United States District Court, N.D. Illinois, Eastern Division
November 7, 2005.
KIMBERLY ROWLAND, Plaintiff,
HAVEN PROPERTIES, LLC, BARRINGS MORTGAGE, INC., JEFF BRANDT, MARY NIEGO-MCNAMARA, QUINN NIEGO, JOE NIEGO, and BRIDGEVIEW BANK AND TRUST, TRUST #1-3050, Defendants.
The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
Kimberly Rowland brings a ten-count complaint against Haven
Properties, LLC, Barrings Mortgage, Inc., Jeff Brandt, Mary
Niego-McNamara, Quinn Niego, Joe Niego, and Bridgeview Bank and
Trust, Trust #1-3050 (collectively "defendants"), alleging
various violations of federal and state laws pertaining to the
sale of her home. In a joint motion, Bridgeview Bank moves to
dismiss Counts IV through IX of the complaint, and Joe Niego
moves to dismiss Counts I through IX. For the reasons set forth
below, the motion is granted in part.
The complaint tells a sad story of a widow who was allegedly
tricked into selling her home to predatory mortgage brokers. Of
course, the allegations are yet to be proven. But for purposes of
this motion, the court accepts all well-pleaded allegations as
true and draws all reasonable inferences in Rowland's favor. See Cler v. Ill. Educ. Ass'n, 423 F.3d 726,
729 (7th Cir. 2005) (citing Gen. Elec. Capital Corp. v. Lease
Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997)).
After the death of her husband, Rowland fell behind in mortgage
payments for her home located at 6430 South Knox Avenue, Chicago,
Illinois. Compl. ¶¶ 1, 6-7. In July 2004, she faced foreclosure
proceedings. Compl. ¶ 7. On February 23, 2005, a judgment of
foreclosure was entered and a foreclosure sale was scheduled.
Compl. ¶ 8. Meanwhile, Rowland began receiving solicitations
promising to help save her home. Compl. ¶ 9.
On February 8, she received a letter signed by Quinn Niego of
Barrings Mortgage. Compl. ¶ 10. Joe Niego was the president and
secretary of Barrings Mortgage. Compl. ¶ 13. In the letter, Quinn
Niego stated that he could "quickly refinanc[e] homes out of
foreclosure." Compl. ¶ 14. Quinn Niego assured Rowland that
unlike a "typical mortgage broker," he would not string her along
or ignore her phone calls. Id. The next day, Rowland met with
Quinn Niego at the offices of Niego Realty. Compl. ¶ 16. At the
meeting, Quinn Niego told Rowland he would help her refinance her
mortgage if it was not too late, and that he would call her the
following day. Id. But Quinn Niego did not call, nor did he
return Rowland's calls. Id. On February 10, Rowland received a
hand-delivered letter signed by Jeff Brandt of Haven Properties
stating that he could help stop her foreclosure. Compl. ¶ 17.
Rowland telephoned Brandt that same day. Compl. ¶ 18. On February
11, she met with Brandt at his office. Compl. ¶ 19. At the time,
she did not realize that his office was upstairs from Niego
Realty, although Brandt told her he had worked with Quinn Niego
before. Compl. ¶¶ 18-19. Brandt told her that Quinn Niego would
not be able to act in time to refinance her home. Compl. ¶ 19.
Rowland started crying. Id. Brandt assured her that he would
help save her home. Id. Over the next several days, Brandt visited Rowland's home,
conducted a walk-through inspection, and sent over a surveyor and
an appraiser. Compl. ¶ 21. On February 15, at Brandt's request,
Rowland went to his office to sign paperwork. Compl. ¶ 23. Brandt
indicated that he would pay off Rowland's existing mortgage and
her car loans. Id. Rowland would be required to give Brandt
monthly payments of $1,300 for one year. Id. At the end of the
year, Rowland would pay Brandt $99,000, or she could obtain
refinancing through Quinn Niego. Id. Rowland was not given any
loan documents nor was she informed of the repayment terms. Id.
Brandt presented Rowland with a form giving him her power of
attorney so that he could request the payoff amounts from her
mortgage and car loan lenders. Compl. ¶ 24. Rowland was not given
a copy of the executed form. Id. Brandt also asked her to sign
other documents; Rowland did not know what the documents were,
nor did she receive copies of them. Compl. ¶ 25. Rowland was not
represented by counsel. Compl. ¶ 26. Brandt told her an attorney
was unnecessary because the transaction involved a small amount
of money and because she was retaining her home. Id.
