The Fifth Appellate Court has reversed Madison County Circuit Judge Lola Maddox who in July 2006 dismissed a Lakin Law Firm class action suit for a reason that a federal court had previously rejected.

Maddox, who retired in December 2006, dismissed the suit filed by Gary Treadway against Nationscredit Financial Services, as special representative of the estate of his mother, Juanita Treadway.

Treadway claimed his mother paid a discount fee in order to reduce the interest on a mortgage, and Nationscredit did not reduce the interest.

In her dismissal order Maddox had written that that a U.S. District Court decision to remand a suit over a mortgage loan to Madison County would not control her decision.

"The law has become clearer and more explicit on the issue raised herein since the Federal Court's remand order," Maddox wrote.

Nationscredit removed the suit, originally filed in 2005, to U.S. District Court in East St. Louis, arguing that a plaintiff must bring a claim based on the charging of interest in federal court under the National Banking Act.

The district court remanded the suit, finding that the National Banking Act did not apply.

Justice Stephen Spomer wrote the opinion for a three-judge panel stating that the circuit court dismissed the case on the basis that it was "completely" preempted by the National Bank Act.

"The circuit court also relied on Dannewitz v. EquiCredit Corp. of America, 362 Ill. App. 3d 82 (2005), in making its finding that the instant cause is preempted by the National Bank Act," Spomer wrote. "In so holding, the court rejected the plaintiffs' argument that because the loans at issue were made by a nonnational bank and subsequently purchased by a national bank, the National Bank Act did not apply.

"We find neither of the decisions relied upon by the trial court determinative of the issue at hand," he wrote.

Spomer remanded the case to Madison County.

Nationscredit attorney Joe Whyte of Edwardsville moved in October 2005 to dismiss.

In her order Maddox wrote, "Plaintiff attempts to avoid application of the National Bank Act…by stating that they do not claim that the charge for loan discount fee or discount constitutes usury under Illinois state law."

"Their 'artful pleadings' are nonetheless unavailing," she wrote.

She also wrote that Treadway did not allege that Nationscredit made fraudulent representations to his mother.

Justices James Donovan and Melissa Chapman concurred with Spomer in the decision released Wednesday.

"Gary Treadway does not allege that EquiCredit charged Mrs. Treadway interest that exceeded any limit imposed by any state or federal lending statute or regulation," Spomer wrote.

"Instead, Gary Treadway alleges a breach of contract, a violation of the Consumer Fraud and Deceptive Business Practices Act, and unjust enrichment based on EquiCredit's failure to reduce Mrs. Treadway's interest rate in exchange for her payment of the loan discount fee.

"EquiCredit argued in its brief that even if the appellate court concluded that the circuit court erred in its finding that Treadway's claims are preempted by the National Bank Act, the claims would also be barred by the doctrine of res judicata because the fees challenged appeared on the same settlement statement and both fees were paid by one deduction from the loan proceeds.

"We find that EquiCredit's conduct in this case rises to the level of acquiescence," Spomer wrote.

"Although EquiCredit's answer to Gary Treadway's complaint in the instant action does not appear in the record, Gary Treadway filed reply to EquiCredit's affirmative defenses in the circuit court of Madison County on August 18, 2005, after the instant case had been remanded from the federal court.

"According to the reply, EquiCredit's eighth affirmative defense stated that in the event the case was remanded to state court, Gary Treadway's claim is barred by section 2-619(3) of the Code (735 ILCS 5/2-619(3) (West 2004)) because there was another action pending between the same parties for the same cause.

"However, EquiCredit later voluntarily withdrew that answer, including the affirmative defense that another action was pending, and filed a motion to dismiss based solely on federal preemption.

"In addition, EquiCredit did not move to amend its motion or file an alternative motion on the basis of res judicata after the summary judgment had been entered in the 2003 action.

"Based on EquiCredit's choice to proceed solely on federal preemption at this stage in the proceedings, we find that EquiCredit acquiesced to the splitting of the causes.

"Accordingly, we find that EquiCredit waived the issue of res judicata for purposes of this appeal by its failure to raise the issue in the circuit court."

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