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Overstreet v. Cit Mortgage Home Loan Trust 2007-1

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

March 16, 2017

ELIZABETH OVERSTREET, Plaintiff,
v.
CIT MORTGAGE HOME LOAN TRUST 2007-1 and CALIBER HOME LOANS, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT M. DOW, JR. UNITED STATES DISTRICT JUDGE.

         Before the Court are Defendants CIT Mortgage Home Loan Trust 2007-1's and Caliber Home Loans' motion to dismiss [26]. For the reasons set forth below, Defendants' motion to dismiss [26] is granted. Plaintiff is given until April 17, 2017, to file an amended complaint.

         I. Background

         This case involves a residential mortgage of a single family residence located on Oakwood Court in Country Club Hills, Illinois (the “Property”). On October 21, 2005, Plaintiff Elizabeth Overstreet obtained a first and second mortgage on the Property from BNC Mortgage, Inc. (“BNC”) for amounts totaling $170, 000. [24, ¶ 10.] Both mortgages were subprime. Id. ¶¶ 12-13. In January 2006, BNC transferred the loans to Defendant CIT Mortgage Home Loan Trust 2007-1 (“CIT”), and the loan servicer became the entity now known as Caliber Home Loans (“Caliber, ” collectively with CIT, “Defendants”). Id. ¶¶ 15, 41.

         In March 2015, Caliber sent Plaintiff a “Loss Mitigation Package” that included a loan modification application in an effort to help Plaintiff reduce her loan payments. Caliber approved Plaintiff's request for a short-term loan modification on July 25, 2015. On September 3, 2015, Caliber notified Plaintiff that her August payments were thirty days overdue. Plaintiff alleges that this was an error. On October 9, 2015, Caliber sent another notice that it had updated her credit information to show that her August payments were current.

         On November 5, 2015, Plaintiff sent a “notice of rescission” to Caliber because of its alleged violations of the Truth In Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”), and requested that Caliber rescind Plaintiff's mortgage. [24, at 35.] Defendants did not do so. Eight days later, Caliber sent Plaintiff a mortgage statement that listed a fee of $118.50. Id. at 37. Plaintiff alleges that this fee was for a broker price opinion (“BPO”), which is typically used to determine the potential sales price or value of a real estate property. Id. ¶ 30.

         In connection with these events, Plaintiff filed an amended complaint asserting claims under TILA and the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) as well a as state law claim for unjust enrichment. [24.] The amended complaint asserts federal question and diversity jurisdiction. Id. ¶ 2. Defendants move to dismiss. [26.]

         II. Legal Standard

         To survive a Federal Rule of Civil Procedure (“Rule”) 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, 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 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original). 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). 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. In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiff's well-pleaded factual allegations and draws all reasonable inferences in Plaintiff's favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007). The “documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his [or her] claim” and “may be considered by the district court in ruling on the motion to dismiss * * * without converting [it] to a motion for summary judgment.” Wright v. Associated Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994).

         III. Analysis

         Defendants advance several arguments to dismiss. With respect to Plaintiff's TILA claim (Count I), Defendants argue that Plaintiff's right to rescind has been extinguished. Regarding the ICFA claims (Counts II and III), Defendants argue that Plaintiff fails to plead any facts that would show that Defendants engaged in “deceptive” or “unfair” conduct. Regarding the unjust enrichment claim (Count IV), Defendants contend that this claim must fall with Plaintiff's ICFA claim. The Court starts with the TILA claim.

         A. TILA

         Plaintiff's TILA claim is based on her 2015 rescission notice. Plaintiff alleges the original disclosures she received for her 2005 mortgage “did not identify the actual true lender, ” although CIT “was and always has been the actual lender.” [24, ¶¶ 36-37.] Plaintiff states that she served her notice to rescind, but Defendants failed to return any money or property to her, which violates TILA. Id. ¶¶ 38-42.

         Congress enacted TILA “to assure meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various terms available to him and to avoid the uninformed use of credit and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a). TILA grants borrowers the unconditional right to rescind a loan within three business days of “the consummation of the transaction.” 15 U.S.C. § 1635(a); Jesinoski v. Countrywide Home Loans, Inc., 135 S.Ct. 790, 792 (2015). “Consummation means the time that a consumer becomes contractually obligated on a credit transaction.” 12 C.F.R. § 226.2(a)(13); accord Dowdy v. First Metro. Mortg. Co., 2002 WL 745851, at *1 (N.D.Ill. Jan. 29, 2002) (“A credit transaction is consummated for the purposes of TILA when the plaintiffs become contractually obligated on a credit transaction; in this case, the consummation being the closing of the loan.”). If the creditor fails to comply with TILA's various disclosure requirements, the statute extends the borrower's conditional right to rescind to three years after consummation. 15 U.S.C. § 1635(f); Jesinoski, 135 S.Ct. at 792.

         Here, Plaintiff consummated her mortgage when she executed her mortgage documents on October 21, 2005.[1] [24, at 12-20.] However, Plaintiff served her notice to rescind on Defendants on November 5, 2015 (id. at 35)-more than ten years later. Even assuming that Defendants failed to make their required TILA disclosures, Plaintiff's right to rescind was extinguished on October 21, 2008. 15 U.S.C. § 1635(f); Jesinoski, 135 S.Ct. at 792.

         The only way Plaintiff attempts to save her TILA rescission claim is through resort to “equitable tolling.” [28, at 2-4.] But TILA's three-year limit is a statute of repose. See Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998); Doss v. Clearwater Title Co., 551 F.3d 634, 638 (7th Cir. 2008). Unlike a statute of limitations, “[a] statute of repose * * * is substantive. It extinguishes any right to bring any type of cause of action against a party, regardless of whether such action has accrued.” Augutis v. United States, 732 F.3d 749, 752-53 (7th Cir. 2013). “The rule in the federal courts is that both tolling doctrines-equitable estoppel and equitable tolling- are, just like the discovery rule, grafted on to federal statutes of limitations.” Cada v. Baxter Healthcare Corp., 920 F.2d 446, 451 (7th Cir. 1990). However, “[n]either tolling doctrine applies to statutes of repose.” Id. Because ...


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