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Selena Jones v. Us Bank National Association

March 11, 2011

SELENA JONES, PLAINTIFF,
v.
US BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR CREDIT SUISSE FIRST BOSTON 2004-AA1; AHL ACQUISITION, LLC, AS SUCCESSOR IN INTEREST BY WAY OF MERGER TO AAMES FUNDING CORPORATION D/B/A AAMES HOME LOAN; WELLS FARGO HOME MORTGAGE, INC., D/B/A AMERICA'S SERVICING COMPANY; REAL TIME RESOLUTIONS, INC.; WILLIAM J. PARKER;
CODILIS & ASSOCIATES, P.C.; UNKNOWN SHELL COMPANY; UNKNOWN TRUSTEE FOR UNKNOWN TRUST; UNKNOWN BENEFICIARY OF UNKNOWN TRUST;
UNKNOWN HOLDER OF THE NOTE; DEFENDANTS.



The opinion of the court was delivered by: James F. Holderman, Chief Judge:

MEMORANDUM OPINION AND ORDER

In this lawsuit, pro se plaintiff Selena Jones ("Jones") alleges that defendants US Bank National Association, as Trustee for Credit Suisse First Boston 2004-AA1 ("US Bank") and Wells Fargo Home Mortgage, Inc. d/b/a America's Service Company ("ASC") (together "Defendants") are liable to Jones for damages she suffered due to the unlawful execution of two "consumer mortgage refinance transaction[s]" entered into on August 6, 2004, and for damages Jones suffered due to Defendants' unlawful efforts to foreclose on the residential property mortgaged by Jones and collect on the underlying notes. (Dkt. No. 73 ("2d Am. Compl.") ¶¶ 32- 33.)

Specifically, Jones alleges that US Bank and ASC are liable for violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq. ("RICO") ("First Cause of Action"), that US Bank is liable for violations of the Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. ("TILA") ("Second Cause of Action"), that ASC is liable for violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601, et seq. ("RESPA") ("Third Cause of Action"), that US Bank and ASC are liable for violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA") ("Eighth Cause of Action"), and that ASC is liable for violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq. ("FCRA") ("Ninth Cause of Action").*fn1

On June 18, 2010, Defendants filed a "Motion to Dismiss for Failure to State a Claim" (Dkt. No. 48), asking the court "to dismiss with prejudice all claims set forth against it [sic] by Plaintiff Selena Jones in Plaintiff's Amended Complaint pursuant to Fed.R.Civ.P. 9(b) and 12(b)(6) for failure to state a claim upon which relief can be granted." (Id.) The court separately addresses each of Jones's claims against US Bank and ASC in the analysis that follows.

BACKGROUND

At this stage in the litigation, the court under the law must accept the factual allegations set forth in Jones's Second Amended Complaint*fn2 as true for purposes of ruling on the pending motion and draw all reasonable inferences in Jones's favor. Fednav Int'l Ltd. v. Continental Ins. Co., 624 F.3d 834, 837 (7th Cir. 2010). The facts set forth below are therefore stated from that perspective.

On August 6, 2004, Jones executed two "consumer mortgage refinance transaction[s]" with defendant AHL Acquisition, LLC, as successor in interest by way of merger to Aames Funding Corporation d/b/a Aames Home Loan ("Aames") in the amount of $155,200.00 ("First Loan") and $38,800.00 ("Second Loan") (together the "Loans").*fn3 (2d Am. Compl. ¶¶ 32-33.)

Prior to the August 6, 2004 closing, Aames had entered into "Assignment and Assumption Agreements" and "Pooling and Service Agreements" with one or more parties. (Id. ¶ 44.) After the closing, Jones's Loans were securitized as a "Real Estate Mortgage Investment Conduit" and entered into a loan pool, where the Loans were purchased by investors. (Id. ¶¶ 45, 62.) Although Aames is listed as the "lender" in the Loan documents, the actual source of funding for the Loans is these undisclosed investors. (Id. ¶¶ 53-54.) The Loans also include undisclosed fees for the services of a mortgage aggregator and an investment banker. (Id. ¶ 53.) Through the process of pooling and selling Jones's mortgage documents, the associated notes were "pledged as collateral for other secured transactions" and negotiated to an undisclosed party. (Id. ¶¶ 55-60.) No assignment of either mortgage has been recorded in the county property records. (Id. ¶ 66.)

