McGann v. PNC Bank, National Association

Filing 98

MEMORANDUM Opinion and Order Signed by the Honorable Joan H. Lefkow on 3/29/2013:Mailed notice(mad, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

VIRGINIA MCGANN,
on behalf of herself and all others similarly
situated
Plaintiff,
vs.
PNC BANK, NATIONAL ASSOCIATION,
Successor by merger to National City
Mortgage Co.,
Defendant.

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No. 11-cv-06894
Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER
Plaintiff, Virginia McGann (“McGann”), brings this putative class action against
Defendant, PNC Bank, National Association, successor by merger to National City Mortgage
Co. (“PNC”), alleging breach of contract (count I), breach of the duty of good faith and fair
dealing (count II)1, promissory estoppel (count III), and violation of the Illinois Consumer Fraud
and Deceptive Business Practices Act 815 ILL. COMP. STAT. 505 et seq. (count IV).2 McGann
sues on behalf of herself and thousands of similarly situated, distressed Illinois homeowners
alleging that PNC failed to honor its written agreements to modify mortgage loans and prevent
foreclosures under the federal government’s Home Affordable Modification Plan. Presently

1

By agreement of the parties, McGann voluntarily dismissed count II. See Dkt. 44 at 26 ¶ 131.

2

This court has jurisdiction under 28 U.S.C. § 1332 and venue is appropriate under 28 U.S.C. §

1391(b).

before the court is PNC’s motion for judgment on the pleadings.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(c) allows a party to move for judgment on the
pleadings after a complaint and answer have been filed. Fed. R. Civ. P. 12(c); Buchanan-Moore
v. Cnty. of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Similar to a Rule 12(b)(6) motion, a
court deciding a Rule 12(c) motion must “accept all well-pleaded allegations in the complaint as
true and draw all reasonable inferences in favor of the plaintiff.” Forseth v. Vill. of Sussex, 199
F.3d 363, 368 (7th Cir. 2000). A court will grant a defendant’s motion for judgment on the
pleadings “only when it appears beyond a doubt that the plaintiff cannot prove any facts to
support a claim for relief and the moving party demonstrates that there are no material issues of
fact to be resolved.” Guise v. BWM Mortg., LLC, 377 F.3d 795, 798 (7th Cir. 2004) (internal
quotation marks omitted). In deciding a motion for judgment on the pleadings, “the court
considers the pleadings alone, which consist of the complaint, the answer, and any written
instruments attached as exhibits.” Housing Auth. Risk Retention Grp., Inc. v. Chicago Housing
Auth., 378 F.3d 596, 600 (7th Cir. 2004). When making this determination, the court is “not
obliged to ignore any facts set forth in the complaint that undermine the plaintiff’s claim or to
assign any weight to unsupported conclusions of law.” N. Ind. Gun & Outdoor Shows, Inc. v.
City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998).

2

BACKGROUND3
I.

The HAMP Program
On October 3, 2008, Congress passed the Emergency Economic Stabilization Act of

2008, 12 U.S.C. §§ 5201 et seq., which Congress amended on February 17, 2009, with the
passage of American Recovery and Reinvestment Act (collectively referred to as “the Act”).
Part of the Act’s purpose was to protect home values and preserve homeownership. Pursuant to
the Act, on February 18, 2009, the Secretary of the Treasury and Director of the Federal Housing
Finance Authority announced the Making Home Affordable Program (“MHAP”). Part of
MHAP included the creation and implementation of a loan modification process called the Home
Affordable Modification Plan (“HAMP”).
The HAMP loan modification process consists of two stages. First, a servicer4 gathers
financial information from the homeowner interested in a loan modification. The servicer then
offers the homeowner a Trial Period Plan, which is a three-month trial period where the
homeowner makes reduced monthly mortgage payments determined by a formula incorporating
the data from the financial information provided by the homeowner. The Trial Period Plan
Agreement (“TPP Agreement”) describes the homeowner’s duties and obligations in order to be
considered for a permanent loan modification. Second, if the homeowner complies with the TPP
Agreement, the servicer then offers the homeowner a permanent loan modification.

