The opinion of the court was delivered by: Judge Blanche M. Manning
Plaintiff Kausunda Shelton, as next friend of Eric Shelton, brings this action against Long Beach Mortgage Company ("Long Beach") and First Capital Mortgage Corporation ("First Capital") alleging violations of the Real Estate Settlement Practices Act ("RESPA") and the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act") against each of the defendants as well as a violation of the Truth in Lending Act ("TILA") against Long Beach. Specifically, the counts are as follows: Count I (against Long Beach--payment of kickback in violation of RESPA); Count II (against First Capital--receipt of kickback in violation of RESPA); Count III (against both defendants--violation of the Consumer Fraud Act); and Count IV (class action claim against Long Beach--violation of TILA).
In a nutshell, Kausunda alleges that Long Beach and First Capital entered into a scheme by which First Capital paid and Long Beach received illegal kickbacks in exchange for First Capital referring mortgage business to Long Beach.
First Capital moves to dismiss the action on the following grounds: (a) a presently pending state court action requires abstention under Colorado River;*fn1 (b) Kausunda lacks standing to bring claims as a next friend; and (c) Kausunda failed to plead fraud with particularity. Long Beach moves to dismiss on the following grounds: (a) Kausunda lacks standing to bring claims as a next friend; (b) Counts I and IV for failure to state a claim under Fed. R. Civ. P. 12(b)(6) ; and, (c) Counts I and III fail to plead fraud with particularity under Fed. R. Civ. P. 9(b).
In ruling pursuant to Fed. R. Civ. P. 12(b)(6), the court assumes the truth of all well-plead factual allegations in the complaint, construing allegations liberally and viewing them in the light most favorable to the non-moving party. McMath v. City of Gary, 976 F.2d 1026, 1031 (7th Cir. 1992); Craigs, Inc. v. General Electric Capital Corp., 12 F.3d 686, 688 (7th Cir. 1993). Dismissal is properly granted if it is clear that no set of facts which plaintiff could prove consistent with the pleadings would entitle plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Kunik v. Racine County, Wis., 946 F.2d 1574, 1579 (7th Cir. 1991). The court will not dismiss a complaint unless it is clear that there is no set of facts on which a plaintiff could recover on a claim. Freiburger v. Emery Air Charter, 795 F.Supp. 253, 259 (N.D. Ill. 1992).
Because the standing issue goes to this court's jurisdiction, the court will address it first. Standing Both defendants challenge Kausunda's standing as the next friend of Eric, the real party in interest. Kausunda alleges in the complaint that Eric was shot in the head in 1996 and is unable to care for himself. She further alleges that Eric is permanently physically and mentally impaired and is "unable to fully appreciate contractual obligations or to fully or freely communicate with others." According to the complaint, Kausunda resides in Chicago and is Eric's sister and caretaker. She has, for the past eight years, been the payee of Eric's social security income benefits and handles his financial affairs.
Fed. R. Civ. P 17(c) (emphasis added) states in part:
Infants or Incompetent Persons. Whenever an infant or incompetent person has a representative, such as a general guardian, committee, conservator, or other like fiduciary, the representative may sue or defend on behalf of the infant or incompetent person. An infant or incompetent person who does not have a duly appointed representative may sue by a next friend or by a guardian ad litem. . . .
1. Kausanda as "next friend"
A next friend must meet three criteria. The next friend must: (1) provide an adequate explanation--such as inaccessibility, mental incompetence, or other disability--as to why the real parties in interest cannot bring the suit themselves, (2) be dedicated to the claimant's best interests, and (3) have some significant relationship with the claimant. Whitmore v. Arkansas, 495 U.S. 149, 163-64 (1989).*fn2 In addressing the next friend issue, the Seventh Circuit stated:
Bearing in mind the considerations that we have discussed, and the almost complete lack of authority on the question, we think the proper rule is that the next friend must be an appropriate alter ego for a plaintiff who is not able to litigate in his own right; that ordinarily the eligibles will be confined to the plaintiff's parents, older siblings (if there are no parents), or a conservator or other guardian, akin to a trustee; that persons having only an ideological stake in the child's case are never eligible; but that if a close relative is unavailable and the child has no conflict-free general representative the court may appoint a personal friend of the plaintiff or his family, a ...