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Nieves v. Bank of America, N.A.

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

February 20, 2015

MIGUEL NIEVES, Plaintiff,
v.
BANK OF AMERICA, N.A., BAC HOME LOANS SERVICING, EVERBANK and EVERHOME MORTGAGE, Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, Jr., District Judge.

This matter is before the Court on Defendants' Bank of America, N.A., [1] EverBank, and Everhome Mortgage's motions to dismiss the complaint [20, 21] pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Defendants' motions are granted in part. For the reasons that follow, the Court determines that abstention is appropriate under the Colorado River doctrine. These proceedings therefore are stayed pending resolution of Case Number 2011-CH-11285 in the Circuit Court of Cook County. The parties are instructed to provide the Circuit Court with a copy of this memorandum opinion and to file a joint status report with this Court within seven days of the Circuit Court's final disposition of Case Number 11-CH-11285.

I. Background[2]

This case arises from a pending foreclosure on Plaintiff's primary residence on West Grace Street in Chicago. Plaintiff Miguel Nieves alleges that he borrowed $252, 500 from Countrywide Bank on April 3, 2007 to purchase the property. [1], Compl. at ¶ 18. In his response brief in opposition to Defendants' motions, Plaintiff clarifies that he actually has owned the property since 1995, but that he "obtained a refinance loan from Countrywide Bank in the amount of $252, 500" in April 2007. [22], Pl.'s Resp. at 3. At some point thereafter, BANA acquired the servicing rights on the loan, and BAC became the creditor. [1], Compl. at ¶ 19.

In July 2009, Plaintiff called BANA to discuss lowering his monthly loan payments after his income declined. See [1], Compl. at ¶¶ 21-22. BAC offered Plaintiff the Fannie Mae HomeSaver Forbearance program, under which, pursuant to a Forbearance Agreement, Plaintiff's monthly payment would be reduced to $978 per month for a period of six months; previously, Plaintiff paid between $1, 200 and $1, 750 per month. See id. at ¶¶ 23-25. The program allegedly required BANA to "work with the borrower to identify the feasibility of, and implement, a more permanent foreclosure prevention alternative." Id. at ¶ 26 (quoting Ex. D, Fannie Mae Announcement). BANA also advised Plaintiff that the "Forbearance Agreement was similar to a trial payment program that would lead to a permanent mortgage modification." Id. at ¶ 27. Based on these representations, Plaintiff signed the Forbearance Agreement believing that BANA would work with him to permanently reduce his monthly loan payments. See id. at ¶ 28. Plaintiff made six reduced payments to BANA from September 2009 through February 2010, but BANA never discussed a "more permanent solution" with Plaintiff, despite Plaintiff inquiring about modifications to his loan. Id. at ¶¶ 28-30. After Plaintiff made a seventh reduced payment in March 2010, BANA directed Plaintiff to resume his payments in accordance with the original loan schedule. Id. at ¶ 32. Plaintiff did so by paying approximately $1, 723.44 per month thereafter. Id. at ¶ 33. Plaintiff contends that he has never missed a loan payment and that he has made payments on the loan since 2007 through the date he filed his complaint. See id. at ¶¶ 20, 34.

At some point, BANA allegedly began assessing "hundreds of dollars in unearned fees and costs, including hundreds of dollars in late fees against [Plaintiff's] account each and every month." [1], Compl. at ¶ 35. Such fees and costs wrongfully were deducted from Plaintiff's payments before the payments were applied to principal, interest, and escrow. Id. at ¶ 36. BAC filed a foreclosure action against Plaintiff in the Circuit Court of Cook County, Case Number 11-CH-11285, on March 24, 2011 (the "State Foreclosure Action"). Id. at ¶ 38. In August 2011, BANA began rejecting Plaintiff's monthly payments, and in September, inaccurately claimed that Plaintiff owed $16, 574 (or eleven monthly payments) to bring the loan current. Id. at ¶¶ 42, 44. BANA also allegedly failed to respond to Plaintiff qualified written requests, in which he disputed the default amount. Id. at ¶¶ 47, 50. BANA began accepting Plaintiff's monthly payments again in November 2011 and continued to do so for about two years. Id. at ¶¶ 50, 52.

In September 2013, however, BANA rejected a payment and reported that Plaintiff's loan had been referred to foreclosure. [1], Compl. at ¶ 53. At the end of September, Plaintiff also learned that his loan was to be transferred to Everhome Mortgage and EverBank. Id. at ¶¶ 57-58. Everhome Mortgage and EverBank are Florida corporations that have served as the servicer and creditor, respectively, on Plaintiff's mortgage loan from October 2013 to the present. See id. at ¶¶ 10-13. On October 2, 2013, Everhome Mortgage sent Plaintiff a Validation of Debt Notice pursuant to the Federal Debt Collection Practices Act ("FDCPA"). Id. at ¶ 61. According to Everhome Mortgage, Plaintiff owed $290, 095, of which $251, 727 was unpaid principal and the rest interest, escrow advances, and $2, 634 in corporate advances. Id. Plaintiff disputed the debt amount and alleges that neither Everhome Mortgage nor EverBank ever verified the debt amount. Id. at ¶ 67. In March 2013, EverBank proceeded with the State Foreclosure Action by filing a motion for judgment and sale. Id. at ¶ 68.

