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Teri Petit v. Washington Mutual Bank

August 14, 2012

TERI PETIT, PLAINTIFF,
v.
WASHINGTON MUTUAL BANK, F.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

On November 23, 2004, Defendant Washington Mutual Bank (hereafter "WaMu") lent Plaintiff Teri Petit $504,000 subject to a Note executed in favor of WaMu. To secure the Note, WaMu executed a Mortgage on Petit's home, which was recorded with the Cook County Recorder of Deeds on December 21, 2004. Thereafter, Petit alleges that WaMu sold and transferred the Note and Mortgage to WaMu-Securities, which in turn sold the Note to a mortgage-backed securities trust (hereafter "Trust 2005-AR1") with Defendant Deutsche Bank National Trust Company serving as trustee. Petit alleges that Trust 2005-AR1 was dissolved on March 30, 2006, and that any interest in her Mortgage previously held by WaMu, WaMu-Securities, or Deutsche Bank terminated on that date. After the dissolution of the trust, Defendant JPMorgan Chase collected payments on Petit's Mortgage prior to February 6, 2009. On that date, Chase filed a foreclosure action in the Illinois Circuit Court of Cook County, claiming that Petit had defaulted on her obligations under her Mortgage and seeking to enforce the Note secured thereby. That action is currently pending before the state court. In response, Chase and Deutsche Bank move separately pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Petit's Amended Complaint for failure to state a claim upon with relief may be granted.*fn1 In the alternative, Chase moves the Court to stay the present action pursuant to the abstention doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). For the following reasons, the Court grants Deutsche Bank's Motion to Dismiss Petit's Complaint and grants Chase's Motion to stay further proceedings related to Petit's Amended Complaint pursuant to Colorado River pending the outcome of the aforementioned state foreclosure action that is currently pending in the Circuit Court of Cook County.

I. Background

On January 16, 2012, Petit filed a Complaint with this Court against WaMu, Chase, and Deutsche Bank, alleging four counts against WaMu and Chase, each of which stem from the continued collection of payments under Petit's Mortgage after March 30, 2006: (1) violations of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.; (2) common law fraud, conversion, and unjust enrichment under Illinois law; (3) violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., and the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq.; and (4) violations of the Illinois Fair Debt Collection Practices Act, 225 ILCS 425 et seq. Petit also brings a quiet title claim against WaMu, Chase, and Deutsche Bank, seeking a declaratory judgment that the certificateholders of the terminated Trust 2005-AR1 are the true mortgagees of Petit's Mortgage.

II. The Standard of Review

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all of the well-plead allegations in the complaint and construes all reasonable inferences in favor of the nonmoving party. See Killingsworth v. HSBC Bank, 507 F.3d 614, 619 (7th Cir. 2007) (citing Savory v. Lyons, 469 F.3d 667, 670 (7th Cir. 2006)); accord Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). To state a claim upon which relief may be granted, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true . . . state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal quotations omitted). In analyzing whether a complaint meets this standard, the "reviewing court [must] draw on its judicial experience and common sense." Id. at 678. When the factual allegations are well-plead, the Court assumes their veracity and then determines if they plausibly give rise to an entitlement to relief. See Id. at 679. A claim has facial plausibility when the factual content plead in the complaint allows the Court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See Id. at 678.

Claims alleging fraud must satisfy the heightened pleading requirement of Rule 9(b), which requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). Rule 9(b) applies both to common law fraud claims and to claims brought under the Illinois Consumer Fraud and Deceptive Business Practices Act. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011). "While [Rule 9(b)] does not require a plaintiff to plead facts that if true would show that the defendant's alleged misrepresentations were indeed false, it does require the plaintiff to state the identity of the person making the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir.1992) (quoting Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 683 (7th Cir.1992)) (internal quotations omitted).

The heightened pleading requirement of Rule 9(b) therefore mandates that a complaint alleging fraud contain more substance to survive a motion to dismiss than a complaint based on another cause of action governed only by the minimal pleading standards of Rule 8. See Ackerman v. Nw. Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir.1999) (Rule 9(b) forces "the plaintiff to do more than the usual investigation before filing his complaint"); Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir.1994) (the rule serves three main purposes: (1) protecting a defendant's reputation from harm; (2) minimizing 'strike suits' and 'fishing expeditions'; and (3) providing notice of the claim of fraud to the defendants).

III. Discussion

Petit's Amended Complaint names Deutsche Bank only in connection with her quite title claim. Petit does not allege that Deutsche Bank wrongfully sought to collect payments on her Mortgage, nor does she allege unfair or deceptive business practices in violation of Illinois statutory or common law. Likewise, although Chase has initiated foreclosure proceedings against Petit, Petit does not allege that Deutsche Bank has sought to enforce an interest in the subject property. Instead, Petit simply claims that Deutsche Bank, along with the other named Defendants, "are claimants to an interest in [Petit's residential property] adverse to that of Ms. Petit." To support this allegation, Petit alleges that Deutsche Bank's legal interest in Petit's Mortgage and Note terminated upon the dissolution of Trust 2005-AR1.

"An action to quiet title in property is an equitable proceeding in which a party seeks to remove a cloud on his title to the property." Stahelin v. Forest Pres. Dist. of Du Page County, 877 N.E.2d 1121, 1135 (Ill. App. Ct. 2007) (citing Illinois Dist. of Am. Turners, Inc. v. Rieger, 770 N.E.2d 232 (Ill. App. Ct. 2002)). For this reason, a plaintiff may not bring a quiet title action where the defendant has not made an adverse claim to an interest in the plaintiff's property. See Rieger, 770 N.E.2d at 239. Although Petit concludes that Deutsche Bank is an adverse claimant to Petit's interest in her home, Petit has failed to allege that Deutsche Bank has made an adverse claim to support this legal conclusion.

Under Twombly, "legal conclusions and conclusory allegations merely reciting the elements of the claim are not entitled to [the] presumption of truth." McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). Petit's conclusory allegation that Deutsche Bank is an adverse claimant to her property is unsupported by factual allegations of Deutsche Bank's attempt to exercise its putative adverse claim. Thus, Petit has failed to plead a proper quiet title action against Deutsche Bank. See Stahelin v. Forest Pres. Dist. of Du Page County, 877 N.E.2d 1121, 1135 (Ill. App. Ct. 2007) (upholding dismissal of quite title action where plaintiff failed to allege either the basis for an adverse title claim or that defendant sought to exercise an adverse claim on the property). For this reason, the Court grants Deutsche Bank's Motion and dismisses Petit's Amended Complaint as it relates to Deutsche Bank.

Petit's Amended Complaint names Chase in each of the counts relating to alleged efforts to enforce Petit's Mortgage after March 30, 2006. Because the Court grants Chase's motion to stay further proceedings in the instant matter pursuant to the abstention doctrine set forth in Colorado River, the Court will not consider Chase's Motion to Dismiss Petit's Amended Complaint pursuant to Rule 12(b)(6).

The Colorado River abstention doctrine applies when a party seeks to stay a federal case in light of an action proceeding in another forum. See Colorado River Water Conserv. Dist., 424 U.S. 800. Thus, although the Court has a "virtually unflagging obligation" to exercise its legal jurisdiction, the Court may stay or dismiss a suit where a stay or dismissal would promote "wise judicial administration." Id. at ...


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