United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
D. Leinenweber, United States District Court Judge
reasons stated herein, the Court grants Dwayne and Deborah
Skibbe's Motion to Dismiss U.S. Bank Trust's
Counterclaims [ECF No. 50].
events in this lawsuit are largely undisputed. In 2004,
Dwayne and Deborah Skibbe (collectively, the
“Skibbes”) obtained a mortgage from Household
Finance Corporation. The mortgage was secured by the
Skibbes' residence. In April 2010, the Skibbes stopped
paying their mortgage and have not made another payment
since. In December of that year, Household Finance, through
its agent Ira T. Nevel (“Nevel”), a co-Defendant
in this case, filed a foreclosure action again the Skibbes in
Kane County. In this first of three foreclosure lawsuits,
Household Finance alleged that the Skibbes defaulted in April
2010 and owed Household Finance some $259, 657.30.
2011, the Skibbes filed for Chapter 13 bankruptcy. As part of
the bankruptcy, they submitted a statement of intention in
which they declared that they would surrender the subject
property in satisfaction of the outstanding debt. Even though
such a statement would not alleviate the need for the
creditor to foreclose on the property, see, Vlasic v.
Equifax Credit Info. Servs., No. 03 C 4044, 2004 U.S.
Dist. LEXIS 8361, at *6 (N.D. Ill. May 10, 2004)
(“Defendants correctly point out that Vlasic's
intention to surrender the property did not transfer title in
the property.”); ECF No. 72 (U.S. Bank
Trust's Reply Br.) at 14 (agreeing that “legal
transfer of title requires a judicial foreclosure”),
Household Finance, for whatever reason, voluntarily dismissed
its foreclosure lawsuit against the Skibbes about a year
mortgagee then evidently had a change of heart, as it filed
another foreclosure lawsuit in June of 2013. This complaint
alleged a default date of August 10, 2010, with an unpaid
balance of roughly $1, 000 less than what was alleged in the
first lawsuit, or $258, 542.72. Despite this later-pled
default date, the record shows that the Skibbes had not made
a payment since April 2010. See, ECF No. 46
(Countercl.) at 19 ¶ 7; ECF No. 72, Ex. B, at
10:7-12:18; United States Bank Tr., N.A. v. Skibbe,
2016 IL App (2d) 151143-U, ¶¶ 8-9.
October 2013, the Skibbes converted their Chapter 13
bankruptcy to Chapter 7. The effect of this conversion on the
present matter is unclear. The parties, however, do not
dispute that the Skibbes did not amend their statement of
intention to surrender the subject property at any point
during their Chapter 7 bankruptcy. Sometime after the
conversion, Household Finance voluntarily dismissed its
second foreclosure complaint.
January 2014, the Skibbes received their bankruptcy
discharge. The case closed some two months later, seemingly
without any objections from Household Finance despite the
fact that the Skibbes did not surrender the property and
Household Finance had not successfully foreclosed on it.
Indeed, the Skibbes never gave up possession of their house,
and later that same year, Household Finance transferred their
mortgage loan to U.S. Bank Trust. U.S. Bank Trust then took
the action that led to the Skibbes bringing this lawsuit: it
had Nevel file a third foreclosure action against the couple.
Bank Trust's lawsuit fared worse than the first two
foreclosure actions. The state circuit court dismissed the
suit with prejudice for violating Illinois's
no-second-refiling rule. This rule came about as a result of
the Illinois Supreme Court interpreting 735 ILCS 5/13-217 as
allowing a case to be refiled just once. See, Timberlake
v. Illini Hosp., 175 Ill.2d 159, 162-63 (1997)
(“[735 ILCS 5/13-217] was not intended to permit
multiple refilings of the same action. This court has
interpreted section 13-217 as permitting only one refiling
even in a case where the applicable statute of limitations
has not yet expired.”). In reaching its decision to
dismiss the case, the circuit court deemed the 2010 action to
be the originally filed action, the 2013 action to be the
first refiling, and the 2015 action to be the second - and
thus barred - refiling. The court further denied U.S.
Bank's motion for reconsideration, giving no weight to
the argument that the Skibbes were unfairly getting a
“free house” as a result of the court turning
away the foreclosure suit. See, ECF No. 72, Ex. B
(Ruling on Mot. Reconsider), at 13:18-14:21.
Illinois appellate court affirmed the dismissal.
Skibbe, 2016 IL App (2d) 151143-U, ¶ 11. It
explained that 735 ILCS 5/13-217 “applies to all claims
raised in the original action as well as all claims that grew
out of the same transaction involved in the original
action.” Id. ¶ 6. The court rejected the
argument that the 2015 foreclosure action was not a second
refiling of the original 2010 action because the 2015 action,
like the 2013 complaint but unlike the 2010 complaint,
alleged a default date of August 2010 and not April 2010. As
the appellate court stated, “in contrast to what
plaintiff alleges on appeal, the 2010, 2013, and 2015
complaints all involve the same transaction, i.e.,
defendants' failure to make any payments on their
mortgage since April 2010.” Id. ¶ 8.
won, the Skibbes went on the offensive. They filed this
federal lawsuit alleging that U.S. Bank Trust and Nevel
violated the Fair Debt Collection Practices Act
(“FDCPA”) and the Illinois Consumer Fraud and
Deceptive Business Practices Act (“ICFA”) in
instituting the third foreclosure action. U.S. Bank Trust hit
back with four counterclaims, including promissory estoppel,
set-off, constructive trust, and equitable lien. The nub of
the counterclaims is that the Skibbes should be compelled to
pay the Bank, in one way or another, for their “free
house.” U.S. Bank Trust proposed as remedies an award
of damages, a surrender of the property, an imposition of a
constructive trust, or a creation of an equitable lien.
Skibbes now bring this Motion to Dismiss the Counterclaims on
both Rule 12(b)(1) and 12(b)(6) grounds. For the reasons
discussed below, the Court finds dismissal appropriate
because of res judicata. It therefore does not reach
the Skibbes' Rule 12(b)(6) arguments regarding the
adequacy of U.S. Bank Trust's pleadings.
the Court ultimately concludes that U.S. Bank Trust's
counterclaims are barred by res judicata, it first
addresses its jurisdiction to decide the issue. See,
Steel Co. v. Citizens for a Better Env't, 523 U.S.
83, 94-95 (1998) (“Without jurisdiction the court