United States District Court, N.D. Illinois
January 21, 2004.
GUARANTY RESIDENTIAL LENDING, INC., Plaintiff,
INTERNATIONAL MORTGAGE CENTER, INC., a/k/a HTFC Corporation, et al., Defendants
The opinion of the court was delivered by: WILLIAM HART, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Guaranty Residential Lending, Inc. alleges that it purchased
six fraudulent mortgage loans (the "Subject Loans") on the secondary
market and that the named defendants are responsible for the losses
resulting from the Subject Loans. Plaintiff alleges a scheme in which
residential properties located in Chicago, Illinois (the "Subject
Properties") were purchased and then purportedly resold at inflated
values, with the Subject Loans being based on the inflated values. As to
at least four of the Subject Properties, the purported second purchasers
and borrowers were already deceased at the time the Subject Loans were
closed. When the Subject Loans defaulted, there was no mortgagee
available for collection and the Subject
Properties were worth substantially less than the principal of the
Subject Loans. Plaintiff alleges it lost more than $770,000 on the
Subject Loans. Four corporations and six individuals are named as
defendants. One count of plaintiff's Complaint is a federal claim for
violation of the Racketeer Influenced and Corrupt Organizations Act
("RICO")", 18 U.S.C. § 1961-68. All other counts contain state common
law claims. The state law claims are supplemental to the federal RICO
claim. See 28 U.S.C. § 1367. Plaintiff also asserts that
there is diversity jurisdiction in that there is complete diversity of
citizenship and the amount in controversy exceeds $75,000.*fn1
Two motions to dismiss are: pending.*fn2 One motion is brought by
defendant Lawyers Title Insurance Corporation ("Lawyers Title") and the
other motion is brought by defendants Nations Title Agency of Illinois
("Nations Title") and Janice Seeman, who allegedly was Nations Title's
closing manager.*fn3 In
their briefs, the parties generally fail to recognize the
interrelationships between the applicable law and pleading standards
applicable to this case. While state law*fn4 provides the substantive
law for the common law claims that are alleged, federal law establishes
the pleading standard. Muzikowski v. Paramount Pictures Corp.,
322 F.3d.918, 925-26 (7th Cir. 2003); Johnson v. Hondo, Inc.,
125 F.3d 408, 417 (7th Cir. 1997); Lifton v. Board of Education of
City of Chicago, 290 F. Supp.2d 940, 946 (N.D. Ill. 2003). Thus,
Illinois law provides the elements of each particular common law claim,
but federal law controls as to what must be alleged in the Complaint.
Except as to those claims based on fraud, notice pleading is all that is
required. See Fed.R.Civ.P. 8. here fraud is alleged,
however, the circumstances must be alleged with particularity, though
intent and knowledge may still be averred generally. See Fed.
R. Civ. P. 9(b).
The Complaint contains eight counts denominated as follows: I: fraud by
all defendants; II: conspiracy to defraud by all defendants; III:
negligent misrepresentation by all
defendants; IV: promissory estoppel*fn5 by all defendants; V: RICO
violations (18 U.S.C. § 1962(a), (c), & (d)) by all defendants
based on predicate acts of mail fraud (id. § 1341), wire
fraud (id. § 1343), and bank fraud (id. §
1344); VI: breach of contract by defendant International Mortgage
Center, Inc. ("IMC") only; VII: unjust enrichment by IMC only; and VIII:
constructive trust against IMC only.
On a Rule 12(b)(6) motion to dismiss, plaintiff's well-pleaded
allegations of fact are taken as true and all reasonable inferences are
drawn in plaintiff's favor. Leatherman v. Tarrant County Narcotics
Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993);
Dixon v. Page 291 F.3d 485, 486 (7th Cir. 2002); Stachon
v. United Consumers Club, Inc., 229 F.3d 673, 675 (7th Cir. 2000).
Ordinarily, a complaint need not set forth all relevant facts or recite
the law; all that is required is a short and plain statement showing that
the party is entitled to relief. Fed.R.Civ.P. 8(a)(2); Boim v.
Quaranic Literacy Institute, 291 F.3d 1000, 1008 (7th Cir. 2002);
Anderson v. Simon, 217 F.3d 472, 474 (7th Cir. 2000),
cert. denied, 531 U.S. 1073 (2001); Scott v. City of
Chicago, 195 F.3d 950, 951 (7th Cir. 1999). Ordinarily, a plaintiff
in a suit in federal court need not plead facts; conclusions may be
pleaded as long as the defendant has at least minimal notice of the
claim. Fed.R.Civ.P. 8(a)(2); Swierkiewicz v. Sorema N.A.,
534 U.S. 506, 512 (2002); Scott, 195 F.3d at 951; Albiero
v. City of Kankakee. 122 F.3d 417, 419 (7th Cir. 1997); Jackson
v. Marion County. 66 F.3d 151, 153-54 (7th Cir. 1995). However, to
the extent fraud is alleged, it must be pleaded with particularity.
See Fed.R.Civ.P. 9(b); Slaney v. The International
Amateur Athletic Federation. 244 F.3d 580, 597 (7th Cir.),
cert. denied, 534 U.S. 828 (2001); Shapo v.
O'Shaughnessy, 246 F. Supp.2d 935, 955-56 (N.D. Ill. 2002).
Additionally, even if not required to plead specific facts, a plaintiff
can plead itself out of court by alleging facts showing there is no
viable claim. See Slaney, 244 F.3d at 597; Kauthar SDN BHD
v. Sternberg, 149 F.3d 659, 669-70 & n.14 (7th Cir. 1998),
cert. denied, 525 U.S. 1114 (1999); Jackson, 66 F.3d
Ordinarily, as long as they are consistent with the allegations of the
complaint, a plaintiff may assert additional facts in its response to a
motion to dismiss. Brokaw v. Mercer County, 235 F.3d 1000, 1006
(7th Cir. 2000); Forseth v. Village of Sussex, 199 F.3d 363,
368 (7th Cir. 2000); Albiero, 122 F.3d at 419; Gutierrez
v. Peters. 111 F.3d 1364, 1367 n.2 (7th Cir. 1997). However,
Rule 9(b) requires that the necessary allegations be in the complaint itself.
Kennedy v. Venrock Associates, 348 F.3d 584, 593 (7th Cir.
2003); Abrams v. Van
Kampen Funds, Inc., 2002 WL 1160171 *2 (N.D. Ill. May
30, 2002); Chicago District Council of Carpenters Welfare Fund v.