Upon Brandt's request, Rowland met with him in a room below his
office and in the back of Niego Realty's offices on February 17.
Compl. ¶ 28. Brandt presented her with a U.S. Department of
Housing and Urban Development settlement statement, which
reflected: (1) a contract sales price/gross price of $91,500.00
due to seller; (2) that $78,593.61 would be paid to her mortgage
company; and (3) that $6,751.43 would be paid to her car loan
company. Compl. ¶¶ 28-29. "Bridgeview Bank and Trust, Trust
#1-3050" was named as "borrower" in the statement. Compl. ¶ 34.
Niego-McNamara was listed as the individual who received "Buyer's
Attorney Fees." Compl. ¶ 31. Rowland asked whether she would
receive any money in cash, since this was a refinanced loan.
Compl. ¶ 28. Brandt adjusted the settlement statement amounts,
presented Rowland with a $3,000 check, and told her she would be required
to pay him an extra $50 per month. Compl. ¶ 28. Rowland signed
the settlement statement in reliance on Brandt's representation
that the transaction would provide her with a home equity loan.
Compl. ¶ 30.
After Brandt left, an unknown man came into the room and
presented Rowland with additional documents to sign. Compl. ¶ 35.
She did not understand why more documents were necessary. Id.
She signed a Chicago apartment lease with a one year term and a
$1,350 monthly rent. Id. The man also had her sign a rider to
the lease. Id.
At no time did Rowland intend to sell her home. Compl. ¶ 30.
Rather, she understood she was receiving a loan on her home from
Brandt. Id. But after signing all the documents, she
effectively sold her home, which was valued at $245,000, for a
$91,500 loan. Compl. ¶ 41. As a result, she became a tenant of
6430 South Knox Avenue, owned by Haven Properties.
Rowland filed this lawsuit seeking to void the home sale and to
recover damages. She claims she was under a great deal of stress
from the prospect of foreclosure. Compl. ¶ 38. She alleges
defendants conspired to exacerbate her distress to take advantage
of her and to fraudulently obtain ownership of her home. Compl.
¶¶ 39-40. Rowland advances the following ten claims:
declaratory judgment that the purported sale was an
equitable mortgage (Count I);
preliminary and permanent injunctive relief to stay
prosecution of any foreclosure action (Count II);
constructive trust (Count III);
intentional infliction of emotional distress (Count
rescission of contract due to duress, fraud, or
unconscionability (Count V);
Truth in Lending Act and Home Ownership and Equity
Protection Act (Count VI);
Illinois Consumer Fraud and Deceptive Business Act
Illinois High Risk Home Loan Act (Count VIII);
common law fraud (Count IX); and
Racketeer Influenced and Corrupt Organizations Act
("RICO") (Count X). DISCUSSION
I. Motion to Dismiss Standard
"A motion to dismiss under Rule 12(b)(6) challenges the
sufficiency of the complaint, and dismissal of an action under
the rule is warranted only if `no relief could be granted under
any set of facts that could be proved consistent with the
allegations.'" Cler, 423 F.3d at 729 (quoting DeWalt v.
Carter, 224 F.3d 607, 612 (7th Cir. 2000)). To survive a motion
to dismiss, a complaint "need not plead particular legal theories
or particular facts in order to state a claim." DeWalt,
224 F.3d at 612. "All that is required is `a short and plain
statement . . . that will give the defendant fair notice'" of the
nature and basis of the claim. Id. (quoting Leatherman v.
Tarrant County Narcotics Intelligence & Coordination Unit,
507 U.S. 163, 168 (1993)).
Rowland argues this motion is procedurally improper because the
court has denied Haven Properties' motion to dismiss. But
Bridgeview Bank and Joe Niego are entitled to move to dismiss in
their own right. See Fed.R.Civ.P. 12. Therefore, Rowland's
argument is incorrect. The court now turns to the merits of this
II. Claims Against Bridgeview Bank
Moving to dismiss Counts IV through IX, Bridgeview Bank
advances three arguments: (1) as trustee of 6430 South Knox
Avenue, Bridgeview Bank is not a proper party to this lawsuit;
(2) Rowland fails to allege any wrongdoing on its part; and (3)
she fails to plead fraud with sufficient particularity under
Federal Rule of Civil Procedure 9(b). The court analyzes these
arguments in turn.
