United States District Court, N.D. Illinois, Eastern Division
OPINION AND ORDER
SARA L. ELLIS, District Judge.
In their continuing attempt to find a way to contest the foreclosure of their property, Plaintiffs Meryl Squires Cannon and Richard Kirk Cannon (collectively, the "Cannons") have filed another suit in this Court against Defendants Forest Preserve District of Cook County, Illinois (the "FPD"); BMO Harris Bank, N.A. ("BMO"); the United States of America; Bayview Loan Servicing, LLC ("Bayview"); McGinley Partners, LLC and Robert R. McGinley (collectively, the "McGinley Defendants"); and unnamed defendants (Does 1-15). The Court dismissed the Cannons' prior complaint against the FPD, BMO, Bayview, and the Federal Deposit Insurance Corporation (the "FDIC"), for lack of jurisdiction, finding that the United States, and not the FDIC, was the proper Defendant, and that federal jurisdiction was lacking without the United States as a named party. Cannon v. Forest Preserve Dist. of Cook County, No. 13 C 6589, 2014 WL 1758475 (N.D. Ill. May 2, 2014). The Cannons then voluntarily dismissed that suit without prejudice and filed the present lawsuit. In this case, the Cannons allege that Defendants committed fraud by preventing the Cannons from learning that the FPD was purchasing their mortgage. The Cannons also allege that Defendants conspired to violate the Cook County Forest Preserve District Act (the "Forest Preserve Act"), 70 Ill. Comp. Stat. 810/0.01 et seq., and the Open Meetings Act, 5 Ill. Comp. Stat. 120/1 et seq. All Defendants have filed motions to dismiss [10, 12, 17]. Because the United States may not be sued for claims arising from fraud, the Cannons' fraud claims and conspiracy claim, to the extent it relies on fraud allegations, are dismissed. The Cannons have also failed to adequately plead their remaining fraud and conspiracy claims, leaving them yet again without a viable claim on which to proceed.
In December 2006, the Cannons, through two wholly-owned limited liability companies (the "LLCs"), purchased a farm in Barrington, Illinois. To finance the purchase, the LLCs executed a $14, 500, 000 mortgage loan agreement with Amcore Bank, N.A. ("Amcore"), which the Cannons personally guaranteed. After the loan matured and the Cannons did not refinance or pay it off, Amcore instituted foreclosure proceedings. Amcore failed in 2009, however, and its assets were taken over by the FDIC as receiver. The FDIC entered into an agreement with BMO, through which BMO acquired the mortgage and substituted in as the plaintiff in the foreclosure action.
Behind closed doors, BMO, Bayview, the FDIC, and Does 1-15 entered into an agreement with the FPD for the FPD to pay $14, 000, 000 for the mortgage with taxpayer funds. Because of the real estate market's collapse, however, the farm's value had fallen to $7, 000, 000. Defendants refused to disclose to the Cannons that the FPD was the purchaser of the mortgage, despite the FPD's active steps to evaluate the property and negotiate with BMO for the purchase of the mortgage. At one point in February 2013, FPD representatives even represented that a limited liability company to be formed under the name of "Horizon Farms Loan Acquisition LLC" was acquiring the mortgage and would forego seeking a deficiency judgment against the Cannons if the Cannons would waive their ownership claims to the property and assign title to the individual operating behind the limited liability company. The Cannons rejected that offer, however. Thereafter, BMO sought court approval for the unnamed purchaser to inspect the property without disclosing the purchaser's identity. McGinley, acting on behalf of the FPD, also represented to the Cannons on or about March 11, 2013 that an individual neighbor was interested in acquiring part or all of the property if the Cannons would assign title to the undisclosed neighbor. McGinley's actions caused the Cannons to ask him to obtain further detailed proposals from the undisclosed neighbor. McGinley acted in exchange for certain recognition, compensation and consideration from the FPD, such as the use of the property for fox hunting and equine purposes.
On June 27, 2013, the FPD executed and closed an assignment and assumption agreement with BMO, pursuant to which the FPD acquired the mortgage on the property. The agreement was entered into with the FDIC's and Bayview's assistance and approval. The FPD was thereafter substituted as the plaintiff in the foreclosure action. The FPD obtained a judgment of foreclosure and sale on August 30, 2013. On that same day, the Cannons, along with Todd Baker, filed a state court action against the FPD, the FPD Board, and BMO (the " Baker action"). In the Baker action, the Cannons and Baker asserted that the FPD violated the Forest Preserve and Open Meetings Acts. They sought to prevent foreclosure of the farm and to have the assignment and assumption agreement between the FPD and BMO rescinded. The trial court ruled against the Cannons and Baker. The Cannons and Baker have appealed the ruling on the Forest Preserve Act claims.
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.
Rule 9(b) requires a party alleging fraud to "state with particularity the circumstances constituting fraud." Fed.R.Civ.P. 9(b). This "ordinarily requires describing the who, what, when, where, and how' of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case." AnchorBank, 649 F.3d at 615 (citation omitted). Rule 9(b) applies to "all averments of fraud, not claims of fraud." Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007). "A claim that sounds in fraud'- in other words, one that is premised upon a course of fraudulent conduct-can implicate Rule 9(b)'s heightened pleading requirements." Id.
I. Fraud Claims (Counts II and III)
A. Against the United States
Although the Federal Tort Claims Act ("FTCA") waives sovereign immunity for certain torts, 28 U.S.C. § 1346(b)(1); F.D.I.C. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994), it does not allow actions against the United States for claims "arising out of... misrepresentation, deceit, or interference with contract rights, " 28 U.S.C. § 2680(h). Thus, the Cannons cannot proceed against the United States on their fraud claim. See Paul v. United States, 929 F.2d 1202, 1204 (7th Cir. 1991) (explaining that "[d]eceit is intentional manipulation through lies or material omissions when there is a duty to speak; misrepresentation covers negligent misstatements"); Mendrala v. Crown Mortg. Co., No. 88 C 7386, 1990 WL 129602, at *2 (N.D. Ill. Aug. 28, 1990) (FTCA does not waive sovereign immunity for "claims that have deceit or misrepresentation as one of their elements").
Indeed, the Cannons do not present any real opposition to the dismissal of their fraud claim against the United States, only pointing out that the Seventh Circuit has held that § 2680(h) does not withdraw subject matter jurisdiction from the Court. Although the United States brought its motion under both Rule 12(b)(1) for lack of subject matter jurisdiction and under Rule 12(b)(6) for failure to state a claim, it admits that Seventh Circuit precedent requires dismissal to be on the merits and not for lack of subject matter jurisdiction. See Williams v. Fleming, 597 F.3d 820, 824 (7th Cir. 2010); Collins v. United States, 564 F.3d 833, 837-38 (7th Cir. 2009).[ ...