3

The facts in the background section are taken from the complaint, answer, and exhibits attached
thereto and are taken as true for purposes of this motion.
4

Servicers are those entities in the mortgage industry that perform the actual interface with
borrowers and act as agent of the entities that hold the mortgage loans. Servicers perform functions such
as payment acceptance and processing, collections, credit reporting, escrow account maintenance, loss
mitigation and foreclosure.

3

On September 23, 2010, PNC executed an Amended and Restated Commitment to
Purchase Financial Instrument and Servicer Participation Agreement (“SPA”) with Fannie Mae
acting as agent of the United States Department of the Treasury. In connection with the SPA,
PNC received $58,300,000 in incentive payments in exchange for modifying mortgage
obligations of eligible homeowners to prevent and reduce foreclosures.
II.

Plaintiff Virginia McGann
McGann is a homeowner who owns and resides at the property located at 11306 South

Bell Avenue in Chicago, Illinois (“the property”) with her two children. On or about October
11, 2004, National City Mortgage Company (“National City”) gave McGann and Earl Evans,
McGann’s then-husband, a refinance mortgage loan for the property. In connection with the
closing of the loan, Evans received a promissory note, a mortgage, a HUD-1 Settlement
Statement, and a final Truth-in-Lending Disclosure Statement. Evans and McGann signed the
mortgage; however, only Evans signed the promissory note. In December 2008, PNC acquired
National City and PNC is the current owner and servicer of McGann’s loan.
On June 24, 2008, the Circuit Court of Cook County entered a judgment for dissolution
of the marriage of McGann and Evans. The divorce decree provided that McGann would retain
exclusive possession of the property until either (1) their youngest child graduated from high
school; or (2) McGann sold or refinanced the mortgage at which time McGann would pay Evans
$20,000 for his interest in the property. The divorce decree also provided that McGann would
assume all obligations for the payment of the mortgage, including paying real estate taxes,
insurance, and all other expenses relating to the property. McGann further agreed to indemnify

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Evans for any payments in connection with his financial obligations for the property.5
III.

The TPP Agreement
Starting in May 2009, McGann was temporarily unemployed for several months and she

began having difficulty making mortgage payments on the property. Before missing a payment,
in August 2009, McGann contacted PNC for assistance with restructuring her monthly mortgage
payments. On or about September 14, 2009, McGann submitted her first application for a loan
modification through the HAMP program. On October 15, 2009, PNC responded to McGann’s
HAMP request via letter addressed to Evans offering a Home Affordable Modification Trial
Period Plan. The TPP Agreement identified Evans as the borrower. The TPP Agreement
reduced McGann’s monthly mortgage payments to $1,266.85 (inclusive of principal, interest,
taxes, and insurance) for a ninety-day period.
The TPP Agreement conditioned a permanent loan modification on the borrower’s
remaining in compliance with the terms of the TPP Agreement and certifying that he or she lived
at the property and that there had been no change with regard to the ownership of the property
after execution of the loan documents. The TPP Agreement further provided that it would not
take effect until both parties signed the document:
I understand that after I sign and return two copies of this Plan to the Lender, the
Lender will send me a signed copy of this Plan if I qualify for the Offer or will send
me the written notice that I do not qualify for the Offer. This Plan will not take
effect unless and until both I and the Lender sign it and Lender provides me with a
copy of this Plan with the Lender’s signature.

5

The court may take judicial notice of the divorce decree without converting PNC’s motion for
judgment on the pleadings into a motion for summary judgment. See Ennenga v. Starns, 677 F.3d 766,
773 (7th Cir. 2012) (“Taking judicial notice of matters of public record need not convert a motion to
dismiss into a motion for summary judgment.”).

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(Dkt. 42-3 Ex. G at 1.) PNC never executed the TPP Agreement.6
IV.

McGann’s Correspondence and Communication with PNC Regarding the HAMP
Loan Modification
On November 1, 2009, McGann returned two copies of the signed TPP Agreement to

PNC. McGann crossed out Evans’s name in the signature block and signed her name. McGann
made the first three payments under the TPP Agreement of $1,266.85 in November and
December, 2009 and January, 2010. On March 22, 2010, PNC sent Evans a letter at the property
that McGann received7 discussing the need for “additional or missing documents” and stating
that PNC needed those documents within 15 days or the file would be closed.
On April 1, 2010, McGann spoke with a PNC employee named Kathy Rawlins who
explained that McGann needed to submit further documentation regarding her unemployment
benefits from the State of Illinois. Rawlins told McGann that she was not in danger of being
removed from her trial period plan because she called before the deadline identified in the March
22, 2010 letter. On April 13, 2010, PNC sent Evans a letter at the property that McGann

