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Vazquez v. JP Morgan Chase Bank, N.A.

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

September 8, 2014

J.P. MORGAN CHASE BANK, N.A., Defendant.


ANDREA R. WOOD, District Judge.

Plaintiff William Vázquez brought this lawsuit against Defendant J.P. Morgan Chase Bank, N.A. ("J.P. Morgan") alleging fraudulent misrepresentation and a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS 505/1 et seq. , in connection with the servicing of Vázquez's home mortgage loan. J.P. Morgan has now filed a motion to dismiss Vázquez's Second Amended Complaint ("SAC") pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction (the "Motion") (Dkt. No. 27). For the reasons explained below, the Motion is denied.


In April 2011, J.P. Morgan filed a foreclosure action (the "Foreclosure Action") against Vázquez in the Circuit Court of DuPage County, Illinois (the "State Court") alleging that Vázquez defaulted on his mortgage.[1] On March 11, 2013, the State Court entered a Judgment of Foreclosure and Sale against Vázquez. After the State Court denied his motion to reconsider, Vázquez appealed the decision to the Illinois Appellate Court. The Appellate Court then dismissed Vázquez's appeal for lack of appellate jurisdiction, finding that the Foreclosure Action would not be ripe for appeal until the sale of Vázquez's property was confirmed. To date, the State Court has not entered an order confirming the sale of the property.

On July 1, 2013, while the Foreclosure Action was pending, Vázquez filed a pro se complaint in this Court against J.P. Morgan and the law firm Fisher & Shapiro, LLC, asserting causes of action for fraudulent misrepresentation or concealment and violations of the ICFA. On July 10, 2013, the Court sua sponte dismissed the complaint, without prejudice, for lack of subject matter jurisdiction because the complaint did not allege the citizenship of all parties. At that time, the Court noted that based on the jurisdictional allegations that were included in the complaint, it appeared likely that both Vázquez and Fisher & Shapiro were citizens of Illinois, which would prevent this Court from exercising federal diversity jurisdiction. Vázquez subsequently filed an Amended Complaint on July 15, 2013 asserting the same claims against J.P. Morgan but dropping Fisher & Shapiro as a defendant. On August 6, 2013, the Court dismissed the amended complaint without prejudice for lack of subject matter jurisdiction, this time noting that Vázquez did not include an explicit request for monetary damages. With no indication from Vázquez regarding how much money he was seeking to recover from J.P. Morgan, the Court could not determine that the lawsuit satisfied the amount in controversy requirement for diversity jurisdiction.

Vázquez filed the SAC, which is the subject of the present Motion, on August 26, 2013. In the SAC, Vázquez alleges that he became unemployed on March 31, 2008. (SAC ¶ 6, Dkt. No. 12.) As a result of his unemployment, Vázquez requested help from his mortgage servicer, Washington Mutual ("WaMu"), in late 2008. ( Id. ¶ 7.) In response, WaMu offered him a forbearance agreement for the period March 2009 through August 2009. According to Vázquez, he accepted the forbearance agreement on March 5, 2009 based on representations made by WaMu. ( Id. ¶ 9.) Vázquez alleges that at a certain point WaMu was sold to J.P. Morgan. ( Id. ¶ 13.)[2] Vázquez claims that he continued to comply with demands from WaMu and then J.P. Morgan, and that J.P. Morgan delayed filing for foreclosure against Vázquez to increase its fees and penalties against him. ( Id. ¶¶ 14-19.) Vázquez further claims he became employed again in April 2011 and applied for a loan modification, but J.P. Morgan told him he could not get a modification because of his prior acceptance of the forbearance agreement. ( Id. ¶ 20.) Vázquez also claims he complained to the Office of the Comptroller of the Currency ("OCC") in November 2012 about his treatment by J.P. Morgan, that the OCC "determined that indeed [Vázquez] was not treated fairly, " and that he received $2, 000 from J.P. Morgan "as an admission of guilt." ( Id. ¶¶ 23-24, 36.)

Based on these allegations, Vázquez asserts two causes of action against J.P. Morgan. In Count I, Vázquez asserts a claim for "Fraudulent Misrepresentation or Concealment, " alleging that in February 2009 WaMu made statements to him regarding his forbearance agreement that were false and untrue to induce him to sign the agreement. In Count II, Vázquez asserts a claim for violations of the ICFA based on allegations that J.P. Morgan did not fulfill its obligations during the forbearance agreement or when he applied for a loan modification.

In the Motion, J.P. Morgan raises three arguments challenging this Court's jurisdiction. First, J.P. Morgan argues that the SAC should be dismissed because Vázquez's claims are barred by the Rooker-Feldman doctrine. Second, J.P. Morgan contends that the Court should dismiss the SAC because it is barred by the doctrine of res judicata. And third, J.P. Morgan argues that the Court should dismiss the SAC because this case does not meet the requirements for the exercise of federal diversity jurisdiction. However, the Court finds that, on his third attempt, Vázquez has pleaded a complaint that survives a review for federal jurisdiction.


"Federal courts are courts of limited jurisdiction and may only exercise jurisdiction where it is specifically authorized by federal statute." Evers v. Astrue , 536 F.3d 651, 657 (7th Cir. 2008) (internal quotation omitted). In considering a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the Court must accept the complaint's well-pleaded factual allegations as true and draw all reasonable inferences from those allegations in the plaintiff's favor. Transit Exp., Inc. v. Ettinger , 246 F.3d 1018, 1023 (7th Cir. 2001). Because Vázquez is proceeding pro se , the Court holds the SAC to a "less stringent standard than formal pleadings drafted by lawyers, with the primary goal being to give pro se filings fair and meaningful consideration." Philos Tech. Inc. v. Philos & D, Inc. , 645 F.3d 851, 858 (7th Cir. 2011).

I. Res Judicata

J.P. Morgan argues that the claims asserted in the SAC are barred by the doctrine of res judicata. Under that doctrine, when a final judgment has been entered on the merits of a case, "it is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose." Highway J Citizens Grp. v. U.S. Dept. of Transp. , 456 F.3d 734, 741 (7th Cir. 2006) (quoting Nevada v. U.S. , 463 U.S. 110, 129-30 (1983)). "Because an Illinois state court rendered the... order at issue, we must apply Illinois law to determine whether res judicata bars [the] claims." Long v. Shorebank Dev. Corp. , 182 F.3d 548, 560 (7th Cir. 1999). Under Illinois law, the doctrine of res judicata applies when: (1) the identity of the parties or their privies in the two suits are the same; (2) the causes of action in the prior and current suit are the same; and (3) there has been a final judgment on the merits in the prior suit. Rockford Mut. Ins. Co. v. Amerisure Ins. Co. and Michigan Mut. Ins. Co. , 925 F.2d 193, 195 (7th Cir. 1991).

In this case, res judicata does not bar Vazquez's suit because there has been no final judgment on the merits in the Foreclosure Action. While the State Court has entered an order of foreclosure, such an order is not considered a final judgment under Illinois law. As the Illinois Supreme Court has explained:

It is well settled that a judgment ordering the foreclosure of mortgage is not final and appealable until the trial court enters an order approving the sale and directing the distribution. The reason such a judgment is not final and appealable is because it does not dispose of all issues between the parties and it does not terminate the litigation. Specifically, although a judgment of foreclosure is final as to the matters it adjudicates, a judgment foreclosing a mortgage, or a lien, determines fewer than all the rights and liabilities in issue because the trial court has still to enter a subsequent order approving the foreclosure sale and directing ...

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