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Shekar v. Ocwen Loan Servicing, LLC

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

November 12, 2019

OCWEN LOAN SERVICES, LLC, et al., Defendants.


          Sharon Johnson Coleman United States District Court Judge

         Pro se plaintiffs Roger and Monica Shekar (“the Shekars”) brought the present amended complaint dated March 11, 2019, against their loan servicing company, defendant Ocwen Loan Services, LLC (“Ocwen”), in relation to real property located at 15 Eagle Court in Streamwood, Illinois. Ocwen has moved to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, the Court grants in part and denies in part Ocwen's motion to dismiss with prejudice. The Court does not grant the Shekars leave to amend the dismissed counts because the Shekars already had the opportunity to amend their pleadings. See Runnion v. Girl Scouts of Greater Chicago & Nw. Ind., 786 F.3d 510, 518 (7th Cir. 2015) (there is a “presumption in favor of giving plaintiffs at least one opportunity to amend.”). As such, the only remaining claim in this lawsuit is the Shekars' breach of contract claim as alleged in Count I.


         In setting forth the background facts, the Court construes the Shekars' pro se amended complaint liberally, see Kiebala v. Boris, 928 F.3d 680, 684 (7th Cir. 2019), and considers documents incorporated by reference in the pleadings. Orgone Capital III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir. 2019).

         In October 2003, the Shekars entered into a promissory note and executed a mortgage as security in the amount of $282, 000.00. Originally, the mortgage provided that the Shekars were to pay amounts for escrow items such as taxes and insurance, along with principal and interest. In 2014, Ocwen became the Shekars' loan servicing company, and in 2016, the Shekars directed Ocwen to convert their loan to a “non-escrow” account.

         On September 23, 2016, Ocwen's counsel sent a letter to the Shekars explaining the status of their escrow account:

Based on your recent emails, we understand that you have requested to remove the escrow for taxes and insurance from your account, so you will only pay principal and interest to Ocwen. To accommodate your request, Ocwen has now taken steps to remove the escrow from your account…. Because your account is no longer escrowed, you owe Ocwen $698.49 to reimburse it for the August 8, 2016 real estate tax payment. Further, you will be responsible for all future payments of taxes and insurance.

(R. 134-2, Mot., Ex. 2, 9/23/16 letter.) In their amended complaint, the Shekars also discuss a letter that Ocwen sent them on October 5, 2016, which stated in relevant part:

Prior to the removal of the escrow account, the August 1, 2016 and September 1, 2016 payments received did not satisfy the full amount owed, as you did no include any funds for escrow. As mentioned in the September 23, 2016 response, the escrow account had a negative balance owed of $698.49. To pay this balance in full, please send a check or money order, with your Ocwen account number on it, to the below address. If this balance is not repaid, it will be added to your payment in monthly installments until repaid.
Ocwen is unable to comply with your request for reimbursement of $1, 077.00 for the insurance payment you made due to the negative balance in the escrow account. This negative balance was created as more funds have been disbursed from escrow than have been received, as reflected on the enclosed transactional history.

(Ex. 3, 10/5/16 letter, at 1.)

         The Shekars allege that they do not owe the tax debt of $698.49, and thus they did not repay this amount to Ocwen. Instead, the Shekars contend that when Ocwen closed the escrow account, there was a positive balance because they had made an insurance payment of $1, 077.00. Meanwhile, because the Shekars refused to pay the negative balance of $698.49, Ocwen “re-escrowed” their account pursuant to Section 3 of the mortgage. Thereafter, the Shekars did not pay any escrow amounts.

         Attached to the Notice of Removal are the Shekars' state court filings and attachments, including delinquency notices from Ocwen in relation to the Shekars' mortgage payments. These notices indicate that the Shekars failed to pay the principal and interest due on their monthly mortgage payments starting in April 2017 through August 2017. On November 26, 2018, Ocwen instituted foreclosure proceedings in the Circuit Court of Cook County. In the interim, the Shekars filed this lawsuit in the Circuit Court of Cook County, Law Division, after which Ocwen removed this case on April 27, 2018.

         Legal ...

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