United States District Court, N.D. Illinois, Eastern Division
R. Wood, Judge
motion to dismiss Defendant's counterclaim for failure to
state a claim for relief  is granted in part and denied
in part. Because the counterclaim plausibly alleges that the
mortgage debt pursued by Plaintiff was released, the motion
is denied to the extent that, on the basis of the claimed
release, Defendant seeks injunctive relief to clear improper
clouds upon the title to the subject property.
Plaintiff's motion is otherwise granted. Status hearing
set for 8/30/2016 at 11:00 a.m. remains firm. For details,
see the accompanying Statement.
response to the filing of this residential mortgage
foreclosure action, Defendant Milton Holmes, appearing
pro se, filed an answer along with a counterclaim
against Plaintiff Bank of New York Mellon
(“BONYM”). (Dkt. No. 9.) Holmes alleges that the
documents purporting to show his original lender's
assignment of its rights under the mortgage agreement were
suspiciously, and possibly fraudulently, signed and
notarized. (Id. ¶¶ 26-27, 34-36.) He also
alleges that the mortgage has been released; his counterclaim
attaches a “Release of Mortgage” filed with the
Cook County Recorder of Deeds that indicates that the
mortgage debt has been satisfied. (Id. ¶ 8, Ex.
2.) With the present motion, BONYM seeks dismissal of the
counterclaim for failure to state a claim for relief.
analysis of a motion to dismiss a counterclaim for failure to
state a claim is the same as that applicable to a complaint:
to survive, the pleading at issue must allege facts that, if
true, plausibly raise a right to relief. Intercon Sols.,
Inc. v. Basel Action Network, 969 F.Supp.2d 1026, 1067
(N.D. Ill. 2013). At this stage, Holmes's pleading must
be construed in the light most favorable to him, with all
well-pleaded facts taken as true and all possible inferences
drawn in his favor. Tamayo v. Blagojevich, 526 F.3d
1074, 1081 (7th Cir. 2008). As a pro se litigant,
Holmes also receives the benefit of pleading standards that
are “considerably relaxed.” Luevano v.
Wal-Mart Stores, Inc., 722 F.3d 1014, 1027 (7th Cir.
2013). Yet even with the benefit of these presumptions in his
favor, Holmes's counterclaim does not state a plausible
claim for relief for the alleged improprieties in the
assignment of the mortgage agreement.
removed this action from the Circuit Court of Cook County,
Illinois by invoking this Court's diversity jurisdiction.
Illinois law thus applies. Merrill v. Trump Indus.,
Inc., 320 F.3d 729, 731 (7th Cir. 2003). Under Illinois
law, a mortgage lien and the right to foreclose upon it are
linked to the underlying debt, and the assignment of the debt
is sufficient equitably to transfer rights under the
mortgage. Fed. Nat. Mortg. Ass'n v. Kuipers, 732
N.E.2d 723, 730 (Ill.App.Ct. 2000); Citibank, N.A. v.
Wilbern, No. 12 C 755, 2014 WL 1292374, at *8 (N.D. Ill.
Mar. 28, 2014).
attached to its complaint a copy of the note memorializing
Holmes's indebtedness. (Note, Ex. 1 to Compl., Dkt. No.
1.) The note provides that it could be transferred by the
original lender. (Id. at 1.) The original lender
endorsed the note in blank. (Id. at 3.) Under
Illinois law, the note was thus payable to the bearer, and
BONYM's possession of the note was prima facie
evidence that it was entitled to payment of Holmes's
debt. Rosestone Investments, LLC v. Garner, 2 N.E.3d
532, 540 (Ill.App.Ct. 2013); Parkway Bank & Trust Co.
v. Korzen, 2 N.E.3d 1052, 1066 (Ill.App.Ct. 2013).
BONYM's acquisition of the debt thus carried with it
equitable rights under the mortgage. Kuipers, 732
N.E.2d at 730; Wilbern, 2014 WL 1292374, at *8.
