                                                    NO. 5-06-0425
                   NOTICE

 Decision filed 11/26/07. The text of
                                                       IN THE
 this decision may be changed or

 corrected prior to the filing of a
                                            APPELLATE COURT OF ILLINOIS
 Peti tion   for    Rehearing   or   th e

 disposition of the same.
                             FIFTH DISTRICT
_________________________________________________________________________

GARY TREADWAY, Special Representative of     ) Appeal from the
the Estate of Juanita Treadway, Deceased,    ) Circuit Court of
Individually and on Behalf of Others Similarly
                                             ) Madison County.
Situated,                                    )
                                             )
   Plaintiff-Appellant,                      )
                                             )
v.                                           ) No. 05-L-27
                                             )
NATIONS CREDIT FINANCIAL SERVICES            )
CORPORATION, d/b/a EquiCredit,               ) Honorable
                                             ) Lola P. Maddox,
   Defendant-Appellee.                       ) Judge, presiding.
_________________________________________________________________________

             JUSTICE SPOM ER delivered the opinion of the court:

             The plaintiff, Gary Treadway, special representative of the estate of Juanita

Treadway, deceased, individually and on behalf of others similarly situated, appeals the order

of the circuit court of Madison County that dismissed his class action complaint against the

defendant, Nations Credit Financial Services Corp., doing business as EquiCredit

(EquiCredit). The issues necessary for our determination of this appeal are as follows: (1)

whether the circuit court erred in dismissing Gary Treadway's complaint on the basis that it

is preempted by sections 85 and 86 of the National Bank Act (12 U.S.C. §§85, 86 (2000))

and (2) whether Gary Treadway's complaint is barred by the doctrine of res judicata. For

the reasons that follow, we reverse the order of the circuit court dismissing this action and

remand for further proceedings not inconsistent with this opinion.

                                                       FACTS

             The facts necessary for our disposition of this appeal are as follows. In September


                                                         1
1999, Juanita Treadway (Mrs. Treadway) obtained a $15,000 loan from EquiCredit secured

by a first mortgage on her home. Mrs. Treadway passed away in November 2001. On

October 22, 2003, Mrs. Treadway's son, Gary Treadway, filed a class action complaint in

the circuit court of Madison County against EquiCredit, which he amended on April 30,

2004 (the 2003 action). Although the 2003 action is not the subject of this appeal, it is a part

of the record on appeal and we discuss it here due to the res judicata argument raised by

EquiCredit in its brief.

       The complaint in the 2003 action alleged that as a part of the closing costs for the

1999 loan to Mrs. Treadway, EquiCredit deducted $30 from the loan amount for what was

described on the closing statement as "Overnights Airborne–Equi[C]redit." According to the

2003 complaint, Airborne Express charged less than $30 to deliver the closing documents

to the title company and EquiCredit secretly kept the remainder of the $30 fee for itself. The

2003 complaint, as amended, contained two alternative counts for unjust enrichment.

       While the 2003 action was pending, Gary Treadway filed the instant class action

complaint in the circuit court of Madison County against EquiCredit on January 10, 2005

(the instant action). The complaint in the instant action alleged that as a part of the same

1999 loan transaction, EquiCredit charged Mrs. Treadway a $150 "loan discount fee." We

note that the fee complained of in the instant action was charged as a part of the same

$15,000 loan transaction involved in the 2003 action and appeared on the same settlement

statement involved in the 2003 action. According to the complaint in the instant action,

EquiCredit did not reduce Mrs. Treadway's interest rate in exchange for her payment of the

"loan discount fee" but, instead, kept the fee as profit for itself. Count I of the complaint in

the instant action alleged a cause of action for a breach of contract. Count II alleged a

violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et

seq. (West 2004)). Count III alleged an alternative claim for unjust enrichment.


                                               2
       On February 24, 2005, the discovery deposition of Gary Treadway was taken on

behalf of EquiCredit in the 2003 action. Gary Treadway testified that he did not accompany

Mrs. Treadway to the closing on the 1999 loan that is also the subject of this action. He

testified that he did not speak to M rs. Treadway about the transaction until after the closing,

when Mrs. Treadway told him she had taken out the loan. Gary Treadway does not know

how Mrs. Treadway came to do business with EquiCredit, and neither he nor his siblings

know any of the details of the transaction other than what is stated on the paperwork. Mrs.

Treadway never told him she thought she had been overcharged on the transaction. Mrs.