Angulo, 169 F. Supp.2d 880, 886 (N.D. Ill. 2001); Implant
Innovations, Inc. v. Nobelpharma AB, 1995 WL 562.092 *5 (N.D. Ill.
Sept. 14, 1995). Additional allegations contained in the responsive
brief, however, may indicate that plaintiff should be given the
opportunity to amend the Complaint to comply with Rule 9(b). See
Ziemba v. Cascade International, Inc., 256 F.3d 1194, 1213 (11th
Cir. 2001); Angulo, 169 F. Supp.2d at 886; Implant
Innovations, 1995 WL 562092 at *5. While additional allegations
contained in a responsive brief are not considered to be incorporated in
the complaint, documents that are referred to in the complaint and that
are central to a claim that is made may be considered to be part of the
complaint even if not actually attached to the complaint. Rosenblum
v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002);
Duferco Steel Inc. v. M/V Kalisti, 121 F.3d 321, 324 n.3 (7th
Cir. 1997); Venture, Associates Corp. v. Zenith, Data Systems
Corp.. 987 F.2d 429, 431 (7th Cir. 1993). However, where a dispute
exists as to whether a document provided by the moving party is authentic
or complete, the document will not be considered on a motion to dismiss
even if the document was referenced in the complaint and central to a
claim. Divane v. Nextiraone, LLC, 2002 WL 31433504 *2 (N.D.
Ill. Oct. 30, 2002). Where the document may properly be considered,
though, the actual
document will override inconsistent descriptions of the document
alleged in the body of the complaint. See Rosenblum, 299 F.3d
at 661 (quoting 5 Wright & Miller, Federal Practice &
Procedure: Civil 2d § 1327 at 766 (1990)); In re Wade.
969 F.2d 241, 249 (7th Cir. 1992); Beam v. IPCO Corp..
838 F.2d 242, 244-45 (7th Cir. 1988).
In the complaint itself, it, is unnecessary to specifically identify
the legal basis for a claim as long as the facts alleged would support
relief. Forseth, 199 F.3d at 368; Scott, 195 F.3d at
951; Albiero. 122 F.3d 419; Bartholet v. Reishauer A.G.
(Zurich), 953 F.2d 1073, 1078 (7th Cir. 1992); Dodaro v.
Village of Glendale Heights, 2003 WL 1720030 *8 (N.D. Ill. March 31,
2003). The plaintiff is not bound by legal characterizations of the
claims contained in the complaint. Forseth, 199 F.3d at 368;
Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th
Cir. 1999). However, in response to a motion to dismiss that raises the
issue, the plaintiff must identify a legal basis for a claim and make
adequate legal arguments in support of it. Kirksey, 168 F.3d at
1041-42; Stransky v. Cummins Engine Co., 51 F.3d 1329, 1335
(7th Cir. 1995); Levin v. Childers, 101 F.3d 44, 46 (6th Cir.
1996); Gilmore v. Southwestern Bell Mobile Systems, L.L.C.,
224 F. Supp.2d 1172, 1175 (N.D. Ill. 2002); Carpenter v. City of
Northlake, 948 F. Supp. 759, 765 (N.D. Ill. 1996).
Rule 9(b) requires that "[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with
particularity. Malice, intent, knowledge, and other condition of mind of
a person may be, averred generally." The circumstances of fraud generally
include "the identity of the person who made the misrepresentation, the
time, place and content of the misrepresentation, and the method by which
the misrepresentation was communicated to the plaintiff."
Slaney, 244 F.3d at 599; General Electric Capital Corp. v.
Lease Resolution Corp.. 128 F.3d 1074, 1CL78 (7th Cir. 1997). A
complaint must outline the alleged misrepresentations and reasonably
notify a defendant of the specifics of the alleged fraudulent activity,
including the particular defendant's role. Lachmund v. ADM Investor
Services, Inc., 191 F.3d 777, 782 (7th Cir. 1999); Goren v. New
Vision International, Inc., 156 F.3d 721, 730 (7th Cir. 1998);
Midwest Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1020 (7th
Cir. 1992); Ward Enterprises, Inc. v. Bang & Olufsen, 2003
WL 22859793 *1 (N.D. Ill. Dec. 2, 2003); Gilmore v. Southwestern
Bell Mobile Systems, L.L.C., 210 F.R.D. 212, 224 (N.D. Ill. 2001).
Fair notice is the most basic consideration. Vicom, Inc. v.
Harbridge Merchant Services, Inc., 20 F.3d 771, 777-78 (7th Cir.
19941; In re Bridgestone/Firestone Inc. Tires Products Liability
Litigation. 2002 WL 31689264 *8 (S.D. Ind. Nov. 20, 2002);
Gilmore. 210 F.R.D. at 224.
Additionally, the requirements of Rule 9(b) may be relaxed where
the plaintiff makes an adequate showing that necessary information is
within the control of a defendant so that particularized pleading cannot
be fully accomplished prior to receiving discovery. See Emery v.
American General Finance, Inc., 134 F.3d 1321, 1323 (7th Cir.),
cert. denied, 525 U.S. 818 (1998).
By its language, the particularity requirement of Rule 9(b) is limited
to the "circumstances constituting fraud." See Lachmund. 191
F.3d at 783; Hecht v. Commerce Clearing House, Inc.
897 F.2d 21, 26 n.4 (2d Cir. 1990); Hirata Corp. v. J.B. Oxford &
Co., 193 F.R.D. 589, 596-97 (S.D. Ind. 2000). Thus an agency
relationship establishing vicarious liability for fraud generally does
not have to be pleaded with particularity. See Lachmund, 191
F.3d at 783; Hirata, 193 F.R.D. at 597. Where a conspiracy to
commit fraud is alleged, the conspiracy itself generally need not be
alleged with particularity. See Hecht, 897 F.2d at 26 n.4;
Perlman v. Zell, 938 F. Supp. 1327, 1348-49 (N.D. 111. 1996),
aff'd, 185 F.3d 850 (7th Cir. 1999). However, where the same
circumstances establish both the fraud and an otherwise independent basis
for liability, both must be alleged with particularity. For example,
where there is no separate agency relationship relied on as a basis for
fraud, only vicarious liability based on being a coconspirator,
in the conspiracy must be alleged with particularity. See
Lachmund. 191 F.3d at 783.
