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Elias v. Stewart Title of Illinois

November 1, 2010

JOHN L. ELIAS, PLAINTIFF,
v.
STEWART TITLE OF ILLINOIS, NATIONAL CITY BANK, NATIONAL CITY MORTGAGE, NATIONAL LENDING CORPORATION, NATIONAL LENDING CORPORATION OF ILLINOIS, TRACEE YOUNG, CHRISTINA ZIABARAS, E*TRADE FINANCIAL CORPORATION, FEDERAL NATIONAL MORTGAGE ASSOCIATION, GREEN TREE SERVICING LLC, AND DOES 1 TO 100, DEFENDANTS.



The opinion of the court was delivered by: Virginia M. Kendall United States District Court Judge Northern District of Illinois

Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff John Elias ("Elias") filed suit against Stewart Title of Illinois ("Stewart"), National City Bank ("NCB"), National City Mortgage ("NCM"), National Lending Corporation ("NLC"), National Lending Corporation of Illinois ("NLCIL"), Tracee Young ("Young"), Christina Ziabaras ("Ziabaras"), E*Trade Financial Corporation, Federal National Mortgage Association ("FNMA"), Green Tree Servicing LLC, and other unnamed defendants (collectively "Defendants") under the Truth in Lending Act, 15 U.S.C. 1601 et seq. ("TILA") (Count I), the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ICLS 505/1 et seq. ("ICFA") (Count II), common law fraud (Count III), notary fraud (Count IV), civil conspiracy (Count V), and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961, et seq. ("RICO") (Count VI). PNC Bank ("PNC") is the successor to NCB and NCM. Count I was voluntarily dismissed with regards to Stewart but not with regards to any other defendant. Stewart and PNC separately move to dismiss Counts II, III, IV, V, and VI of Elias' Amended Complaint. For the following reasons, Stewart's Motion to Dismiss is granted. PNC's Motion to Dismiss is granted in part and denied in part. PNC's motion is granted regarding Counts I, II, III, IV, and VI. PNC's motion is granted regarding Count V for all claims except that of civil conspiracy to commit a violation of TILA, for which it is denied.

STATEMENT OF FACTS

The following facts are taken from Elias' Amended Complaint and are assumed to be true for purposes of this Motion to Dismiss. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995).

Stewart is a provider of title insurance and related real estate closing services in Illinois. NLC and NLCIL, both defunct corporations, were the mortgage broker and agent, respectively, of NCB and NCM. (Compl. ¶ 3.) NCB and NCM are now known as PNC. (Compl. ¶ 4.)

Elias sought to refinance and take a home equity line of credit on his home in Chicago in October 2006. (Compl. ¶¶ 19, 20.) Elias negotiated the refinancing and line of credit with Ziabaras, an employee and mortgage broker of NLC and NLCIL. (Compl. ¶ 21.) On Friday, October 20, 2006, Ziabaras met with Elias in Elias' office to sign forms authorizing the refinancing and the line of credit. (Compl. ¶ 23.) Elias was unhappy with the terms of the loans and did not sign the papers. (Compl. ¶ 24.) Elias changed his mind that weekend and decided he would sign and accept the terms of the loans. (Compl. ¶ 25.)

On Tuesday, October 24, 2006, Ziabaras went to Elias' house and he signed but did not date the loan documents. (Compl. ¶ 26.) Pursuant to TILA, borrowers are given three days to rescind their loans without penalty. (Compl. ¶¶ 29, 30.) The three day right of recision gave Elias until October 27, 2006 to rescind the loans he negotiated with Ziabaras. (Compl. ¶ 29.) However, both of Elias' loans were funded on Wednesday October 25, 2006. (Compl. ¶ 28.) NCM funded Elias with $289,768.49 for the refinancing and charged settlement fees of $2,496.35. (Compl. ¶ 32.) NCB funded Elias with $20,000 for his home equity line of credit and charged settlement fees of $419. (Compl. ¶ 33.)

The premature funding of the loans violated Elias' three-day right to rescind the loans under TILA. (Compl. ¶ 29.) Elias attempted to utilize another lender, but did not because his loans had already been funded by NCB. (Compl. ¶ 30.) Elias noticed that his refinancing and his home equity loan documents were both backdated and notarized as of Friday, October 20, 2006 even though he did not actually sign them until Tuesday, October 24, 2006. (Compl. ¶ 27.) Elias informed Defendants of his wish to rescind and that he was willing and able to tender the borrowed funds back to Defendants.*fn1 (Compl. ¶¶ 39, 40.)

Elias filed his Original Complaint on October 27, 2009. Stewart filed a Motion to Dismiss on February 20, 2010. Elias filed an Amended Complaint on May 3, 2010 and voluntarily dismissed Count I of the Amended Complaint with regards to Stewart on May 10, 2010. PNC filed a Motion to Dismiss Counts II-VI on May 27, 2010. PNC also filed a cross claim against NLC for breach of contract and express indemnity on May 27, 2010 regarding Count I.

STANDARD OF REVIEW

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all facts alleged in the complaint and construes all reasonable inferences in favor of the plaintiff. See Murphy, 51 F.3d at 717. To state a claim upon which relief can be granted, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true . . . 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In analyzing whether a complaint has met this standard, the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950. When there are well-pleaded factual allegations, the Court assumes their veracity and then determines if they plausibly give rise to an entitlement to relief. Id. A claim has facial plausibility when the pleaded factual content allows the Court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See id. at 1949.

Rule 9 provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Red. R. Civ. P. 9. This heightened pleading requirement was intended to protect against the "great harm to the reputation of a business of a firm or other enterprise a fraud claim can do." Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007). To satisfy the requirements of Rule 9, a plaintiff must set ...


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