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The TPP Agreement did not constitute a loan modification. Rather, the TPP Agreement
identified necessary conditions before a modification could occur, stating that,
I understand that the Plan is not a modification of the Loan Documents and that the Loan
Documents will not be modified unless and until (i) I meet all of the conditions required for
modification, (ii) I receive a fully executed copy of the Modification Agreement, and (iii)
the Modification Effective Date has passed. I further understand and agree that the Lender
will not be obligated or bound to make any modification of the Loan Documents if the
Lender determines that I do not qualify or if I fail to meet any one of the requirements under
this Plan.
(Dkt. 42-3 Ex. G at 3 ¶ 2.G.)
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PNC addressed all correspondence to Evans at the property. McGann received the
correspondence as she lived at the property. The record does not indicate whether McGann informed the
PNC employees with whom she spoke that, although she and Evans had divorced, McGann continued to
live at the property, was making the monthly mortgage payments, and was seeking a loan modification
under HAMP.

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received stating that it could not approve the HAMP loan modification because PNC had not
received the required documents. Additionally, McGann spoke with a PNC employee who
informed her that her file had been deleted from the MHAP. On April 19, 2010, a PNC
employee informed McGann that her loan had been switched to PNC’s collections department
and McGann requested that her loan be reinstated into the MHAP. On or about April 20, 2010,
McGann faxed PNC the requested employment and HAMP application documents.
On or about April 22, 2010, PNC sent Evans a letter at the property that McGann
received stating that PNC needed a “Financial Information Summary.” McGann faxed this
paperwork the next day. On or around May 6, 2010, McGann called Rawlins to make a payment
under the TPP Agreement and inquire about the status of her reinstatement to MHAP. Rawlins
informed McGann that her file was still under review and to refrain from making any further
TPP Agreement payments until she was reinstated in the MHAP program. McGann still
continued to make and PNC accepted TPP Agreement payments through the summer of 2010.
On May 7, 2010, McGann received a call from PNC requesting documents that McGann
had already submitted and she faxed the requested documents the same day. On or about May
26, 2010, McGann spoke with an employee at PNC who informed her that she was reinstated in
MHAP and that she needed to re-submit her 2009 tax returns, which she did. On June 15, 2010,
PNC sent Evans a letter at the property that McGann received, similar to the March 15, 2010
letter, again requesting 2009 tax returns. Although she had already submitted her 2009 tax
returns, on June 21, 2010, McGann faxed those documents to PNC. On June 30, 2010, McGann
spoke with a PNC employee, Lisa Cole, who told her to continue making TPP Agreement
payments and to wait to hear from PNC.

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On July 1, 2010, PNC sent Evans a letter at the property that McGann received denying
eligibility for a HAMP loan modification due to an incomplete credit application. The letter
further provided that “a notice which listed the specific documents we needed and the time frame
required to provide them was sent to you more than 30 days ago.” (Am. Compl. ¶ 64) (internal
quotation marks omitted). McGann, however, never received the notice referenced in PNC’s
July 1, 2010 letter. On July 7, 2010, McGann called PNC and spoke with Cole, who stated that
she saw no reason why McGann’s file had a “failed” status. Cole apologized to McGann and
reset her loan application to be approved under MHAP. On July 28, 2010, PNC sent Evans a
letter that McGann received at the property stating that PNC had denied the HAMP loan
modification because the property was not owner occupied. On July 30, 2010, McGann called
PNC explaining that the system would no longer let her make payments under the TPP
Agreement. The employee with whom McGann spoke replied, “I know, I get this all the time.”
(Am. Compl. ¶ 82) (internal quotation marks omitted). In total, McGann made eight payments
under the TPP Agreement.
On August 3, 2010, PNC sent Evans a letter at the property that McGann received
providing that the loan was in default as no monthly installment payment had been paid since
January 2010. The letter stated that a payment of $18,639.64 was needed to cure the breach. On
August 13, 2010, PNC sent Evans a letter at the property that McGann received stating that PNC
had not received all the requisite documentation to become eligible for a HAMP modification.
On August 16, 2010, PNC sent a letter to McGann that included directions regarding how to
apply to HAMP.
On August 20, 2010, McGann sent PNC documents regarding her financial information