The following facts are assumed to be true for purposes of ruling on
the pending motions to. dismiss. The Complaint describes the named
defendants as follows. Defendant IMC, also known as HTFC Corp., *fn6 has
its principal place of business in New York and is a licensed mortgage
banker in Illinois. Defendant Aaron Wider is IMC's chief executive
officer and sole shareholder. Defendant Century Mortgage & Funding,
Inc. ("CMF") has its principal place of business in Illinois and is a
subsidiary of or otherwise legally affiliated with IMC. CMF acted as the
mortgage broker and original lender for each of the Subject Loans.
Defendant Tommy Pililimis ("Pililimis") is an Illinois resident and was
employed by IMC and CMF. Pililimis represented that he conducted face to
face interviews with borrowers on the Subject Loans even. though those
borrowers were already dead at the time the interviews purportedly
Defendant Nations Title transacts business at a location in Illinois.
Nations Title was the title company/closing agent on each of the Subject
Loans when originated and funded by IMC/CMF. Nations Title prepared the
documents of conveyance,
settled the transactions, collected payments from the buyers and
sellers, and disbursed proceeds. It is alleged that Nations Title "is an
approved local agent of Defendant Lawyers Title Insurance Corp. and holds
itself out, as such." Compl. ¶¶ 8. Defendant Seeman was employed as a
closing manager for Nations Title and acted as the settlement agent for
each of the Subject Loan transactions. Seeman is a resident of Illinois
and a certified notary public in Illinois. Nations Title and Seeman were
involved in the closing of the Subject Loans when funded and originated
by IMC/CMF. Nations Title and Seeman were not directly involved in the
sale of the Subject Loans to plaintiff, but documents they prepared at
the closings were provided to plaintiff at the time the Subject Loans
were sold to plaintiff.
Defendant Lawyers Title transacts business at a location in Illinois.
Lawyers Title is in, the business of underwriting title insurance for
approved local agents. Lawyers Title is the underwriter for the property
title insurance for each of the Subject Loans. It is alleged that,
although Lawyers Title "did not itself actively participate in the
conspiracy to defraud Guaranty Residential, under principles of agency
law, [Lawyers Title] is vicariously liable for acts of its agent,
[Nations Title], which did actively participate in this conspiracy."
Compl. ¶ 9.
Defendants Steve Fobs, Jr., Stavros (or Steven) Bourmas, and
Anthony Mitchell (the "Appraiser Defendants") were all certified
residential real estate appraisers licensed by the State of Illinois.
Each of these defendants provided an inflated appraisal for one or more
Subject Properties. The appraisals were submitted to plaintiff at the,
time the Subject Loans were sold to plaintiff.
The Complaint specifically identifies the six Subject Loans, including
the amounts of the loans, the underlying Subject Properties, the real or
purported borrowers, the dates of the Loans, and the dates the Loans were
resold. As to five of the Subject Properties, prior sales in which the
prices increased substantially in a short time period are identified,
including the sales dates, sales prices, and purported buyers and
sellers.*fn7 As to the four purported borrowers., who were deceased
prior to the closings, their dates of death are alleged and supported by
copies of a death certificate or obituary.*fn8 As to one Subject
Property (Saginaw), it is alleged that the false representation was that
it was owner occupied. The fact that this property was
not actually owner occupied prevented plaintiff from reselling the
loan on the secondary market.
As to five*fn9 of the Subject Properties, the Appraiser Defendant's
involvement is specifically alleged. The particular Appraiser Defendant
who appraised each Subject Property is identified and deficiencies in the
"appraisals are identified. The deficiencies generally involve failure to
disclose or affirmatively misrepresenting the conditions of the Subject
Properties and failing to note the recent sales of the Subject Properties
at substantially lower prices.
It is alleged that plaintiff and IMC had a Correspondent Loan Purchase
Agreement ("CLP Agreement") dated March 22, 2002. Under the CLP
Agreement, plaintiff and IMC had an ongoing business relationship in
which plaintiff would purchase mortgage loans from IMC or its affiliates,
including CMF. IMC made fraudulent representations to plaintiff when
selling the Subject Loans in that IMC misrepresented that (a) the Subject
Loans were secured by properties worth the market values reflected in the
appraisals; (b) as to four of the Subject Loans, that the borrowers were
then-living; and (c) that authentic signatures were on loan documents for
the three deceased borrowers.*fn10 The
loan documents involving the deceased borrowers contain false
statements that a CMF or IMC employee conducted a face-to-face interview
with the borrower, Pililimis on two of the loans, Wider on one, and
nondefendant CMF employee Jenny Poe on the other. It is alleged that
plaintiff relied on the false representations when purchasing the loans.
It is also alleged that Wider, Pililimis, and other IMC/CMF employees
knew the representations were false.
It is alleged that Seeman was personally involved in the closings for
all six of the Subject Loans and that Nations Title was involved in the
closings through Seeman and other employees. Nations Title was
responsible for. "preparing the documents of conveyance; issuing title
insurance; conducting settlements of the sale and financing transactions;
collecting payments from the buyers and sellers; and disbursing purchase
money." Compl. ¶ 77. Seeman was a closing manager formations Title
and a certified notary public. As to the four Subject Loans involving the
purported borrowers who were deceased, Seeman notarized documents falsely
stating that the purported borrowers appeared before her and executed the
documents. It is alleged that Seeman and Nations Title "knew or should
have known" that these borrowers were deceased. As to one property,
Seeman also participated in preparing a HUD-1 form and warranty deed
containing a forged signature of purported seller Kyla Fondren, even
had previously sold the property to, another person. There are no
additional allegations regarding Seeman's and Nations Title's involvement
in the two Subject Loans not involving the deceased purported borrowers,
other than that they conducted the closings.
As to Seeman and Nations Title, it is further alleged:
87. Along with the other Defendants, [Nations
Title] and Seeman conspired to defraud, and did
defraud, Guaranty Residential by ratifying the
borrowers' forged signatures in countersigning the
aforementioned closing documents and in affixing
Seeman's official notary seal to those documents.
The ratification of the forged signatures by
Seeman violated the Illinois Notary Public Act `(5
ILCS 312/6-102 (West 1996)), by swearing under
oath that she witnessed the signing of the closing
documents when, in fact, she knew that these
borrowers were deceased. This violation of
Illinois law constitutes fraudulent and unlawful
means in furtherance of the conspiracy to defraud
88. [Nations Title] and Seeman knew or should
have known they were participating in the
conspiracy to defraud Guaranty Residential or
actually were defrauding Guaranty Residential by
the use of the fraudulent and unlawful means
identified in the preceding paragraph and
elsewhere in this Complaint.
