United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
S. SHAH UNITED STATES DISTRICT JUDGE
bought a home financed by an adjustable-rate mortgage. She
sues defendants JPMorgan Chase Bank, N.A., JPMorgan Chase
& Co., Chase Bank, N.A.,  and Nationwide Title Clearing for
their roles in administering that mortgage. She alleges that
the assignment, assessment of fees, escrow calculations,
foreclosure, and communications regarding her mortgage were
unlawful in a number of ways. She brings claims against all
four defendants under the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C § 1962(c). She brings a
claim against “Chase” for violation of the Real
Estate Settlement Procedures Act, 12 U.S.C. § 2605(e).
She brings claims against Chase and NTC for violations of the
Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS
505/2. Defendants move to dismiss the complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6). For the following
reasons, defendants' motion to dismiss is granted.
motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6) challenges the viability of a complaint by arguing
that it fails to state a claim upon which relief may be
granted.” Camasta v. Jos. A. Bank Clothiers,
Inc., 761 F.3d 732, 736 (7th Cir. 2014). Under the
federal notice pleading standards, a plaintiff must allege
facts sufficient “to raise a right to relief above the
speculative level.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Put differently, 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
Twombly, 550 U.S. at 570). The court must construe
all factual allegations as true and draw all reasonable
inferences in the plaintiff's favor, but the court need
not accept legal conclusions or conclusory allegations.
Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939,
946 (7th Cir. 2013). Under Federal Rule of Civil Procedure
9(b), a plaintiff alleging fraud must do so with
particularity, which generally means a plaintiff must plead
“the who, what, when, where, and how of the
fraud.” Camasta, 761 F.3d at 737.
Merlyn McNeal obtained an adjustable-rate mortgage for $261,
000 to purchase a home in June 2007.  ¶
34-35. The interest rate was set at 9.125% for
two years and subject to change every six months thereafter,
up to 16.215%. Id. ¶ 35. The mortgage provided
that under certain circumstances the lender may take actions
to protect its rights in the property, including
“entering on the Property to make repairs, ” as
long as the lender gave notice before taking such action.
Id. ¶ 36. Initially, McNeal was to make
payments to Chase Home Finance, LLC. Id. ¶ 37.
Federal National Mortgage Association (Fannie Mae) later
became the owner of the loan and assigned it to JPMorgan
Chase Bank. Id. ¶ 38-39.
Chase Bank filed a foreclosure complaint against McNeal in
the Circuit Court of Cook County in March 2013. Id.
¶ 40. McNeal responded to the lawsuit and later applied
to JPMorgan Chase Bank for loan modification assistance.
Id. ¶ 41-42. JPMorgan Chase Bank approved
McNeal for a trial period plan, effective July 1, 2015, and
requiring three monthly trial payments. Id. ¶
43-44. McNeal was informed at that time that her escrow
shortage was $773.78. Id. ¶ 45. JPMorgan Chase
Bank sent McNeal a final loan modification agreement in
November 2015. [49-2] at 2. A few weeks later, Chase sent
McNeal a statement showing that her escrow account would be
$3, 989.74 short in 2016 and giving her three options for
repayment. [49-2] at 13. McNeal also received a statement
showing charges for corporate advance fees-one in the amount
of $50, 438.09 and thirty-one separate fees, each for
$999.99.  ¶ 52; [49-2] at 16-17. In December 2015,
McNeal sent a letter requesting information about her loan,
including an explanation about the corporate advance fees
that had been assessed to her account. [49-2] at 18. In
response, she received a list of all corporate advance
balance fees charged to her account from November 2008
through January 2016. Id. at 19-24. The summary did
not list either the $50, 438.09 fee or any of the $999.99
fees. Id. It stated that the listed fees had been
waived, and showed McNeal's corporate advance fee balance
as $0.00. Id. at 19, 24.
filed a lawsuit against JPMorgan Chase Bank, JPMorgan Chase
& Co., Fannie Mae, and Chase Home Finance LLC for their
conduct in administering her mortgage. She alleged that the
Chase defendants had violated RICO and RESPA. She also
brought claims against all four defendants for violations of
the Illinois Consumer Fraud and Deceptive Practices Act, the
Residential Mortgage License Act, 205 ILCS 635/1-3, breach of
contract, and unjust enrichment. Defendants moved to dismiss
all claims under Federal Rule of Civil Procedure 12(b)(6);
their motion was granted, without prejudice. McNeal filed an
amended complaint, dropping defendants Chase Home Finance,
LLC and Fannie Mae, and adding defendants Chase Bank, N.A.
and Nationwide Title Clearing, Inc. McNeal again alleges that
defendants violated RICO, RESPA, and the Illinois
consumer-fraud statute. Defendants filed a second Rule
12(b)(6) motion to dismiss. Though McNeal made some changes
from her original complaint, she failed to remedy the legal
deficiencies laid out in the court's previous order.
