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Sekre Kouakou, et al v. Sutton Funding

February 22, 2012


The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge


This matter is before the court on Defendant Michael J. Riley's (Riley), Defendant Christopher Likens'(Likens), Defendant Piggybanker Stock Company's (PSC), and Defendant Nations Holding Company's (NHC) (collectively "Moving Defendants") motions to dismiss. For the reasons stated below, the court grants the motions to dismiss.


Plaintiffs allege that they had a financial interest in a property located at 14 S. 15th Avenue, in Maywood, Illinois (Property), and that in 2006, they secured an adjustable rate mortgage loan on the Property (Original Loan) with an initial interest rate of 7%. Plaintiffs also allege that in July of 2007, they received a telephone solicitation from Defendant Challenge Financial Investors Corp. (Challenge), offering to refinance the Original Loan so that Plaintiffs received better loan terms and cash back at closing to use toward the repayment of other existing debt. Plaintiffs allegedly met with a loan officer from Challenge (Loan Officer), provided him with their financial information for the purpose of completing a loan application (Application), but did not execute the Application at that time. After reviewing their financial information, the Loan Officer allegedly indicated to Plaintiffs that Challenge could offer them a new mortgage loan on the Property (Refinance Loan) with a fixed interest rate of 7.8%, and the Loan Officer also represented to Plaintiffs that they would receive $20,000.00 cash back at closing.

According to Plaintiffs, although they met the Loan Officer at an office of Challenge, the Application falsely indicates that the Application was taken over the telephone. In addition, the Application allegedly omitted certain information. Further, Plaintiffs allege that prior to the closing of the Refinance Loan, the Property was appraised by an appraiser chosen by Challenge, who indicated that the Property was worth $244,000.00. Plaintiffs also allege that when the Property was appraised the prior year, it was appraised for $30,000.00 less than that amount.

On July 31, 2007 (Settlement Date), Plaintiffs allegedly closed on the Refinance Loan. The principal amount borrowed under the Refinance Loan was allegedly $219,000.00. In addition, the Refinance Loan allegedly had a 30-year maturity date, and provided that the interest rate would be 8.9% for a three-year period and that the interest rate would be a variable rate every six-months thereafter. Plaintiffs allege that the closing documents were never explained to them, and that at the closing, they were merely instructed regarding where to sign each document. In addition, Plaintiffs allege that after the closing, they received only $1,249.48 cash back.

According to Plaintiffs, they were never provided with written disclosures of the terms of the Refinance Loan prior to the Settlement Date. Instead, Plaintiffs allegedly relied on the earlier representations of the Loan Officer regarding the terms of the Refinance Loan. Plaintiffs allege that entering into the Refinance Loan has put them in a worse financial position than they were in when they entered into the Original Loan. The cost to enter into the Refinancing Loan was allegedly more than $1,200.00, and Plaintiffs' monthly mortgage payments were allegedly $400.00 more under the terms of the Refinance Loan. In addition, Plaintiffs were allegedly charged various questionable fees related to the closing of the Refinance Loan. In addition, prior to the Settlement Date, Plaintiffs were allegedly never provided copies of the notice indicating their right to rescission and cancellation of the Refinance Loan (Notice), nor were Plaintiffs allegedly ever provided with an itemization of the amount financed or other disclosures required by law.

In June 2008, Challenge's Illinois Mortgage Broker License was allegedly revoked due to Challenge's alleged violation of various Illinois consumer protection laws. In late 2008, Plaintiffs allegedly sent a Qualified Written Request (Request) to the lender and the servicer of the Refinance Loan, but allegedly neither party ever fully responded to the Request. Plaintiffs include in their amended complaint claims alleging violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and Regulation Z, 12 C.F.R. § 226.1 et seq. (Count I and Count II), claims alleging violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605 et seq. (Count III), state law breach of contract claims (Count IV) and breach of fiduciary duty claims (Count V), claims alleging violations of the Credit Repair Organization Act, 15 U.S.C. § 1679 et seq. (Count VI), state law civil conspiracy claims (Count VII), quiet title claims (Count VIII), claims alleging a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (Count IX), misrepresentation claims (Count X), and common law fraud claims (Count XI). Moving Defendants now move to dismiss all claims brought against them, contending that this court lacks personal jurisdiction over them.

The court notes that after the instant motions to dismiss were fully briefed, Plaintiffs filed a motion for leave to conduct jurisdictional discovery and requested another opportunity to brief the issue of personal jurisdiction. On October 12, 2011, the court granted Plaintiffs' motion and gave Plaintiffs thirty-days to conduct jurisdictional discovery. The court also set another briefing schedule so that the parties could address the issue of personal jurisdiction a second time. After several of the Defendants in the instant action were dismissed pursuant to settlement, the court revised the briefing schedule, and gave Plaintiffs until January 23, 2012 to file additional responses to Moving Defendants' motions to dismiss. Plaintiffs failed to file any additional responses.


Federal Rule of Civil Procedure 12(b)(2) (Rule 12(b)(2)) says a party can move to dismiss claims for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). A plaintiff is not required to allege in his complaint facts to support the existence of personal jurisdiction. Steel Warehouse of Wisconsin, Inc. v. Leach,154 F.3d 712, 715 (7th Cir. 1998). However, once a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the existence of personal jurisdiction. Id.; RAR, Inc. v. Turner Diesel, Ltd.,107 F.3d 1272, 1276 (7th Cir. 1997). When the court adjudicates a motion to dismiss brought pursuant to Rule 12(b)(2) based on written materials submitted to the court, "the plaintiff need only make out a prima facie case of personal jurisdiction." Purdue Research Found. v. Sanofi-Synthelabo, S.A.,338 F.3d 773, 782 (7th Cir. 2003)(citations omitted) (internal quotations omitted). In determining whether the plaintiff has met his burden, the "court accepts all well-pleaded allegations in the complaint as true." Hyatt Int'l. Corp. v. Coco, 302 F.3d 707, 712-13 (7th Cir. 2002). In addition, "the plaintiff is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record." Purdue Research Found.,338 F.3d at 782; see also RAR, 107 F.3d at 1275 (stating that the plaintiff "is entitled to have any conflicts in the affidavits resolved in its favor").


Moving Defendants argue that the claims against them must be dismissed because this court lacks personal jurisdiction over them. Personal jurisdiction involves consideration of both federal and state law. Illinois v. Hemi Group, LLC, 622 F.3d 754, 756-57 (7th Cir. 2010). Under both the Federal Constitution and the Illinois Constitution, a defendant is subject to personal jurisdiction "only if the defendant had certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Mobile Anesthesiologists Chicago, LLC v. Anesthesia Associates of Houston Metroplex, P.A.,623 F.3d 440, 443-44 (7th Cir. 2010)(citations omitted)(internal quotations omitted). A court has general personal jurisdiction over a defendant if the defendant has "continuous and systematic" contacts with the forum that are "sufficiently extensive and pervasive to approximate physical presence." Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir. 2010). The court has specific personal jurisdiction over a defendant if "(1) the ...

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