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Olatunji Alabi v. Homecomings Financial LLC

September 21, 2011

OLATUNJI ALABI, PLAINTIFF,
v.
HOMECOMINGS FINANCIAL LLC, AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. DEFENDANTS.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

This matter is before the Court on a motion to dismiss [67] filed by Defendants Homecomings Financial LLC and Mortgage Electronic Registration Systems, Inc. For the reasons set forth below, the Court grants Defendants' motion to dismiss [67].

I. Background*fn1

Plaintiff Olatunji Alabi immigrated to this country from Nigeria in 1999, along with his wife and four children. (Am. Compl. ¶ 14). In August 2003, he purchased a home on Chicago's south side, paying approximately $70,500. (Id. ¶ 18). Mr. Alabi financed this purchase with a mortgage loan assumed by Defendant Homecomings Financial LLC and serviced by Defendant Mortgage Electronic Registration Systems, Inc. ("MERS"). (Id. ¶¶ 19-20, 26-27). Shortly thereafter, Mr. Alabi's wife was diagnosed with cancer. She died two months later. (Id. ¶ 22). After his loss, Mr. Alabi struggled to earn enough money to make his mortgage payments while taking care of his children alone. (Id. ¶¶ 23-25).

On July 26, 2004, Defendants filed a foreclosure action against him. (Id. ¶ 26). A few months later, Defendants presented Mr. Alabi with a proposed repayment agreement in lieu of foreclosure-an agreement that Plaintiff alleges contained false and inaccurate statements as to the amount owed. This agreement required acceptance in the form of a $1,000 payment to be received by Defendants. (Id. ¶¶ 30-31, Ex. B). Mr. Alabi transferred the $1,000 payment, but alleges that Defendants did not credit that payment or return the money and instead continued with the foreclosure action. (Id. ¶¶ 32-37).

On March 4, 2005, less than a year after the foreclosure action was filed and shortly after he learned that his thirteen year-old daughter was seriously ill with a brain tumor, Mr. Alabi filed a voluntary Chapter 13 petition for bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois. The bankruptcy was confirmed, and on August 22, 2005, an order was entered which directed Mr. Alabi to make monthly payments to Defendants in the amount of $662.97. (Id. ¶¶ 40, 42). Despite his difficult circumstances, Mr. Alabi made payments to Defendants and his other creditors pursuant to his Chapter 13 plan. Each payment was made to Defendants by certified money order. Mr. Alabi's amended complaint alleges that through his September 2006 payments, he either was current on his mortgage payments pursuant to the August 22, 2005 order, or nearly so. (Id. ¶¶ 43-44).

On October 27, 2006, Defendants filed a motion to modify the automatic stay to allow foreclosure proceedings to move forward. Defendants' motion asserted that Mr. Alabi's post-petition mortgage payments were $1,195.59 per month (as opposed to $662.97), that Mr. Alabi was in default with respect to the August 2005 order, that the post-petition payments through November 2006 were delinquent by $9,187.18 (including attorneys fees and costs), and that Mr. Alabi had no equity in his home for the benefit of unsecured creditors. (Id. ¶¶ 46-49, Ex. E). Attached to the motion was a statement that estimated the value of the property to be $95,000.00.

