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Chen v. Urban Partnership Bank

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

December 12, 2016

Ming J. Chen, Plaintiff,
Urban Partnership Bank, Defendant.


          Edmond E. Chang, Judge

         Pro se plaintiff Ming Chen filed this action against Urban Partnership Bank, alleging a variety of federal and state claims in connection with two foreclosure actions that Urban Partnership brought against Chen in Illinois state court. R. 26, Am. Compl.[1] The state-court actions were triggered by Chen's failure to make payments on promissory notes issued by ShoreBank (Urban Partnership became the holders of the notes after the Federal Deposit Insurance Corporation took over ShoreBank, which is now defunct). Id. at 4-6. The notes were secured by mortgages on the foreclosed properties.[2] Id. Urban Partnership has filed a motion to dismiss for lack of subject-matter jurisdiction and failure to state a claim. R. 33, Mot. to Dismiss. For the reasons stated below, the motion is granted.

         I. Background

         For the purpose of deciding this motion, the Court accepts the allegations in the Amended Complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). In the mid-2000s, Chen took out two mortgages from ShoreBank. Am. Compl. at 2-3. One mortgage covered a property on South Princeton Avenue in Chicago, Illinois, and the other a property on Braemer Court, in Bolingbrook, Illinois. See Id. at 2-3, 29, 32-33, 36-37, 39.

         In 2010, ShoreBank filed for bankruptcy and was closed by the Illinois Department of Financial and Professional Regulation. Am. Compl. at 4; Mot. to Dismiss at 3. The Federal Deposit Insurance Corporation (FDIC) was later assigned as ShoreBank's receiver and succeeded to "all rights, titles, powers, and privileges" of ShoreBank. Am. Compl. at 4; Mot. to Dismiss at 3; see 12 U.S.C. § 1821 (c)(3)(A). Urban Partnership Bank then entered into a Purchase and Assumption Agreement with the FDIC and bought ShoreBank's assets. Am. Compl. at 4; Mot. to Dismiss at 3; see also R. 33-3, Mot. to Dismiss Exh. C, Purchase and Assumption Agreement.

         In 2011, Chen fell behind on her payments on at least one of the mortgages. Am. Compl. at 4. Urban Partnership Bank filed state-court foreclosure actions against the Braemer Court property in 2012, Mot. to Dismiss at 2; R. 33-1, Mot. to Dismiss Exh. A, Braemer Foreclosure Compl., and against the South Princeton Avenue property in 2013, Mot. to Dismiss at 2; R. 33-2, Mot. to Dismiss Exh. B, Princeton Foreclosure Compl. See also Am. Compl. at 4. The Circuit Court of Will County entered default judgment against Chen as to the Braemer Court property, and the house was sold at a sheriffs auction in December 2014 over Chen's objection and motion to reconsider approval of the sale. Am. Compl. at 6, 41-42. Chen then filed suit against Urban Partnership Bank in federal court, alleging two federal claims and ten state-law claims.[3]

         II. Standard

         Urban Partnership Bank brings its motion under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). A Rule 12(b)(1) motion tests whether the Court has subject-matter jurisdiction, Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009); Long v. ShoreBank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999), while a Rule 12(b)(6) motion tests the sufficiency of the complaint, Hallinan, 570 F.3d at 820; Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). When reviewing a motion to dismiss under either rule, the Court accepts as true all factual allegations in the complaint and draws all reasonable inferences in the plaintiffs favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007). Because Chen is a pro se plaintiff, her complaint is liberally construed and held "to a less stringent standard than formal pleadings drafted by lawyers." Arnett v. Webster, 658 F.3d 742, 751 (7th Cir. 2011).

         Under Rule 8(a)(2), a complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The complaint must "give the defendant 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) (alteration in original) (internal quotation marks and citation omitted). These allegations "must be enough to raise a right to relief above the speculative level, " id. at 555, and 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) (quoting Twombly, 550 U.S. at 570). The allegations entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.

         In order to survive a Rule 12(b)(1) motion, the plaintiff must establish that the district court has jurisdiction over an action. United Phosphorous, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2011), overruled on other grounds by Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012). "If subject matter jurisdiction is not evident on the face of the complaint, [then] the ... Rule 12(b)(1) [motion is] analyzed [like] any other motion to dismiss, by assuming for the purposes of the motion that the allegations in the complaint are true." United Phosphorus, 322 F.3d at 946. But "if the complaint is formally sufficient but the contention is there that there is in fact no subject matter jurisdiction, [then] the movant may use affidavits and other material to support the motion." Id. (emphasis in original).

         III. Analysis

         Because the parties are not of diverse citizenship, [4] this Court may only exercise subject-matter jurisdiction if Chen adequately states at least one federal claim-that is, a claim "arising under the Constitution, laws, or treaties of the United States, " 28 U.S.C. § 1331. If she does, the Court may also exercise supplemental jurisdiction over any state-law claims that are "so related to [the federal] claims ... that they form part of the same case or controversy." 28 U.S.C. § 1367(a).

         A. Federal Claims

         The Amended Complaint asserts two federal claims. First, Chen alleges that she did not receive required disclosures about the costs and terms of the Braemer Court mortgage, [5] in violation of the Truth in Lending Act, 15 U.S.C. § 1601 et seq. Although Chen directs this particular claim against, at different points, "Defendants, " "ShoreBank/UPB, " and "UPB, " only ShoreBank could have committed the alleged acts or omissions giving rise to the claim because they occurred at the time of loan origination. Am. Compl. at 8-9 ("Defendants failed to disclose [the required information] to the Plaintiff prior to the closing of the loan ... . ShoreBank/UPB failed to provide borrower necessary information ... within three days of the loan application."). Chen claims that "UPB" (meaning Urban Partnership Bank) specifically violated the Truth in Lending Act by providing Chen with a Disclosure Statement containing an incorrect APR, id. at 9, but the allegedly deficient Disclosure Statement is dated September 6, 2005, Id. at 43-well before Urban Partnership ...

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