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Kane v. Bank of America, National Association

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

May 23, 2017

THOMAS H. KANE, Plaintiff,


          Gary Feinerman Judge

         Thomas Kane alleges in this suit that Bank of America and Wells Fargo Bank (together, the “Banks”) committed common law fraud and violated the Illinois Consumer Fraud Act (“ICFA”) in connection with their processing and denial of his requests for a mortgage modification. Doc. 55. The Banks have moved the court to stay and abstain from hearing this case under the doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), pending resolution of earlier filed foreclosure proceedings in Illinois state court. Doc. 123. The motion is granted.


         In 2006, Kane took out a $470, 000 loan from Wells Fargo and secured it with a mortgage on his home. Doc. 55 at ¶¶ 86, 88, 90. Wells Fargo transferred the mortgage to Bank of America, but continued to service it. Id. at ¶¶ 66-67. When Kane was laid off in 2009, he sought a loan modification. Id. at ¶¶ 92-93. Thus began a multi-year back-and-forth between Kane and the Banks over whether and how they might modify his repayment terms. Id. at ¶ 76. In the end, the Banks denied all of Kane's requests and proceeded with foreclosure. Id. at ¶ 85.

         Litigation commenced on March 24, 2011, when Bank of America filed a foreclosure action against Kane in the Circuit Court of Cook County, Illinois. Bank of Am., N.A. v. Kane, No. 2011 CH 11338 (Cir. Ct. Cook Cnty., Ill.) (complaint reproduced at Doc. 124-1 at 6-40). Well over two years later, on November 9, 2013, Kane brought this suit against the Banks in federal court, alleging common law fraud and violations of the ICFA, the Racketeer and Corrupt Organizations Act (“RICO”), and the Fair Debt Collection Practices Act (“FDCPA”). Doc. 1. The gist of Kane's suit is that the Banks strung him along without intending to modify his loans and violated federal guidelines, in order to milk extra late fees and interest from him.

         This case was originally assigned to Judge Marovich, who in August 2014 granted the Banks' motion to dismiss. Doc. 23 (reported at 2014 WL 4198295 (N.D. Ill. Aug. 25, 2014)). Kane then sought and, in June 2015, obtained permission from Judge Marovich to file an amended complaint that did not include the RICO claims, the FDCPA claims, and some of the originally pleaded fraud claims. Doc. 40 (reported at 2015 WL 3798142 (N.D. Ill. June 17, 2015)). The following day, the case was reassigned to the undersigned judge. Doc. 41. Kane then moved for reconsideration of Judge Marovich's rulings insofar as they precluded him from re-pleading his RICO claims. Doc. 44. The court denied that motion in September 2015, Doc. 54, and Kane filed a second amended complaint, Doc. 55, which the Banks answered in November 2015, Doc. 60. The court then urged the parties to get moving on discovery, which had only recently begun, and the parties engaged in unsuccessful settlement negotiations before Magistrate Judge Kim. Docs. 46, 61-68. The discovery deadline has been extended three times, most recently to November 18, 2016. Docs. 73, 87, 101, 119.

         Meanwhile, on July 29, 2014, Kane in the foreclosure action asserted as affirmative defenses the same fraud-based theories underlying his claims in this federal suit. Doc. 124-1 at 55-122. Bank of America twice moved to strike those defenses, prompting Kane to amend twice more. Id. at 124; Doc. 124-2 at 2-113, 115, 117-183. Kane's third and final amended affirmative defenses sounded in common law promissory fraud and violations of the ICFA, closely tracking the allegations of his federal complaint. Doc. 124-2 at 117-183. The state court struck those defenses with prejudice on June 2, 2016, and then denied Kane's motion for reconsideration on October 5, 2016. Id. at 185, 187. On October 11, 2016, Bank of America moved for summary judgment in the foreclosure action, id. at 189, and after briefing and oral argument, the state court granted the motion on December 15, 2016, Doc. 133-1 at 5. The state court also issued a judgment for foreclosure and sale and appointed a sale officer to auction the property. Id. at 9-13, 15.


         The Colorado River doctrine provides that “a federal court may stay or dismiss a suit in federal court when a concurrent state court case is underway, but only under exceptional circumstances and only if it would promote ‘wise judicial administration.'” Freed v. JPMorgan Chase Bank, N.A., 756 F.3d 1013, 1018 (7th Cir. 2014) (quoting Colorado River, 424 U.S. at 818); see also Caminiti & Iatarola, Ltd. v. Behnke Warehousing, Inc., 962 F.2d 698, 700 (7th Cir. 1992). The Supreme Court “has cautioned that abstention is appropriate only in ‘exceptional circumstances, ' and has also emphasized that federal courts have a ‘virtually unflagging obligation … to exercise the jurisdiction given them.'” AXA Corporate Solutions v. Underwriters Reins. Corp., 347 F.3d 272, 278 (7th Cir. 2003) (alteration in original) (citation omitted) (quoting Colorado River, 424 U.S. at 813, 817). In determining whether to abstain, the court's task is “not to find some substantial reason for the exercise of federal jurisdiction by the district court; rather, the task is to ascertain whether there exist exceptional circumstances, the clearest of justifications, that can suffice under Colorado River to justify the surrender of that jurisdiction.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26 (1983) (internal quotation marks and emphases omitted).

         The Colorado River analysis has two steps. First, the court asks “whether the state and federal court actions are parallel.” Freed, 756 F.3d at 1018; see also Caminiti, 962 F.2d at 700. If the proceedings are not parallel, Colorado River abstention must be denied. Freed, 756 F.3d at 1018. If the proceedings are parallel, the court then must weigh ten non-exclusive factors to determine whether abstention is proper. Ibid.

         Kane concedes in his opposition brief that this federal suit and the state court foreclosure action are parallel. Doc. 128 at 13. This concession is a waiver. See Mays v. BNSF Ry. Co., 974 F.Supp.2d 1166, 1177-78 (N.D. Ill. 2013) (holding that the plaintiff “affirmatively waived” an argument by conceding the point).

         The second step in the Colorado River analysis requires examining and balancing these ten non-exclusive factors:

1) whether the state has assumed jurisdiction over property;
2) the inconvenience of the federal forum;
3) the desirability of avoiding piecemeal litigation;
4) the order in which jurisdiction was obtained by the ...

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