United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
EDMOND E. CHANG, District Judge.
Pro se Plaintiff Diahann Goode filed this suit against PennyMac Loan Services, LLC, American Sterling Bank, Mortgage Electronic Registration Systems, Inc. (MERS), Government National Mortgage Association (Ginnie Mae), Bank of America, N.A., and "Does 1 through 100, inclusive, " alleging various claims related to Goode's mortgage loan. R. 8, Compl. Defendants PennyMac, MERS, and Bank of America have moved to dismiss Goode's complaint under Federal Rule of Civil Procedure 12(b)(6). R. 30, PennyMac and MERS's Mot. Dismiss; R. 33, Bank of America's Mot. Dismiss. For the reasons discussed below, Defendants' motions are granted. Goode's claims against American Sterling Bank and Ginnie Mae are also dismissed without prejudice for failure to effect proper service under Federal Rule of Civil Procedure 4. Finally, Goode's claims against "Does 1 through 100, inclusive" are dismissed without prejudice because Goode failed to timely identify and serve these unidentified parties.
In November 2007, Diahann and Anson Goode took out a $197, 214 loan from American Sterling Bank. Compl. ¶ 30; see also R. 9, Pl.'s Exh. 1, Carrigan Aff. ¶¶ 6-7 (identifying November 26, 2007 as the closing date); R. 9, Pl.'s Exh. 2, Elrod Aff. ¶ 16 (same); R. 32-1, Defs.' Exh. A.A, Mortgage at 7 (same). The loan was secured by a mortgage on their home, located at 9343 South Indiana Avenue in Chicago, Illinois. Compl. ¶¶ 13, 30. The mortgage identifies MERS as the nominee of the American Sterling Bank and its successors and assigns. Id. ¶¶ 8, 34; Mortgage at 1. In February 2014, PennyMac (which is now the holder of the note, as explained later in the Opinion) sought to foreclose the Goodes' mortgage, claiming that the Goodes had not made payments since August 2013. R. 32-1, Defs.' Exh. A, Foreclosure Compl.
Goode filed this lawsuit shortly after PennyMac initiated the foreclosure proceedings. She alleges that American Sterling signed a "Pooling and Servicing Agreement" that allowed her loan to be converted into a security. Compl. ¶¶ 22, 30. Securitizing the mortgage required transferring the note to Ginnie Mae, which was acting as trustee for the TRUST 2008-012 Trust. Id. ¶ 31. The Goodes' mortgage would then be packaged with other mortgages and shares would be sold to investors. Id. ¶¶ 18, 20. According to Goode, this process required several transfers and assignments before a particular date. Id. ¶¶ 32-33, 35-36. She alleges that these transfers did not happen properly, and that Ginnie Mae, therefore, did not hold or own the promissory note or have a right to enforce the mortgage. Id. ¶¶ 35-36, 40-43. Goode also claims that during the securitization process, the promissory note and the underlying mortgage were separated, making them unenforceable. Id. ¶¶ 44-45, 50. She alleges that, because of these deficiencies, none of the Defendants (whose precise role in the securitization process is not explained in the complaint) can enforce the mortgage against the Goodes. Id. ¶ 51. The only individual who has standing to foreclose, according to Goode, "is the holder of the note because they have a beneficial interest." Id. ¶ 59. She identifies these individuals as "the certificate holders of the securitized trust." Id. Based on these allegations, Goode brought claims for wrongful foreclosure, fraud in the inducement, intentional infliction of emotional distress, slander of title, and quiet title. Id. ¶¶ 57-76, 87-88, 90, 94-120.
In her complaint, Goode also identifies several issues with substance of the note and mortgage. She alleges that the terms of the promissory note and mortgage were not properly disclosed by American Sterling, that the terms were unclear, inconsistent, and illegal, and that American Sterling wrongfully qualified the Goodes for a loan that they could not afford. Compl. ¶¶ 52-54. She further claims that all of the Defendants "neither explained the workings of the entire mortgage loan transaction, how the rates, finance charges, costs and fees were computed, nor the inherent volatility of the loan product(s) provided by Defendants." Id. ¶ 55. Based on these allegations, Goode brought claims for fraudulent concealment, fraud in the inducement, violations of the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq., and violations of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seq.
