Gu v. Bank of America

Filing 25

MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 2/8/2012:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ALEX GU,
Case No. 11 C 6290
Plaintiff,
v.

Hon. Harry D. Leinenweber

BANK OF AMERICA,
Defendant.

MEMORANDUM OPINION AND ORDER
I.

BACKGROUND

For the purposes of this motion, the Court accepts as true the
facts pleaded in the Complaint. According to Plaintiff, he applied
to modify his Bank of America mortgage under the Home Affordable
Modification

Program

(“HAMP”)

modifications

permit

qualifying

in

March

2009.

individuals

to

Such
reduce

mortgage payments to 31 percent of their income.

loan
their

Evidently,

Plaintiff’s application was initially approved and he was allowed
to begin making trial payments at the lower rate.

Individuals who

successfully complete their trial period, and otherwise prove that
they are qualified for the program, are eligible to modify their
loans permanently.
Plaintiff alleges that he submitted all of the required
financial documents and successfully made 21 trial payments – well
more than what should have qualified him to permanently modify his

loan.
of

However, on both July 30, 2010 and September 2, 2010, Bank

America

(“the

Bank”)

denied

his

request

for

a

permanent

modification on the grounds that his application was incomplete.
Plaintiff claims that he followed up with the Bank, trying to
remedy the situation, all the while continuing to make mortgage
payments at the lower trial rate.

He contends that both he and his

counsel received conflicting information from the Bank, but that he
was generally assured that the Bank had received all necessary
information.

Plaintiff’s application was denied again on July 27,

2011, on the grounds that his application was incomplete.
In August 2011, the Bank filed a foreclosure action in Will
County, Illinois.

On September 9, 2011, Plaintiff filed his

Complaint in federal court.

He subsequently amended his Complaint

on October 24, 2011, dropping his request that this Court enjoin
the foreclosure action.

Defendant has now moved to dismiss the

Complaint under the Younger abstention doctrine.
II.
In

considering

a

LEGAL STANDARD

motion

to

dismiss,

the

Court

accepts

Plaintiffs’ well-pleaded factual allegations as true, and draws all
inferences in their favor.

Anchor Bank, F.S.B. v. Hofer, 649 F.3d

610, 614 (7th Cir. 2011). It construes pro se pleadings liberally.
Myles v. United States, 416 F.3d 551, 552 (7th Cir. 2005).
District Courts have diversity jurisdiction when a case arises
between citizens of different states and the amount in dispute
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exceeds $75,000.

See 28 U.S.C. § 1332.

The Bank does not dispute

that diversity jurisdiction exists, but asks this Court to invoke
the Younger abstention doctrine.

Younger

requires federal courts

to abstain from enjoining ongoing state proceedings that “(1) [are]
judicial in nature, (2) implicate important state interests, and
(3) offer an adequate opportunity for review of constitutional
claims, (4) so long as no extraordinary circumstances — like bias
or

harassment

—

exist

which

auger

against

abstention.”

FreeEats.com, Inc. v. Indiana, 502 F.3d 590, 595–96 (7th Cir.
2007).
Younger is one of several doctrines that will bar litigation
in federal court if there is a parallel state court case.

One

other such doctrine is referred to as Colorado River abstention.
Sverdrup Corp. v. Edwardsville Cmty. Unit School Dist. No. 7, 125
F.3d 546, 548 (7th Cir. 1997).

Under Colorado River, a District

Court may abstain from hearing a case where there is a parallel
state proceeding and the Court finds that exceptional circumstances
warrant abstention. Id.
III.
A.

DISCUSSION

Motion for Default Judgment

As an initial matter, Plaintiff has filed a second Motion for
Default Judgment, alleging that the Bank has taken too long to
answer his Complaint.

However, on October 19, 2011 this Court

granted the Bank’s Motion for an Extension of Time, giving them
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until November 16, 2011 to answer or otherwise plead in response to
the

Complaint.

Defendant

filed

its

motion

to

dismiss

on

November 14, 2011. Accordingly, although the Bank has not filed an
Answer, it is not in default.

Plaintiff’s Motion for Default

Judgment [DKT #16] is denied.
B.

Removal

In his response to the Motion to Dismiss, Plaintiff endeavors
to invoke this Court’s removal jurisdiction.

However, the thirty-

day window for removing the state case on diversity grounds has
long since expired.

See 28 U.S.C. § 1446.

Although Plaintiff

filed this action in federal court within 30 days of receiving the
state court

complaint,

he

did

not

mention removal

January 2012 response to the motion to dismiss.

until

his

Although the

statutory removal procedures are not jurisdictional, they are
strictly construed. Boruff v. Transervice, Inc., 10–CV–00322, 2011
WL 1296675, at*3-5 (N.D. Ind. March 30, 2011).