89. [Nations Title] and Seeman knew or should have
known that their actions would affect Guaranty
Residential's decisions with respect to the
Subject Loans by causing Guaranty Residential to
reasonably rely on the, accuracy and completeness
of the closing documents.
Compl. ¶¶ 87-89.
As to Lawyers Title, it is not alleged that Lawyers Title was aware of
or directly involved in the fraudulent activity. Instead, it is contended
that Lawyers Title is liable on Counts I
through V based on Nations Title being its agent. The entire
allegations regarding the relationship between Lawyers Title and Nations
Title are included in the following paragraphs of the Complaint.
91. On information and belief [Lawyers Title]
contracted with [Nations Title] to serve as its
agent in the issuance of title insurance. In
connection with the provision of such insurance,
[Lawyers Title] also permits its title agents to
perform escrow and related closing services with
respect to the property conveyance and related
mortgage transactions. Accordingly, [Nations
Title] acted as [Lawyers Title's] agent pursuant
to actual and apparent authority when it engaged
in closing activities relating to the Guaranty
Residential loans, that are at issue in this
92. [Lawyers Title] is liable for the acts of
[Nations Title] as the closing agent for the loans
at issue in this action based on the manner in
which [Lawyers Title] holds itself out to the
public as providing closing services through its
closing agents. Specifically, this includes
representations that [Lawyers Title's] title
closing agents perform closing services, including
preparation of documents and the collection and
disbursement of funds. By making such
representations, [Lawyers Title] gives the
appearance to the public at large, including
Guaranty Residential, that [Lawyers Title] has
authorized [Nations Title] to act as its agent in
providing mortgage loan closing services.
93. [Lawyers Title]" is liable for the acts of
[Nations Title] as the closing agent for the loans
at issue in this action based on the manner in
which [Nations Title] holds itself out to the
public as being an agent of [Lawyers Title].
Specifically, by continuing to allow [Nations
Title] to make such representations, [Lawyers
Title] gives the appearance to the public at
large, including Guaranty Residential that
[Lawyers Title] has authorized [Nations Title] to
act as its agent in providing mortgage loan
Compl. ¶¶ 91-93.
As to conspiracy, it is additionally alleged as to all defendants:
"Defendants, either individually or through their agents, entered an
agreement or common plan to accomplish the sale of the Subject Loans to
Guaranty Residential by the use of fraudulent and unlawful means," Compl.
¶ 101. It is also alleged that "Defendants conspired, with and
amongst themselves and others to violate the provisions of
18 U.S.C. § 1962 (a), and that conspiracy by Defendants violated
18 U.S.C. § 1962(c) and 1962(d)." Id. ¶ 134. Overt acts are
alleged and that defendants "controlled, managed, supervised, authorized,
sanctioned, recommended, concurred in, ordered, participated in, and/or
knew of or should have known of these overt acts in furtherance of the
conspiracy." Id. ¶ 106,
In the RICO count, it is alleged that defendants used the mails,
interstate carriers, and/or wired facsimiles when providing plaintiff the
documents containing misrepresentations. No specific mailing or use of
the wires is alleged. See Compl. ¶¶ 126, 128-29. It is also
alleged, that defendants received income directly from their racketeering
activity and used the income or its proceeds for their own operations.
Id. ¶ 133.
There is no express allegation that the proceeds were invested in
the enterprise itself.
As to the existence of a RICO enterprise, plaintiff conclusorily
alleges that "Defendants collectively constitute an `enterprise' within
the meaning of 18 U.S.C. § 1961(4)." Compl. ¶ 129. In addition to
particulars about how the fraud was committed, it is also alleged:
136. Defendants' conduct, by its very nature, is
continuous in that the threat of repetition in the
future is both likely and distinct. On information
and belief, Defendants' conduct is part of an
ongoing and regular way of doing business. For
example, Defendants IMC and Wider are currently
engaged in litigation with Greenpoint Mortgage
Funding, Inc., in the Queens County Supreme Court
in the. State of New York (No. 10542/02). It is
alleged therein that Greenpoint purchased a loan
from IMC, based on IMC's fraudulent
representations and warranties as to the quality
of the loan and that IMC fraudulently altered the
date on a deed.
137. On information and belief, Defendants are
part of a long term association that exists for
fraudulent and criminal purposes which include
defrauding, among others, mortgage lenders and
Id. ¶¶ 136-37.
Most of the activities alleged in the Complaint occurred from April
through June of 2002. At least four of the earlier purchases of Subject
Properties at lower prices occurred prior to April 2002. The earliest
that one of the Subject Properties was purchased by a related person or
entity was the October 2, 2001 purchase of one Subject Property.,
Lawyers Title contends all the claims against it, including the RICO
claim, fail because plaintiff has not alleged a basis for agency
liability. It also contends that the RICO claim fails because a RICO
enterprise has not been adequately alleged. Nations Title and Seeman
attack the state law claims on various grounds. As to the RICO claim,
they contend plaintiff has not adequately alleged a RICO enterprise, a
pattern of racketeering activity, nor their conducting of an enterprise
in violation of 18 U.S.C. § 1962(c).*fn11 The RICO claim will be
Plaintiff contends all the named defendants constitute the enterprise.
. . . While a RICO enterprise can be formal or
informal, some type of organizational structure is
required. See Richmond v. Nationwide Cassel
L.P.l, 52.F.3d [640,] 645 [(7th Cir. 1995)];
Bachman v. Bears, Stearns & Co.,
178 F.3d 930, 931 (7th Cir. 1999). A RICO enterprise
must have "an ongoing `structure' of persons
associated through time, joined in purpose, and
organized in a manner amenable to hierarchical or
consensual decision making." Jennings v.
Emry, 910 F.2d 1434, 1440 (7th Cir. 1990)
(citations omitted); see United States v.
Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524,
69 L.Ed.2d 246 (1981) (describing a RICO
enterprise as "a group of persons associated
together for a common purpose of engaging in a
course of conduct" and indicating that an
enterprise is shown "by evidence of an ongoing
organization, formal or informal, and by evidence
that the various associates function as a
continuing unit"). Moreover, because a RICO
enterprise is "more than a group of people who get
together to commit a `pattern of racketeering
activity,'" Richmond, 52 F.3d at 645
(internal quotation and citation omitted); see
Bachman, 178 F.3d at 932, there must be
"an organization with a structure and goals
separate from the predicate acts themselves."
United States v. Masters, 924 F.2d 1362,
1367 (7th Cir. 1991).
Stachon, 229 F.3d at 675.
