property, or services, the ECOA is inapplicable. fd.

Here, plaintiff had paid one month’s rent and another month’s rent as a sccurity deposit.
When plaintiff signed the lease with defendant, there certainly was never any credit extended to
plaintiff. In signing the lease, plaintiff did not obtain a right to defer any payment, and
defendant was not capable of extending credit. As a potential landlord of apartments, defendant
is not in the business of “regularly extending, renewing, or continuing credit.” See 15 U.S.C. §
169la(e). Rather, defendant is in the business of renting out apartment units. Similarly, plaintiff
is not an “applicant.” Plaintiff applied with defendant for an apartment; plaintiff was not
applying-directly or indirectly-to a creditor for an extension, renewal, or continuation of credit.
Plaintiff was merely applying for an apartment lease with defendant. Plaintiff fails to state an
ECOA claim because he is not an applicant, defendant is not a creditor, and no credit was
extended.

Plaintiff relies extensively on Brothers v. First Leasing, 724 F.2d 789 (9th Cir. 1984),
which involved a consumer lease for an automobile. There, the plaintiff claimed that her
application for an automobile leasc had been denied on the basis of sex or marital status in
violation of the Equal Credit Opportunity Act. Jd. at 791. However, that case is readily
distinguished from the case at bar.

In Brothers, the plaintiff's lease for an automobile was entitled “Application for Lease
Credit,” which, as defendant points out in its brief, “indicates on its face that it is an application
for credit,” Jd, at 790. Here, plaintiff merely signed a lease to rent an apartment from defendant;
plaintiff did not enter into any form of credit transaction. Although plaintiff contends that the
lease in Brothers was similar to his apartment lease in that both leases obligate the lessee to pay

the entire amount of the lease, there are several situations in which plaintiff would not have to

4



iL. Counts If and II

Plaintiff has invoked the supplemental jurisdiction of the Court with regard to Counts IL
and II of the complaint pursuant to 28 U.S.C. § 1367(a). Plaintiff contends in Count II that
defendant violated Chicago Municipal Code § 5-12-110(b)(2) when it failed to deliver
possession of the apartment. Plaintiff contends in Count III that defendant violated the Illinois
Consumer Fraud and Deceptive Practices Act because he alleges defendant’s statement that
plaintiff would receive the apartment keys and could move in was a misrepresentation.

In any civil action of which the district courts have original jurisdiction, the district
courts shall have supplemental jurisdiction over all other claims that are so related to claims in
the action so that they form part of the same case or controversy under Article III of the United
States Constitution. 28 U.S.C. § 1367(a). The district courts may decline to exercise
supplemental jurisdiction over a claim under subsection (a) if. . . the district court has dismissed
all claims over which it has original jurisdiction. 28 U.S.C. § 1367(c)(3). A district court's
decision to relinquish pendent jurisdiction before the federal claims have been tried is the norm,
not the exception, and such a decision will be reversed only in extraordinary circumstances.
Miller Aviation v. Milwaukee County Bd. of Supervisors, 273 F.3d 722, 732 (7th Cir. 2001). “It
is the well-established law of this circuit that the usual practice is to dismiss without prejudice
state supplemental claims whenever all federal claims have been dismissed prior to trial.” Groce
y. Eli Lilly & Co,, 193 F.3d 496, 501 (7th Cir. 1999).

Here, as discussed above, the Court dismisses plaintiff's only claim over which it has
original jurisdiction. Based on the circumstances and facts of this case, the Court declines to

exercise supplemental jurisdiction over Counts II and Ll of the complaint and dismisses those

counts without prejudice,



claim will not be ignored. Gray v. Dane County, 854 F.2d 179, 182 (7th Cir. 1988).

I. CountI

Plaintiff first argues that defendant North Pier “willfully violated” the ECOA, in
particular 15 U.S.C. § 1691(d), by failing to notify him in writing that his application for credit
had been denied, Defendant disagrees and argues that plaintiff was not extended “credit” under
the ECOA, that defendant was not a “creditor” under the ECOA, and that plaintiff was not a
credit “applicant” under the ECOA.

The ECOA imposes duties on creditors to avoid certain types of discrimination and
requires a creditor to provide a credit applicant with a statement of reasons as to why
unfavorable action has been taken on a credit application. 15 U.S.C. § 1691 (a); id. § 1691(d).
Here, however, it is defendant's position, and the Court agrees, that the ECOA does not apply to
this case

The ECOA defines credit as “the right granted by a creditor to a debtor to defer payment
of debt or to incur debts and defer its payment or to purchase property or services and defer
payment therefore.” 15 U.S.C, § 1691a(d). The term “creditor” is defined by the ECOA as "any
person who regularly extends, renews, or continues credit." 15 U.S.C, § 1691a(e). Finally, the
ECOA defines credit “applicant” as “any person who applies to a creditor directly for an
extension, renewal, or continuation of credit, or applies to a creditor indirectly by use of an
existing credit plan for an amount exceeding a previously established credit limit.” 15 U.S.C. §
1691a(b). In reading these definitions together, it is clear that the ECOA extends only to
instances in which the right to defer payment of an obligation is granted. Shaumyan v. Sidetex
Co., Inc., 900 F.2d 16, 18 (2nd Cir. 1990). Absent a right to defer payment for a monetary debt,

