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TAYLOR, BEAN & WHITAKER MORTGAGE CORPORATION v. CEBULAK

September 17, 2004.

TAYLOR, BEAN & WHITAKER MORTGAGE CORPORATION, a Florida corporation, Plaintiff,
v.
VINCENT CEBULAK, et al., Defendants.



The opinion of the court was delivered by: MICHAEL MASON, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Before the court are three motions to dismiss: (1) defendants Northwest Fidelity Mortgage Corp. ("Northwest") and Dorothy Kawa's ("Kawa") joint motion to dismiss Counts I, II, IV, VII, VIII, IX, and X of plaintiff's complaint; (2) defendants Prime Realty, Inc. ("Prime Realty") and Vincent Cebulak's ("Cebulak") joint motion to dismiss Counts I, II, IV, IX, and X of plaintiff's complaint; and (3) defendant Marta Kwietniewska's ("Kwietniewska") motion to dismiss Counts I, II, IV, VII, VIII, IX, and X of plaintiff's complaint. For the reasons set forth below, defendants' motions are granted in part and denied in part.

Factual Background

  Plaintiff Taylor, Bean & Whitaker Mortgage Corp. ("Taylor Bean") filed a tencount complaint against the following twenty-five defendants: Wojtek Lis, Vincent Cebulak, Andrzej Szudzinski, Stations Café, Storc Construction, Inc., Prime Realty, Northwestern Fidelity Mortgage Corp., Dorothy Kawa, Thomas Groh, Tadeusz Twarog, Eugene Developers, Inc., Eugene Fraczek, Universal Appraisal Service, Inc., Janusz Kozera, Daniel Lesniak, Malgorazata Grzybowska, Piotr Grzybowski, Jan Sztorc, Marta Kwietniewska, Zbigniew Kasza, Andrezj Szudinski, Mark Locascio, Jean Locascio, Edward Whitefield, and Richard Ross. Plaintiff has either voluntarily dismissed or obtained a default judgment against nineteen of these twenty-five defendants. Plaintiff has asserted federal subject matter jurisdiction pursuant to both federal question jurisdiction under 28 U.S.C. § 1331 and 28 U.S.C. § 1964, and diversity jurisdiction under 28 U.S.C. § 1332. Defendants do not take issue with federal subject matter jurisdiction under either ground.

  Counts III, V, and VI of plaintiff's complaint allege fraud claims solely as to dismissed or defaulted defendants and are therefore dismissed. Further, plaintiff has voluntarily dismissed its breach of contract claim (Count VIII) as to defendants Kawa and Kwietniewska. This opinion addresses plaintiff's remaining seven claims against five of the six remaining defendants: Cebulak, Prime Realty, Northwest, Kawa, and Kwietniewska (collectively "Defendants").*fn1

  Plaintiff's complaint primarily alleges that Defendants have been participants in an illegal scheme to defraud Taylor Bean through a series of fraudulent mortgage transactions.*fn2 According to plaintiff, the original defendants fall into seven categories: (1) buyers or sellers of real estate for which mortgages were allegedly fraudulently obtained; (2) real estate brokers; (3) mortgage brokers; (4) individuals funding the real estate transactions with knowledge of the ongoing fraud; (5) recipients of funds from the alleged fraud; (6) appraisers who misrepresented the value of the real estate involved in the fraud; and (7) attorneys who participated in the real estate closings with knowledge of the fraudulent purpose.*fn3 Generally, plaintiff alleges that defendants purchased multiunit residential complexes at fair market value and then appraised individual units within the multi-unit complexes at values far in excess of their fair market value. Plaintiff further alleges that defendants falsified loan applications to induce plaintiff to enter into mortgage agreements and loan the purchasers of those units amounts up to fives times more than the fair market value of the mortgaged property. Thereafter the purchasers defaulted on their loans and Taylor Bean foreclosed on the individual units. At the time of foreclosure, the principle due on the outstanding loans far exceeded the fair market value of the individual units.

  Specifically, the seven remaining claims in plaintiff's complaint allege that: (1) Defendants violated Sections 1962(a) and (d) of the Federal Racketeer Influenced and Corrupt Organizations Act ("RICO") (Count I); (2) Defendants violated RICO Sections 1962(c) and (d) (Count II); (3) Defendants committed common law fraud (Count IV); (4) Kawa, Kwietniewska, and Northwest breached their fiduciary duties to plaintiff (Count VII); (5) Northwest breached its contract with plaintiff (Count VIII); (6) Defendants have been unjustly enriched to the detriment of plaintiff (Count IX); and (7) Defendants committed common law conspiracy (Count X).

