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Levey v. Citimortgage

August 10, 2009


The opinion of the court was delivered by: Joan B. Gottschall United States District Judge

Judge Joan B. Gottschall



Defendant CitiMortgage has filed a motion to dismiss Dorothy Levey and Moses Hyles' Fourth Amended Complaint (the "Complaint"),*fn1 which alleges violations of the Fair Housing Act ("FHA"), 42 U.S.C. § 3601-19, and the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691-91f. Compl. ¶ 1. Plaintiffs additionally bring a statutory claim under the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), and Illinois common law claims of unconscionability and breach of fiduciary duty under the court's supplemental jurisdiction. See Compl. Hyles' claims are brought against Mark Diamond, the individual who allegedly perpetrated the fraud against him, and CitiMortgage, Inc., the assignee of the loan brokered by Diamond and originally funded at closing by Delta Funding Corporation ("Delta"). Levey's claims are brought against CitiMortgage, the reputed assignee of a loan originated by BNC Mortgage (the "BNC Loan"). Id.

In the Complaint Hyles specifically alleges that after entering into a series of loans over several years to pay various expenses he received a number of telephone calls from arepresentative of Diamond's firm inquiring whether Hyles wished to refinance his existing loan in order to have "extra money" to "re-do [his] bathroom and . . . kitchen." Compl. ¶¶ 27, 28. Subsequently, Diamond introduced Hyles and his wife to the mortgage lender Delta. Compl. ¶ 32. Hyles and his wife entered into a mortgage agreement (the "Mortgage") with Delta, the proceeds of which Hyles claims he never received. Compl. ¶¶ 30, 35. At an unspecified time the Mortgage was assigned to CitiMortgage, which is currently collecting on it. Compl. ¶¶ 5, 47, 83.

Levey avers that on February 20, 2002 she and her husband Dan Levey unknowingly signed papers for a mortgage loan from BNC Mortgage for $73,950 which they believed to be a debt-consolidation loan ("BNC Loan"). Compl. ¶¶ 9-10. At the closing, Levey paid a variety of fees including a "yield-spread premium" which she allegedly did not agree to. Compl. ¶¶ 12-16. Levey further states that BNC Mortgage "granted, bargained, sold, assigned, transferred or set over the Levey Mortgage to" CitiMortgage. Compl. ¶ 17.

CitiMortgage attaches various documents to its motion to dismiss which it maintains are properly before the court, and which show that Levey and her husband entered into a separate and succeeding mortgage loan in January 2003 with First National Bank of Arizona ("First National Loan"). Mot. 2, Ex. B. CitiMortgage asserts that it is the assignee of the First National Loan, not the BNC Loan that is the focus of Levey's allegations. Mot. 3, Ex. C, D.


Rule 12(b)(6) allows a defendant to seek dismissal of a complaint that fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). On a Rule 12(b)(6) motion the court must accept as true the allegations of the complaint and draw all reasonable inferences in favor of the plaintiff. Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (internal citation omitted). Legal conclusions, however, are not entitled to any assumption of truth. Ashcroft v. Iqbal, 129 S.Ct.1937, 1940 (2009). To survive a Rule 12(b)(6) motion, "the complaint need only contain a 'short and plain statement of the claim showing that the pleader is entitled to relief.'" EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Fed. R. Civ. P. 8(a)(2)). However, the allegations must provide the defendant with "fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957)). The plaintiff need not plead particularized facts, but the factual allegations in the complaint must be sufficient to "state a claim to relief that is plausible on its face[.]" Id. at 570. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1940 (citing Twombly, 550 U.S. at 556).

A. FHA Claim (Count V)

The FHA prohibits discrimination "against any person in the terms, conditions, or privileges of sale or rental of a dwelling or in provisions of services or facilities therewith, because of race, color, religion, sex, familial status or national origin." 42 U.S.C. § 3604(b). Respecting mortgage loans, the FHA regulations specifically forbid discrimination "against any person in making available loans or other financial assistance for a dwelling, or which is or is to be secured by a dwelling" based on the same criteria prohibited by statute. 24 C.F.R. § 100.120.

Hyles fails to allege any facts which might be construed to state a claim against CitiMortgage under the FHA. See generally Compl. All of Hyles's allegations of wrongdoing are directed at co-defendant Mark Diamond and various entities with whom he was associated, not against CitiMortgage. Indeed, Hyles avers in his complaint that CitiMortgage was not present at the closing of the Mortgage and does not allege that CitiMortgage had any involvement at all with setting the terms of the Mortgage originated by Delta. Compl. ¶ 46(a). CitiMortgage, moreover, is referred to throughout the complaint as an assignee of the Mortgage. See Compl. None of Hyles' allegations, then, are sufficient to state a claim that CitiMortgage has discriminated against Hyles in "making available loans or other financial assistance for a dwelling," because Hyles has not claimed that CitiMortgage ever made him a loan. 42 U.S.C. § 3604(b).

The same reasoning applies to the BNC Loan issued to Levey, who avers that CitiMortgage was not present at the origination of the BNC Loan and is referred to throughout the complaint as an assignee.*fn2 Compl. ¶ 45(a).

Hyles and Levey have alleged that CitiMortgage discriminated against them on the basis of race by "contracting or assuming a contract"for the Mortgage and the BNC Loan because the "contracted" mortgages contained "terms and conditions less favorable than in mortgage loans" that CitiMortgage "contracted" from similarly-situated, non-minority borrowers. Compl. ¶ 75. While FHA regulations prohibit purchasers of loans from refusing "to purchase loans . . . or . . . impos[ing] different terms or conditions for such purchases" based on race or other impermissible criteria, Plaintiffs' allegations cannot be construed to make out such a claim because they have not pled any facts related to the sale or transfer of the loans from Delta or BNC to CitiMortgage. See 24 C.F.R. § 100.125. As a consequence, Hyles and Levey have also failed to allege that CitiMortgage imposed different terms or conditions on the "purchase" of the ...

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