Treadway tended to her own affairs until her death. Gary Treadway knew nothing about any

"questionable" fees until he was solicited by an attorney who was reviewing the paperwork

associated with the transaction.

       On February 25, 2005, EquiCredit filed a notice of removal to the United States

District Court for the Southern District of Illinois in the instant action. On June 8, 2005, the

United States District Court for the Southern District of Illinois entered an order remanding

the case to the circuit court of Madison County. Meanwhile, EquiCredit filed a motion for

a summary judgment in the 2003 action, arguing that the voluntary-payment doctrine barred

Gary Treadway's claims.

       Although EquiCredit's answer to Gary Treadway's complaint in the instant action does

not appear in the record, apparently because it was filed in the federal court, Gary Treadway

filed a reply to EquiCredit's eight affirmative defenses in the circuit court on August 18,

2005. According to the reply, EquiCredit's first affirmative defense stated that Gary

Treadway's claims are barred by federal preemption. EquiCredit's eighth affirmative defense

stated that in the event the case was remanded to state court, Gary Treadway's claim would

be barred by section 2-619(3) of the Code of Civil Procedure (the Code) (735 ILCS 5/2-

619(3) (West 2004)) because there was another action pending between the same parties for


                                               3
the same cause. Gary Treadway denied all of EquiCredit's affirmative defenses.

       On September 6, 2005, EquiCredit filed a motion for leave to withdraw its answer in

the instant action and for leave to file a motion to dismiss pursuant to section 2-619 of the

Code (735 ILCS 5/2-619 (West 2004)) on the ground that Gary Treadway's claim is

completely preempted by the National Bank Act (12 U.S.C. §§85, 86 (2000)). In support of

its motion, EquiCredit asserted that it did not have an opportunity to file such a motion prior

to filing its answer because, at the time its answer was filed, the case had been removed to

and was pending in federal court and there is no equivalent to section 2-619 of the Code

under the federal rules of civil procedure. On October 13, 2005, the circuit court granted the

motion for leave to withdraw the answer and to file the motion to dismiss.

       EquiCredit filed its section 2-619 motion to dismiss in the instant action on October

19, 2005. As promised, EquiCredit argued that sections 85 and 86 of the National Bank Act

completely preempts Gary Treadway's claims. However, EquiCredit chose not to argue in

its motion to dismiss that Gary Treadway's claim is barred by section 2-619(3) of the Code

because there was another action pending between the same parties for the same cause. On

April 27, 2006, a hearing was held on EquiCredit's motion to dismiss in the instant action,

and the motion was taken under advisement.

       On June 26, 2006, while the motion to dismiss the instant action was under

advisement, in the 2003 action the circuit court entered an order granting EquiCredit's motion

for a summary judgment based on the voluntary-payment doctrine.              Citing Harris v.

ChartOne, 362 Ill. App. 3d 878, 881 (2005), the circuit court explained in its order that

because Mrs. Treadway is now deceased and Gary Treadway testified that he is unaware of

the facts and circumstances surrounding the loan transaction, Gary Treadway cannot produce

evidence of Mrs. Treadway's state of mind sufficient to present a question regarding whether

Mrs. Treadway's payment of the fees at issue was involuntary. The circuit court concluded


                                              4
that a summary judgment was warranted based on the voluntary-payment doctrine because

"[t]here is simply no evidence in the record and no evidence that could be produced as to

[Mrs. Treadway]'s state of mind when she saw the HUD statement." (Emphasis in original.)

       After the summary judgment was entered in the 2003 action, EquiCredit did not seek

leave to amend its 2-619 motion to dismiss the instant action on the basis of res judicata.

On July 10, 2006, the circuit court issued an order finding that sections 85 and 86 of the

National Bank Act preempted Gary Treadway's claim and dismissing the instant action. On

July 31, 2006, Gary Treadway filed a notice of appeal from the order dismissing the 2003

action. Gary Treadway also filed a timely notice of appeal in the instant action on August

8, 2006. O n December 14, 2006, Gary Treadway voluntarily dismissed the appeal in the

2003 action.

                                        ANALYSIS

                                  1. Standard of Review

       We begin our analysis of the issues on appeal in the instant action with a discussion

of the standard of review. The circuit court dismissed Gary Treadway's claims pursuant to

section 2-619 of the Code, finding the claims preempted by the National Bank Act. "Section

2-619(a)(9) permits the dismissal of a claim when 'the claim asserted *** is barred by other

affirmative matter avoiding the legal effect of or defeating the claim.' 735 ILCS 5/2-

619(a)(9) (W est 2002); Glisson v. City of Marion, 188 Ill. 2d 211, 220 (1999)." Moody v.