  In deciding these motions to dismiss, we accept plaintiff's well-pleaded allegations as true and draw all reasonable inferences from these facts in plaintiff's favor. Travel All Over the World, Inc. v. The Kingdom of Saudi Arabia, 73 F.3d 1423, 1429 (7th Cir. 1996). This case arises from six real estate transactions involving Taylor Bean and Defendants. Taylor Bean provides residential mortgage lending services. Cebulak is a real estate broker and the sole proprietor of Prime Realty, a real estate brokerage business. Kwietniewska owns forty-nine percent of Northwest, which provides title commitment and real estate closing services. Kwietniewska is also Northwest's incorporator, secretary and/or president. Kawa is a loan officer, loan processor, and secretary at Northwest.

  Building I

  On February 1, 2001, Jan Sztorc, president, registered agent, and incorporator of Storc Construction, a company that builds and rehabilitates residential and commercial structures, purchased a six-flat building in Chicago, Illinois ("Building I") for $285,000. Sztorc transferred ownership of Building I, by quitclaim deed, to Storc Construction on May 18, 2001. Approximately two weeks later, on June 4, 2001, at the request of Kawa or another agent of Northwest, and with the full knowledge of the other Defendants, Thomas Groh, the owner of Universal Appraisal, appraised three individual units within Building I, Units #1N, #2S, and #3N, at values far in excess of their actual market value. Specifically, Groh appraised #1N at $169,500 and #2S at $169,500. The complaint does not contain Groh's appraisal figure for #3N. In August 2001, Storc Construction sold those three units. On August 9, 2001, Malgorazata Grzybowska ("Grzybowska") entered into a contract to purchase and did purchase Unit #1N for $167,500. The real estate sales contract listed Janusz Kozera ("Kozera") of Prime Realty as the realtor for Unit #1N. That same day, with the assistance of Andrezj Szudzinski ("Szudzinski"), a loan officer for Northwest, Grzybowska mortgaged the property to Taylor Bean for $134,000 and executed a note in favor of Taylor Bean obligating her to repay $134,000 in principal at 7.625% interest amortized over thirty years. In determining whether to lend Grzybowska the $134,000, Taylor Bean relied on Groh's appraisal and evaluated and relied on the information contained in the Uniform Residential Loan Application ("Loan Application") and related documents that Defendants "intended to provide and/or did in fact provide . . . to Taylor Bean via U.S. mail and/or telephone, facsimile and/or computer network lines for the purpose of facilitating their scheme to defraud Taylor Bean." Complaint ¶ 119. On August 9, 2001, Grzybowska signed a Re-certification of Employment and Income form ("Re-certification form") certifying that the information in the Loan Application was still accurate. At some point, the Re-certification form was transmitted to Taylor Bean via U.S. mail, facsimile or other electronic or computer transmission. Szudzinski obtained the information contained in the Loan Application through a personal interview with Grzybowska. The Loan Application contained incorrect information including, inter alia, misrepresentations about Grzybowska's income, employment verifications, identity, social security number, marital status, and personal financial information.

  Proceeds from the mortgage transaction between Taylor Bean and Grzybowska were distributed among the defendants. Sometime after August 9, 2001, Taylor Bean sold Grzybowska's mortgage to GMAC Mortgage Corp. ("GMAC"). Subsequently, GMAC sold the mortgage to Freddie Mac and Grzybowska defaulted on the loan. On October 30, 2002, Freddie Mac sent GMAC a written notice requesting that GMAC repurchase the mortgage. Two weeks later, on November 12, 2002, GMAC sent Taylor Bean a written notice requesting that it repurchase the mortgage. Thereafter, Taylor Bean repurchased the mortgage from Freddie Mac and foreclosed on the property. A broker's price opinion ("BPO") completed on April 15, 2003 valued the property at $36,000, far less than the principal due Taylor Bean on the note.

  The facts surrounding the sale and mortgage of the remaining two units in Building I, Units #2S and #3N, are similar to the transaction described above. On August 30, Zbigniew Kasza ("Kasza") entered into a real estate contract to purchase and did purchase Unit #2S for $168,500. Kozera was the realtor listed on the real estate sales contract. That same day, with the assistance of one of Northwest's agents, Kasza mortgaged the property to Taylor Bean for $134,800 and executed a note in favor of Taylor Bean obligating him to repay $134,800 in principal at 7.5% interest amortized over thirty years.

  In determining whether to loan Kasza the $134,800, Taylor Bean relied on Groh's appraisal and evaluated and relied on the information contained in the Loan Application and related documents the Defendants "intended to provide and/or did in fact provide . . . to Taylor Bean via U.S. mail and/or telephone, facsimile and/or computer network lines for the purpose of facilitating their scheme and defrauding Taylor Bean." Complaint ¶ 143. Kawa obtained the information contained in the Loan Application through a personal interview with Kasza. The Loan Application contained incorrect information including, inter alia, misrepresentations about Kasza's income, employment verifications, and her personal financial information. On August 30, 2001, Kasza signed a Re-certification form, affirming that the information contained in the Loan Application was still accurate. The form was transmitted to Taylor Bean via U.S. mail, facsimile, or some other electronic or computer transmission.