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and hardships, and on September 18, 2010, PNC approved McGann for a four-month
forbearance agreement. McGann made all of the forbearance payments on time. On September
30, 2010, after speaking with a PNC employee, McGann submitted another HAMP application.
On February 7, 2011, PNC responded to McGann’s HAMP application and informed her that she
needed to submit updated pay stubs, bank information, and her 2010 tax returns. On February
15, 2011, PNC sent Evans a letter at the property that McGann received stating that the loan had
been referred to foreclosure. On or about February 24, 2011, a PNC employee approved
McGann for a second forbearance agreement. The second forbearance agreement was
contingent on McGann’s submitting all required documents no later than February 28, 2011.
The second forbearance agreement called for four payments, the first of which was due on
March 15, 2011 and the last of which was due on June 15, 2011. McGann made two of the four
payments in full and on time. Still, on March 3, 2011, PNC filed a complaint to foreclose the
mortgage on the property.
ANALYSIS
I.

Breach of Contract (Count I)
McGann claims that PNC is liable for breach of contract because the TPP Agreement

contained an offer for a HAMP loan modification, which she accepted by executing the TPP and
returning it to PNC with the requested documentation. McGann claims that PNC breached the
TPP Agreement by not offering her a permanent HAMP loan modification. PNC contends that it
did not breach the TPP Agreement because its plain terms provide that it had no obligation to
provide a permanent HAMP loan modification until it executed and returned the TPP Agreement
to McGann. McGann argues that even if PNC never intended to be bound by the TPP

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Agreement, her returning the TPP Agreement to PNC constituted an offer that PNC accepted by
accepting her modified mortgage payments.
A.

Whether PNC Intended to be Bound by the TPP Agreement

Under Illinois law,8 a plaintiff alleging breach of contract must show “(1) the existence of
a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the
defendant; and (4) resultant damages.” Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759, 764
(7th Cir. 2010) (internal quotation marks omitted). In construing a contract, a court’s role “is to
give effect to the parties’ intent as expressed in the terms of their written agreement.” Lewitton
v. ITA Software, Inc., 585 F.3d 377, 379 (7th Cir. 2009). Neither party contends that the contract
is ambiguous, so the “four corners rule” applies. See Home Ins. Co. v. Chicago & Nw. Trans.
Co., 56 F.3d 763, 767 (7th Cir. 1995). “This so called four-corners rule holds that if a contract is
clear on its face and the text contains no clue that the contract might mean something different
from what it says, then the inquiry is over–no evidence outside of the contract may be
considered.” Id.
In Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012), the Seventh Circuit
addressed whether a TPP Agreement binds the lender to provide a HAMP loan modification
when the borrower complies with the terms contained therein. After determining that the
plaintiff was eligible for a HAMP loan modification, the defendant sent the plaintiff a TPP
Agreement, which she signed and returned. Id. at 558. The defendant executed a copy of the
8

Pursuant to the doctrine espoused by the Supreme Court in Erie Railroad Co. v. Tompkins, 304
U.S. 64, 58 S. Ct. 817, 82 L. Ed. 2d 1188 (1938), the court applies Illinois substantive law when
determining whether the parties have a valid contract. See Gacek v. Am. Airlines, Inc., 614 F.3d 298,
301–02 (7th Cir. 2010) (“Under the Erie doctrine, federal courts in diversity cases (and any other cases in
which state law supplies the rule of decision) apply state ‘substantive’ law but federal ‘procedural’ law.”).