3


pay the entire amount of his lease. The lease at issue allowed for the opportunity to sublet the
apartment to a third party, which would relieve plaintiff of his payment obligation (Pl.’s Ex. A, 4
10.) Further, if plaintiff as a tenant were to vacate his apartment before the lease had expired,
defendant would be required actively to seek another prospective tenant in an attempt to mitigate
plaintiffs remaining rent obligations. Chicago Mun. Code ch. 5-12-120, Most convincing,
however, is the fact that plaintiff's rental obligation demanded a monthly payment of $2,340 in
exchange for use of the apartment.

Where the leasing agreement provides for the lessee to make incremental payments as
contemporaneous exchange of consideration for possession of the leased goods, the lesscc
cannot be said to “defer payment of debt,” and the lease will not be regarded as a “credit
transaction,” within meaning of the ECOA. Liberty Leasing Co. v. Machamer, 6 F. Supp. 24
714, 717 (S.D. Ohio 1998). In Liberty Leasing Co. v. Machamer, the lessees were obligated to
make rent payments in exchange for the quiet use and enjoyment of the equipment they were
leasing. d. Moreover, the lessees were never obligated to pay the full amount of the lease under
the agreement. Id. The lcase provided that upon the lessees’ default, the lessor had the right to
lease the equipment to another party in an attempt to mitigate damages, thus relicving the
original lessees from the entire obligation of the lease. Jd. The court held that the lessees did not
incur a debt for which payment was deferred because the lessee’s surrender of possession of the
equipment would have released the lessees of their debt for the full lease amount. Jd. In
rejecting the Brothers ruling that a lease obligation is credit as defined in the ECOA, the Liberty
court found that when remedial scenarios exist where the lessee’s financial obligation can be

extinguished upon surrender of possession, the transaction cannot be classified as credit, Jd. at

718,



CONCLUSION
For the reasons set forth above, the Court grants defendant’s motion to dismiss Count I
pursuant to Fed. R. Civ, P. 12(b)(6) [doc, no. 6-1]. Pursuant to 28 U.S.C. § 1367(c)(3), the Court
declines to cxercise supplemental jurisdiction over Counts II and Lil and dismisses those counts

without prejudice. This case is hereby terminated.

; 1? a00
SO ORDERED ENTER: deplink, Lf 2003

HON. RONALD A. GUZM.
United States Judge



se

United States District Court, Northern District of Illinois

of Assigy e Sitth if Other
ari Maghtate Taye Ronald A. Guzman chan Assigned Judge
CASE NUMBER 02 € 5879 DATE 9/9/2003
CASE GARNIE fTEAD ys. NORTH PIER APARTMENT TOWER
TITLE

MOTION:

[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) slate briefly the nature
of the motion being presented.)

DOCKET ENTRY:

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defendant’s motion to dismiss Count | pursuant to Fed.R.Civ.P. 12(b)(6) [6-1]. Pursuant to 28 U.S.C.
Section 1367(c)(3), the Court declines to exercise supplemental jurisdiction over Counts II and IIT and
dismisses those counts without prejudice. This case is hereby terminated.

Filed motion of [ use listing in “Motion” box above.]
Brief in support of motion duc

Answer brief to motion due . Reply to answer brief due.

Ruling/Hearing on set for at
Status hearing[held/continued to} [set for/re-set for] on set for at
Pretrial conferencefheld/continued to) [set for/re-set for] on set for at .

Trial[sct for/re-set for] on at

(Bench/Jury trial] [Hearing] hetd/continued to at

This case is dismissed [with/without] prejudice and without costs[by/agreement/purguant to]
OOFRCP4(m) CO) Local Rule 41.1 CHFRCP41(a)(1) CFRCP41(a)(2).

[Other docket entry} ©. ENTER MEMORANDUM OPINION AND ORDER: The Court grants

[For further detail sec order attached to the original minute order.]

No notices required.

Notices tailed by judge's staff.

Notified counsel by telephone.

