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Jeffrey Sindles v. Saxon Mortgage Services

May 22, 2012


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


On October 12, 2011, plaintiff Jeffrey Sindles ("Sindles") filed a complaint (Dkt. No. 1 ("Complaint")) against defendants Saxon Mortgage Services, Inc. ("Saxon"), Ocwen Loan Servicing, LLC ("Ocwen"), and Deutsche Bank National Trust Company ("DBNTC") (collectively "Defendants"). Sindles seeks recovery from Defendants for fraud, breach of contract and implied covenants of good faith and fair dealing, promissory estoppel, unjust enrichment, negligent infliction of emotional distress, and alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS § 505/2, the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692e, 1692f, and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605(e). Ocwen and DBNTC have each moved to dismiss Sindles's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons detailed below, "Ocwen Loan Servicing, LLC's Motion to Dismiss" (Dkt. No. 9 ("Ocwen's Mot.")) is granted in part and denied in part, and "Deutsche Bank National Trust Company, As Trustee's Motion to Dismiss" (Dkt. No. 11 ("DBNTC's Mot.")) is granted.


At this stage in the litigation, the court under the law accepts the factual allegations set forth in Sindles's Complaint as true for purposes of ruling on the pending motion and draws all reasonable inferences in Sindles'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.

Sindles generally alleges that Defendants "engaged in illegal, unfair, and unlawful business practices that violate both federal and state law" while servicing a residential mortgage entered into by Sindles on December 29, 2006 by virtue of a written promissory note ("Note") and mortgage ("Mortgage") with non-party New Century Mortgage Corporation ("New Century"). (Compl. ¶¶ 11, 13.) Specifically, Sindles alleges "Defendants have charged [Sindles] and have sought to collect from [Sindles] various improper fees, costs, and charges that are either not legally due under the mortgage contract or applicable law, or that are in excess of amounts legally due." (Id. ¶ 12.) Saxon and Ocwen are both in the business of loan servicing. DBNTC is listed as the investor on Sindles's Mortgage. (Id. ¶¶ 4, 98-100.)

Starting on June 1, 2009, Sindles began to receive daily phone calls from a Saxon representative named "Jack" seeking Sindles's enrollment in a "Fast Track Rate Freeze." (Id. ¶ 14.) On July 27, 2009 Sindles received a voice message from Jack indicating that he could lock Sindles's interest rate for the next five years with "Fast Track Rate Freeze." (Id. ¶ 17.) Sindles returned Jack's call the same day, but was informed that Jack was no longer employed by Saxon and that the "Fast Track Rate Freeze" was not available. (Id. ¶ 18.) Instead, Sindles was offered enrollment in a "Home Affordable Modification Program" ("HAMP"), contingent on his submission of application materials, which would be mailed to him, and his payment for the first month trial period by August 1, 2009 (three days later). (Id. ¶ 19.) Between July 30, 2009 and November 1, 2009, Sindles made four payments according to the HAMP terms he was quoted over the phone. (Id. ¶¶ 21, 24, 26, 27.) Despite having never received the application package he was told he would be required to complete, Sindles received letters from Saxon requesting additional information for processing the HAMP modification on August 26 and November 2, 2009. (Id. ¶¶ 22, 29.) On November 5, 2009, Sindles received an application packet outlining his loan modification under the HAMP program which included, inter alia, that under the program Saxon would not apply payments towards the Mortgage but instead send a report to the credit bureaus that Sindles was delinquent in payments. (Id. ¶ 30.) Sindles called Saxon informing them that he was not interested in HAMP enrollment based on these terms, but was told that, "you cannot be removed from the program once you are in it." (Id.)

