the closing documents attached to and made a part of the cross-claim indicate Fremont's California office as the lender and final approval and disbursement came from California." Morequity, 118 F. Supp. 2nd at 898. Therefore, the complaint itself established the preemption defense. Accordingly, the Naeem's Motion For Reconsideration or In The Alternative To Replead is denied.