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Romo v. Federal National Mortgage Association

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

November 4, 2014

JORGE MARTINEZ ROMO, on behalf of himself and all others similarly situated, Plaintiff,


SARA L. ELLIS, District Judge.

This putative class action stems from a dispute over who is responsible for paying assessments owed on a condominium when that condominium is purchased from a mortgagee. In 2013, Plaintiff Jorge Martinez Romo agreed to purchase a condominium from the Federal National Mortgage Association ("Fannie Mae"). Romo now sues Fannie Mae, alleging that Fannie Mae agreed to pay all outstanding condominium assessments prior to closing and that when it required Romo to pay six months' of assessments, Fannie Mae breached the purchase agreement and violated the Illinois Consumer Fraud Act, 815 Ill. Comp. Stat. 505/1 et seq. ("ICFA"). Fannie Mae moves to dismiss, arguing that the Illinois Condominium Property Act, 765 Ill. Comp. Stat 605/1 et seq., requires purchasers like Romo to pay six months' of assessments that had accumulated under the previous owner. Fannie Mae also contends that Romo waived his claims and that Count II fails to state a valid ICFA claim. Each of Fannie Mae's arguments fails at this stage: the Court cannot determine on the record before it that the Condominium Property Act or the contract's waiver provisions apply here, and Romo has plausibly alleged a non-redundant ICFA claim. Therefore, the motion to dismiss [26] is denied.


On October 10, 2013, Jorge Martinez Romo offered to purchase a condominium at 1550 South Blue Island Avenue in Chicago, Illinois. The condominium was managed by the University Station Condominium Association ("University Station") and was held by Fannie Mae as mortgagee. When making his offer, Romo provided Fannie Mae with $5, 000 in earnest money, as Fannie Mae required him to do. Fannie Mae accepted Romo's offer in December of 2013. Fannie Mae and Romo entered into a real estate purchase addendum (the "Addendum") memorializing their agreement.

The Addendum is a form contract that was created by Fannie Mae and presented to Romo for his signature. A few provisions in the Addendum are relevant to the pending motion. Section 10 of the Addendum is titled "Closing Costs and Adjustments." Section 10(a) refers to the manner in which Romo and Fannie Mae would satisfy the outstanding assessments due to University Station. But as discussed below, Romo and Fannie Mae dispute what § 10(a) actually requires of each. Sections 10(d) and 17(D) require Romo to waive and release Fannie Mae from "all claims arising from the adjustments or prorations or errors in calculating the adjustment or prorations that are or may be discovered after closing." Doc. 1-2 at § 10(d); see also Doc. 1-2 at § 17(D). Section 19(a) of the Addendum set out that Romo would forfeit his earnest money if he breached the Addendum. Closing was set for January 10, 2014.

On December 23, 2013, University Station, which is not a party to this suit, sent a letter to Romo and Fannie Mae outlining the assessments owed on the condominium (the "December 23 letter"). The letter states that there was $4, 270.32 in outstanding assessments due on the condominium. Under "General Information, " the letter states that "Unit #614 is responsible for the amount of $3, 010.30 (seller) for outstanding assessments and $1, 260.02 (buyer) for six months previous owner assessments. If the balance is not paid prior to or at closing the amount will remain on the account and become the responsibility of the new owner." Doc 1-3 at 1. The December 23 letter also sets out that monthly assessments were $460.05. Id.

On January 8, 2014, Fannie Mae informed Romo that he would be responsible for paying six months' of outstanding assessments. On January 10, 2014, Romo's counsel sent a letter to Fannie Mae notifying it that Romo would pay the "six months of outstanding assessments under protest and [that he] reserved all rights under the Addendum to sue for Fannie Mae's breach." Doc. 1 ¶ 15. At the January 10 closing, when Fannie Mae refused to pay the six months' of outstanding assessments, Romo paid this amount under protest.[2]


A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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." Iqbal, 556 U.S. at 678.


Romo alleges that by requiring him to pay six months' worth of outstanding assessments just before closing, Fannie Mae breached the Addendum (Count I) and engaged in an unfair practice in violation of ICFA (Count II). Fannie Mae seeks dismissal as a matter of law on the basis that: (1) the Illinois Condominium Property Act requires Romo to pay the six months' of assessments; (2) Romo waived his right to bring any claims based on prorating the assessments; and (3) the complaint fails to state a valid ICFA claim. The Court takes Fannie Mae's arguments in turn.

I. The Illinois Condominium Property Act

Fannie Mae contends that the Illinois Condominium Property Act required Romo to pay six months' of outstanding assessments as a matter of law. The statute states, in relevant part:

The purchaser of a condominium unit at a judicial foreclosure sale, other than a mortgagee, who takes possession of a condominium unit pursuant to a court order or a purchaser who acquires title from a mortgagee shall have the duty to pay the proportionate share, if any, of the common expenses for the unit which would have become due in the absence of any assessment acceleration during the 6 months immediately preceding institution of an action to enforce ...

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