Plaintiff contends that its allegations as to an enterprise are not
limited to those contained in paragraphs 129, 136, and 137. Instead,
plaintiff contends that the allegations describing the fraudulent
activity establish the necessary structure. The allegations of fraud,
however, do not set forth the structure of the enterprise; an enterprise
must be more than a group of people and entities who commit a pattern of
criminal activity. Stachon, supra. Moreover, plaintiff alleges
that all the defendants constitute the enterprise. Two of the Appraiser
Defendants, however, are alleged to have been directly involved with only
one of the Subject loans. Such sporadic involvement is not sufficient to
make them part of an enterprise. Pulphus v. Sullivan, 2003 WL
1964333 *1 (N.D. Ill. April 28, 2003). Plaintiff has not alleged a RICO
enterprise. cf. Stachon, supra; Richmond, supra.
Plaintiff also contends it "cannot plead facts as to the actual
relationship between the parties without first obtaining more discovery.
Plaintiff, however, can do more than simply lump all named defendants
together as the enterprise. Plaintiff can presently describe some or all
aspects of the structure. As noted in plaintiff's brief, some documents
attached to one of the motions to dismiss would enable it to allege at
least some aspects of the structure. Since plaintiff does not adequately
allege an enterprise, the RICO claim will be dismissed as to all
defendants. However, plaintiff will be provided an opportunity to amend
the Complaint to cure the deficiencies. Since it is possible that
plaintiff will be able to cure the deficiency regarding alleging an
enterprise, the other grounds that are raised regarding the RICO claim
will still be considered.
It is contended that plaintiff has not adequately alleged a pattern of
racketeering activity. The issue raised is not whether plaintiff has
alleged the predicate acts themselves with sufficient
particularity,*fn12 but whether the predicate acts that
are alleged constitute a pattern of racketeering activity.
Plaintiff has alleged multiple acts, of fraud. In order to allege a
pattern of racketeering activity, two predicate acts occurring within ten
years of each other must be alleged as well as sufficient facts
showing "continuity plus relationship with respect to the alleged
predicate", acts. Williams v. Aztar Indiana Gaming Corp.,
351 F.3d 29A, 298 (7th Cir. 2003) (quoting Corley v. Rosewood Care
Center, Inc., 142 F.3d 1041, 1048 (7th Cir. 1998)). This requires
allegations both that the predicate acts are related to one another and
that they pose a threat of continued criminal activity. Id.; Anael
v. Interstate Brands Corp., 2003 WL 21995183 *7 (N.D. Ill. Aug. 18,
2003). "The relationship prong requires that the predicate acts be
`committed somewhat closely in time to one another, involve the same
victim, or involve the same type of misconduct.'" Shapo,
246 F. Supp.2d at 959 (quoting Vicom, 20 F.3d at 779). The continuity
prong can be satisfied by allegations of either "closed-ended" or
"open-ended" continuity. Shapo, 246 F.' Supp.2d at 960. Here,
plaintiff cannot rely on closed-ended continuity because the scheme that
is alleged in the Complaint covers only a short
period of time. See id. Open-ended continuity can be
based on predicate acts occurring over a short period of time, but the
nature of the acts must have represented a threat of repetition into the
future. Corley, 142 F.3d at 1049. "Such a threat is present
when: `(1) `a specific threat of repetition' exists, (2) the predicates
are a regular way of conducting [an] ongoing legitimate business,' or (3)
`the predicates can be attributed to a defendant operating as part of a
long-term association that exists for criminal purposes.'" Id.
(quoting Vicom, 20 F.3d at 782 (quoting H.J. Inc. v.
Northwestern Bell Telephone Co., 492 U.S. 229, 242-43 (1989))).
Here, six fraudulent loan transaction occurred within a few months of
each other. The six Subject Loans were sold to a single victim on four
different dates and involved similar misrepresentations. The relationship
prong clearly is satisfied. Plaintiff conclusorily alleges that
defendants' conduct represented a regular way of doing business and a
threat of continued conduct. Such conclusory allegations, however, are
not sufficient to allege open-ended continuity, specific facts must
support such a conclusion. Johnson Controls, Inc. v. Exide
Corp., 132 F. Supp.2d 654, 661 (N.D. Ill. 2001); Early v.
K-Tel International, Inc., 1999 WL 1819 *4 (N.D. Ill. March 24,
1999); Bachman v. Bear Stearns & "Co.. 1997 WL 769554 *9
(N.D. Ill. Dec. 4, 1997), aff'd, 178 F.3d 930 (7th Cir. 1999);
Creek Coal, Inc. v. United Workers of America,
917 F. Supp. 601, 612 (S.D. Ind. 1995). The allegations regarding another
victim to whom fraudulent loans were sold must be ignored because
those purported acts of fraud are not alleged with any particularity
whatsoever. Nevertheless, the specific facts that are alleged support
that a threat of continued racketeering activity existed. Six different
loans were sold to plaintiff that involved fraudulent documentation. At
least three different appraisers were brought into the scheme as well as
a number of intermediary buyers of the property who are not-named as
defendants. This is indicative of a scheme that threatened to be (and
following discovery may actually be proved to, have been) more widespread
than just the six Subject Loans sold to plaintiff during a few-month
period of time. Cf. United States v. Busacca, 936 F.2d 232, 238
(6th Cir. 1991) (cited favorably in United States, v. Torres,
191 F.3d 799, 808 (7th Cir. 1999), cert. denied, 528 U.S. 1180
(2000)). Plaintiff has alleged a pattern of racketeering activity.
As to conducting the affairs of an enterprise in violation of §
1962(c), plaintiff's allegations are deficient in a manner similar to
the deficiency in alleging the existence of an enterprise. In order to
commit a violation of § 1962(c), the defendant must have had some
part in directing the affairs of the enterprise; "[i]n other words, she"
must have participated in the
operation or the management of the enterprise itself, and she must
have asserted some control over the enterprise." Slaney, 244
F.3d at 598 (quoting United States v. Swan, 224 F.3d 632, 635
(7th Cir. 2000), amended and superseded by, 250 F.3d 495,
498-99 (7th Cir. 2001)). See also Roger Whitmore's Automotive
Services, Inc. v. Lake County, Ill., 2002 WL 959587 *6 (N.D. Ill.