Federal Express Corp., 368 Ill. App. 3d 838, 841 (2006). " 'The phrase "affirmative matter"

refers to something in the nature of a defense that negates the cause of action completely or

refutes crucial conclusions of law or conclusions of material fact contained in or inferred

from the complaint.' " Moody, 368 Ill. App. 3d at 841 (quoting Glisson, 188 Ill. 2d at 220).

"The standard of review for an order granting a motion to dismiss pursuant to section 2-

619(a)(9) is de novo." Moody, 368 Ill. App. 3d at 841 (citing Glisson, 188 Ill. 2d at 220).


                                             5
                                        2. Preemption

       Here, the circuit court dismissed the instant action on the basis that it is completely

preempted by the National Bank Act (12 U.S.C. §§85, 86 (2000)). Section 85 of the

National Bank Act provides, in relevant part, "Any association may take, receive, reserve,

and charge on any loan or discount made *** interest at the rate allowed by the laws of the

State, Territory, or District where the bank is located ***." 12 U.S.C. §85 (2000). Section

86 of the National Bank Act provides as follows:

              "The taking receiving, reserving, or charging a rate of interest greater than is

       allowed by section 85 of this title, when knowingly done, shall be deemed a forfeiture

       of the entire interest which the note, bill, or other evidence of debt carries with it, or

       which has been agreed to be paid thereon. In case the greater rate of interest has been

       paid, the person by whom it has been paid, or his legal representatives, may recover

       back, in an action in the nature of an action of debt, twice the amount of the interest

       thus paid from the association taking or receiving the same: Provided, That such

       action is commenced within two years from the time the usurious transaction

       occurred." 12 U.S.C. §86 (2000).

       In Beneficial National Bank v. Anderson, 539 U.S. 1, 11, 156 L. Ed. 2d 1, 10, 123 S.

Ct. 2058, 2064 (2003), the United States Supreme Court found:

       "In actions against national banks for usury, [sections 85 and 86] supercede both the

       substantive and the remedial provisions of state usury laws and create a federal

       remedy for overcharges that is exclusive, even when a state complainant *** relies

       entirely on state law. Because [sections] 85 and 86 provide the exclusive cause of

       action for such claims, there is, in short, no such thing as a state-law claim of usury

       against a national bank."

       EquiCredit argues, and the circuit court held, that the United States Supreme Court's


                                               6
holding in Beneficial National Bank applies to the instant action. In so holding, the circuit

court relied primarily on Phipps v. Federal Deposit Insurance Corp., 417 F.3d 1006 (8th Cir.

2005). In Phipps, at issue was whether the plaintiffs' claims that their lender had charged

them unlawful and excessive fees, including a loan discount fee, in violation of Missouri's

Second Mortgage Loan Act (Mo. Ann. Stat. §408.231 et seq. (West 2002)) were completely

preempted by sections 85 and 86 of the National Bank Act. Phipps, 417 F.3d at 1009. The

plaintiffs argued that their claims were not for interest but for fees and thus were not

preempted. Phipps, 417 F.3d at 1011. The court of appeals disagreed, concluding that the

plaintiffs' claims were for excessive interest and thus were completely preempted under

Beneficial National Bank. Phipps, 417 F.3d at 1012.

       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. In Dannewitz, our colleagues in the First District held that the plaintiffs' claims

that the defendant violated the Illinois Interest Act (815 ILCS 205/4 et seq. (West 2002)) and

the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West

2002)) based on the inclusion of an allegedly unlawful prepayment penalty in the plaintiffs'

residential mortgage loan were preempted by the National Bank Act. Dannewitz, 362 Ill.

App. 3d at 87. 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. Dannewitz, 362 Ill. App. 3d at 85.

       We find neither of the decisions relied upon by the trial court determinative of the

issue at hand. 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.

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


                                              7
reduce Mrs. Treadway's interest rate in exchange for her payment of the loan discount fee.

Accordingly, these are not the state law usury claims that were held to be completely

preempted under the Beneficial National Bank court's analysis. Nor do we find this to be a

case of ordinary preemption. As this court explained with regard to the federal preemption

of state law contract actions in Burton v. Airborne Express, Inc., 367 Ill. App. 3d 1026, 1032

(2006), where "the court's concern is restricted to the parties' bargain," there is no

preemption. That is the instant action.

