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Kane v. Bank of America, National Association

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

June 17, 2015

THOMAS H. KANE, Plaintiff,
v.
BANK OF AMERICA, NATIONAL ASSOCIATION, and WELLS FARGO BANK, N.A. d/b/a WELLS FARGO HOME MORTGAGE, Defendants.

MEMORANDUM OPINION AND ORDER

GEORGE M. MAROVICH, District Judge.

Before the Court is plaintiff's motion for leave to file an amended complaint. Plaintiff Thomas H. Kane ("Kane"), who took out a 30-year mortgage at the age of 70 or 71 and ran into trouble paying it when he was laid off from his job nearly three years later, seeks leave to file a 150-page proposed amended complaint containing 723 numbered paragraphs in which he asserts six counts against two proposed defendants. The proposed amended complaint is significantly shorter and more concise than Kane's original complaint, which asserted seventeen counts against defendants Bank of America NA ("Bank of America") and Wells Fargo NA d/b/a Wells Fargo Home Mortgage ("Wells Fargo").

On the defendants' motion to dismiss the original complaint, the Court dismissed fifteen of plaintiff's seventeen counts. The Court dismissed four counts (plaintiff's claims under the Fair Debt Collection Practice Act and his claim for breach of contract) with prejudice. The Court dismissed without prejudice for failure to state a claim plaintiff's fraud and RICO claims (as well as related conspiracy claims), because plaintiff had failed to allege a single misrepresentation (despite seeming to have included in his complaint every communication between himself and defendants).

What survived the motion to dismiss (and remain pending) are two counts (Count III and Count X) in which plaintiff seeks to hold defendants Bank of America and Wells Fargo, respectively, liable under the Illinois Consumer Fraud and Deceptive Trade Practices Act ("ICFA" or "Illinois Consumer Fraud Act") for their alleged violations of the Home Affordable Modification Program ("HAMP") guidelines. Although those are state-law claims, the Court has diversity jurisdiction over this case, because: (a) plaintiff is a citizen of Illinois; (b) Wells Fargo is a citizen of Delaware and California; (c) Bank of America is a citizen of Delaware and North Carolina; and (d) the amount in controversy is greater than $75, 000.00.

Kane now seeks leave to file his proposed amended complaint. The biggest change in Kane's proposed amended complaint is that he wants to name different defendants. Instead of defendant Wells Fargo, plaintiff wants to name "Wells Fargo Home Mortgage, a division of Wells Fargo Bank NA" (the "Wells Fargo division"). Instead of Bank of America, plaintiff wants to name "Unknown Divisions within Bank of America, National Association" (the "Bank of America divisions"). Against the Wells Fargo division, plaintiff proposes to assert three counts: promissory fraud, a violation of the Illinois Consumer Fraud Act (the count that survived the first motion to dismiss) and a violation of RICO § 1962(c). Plaintiff would like to assert essentially the same claims against the Bank of America divisions. Defendants oppose the motion for leave to amend.

For the reasons set forth below, the Court denies plaintiff's motion for leave to file his proposed amended complaint. The Court will, however, grant plaintiff leave to file a second-amended complaint consistent with this opinion.

I. Background

The Court takes as true (but does not vouch for) the allegations in plaintiff's complaint for purposes of considering whether to grant plaintiff leave to amend. The Court also considers the documents attached to plaintiff's proposed amended complaint. Fed.R.Civ.P. 10(c).

In June 2006, when he was 70 or 71 years of age, plaintiff Kane took out a 30-year mortgage in the amount of $470, 000.00. Wells Fargo originated and serviced the mortgage, and Bank of America eventually purchased the note. The reason Kane took out the mortgage was to pay his ex-wife for her share of their home, which was recently appraised at $910, 000.00. (Prop. Am. Complt. ¶ 92). Things went fine with the mortgage until Kane was laid off from his job as an architect on February 4, 2009.

In the meantime, Kane was not the only person in the country having trouble paying his mortgage. In 2008, Congress passed the Emergency Economic Stabilization Act of 2008, pursuant to which the Secretary of Treasury established the Home Affordable Modification Program ("HAMP"). (Prop. Am. Complt. ¶¶ 16, 19). The purpose of HAMP was to encourage banks to modify mortgage loans that were in default or in danger of default by paying banks $1, 000.00 for each permanent loan modification a bank provided such a borrower. (Prop. Am. Complt. ¶¶ 16, 19, 21).

To participate in HAMP, a bank had to sign a Servicer Participation Agreement ("SPA") with Fannie Mae. (Prop. Am. Complt. ¶ 31). The SPA required the signing bank to abide by the HAMP guidelines and any supplemental directives published by the Treasury Department. (Prop. Am. Complt. ¶¶ 34, 37). Wells Fargo signed an SPA, as did Bank of America. (Prop. Am. Complt. ¶ 32).

After Kane lost his job, he telephoned Wells Fargo to request loan counseling and modification. Thus began a series of communications (each of which is described in the proposed amended complaint) between Wells Fargo and Kane over the course of several years, during which time Kane applied for at least nine loan modifications but was never granted one. Kane asserts that many of these communications were part of a scheme to defraud him.

The basic scheme was to encourage Kane to stay in his home as long as possible, to increase the amount of fees he owed Wells Fargo and Bank of America. Kane describes this as a means of transferring the equity he had in his home from him to the banks. (Prop. Am. Complt. ¶¶ 124, 278). The banks encouraged plaintiff to stay in his home by repeatedly (and over the course of several years) encouraging him to apply for loan modifications. Plaintiff alleges that the banks never intended to give plaintiff a loan modification. Plaintiff alleges that when the banks encouraged him to apply for a loan modification, they promised him that they would evaluate his application according to the HAMP guidelines; but, the banks knew they would not actually follow the HAMP guidelines. (Prop. Am. Complt. ¶¶ 79-80, 82, 241-242, 391, 442-443). Plaintiff alleges that the reason the banks knew they would not follow the HAMP guidelines is that the HAMP guidelines violated Bank of America's investor guidelines. (Prop. Am. Complt. ¶ 82). Thus, each time Wells Fargo invited plaintiff to apply for a loan modification, it knew it would violate HAMP guidelines in order to comply with the investor guidelines. (Prop. Am. Complt. ¶ 82, 391, 442-443). Plaintiff alleges he was denied at least one loan modification on account of "investor limitations." (Prop. Am. Complt. ¶ 428).

Over time, defendants charged plaintiff more than $100, 000.00 in late fees and extra interest. Eventually, Bank of America filed a foreclosure ...


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