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Thomas-Wise v. National City Mortgage Co.

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

February 13, 2015

GLORIA J. THOMAS-WISE, Plaintiff,
v.
NATIONAL CITY MORTGAGE CO./PNC BANK, N.A., KONDAUR CAPITAL CORP., MORTGAGE ELECTRONIC REGISTRATION SYSTEM, also known as MERS, PIERCE & ASSOCIATES, P.C., and JOHN KNOPIC, II, Defendants.

MEMORANDUM OPINION AND ORDER

GARY FEINERMAN, District Judge.

Believing that Gloria Thomas-Wise had defaulted on her mortgage, PNC Bank (successor by merger to National City Mortgage Co., which originated the loan) initiated foreclosure proceedings against her in state court. Doc. 28 at ¶¶ 3, 8-10. More than two years later, Thomas-Wise filed this suit against PNC, its lawyer (John Knopic, II) and law firm (Pierce & Associates, P.C.), Kondaur Capital Corporation, and MERS (the Mortgage Electronic Registration System). Doc. 1. After Defendants moved to dismiss the complaint, Docs. 10, 13, 20, Thomas-Wise sought and obtained leave to file an amended complaint, Doc. 24. The amended complaint alleges violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., and the United Nations' Charter and Universal Declaration of Human Rights. Doc. 28. PNC, Pierce, and Kondaur/MERS have moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the amended complaint. Docs. 32, 34, 37. PNC's and Kondaur/MERS's motions are granted, Pierce's motion is granted in part and denied in part.

Background

On a motion to dismiss under Rule 12(b)(6), the court must accept the amended complaint's well-pleaded factual allegations, with all reasonable inferences drawn in Thomas-Wise's favor, but not its legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012). The court must also consider "documents attached to the [amended] complaint, documents that are critical to the [amended] complaint and referred to in it, and information that is subject to proper judicial notice, " along with additional facts set forth in Thomas-Wise's brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). The facts are set forth as favorably to Thomas-Wise as those materials permit. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir. 2012).

In April 1999, Thomas-Wise obtained a mortgage from National City to purchase a house in Chicago. Doc. 28 at ¶¶ 3, 6. Section 9(a) of the mortgage agreement provides that the "Lender may, except as limited by regulations issued by the Secretary [of Housing and Urban Development], in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument if" certain conditions are met. Doc. 11-1 at 5 (mortgage agreement, referenced in Thomas-Wise's amended complaint, Doc. 28 at ¶ 7, and response brief, Doc. 40 at 7). Section 9(d) reiterates: "This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary." Doc. 11-1 at 6.

In 2011, claiming that Thomas-Wise was in default, PNC, having succeeded (by merger) National City in interest, initiated foreclosure proceedings against Thomas-Wise in the Circuit Court of Cook County, Illinois. Doc. 28 at ¶¶ 3, 8-10; Doc. 40-1 (foreclosure complaint). PNC was represented by attorney Knopic of the Pierce law firm. Doc. 28 at ¶¶ 4, 5, 11; Doc. 40-1 at 6. One or more of the defendants alerted credit reporting agencies to Thomas-Wise's alleged default and the resulting foreclosure proceeding. Id. at ¶ 14. The foreclosure proceeding is ongoing, Doc. 33-1 (foreclosure suit docket), although on September 17, 2014, Kondaur and Ira T. Nevel of the Law Offices of Ira T. Nevel, LLC, replaced PNC and Knopic/Pierce as the plaintiff and plaintiff's counsel, respectively. Id. at 1, 14; Doc. 40-2; see also Doc. 40 at 3 (response brief acknowledging Kondaur's and Nevel's substitutions in the foreclosure suit).

Discussion

PNC, Kondaur/MERS, and Pierce (Knopic has not yet appeared, Doc. 45, but as he is a lawyer at Pierce, his interests doubtless coincide with his firm's) ask the court to dismiss the amended complaint or, alternatively, to abstain under Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), in light of the parallel state court foreclosure suit.

