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Griffin v. U.S. Bank National Association

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

April 4, 2018




         Defendants Ocwen Loan Servicing, LLC (“Ocwen”) and U.S. Bank, National Association, as Trustee for TBW Mortgage-Backed Trust Series 2007-2, TBW Mortgage Pass Through Certificates Series 2006-A35 (“U.S. Bank”) have filed a partial motion to dismiss plaintiff's first amended complaint. For the reasons set forth below, the motion [113] is granted in part and denied in part.


         In July 2007, plaintiff Jonathan Griffin executed a 30-year Mortgage Loan and Note for $114, 750.00 with Taylor Bean & Whitaker Mortgage Corp for certain property[1] located in Chicago, Illinois. (Am. Compl. ¶ 31, Exhibit A, ECF No. 99.) Beginning in November 2012, plaintiff fell behind on his mortgage payments because his tenants were late in their payments. (Am. Compl. ¶ 32.)

         On March 3, 2013, defendant Ocwen Loan Servicing (“Ocwen”) acquired the servicing rights for plaintiff's loan. (Id. ¶ 33.) On August 27, 2013, U.S. Bank filed a foreclosure action against the property and plaintiff. (Id. ¶ 34.) On March 6, 2015, plaintiff applied for a Loan Modification from Ocwen. (Id. ¶ 35.) On April 24, 2015, Ocwen sent plaintiff a proposed Loan Modification Agreement, which laid out certain terms. (Id. ¶ 36, Exhibit C.) On May 13, 2015, plaintiff signed the Loan Modification Agreement and sent it to Ocwen. (Id. ¶ 40.) Plaintiff made payments for the months of June and August 2015 under the Loan Modification Agreement. (Id. ¶¶ 50, 59.) On August 4, 2015, plaintiff received the countersigned Loan Modification Agreement from Ocwen, which Ocwen had signed and dated on July 24, 2015. (Id. ¶¶ 40, 60.)


         To survive a motion to dismiss pursuant to Rule 12(b)(6), a pleading that purports to state a claim for relief must “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim satisfies this standard when its factual allegations “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555-56; see also Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) (“[P]laintiff must give enough details about the subject-matter of the case to present a story that holds together.”). For purposes of a motion to dismiss, the Court accepts “as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in favor of the plaintiff.” Platt v. Brown, 872 F.3d 848, 851 (7th Cir. 2017). When ruling on a Rule 12(b)(6) motion, the court considers “the complaint itself, documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice.” Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 604 (7th Cir. 2013) (citing Geinosky v. City of Chicago, 675 F.3d 743, 745-46 n. 1 (7th Cir. 2012)).


         Count III - Breach of Contract

         In plaintiff's initial complaint, he generally alleged that defendants breached the Loan Modification Agreement by collecting unauthorized fees and costs. Defendants moved to dismiss the breach of contract claim, arguing that plaintiff had failed to state a plausible claim for relief. In its prior order, the Court found that plaintiff insufficiently pled a breach of contract claim, dismissed the claim, and gave plaintiff an opportunity to amend his complaint. (See ECF No. 85.) Plaintiff filed an amended complaint, in which he specified that defendants breached the Note and Mortgage “by charging and colleting property inspection fees, and BPO that were not permitted by the mortgage and note.” (Am. Compl. ¶ 97, ECF No. 99.)

         Defendants again move to dismiss, arguing that plaintiff has failed to plausibly allege a breach of contract claim because he did not include specific facts indicating exactly how defendants breached the contract. Plaintiff responds that the key difference between the initial complaint and the amended complaint is plaintiff's allegation that defendants breached the Note and Mortgage by improperly charging and collecting property inspection fees. Plaintiff also includes in the amended complaint the actual dollar amount charged by defendants for the inspection fees and alleges that the fees were improper because the inspections were never conducted. Because plaintiff's allegations are accepted as true in a motion to dismiss, plaintiff's allegation that the fees were for charges never incurred is sufficient to state a claim for breach of contract. Chatman v. Fairbanks Capital Corp., No. 02 C 665, 2002 WL 1338492, at *4 (N.D. Ill. June 18, 2002) (denying defendant's motion to dismiss for failure to state a claim for a breach of contract claim alleging defendant improperly collected property preservation fees). Furthermore, whether defendants actually incurred the property inspection fees is a factual issue that is more appropriate for summary judgment. Id.

         Defendants next argue that plaintiff is unable to state a claim because he previously defaulted on his loan and therefore materially breached the contract. To support this argument, defendants cite Fireman's Fund Mortg. Corp. v. Zollicoffer, 719 F.Supp. 650 (N.D. Ill. 1989), where the court found that the plaintiffs, who made the first two payments under their Note and Mortgage and were 33 payments in arrears, materially breached their Note and Mortgage. 719 F.Supp. 655-656. After the plaintiffs missed several payments, the defendants accelerated the loan, took action to secure the premises, and filed a complaint to foreclose on the loan. Id. at 655. The court found that the plaintiffs' material breach of the loan precluded the plaintiffs from seeking recovery for any subsequent breach by the lender and, therefore, granted summary judgment in favor of defendants. Id. at 657. The facts and procedural posture of Zollicofer are distinguishable from this case. Here, the limited facts before the Court show that plaintiff missed two payments on his Note and Mortgage, U.S. Bank filed a foreclosure action, plaintiff applied for a Loan Modification Agreement, and plaintiff later entered into a Loan Modification Agreement with Ocwen. It is too early at this stage to determine whether plaintiff's missed payments constitute a material breach under the Note and Mortgage that completely precludes him from alleging a breach of contract claim. Furthermore, the Seventh Circuit has rejected an argument similar to the one brought by defendants-that any failure by a borrower to perform under the contract precludes a borrower from bringing a breach of contract claim against a lender. See Catalan v. GMAC Mortg. Corp., 629 F.3d 676, 692 (7th Cir. 2011). Accordingly, the Court finds that plaintiff has plausibly alleged a breach of contract claim, and defendant's motion to dismiss plaintiff's breach of contract claim is denied.

         Count IV - Truth in Lending

         Act Plaintiff next alleges that Ocwen violated the Truth in Lending Act (“TILA”). TILA, 15 U.S.C. § 1601, et seq., and its implementing Regulation Z, 12 C.F.R. § 226, et seq., “require that certain material disclosures be made to a consumer seeking an extension of credit secured by real property.” Drake v. Ocwen Fin. Corp., No. 09-C-6114, 2010 WL 1910337, at *7 (N.D. Ill. May 6, 2010). Regulation Z's purpose “is ...

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