United States District Court, N.D. Illinois
Hector M. Carlos and Maria D. Carlos, Plaintiffs,
Beneficial Financial I Inc., et al., Defendants.
MEMORANDUM OPINION AND ORDER
A. Guzmán United States District Judge
reasons stated below, Beneficial's motion to dismiss 
is granted in part and denied in part. The breach of contract
and TILA claims are dismissed with prejudice, Plaintiffs are
given 14 days to file an amended complaint containing a
revised ICFA count as discussed herein, and the motion to
dismiss the RESPA count is denied.
allege that on October 23, 2002, they refinanced their
mortgage with Beneficial Financial I, Inc.
(“Beneficial”) by executing a note in the amount
of $132, 296.53, which was secured by a mortgage on their
home. (Am. Compl., Dkt. # 36, ¶¶ 8-9, 16.)
According to Plaintiffs, Beneficial charged them interest on
a daily, not monthly, basis “in derogation of the loan
documents.” (Id. ¶ 35.) “Under
Beneficial's method, interest apparently accrued daily
such that if [Plaintiffs] made a payment more than thirty
days after the previous payment, they would be charged extra
interest in addition to that included in the . . . mortgage
payment, even if both payments were timely.” (Pls.'
Resp., Dkt. # 49, at 2.) In addition, as a result of the way
in which Beneficial accounted for Plaintiffs' loan, they
“accumulated an interest arrearage of at least $51,
958.34, including an unauthorized $41, 131.16 ‘deferred
interest' balloon payment.” (Am. Compl., Dkt. # 36,
¶ 11.) According to Plaintiffs, the manner in which the
loan was calculated and the “additional” charges
were explained to them for the first time in summer 2017.
(Id. ¶¶ 43, 45.)
2014, Plaintiffs provided multiple notices of error, requests
for information and qualified written requests
(“QWR”) to Beneficial through their then-attorney
due to the confusion as to how much they owed. (Id.
¶¶ 58, 62.) Beneficial failed to correct the
purported errors or provide the requested information, and
instead gave “non-responsive and largely
incoherent” answers. (Id. ¶ 59.) In or
about May 2015, Beneficial accelerated Plaintiffs' loan,
calling the entire balance due, including the approximately
$41, 000.00 “deferred interest balloon payment.”
(Id. ¶ 69.)
was responsible for servicing the loan from approximately
October 23, 2002 to June 1, 2015, when it transferred
servicing of the loan to defendant Caliber Home Loans, Inc.
(“Caliber”). (Id. ¶¶ 22, 53.)
Beneficial allegedly failed to provide Caliber with
Plaintiffs' full payment history as well as the QWRs and
requests for information from Plaintiffs to Beneficial.
(Id. ¶¶ 72-73.) Beneficial assigned the
loan to U.S. Bank on or about July 22, 2015. (Id.
¶¶ 22-23.) When Beneficial transferred the loan to
Caliber and U.S. Bank, it had calculated Plaintiffs'
outstanding interest balance to be $51, 958.34. (Id.
¶ 46.) Caliber and U.S. Bank continued to incorrectly
account for Plaintiffs' mortgage debt. (Id.
¶ 13.) After a trial modification, U.S. Bank, through
Caliber, offered Plaintiffs a permanent modification of their
loan. On September 2, 2015, U.S. Bank filed a foreclosure
action against Plaintiffs, during which Plaintiffs, through
counsel, negotiated and entered into a loan modification that
included the $41, 131.16 in deferred interest. (Id.
¶¶ 120-26, 140.) The foreclosure case has been
moves to dismiss the claims alleged against it, which include
breach of contract, violations of the Illinois Consumer Fraud
and Deceptive Business Practices Act (“ICFA”),
violations of the Truth in Lending Act (“TILA”),
and violations of the Real Estate Settlement Procedures Act
motion under Rule 12(b)(6) challenges the “sufficiency
of the complaint to state a claim upon which relief may be
granted.” Hallinan v. Fraternal Order of Police of
Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).
“[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) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). These
allegations “must be enough to raise a right to relief
above the speculative level.” Twombly, 550
U.S. at 555. The allegations that are entitled to the
assumption of truth are those that are factual, rather than
mere legal conclusions. Iqbal, 556 U.S. at 678-79.
Breach of Contract
contends that the breach of contract count against it must be
dismissed on several grounds, but because the first ground is
dispositive, that is the only one the Court will address. It
is undisputed that Plaintiffs and U.S. Bank entered into a
modification of the original loan entered into between
Plaintiffs and Beneficial, and that the modification was
accepted by Plaintiffs. (Id. ¶ 141
([Plaintiffs] timely accepted the modification. . .
.”).) As a result, Plaintiffs can only sue for breach
of contract based on the terms of the modified agreement with
U.S. Bank. See Galesburg 67, LLC v. Nw. Television,
Inc., No. 15 C 5650, 2017 WL 3608204, at *4 (N.D. Ill.
Aug. 22, 2017) (“When, as here, a contract is modified
or amended by a subsequent agreement, ‘any lawsuit to
enforce the [agreement] must be brought on the modified
agreement and not on the original agreement.'”)
(citation omitted). Thus, Beneficial's motion to dismiss
the breach of contract count is granted.
also moves to dismiss the ICFA claim against it. Plaintiffs
allege that Beneficial engaged in unfair and/or deceptive
acts and practices by: (1) incorrectly charging interest
daily instead of monthly, resulting in a purported balloon
payment and “negative amortizing loan, ” and
leading to allegedly unauthorized loan
“restructurings” and modifications; (2) failing
to inform Plaintiffs of the interest computation; and (3)
“recklessly transferring [Plaintiffs'] loan”
to U.S. Bank. (Am. Compl., Dkt. # 36, ¶ 230.)
“[T]he elements of a claim under [the] ICFA are 1) a
deceptive or unfair act or practice by the defendant; 2) the
defendant's intent that the plaintiff rely on the
deceptive or unfair practice; 3) the unfair or deceptive
practice occurred during a course of conduct involving trade