If Colorado River abstention were "jurisdictional, " it would be a threshold issue that the court would have to address before reaching the merits. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999); Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998). The court does not believe Colorado River abstention to be jurisdictional. Colorado River abstention exists "merely to serve the convenience of the federal courts or, to put a more prepossessing name to it, to avoid duplicative litigation." 17A Charles Alan Wright et al., Federal Practice & Procedure § 4247, p. 429 (3d ed. 2007). That sounds like a prudential rule, not a jurisdictional one. Supporting this view is the Colorado River opinion itself, which describes its abstention doctrine as an exception to "the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them, " 424 U.S. at 817 (emphasis added), and characterizes the pertinent inquiry as one that "assess[es] the appropriateness of dismissal in the event of an exercise of concurrent jurisdiction, " id. at 818 (emphasis added). The italicized phrases suggest that Colorado River abstention comes into play only after a federal court has otherwise assured itself of its subject matter jurisdiction. See id. at 817 ("the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction") (internal quotation marks omitted); see also Kendall-Jackson Winery, Ltd. v. Branson, 212 F.3d 995, 997 (7th Cir. 2000) (holding that the abstention doctrines set forth in Younger v. Harris, 401 U.S. 37 (1971), and Texas Railroad Comm'n v. Pullman Co., 312 U.S. 496 (1941), do not implicate subject matter jurisdiction); Joan Steinman, "After Steel Co.: Hypothetical Jurisdiction' in the Federal Appellate Courts, " 58 Wash. & Lee L. Rev. 855, 867-68 (2001) ("Insofar as [abstention doctrines] are not jurisdictional in the relevant sense, courts... may continue to assume arguendo against them and address the merits first.") (footnote omitted). Also, the Seventh Circuit has said that a party may "waive[]" Colorado River abstention "by expressly urging the federal court to address the merits, " Barichello v. McDonald, 98 F.3d 948, 955 (7th Cir. 1996), which necessarily means that the doctrine is not jurisdictional, since jurisdictional matters cannot be waived. See Boley v. Colvin, 761 F.3d 803, 806 (7th Cir. 2014) (holding that a "jurisdictional" requirement "cannot be waived by the parties"); Travelers Property Cas. v. Good, (7th Cir. 2012) ("Jurisdictional objections cannot be forfeited or waived, of course, for this court has an independent obligation to satisfy itself that federal subject matter jurisdiction exists.") (internal quotation marks omitted). Accordingly, and because the court unquestionably has federal question jurisdiction over at least the FDCPA and FCRA claims under 28 U.S.C. § 1331, the court will tackle the merits first. And in light of the amended complaint's many deficiencies, which are addressed immediately below, the court will not reach the Colorado River issue at this juncture.

Kondaur and MERS urge dismissal on the ground that the amended complaint mentions neither of them. Doc. 33 at 4. Thomas-Wise agrees that MERS should be dismissed, and concedes that she neglected to allege any wrongful conduct by Kondaur. Doc. 40 at 3. A "complaint must describe the claim in sufficient detail to give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (alteration in original). A complaint that does not mention a defendant's name, let alone allege its misconduct, obviously flunks this test. The claims against Kondaur and MERS are therefore dismissed. Thomas-Wise is, however, granted leave to file a second amended complaint naming Kondaur as a defendant.

PNC argues that it cannot be liable under the FDCPA because it is not a "debt collector" within the meaning of the statute. Doc. 36 at 6-7. Thomas-Wise alleges that Defendants violated 15 U.S.C. §§ 1692e ("A debt collector may not use any false, deceptive, or misleading representation") and 1692f ("A debt collector may not use unfair or unconscionable means") in attempting to collect the mortgage debt. Doc. 28 at ¶¶ 21-26. But the FDCPA's definition of "debt collector" specifically excludes "any person collecting or attempting to collect any debt... which was originated by such person." 15 U.S.C. § 1692a(6)(F)(ii). Because PNC (by merger with National City) undisputedly "originated" the loan to Thomas-Wise, it cannot be liable under the FDCPA-a point that Thomas-Wise concedes in her response brief. Doc. 40 at 3 (conceding "PNC's status as... legislatively immune from the FDCPA claim"); see Ruth v. Triumph Partnerships, 577 F.3d 790, 796 (7th Cir. 2009) ("The FDCPA distinguishes between debt collectors, who are subject to the statute's requirements, and creditors, who are not.").

