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Juanita Rodriguez, On Behalf of Herself and All Others Similarly Situated v. Chase Home Finance

October 25, 2011


The opinion of the court was delivered by: Judge Edmond E. Chang


Plaintiff Juanita Rodriguez brought a complaint alleging that Defendant Chase Home Finance, LLC violated a federal law and an Illinois state law. In a previous order, R. 36, the Court dismissed Rodriguez's federal claim under the Homeowners Protection Act (HPA), 12 U.S.C. § 4901 et seq., for failure to state a claim. The parties were asked whether this Court ought to retain supplemental jurisdiction over the state law claim, or whether there was some other basis for jurisdiction. Both Rodriguez and Chase asked that the Court retain jurisdiction over Rodriguez's Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/1 et seq., claim pursuant to 28 U.S.C. § 1367,*fn1 and decide Chase's motion to dismiss the claim. R. 37, 38. For the following reasons, the Court will exercise supplemental jurisdiction over the state law claim in this case, but grants Chase's motion to dismiss [R. 19] that claim.


The Court assumes familiarity with the facts described in the previous order dealing with the federal law claim. R. 36 at 2-3. On September 23, 2011, the Court issued an order asking the parties to file position papers addressing whether the Court should exercise its discretion under § 1367 and maintain jurisdiction over Rodriguez's state law claim. Id. at 9. The Court also inquired whether Rodriguez can allege the requisite amount in controversy, such that her ICFA claim falls within the Court's diversity jurisdiction. Id. at 9-10.

In their position papers, both parties asked this Court to exercise supplemental jurisdiction over the state law claim. "[T]he district courts shall have supplemental jurisdiction over all claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States." 28 U.S.C. § 1367(a). Here, supplemental jurisdiction does apply because the ICFA claim is factually related to the federal claim against Chase.*fn2

The only question is whether or not to retain supplemental jurisdiction after the dismissal of the federal law claim.

In cases where the district court has dismissed all claims over which it has original jurisdiction -- as is the case here -- the court's decision whether to exercise supplemental jurisdiction over the remaining state law claim is "purely discretionary." Carlsbad Tech. v. HIF Bio, 129 S. Ct. 1862, 1866-67 (2009) (citing 28 U.S.C. § 1367(c)). Because this action was filed in federal court over a year ago, and there is only one state law claim at issue, and neither party disputes jurisdiction, the Court elects to assert supplemental jurisdiction over the ICFA claim. See Wright v. Associated Ins. Cos., 29 F.3d 1244, 1251 (7th Cir. 1997) (district court should consider and weigh the factors of judicial economy, convenience, fairness, and comity in deciding whether to exercise jurisdiction over pendent state law claims).


The Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) "is a regulatory and remedial statute intended to protect consumers . . . against fraud, unfair methods of competition, and other unfair and deceptive business practices." Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960 (Ill. 2002). The Supreme Court of Illinois has held that recovery under the ICFA "may be had for unfair as well as deceptive conduct." Id.; see also Rockford Mem'l Hosp. v. Havrilesko, 858 N.E.2d 56, 62 (Ill. App. Ct. 2006) (under the ICFA, a practice can be unfair without being deceptive).In this case, Rodriguez claims that Chase's failure to disclose that Rodriguez's private mortgage insurance was not included in her loan modification trial payment plan violated the ICFA because it was both deceptive and unfair. R. 1 (Compl.) ¶¶ 45-53. Thus, in deciding Chase's motion to dismiss, the Court must make two separate inquiries: (1) whether Rodriguez sufficiently stated a "deceptive practice" claim, which must be pled with particularity under Federal Rule of Civil Procedure 9(b); and (2) whether Rodriguez sufficiently stated an "unfair conduct" claim, which must meet the less-stringent notice pleading standard of Rule 8(a). Windy City Metal Fabricators & Supply v. CIT Tech. Fin. Servs., 536 F.3d 663, 668-70 (7th Cir. 2008).