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TPP Agreement and returned it to the plaintiff who then made all scheduled payments. Id. The
defendant, however, never approved the plaintiff for a permanent HAMP loan modification. Id.
The plaintiff filed suit alleging, inter alia, that the defendant was liable for breach of contract by
not offering her a permanent HAMP loan modification pursuant to the terms of the TPP
Agreement. Id. at 559. The Seventh Circuit held that once the defendant executed the TPP
Agreement, “its terms included a unilateral offer to modify [the plaintiff’s] loan conditioned on
her compliance with the stated terms of the bargain.” Id. at 562. If the plaintiff satisfied her
obligations under the TPP Agreement, the defendant “had on obligation to offer [the plaintiff] a
permanent modification[.]” Id. at 563 (emphasis in original). The plaintiff alleged that she
satisfied her obligations but the defendant still did not offer her a permanent modification. Id. at
565. The Seventh Circuit reversed, holding that the plaintiff had sufficiently pleaded a breach of
contract claim against the defendant for failing to comply with the TPP Agreement. Id. at
565–66.
Here, the plain language of the TPP Agreement states PNC is not obligated to provide a
HAMP loan modification until both parties execute the TPP Agreement, stating that,
This Plan will not take effect unless and until both I and the Lender sign it and [the]
Lender provides me with a copy of this Plan with the Lender’s signature.
(Dkt. 42-3, at 1.) Unlike Wigod, PNC never executed and returned the TPP Agreement to
McGann and instead it requested additional documentation from McGann. Pursuant to the TPP
Agreement’s own terms, PNC’s failure to sign the agreement evidences that it had no obligation
to offer McGann a HAMP loan modification. See, e.g., Pennington v. HSBC Bank USA, N.A.,
493 F. App’x 548, 554 (5th Cir. 2012) (The parties’ TPP Agreement did not form a binding
contract as it required that the lender execute the TPP Agreement and the lender’s failure to
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execute the TPP Agreement evidenced that it “never expressed an intent to be bound.”); Avevedo
v. CitiMortgage, Inc., No. 11 C 4877, 2012 WL 3134222, at *8 (N.D. Ill. July 25, 2012) (“The
court agrees with [the defendant] that the fact it did not execute the TPP associated with the
plaintiffs’ loan and return that document to them is fatal to the plaintiffs’ breach of contract
claim.”); see also Wigod, 673 F.3d at 563 (“Once [the defendant] signed the TPP Agreement and
returned it to [the plaintiff], an objectively reasonable person would construe it as an offer to
provide a permanent modification agreement if [the plaintiff] fulfilled its conditions.”); but see
Sutcliffe v. Wells Fargo Bank, N.A., 283 F.R.D. 533, 550 (N.D. Cal. 2012) (“The Court finds
more persuasive the reasoning in the line of cases that has found, at least at the pleading stage,
that the TPP offers a sufficient basis to show the existence of an enforceable agreement.”).
Because PNC never executed and returned the document, it had no obligation to offer McGann a
permanent HAMP loan modification pursuant to the TPP Agreement.9
B.

Whether McGann’s Payments to PNC under the TPP Constituted a
Counter-Offer

McGann additionally argues that executing and returning the TPP Agreement to PNC
constituted an offer, which PNC accepted by accepting her reduced mortgage payments and
financial documents. Under Illinois law, “[a] purported acceptance that contains different or
additional terms is not a valid acceptance, but is treated as a counter-offer.” Dawson v. Gen.
Motors Corp., 977 F.2d 369, 374 (7th Cir. 1992). “Where one accepts an offer conditionally or
introduces a new term into the acceptance, no acceptance occurs, rather it becomes in effect a
counterproposal which must be accepted by the offeror before a valid contract is formed.”
9

PNC first raised the argument that it did not execute the TPP Agreement in its reply brief. The
court gave McGann an opportunity to file a sur-reply on this issue; however, she failed to comply with
the filing date proscribed by the court.

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Arthur Rubloff & Co. v. Drovers Nat’l Bank of Chicago, 400 N.E.2d 614, 618, 80 Ill. App. 3d
867, 36 Ill. Dec. 194 (Ill. App. Ct. 1980).
Even if it is assumed that McGann’s signing and returning the TPP constituted a
counteroffer, McGann cannot show that PNC accepted that counteroffer. PNC continued to
accept McGann’s reduced mortgage payments after the TPP period ended but McGann still owed
PNC monthly payments pursuant to the note. See Pennington, 493 F. App’x at 555 (“Although
the [defendant’s] acceptance of the trial payments from the [plaintiffs] lends some support to
finding that the parties intended to be bound, that weight is reduced, because the [plaintiffs]
already owed regular payments.”). Although PNC continued to request and accept McGann’s
financial documentation, merely requesting and accepting those documents did not evidence an
intent to be bound by the terms of the TPP Agreement. McGann’s signing and returning the TPP
to PNC thus did not create a contractual relationship obligating PNC to offer her a HAMP home
loan modification. Therefore, PNC’s motion for judgment on the pleadings is granted as to
count I.
II.