May 9, 2002). Other than generally alleging that all defendants
controlled the enterprise, plaintiff has not alleged which individuals or
entities exercised control over the purported enterprise. No §
1962(c) violation is adequately stated. See Slaney, 244 F.3d
In an argument that applies only to itself, Lawyers Title contends it
cannot be liable for the RICO claim against it because Nations Title's
provision of closing services was not as an agent of Lawyers Title. This
"purported agency relationship is independent of the fraudulent
racketeering activity itself and
therefore need not be pleaded with the particularity required by
Rule 9(b). Lachmund, 191 F.3d at_783; Sequel Capital, LLC
v. Rothman, 2003 WL 22757758 *13 (N.D. Ill. Nov. 20, 2003);
Hirata, 193 F.R.D. at 597 & n.4. Since Rule 9(b) does not
apply, it would be sufficient to allege conclusorily, as is done in 1 91
of the Complaint, that Nations Title was acting as Lawyers Title's agent
when performing closing services. Sequel Capital, 2003 WL
22757758 at *13-14; Hirata, 193 F.R.D. at 597. The question is
whether, despite the conclusory allegations of an agency relationship
contained in ¶ 91 of the Complaint, plaintiff has alleged facts
(see Compl. ¶¶ 91-93) showing that Nations Title was not
acting as Lawyers Title's agent when providing closing services.
See Slaney, 244 F.3d at 597; Kauthar, 149 F.3d at
669-70 & n.14; Jackson. 66 F.3d at. 153-54.
Lawyers Title contends that actual authority has not been alleged
because plaintiff alleges that Lawyers Title "permits" Nations Title to
engage in closing transactions, not that it "grants authority" to engage
in closing transactions. While "permits" could mean allows by
acquiescence, it also can mean expressly authorizes. Moreover, when it is
immediately thereafter followed by an allegation of "actual . . .
authority," Compl. SI 91, the Complaint must he read as alleging actual
authority. Since SI 91 also refers to a contract that permits Nations
Title to act as Lawyers Title's agent in the issuance of
title insurance, Lawyers Title provides a copy of that contract to
show that the contract does not grant Nations Title authority to act as
Lawyers Title's agent for closings.*fn14 Reliance on the cited provision
is misplaced. First, the Complaint does not allege that this contract is
the basis for Nations Title being an agent for purposes of a closing nor
that this is the only agreement, written or oral, that exists between
Lawyers Title and Nations Title. Second, the contract provision relied
upon only indicates that this particular contract does not establish an
agency relationship as to closings,*fn15 it does not preclude an agency
relationship from otherwise being created. The contract provided by
Lawyers Title does not conclusively establish that an agency relationship
did not exist. While it may ultimately be shown that no relationship of
actual authority existed, on the motion to dismiss, plaintiff's
allegations of a principal-agent relationship must be taken as true.
Even if actual authority had not been adequately alleged, plaintiff has
also pleaded apparent authority.
Under Illinois law, "an agent may bind his
principal by acts which the principal has not
given him actual authority to perform, but which
he appears authorized to perform." Lundberg
v. Church Farm, Inc., 151 Ill. App.3d 452,
502 N.E.2d 806, 813 (2d Dist. 1986), appeal
denied, 114 Ill.2d 547, 508 N.E.2d 729
(1987). "An agent's apparent authority is that
authority which the principal knowingly permits
the agent to assume or which he holds his agent
out as possessing. It is the authority that a
reasonably prudent man, exercising diligence and
discretion, in view of the principal's conduct,
would naturally suppose the agent to possess.'"
Id. (quoting Hofner v. Glenn Ingram
& Co. 140 Ill. App.3d 874, 489 N.E.2d 311,
316 (1st Dist. 1985)). Accord A.J.
Maggie Co. v. Willis. 316 Ill. App.3d 1043,
738 N.E.2d 592, 598 (1st Dist. 2000),
appealed dismissed, 197 Ill.2d 397,
757 N.E.2d 1267 (2001); International Union of
Operating Engineers v. Triad Construction
Services, Inc., 1999 WL 521053 *7 (N.D. Ill.
July 29, 1999). Apparent authority must derive
from acts of the principal. Lundberg,
502 N.E.2d at 813. . . . The inquiry focuses on
three factors: (1) the manifestation to the third
party by the principal; (2) the reasonableness of
the third party's belief that, authority extended
to the act of the agent; and. (3) the third
party's detrimental reliance on the apparent
authority. Aspacher v. Kretz, 1997 WL
692943 *5 (N.D. Ill. Aug. 13, 1997).
Sphere Drake Insurance Ltd, v. All American Life Insurance Co.,
___ F. Supp.2d ___, 2003 WL 22232840 *6 (N.D. Ill. Sept. 22, 2003).
Plaintiff conclusorily alleges that Nations Title had apparent
authority to act as Lawyers Title's closing agent.
Although federal pleading rules do not require that more be
alleged, it is also alleged that Lawyers Title itself held itself out to
the public as providing closing services through closing agents. There is
no express allegation of plaintiff's reliance on these representations,
but plaintiff's knowledge of Lawyers Title's representations and
detrimental reliance thereon can be inferred from the allegations of the
Complaint. Apparent authority is adequately alleged.
Even if an agency relationship is adequately alleged, Lawyers Title
cites Williams Electronics Games Inc. v. Barry, 42 F. Supp.2d 785,
792-93 (N.D. Ill. 1999), for the proposition that RICO liability is
not stated because plaintiff has not alleged Lawyers Title's knowing
authorization or acquiescence in the fraudulent conduct of Nations Title.
Plaintiff expressly alleges that Lawyers Title did not "actively
participate" in the fraud. Compl. ¶ 9. That, however, is not an
allegation that Lawyers Title's receipt of title insurance fees from the
transactions was without knowledge of the underlying fraudulent conduct.
To the contrary, the Complaint expressly alleges that all defendants,
including Lawyers Title, knew of the fraudulent misrepresentations.
See Compl. ¶ 96. Therefore, even if Barry
correctly states the vicarious liability standard under RICO, plaintiff
has alleged knowing acquiescence by Lawyers Title.
Still to be considered are Nations Title's and Seeman's contentions
regarding the state law claims. As to the Count I fraud claim, these
defendants contend that their knowledge of the fraudulent nature of the
signatures is not adequately alleged. They also contend the Notary Public
Act was not violated and that Seeman's notarization of the signatures did
not constitute a ratification. The latter two contentions are immaterial
issues that need not be addressed. Even under Rule 9(b), knowledge can be
generally alleged. Sequel Capital, 2003 WL 22757758 at *1;
Ray v. Citigroup Global Markets, Inc., 2003 WL 22757761 *2
(N.D. Ill. Nov. 20, 2003). Although plaintiff alleges that defendants
"knew or should have known," Compl. ¶ 96, the alternative that is
more favorable to plaintiff must be taken as true in ruling on
defendants' motion to dismiss. See Alper v. Altheimer &
Gray, 257 F.3d 680, 688 (7th Cir. 2001); Convoy Servicing Co.
v. Trailmobile Trailer, LLC. 234 F. Supp.2d 826, 832 (N.D. Ill.