Plaintiff brings five counts in his complaint. In Count I, Plaintiff asserts a breach of contract claim against all Defendants for their alleged failure to abide by the original mortgage contract and the subsequent Forbearance Agreement. See [1], Compl. at ¶¶ 78-84. Plaintiff alleges that Defendants failed to apply his payments in accordance with the agreements, and that BANA and BAC breached the agreements in a number of ways, such as by failing to accept Plaintiff's payments, placing the loan in foreclosure, filing a wrongful foreclosure action, and converting escrow funds to unauthorized fees and costs. Id. at ¶ 85. In Count II, Plaintiff alleges violations of the FDCPA against Defendants Everhome Mortgage and EverBank under 15 U.S.C. §§ 1692d, e, f & g(b) for misapplying and rejecting his payments, failing to dismiss the foreclosure action, and wrongfully declaring that the loan was in default, among other actions. See id. at ¶¶ 88-98. In Count III, Plaintiff alleges violations of the Illinois Consumer Fraud Act ("ICFA"), 815 ILCS 505/2, against all Defendants based on their attempts to collect payments from Plaintiff, the filing of the foreclosure action, and the alleged failure to comply with the Forbearance Agreement. See id. at ¶¶ 101-121. In the fourth count, Plaintiff alleges a violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605 against BANA and Everhome Mortgage based on their alleged failure to investigate Plaintiff's dispute of the outstanding debt amount and their failure to properly credit Plaintiff's payments, among other allegedly wrongful actions. See id. at ¶¶ 122-133. Finally, in the fifth count, Plaintiff alleges violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1641(g) and 1666d against BAC and EverBank. See id. at ¶¶ 134-139.[3]

As discussed, BAC filed a foreclosure complaint against Plaintiff in March 2011. On March 24, 2014, BAC filed a motion for a default judgment and a motion seeking a judgment of foreclosure and sale of the property. [20-1], Def.'s Mot. at 2. Plaintiff filed his complaint in this Court a week later, on April 1, 2014. Shortly thereafter, on May 21, 2014, Plaintiff filed a motion in the State Foreclosure Action, requesting that the Cook County Circuit Court stay the proceedings until resolution of this case. See [20-5], Ex. 4. On August 1, 2014, the Circuit Court entered an order staying the foreclosure action pending resolution of Defendants' motions to dismiss in this case. See [25], Ex. A.

II. Legal Standard

Defendants have moved to dismiss Plaintiff's complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).[4] Defendants first argue that under Rule 12(b)(1), the Court must decline to exercise jurisdiction and dismiss Plaintiff's complaint under the Colorado River abstention doctrine. With respect to Defendants' Rule 12(b)(6) arguments, BANA argues that Plaintiff cannot state a valid breach of contract claim because BANA never executed the Forbearance Agreement, that Plaintiff has not properly pleaded violations of the ICFA, and that the RESPA and TILA claims are time-barred. Defendants Everhome Mortgage and EverBank similarly argue that Plaintiff cannot state a breach of contract claim and that Plaintiff fails to plead sufficient facts to allege violations of the FDCPA and ICFA. The Court first will address Defendants' abstention argument under Rule 12(b)(1) and will then, if necessary, turn to the merits of Defendants' Rule 12(b)(6) arguments. See Yassan v. J.P. Morgan Chase & Co., 708 F.3d 963, 967 n.1 (7th Cir. 2013).

A Rule 12(b)(1) motion seeks dismissal of an action over which a court allegedly lacks subject matter jurisdiction. The party asserting jurisdiction bears the burden of establishing that jurisdiction is satisfied. Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 913 (7th Cir. 2009). In evaluating a motion brought under Rule 12(b)(1), the court accepts as true the plaintiff's well-pleaded allegations and draws all reasonable inferences in favor of the nonmoving party. Long, 182 F.3d at 554. The court also may "look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Id. (quoting Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir. 1993)) (internal quotation marks omitted).

III. Analysis

In general, "the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal Court." Huon v. Johnson & Bell, Ltd., 657 F.3d 641, 645 (7th Cir. 2011) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). The Colorado River doctrine presents an exception to that rule, however, where there are "exceptional circumstances, " and "the clearest of justifications" warrant abstention and deferral to a concurrent state court case. See Huon, 657 F.3d at 645-46 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 25-26 (1983)) (internal quotation marks omitted). Defendants argue that the Court should abstain under Colorado River due to the pending State Foreclosure Action, which was filed three years before Plaintiff's federal complaint. Abstention is appropriate, Defendants argue, because the federal and state cases arise from the same set of operative facts, and "the foundation of each of Plaintiff's claims in this case is based upon the ownership of the Note and Mortgage and the right to collect the debt ...


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