Aames sold Jones's Loans to US Bank, despite the fact that Aames had "already been paid in full" for these same documents. (Id. ¶ 46.) On April 12, 2005, US Bank sued Jones for foreclosure in the Circuit Court of Cook County, Illinois, County Department, Chancery Division, Case No. 2005-CH-06541 (the "Foreclosure Case"), based on an alleged default on the First Loan. (Id. ¶ 68.) However, US Bank was not an assignee of the mortgage for the First Loan, nor was US Bank the owner or holder of the associated note. (Id. ¶¶ 69-70.) Additionally, Jones was never served with a notice of default, and no notice of default was filed in the county property records. (Id. ¶ 67.)

On June 9, 2008, US Bank obtained a judgment of foreclosure against Jones's home at 3622 Cherry Hill Drive, Flossmoor, IL 60422 (the "Property"), which had been mortgaged in support of both Loans. (Id. ¶¶ 26, 51, 74.) The Property was then sold as a result of the foreclosure judgment on January 6, 2010. (Id. ¶ 77.) Jones was never served with a notice of sale prior to the January 6, 2010 sale, and no notice of sale was recorded in the county property records. (Id. ¶ 76).

Defendant ASC acted as the mortgage servicer for the First Loan. (Id. ¶ 11.) ASC is not the holder in due course of the associated note, nor "the owner of any rights under the mortgage provisions of the deed of trust." (Id. ¶ 49.) The payments that Jones made to ASC for loan servicing were not applied to repay the First Loan. (Id. ¶¶ 48-50.)

LEGAL STANDARD

Under the Federal Rules of Civil Procedure, a complaint generally must include only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). To survive a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual material, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1940 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). If the allegations of a complaint "fail[ ] to state a claim upon which relief can be granted," the complaint will be dismissed. Fed. R. Civ. P. 12(b)(6). Allegations of fraud, including Jones's RICO claim alleging a "scheme to defraud" (2d Am. Compl. ¶ 82), are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Slaney v. The Int'l Amateur Athletic Fed'n, 244 F.3d 580, 597 (7th Cir. 2001).

In ruling on the pending motion to dismiss, the court construes Jones's Second Amended Complaint in the light most favorable to Jones, accepts as true all well-pleaded factual allegations set forth therein, and draws all reasonable inferences in Jones's favor. Fednav Int'l Ltd., 624 F.3d at 837.

ANALYSIS

1. RICO Claim (First Cause of Action)

In her civil RICO claim, Jones alleges that Defendants, along with Aames, are liable under 18 U.S.C. § 1962 for "committ[ing] acts of extortionate credit transactions and mail fraud / wire fraud," scheming to "falsely represent[ ] material facts and ma[ke] material omissions . . . to induce the plaintiff to rely on them," and agreeing "to engage in a course of conduct . . . in furtherance of the conspiracy to defraud the Plaintiff for the common purpose of accruing economic gains for themselves at the expense of and detriment to the Plaintiff." (2d Am. Compl. ¶¶ 81-82, 91.) In furtherance of this scheme, Defendants "purported to 'negotiate' [Jones's] notes by adding terms which allowed the proceeds of the notes to be allocated to the payment of the notes of other borrowers," thereby fraudulently promoting the "securitization process." (Id. ¶¶ 97-98.) Jones describes the negotiation of her notes as being "in actuality the theft of her identity to hide the vast number of 'toxic waste mortgages,['] notes and obligations that the enterprise defendants were selling up through their 'securitization' chain." (Id. ...


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