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Swanson v. CITI

December 22, 2009


The opinion of the court was delivered by: James B. Zagel United States District Judge

Judge James B. Zagel


Plaintiffs Gloria Swanson ("Swanson") and Charles Routen ("Routen") filed their Amended Complaint on June 9, 2009 alleging racial discrimination after being denied a loan application and asserting claims against Defendants Citibank, Andre Lanier ("Lanier"), and PCI Appraisal Services ("PCI") under the Fair Housing Act ("FHA"), 42 U.S.C § 3605(a), and the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691(a)(1) . Defendants filed motions to dismiss and on October 16, 2009 I allowed Plaintiffs to proceed against Defendants under a theory of common law fraud theory. Although this theory of liability was not invoked by Plaintiffs, I construed this claim from their complaint. I then granted Defendants leave to file a motions to dismiss regarding the common law fraud claim. Defendants now come with motions to dismiss Plaintiffs' common law fraud claims pursuant to Federal Rule of Civil Procedure 12(b)(6). I address each of these motions in this Order.


On or about February 4, 2009, Swanson heard an announcement on NBC5 news television that Citibank was going to "make a concerted effort to get more TARP money" into the hands of consumers. Plaintiffs allege that this public announcement was not sincere, but rather an attempt to downplay bad publicity Citibank was experiencing because of a scandal involving executives' personal use of company jets. Additionally, Plaintiffs allege that the announcement that Citibank planned on distributing TARP money was insincere because Citibank had "no intention of granting many loans in the African American community." Thereafter, Swanson went to Citibank and applied for an equity loan.

When Swanson entered Citibank, she first spoke with Citibank loan representative B. Skertich. Swanson told Skertich that she had previously been denied an equity loan with Washington Mutual (now JPMorgan Chase). Skertich informed Swanson that her husband (Routen) would need to be present to make the loan application. Swanson did not accept this statement and at which point Skertich asked a manager to speak with Swanson.

Citibank Manager Cimino spoke to Swanson, reiterated that her husband needed to be present for the loan application, and also informed Swanson that Citibank's loan criteria was comparatively more stringent than JPMorgan Chase's. At the end of this conversation, Skertich gave Swanson an application to take home and complete, to be signed by both Swanson and her husband Routen.

Swanson returned the next day with the completed application. Skertich proceeded to input Plaintiffs' required information into the computer and verbally confirmed each answer with Swanson. Plaintiffs allege that when the question of race arose, a discussion between Skertich and Swanson commenced regarding the Skertich's mixed race wife and child.

Plaintiffs later received a letter dated February 5, 2009 stating that they had been conditionally approved for $50,000 pending the review of required documents. On February 7, 2009 Andre Lanier of PCI Appraisal Services went to Plaintiffs' home and performed an appraisal for Citibank. On February 17, 2009 Plaintiffs were informed that the appraisal of their home was $170,000 and that they were being denied a loan because there was not sufficient equity in Plaintiffs' home.*fn1 A series of letters followed between Citibank and Plaintiffs whereby Plaintiffs challenged the appraisal. Plaintiffs allege that in 2003 their home was appraised for $260,000. Additionally, Plaintiffs noted that other homes on their block recently sold for $325,000 and $260,000 respectively.*fn2 Plaintiffs also state that Allstate Insurance Company currently insures their home for $236,817. On April 12, 2009 Plaintiffs hired Midwest Valuations to conduct an appraisal of their home. This appraisal valued their home at $240,000.

Plaintiffs allege racial discrimination by Defendants after being denied their loan application. Plaintiffs allege that Citibank intentionally discriminates against the African American community both by discouraging African Americans from applying for loans, and also by undervaluing appraisals to provide a legitimate reason to deny conditionally approved loans. Plaintiffs allege that Defendants Lanier and PCI are involved in Citibank's scheme and intentionally undervalued their home's value in their appraisal for Citibank.


A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted. In ruling on such a motion, I accept as true all well-pleaded factual allegations in the complaint and draw all reasonable inferences from those facts in the plaintiff's favor. Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002). To state a claim, the complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). That said, the complaint must describe the claim in sufficient detail to give the defendant "fair notice of what . . . the claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation and citation omitted). The "allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a 'speculative level.'" EEOC v. Concentra Health Serv., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555).


A claim for fraud must include the following elements: (1) a false statement of material fact; (2) defendant's knowledge that the statement was false; (3) defendant's intent that the statement induce the plaintiff to act; (4) plaintiff's reasonable reliance on the statement; and (5) plaintiff's damages resulting from reliance upon the truth of the statement. Tricontinental Indus. v. Pricewaterhouse Coopers, LLP, 475 F.3d 824, 841 (7th Cir. 2007) (internal citations omitted); Chicago Export Packing Co. v. Teledyne Industries, Inc., 566 N.E.2d 326, 329 (Ill.App.Ct.1990). Allegations of fraud must conform to a heightened pleading standard set forth by Federal Rule of Civil Procedure 9(b) and require that a plaintiff plead all averments of fraud with ...

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