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Stephens v. Capital One, N.A.

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

September 7, 2016

SEAN STEPHENS and LINDA STEPHENS, Plaintiffs,
v.
CAPITAL ONE, N.A., Defendant.

          MEMORANDUM OPINION AND ORDER

          Robert M. Dow, Jr. Judge

         Before the Court is Defendant Capital One, N.A.'s motion to dismiss [16]. For the reasons set forth below, Defendant's motion [16] is granted in part and denied in part. This case is set for further status on September 21, 2016, at 9:00 a.m to discuss whether Plaintiff seeks to pursue an amended complaint.

         I. Background

         The Court accepts as true the facts alleged in Plaintiffs' complaint and makes all reasonable inferences in their favor. See McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 879 (7th Cir. 2012). On July 31, 2007, Plaintiffs entered into an adjustable rate mortgage to purchase the property at 741 Hillside Avenue, Elmhurst, Illinois 60126 (the "Property"). The lender was ING Bank, FSB, predecessor-in-interest to Capital One ("Defendant"). On December 12, 2013, Defendant filed a foreclosure complaint alleging that Plaintiffs had missed payments from April 1, 2013 through June 30, 2013. However, due to a mistake by Defendant, Plaintiffs made multiple overpayments on the mortgage. Defendant communicated this mistake to Plaintiffs in a letter dated September 4, 2014. [1-1] at 26. Consequently, the mortgage was not in default during this period.

         Plaintiffs' account was credited $8, 673.21 towards the April 1, 2013 through June 30, 2013 payments and $2, 845.81 towards the principal balance. Id. The parties then engaged in negotiations regarding a potential loan modification, yet were unsuccessful. On July 30, 2015, Defendant voluntarily dismissed its Complaint. [1-1] at 27-34.

         On September 29, 2015, Plaintiffs filed the instant lawsuit [1-1] against Defendant in the Circuit Court for the 18th Judicial District in DuPage County, Illinois (Case No. 2015L000924). The complaint ("Complaint") alleges the following seven counts: wrongful foreclosure based on mistake (Count I), breach of contract (Count II), violations of § 5(a) of the Federal Trade Commission Act ("FTC"), 15 U.S.C. §45(a) (Count III), violations of §623(a)(1)(A) of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681s-2(a) (Count IV), violations of § 807 of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692e (Count V), violations of the Illinois Consumer Fraud Act ("ICFA"), 815 ILCS 505/1 et seq. (Count VI), and violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605(f)(1)(A) (Count VII). On October 30, 2015, Defendant removed [1] the instant lawsuit, pursuant to 28 U.S.C. §§ 1441 and 1446, from the 18th Judicial District, DuPage County, Illinois to this Court.

         On December 10, 2015, Defendant filed a motion [16] to dismiss six of the seven counts (all but Count V) alleged in the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant argues that Counts I, II, III, IV, VI, and VII must be dismissed for the following reasons: (1) the cause of action for "wrongful foreclosure" does not exist; (2) Plaintiffs' nonperformance necessitates dismissal of breach of contract claim; (3) there is no private right of action under the FTC act; (4) there is no private right of action for furnishing inaccurate information under the FCRA; and (5) Plaintiffs fail to state a claim for a violation of both ICFA and RESPA. In response to Defendant's motion to dismiss, Plaintiffs voluntarily dismissed Counts I, III, and IV on January 15, 2016. [17] at 1. The remaining counts at issue in Defendant's motion to dismiss are Counts II, VI, and VII. Plaintiffs ask the Court to deny Defendant's motion to dismiss or, in the alternative, to grant leave to file an amended complaint.[1]

         II. Legal Standard

         To survive a Rule 12(b)(6) motion to dismiss, the complaint 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 Ail. 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 complaint must be sufficient to raise the possibility of relief above the "speculative level." 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). Dismissal for failure to state a claim under Rule 12(b)(6) is proper "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Twombly, 550 U.S. at 558. The Court reads the complaint and assesses its plausibility as a whole. See Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011).

         III. Analysis

         A. Count VII (RESPA)

         Count VII alleges a violation of 12 C.F.R. § 1024.41(f), a federal regulation pursuant to the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(f)(1)(A), which states the following: "A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless: (i) A borrower's mortgage loan obligation is more than 120 days delinquent * * * *" Plaintiffs' complaint alleges a violation of 12 C.FR. § 1024.41(f) based on the claim that from April 1, 2013 through June 30, 2013 Plaintiffs were not in default. This allegation stems from Defendant filing a foreclosure complaint against Plaintiffs on December 12, 2013. Defendant argues that Plaintiffs have failed to make any claim that Plaintiffs were in default for less than 120 days. Furthermore, Defendant asserts that Plaintiffs have failed to adequately allege actual damages and that Plaintiffs' RESPA claim is not ripe. In response, Plaintiffs claim that it is "inexcusable" for Defendant to claim that the foreclosure complaint was proper and just because Plaintiffs allegedly stopped making their payments post-June 30, 2013. [17] at 6.

         1. RESPA, 12 C.F.R. § 1024.41

         In ¶ 12 of the complaint, Plaintiffs claim that the mortgage was not in default from April 1, 2013 through June 30, 2013. The mortgage foreclosure complaint was filed on December 12, 2013. From June 30, 2013 until December 12, 2013, 164 days passed. In order to comply with 12 C.F.R. § 1024.41(f)(1), "a servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless a borrower's mortgage loan obligation is ...


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