WY | Docketing to mail notices
wv | Mail AO 450 form.
Copy to judge/magistrate judge.
courtroom
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we

The contemporaneous exchange of consideration in Liberty is likewise existent in the
case at bar. Here, there was never any deferral of a debt payment since plaintiff had to pay his
rent each month in exchange for occupying the apartment. Morcover, plaintiff was not required
to pay the lease’s entire amount because he would have been able to sublease the apartment and
therefore not pay the full amount of the lease, In its reply to plaintiffs response, defendant
points to the position taken by the 1985 Final Official Staff Interpretation issued by the Board of
Governors for the Federal Reserve, which was responsible for promulgating the ECOA
regulations. The Interpretation stated resoundingly that leases should not be considered under
the ECOA. 50 F.R. 48018. The Board reasoned that if Congress wanted to include leases under
the ECOA, it would have explicitly done so in the language of the statute; the Board also refused
to adopt the broad definition of credit in Brothers. 50 F.R, 48019-20; 50 F.R. 48018, 28019-20.

Plaintiff's contention in his reply brief that defendant violated the Fair Credit Reporting
Act (FCRA) when defendant pulled plaintiff's credit report is unfounded. Although plaintiff
relies on Exhibit B, which is a notification that plaintiff's credit report had been reviewed,
Exhibit C clearly establishes that defendant did not violate the FCRA. In Exhibit C, plaintiff's
signature appears at the bottom of the application, which almost directly above reads: “The
application hereby authorizes [defendant] to make any investigations as to credit ....” (PI.’s
Reply, Ex. C, 4 14.) The FCRA allows the use of such a report as a form of tenant screening as
long as the plaintiff gives permission to its use. 15 U.S.C. § 1681(b)(a)(2). Thus, plaintiff
clearly gave his permission to defendant for such use, and defendant did not violate the FCRA.

The Court finds that because plaintiff was not extended credit, defendant was not a
creditor, and the apartment lease was not an extension of credit, Count J of the complaint is

dismissed for failure to state a claim upon which relief can be granted.

6



al

‘a
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GARNIE HEAD, )
)
Plaintiff, )
)
ve ) Jadge Ronald Guzman
)
NORTH PIER APARTMENT TOWER, ) 02 C5879
a/k/a/ BROADACRE MANAGEMENT, )
yy DOCKETED
Defendant. )

SEP 12 2003
MEMORANDUM OPINION AND ORDER

Pending is defendant North Pier Apartment Tower’s motion to dismiss the complaint
pursuant to Fed. R. Civ. P, (“Rule”) 12(b)(6) and 12(b)(1) and 28 U.S.C. § 1367(c). For the

reasons set forth below, the Court grants the motion.

FACT:

For purposes of this motion, the Court takes the facts alleged in the complaint as truc.
Plaintiff applied for an apartment owned and managed by defendant on August 9, 2000.
Defendant informed plaintiff that he had been approved for the lease of Unit 1905 at North Pier
Apartment Tower at 474 North Lake Shore Drive in Chicago, Illinois, on August 20, 2000.
Pursuant to the agreement plaintiff paid $2,340 as a security deposit and further promiscd to pay
$2,340 for the first month’s rent before moving into the premises, Plaintiff received a receipt for
his security deposit, and defendant informed plaintiff that he would be able to move into Unit
1905 on August 29, 2000. On August 28, 2000, plaintiff went to North Pier Apartment Tower,
where he signed the lease and paid two months rent totaling $4,680, Defendant's agent informed

plaintiff that he could pick up his apartment keys and move in at 4:00 pm the following day. On

|



a

August 29, 2000, defendant refused to deliver possession of the apartment to plaintiff.

In Count I of his complaint, plaintiff alleges that defendant failed to notify him in writing
that his application for credit had been denied in violation of section 1691(d) of the Equal Credit
Opportunity Act (“ECOA”). In Count II of his complaint, plaintiff alleges that defendant
violated the City of Chicago Landlord and Tenant Ordinance, Municipal Code 5-12-110(b), in
failing to deliver possession of the apartment. In Count III of his complaint, plaintiff alleges that
defendant violated the Illinois Consumer Fraud and Deceptive Practices Act in that defendant’s
statement to plaintiff that he would receive the keys to the unit and could move in on August 29,

2000 was a misrepresentation.

DISCUSSION

Defendant moves to dismiss all three counts of plaintiff's complaint pursuant to Fed. R.
Civ. P. 12(b)(6) and 12(b)(1). Defendant contends that Count I of the complaint fails to state a
claim under the ECOA. Defendant further contends that supplemental jurisdiction over Counts
IL and III of the complaint should be declined pursuant to 28 U.S.C. § 1367(c).

On a motion to dismiss under Fed. R. Civ, P. 12(b)(6), “all factual allegations in the
complaint” are accepted as true, and all reasonable inferences from the facts are weighed in
plaintiff's favor. Murphy v, Walker, 51 F.3d. 714, 717 (7th Cir. 1995). The complaint will be
dismissed only if “it appears beyond doubt that the plaintiff can prove no set of facts in support
of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In
addition, the Court will construe the complaint liberally and will view the allegations in a light
most favorable to the non-moving party. Caremark, Inc. v. Coram Healthcare Corp., 113 F.3d

645, 648 (7th Cir. 1997), However, facts alleged in the complaint which undermine plaintiff's

2