From November 5, 2009 through May 16, 2011, Saxon continued to mismanage Sindles's account. (See generally id. ¶¶ 31-112.) Specifically, Saxon wrongfully deposited Sindles's payments into a suspense account, diverted Sindles's payments to pay an unnecessary and unauthorized homeowner's insurance policy, automatically placed Sindles into a "Saxon Alternative Modification Program" ("SAMP") from which he could not be removed, charged improper late fees, and threatened Sindles with foreclosure if he did not sign up for the "Home Affordable Foreclosure Alternative" ("HAFA") Short Sale Program. (Id. ¶¶ 28, 31, 40, 50, 57, 62, 65, 69, 73, 103, 110.) Saxon also erroneously reported delinquencies in Sindles's account to credit bureaus. (See e.g. id. ¶¶ 41-42, 45-46, 49, 67, 71, 85.) As a result of the fluctuating status of his Mortgage account, Sindles suffered damage to his personal credit, including denial of a credit line from Fifth Third Bank ("Fifth Third") based on Saxon's reporting that Sindles's Mortgage payments were delinquent, the lowering of an existing Fifth Third line of credit (twice) based on the reported delinquency in Sindles's credit report, and the lowering of an existing Home Depot line of credit based on the reported delinquency in Sindles's credit report. (Id. ¶¶ 23, 25, 74, 78.)

On May 16, 2011, Saxon informed Sindles, by letter, that the servicing of his loan would be transferred to Ocwen. (Id. ¶ 112.) Subsequently, Sindles made monthly mortgage payments to Ocwen on May 31, 2011 and July 12, 2011. (Id. ¶¶ 113-14.) Ocwen contacted Sindles by telephone on June 29, 2011 to inform him that his account was past due and that late fees had been assessed. (Id. ¶ 115.)

Sindles was told the late fee was based on an "outstanding balance in his escrow account," despite Sindles's assertions that no such account existed. (Id.) After taking over service of the Mortgage, Ocwen called Sindles several times per day regarding late fees. (Id. ¶ 116.) On July 11, 2011 Sindles contacted Ocwen regarding these calls and was told by a representative that $420.26 was still due from the June 1, 2011 statement. (Id.) Additionally, the representative informed Sindles that a reinstatement fee was due in the amount of approximately $1,700, and that his monthly payment would be increasing by $390.47 beginning the next month. (Id.)


To survive a motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To be facially plausible, a plaintiff's allegations must allow "the court to draw the reasonable inference that defendant is liable for the misconduct alleged." Id. However, "the plausibility requirement is not akin to a 'probability requirement . . .'" Id. The complaint must simply give defendant "fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (internal quotation marks and citations omitted).

The Seventh Circuit has interpreted Iqbal as "admonishing those plaintiffs who merely parrot the statutory language of the claims they are pleading . . . rather than providing some specific facts to ground those legal claims." Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). Without "some specific facts," the complaint is insufficient and fails to give defendant "fair notice." Id. However, a complaint is sufficient if it gives "enough details about the subject-matter of the case to present a story that holds together." Swanson v. Citibank, 614 F.3d 400, 404 (7th Cir. 2010).


1. Claims Against Ocwen

a. Count I -- Common law fraud

Ocwen argues that Sindles has failed to plead common law fraud with sufficient particularity and urges dismissal. (Ocwen's Mot. at 3.) The court agrees. Common law fraudulent misrepresentation in Illinois is met by a showing of: "(1) [a] false statement of material fact (2) known or believed to be false by the party making it; (3) intent to induce the other party to act; (4) action by the other party in reliance on the truth of the statement; and (5) damage to the other party resulting from that reliance." Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 569 (7th Cir. 2012). The heightened pleading requirement of particularity articulated in Rule 9(b) of the Federal Rules of Civil Procedure is met by the pleading alleging the "who, what, when, where, and how" of the defendant's purportedly fraudulent conduct. Id.

In Count I, Sindles explicitly, and to the exclusion of Ocwen, lists the false statements made by Saxon, Saxon's knowledge those statements were false, Saxon's inducement of Sindles to modify the Mortgage, Saxon's intent to maximize its fees and income, Saxon's intent for Sindles's subsequent justifiable reliance on Saxon's statements, and the harm suffered by Sindles "as a direct and proximate cause of Saxon's actions." (Compl. ¶¶ 118-29 (emphasis added).) In fact, Ocwen's name is not even mentioned by Sindles in his discussion of his common law fraud claim, nor did Sindles allege any conduct by Ocwen that satisfies the heightened pleading requirement for fraud claims under Federal Rule of Civil Procedure 9(b). Viewing the allegations in the light most favorable to Sindles, Ocwen misrepresented to Sindles on June 29, 2011 and again on July, 11, 2011 that Sindles's account was past due and that Ocwen had charged late fees because of an outstanding balance in Sindles's escrow account. (Id. ¶¶ 115-16.) Sindles's response that he had no escrow account and "never made a late payment," ...

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