In addressing the FDCPA claim, Pierce argues only that Thomas-Wise has not alleged anything to suggest that it used "unfair or unconscionable means" to collect a debt in violation of § 1692f. Doc. 38 at 3. That is true, but Thomas-Wise also alleges a violation of § 1692e, Doc. 28 at ¶ 24, which, among other proscriptions, prohibits making a "false representation of... the character, amount, or legal status of any debt." 15 U.S.C. § 1692e(2)(A). It is questionable whether Pierce's filings in the state court foreclosure suit could have violated § 1692e. See O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 941 (7th Cir. 2011) ("when read in light of the Act's purpose and numerous provisions, the prohibitions [in § 1692e] are clearly limited to communications directed to the consumer and do not apply to state judges"). But if Pierce represented to Thomas-Wise -say, in a pre-foreclosure effort to pressure her to pay up- that her loan had been accelerated in compliance with HUD regulations and § 9(d) of the mortgage agreement when in fact it had not been, that could potentially be a "false representation of... the character... or legal status of a[] debt." Cf. Ross v. RJM Acquisitions Funding LLC, 480 F.3d 493, 495 (7th Cir. 2007) (holding that a letter attempting to collect a debt that had been discharged in bankruptcy was "false" under § 1692e). Thomas-Wise does not, however, allege any such conduct on Pierce's part; instead, her allegations appear to rest solely on the filing of the foreclosure action and other legal proceedings, Doc. 28 at ¶¶ 10, 12-13, which, as just noted, may not be actionable under § 1692e. In addition, Thomas-Wise does not identify which HUD regulations the foreclosure action allegedly violates, or what actions Pierce allegedly took that breached the mortgage agreement.

These shortcomings ordinarily might be fatal to a claim, but it is not here because Pierce makes absolutely no argument urging dismissal of the § 1692e claim; it addresses only § 1692f. Docs. 38, 42. Nor does Pierce argue that Thomas-Wise's FDCPA claim as a whole is untimely. Accordingly, the FDCPA claim against Pierce survives, at least for now. See Stransky v. Cummins Engine Co., 51 F.3d 1329, 1335 (7th Cir. 1995) ("The federal courts will not invent legal arguments for litigants."). If Pierce pursues the argument after Thomas-Wise files (or fails to timely file) a second amended complaint, the court will address whether the FDCPA claim against Pierce should be stayed or dismissed under Colorado River.

As for the FCRA claim, the amended complaint's only remotely relevant allegation is that "Defendants, individually and/or severally, reported the false claim of default and falsely filed foreclosure to the credit reporting agencies." Doc. 28 at ¶ 14. Thomas-Wise submits that this conduct violated 15 U.S.C. §§ 1681n, 1681o, and 1681q. Id. at ¶ 32. Two of those sections simply provide for civil liability for "fail[ing] to comply with any requirement imposed under this subchapter, " without specifying any proscribed conduct. See 15 U.S.C. §§ 1681n ("Civil liability for willful noncompliance"), 1681o ("Civil liability for negligent noncompliance"). And § 1681q prohibits only "knowingly and willfully obtain[ing] information on a consumer from a credit reporting agency under false pretenses." 15 U.S.C. § 1681q. Obtaining, not reporting- yet Thomas-Wise alleges only that that PNC and/or Pierce reported the default and foreclosure to credit agencies, not the other way around. So the amended complaint does not state a plausible claim for relief under § 1681q. Thomas-Wise's brief does not argue (and her complaint does not allege) that Defendants violated any other provision of the FCRA, thus forfeiting any such argument for purposes of this motion. See Cnty. of McHenry v. Ins. Co. of the W., 438 F.3d 813, 818 (7th Cir. 2006) ("[W]hen presented with a motion to ...


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