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Horton v. Country Mortgage Services

August 11, 2008

CHARLOTTE HORTON, PLAINTIFF,
v.
COUNTRY MORTGAGE SERVICES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: George W. Lindberg District Judge

MEMORANDUM OPINION AND ORDER

Defendant Country Mortgage Services, Inc. ("CMS"), has filed a second motion pursuant to Federal Rule of Civil Procedure 11 seeking sanctions on three grounds: (1) Plaintiff's claim for violation of the Real Estate Settlement Procedures Act, 18 U.S.C. 2607 ("RESPA claim"), is barred by the statute of limitations; (2) plaintiff's claim for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 ("ICFA claim"), fails to state a claim upon which relief can be granted; and (3) the allegations in the second amended complaint are interposed for an improper purpose and lack evidentiary basis. See Fed. R. Civ. Pro. 11(b).

Federal Rule of Civil Procedure 11 provides:

(b) Representation to the Court. By presenting to the court a pleading . . . an attorney certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;

(2) the claims, defenses, and other legal contentions are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law;

(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery[.]

Fed. R. Civ. Pro. 11(b). In determining whether a party has violated Rule 11:

[T]he court need not make a finding that the transgressor acted in bad faith. Instead, the district court need only undertake an objective inquiry into whether the party or his counsel should have known that his position is groundless.

National Wrecking Co. v. International Brotherhood of Teamsters, Local 731, 990 F.2d 957, 963 (7th Cir. 1993).

Plaintiff filed a four-count complaint on November 11, 2007. On March 5, 2008, this court granted defendant's motion to dismiss the complaint's RESPA and ICFA claims, pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), because "The RESPA[ ] claims . . . are barred by the statute of limitations, and the fraud [ICFA] claim . . . fails to state a claim upon which relief may be granted." Plaintiff filed and withdrew a first amended complaint. Plaintiff then filed a four-count second amended complaint, which is essentially identical to the original complaint with the exception of paragraphs 25 and 26. It is for filing the second amended complaint that defendant seeks sanctions.

Defendant argues that sanctions are appropriate because the second amended complaint's RESPA and ICFA claims are violative of Federal Rule of Civil Procedure 11 on different grounds.

First, defendant contends that plaintiff's RESPA claim is still barred by the applicable one-year limitation period and plaintiff's arguments to the contrary, specifically those contained in paragraphs 25 and 26 of the second amended complaint, are interposed for an improper purpose and lack evidentiary support. This court disagrees.

Plaintiff can avoid the bar of the statute of limitations "if despite all due diligence he [was] unable to obtain vital information bearing on the existence of his claim." Cada v. Baxter Healthcare Corp., 920 F.2d 446, 451 (7th Cir. 1990). The limitation period will be tolled "for ...


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