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Watkins v. Cit Group/Consumer Finance, Inc.

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

February 25, 2015



ROBERT M. DOW, Jr., District Judge.

Before the Court is a motion to dismiss filed by Defendants CitiGroup Global Markets Realty, Corp. (sued as "CitiGroup Global Markets Realty Group"), CitiGroup Mortgage Loan Trust, Inc., and CitiMortgage, Inc. (collectively, "Citi Defendants"). For the reasons set forth below, the Court grants Citi Defendants' motion to dismiss [17].

I. Background[1]

This lawsuit arises out of Plaintiffs' purchase of a mortgage note and subsequent foreclosure proceedings brought against Plaintiffs on July 12, 2013 in the Circuit Court of Cook County, Illinois, Chancery Division.[2] On January 26, 2007, Plaintiffs purchased a mortgage note from Defendant CIT Group ("CIT") in connection with property located at 8052 South Bennett Avenue, Chicago, Illinois 60617. Plaintiffs allege that the note was then securitized pursuant to a Pooling and Servicing Agreement ("PSA") between various banks, servicers and a trustee. They allege that under a typical PSA, a homeowner's note is transferred from an originator to a sponsor, from a sponsor to a depositor, and from a depositor to a trustee. During this process, a note is typically separated from a mortgage. The mortgage is transferred to Defendant Mortgage Electronic Registrations System ("MERS"), which holds the mortgage on behalf of whoever owns the note. The complaint alleges that Defendant CIT is the originator; Defendant CitiGroup Global Markets Realty is the sponsor; Defendant CitiGroup Mortgage Loan Trust is the depositor; Defendant U.S. Bank National Association is the trustee; and Defendant CitiMortgage is the servicer of the trust.

A. State Foreclosure Proceeding

On July 12, 2013, Defendant CitiMortgage filed the foreclosure proceeding against Plaintiffs. The alias summons, served on September 7, 2013, stated that Plaintiffs had 30 days to answer or otherwise plead, or else face a potential default judgment; that Plaintiffs might be able to save their home and that they should not ignore the summons; that CitiMortgage did not wish to foreclose and that there might be workout options; and that Plaintiffs could ask the judge to refer their case to the court's free Foreclosure Mediation Program. Plaintiffs failed to file an appearance, answer or otherwise plead within the required period. On February 6, 2014, CitiMortgage moved for an order of default judgment. They also moved to substitute U.S. Bank as plaintiff. On February 25, 2014, the judge entered a default call order, ordering Plaintiffs to file an answer and appearance by March 25, 2014, and they again failed to do so. On April 22, 2014, the court substituted U.S. Bank as plaintiff and entered a Judgment of Foreclosure and Order of Sale in favor of U.S. Bank. U.S. Bank continued under the representation of CitiMortgage's counsel. On July 23, 2014, Plaintiffs moved to vacate the order of judgment, generically stating that the plaintiffs had committed a fraud upon the court without supporting their motion with any factual explanation. The court denied their motion, entering an Order Confirming the Sale and an Order of Possession on November 17, 2014.

B. Federal Complaint

On May 29, 2014, Plaintiffs filed a ten-count complaint alleging and/or praying for: (1) wrongful foreclosure based on an alleged lack of standing; (2) fraudulent concealment of the fact of securitization; (3) fraudulent inducement; (4) intentional infliction of emotional distress for fraudulently foreclosing on Plaintiffs' property; (5) slander of title; (6) quiet title; (7) declaratory judgment that Defendants lack standing to foreclose; (8) violation of the Truth in Lending Act ("TILA"), as amended by the Home Owners Equity Protection Act ("HOEPA"); (9) violation of the Real Estate Settlement Procedures Act ("RESPA"); and (10) rescission of the loan based on the violations alleged in the previous counts.

Citi Defendants moved to dismiss on July 18, 2014 [17], and Plaintiffs did not file a response. Citi Defendants then filed a reply brief [21]. On January 1, 2015, the Court entered an order [22], giving Plaintiffs until February 12, 2015 to show cause as to why the Court should not dismiss their claims on one or more of the grounds argued in Citi Defendants' motion to dismiss and reply brief. Plaintiffs did not respond. In fact, Plaintiffs have not filed anything with the Court since filing their complaint, and since the state foreclosure proceedings began, they have filed nothing in either proceeding except an unsupported motion to vacate the circuit court's entry of a default judgment and this complaint.

II. Legal Standard

The purpose of a Rule 12(b)(6) motion to dismiss is not to decide the merits of the case; a Rule 12(b)(6) motion tests the sufficiency of the complaint. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). As previously noted, reviewing a motion to dismiss under Rule 12(b)(6), the Court takes as true all factual allegations in Plaintiff's complaint and draws all reasonable inferences in his favor. Killingsworth, 507 F.3d at 618. To survive a Rule 12(b)(6) motion to dismiss, the claim first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "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) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the claim must be sufficient to raise the possibility of relief above the "speculative level, " assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). However, "[s]pecific facts are not necessary; the statement need only give the defendant fair notice of what the... claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550 U.S. at 555) (ellipsis in original). The Court reads the complaint and assesses its plausibility as a whole. See Atkins v. City of Chi., 631 F.3d 823, 832 (7th Cir. 2011); cf. Scott v. City of Chi., 195 F.3d 950, 952 (7th Cir. 1999) ("Whether a complaint provides notice, however, is determined by looking at the complaint as a whole.").

To state a claim of fraud, a plaintiff must also satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Under Rule 9(b), "a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). More specifically, a plaintiff must allege "the identity of the person who made the misrepresentation, the time, place and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir. 1994) (citations and internal quotation marks omitted). In other words, a complaint must allege the "who, what, when, where, and how of the fraud-the first paragraph of any newspaper story." Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011) (citation and internal quotation marks omitted).

III. ...

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