United States District Court, N.D. Illinois, Eastern Division
LAWRENCE J. BALOGH, Plaintiff,
DEUTSCHE BANK NATIONAL TRUST COMPANY, OCWEN LOAN SERVICING, LAW OFFICES OF IRA T. NEVEL, Defendants.
MEMORANDUM OPINION AND ORDER
Honorable Edmond E. Chang United States District Judge
Lawrence Balogh filed this action against Deutsche Bank,
Ocwen Servicing, and the Law Offices of Ira Nevel, alleging a
variety of federal and state claims, in connection with
Deutsche Bank's foreclosure action brought against Balogh
in Illinois State Court. R. 1, Compl. In August 2016, Deutsche
Bank received a Judgment of Foreclosure against Balogh in the
Circuit Court of Cook County. R. 14, Def. Deutsche's Br.,
Exh. 2. Balogh alleges a variety of federal and state law
claims: violations of the Real Estate Settlement Procedures
Act (RESPA), 12 C.F.R. § 1024.36(d); the Truth in
Lending Act (TILA), 15 U.S.C. § 1635; the Illinois
Consumer Fraud Act (ICFA), 815 ILCS 505/2); and a conspiracy
to commit fraud. Now, Defendants move to dismiss all
claims, arguing that (1) there is no subject matter
jurisdiction under the Rooker-Feldman doctrine; and
(2) even if there is jurisdiction, the allegations do not
state a claim. Def. Deutsche Mot. Dismiss ¶¶
Def. Nevel's Br. at 1. For the reasons below, the motion
to dismiss the federal law claims is granted, and the Court
relinquishes supplemental jurisdiction over the state law
purpose of deciding this motion, the Court accepts the
allegations in the Complaint as true. Erickson v.
Pardus, 551 U.S. 89, 94 (2007). In May 2005, Balogh took
out an adjustable-rate mortgage from IndyMac Bank, FSB to buy
his Brookfield, Illinois home. Compl. ¶ 14. In July
2008, IndyMac Bank failed and closed, and the Federal Deposit
Insurance Corporation (FDIC) was appointed as the receiver.
Id. ¶ 17. In June 2012, the Law Offices of Ira
T. Nevel prepared paperwork assigning and transferring
Balogh's mortgage to Deutsche Bank. Compl. ¶ 22.
Nevel attested that the Mortgage Electronic Registration
Systems (MERS) assigned the note to Deutsche Bank in 2005,
and that assignment paperwork was filed in the Cook County
Recorder's office. Compl. ¶ 56. Because Nevel's
office was not incorporated until 2008, Balogh alleges that a
valid assignment is impossible. Id. ¶ 52.
Balogh made his scheduled mortgage payments up until his
default in August 2008. Compl. ¶ 71; Def. Deutsche Br.,
Exh. A. ¶ 3(j). In June 2012, Deutsche Bank, as the
Trustee of the IndyMac INDX Mortgage Loan Trust, filed a
state-court complaint to foreclose on the Brookfield
property. Compl. ¶ 21. Balogh alleges that Deutsche and
Ocwen did not review his mortgage for loss mitigation before
Deutsche Bank filed its complaint for foreclosure. Compl.
¶¶ 23, 71.
2016, Balogh sent notice to Ocwen Servicing that he wanted to
rescind the loan. Compl. ¶ 24. Ocwen did not return any
money or property at issue in the loan transaction to Balogh
after receiving notice of rescission, nor did it begin the
process of formally rescinding the loan. Compl. ¶¶
45-46. The same day, he sent an official Request for
Information to Ocwen seeking details about his loan,
including the owner of the note, proof of any assignments,
and a breakdown of fee assessments. Id. ¶ 25.
