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Davis v. Wells Fargo Bank

April 17, 2008


The opinion of the court was delivered by: Marvin E. Aspen United States District Judge


Marvin E. Aspen, District Judge

Dorothy Davis ("Davis") filed an eight-count amended complaint against Wells Fargo Bank ("Wells Fargo"), Paragon Financial Corporation ("Paragon"), and Litton Loan Servicing ("Litton"), alleging various federal and state law claims. Before us is a motion from Litton and Wells Fargo (collectively "the Defendants") to dismiss each of Davis's claims.*fn1 For the reasons set forth below, Defendants' motion is granted in part and denied in part.


Davis is an elderly, African-American widow. (Amended Compl. at ¶ 14.) At all times relevant to this litigation she resided in the single family home that she owned in Kankakee, Illinois. (Id.) On or about September of 1999, Larry Turner ("Turner"), a neighbor's repairman, approached Davis and pointed out repairs that he thought she should complete on her garage and house. (Id. at ¶ 18.) In order to pay for the repairs, Turner offered to arrange a new home loan for Davis at a better rate than she was paying on her current mortgage. (Id. at ¶ 19.)

Turner arranged a loan for Davis with "Mortgage Express."*fn2 (Id. at ¶ 21.) Davis alleges that on September 23, 1999, Turner came to her house with Frank Saenz ("Saenz"), a Mortgage Express agent, in order to close the loan. (Id. at ¶ 23.) At the closing Davis objected to the terms of the loan, but she alleges that Turner strongly pressured her to sign the loan papers, which she did without reading or knowing their terms. (Id. at ¶ 24.) The new mortgage on Davis's house was for $87,550 including settlement charges of $32,916.10. (Id.) Turner and Saenz left without giving Davis copies of the papers she had signed. (Id.)

Davis alleges that on the date of the loan closure, Mortgage Express assigned her mortgage to The Provident Bank ("Provident") (Id. at ¶ 2) and that on the same day, Provident transferred her mortgage to Wells Fargo. (Id. at ¶ 48.) Then, at some point, Wells Fargo allegedly contracted with Litton to service the mortgage. (Id. at ¶¶ 6, 11.)

Plaintiff's first contact with Litton was through a loan-modification agreement dated September 28, 2005. (Id. at ¶ 7.) According to the complaint, this agreement may have arrived six months before Wells Fargo was assigned the mortgage. (Id.) However, the complaint also alleges that Paragon assigned the mortgage to Wells Fargo on September 23, 1999, the same date as the loan closing. (Id. at ¶ 48.)

Since its inception, the mortgage has been the subject of multiple suits. On March 23, 2001, Davis sued Long Beach Mortgage Company (apparently the owner of Davis's original mortgage, before she refinanced with Mortgage Express), Mortgage Express, and Personal Mortgage, Inc. in this court, alleging various federal and state causes of action relating to the origination of her mortgage with Paragon. (Id. at ¶ 1.) See Davis v. Long Beach Mortgage Co., No. 1:01-cv-02059 (N.D. Ill. Mar. 23, 2001) (complaint). On August 21, 2001, Davis's motion for voluntary non-suit was granted and her action was dismissed without prejudice. Davis v. Long Beach Mortgage Co., No. 1:01-cv-02059 (N.D. Ill. Aug. 21, 2001) (order granting voluntary non-suit).

On September 5, 2001, Davis re-filed her complaint in Kankakee County, Illinois and her case went to trial on February 14, 2007. (Compl. at ¶ 9.) Davis received a $136,500 judgment against Paragon for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. (Id.) Neither Wells Fargo nor Litton were party to the Kankakee County suit. (Id.)

While the Kankakee County case was pending, a foreclosure action was filed against Davis in the Kankakee County Court, Chancery Division. (Id. at ¶ 4.) Davis responded to the foreclosure with affirmative defenses based on Illinois law. (Id. at ¶ 5.) On January 18, 2007, Wells Fargo petitioned to substitute itself as the plaintiff in this foreclosure action and to sever Davis's affirmative defenses related to the closing costs of her mortgage. (Id. at ¶ 8.) This motion was granted.*fn3 (Id.)

Davis now alleges additional wrongful action by Litton and Wells Fargo since the Kankakee County verdict. According to the complaint, after that verdict, Davis received a payoff statement from Litton and Wells Fargo demanding payment of $157,497.27. (Id. at ¶ 11.)

Davis alleges that this payoff statement included demands for closing and settlement fees which were found to be illegal in the Kankakee County trial. (Id.)

Based on these facts Davis brings a seven-count complaint alleging*fn4 that the loan was unconscionable ("Count 1"); that the Defendants engaged in fraud ("Count 2"); that the Defendants violated Home Ownership Equity Protection Act ("HOEPA"), 15 U.S.C. § 1639 ("Count 3"); a violation of the Fair Housing Act ("FHA"), 42 U.S.C. § 3601 et seq. ("Count 4"); a violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq. ("Count 5"); that the Defendants violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961--1968 ("Count 6"); and violations of the Fifth Amendment to the U.S. Constitution ("Count ...

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