Racketeer Influenced & Corrupt Organizations Act
1962(c) of RICO makes it “unlawful for any person
employed by or associated with any enterprise engaged in, or
the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly,
in the conduct of such enterprise's affairs through a
pattern of racketeering activity or collection of unlawful
debt.” To state a § 1962(c) claim, a plaintiff
must “demonstrate (1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity.”
Rao v. BP Prods. N. Am., Inc., 589 F.3d 389, 399
(7th Cir. 2009). A plaintiff must “identify a
‘person'-i.e., the defendant-that is
distinct from the RICO enterprise.” United Food
& Commercial Workers Unions & Emp'rs Midwest
Health Benefits Fund v. Walgreen Co., 719 F.3d 849, 853
(7th Cir. 2013) (citing Cedric Kushner Promotions, Ltd.
v. King, 533 U.S. 158, 161 (2001)). This is because RICO
“liability depends on showing that the defendants
conducted or participated in the conduct of the
‘enterprise's affairs, ' not just
their own affairs.” Reves v. Ernst &
Young, 507 U.S. 170, 185 (1993); see also Baker v.
IBP, Inc., 357 F.3d 685, 692 (7th Cir. 2004)
(“Without a difference between the defendant and the
‘enterprise' there can be no violation of
RICO.”). A parent and subsidiary may be sufficiently
distinct to satisfy the person-enterprise distinction,
see, e.g., Haroco, Inc. v. Am. Nat'l Bank & Trust
Co., 747 F.2d 384, 402 (7th Cir. 1984), but “[t]he
firm must be shown to use its agents or affiliates in a way
that bears at least a family resemblance to the paradigmatic
RICO case in which a criminal obtains control of a legitimate
(or legitimate-appearing) firm and uses the firm as the
instrument of his criminality.” Emery v. Am. Gen.
Fin., Inc., 134 F.3d 1321, 1324 (7th Cir. 1998).
original complaint, McNeal failed to identify a person that
was distinct from the RICO enterprise. See McNeal v. J.P.
Morgan Chase Bank, N.A., No. 16 CV 3115, 2016 WL
6804585, at *7-11 (N.D. Ill. Nov. 17, 2016). Her allegations
were inconsistent, alleging that all four defendants were the
persons; that all four defendants, plus their directors,
employees and agents were the enterprise; and that Chase and
its employees conducted the Chase enterprise. McNeal provided
no information regarding the structure, duration, or
organization of the enterprise. Her complaint further failed
to assert that defendants were conducting the affairs of a
separate criminal enterprise, rather than their own affairs.
McNeal also failed to allege her RICO claim with sufficient
particularity to satisfy Federal Rule of Civil Procedure
amended complaint, McNeal asserts a RICO claim against all
four defendants. A number of the allegations are identical
to her original complaint, and though there are some
differences between the two, McNeal has still failed to
allege a distinct person and enterprise. In her amended
complaint, it remains unclear who is the ‘person'
distinct from the enterprise. McNeal asserts that JPMorgan
Chase & Co., JPMorgan Chase Bank, and Chase comprise the
enterprise and conduct its affairs. Id. ¶ 66,
83. She also alleges that each of these is a person
responsible for operating and managing the affairs of the
enterprise. Id. ¶ 67. She asserts that
“[a]ll the enterprises described in this paragraph are
an ‘individual, partnership, corporation, association
or other legal entity' and are therefore valid legal
enterprises within the definition of § 1961(4) of the
RICO Act.” Id. ¶ 71. Later, however, she
states that JPMorgan Chase & Co. is separate and distinct
from the association of Chase Bank, JPMorgan Chase Bank, and
NTC. Id. ¶ 87.
goes on to describe the three Chase defendants and their
different roles in the enterprise. See id. ¶
63-65; 85-86. She alleges that JPMorgan Chase & Co.
engaged in a scheme to defraud and make a profit by using
JPMorgan Chase Bank to file a foreclosure complaint based on
falsified, fraudulent, and deficient documents. Id.
¶ 58, 62. She asserts that JPMorgan Chase Bank, which
provides consumer loans, hired NTC to create a fraudulent
assignment, and that Chase Bank was responsible for servicing
the loan,  ordering the property inspection fees,
calculating the escrow statements, and mailing the statements
containing misrepresentations and unlawful fees. Id.
¶ 68, 85-88. She also adds that Chase, in furtherance of
the scheme, serviced McNeal's loan on behalf of the
enterprise, routinely and systematically misrepresenting to
borrowers that they had an escrow shortage after modifying
their loans to ...