II. Legal Standards
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and citation omitted). The Seventh Circuit has explained that this rule "reflects a liberal notice pleading regime, which is intended to focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).
"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). "[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 (2009) (quoting Twombly, 550 U.S. at 570). These allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.
Claims alleging fraud must also satisfy the heightened pleading requirement of Federal Rule of Civil Procedure 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) (emphasis added). Thus, Rule 9(b) "require[s] 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) (internal quotation marks and citation omitted). Put differently, the complaint "must describe the who, what, when, where, and how of the fraud." Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011) (internal quotation marks and citation omitted).
A. PennyMac, MERS, and Bank of America
In her complaint, Goode brings ten separate claims against all Defendants: (1) wrongful foreclosure; (2) fraudulent concealment; (3) fraud in the inducement; (4) intentional infliction of emotional distress; (5) slander of title; (6) quiet title; (7) declaratory relief; (8) TILA; (9) RESPA; and (10) rescission. Compl. ¶¶ 57-154. Because many of Goode's claims-Counts 1, 3, 4, 5, 6, 7, and 10-depend at least in part on which party (if any) has standing to foreclose on the Goodes' mortgage, the Court will address that issue first. The remaining claims will be addressed in turn.
1. Standing to Foreclose
The central allegation of Goode's complaint is that no Defendant has a "lawful ownership or a security interest" in Goode's home. Compl. ¶¶ 15, 30-56. Goode claims that her mortgage loan was securitized shortly after it was executed. Id. ¶ 31. The securitization process required several transfers between various parties, ultimately culminating in a transfer to Ginnie Mae, acting as trustee for the TRUST 2008-012 Trust. Id. ¶¶ 31-33. Goode alleges that the transfers were not properly performed and are therefore void. Id. ¶¶ 35-44. She further alleges that in the process of these transfers, her mortgage and promissory note were split up, allegedly making them unenforceable. Id. ¶ 50. Because the transfer to Ginnie Mae was invalid and the split note and mortgage could not be enforced, Goode concludes that Ginnie Mae, which she claims identified itself (though she provides no factual context for this allegation) as the "holder and owner" of the note and beneficiary of the mortgage, does not own the mortgage or have standing to foreclose. Id. ¶¶ 35-51. She further concludes that the only party who can foreclose on her mortgage is the "holder of the note"; she identifies "the holder of the note" as the "certificate holders of the securitized trust." Id. ¶ 59.
PennyMac, MERS, and Bank of America argue that documents in the public record demonstrate that PennyMac has standing to foreclose Goode's mortgage loan. See R. 32, Defs.' Br. at 4-7. Ordinarily, a court may not consider matters outside the pleadings when deciding a motion to dismiss. Doss v. Clearwater Title Co., 551 F.3d 634, 639-40 (7th Cir. 2008). A court may, however, take judicial notice of matters of the public record without converting a motion to dismiss into a motion for summary judgment. Ennenga v. Starns, 677 F.3d 766, 773-74 (7th Cir. 2012). This "narrow exception" only permits judicial notice of facts that are "not subject to reasonable dispute." Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080-81 (7th Cir. 1997) (quoting Fed.R.Evid. 201(b)). A fact is not subject to reasonable dispute when it "(1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201(b). Judicial notice thus "allow[s] courts to avoid unnecessary proceedings when an undisputed fact in the public record establishes that the plaintiff cannot satisfy the 12(b)(6) standard." Gen. Elec. Capital, 128 F.3d at 1081. A court may also consider documents attached to a motion to dismiss without transforming it into a motion for summary judgment if the documents are "referred to in the plaintiff's complaint and are central to his claim." McCready v. eBay, Inc., 453 F.3d 882, 891 (7th Cir. 2006) (internal ...