Since BONYM's possession of the note entitled it to the
lender's rights under the mortgage even in the absence of
a valid assignment of the mortgage document, Holmes cannot
state a plausible claim that he is entitled to affirmative
relief based on any irregularities in the signing and
notarizing of the purported assignment. Accordingly,
BONYM's motion to dismiss is granted as to Holmes's
claims for such irregularities. This dismissal is without
prejudice to Holmes's right to assert in defense of the
foreclosure claim that BONYM is not the lawful holder of his
also asserts that his mortgage was released and that a
document indicating that his debt had been satisfied and the
mortgage released was filed with the Cook County Recorder of
Deeds. In his prayer for relief, Holmes asks for an order
requiring BONYM “to record in the docket or claims
register of each court's official record [a]
‘Notice of Improperly Acknowledged Document' or
such similar Notice as the Court deems appropriate, each of
which shall correspond and identify each specific improperly
acknowledged document previously filed as an exhibit or
referenced within any pleading by [BONYM] in any court's
docket or claims register.” (Countercl. at 10, Dkt. No.
9.) Holmes also asks that BONYM be enjoined from future
filings of “improperly acknowledged documents.”
(Id.) These prayers for relief are not linked by
language or proximity to Holmes's allegation of a release
of his debt and appear instead to refer to Holmes's
allegations of improprieties regarding the mortgage
defects do not render Holmes's claim insufficient,
however. “The essence of liberal construction is to
give a pro se plaintiff a break when, although he
stumbles on a technicality, his pleading is otherwise
understandable.” Hudson v. McHugh, 148 F.3d
859, 864 (7th Cir. 1998). Because a complaint is required to
plead claims but not legal theories, “all a complaint
need do is narrate a claim for relief.” Gale v.
Hyde Park Bank, 384 F.3d 451, 453 (7th Cir. 2004).
Applying these principles, the Seventh Circuit has held that
seeking the wrong relief is not fatal to a claim and that a
complaint may state a sufficient claim for relief even under
a statute that the pleader did not cite. Norfleet v.
Walker, 684 F.3d 688, 690 (7th Cir. 2012); Bartholet
v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th
BONYM comprehends the significance of Holmes's allegation
that his debt was released is clear from its response: it
asserts that the release was erroneously executed and
recorded, and that its predecessor, Mortgage Electronic
Registration Systems, Inc., recorded a rescission of that
release. (See Dkt. No. 42-1.)  Since Holmes
explicitly seeks injunctive relief to remove encumbrances on
his title and to prevent more in the future and he has
asserted a factual claim that, if true, would arguably
entitle him to that relief, the Court concludes that his
failure to explicitly link claim and remedy in his
counterclaim does not render his claim insufficient.
argues that the recorded rescission may be considered in
support of its motion to dismiss because it is a
publicly-recorded document. (Pl.'s Mem. at 2, n.1, Dkt.
No. 43.) But the rescission does not purport to be a final
determination by a court or any other entity of the fact it
asserts-i.e, that the release was executed and
recorded in error. The document thus serves only to raise an
inference that competes with that raised by the release
invoked by Holmes. Although the issue may properly be
resolved by motion for summary judgment, at the pleading
stage, the Court cannot resolve the factual question of
whether Holmes did in fact satisfy his debt or whether the
debt remains unpaid and the release was recorded by mistake.
Since competing inferences are to be resolved in favor of the
non-movant at this stage, the rescission cannot be a basis
for dismissing the aspect of the counterclaim that seeks
equitable relief based upon the release. BONYM's
motion is therefore denied as to that portion of the
counterclaim. This denial is without prejudice to BONYM's
right to dispute the factual basis of any claim by Holmes
that his debt has been satisfied.
 Holmes confirmed in open court on May
19, 2016 that he attached the release to his answer and
counterclaim because it showed that the property ...