As an exhibit to its moving brief, Bridgeview Bank attaches the
agreement creating trust number 1-3050. Def. Ex. 1. This
agreement constitutes part of Bridgeview Bank's pleading. Fed.R.Civ.P. 10(c). "As a general rule, on a Rule 12(b)(6) motion,
the court may consider only the plaintiff's complaint."
Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir.
2002). As an exception to the general rule, however, the court
may consider documents attached to a motion to dismiss if they
are central to plaintiff's claims. Id. (this exception applies
even where the complaint does not specifically refer to the
documents attached). Bridgeview Bank's trust agreement is crucial
for understanding the relationships among defendants and to
evaluate the validity of Rowland's claims against them. Rowland's
citation of the agreement in her opposition brief highlights the
agreement's importance. See Pl. Mem. 4. Therefore, the court
considers this agreement in ruling on Bridgeview Bank's motion.
See Rosenblum, 299 F.3d at 661 (the court may properly consider
an exhibit without converting a motion to dismiss to a motion for
The agreement provides Bridgeview Bank and Trust, as trustee,
holds legal and equitable title to the properties held in trust
number 1-3050. Def. Ex. 1. The sole beneficiary is Haven
Properties, and the power of direction to convey and manage the
properties is vested in Terry Niego or Quinn Niego. Id. The
interest of the beneficiary is personal property. Id. These
provisions are typical in an Illinois land trust. See 735 ILL.
COMP. STAT. 5/15-1205 (2005) (codifying the same land trust
In an action involving an Illinois land trust, the question of
whether the beneficiary or the trustee is the proper party
depends on "the nature of the action in light of the rights and
duties established by the trust agreement." See Just Pants v.
Bank of Ravenswood, 483 N.E.2d 331, 335 (Ill.App.Ct. 1st Dist.
1985) (refusing to rule on whether the trustee was the proper
party because the record on appeal did not contain the trust agreement). Based
on the trust agreement, Bridgeview Bank argues it is not a proper
party to this case.
It is true, as the trust agreement shows, a beneficiary of an
Illinois land trust may act as a true owner of the trust
property. The beneficiary's broad power is recognized by the
Illinois Supreme Court:
The trustee derives all of his power from the
beneficiary and acts solely on the beneficiary's
behalf. The beneficiary may withdraw or modify the
trustee's authority at any time. Indeed, there is not
a single attribute of ownership, except title, which
does not rest in the beneficiary. The rights of
creation, modification, management, income and
termination all belong to the beneficiary. In reality
the transfer to the trustee is a formality involving
a shifting of legal documents. The land trust is, in
fact, a fiction which has become entrenched in the
law of this State and accepted as a useful instrument
in the handling of real estate transactions. Outside
of relationships [b]ased on legal title, the
trustees' title has little significance.
People v. Chicago Title & Trust Co., 389 N.E.2d 540
, 545 (Ill.
1979) (internal citations omitted). But this broad power does not
render a beneficiary a proper party to every lawsuit involving a
land trust. A trustee can be the proper party to a lawsuit if the
trustee is a party to the underlying transaction.
The decision by the Illinois Court of Appeals in Jakovljevich
v. Alvarez is instructive. 252 N.E.2d 60 (Ill.App. 1st Dist.
1969). In Alvarez, the beneficiaries of a land trust sued a
tenant of the trust property for back rent based on a lease.
Id. at 61. The relevant trust provisions concerning the rights
and duties of the trustee bank were identical to the provisions
in the Bridgeview Bank trust. See id. at 62 n. 1. The trustee
bank in Alvarez was the lessor in the underlying lease,
although one of the two beneficiaries executed the lease on the
trustee bank's behalf. Id. at 61. The tenant moved to dismiss,
claiming that only the trustee bank, not the beneficiaries, had
the right to sue. Id. The trial court dismissed the beneficiaries' claims. Id. at 61. The
Alvarez court's affirmance turned on the fact that the trustee
bank was the lessor in the underlying lease. Id. at 63.
The reasoning in Alvarez is applicable to this case. Rowland
alleges "Bridgeview Bank and Trust, Trust #1-3050" was a party to
the underlying sales contract. Compl. ¶ 34; Compl. Ex. E. She
further claims Niego-McNamara executed the contract on behalf of
Haven Properties, the trust beneficiary. Compl. ¶ 31. Thus,
similar to Alvarez, Bridgeview Bank, as a party to the
underlying contract, is a proper party to this lawsuit. See
Alvarez, 252 N.E.2d at 63; see also Am. Nat'l Bank & Trust Co.
of Chicago v. Harcros Chems., Inc., No. 95C3750, 1997 WL 281295,
at **17-18 (N.D. Ill. May 20, 1997) (following Alvarez in
analyzing succession rights to sue).
