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January 1, 2003


The opinion of the court was delivered by: John F. Grady, United States District Judge


Before the court are two motions: (1) plaintiff's motion to reconsider our dismissal of Counts V-VII of the original complaint; and (2) defendants' motion to dismiss Counts II, III, IV, and VI of plaintiff's second amended complaint. For the reasons explained below, plaintiff's motion is denied, and defendants' motion is granted.


The facts of this case were described in our earlier opinion, and are as follows. Plaintiff, Doris James, brings this action against defendants Olympus Servicing, L.P. and Olympus GP LLC (collectively, "Olympus"), alleging that Olympus engaged in unlawful debt collection and fraudulent mortgage servicing practices and failed to provide plaintiff with her account history when requested.

The second amended complaint alleges the following facts. In May 2000, plaintiff obtained a mortgage loan to refinance various personal debts. In October 2000, servicing of the loan was transferred to Litton Loan Servicing L.P. ("Litton"). On February 2, 2001, Litton sent plaintiff a notice of default. Between February 2, 2001 and April 16, 2001, Litton transferred servicing of the loan to Olympus Servicing. The loan was in default at the time.

"Olympus accelerated plaintiff's note and mortgage and refused to accept further payments on or before June 21, 2001."*fn1(Second Amended Complaint, ¶ 15.) Then, on August 7, 2001, Olympus caused a foreclosure proceeding to be filed against plaintiff. Some time between August 15, 2001 and December 31, 2001, plaintiff's loan was reinstated. (In a letter to plaintiff and in its briefs, Olympus claims that the loan was reinstated on August 15.) The mortgage foreclosure action was dismissed on December 31, 2001.

"Olympus assessed at least one and possibly additional late charges against plaintiff with respect to periods after the loan was accelerated and before it was reinstated." (Second Amended Complaint, ¶ 18.) Olympus continued sending monthly loan statements to plaintiff. Following reinstatement of the loan (assuming it occurred on August 15, 2001), Olympus sent plaintiff a "notice of intent to foreclose" on August 22, 2001 (the "August Notice"). Olympus also began sending plaintiff notices asserting that she was not maintaining hazard insurance on the property. The second amended complaint states that, on information and belief, based on statements made to plaintiff by a representative of Olympus on February 28, 2002, Olympus took plaintiff's monthly payments and applied them to charges for unnecessary force — placed hazard insurance instead of principal and interest on the mortgage loan. Plaintiff had her own insurance and attempted to inform Olympus. In order to determine the allocation of her payments, on February 9, 2002, plaintiff requested an account history and documentation of all charges other than principal, interest, and late charges. Olympus failed to acknowledge or respond to this request within 20 business days.

Plaintiff filed this action on March 19, 2002. In a memorandum opinion dated October 8, 2002, we granted defendants' motion to dismiss Counts II, III, IV, V, VI, and VII of the original complaint, and denied the motion as to Count I. We also dismissed Count VIII. We gave plaintiff leave to amend Counts II, III, IV, and VIII.

On November 13, 2002, plaintiff filed a second amended complaint. The second amended complaint alleges violations of the Fair Debt Collection Practices Act (the "FDCPA") (Counts I, II, and VI), the Illinois Consumer Fraud and Deceptive Business Practices Act (the "CFDBPA") (Count IV), and the Real Estate Settlement Procedures Act (Count V). The complaint also seeks a declaration that Olympus is prohibited from charging post-acceleration late charges (Count III).*fn2

Defendants now move to dismiss Counts II, III, IV, and VI of the second amended complaint. Plaintiff moves for reconsideration of the dismissal of Counts V, VI, and VII of the original complaint.


Plaintiff's Motion to Reconsider Dismissal of Counts V-VII

In our memorandum opinion of October 8, 2002, we dismissed Counts V-VIII of the original complaint. Counts V and VII alleged that Olympus violated the FDCPA and the CFDBPA by "adding attorney's fees, legal fees, and related expenses to the borrower's account" when those fees had not been awarded or approved by a court. Count VI sought restitution for, or cancellation of, those fees. Our reasoning for dismissing Counts V-VII was as follows:

The Note and Mortgage in this case clearly authorize the assessment of reasonable attorney's fees incurred in relation to enforcing the Note and Mortgage. The Note states, "If the Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. Those expenses include, for example, reasonable attorneys' fees." (Complaint, Ex. A, Note, ¶ 6(E).) The Mortgage provides that in the event of a default by the Borrower, the Lender may pay for whatever is necessary to protect the value of the property, including appearing in court and paying reasonable attorney's fees, and that these payments shall become additional debt of the Borrower. (Complaint, Ex. B, Mortgage, ¶ 7.) In the section titled "Acceleration; Remedies," the Mortgage also states: "Lender shall be entitled to collect expenses incurred in pursuing the remedies provided in this paragraph 21, including, but not limited to, reasonable attorney's fees and cost of title evidence." (Complaint, Ex. B, Mortgage, ¶ 21.)
Plaintiff does not dispute that the Note and Mortgage authorize reasonable attorney's fees, and does not allege in the complaint that the amount of attorney's fees was unreasonable, but argues that the assessment of attorney's fees without court approval violates Illinois law and therefore also violates the FDCPA.*fn3 Plaintiff, however, cites no authority in support of this argument, and our own research revealed none. The cases cited by plaintiff merely stand for the principle that a party seeking to recover attorney's fees that are challenged ...

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