United States District Court, N.D. Illinois, Eastern Division
July 15, 2004.
Robert C. Thomas, Plaintiff,
CitiMortgage, Inc., Defendant.
The opinion of the court was delivered by: GEORGE MAROVICH, Senior District Judge
MEMORANDUM OPINION AND ORDER
Robert Thomas ("Thomas"), a citizen of Illinois, filed a
five-count Complaint against CitiMortgage, Inc. ("CitiMortgage"),
a Delaware corporation, seeking damages for negligent credit
reporting (Count I); breach of contract (Count II); a violation
of the Illinois Consumer Fraud and Deceptive Business Practices
Act ("Consumer Fraud Act"), 815 Ill. Comp. Stat. 505/1, (Count
III); tortuous interference (Count IV); and defamation (Count V).
Jurisdiction is based on diversity of citizenship.
28 U.S.C. § 1441 and 1446. CitiMortgage moves to dismiss the Complaint
pursuant to 12(b)(6). For the reasons set forth below,
CitiMortgage's Motion to Dismiss is granted in part and denied in
The Complaint alleges the following relevant facts which, for
the purposes of deciding this motion, are taken as true. Hishon
v. King & Spaulding, 467 U.S. 63, 73 (1984). In 1979, Thomas
entered into a mortgage agreement with CitiMortgage. In November
1996, when Thomas attempted to refinance the mortgage, he
realized that CitiMortgage's records stated that Thomas failed to make payments
on three different occasions. Thomas claimed that CitiMortgage's
records were incorrect and forwarded copies of payment checks to
CitiMortgage. Thomas informed CitiMortgage that the discrepancy
in its records could prevent Thomas from refinancing his home. In
December 1996, Thomas sent a letter to CitiMortgage and again
informed them of the error. On December 9, 1996, Thomas received
a letter from CitiMortgage requesting from him front and back
copies of checks for the mortgage for the months of March, April
and May 1996 to prove that he did pay the rent for the three
months. On December 16, 1996 Thomas sent a letter and copies of
canceled checks for the months of March and April 1996. Since he
did not have a copy of the check for May, Thomas also included
his check register, claiming that this provided proof that the
check was sent to CitiMortgage in May 1996. In his letter, Thomas
stated that, although his bank was searching for the check, he
had enclosed a second check to be applied to the May payment.
Thomas stated that he would cancel the prior check or, in the
event it had already been processed, he would accept a credit to
his account. CitiMortgage cashed the check, but failed to change
the status of Thomas's credit report. Thomas brought action
against CitiMortgage for violating the terms set forth in his
letter of December 16, 1996.
Thomas filed the original five-count Complaint in this Court on
April 12, 2000 alleging negligent credit reporting, violations of
the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681,
tortious interference with prospective economic advantage, and
defamation. On July 26, 2002, this Court dismissed Thomas's FCRA
claims with prejudice, stating that Thomas had failed to state a
cause of action. This Court declined to exercise supplemental
jurisdiction over the state claims and dismissed them without prejudice. Thomas filed a motion on July 29, 2002, seeking leave
to file a proposed amended complaint and to remand the case to
state court. This Court denied the motion as untimely.
Thomas filed his Amended Complaint in the Circuit Court of
DuPage County on June 26, 2003. CitiMortgage removed the case to
this Court pursuant to 28 U.S.C. § 1441 and 1446.
I. Standard for a Motion to Dismiss
When considering a motion to dismiss, a court must view the
complaint's allegations in the light most favorable to the
plaintiff, and all well-pleaded facts in the complaint must be
accepted as true. Wilson v. Formigoni, 42 F.3d 1060, 1062
(7th Cir. 1994). To withstand a motion to dismiss, a
complaint must allege facts which sufficiently set forth the
essential elements of the cause of action. Gray v. County of
Dane, 854 F.2d 179, 182 (7th Cir. 1988). Dismissal is proper
only if it appears beyond a doubt that a plaintiff can prove no
set of facts in support of a claim which would entitle him to
relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
II. Statute of Limitations
CitiMortgage contends that Thomas's claims of defamation and
violation of the Consumer Fraud Act, 815 Ill. Comp. Stat. 505/1
("505/1") are barred by the statute of limitations. A plaintiff
filing a claim pursuant to the Consumer Fraud Act must file the
complaint within three years of the date the cause of action
accrues. Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 441
(7th Cir. 1994). The cause of action accrues when the
plaintiff knows or reasonably should know of his injury and that
it was wrongfully caused. Id.
Thomas's claim pursuant to the Consumer Fraud Act is barred by
the statute of limitations. Thomas knew of the alleged injury in
November 1996. Therefore, the statute of limitations expired in
November 1999. Thomas filed the Amended Complaint on June 26,
2003. Thus, Thomas's Consumer Fraud Act claim must be dismissed
Thomas's defamation claim is also barred by the statute of
limitations. "Illinois imposes a one-year statute of limitations
on all defamation actions that begins to run when the defamatory
statement was published." Muzikowski v. Paramount Pictures
Corp., 322 F.3d 918, 923 (7th Cir. 2003). Furthermore, "a cause
of action accrues at the time a plaintiff knew or should have
known of the allegedly defamatory or false report." Dornhecker
v. Ameritech Corp., 99 F. Supp.2d 918, 932 (N.D. Ill. 2000).