Arguing the contrary, Bridgeview Bank cites BA Mortgage &
International Realty Corp. v. American National Bank & Trust Co.
of Chicago, 706 F. Supp. 1364 (N.D. Ill. 1989). But BA
Mortgage is distinguishable. There, plaintiff mortgage sought
foreclosure of a trust property. Id. at 1366. The beneficiaries
of the trust property counterclaimed, alleging that the mortgagee
breached its fiduciary duty to them when negotiating a lease on
the trust property. Id. at 1370. The court held that the
beneficiaries were proper parties to assert their counterclaims
because they directly dealt with the mortgagee and because the
counterclaims concerned management of the trust property. Id.
Unlike BA Mortgage, the title, rather than the management, of
6430 South Knox Avenue, is in dispute here. Furthermore, as
discussed above, Bridgeview Bank was a party to the underlying
sales contract. Therefore, Bridgeview Bank's reliance on BA
Mortgage is misplaced; its argument must fail. See Tizes v.
Curcio, No. 94C7657, 1995 WL 476675, at **9-10 (N.D. Ill. Aug.
9, 1995) (beneficiaries are the proper parties to a lawsuit
involving the use, rather than the title, of a trust property). Accordingly, the court denies Bridgeview Bank's motion
to dismiss Counts IV through IX on the basis that it is not a
Bridgeview Bank further argues Rowland failed to allege any set
of facts to support its liability in Counts IV through IX. Defs.
Mem. 6. Specifically, the bank asserts that she failed to plead
"any extreme or outrageous act" for her claim for intentional
infliction of emotional distress. Defs. Mem. 7. In support of its
arguments, Bridge Bank cites Sanglap v. LaSalle Bank, FSB,
345 F.3d 515 (7th Cir. 2003). But Sanglap dealt with a judgment as
a matter of law under Federal Rule of Civil Procedure 50; thus,
it sheds no light on the Rule 12(b)(6) motion at hand.
To state a claim for intentional infliction of emotional
distress under Illinois law, a plaintiff must allege that: (1)
defendant's conduct was extreme and outrageous; (2) defendant
either intended that the conduct inflict severe emotional
distress, or knew that there was a high probability that the
conduct would cause severe emotional distress; and (3)
defendant's conduct in fact caused severe emotional distress.
Doe v. Calumet City, 641 N.E.2d 498, 506 (Ill. 1994). Rowland
sufficiently states all three elements against all defendants.
See Compl. ¶¶ 51-54. Contrary to Bridgeview Bank's argument,
federal notice pleading rules do not require a complaint to be
factually specific. See, e.g., Leatherman, 507 U.S. at 168
("heightened pleading standards" are contrary to the system of
notice pleading). Rowland is not required to set forth every
action that allegedly inflicted emotional distress. Cook v.
Winfrey, 141 F.3d 322, 331 (7th Cir. 1998). So long as she gives
Bridgeview Bank fair notice of the nature and basis of her claim
in a short statement, her complaint survives a motion to dismiss.
See DeWalt, 224 F.3d at 612. Thus, Bridgeview's arguments are
without merit. Bridgeview Bank's arguments under Rule 9(b), however, are
persuasive. Rule 9(b) requires that complaints "[i]n all
averments of fraud or mistake shall be stated with
particularity." Fed.R.Civ.P. 9(b). Under this rule, fraud
claims must state with particularity the factual basis for the
alleged fraud, including: (1) the identity of the person(s) who
made the misrepresentation; (2) the time, place, and content of
the misrepresentation; and (3) the method by which the
misrepresentation was communicated to plaintiffs. Gen. Elec.
Capital Corp., 128 F.2d at 1078. In other words, this rule
requires the "who, what, when, where, and how" of the
circumstances of the fraud or mistake. DiLeo v. Ernst & Young,
901 F.2d 624, 627 (7th Cir. 1990). These requirements aim to
ensure "that the charge of fraud is responsible and supported,
rather than defamatory and extortionate." Ackerman v.
Northwestern Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir.
