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Pniewski v. U.S. Bank National Assoc.

United States District Court, N.D. Illinois, Eastern Division

March 19, 2014




This matter is before the court on Defendant U.S. Bank National Association's (U.S. Bank) motion to dismiss. For the reasons stated below, the motion to dismiss is granted in part and denied in part.


Plaintiff David J. Pniewski (Pniewski) alleges that he fell behind on his mortgage payments and that in October 2009, U.S. Bank consequently initiated foreclosure proceedings against Pniewski. Pniewski contends that in September 2011, BAC Home Loans Servicing, LP (BAC), a subsidiary of Bank of America, N.A. (BOA), solicited him to participate in the United States Treasury's Home Affordable Modification Program (HAMP) via letter (Solicitation Letter). Pniewski asserts that in October 2011, he submitted his HAMP application. Pniewski claims that on or about August 17, 2012, his loan modification was denied because of BAC's allegedly erroneous calculations which stated that Pniewski's monthly gross income was $1.00. Pniewski further alleges that U.S. Bank failed to evaluate Pniewski's application in accordance with HAMP requirements and that failure to do so was the sole reason his HAMP application was denied.

Pniewski includes in his complaint a claim alleging a violation of HAMP (Count I), breach of an implied covenant of good faith and fair dealing claims (Count II), Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/1, et seq., claims (Count III), and breach of contract claims (Count IV). U.S. Bank now moves to dismiss the claims brought against U.S. Bank.


In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th Cir. 2012); Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). A plaintiff is required to include allegations in the complaint that "plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level'" and "if they do not, the plaintiff pleads itself out of court." E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007)); see also Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that "[t]o survive a motion to dismiss, the complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, " and that "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged")(quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009))(internal quotations omitted).


I. Subsidiary Relationship

U.S. Bank argues that Pniewski does not state a cognizable legal claim against U.S. Bank because the alleged conduct was caused by entities who are not named as defendants. (MTD Mem. 2). U.S. Bank contends that Pniewski's allegations in the complaint "all relate to conduct by Bank of America, N.A.... or its predecessor by merger, BAC Home Loans Servicing, LP..., the servicers of Pniewski's loan." (MTD Mem. 2). U.S. Bank further contends that Pniewski fails to allege that either BOA or BAC was acting as an agent of U.S. Bank or that U.S. Bank should be held liable for the conduct of BOA or BAC. Id.

Mere existence of a parent-subsidiary relationship does not automatically establish an agency relationship. Daimler AG v. Bauman, 134 S.Ct. 746, 759 (2014)(stating that "[a] subsidiary... might be its parent's agent for claims arising in the place where the subsidiary operates, yet not its agent regarding claims arising elsewhere"). In his complaint, Pniewski alleges that his first mortgage loan was assigned to LaSalle Bank, N.A. (LaSalle) on or about July 9, 2008. (Compl. Par. 28). Pniewski also alleges that BAC subsequently bought LaSalle, although no assignment of the mortgage had been recorded to effectuate the transfer. (Compl. Par. 29). Pniewski further alleges that BAC is a subsidiary of BOA. (Compl. Par. 10). In addition, Pniewski alleges that in April 2009, BOA signed a contract agreeing to participate in HAMP, "a program in which U.S. Bank received incentive payments for providing affordable mortgage loan modifications and other alternatives to foreclosure to eligible borrowers." (Compl. Par. 3). U.S. Bank does not properly challenge Pniewski's allegation that an agency relationship existed between BAC and BOA on one side and U.S. Bank on the other, or that BOA is a servicing agent of U.S. Bank.

The issue of establishing an agency relationship between U.S. Bank and its servicers involves factual issues that cannot be resolved during this stage. In ruling on a Rule 12(b)(6) motion, the court cannot determine the merits of the case and must disregard U.S. Bank's contradiction of Pniewski's allegations. See Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 558-59 (7th Cir. 2012)(reasoning that the court must "disregard [the defendant]'s effort to contradict the complaint" when "reviewing a Rule 12(b)(6) dismissal").

II. HAMP Claim

U.S. Bank argues that Pniewski cannot maintain an action against U.S. Bank for the denial of his HAMP application, because "HAMP does not create a private right of action by a borrower against a lender or a servicer for failure to comply with HAMP." (MTD Mem. 3)(emphasis omitted). The Seventh Circuit has held that HAMP does not provide the borrower with a private right of action. Wigod, 673 F.3d at 571. Accordingly, Pniewski cannot pursue his HAMP-related claim. Id. at 559 n. 4 ("[c]ourts have uniformly rejected these claims because HAMP does not ...

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