Ocwen did not deliver the information and failed to provide a
written response to Balogh that fulfilled the statutory
guidelines. Compl. ¶¶ 30-33.
the state court entered its initial judgment of foreclosure,
and in light of Ocwen not responding sufficiently to his
request, Balogh brought this suit in federal court in
February 2017. Compl. ¶¶ 2, 3, 13. The crux of his
claims is the allegation that Defendants, through a
conspiracy, fraudulently “produced multiple
assignments” of his mortgage and kept the true
ownership information from him. Id. ¶ 13. The
Illinois state foreclosure case remains ongoing. Def.
Nevel's Br., Exh. A. Defendants move to dismiss the
complaint for lack of subject matter jurisdiction and for
failure to state a claim. Def. Deutsche Mot. Dismiss
¶¶ 3-4; Def. Nevel's Br. at 1.
Bank and Ocwen Servicing bring their 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). 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).
other ground that the defense advances is Rule 12(b)(6).
“A motion under Rule 12(b)(6) challenges the
sufficiency of the complaint to state a claim upon which
relief may be granted.” Hallinan, 570 F.3d at
820. “[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
Atlantic 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.
claims only must meet the Rule 8(a)(2) standard. But claims
alleging fraud must also satisfy the heightened pleading
requirement of Federal Rule of Civil Procedure Rule 9(b),
which requires that “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances
constituting fraud or mistake.” Fed.R.Civ.P. 9(b)
(emphasis added). And Rule 9(b)'s heightened pleading
standard applies to fraud claims brought under the ICFA.
Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust
v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011)
(citation omitted). Thus, Rule 9(b) requires that
Balogh's complaint state “the identity of the
person making the misrepresentation, the time, place, and
content of the misrepresentation, and the method by which the
misrepresentation was communicated to the plaintiff.”
Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918,
923 (7th Cir. 1992) (internal quotation marks and citation
omitted). Put differently, his complaint “must describe
the who, what, when, where, and how of the fraud.”
Pirelli, 631 F.3d at 441-42 (internal quotation
marks and citation omitted).
outset, Deutsche Bank and Ocwen Servicing question
Balogh's ability to bring a claim at all because he lacks
any Article III injury. Def. Deutsche's Br. at 10. To
have standing to bring a suit, a litigant must have suffered
an injury that is fairly traceable to the defendant's
conduct and able to be redressed by a favorable judicial
decision. Diedrich v. Ocwen Loan Servicing, LLC, 839
F.3d 583, 587-88 (7th Cir. 2016) (citing Spokeo, Inc. v.
Robins, 136 S.Ct. 1540, 1547 (2016)). Plaintiffs must
allege a particularized injury-in-fact. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
Standing is a threshold showing, and a concrete injury must
“actually exist” and not be
“abstract.” Spokeo, 136 S.Ct. at 1548.
For Balogh to demonstrate that he has standing, this Court
looks to whether he has sufficiently alleged facts supporting
concrete injuries that are fairly traceable to each of his
claims. Lujan, 504 U.S. at 560-61.
brings claims under several federal and state laws, but
Deutsche and Ocwen argue that Balogh “fail[s] to
articulate any concrete injury” from the alleged
statutory violations. Def. Deutsche's Br. at 10. But this
is not right. First, the section of RESPA at issue, 12 U.S.C.
§ 2605(e)(1)(A), “imposes a duty on loan servicers
to respond to borrower inquiries.” Diedrich,
839 F.3d at 587-88. As the Seventh Circuit noted in
Diedrich, RESPA does provide for
“actual damages” caused by the loan
servicer's failure to provide information to the
borrower. Id. at 589 (emphasis in original) (citing
12 U.S.C. § 2605(f)(1)(A)). RESPA also provides for
statutory damages, up to $2000, for a pattern or practice of
failing to comply with the law. § 2605(f)(1)(B).
Although Balogh does not plead factual basis to infer a
pattern or practice of violations (he pleads only the
conclusion of a “pattern, ” Compl. ¶ 34), he
does assert that he hired an “auditor and lawyer to
persist in these efforts to obtain critical
information” on the account. Compl. ¶ 36. Giving
Balogh the benefit of reasonable inferences, Balogh
presumably found it ...