2002), Anderson v. Cornejo. 1999 WL 35307 *4 (N.D. Ill. Jan.
11, 1999). Actual knowledge is assumed to be true for purposes of ruling
on the fraud claim. Plaintiff has alleged that Seeman knew the named
borrowers were dead and also that she knew the signatures she was
notarizing were not those of the named borrowers. It is also alleged
that Seeman knew that the particular HUD-1 did not contain the signature
of the purported seller. Seeman's and Nations Title's knowledge and
in the fraud regarding the four Subject Loans involving the
deceased borrowers is adequately alleged. As to the two other Subject
Loans, it is alleged that Seeman and Nations Title conducted the
closings, Compl. ¶ 77, and that they knew of the fraudulent
representations related to all the transactions, id. ¶ 96.
Therefore, direct liability regarding these two Subject Loans has also
been alleged. Even if not liable based on direct participation, Seeman
and Nations Title would be liable to the extent they are adequately
alleged to be members of a conspiracy and the fraud regarding the other
two Subject Loans was in furtherance of that conspiracy. Adcock v.
Brakegate, Ltd., 164 Ill.2d 54, 645 N.E.2d 888, 894-95 (1994).
Assuming adequate jurisdiction, Count I would not be, dismissed.
Count II is a claim for conspiracy to commit fraud. As has been
previously set forth, the fraud itself is alleged with adequate
specificity. The particularity requirement of Rule 9(b) does not apply to
the conspiracy allegation itself. See Hecht, 897 F.2d at 26
n.4; Perlman, 938 F. Supp. at 1348-49. "[I]t is enough in
pleading a conspiracy merely to indicate the parties, general purpose,
and approximate date, so that the defendant has notice of what he is
charged with." Hoskins v. Poelstra, 320 F.3d 761, 764 (7th Cir.
2003). (quoting Walker v. Thompson,
288 F.3d 1005, 1007 (7th Cir. 2002)). As to the Count II common law
claim, plaintiff has adequately alleged a conspiracy.*fn16
Count III is a claim for negligent misrepresentation. The elements of
such a claim are: "(1) a false statement of material fact, (2)
carelessness or negligence in ascertaining the truth of the statement by
the party making it, (3) an intention to induce the other party to act,
(4) action by the other party in reliance on the truth of the statement,
and (5) damage to the other party resulting from such reliance, (6) when
the party making the statement is under a duty to communicate accurate
information." Pox Associates, Inc. v. Robert Half International,
Inc., 334 Ill. App.3d 90, 777 N.E.2d 603, 606 (1st Dist. 2002).
There is generally no duty unless the defendant is in the business of
providing information, for the guidance of others in business dealings.
Id.; Tolan & Son, Inc. v. KLLM Architects, Inc.,
308 Ill. App.3d 18, 719 N.E.2d 288, 296 (1st Dist. 1999); Bank One,
Oklahoma, N.A. v. Trammell Crow Services, Inc., 2003 WL 23019173 *4
(N.D. Ill. Dec. 23, 2003); Calderon v. Southwestern Bell Mobile
Systems, LLC, 2003 WL" 22340175 *5 (N.D. Ill. Oct. 10, 2003).
Determining whether a defendant owes the duty is a
"precise, case-specific inquiry." Tolan, 719 N.E.2d at 296
(quoting Rankow v. First Chicago Corp., 870 F.2d 356, 361
(7th Cir. 1989)). See also Fox, 777 N.E.2d at 608.
The negligent misrepresentation exception has been
applied to pure information providers such as
accountants; a bank providing credit information
to a potential Lender; aircraft, inventory and
termite inspectors; a title insurer; real estate
brokers; and stockbrokers.
In these cases, the product was purely information
the consumer received analytical work
rather than a tangible product. "In other words,
the end product [was] the ideas, not the documents
or other objects, into which the ideas [were]
incorporated." "[S]upplying information need not
encompass the enterprise's entire undertaking [for
the defendant to fall within the information
provider exception,] but [information] must be
central to the business transaction between the
In contrast, when the information offered by the
defendant relates to the defendant's tangible
goods and/or noninformational goods or services,
the information is considered merely ancillary or
incidental, and the defendant is not deemed to be
in the business of providing information and is
not liable for negligent misrepresentation.
Examples of defendants in this category include
manufacturers and sellers of tangible goods such
as computers and construction materials.
An additional example includes an architect and
engineer retained to design and build townhomes
who did not advise their client that the site's
soil was highly compressible and could not support
the buildings' foundations.
* * *
. . . The determination is dependent upon the
nature of the information at issue and its
relation to the kind of business being conducted.
"`The critical question * * * is whether the
information is an important part of the product
offered. [A] business [ ] will be deemed to be in
the business of supplying information if the
information furnished along with the
non-informational goods or services is central to
the business transaction. ` " Tolan &
Son, 308 Ill. App.3d at 29.
Fox. 777 N.E.2d at 607-08 (citations omitted).*fn17
Defendants contend plaintiff has not alleged facts supporting a duty
owed to plaintiff. However, since Rule 9(b) does not apply to claims of
negligent misrepresentation, Kennedy, 348 F.3d at 593, it is
sufficient to conclusorily allege that the duty exists. See Chaikin
v. Fidelity & Guaranty Life Insurance Co., 2003 WL 21003715 *2
(N.D. Ill. May 1, 2003). However, if the facts that are alleged show that
no such duty existed, plaintiff has pleaded itself out of court on this
count. See Woodard v. American Family Mutual Insurance Co.,
950 F. Supp. 1382, 1389 (N.D. Ill. 1997). Plaintiff alleges defendants had a
duty not to cause plaintiff to purchase mortgages defendants knew or
should have known were inadequately collateralized and/or for which the
borrowers were deceased. See Compl. ¶ 111-12, 114-15.
Plaintiff has also alleged that Nations Title and Seeman were the parties
responsible for conducting the closings and that Seeman notarized the
signatures of the purported borrowers who were
already deceased.*fn18 These two defendants would be entitled to
dismissal of Count III if there is no set of facts under which defendants
in that position could be found to have the necessary duty.
