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Fox v. Manley, Deas & Kochalski, LLC

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

October 19, 2016

THERESA B. FOX, Plaintiff,


          James B. Zagel United States District Judge

         Plaintiff Theresa B. Fox brings claims under the Real Estate Settlement Procedures Act, and Illinois state law against Defendant Seterus, Inc., and she brings a claim under the Fair Debt Collection Practices Act against Defendant Manley, Deas, & Kochalski (MDK).

         Both Defendants' Motions to Dismiss are before me. For the following reasons, Seterus's motion is granted in part and denied in part, and MDK's motion is granted.


         The following facts are taken from the Plaintiff's Complaint and are accepted as true for purposes of resolving these motions to dismiss. Fox owns a home in Chicago on 1854 North Kedzie Ave. She alleges that she has maintained this home as her primary residence. This case arises out of the foreclosure proceedings that were initiated against Fox in Illinois state court in November 2011. The court entered judgment against Fox in those foreclosure proceedings in April 2013.

         A. The Trial Period Plan

         In January 2014, Fox submitted a loss mitigation application to her mortgage loan servicer at the time, Bank of America, N.A. (“BANA”). In February 2015, BANA approved Fox for a trial period plan (TPP) under the federal Home Affordable Modification Program (HAMP).

         Under the TPP offer, Fox would be required to make three monthly payments of $1, 229.54 to BANA. If she made these payments, her mortgage servicer would permanently modify her mortgage. The TPP also ensured that BANA would not sell the home at a foreclosure sale if Fox complied with the TPP terms. BANA could go forward with a sale if it informed Fox of the sale in writing or if Fox did not qualify for a permanent loan modification.

         BANA sent Fox this TPP offer on February 3, 2015, instructing Fox that she could accept the offer by making her first monthly payment in a timely manner. Fox sent her first payment to BANA on March 9, 2015. She sent her second payment under the TPP to BANA on March 25, 2015. At some point in March 2015, BANA transferred the servicing rights on Fox's loan to Defendant Seterus. On April 27, 2015, Fox sent her the third TPP payment by check to Seterus.

         After completing the three months payment required under the TPP, Fox continued to send a monthly check to Seterus up until she filed this complaint in May 2016. Despite making these payments, she never received a permanent modification of the loan. In September 2015, Fox hired an attorney to follow up with Seterus about the status of her permanent modifications. On September 16, 2015, a Seterus representative said that the final modification process was delayed because of the transfer from BANA. When Fox's attorney called again in October 2015, a Seterus representative said that no notes had been entered on Fox's loan record. During this October call, the Seterus representative told Fox's attorney that her matter was being “escalated” and that there should be enough time to cancel or postpone the scheduled November 23, 2015 foreclosure on Fox's home. On November 9, a Seterus representative requested a copy of the TPP because the company did not have enough information about the TPP in their system. Between November and the filing of this Complaint in May 2016, Fox's attorney contacted Seterus at least 16 times. The attorney was continually advised that Fox's matter was escalated, and the file was in the process of converting the TPP to a permanent modification.

         In February 2016, Seterus stopped accepting the monthly payments from Fox. The company returned Fox's check for $1230 uncashed, saying “the funds are insufficient to bring the loan current, and the item must be certified.” This happened again in March 2016. In April 2016, Seterus notified Fox that the loan was being transferred to a new servicer, Selene. At the time of Seterus's transfer to Selene, no permanent modification of the loan had taken place.

         B. The Foreclosure Sale

         Because of her inability to receive a permanent loan modification, Fox took steps to prevent her home from being sold in a foreclosure sale. A sale was scheduled for November 23, 2015. Fox's attorney contacted Seterus's attorney, Defendant MDK, to request a stay or continuance of the foreclosure prior to the November 23 sale. MDK refused to voluntarily cancel the sale. When Fox's attorney said he would need to file an emergency motion to stay the foreclosure, the MDK attorney said that he would seek sanctions if such a motion were filed.

         On November 12, 2015, Fox filed an emergency motion in Illinois state court seeking a stay of the November foreclosure. MDK did not follow through on the threat to seek sanctions. The court granted Fox's motion to stay for a period of 60 days.

         A new foreclosure sale of the home was scheduled to occur on May 2, 2016. At no point did Defendants Seterus or MDK take steps to cancel or stay the sale. Fox alleges that Seterus and MDK caused notice of the sale to be published on March 30, 2016, April 6, 2016, and April 13, 2016. On April 27, 2016, Fox filed another emergency motion to avoid having the house sold. The court granted Fox's motion to stay the May sale.

         C. Public Records

         The parties have also cited documents in the public record, which I can consider when ruling on a motion to dismiss. Fox has filed for bankruptcy and documents filed in those bankruptcy proceedings show a tenant residing at the Kedzie home as of April 2014. Filings in that bankruptcy from January 2015 list the same tenant residing at the Kedzie home. Furthermore, the bankruptcy filings show that Fox owns up to ten properties, all rented out to tenants. Fox states in her briefs that she listed the Kedzie home as her address on her bankruptcy filing and claimed it as exempt, but she has not filed these bankruptcy records with this Court.


         A motion to dismiss under Fed.R.Civ.P. 12(b)(6) does not test the merits of a claim, but rather the sufficiency of the complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In deciding a 12(b)(6) motion, the Court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the plaintiff. Id. at 1521. To survive a 12(b)(6) motion, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         In deciding a Rule 12(b)(6) motion, the Court may also consider documents attached to the pleading without converting the motion into one for summary judgment. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556 (7th Cir. 2012). Fox has attached the TPP approval form that BANA sent her, proof of payments to her mortgage servicers, and other documents produced in the course of her relationship with the defendants. The Court may also consider public documents that are proper subjects for judicial notice, though “caution is necessary, of course.” Id.


         Because the allegations against MDK arise out of Fox's dispute with Seterus, I consider Fox's claims against Seterus before turning to the claims against MDK.

         A. Fox's Claims Against Seterus

         Fox asserts causes of action against Seterus for (1) breach of contract under Illinois law; (2) promissory estoppel under Illinois law; (3) violations of the Real Estate Settlement Procedures Acts, 12 U.S.C. § 2601 et seq. (“RESPA”); and (4) violations of the Illinois ...

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