See also, Wirtz

Corp. v. United Distillers & Vintners N. Am., Inc., 224 F.3d 708,
715-16 (7th Cir. 2000) (any doubts about the propriety of removal
should be resolved against removal). Plaintiff accordingly did not
properly remove the foreclosure action, and the removal statutes
are not a basis for this Court to retain jurisdiction.
C.

Younger Abstention

Defendant asks this Court to dismiss this case on Younger
abstention grounds. However, Plaintiff’s Amended Complaint dropped
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his request for injunctive relief.

Because Plaintiff does not ask

this Court to enjoin a parallel state proceeding, Younger affords
no reason to abstain here.
D.

Colorado River Abstention

The Colorado River abstention doctrine indicates that when a
parallel case is proceeding in state court, a federal court may
decline jurisdiction in exceptional circumstances.

Colorado River

Water Conservation District v. United States, 424 U.S. 800 (1976);
Sverdrup Corp. v. Edwardsville Cmty. Unit School Dist. No. 7, 125
F.3d 546, 548 (7th Cir. 1997).

Thus, there is a judicially

recognized exception to federal courts’ obligation to exercise
whatever jurisdiction they may have.

Sverdrup, 125 F.3d at 548.

The Seventh Circuit has identified 10 factors relevant to the
Colorado River inquiry:
•

the difficulties of a state and federal
assuming jurisdiction over the same res;

•

the relative inconvenience of the federal forum;

•

the need to avoid piecemeal litigation;

•

the order in which the cases were filed;

•

whether state or federal law provides the rule of
decision;

•

whether the state action
plaintiff’s rights;

•

the relative progress of the cases;

•

the presence or absence of concurrent jurisdiction;

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protects

the

court

federal

•

the availability of removal; and

•

the vexatious or contrived nature of the federal
claim.

Sverdrup, 125 F.3d at 548-50.

These factors are not merely a

checklist, however. Id. at 550.

The overarching consideration is

that District Courts must have excellent reasons to justify not
exercising their jurisdiction. Id.
1.

Parallel Actions

To be parallel, two actions need not be identical, but must
involve substantially the same parties and issues.

Pieleanu v.

Mortgage Electronic Registration Systems, Inc., No. 08 C 7404, 2010
WL 1251445, at *1 (N.D. Ill. March 24, 2010).

Here, the parties

are identical in the two cases. Furthermore, Plaintiff’s answer in
state court duplicates his federal complaint almost verbatim.
only

significant

differences

between

the

two

cases

are

The
that

Plaintiff asks the state court to stop the foreclosure, and that he
seeks $880,000 in punitive damages in the federal action but only
$75,000 in state court.

Despite these two differences, the two

courts are being asked to decide essentially identical legal
issues, and letting both cases proceed to judgment thus risks
inconsistent outcomes. See id. at *3.
parallel.

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The two cases are clearly

2.
The

majority

Extraordinary Circumstances
of

the

Sverdrup

factors

weigh

in

favor of

abstention here. Judicial economy weighs strongly in favor of
avoiding piecemeal litigation and, as discussed above, abstention
would mitigate the risk of inconsistent outcomes.

The state court

case was filed first, has proceeded at least through the answer
stage (and thus is further along than this case).

State law would

appear to provide the relevant rules of decision, as Plaintiff
alleges that the Bank breached its contract with the federal
treasury, committed fraud under Illinois law, and was unlawfully
negligent handling HAMP applications.
Plaintiff seems to argue that the state court cannot protect
his rights because it lacks jurisdiction over the Bank.

However,

diversity jurisdiction is not exclusive. Though not a “citizen” of
Illinois, the Bank was already a party to the state court action,
and thus would remain subject to that court’s jurisdiction on
Plaintiff’s counterclaims. In any event, Illinois’ expansive longarm jurisdiction statute almost certainly reaches the Bank in this
case. See 735 Ill. Comp. Stat. 5/2–209.

Accordingly, the state

court appears to be an adequate forum to vindicate Plaintiff’s
claims.
As to the remaining factors, the Court concluded above that
removal is unavailable here.

Plaintiff’s federal action, while

ill-advised, does not appear to be vexatious or contrived. None of
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the other factors appear to cut strongly either against or in favor
of

abstention.

presents

Overall,

exceptional

the

Court

concludes

circumstances

making

that

this

case

it

manifestly

inappropriate to exercise federal jurisdiction over Plaintiff’s
claims.
Under Colorado River, however, the appropriate remedy is to
stay, rather than dismiss, the action.
at *4.

Pieleanu, 2010 WL 1251445

Accordingly, this Court will stay this action pending the

outcome of the state court proceeding.
IV.

CONCLUSION

For the reasons stated herein, the Court denies Defendant’s
Motion to Dismiss, but orders the case stayed until the resolution
of the parallel state case.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE:2/8/2012

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