Defendants contend an escrow agent's duties are limited to those
contained in its escrow instructions. Bescor, Inc. v., Chicago Title
& Trust Co., 113 Ill. App.3d 65, 446 N.E.2d 1209, 1213 (1st
Dist. 1983), Pointing to the closing instructions, which are referenced
in the Complaint, defendants contend they had no duty to investigate
possible identity fraud. They do admit that the instructions for at least
three of the Subject Loans to deceased borrowers stated that "All
signatures must be witnessed if required and customary. All signature
acknowledgments must be executed by a person authorized to take
acknowledgments in the state of closing." Each of the closing
instructions for the four Subject Loans involving deceased borrowers
contained an addendum requiring valid identification and social security
Even assuming that valid identification was the limit of these
defendants' pertinent duties, plaintiff alleges that this duty was
violated. Defendants contend this duty was not violated because this duty
did not require that they inquire beyond the identifications that were
provided to Seeman. However, there is no allegation that false
identification documents were provided and that reasonable care would not
have revealed their falsity. Instead, it is alleged that Seeman was well
aware that the persons signing the forms were not who they represented
themselves to be. Additionally, as to four of the Subject Loans, Seeman
knew the purported borrowers were actually dead. Thus, as to four of the
Subject Loans, these two defendants violated their duty to obtain valid
A notary and her employer can be liable for negligence in determining
the identity of the person whose signature is being notarized.
Shelter Management XIX" v. Much Shelist Freed Denenberg & Ament
P.C., 303 Ill. App.3d 1067, 709 N.E.2d 592, 596 (1st Dist. 1998),
appeal denied, 185 Ill.2d 666, 720 N.E.2d 1106 (1999);
Hoffman v. Schroeder, 38 Ill. App.2d 20, 186 N.E.2d 381,
387-88 (1st Dist. 1962); Bussman v. Krizoe,
166 Ill. App.3d 770, 520 N.E.2d 971, 973 (5th Dist.), appeal denied,
122 Ill.2d 570, 530 N.E.2d 240 (1988). Plaintiff, however,
was not a party to the original loan transactions. Seeman's duty to
acknowledge the authenticity of the signatures, however, was a duty that
centered on providing information. Her verification of signatures
for closing transactions was used by others in their business dealings.
Other jurisdictions have held that a notary public can be liable to third
parties for negligent performance of his or her duties, including for
negligent misrepresentation claims. See Thomas v. State ex rel.
Thorp Finance Corp., 251 Miss. 648, 171 So.2d 303 (1965);
Biakanja v. Irving, 49 Cal.2d 647, 320 P.2d 16 (1958);
State ex rel. Park National Bank v. Globe Indemnity Co.,
332 Mo. 1089, 61 S.W.2d 733 (1933); Immerman v. Ostertag,
83 N.J. Super. 364, 199 A.2d 869, 872-73 (1964). See also Bernal v.
Weitz, 54 Mass. App. Ct. 394, 765 N.E.2d 798 (2002). But see
NationsBank of North Carolina. N.A. v. Parker, 140 N.C. App. 106,
535 S.E.2d 597, 599 (2000).
Seeman had a duty to accurately authenticate the signature which she
allegedly did not exercise with adequate care. On the facts alleged in
the Complaint, Seeman and Nations Title may be found liable for negligent
misrepresentation regarding the four Subject Loans involving purported
borrowers who were deceased.
Negligent misrepresentation regarding the value of the collateral,
however, is different. It is alleged that these two defendants actually
knew all the Subject Properties were overvalued. However, plaintiff makes
no argument as to why a closing agent would have a duty to provide
regarding the value of collateral. Therefore any negligent
misrepresentation claim against these two defendants based on the
misrepresented value of the Subject Properties would be limited to
possible liability based on the acts of coconspirators in furtherance of
In response to the motion to dismiss, plaintiff clarifies that Count IV
is for promissory estoppel. Plaintiff is not bound by the label placed on
the claim "in the Complaint. Forseth, 199 F.3d at 368;
Kirksey, 168 F.3d at 1041. The elements of promissory estoppel
are: "1. An unambiguous promise was made to the party. 2. The party
relied upon this promise. 3. The party's reliance upon this promise was
reasonable in nature. 4. The party suffered a detriment, as a result of
this reliance." ESM Development Corp. v. Dawson,
342 Ill. App.3d 688, 795 N.E.2d 397, 402 (5th Dist. 2003). In
Count IV, plaintiff alleges "Defendants clearly and definitely" promised,
represented and led Guaranty Residential to believe that the Subject
Properties' values as stated in the appraisals were their true fair
market values and that the borrowers were then-living." Compl. ¶ 120.
This is the purported promise relied upon by plaintiff in response to
the motion to dismiss.
Plaintiff bases his promissory estoppel claim on representations, not a
promise, Promissory estoppel is based on a promise of future action,
whereas the similar claim of
equitable estoppel is based on a misrepresentation of fact.
See Promero, Inc. v. Mammen, 2002 WL 31455970 *9 n.2 (N.D. Ill.
Nov. 1, 2002); In re Marriage of Schmidt. 292 Ill. App.3d 229,
684 N.E.2d 1355, 1363 (4th Dist. 1997), appeal denied,
176 Ill.2d 592, 690 N.E.2d 1387 (1998). Plaintiff does
not allege any promise of future action by defendants. No promissory
estoppel claim is alleged. Unless amended to state a promise, not merely
a representation of past fact, no promissory estoppel claim should be
included in any amended complaint.
As is discussed above plaintiff has adequately alleged three claims
against defendants and may be able to properly allege a RICO claim
against all defendants.*fn19 Since the original Complaint also contained
deficient allegations as to diversity jurisdiction, the entire Complaint
will be dismissed and plaintiff will be granted leave to file an amended
complaint. Any claims contained in the amended complaint should be
consistent with the rulings contained in today's opinion. The pending
motion for entry of default will be denied without prejudice to filing
such a motion, if those defendants fail to answer the amended complaint.
IT IS THEREFORE ORDERED that plaintiff's motion to file a surreply 
is granted. Defendant's motion for entry of
default  is denied without prejudice. Defendants' motions to
dismiss [7, 33] are granted in part and denied in part. Plaintiff's
complaint is dismissed. By February 11, 2004, plaintiff may file an
amended complaint that is not inconsistent with today's ruling. By March
3, 2004, defendants shall answer or otherwise plead to the amended
complaint. A status hearing will be held on March 17, 2004 at 11:00 a.m.