In the months surrounding the filing of the stay motion, Plaintiff alleges that Defendants made a series of misrepresentations. First, in a letter dated September 5, 2006, Defendants wrote to Mr. Alabi maintaining that his monthly mortgage payment had been reset such that he would now owe a monthly "escrow" payment of $20,060,201.*fn2 (Id. ¶ 45, Ex. D). Then on December 4, 2006, three days before the hearing on the stay motion, Defendants' attorneys sent Mr. Alabi a letter setting forth another recalculation of his alleged default. The letter asserted that Mr. Alabi's monthly mortgage payments for the period May through September 2006 were $1,121.63, and increased to $1,195.59 only in October 2006. (Id. ¶¶ 50-51, Ex. G). According to Plaintiff's amended complaint, this series of communications-each of which contained a new miscalculation of Mr. Alabi's mortgage payments-was highly misleading and left Mr. Alabi concerned about whether and how he could possibly keep current on his mortgage. (Id. ¶¶ 44, 82, 85-88).
The bankruptcy court held a hearing on December 7, 2006.*fn3 Mr. Alabi appeared in court pro se, while Defendants were represented by counsel. Defendants' attorney represented that, since filing the stay motion, she had recalculated the default due and claimed that Mr. Alabi owed $3,382.21 (not including fees and costs), not $9,351.70. The recalculated amount took into account Mr. Alabi's contention regarding what his monthly payment was. Mr. Alabi still contested the new calculation, and the bankruptcy judge directed the parties to discuss the issue outside the courtroom. (Id. ¶ 52, Ex. H at 2-3, 5). There, counsel presented Mr. Alabi with some handwritten calculations, insisting that Mr. Alabi was delinquent by approximately $3,000.00. Upon return to the courtroom, Defendants' counsel admitted to having "kind of lost [her] temper" with the pro se debtor because he was not understanding what she meant when she told him that she had recalculated the default based on Plaintiff's own figures and that there still was a default. (Id. ¶ 53, Ex. H at 3). After additional back-and-forth, Mr. Alabi and Defendants' counsel again left the court to attempt to reconcile Mr. Alabi's payments. On their return to the courtroom, the parties still were unable to reach a consensus on how much was due. Defendants' counsel continued to insist that Mr. Alabi had missed two months' payments and argued that he also missed two additional months because his checks had been returned NSF -- for "not sufficient funds." (Id. ¶ 54, Ex. H at 8-9). Mr. Alabi maintained that the checks had not been returned NSF (id. ¶ 55, Ex. H at 9), but he was unable to present proof of payment in open court. Mr. Alabi maintains that his checks could not have been returned NSF because they were certified money orders. (Id. ¶ 55, Ex. J).

At that point, the bankruptcy judge questioned Mr. Alabi on what payments he had made.*fn4 Although Mr. Alabi continued to express his frustration that Defendants were unable to determine how much was owed, he eventually admitted that, at the time Defendants filed the stay motion in October, he was "down two months" and that at the time of the hearing, he had not paid the October, November, or December payments. Although he reminded the court that he had until December 15 to pay the December payment, he admitted that he was "two months short, yes." According to the transcript, Mr. Alabi notified the bankruptcy judge that he was prepared to tender the October payment in open court, but did not have money to make the November or December payments.

Relying on Mr. Alabi's assertion that he was, at a minimum, "two months short," the bankruptcy judge modified the stay to allow Defendants' foreclosure action to proceed. (Id. ¶ 56, Ex. H at 10). According to the amended complaint, approximately two to three weeks after the hearing, Mr. Alabi sent Defendants $2,000 sufficient to cover all three months, but this payment was rejected.*fn5 (Id. ¶¶ 49, 71-72). In January 2007, Mr. Alabi filed a motion to vacate the order modifying the automatic stay, which the court denied on January 25. A foreclosure "sale" was held on February 2, 2007, with the Judicial Sales Corporation selling Mr. Alabi's house to Defendant MERS for $84,183.58. (Id. ¶ 59). Mr. Alabi and his family were evicted, and their belongings were removed from the home at the direction of Defendants on August 30, 2007. (Id. ¶¶ 60-61). Public records reveal that Mr. Alabi's house was purchased approximately 10 months later for $175,000. (Id. ¶ 62).

On August 4, 2009, Plaintiff filed a pro se complaint before this Court. On its own motion, the Court appointed counsel for Plaintiff on February 11, 2010. Counsel withdrew on March 9, 2010. On March 11, 2010, the Court appointed a second attorney for Plaintiff, but Plaintiff's second counsel withdrew due to a conflict in November 2010. The Court appointed a third counsel on November 10, and on January 12, 2011, Plaintiff through counsel filed an amended complaint against Defendants for relief under Rule 60(d) and for violations of the Illinois Consumer Fraud Act, 815 ILCS 505/1 et seq. ("CFA") and the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq. ("DTPA").*fn6 On March 8, 2011, Defendants moved to dismiss all claims asserted in the amended complaint.

II. Legal Standard for Rule 12(b)(6) Motions to Dismiss

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the ...


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