1999). The complaint is devoid of any alleged misrepresentations
by Bridgeview Bank. In response, Rowland attempts to cure this
defect by pointing to allegations on page eight of her RICO
statement. Pl. Mem. 4. Even if the court could properly
incorporate the RICO statement into the fraud claims, the RICO
statement only generally alleges defendants "utilized" the trust
to commit fraud. The RICO statement is therefore insufficient to
satisfy particularity requirements. See Ackerman,
172 F.3d at 471 (affirming dismissal of common law fraud claims under Rule
9(b) that alleged only in general terms that corporate officers
"inspired, encouraged, and condoned" misrepresentations by the
corporation's sales agents). Accordingly, Rowland's fraud claims
Counts V, VII, and IX against Bridgeview Bank are dismissed. III. Claims Against Joe Niego
Joe Niego asserts two arguments in support of his motion to
dismiss Counts I through IX: (1) Rowland does not allege he was
involved in any wrongdoing and as an officer of Barrings
Mortgage, he is not liable for its wrongdoings absent his own
involvement; and (2) Rowland's allegations fail to satisfy Rule
9(b) heightened pleading requirements.
Joe Niego's first argument is unpersuasive. Citing Itofca, Inc
v. Hellhake, 8 F.3d 1202 (7th Cir. 1993), he argues that as
president and secretary of Barrings Mortgage, he cannot be held
liable for the alleged wrongdoings of Barrings Mortgage and its
agents. The court is mindful of the general rule of law in
Illinois "that a corporation as an entity is separate from its
officers `who are not . . . liable for the corporation's
obligations.'" Id. at 1204 (quoting Gallagher v. Reconco
Builders, Inc., 415 N.E.2d 560, 563 (Ill.App. 1st Dist. 1980)).
Under this rule, corporate officers are liable for torts only if
they "participated in the conduct giving rise to that
liability.'" Id. (quoting Prince v. Zazove, 959 F.2d 1395,
1401 (7th Cir. 1992)). While this rule may provide Joe Niego with
a defense to Rowland's claims, it does not insulate him from this
lawsuit. Thus, this rule does not require dismissal of claims
Rowland alleges that Joe Niego was the president and secretary
of Barrings Mortgage. Compl. ¶ 13. Quinn Niego, the alleged
architect of the scheme, is an agent of Barrings Mortgage, Compl.
¶ 12, and his initial letter to Rowland bears the address of
Barrings Mortgage, Compl. Ex. C. She further alleges all
defendants colluded to carry out the alleged scheme. See, e.g.,
Compl. ¶¶ 49, 52, 55. These allegations provide Joe Niego with
sufficient notice of her claims, satisfying the notice pleading
standard under Rule 8. Brown v. Budz, 398 F.3d 904, 908 (7th
Cir. 2005) ("This `short and plain statement' [under Rule 8]
requires a plaintiff to allege no more than `the bare minimum facts necessary to put the defendant on notice of the
claim so that he can file an answer.'" (quoting Higgs v.
Carver, 286 F.3d 437, 439 (7th Cir. 2002)). Therefore, dismissal
of claims against Joe Niego is inappropriate.
The two cases cited by Joe Niego are readily distinguishable.
Itofca, Inc. is inapplicable because it dealt with a motion for
summary judgment. Itofca, Inc., 8 F.3d at 1203. In Fure v.
Sherman Hospital, the Illinois Court of Appeals affirmed
dismissal of a malpractice suit against a shareholder of a
medical corporation. 371 N.E.2d 143, 143 (Ill.App. 1st Dist.
1997). In that case, plaintiff sued not only the treating
physician, but also a shareholder of the physician's medical
corporation. Id. But plaintiff failed to allege that the
shareholder rendered any medical services or supervised any
physician related to the underlying treatment. Id. Accordingly,
the court affirmed dismissal of the claims against the
shareholder. Id. Unlike the plaintiff in Fure, Rowland
alleges that Joe Niego colluded with other defendants and that
his agent, Quinn Niego, orchestrated the underlying scheme.
Therefore, Joe Niego's reliance on Fure is misplaced.
Joe Niego further argues that Rowland fails to plead her fraud
claims against him with the requisite particularity under Rule
9(b). For the same reasons stated above concerning the fraud
claims against Bridgeview Bank, the fraud counts are factually
insufficient. Accordingly, Counts V, VII, and IX against Joe
Niego are dismissed. CONCLUSION
For the reasons set forth above, the joint motion by Bridgeview
Bank and Joe Niego is granted in part. Counts V, VII, and IX
against Bridgeview Bank and Joe Niego are dismissed.
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