                                      3. Res Judicata

       EquiCredit argues in its brief that even if we conclude that the circuit court erred in

its finding that Gary Treadway's claims are preempted by the National Bank Act, the claims

are also barred by the doctrine of res judicata because the fees challenged in each action

appeared on the same settlement statement and both fees were paid by one deduction from

the loan proceeds. In response, Gary Treadway argues that EquiCredit waived the issue of

res judicata by acquiescing in Gary Treadway's splitting of the causes of action into two

separate lawsuits, and he cites Thorleif Larsen & Son, Inc. v. PPG Industries, Inc., 177 Ill.

App. 3d 656, 662 (1988), in support of his argument. In Thorleif Larsen & Son, Inc., the

court quoted and applied Comment a to section 26 of the Restatement (Second) of

Judgments:

              " 'Where the plaintiff is simultaneously maintaining separate actions based

       upon parts of the same claim, and in neither action does the defendant make the

       objection that another action is pending based on the same claim, judgment in one of

       the actions does not preclude the plaintiff from proceeding and obtaining judgment

       in the other action. The failure of the defendant to object to the splitting of the

       plaintiff's claim is effective as an acquiescence in the splitting of the claim.' "

       Thorleif Larsen & Son, Inc., 177 Ill. App. 3d at 662 (quoting Restatement (Second)


                                              8
       of Judgments §26, Comment a, at 235 (1982)).

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

Although EquiCredit's answer to Gary Treadway's complaint in the instant action does not

appear in the record, Gary Treadway filed a 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.

                                        CONCLUSION

       For the foregoing reasons, the order of the circuit court that dismissed the instant

action is reversed, and the cause is remanded for further proceedings not inconsistent with

this opinion.



       Reversed; cause remanded.



       DONOVAN and CHAPMAN, JJ., concur.


                                                9
                                          NO. 5-06-0425

                                              IN THE

                               APPELLATE COURT OF ILLINOIS

                                  FIFTH DISTRICT
___________________________________________________________________________________

      GARY TREADWAY, Special Representative of    ) Appeal from the
      the Estate of Juanita Treadway, Deceased,   ) Circuit Court of
      Individually and on Behalf of Others Similarly
                                                  ) Madison County.
      Situated,                                   )
                                                  )
         Plaintiff-Appellant,                     )
                                                  )
      v.                                          ) No. 05-L-27
                                                  )
      NATIONS CREDIT FINANCIAL SERVICES           )
      CORPORATION, d/b/a EquiCredit,              ) Honorable
                                                  ) Lola P. Maddox,
         Defendant-Appellee.                      ) Judge, presiding.
___________________________________________________________________________________

Opinion Filed:        November 26, 2007
___________________________________________________________________________________

Justices:           Honorable Stephen L. Spomer, J.

                 Honorable James K. Donovan, J., and
                 Honorable Melissa A. Chapman, J.,
                 Concur
___________________________________________________________________________________

Attorneys        Bradley M. Lakin, Richard G. Burke, Gerald R. Walters, Gail G. Renshaw, The Lakin
for              Law Firm, P.C., 300 Evans Avenue, P.O. Box 220, Wood River, IL 62095-1127;
Appellant        Paul M. Weiss, Freed & Weiss, L.L.C., 111 W est Washington Street, Suite 1331,
                 Chicago, IL 60602; Timothy F. Campbell, Campbell McGrady & Hoefert Law
                 Offices, 3017 G odfrey Road, P.O. Box 505, Godfrey, IL 62035; Charles W.
                 Chapman, Charles W. Chapman, Chartered, 300 Evans Avenue, P.O. Box 220, Wood
                 River, IL 62095-1127; Phillip A. Bock, Robert M. Hatch, Diab & Bock, LLC, 20
                 North Wacker Drive, Suite 1741, Chicago, IL 60606
___________________________________________________________________________________

Attorneys        Lawrence M. Benjamin, Neal, Gerber & Eisenberg LLP, 2 North LaSalle Street,
for              Suite 2300, Chicago, IL 60602; Robert Shultz, Jr., Joseph P. W hyte, Heyl, Royster,
Appellee         Voelker & Allen, 103 W. Vandalia Street, Suite 100, P.O. Box 467, Edwardsville, IL
                 62025
___________________________________________________________________________________
