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In re Ameriquest Mortgage Co.

October 14, 2008


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

MDL No. 1715

Centralized before the Honorable Marvin E. Aspen


Presently before us is Certain Third-Party Defendants'*fn1 Consolidated Motion to Dismiss the Second Amended Consolidated Third-Party Complaint (Dkt. No. 2034), filed on March 14, 2008. In the Third-Party Complaint, Ameriquest Mortgage Co. ("AMC") and Argent Mortgage Company LLC ("Argent") (collectively, "Ameriquest") contend that, if the allegations of the Borrower Complaint*fn2 are found to be true, Third-Party Defendants breached their contracts with Ameriquest and engaged in negligent conduct. Ameriquest claims that Third-Party Defendants -- a group consisting of closing agents, title underwriters and mortgage brokers -- are wholly responsible for any TILA violations stemming from the alleged failure to provide appropriate NORTC forms. Ameriquest alleges that each of the Third-Party Defendants breached its contractual promise to Ameriquest to deliver compliant NORTC forms. Ameriquest seeks damages as a remedy for Third-Party Defendants' misconduct, as well as equitable indemnity and contribution. For the reasons set forth below, we grant the motion in part and deny it in part.


According to the Third-Party Complaint, Ameriquest and each Third-Party Defendant entered into contracts whereby Third-Party Defendants agreed to negotiate and/or close mortgage loans in exchange for consideration. (Third-Party Compl. ¶¶ 8-17.) Third-Party Defendants allegedly "warranted . . . that they would accurately complete a [NORTC] form with respect to each loan that they closed, and would provide Ameriquest's borrower(s) with the correct number of copies of the completed form." (Id. ¶ 8 (summarizing obligations of Third-Party Defendants hired by AMC); see also id. ¶¶ 12-16 (summarizing obligations of Third-Party Defendants hired by Argent).)Ameriquest alleges that the TILA claims asserted by relevant plaintiffs in the Borrower Complaint "relate to duties that should have been carried out by" Third-Party Defendants. (Id. ¶ 10; see also id. ¶ 17.) Thus, if the TILA claims from the Borrower Complaint are found to be true because NORTCs were not properly delivered, Third-Party Defendants breached their contractual duties to Ameriquest. (Id. ¶¶ 21, 40, 45.)

In the Second and Seventh Causes of Action, Ameriquest further alleges that it suffered damages when Third-Party Defendants breached their duty "to follow any and all federal and state laws relating to required disclosures in connection with mortgage loans, including, but not limited to, the [NORTC]." (Id. ¶¶ 24, 48.) In addition to the contract and negligence causes of action, Ameriquest also alleges that, under principles of equity, it is entitled to equitable indemnification or contribution from Third-Party Defendants "in an amount sufficient to reimburse Ameriquest for any judgment, settlement, attorneys' fees, costs, or other equitable relief" incurred for the TILA violations. (Id. ¶¶ 30, 35, 54, 59.) Ameriquest essentially contends that Third-Party Defendants should be liable for the alleged failure to provide compliant NORTC forms because it was Third-Party Defendants' responsibility (whether by contract or otherwise) to make the appropriate disclosures.


A motion to dismiss under 12(b)(6) is meant to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Accordingly, a court may grant a motion to dismiss under Federal Rule of Procedure 12(b)(6) only if a complaint lacks "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007); see Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618-19 (7th Cir. 2007); EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776-77 (7th Cir. 2007). A sufficient complaint need not give "detailed factual allegations," but it must provide more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 127 S.Ct. at 1964-65; Killingsworth, 507 F.3d at 618-19. These requirements ensure that the defendant receives "fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 127 S.Ct. at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102 (1957)); see also Fed. R. Civ. P. 8(a). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Thompson v. Ill. Dep't. of Prof'l Reg., 300 F.3d 750, 753 (7th Cir. 2002).


A. Contract Claims

Third-Party Defendants contend that the First, Fifth, and Sixth Causes of Action should be dismissed because Ameriquest has not adequately identified the alleged contracts at issue. (Mem. at 4-5; Reply at 2-3.) Ameriquest disagrees, arguing that the Third-Party Complaint is sufficient to give Third-Party Defendants fair notice of the claims against them. (Resp. at 7-8.) Ameriquest adds that it chose not to attach the hundreds of relevant contracts to the Third-Party Complaint to give effect to our March 16, 2007 order (Dkt. No. 615) requiring Ameriquest to streamline this aspect of the litigation to the extent possible. (Resp. at 7.)

To state a claim for breach of contract in Illinois,*fn3 a plaintiff must plead "(1) the existence of a valid and enforceable contract; (2) the performance of the contract by plaintiff; (3) the breach of the contract by defendant; and (4) a resulting injury to plaintiff." Priebe v. Autorbarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001) (quoting Hickox v. Bell, 195 Ill. App. 3d 976, 992, 552 N.E.2d 1133, 1143 (5th Dist. 1990)); see Patel v. Boghra, No. 07 C 6557, 2008 WL 2477695, at *5 (N.D. Ill. June 18, 2008); Sabratek Liquidating LLC v. KPMG LLP, No. 01 C 9582, 2002 WL 774185, at *2 (N.D. Ill. Apr. 26, 2002). When evaluating the sufficiency of the allegations, we rely on the liberal federal notice pleading standard, the purpose of which "is simply to provide a defendant with enough information to prepare a defense." Sabratek Liquidating LLC, 2002 WL 774185, at *2; see Twombly, 127 S.Ct. at 1964; Zurich Capital Mkts. Inc. v. Coglianese, No. 03 C 7960, 2005 WL 1950653, at *8 (N.D. Ill. Aug. 12, 2005) (observing that, in federal court, "complaints need not contain elaborate factual recitation"). With these principles in mind, we conclude that the allegations of the Third-Party Complaint are sufficient to state a claim for breach of contract.

Although Third-Party Defendants argue that the Third-Party Complaint fails to identify the alleged contracts, we find the allegations sufficient to withstand a Rule 12(b)(6) challenge. Ameriquest admittedly, and intentionally, did not list each of the individual contracts by name. (Resp. at 7.) Nonetheless, Ameriquest attached two charts to the Third-Party Complaint, which identify: (1) the names of the relevant Borrower plaintiffs who sued Ameriquest; (2) the case information for those underlying suits; (3) the Third-Party Defendant(s) involved in the disputed transactions; and (4) the approximate date of the agreement between the Third-Party Defendant(s) and AMC or Argent. (Third-Party Compl., Exs. A and B.) Thus, for example, Exhibit A states that Borrower plaintiffs Glenn and Laverne Adams sued Ameriquest for claims arising from a transaction handled by Third-Party Defendant Northwest Title and Escrow Corporation, ...

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