A. Deceptive Practice

Rodriguez alleges that Chase unlawfully and intentionally misrepresented that Rodriguez's monthly trial payment plan (TPP) included "insurance premiums" when, in fact, the private mortgage insurance (PMI) premium was not factored into her TPP. Compl. ¶¶ 45-46. Rodriguez claims that Chase knew the PMI was not included in the TPP, but nonetheless falsely represented the TPP as an "estimate" of the payment Rodriguez would be required to pay in the event her loan was permanently modified. Id. ¶¶ 47-48. Rodriguez claims that Chase intentionally made these misrepresentations in order to induce her sign the TPP and make payments pursuant to the Plan. Id. ¶ 49.

To state a cause of action under the ICFA, the plaintiff must allege: "(1) a deceptive act or unfair practice occurred; (2) the defendant intended for plaintiff to rely on the deception; (3) the deception occurred in the course of conduct involving trade or commerce; (4) the plaintiff sustained actual damages; and (5) such damages were proximately caused by the defendant's deception." Dubey v. Public Storage, Inc., 918 N.E.2d 265, 277 (Ill. App. Ct. 2009). When the allegedly deceptive conduct "sounds in fraud," the heightened pleading standard of Rule 9(b) applies. Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 446-47 (7th Cir. 2011) (citing Borsellino v. Goldman Sachs Grp., 477 F.3d 502, 507 (7th Cir. 2007)) ("A claim that 'sounds in fraud' -- in other words, one that is premised upon a course of fraudulent conduct -- can implicate Rule 9(b)'s heightened pleading requirements."). Here, the complaint alleges that Chase intentionally concealed from Rodriguez, or misrepresented to her, a truthful estimate of the monthly mortgage payment she would be expected to make upon completing the TPP and obtaining a loan modification. This "is fraud predicated on either a misrepresentation or an omission." Pirelli, 631 F.3d at 447 (citing United States v. Stephens, 421 F.3d 503, 507 (7th Cir. 2005)) (fraud embraces half-truths "that the defendant knows to be misleading and which the defendant expects another to act upon to his detriment and the defendant's benefit"). Rule 9(b) applies to Rodriguez's deceptive practices claim.

Chase argues that Rodriguez fails to plead all of the elements of her "deceptive practices" claim with sufficient particularity. Specifically, Chase contends that Rodriguez's allegations regarding the damages she suffered fall short of stating a claim under the ICFA. The Court agrees.

When actual damage is an element of a claim, as it is here, a plaintiff must allege that she has suffered harm "in a concrete, ascertainable way." Price v. Philip Morris, Inc., 848 N.E.2d 1, 55 (Ill. 2005) (Karmeier, J. concurring). "Theoretical harm is insufficient. Damages may not be predicated on mere speculation, hypothesis, conjecture or whim." Id. Here, Rodriguez first alleges that if she had known that her final modification payments were going to be higher than her trial payments, she would not have agreed to the TPP. Compl. ¶ 50. However, she fails to identify how she was actually harmed by making the trial payments instead of her original mortgage payments -- which were greater than her trial payments. The purpose of obtaining a loan modification is to lower the borrower's monthly payments and make the payment "more affordable." See R. 20-1, Def.'s Exh. 1 (Trial Period Plan Notice) at 1, 3. Rodriguez fails to allege how she was damaged by a lower monthly payment. Instead, she states that "[h]ad [she] known that her modified monthly payments would have been $315.31 (12.28%) higher than the 'estimated' TPP payment . . . [she] would have sought any number of other remedies available to her in order to save her home or to otherwise mitigate her losses." Compl. ¶ 50. These allegations do not satisfy Rule 9(b). Even viewed in the light most favorable to Rodriguez, the facts in the complaint only allow the inference that her decision to pursue the modification prevented her from seeking some other unspecified relief. Without knowing what that alleged relief would have been, the complaint does not put Chase or the Court on notice as to how Rodriguez was actually damaged. And although Rodriguez states that she would not have made ...

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