  Proceeds from the mortgage transaction between Taylor Bean and Kasza were distributed among the Defendants. Sometime after August 30, 2001, Taylor Bean sold the mortgage to GMAC, who in turn sold the mortgage to Fannie Mae. Thereafter, Kasza defaulted on the loan, Taylor Bean repurchased the loan from Fannie Mae and foreclosed on the property. A BPO completed on August 18, 2003 valued the property at $36,000.

  On May 20, 2001, Sztorc contracted to sell the last of the three disputed units in Building I. On that day, Daniel Lesniak ("Lesniak") entered into a real estate sales contract with Sztorc to purchase Unit #3N for $169,500. Kozera was the realtor listed on the real estate sales contract. Lesniak purchased the property on August 3, 2001. That same day, with the assistance of one of Northwest's agents, Lesniak mortgaged the property to Taylor Bean for $135,600 and executed a note in favor of Taylor Bean obligating him to repay $135,600 in principal at 7.625% interest amortized over thirty years.

  In determining whether to loan Lesniak the $135,600, Taylor Bean evaluated and relied on the information contained in the Loan Application and related documents the defendants "intended to provide and/or did in fact provide . . . to Taylor Bean via U.S. mail and/or telephone, facsimile, and/or computer network lines for the purpose of facilitating their scheme and defrauding Taylor Bean." Complaint ¶ 165. Kawa obtained the information contained in the Loan Application through a personal interview with Lesniak. The Loan Application contained incorrect information including, inter alia, misrepresentations about Lesniak's income, employment verifications, and personal financial information.

  Proceeds from the mortgage transaction between Taylor Bean and Lesniak were distributed among the defendants. Sometime after August 3, 2001, Taylor Bean sold the mortgage to GMAC, who in turn sold the mortgage to Fannie Mae. Thereafter, Taylor Bean repurchased the mortgage from Fannie Mae and foreclosed on the property. An August 13, 2003 BPO valued the property at $36,000.

  Building II

  On February 9, 2001, Jan Sztorc, purchased a second six-flat building in Chicago, Illinois ("Building II") for $320,000. On May 18, 2001, along with Building I, Sztorc transferred ownership of Building II, by quitclaim deed, to Storc Construction. On June 4, 2001, at the request of Kawa or another agent of Northwest and with the full knowledge of the other defendants, Thomas Groh appraised three individual units within Building II, Units #1N, #2N, and #2S, at values far in excess of their actual fair market value. The complaint does not state Groh's appraisal values for Units #1N or #2N, however he appraised Unit #2S at $176,000.

  Between August and October 2001, Storc Construction sold Units #1N, #2N, and #2S. On October 9, 2001, Wojtek Lis ("Lis") purchased Unit #1N for $176,000. That same day, with the assistance of Kawa, he mortgaged the property to Taylor Bean for $140,800 and executed a note in favor of Taylor Bean obligating him to repay $140,800 in principal at 7.25% interest amortized over thirty years. In determining whether to lend Lis the $140,800, Taylor Bean evaluated and relied on the information contained in the Loan Application and related documents the Defendants "intended to provide and/or did in fact provide via U.S. mail and/or telephone, facsimile and/or computer network lines for the purpose of facilitating their scheme and defrauding Taylor Bean." Complaint ¶ 41. Kawa obtained the information contained in the Loan Application through a personal interview with Lis. The Loan Application contained incorrect information including, inter alia, misrepresentations about Lis' income, employment verifications, social security number, personal financial information, and the parcel number of the subject property recorded on the title policy and the mortgage. Proceeds from the mortgage transaction between Taylor Bean and Lis were distributed among the Defendants. Sometime after November 9, 2001, Taylor Bean sold Lis' mortgage to GMAC, who in turn sold it to Fannie Mae. Lis defaulted on the loan and Fannie Mae foreclosed on the property on February 26, 2003. Thereafter, Taylor Bean repurchased the mortgage from Fannie Mae. The market value of the subject property is far less than the principal on the note due Taylor Bean.

  The facts surrounding the sale and mortgage of the remaining two units in Building II, Units #2N and #2S, are similar to the transaction described above. On September 20, 2001, Piotr Grzybowski ("Grzybowski") purchased Unit #2N for $172,900. The real estate sales contract listed Kozera of Prime Realty as the realtor for Unit #2N. That same day, with the assistance of Kawa, Grzybowski mortgaged the property to Taylor Bean for $138,320 and executed a note in favor of Taylor Bean obligating him to repay $138,320 in principal at 8% interest amortized over thirty years. In determining whether to lend Grzybowski the $138,320, Taylor Bean evaluated and relied on the information contained in the Loan Application and related documents that Defendants "intended to provide and/or did in fact provide . . . to Taylor Bean via U.S. mail and/or telephone, facsimile and/or computer network lines for the purpose of facilitating their scheme and defrauding Taylor Bean." Complaint ¶ 66. Kawa obtained the information contained in the Loan Application ...


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