Thomas knew of the false report in November 1996. Thus, the
statute of limitations for the defamation claim expired in
November 1997. Thomas's defamation claim must also be dismissed
III. Preemption by FCRA
The next issue the court must resolve is whether Thomas's
negligent credit reporting claim is barred by the FCRA. "No
consumer may bring any action or proceeding in the nature of
defamation, invasion of privacy, or negligence with respect to
the reporting of information against . . . any person who
furnishes information to a consumer reporting agency based on
information disclosed pursuant to section 1681(g), 1681(h), or
1681(m) of [the FCRA] . . . except as to false information
furnished with malice or willful intent to injure such consumer."
Dornhecker, 99 F. Supp.2d at 930. Thus, common law claims will
not be pre-empted by the FCRA if the plaintiff sufficiently pleads that the alleged false information was communicated with
malice or willful intent to injure the plaintiff. Id. at 931.
Courts have interpreted the term malice as a statement made "with
knowledge that the statement was false or acted in reckless
disregard of whether the statement was true or false." see e.g.
Thomas's state claim of negligent credit reporting is not
preempted by the FCRA. Thomas sufficiently alleges in his
Complaint that CitiMortgage knew of the alleged discrepancy or
false credit information and continued to publish the report.
Complaint ¶ 6. Thomas further alleges in his Complaint that "the
actions of the Defendant were intentional, willful, and
malicious." Complaint ¶ 14. Thus, Thomas has sufficiently pleaded
a claim of negligent credit reporting, which is not pre-empted by
IV. Tortious Interference
Thomas alleges that CitiMortgage's failure to correct the
credit report has interfered with prospective economic benefits
by preventing Thomas from obtaining refinancing at a reasonable
cost. "To establish a claim for intentional interference with
prospective economic advantage, a plaintiff must allege: (1) a
reasonable expectancy of entering into a valid business
relationship; (2) the defendant's knowledge of the expectancy;
(3) an intentional and unjustified interference by the defendant
that induced or caused a breach or termination of the expectancy;
and (4) damages to the plaintiff resulting from the defendant's
interference." Schaffner v. U.S. Bank N.A., No. 02 C 8062, 2004
U.S. Dist. LEXIS 6935 at *6 (N.D. Ill. Jan. 20, 2004).
Thomas sufficiently alleges the four elements of this tort in
his Complaint. Thomas alleges that CitiMortgage knew of Thomas's
efforts to refinance his mortgage and that CitiMortgage purposely
interfered with the refinancing by publishing false information. Thomas further alleges that CitiMortgage knew to be
false or with reckless indifference as to whether the information
was false. Complaint ¶ 6. The Complaint expressly alleges that
Thomas reasonably expected to obtain financing. Id.
Furthermore, Thomas alleges that interference by CitiMortgage
caused a breach or termination of this prospective economic
advantage and that he suffered damages as a result of the breach.
Complaint ¶ 13. Since a prospective tortious interference claim
has been properly alleged, the motion to dismiss this claim must
III. Breach of Contract
Thomas alleges that CitiMortgage breached the contract set
forth in the letter dated December 16, 1996, in which Thomas
agreed to pay the mortgage for the month of May if CitiMortgage
would agree to correct the alleged inaccurate credit report.
In Illinois, the element of contractual intent,
generally a question of fact, may nonetheless be
established as a matter of law when the material
facts are not disputed. Intent can be inferred from
conduct and, indeed, the very act of knowingly
accepting and cashing or depositing a check upon
which conditional language has been added is the
hallmark of an accord and satisfaction. An agreement
to do a thing in consideration of the settlement of a
controversy or claim is not satisfaction. It is the
doing of the thing agreed upon that has that effect.
It is not the second contract but the performance of
it which discharges the original contract. Under
classical contract analysis, the tender of a check
upon which `payment in full' is clearly displayed
debt. If the creditor takes and keeps the payment
with actual or constructive knowledge of the
condition, he has accepted the offer and the original
debt is settled for the reduced amount.
Shea, Rogal and Associates, Ltd., v. Volkswagen, Inc.,
576 N.E.2d 209
, 213 (Ill.App. 1991). "The acceptance of the check
given in full satisfaction of a disputed claim is an accord and
satisfaction if the creditor took the check with notice of the
condition upon which the check was tendered." Schultheis v.
McWilliams Electric. Co., 579 N.E.2d 1100
, 1103 (Ill.App.
Thomas alleges in his Complaint that a dispute existed as to
whether payment had been rendered to CitiMortgage. Complaint ¶ 11. Thomas further
alleges that the terms of the new agreement were presented in the
letter he sent along with the check and that CitiMortgage
accepted the terms of the new contract by cashing the check
thereby accepting the consideration. Complaint ¶ 15-16.
CitiMortgage does not state a claim that it was unaware of the
conditional language in the letter. By accepting the payment of
the disputed claim, CitiMortgage accepted the new conditions of
the contract. Consequently, CitiMortgage's Motion to Dismiss
Thomas's breach of contract claim is denied.
For the reasons set forth above, CitiMortgage's Motion to
Dismiss Counts I and V is denied and its Motion to Dismiss Counts
II, III and IV is granted.
© 1992-2004 VersusLaw Inc.