The opinion of the court was delivered by: PAUL PLUNKETT, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff has sued defendants under various theories for their
alleged submission to plaintiff of fraudulent mortgage loan
packages. The case is before the Court on plaintiff's combined
motion to strike defendants' affirmative defenses and dismiss
their counterclaim. For the reasons set forth below, the motion
is granted in part and denied in part.
Motion to Dismiss Counterclaim
On a Rule 12(b)(6) motion to dismiss, the Court accepts as true
all well-pleaded factual allegations of the complaint, drawing
all reasonable inferences in plaintiff's favor. Forseth v.
Village of Sussex, 199 F.3d 363, 368 (7th Cir. 2000). No claim
will be dismissed unless "it is clear that no relief could be granted under any set of facts that could be
proved consistent with the allegations." Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984).
In Count I of their counterclaim, defendants allege that
plaintiff breached a duty it owed to them "to verify and
investigate" the loan information they provided to it.
(Countercl., Count I ¶¶ 23-24.) Plaintiff says those allegations
are squarely contradicted by the parties' contract, and thus,
this claim must be dismissed.
The Court agrees with plaintiff. The broker/lender agreement
executed by the parties expressly vests defendants with
responsibility for verifying and investigating loan information.
The agreement states that defendants "shall be responsible for
the accurate preparation and execution of a complete property and
credit loan application package on each loan request submitted,
including . . . [o]riginal appraisal of the subject property."
(Defs.' Second Am. Answer, Affirmative Defenses & Countercl., Ex.
A, Broker/Lender Agreement ¶ 1e.) It also requires defendants to
"obtain an appraisal from an Ivanhoe approved appraiser . . .
and . . . ensure that such appraisal is acceptable in form and
content to Ivanhoe." (Id. ¶ 2.) Further, by signing the
agreement defendants "represent[ed] and warrant[ed]" that "[a]ll
documents [they] submitted . . . in connection with each loan
package . . . including, but not limited to, the credit report
and appraisal, . . . [were] complete, true and accurate." (Id.
¶ 5d.) Finally, defendants warranted that "[n]o fraudulent or
intentionally misleading information ha[d] been provided to
Ivanhoe with respect to [any] loan application. . . . including,
but not limited to, the credit report and appraisal." (Id. ¶
5f.) In short, the contract clearly creates a duty to verify
appraisals, but it vests that duty in defendants, not plaintiff.
Defendants argue, however, that the duty shifted to Ivanhoe
when it: (1) told defendants that its underwriters would "would
verify all information [they] provided"; and (2) required them to
use an Ivanhoe-approved appraiser. (Defs.' Second Am. Answer,
Affirmative Defenses & Countercl. ¶¶ 10-15, 18.) In other words,
defendants say Ivanhoe voluntarily assumed the duty of
verification, even if that duty would otherwise have been theirs.
Under certain circumstances, one person's voluntary action can
create a duty to another. The voluntary undertaking doctrine, as
it is called, "imposes liability upon one who gratuitously
undertakes to render services to another and fails to perform
those services with due care." Weisblatt v. Chicago Bar Ass'n,
684 N.E.2d 984, 987 (Ill.App. Ct. 1997). The doctrine applies,
however, only if the voluntary undertaking caused "physical
injury or damage." Id. Defendants allege that plaintiff's
breach of its duty to verify caused economic damage, not physical
harm. Thus, the voluntary undertaking doctrine does not apply.
Id.; see Martin v. State Farm Mut. Auto. Ins. Co.,
308 N.E.2d 47, 54 (Ill.App. Ct. 2004) (holding that voluntary
undertaking doctrine was inapplicable when there was no
allegation of "bodily injury or property damage").
Moreover, even if the voluntary undertaking doctrine did apply,
defendants' negligence claim would still be barred by Moorman
Mfg. Co. v. National Tank Co., 435 N.E.2d 443 (Ill. 1982). In
that case, the Illinois Supreme Court held that economic loss,
which is all that defendants are claiming, is generally not
recoverable in tort. Id. at 450-51. Thus, defendants could not
pursue their negligence claim against Ivanhoe, even if it had
voluntarily assumed the duty to verify. Plaintiff's motion to
dismiss Count I of the counterclaim is, therefore, granted.
In Count II of their counterclaim, defendants allege that
Ivanhoe, through its appraiser-agent, fraudulently misrepresented
the value of the Spicak and Ruptash properties. To state a
fraudulent misrepresentation claim, plaintiff must allege that:
(1) Ivanhoe made a statement of material fact that it knew or
believed to be false; (2) Ivanhoe intended to induce defendants
to rely on the statement; and (3) defendants acted in reasonable reliance on the
truth of the statement and were damaged. Neptuno Treuhand-Und
Verwaltungsgesellschaft Mbh v. Arbor, 692 N.E.2d 812, 815 (Ill.
App. Ct. 1998).*fn2
Ivanhoe first attacks the agency allegations. In its view, the
alleged facts of this case establish that the appraiser was not
its agent. The appraiser's fraud, if that is what it was, was
perpetrated not only on defendants but on Ivanhoe as well.
Conduct that defrauds the principal, Ivanhoe says, could not
possibly be within the scope of the appraiser's employment.
Even if the appraiser's alleged fraud was within the scope of
his employment, however, defendants would still falter on the
last element of their claim: reasonable reliance. Any allegation
of reasonable reliance is belied by the contract defendants
signed, which clearly and repeatedly states that defendants are
responsible for ensuring the accuracy of the appraisal
information. (See Defs.' Second Am. Answer, Affirmative
Defenses & Countercl., Ex. A, Broker/Lender Agreement ¶¶ 1e, 2,
5d, 5f.) In light of those provisions, defendants' alleged blind
faith in the ...