Promissory Estoppel (Count III)
McGann also claims that PNC is liable under a theory of promissory estoppel for

promising to offer her a HAMP loan modification. PNC contends that it never made such a
promise and that McGann cannot show that she reasonably relied on any representation.
Promissory estoppel is an alternative means by which to obtain contractual relief. Wigod, 673
F.3d at 566. Under Illinois law, to establish a promissory estoppel claim, McGann must show
that (1) PNC made an unambiguous promise to her; (2) she relied on that promise; (3) her
reliance was reasonable and foreseeable by PNC; and (4) she relied on PNC’s promise to her

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detriment. Wigod, 673 F.3d at 566 (citing Newton Tractor Sales, Inc. v. Kubota Tractor Corp.,
906 N.E.2d 520, 523–24, 233 Ill. 2d 46, 329 Ill. Dec. 322 (Ill. 2009)).
PNC argues that it never promised McGann that it would offer her a permanent loan
modification upon which she could have reasonably relied.10 The language of the TPP
Agreement specifically provided that it did not constitute a loan modification. The TPP
Agreement conditioned approval of a loan modification on PNC’s determination that McGann
complied with requisite conditions. McGann, however, alleges that in addition to providing the
TPP Agreement, PNC’s employees told her that she was being considered for a HAMP loan
modification. McGann alleges that PNC’s employees told her that she was not in danger of
being removed from her TPP Agreement (Am. Compl. ¶ 62), that her HAMP application was
still under review and although no decision had yet been made as PNC had all the information it
needed (id. ¶ 71), that she had been reinstated in MHAP and all she needed to do was resubmit
her 2009 tax returns (id. ¶ 73), to continue making payments under the TPP Agreement and wait
to hear from PNC (id. ¶ 77). McGann’s communications with PNC’s employees after receiving
the TPP Agreement lend credence to her belief that continuing to comply with PNC’s dictates

10

PNC argues that McGann never qualified for a HAMP loan modification because she was not
the borrower for the property. Whether McGann was qualified for a permanent loan modification is a
defense that raises factual questions that are not amenable to disposition at the present time. See Wigod,
673 F.3d at 579 (“One [] defense, among others, will be that [the plaintiff] was not actually qualified, but
that presents a factual dispute that cannot be resolved now.”). In addition, PNC argues that McGann
failed to comply with the TPP Agreement’s terms because Evans was the borrower for the property and
he did not reside at the property nor did he sign the TPP Agreement. McGann contends that she
reasonably relied on promises other than those contained solely in the TPP Agreement. McGann alleges
that she was in frequent communication with PNC’s employees who told her to continue submitting
documentation. McGann’s telephone calls with PNC’s employees demonstrate that PNC knew that it was
dealing with McGann and PNC’s employees made representations about the prospect of the home loan
modification in those calls to McGann. McGann thus did not solely rely on the representations contained
in the TPP Agreement.

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would result in PNC’s considering her for a permanent loan modification. See, e.g., Fletcher v.
OneWest Bank, FSB, 798 F. Supp. 2d 925, 932–33 (N.D. Ill. 2011) (“[The plaintiff] is claiming
reliance on [the defendant’s] promise to consider her application and give her a response.”).
McGann’s conversations with PNC, which took place over the course of one year, thus form the
basis of the unambiguous promise that PNC would consider her for a HAMP loan modification.
McGann also alleges that she relied on PNC’s assurance that she was being considered
for a HAMP loan modification to her detriment because she continued to make payments under
the TPP Agreement. The TPP Agreement required that McGann make three reduced monthly
mortgage payments; however, McGann made eight of the reduced payments in total based on
PNC’s employees telling her to do so. Before entering into the TPP Agreement, McGann was
already obligated to make monthly mortgage payments to PNC. See Prentice v. UDC Advisory
Servs., Inc., 648 N.E.2d 146, 152, 271 Ill. App. 3d 505, 207 Ill. Dec. 690 (Ill. App. Ct. 1995)
(“Promissory estoppel cannot be based upon a promise which only induces plaintiffs to do that
which they were already legally bound to do.”). Still, McGann continued to make those
payments in lieu of other options, such as bankruptcy, refinancing her home, or a short sale,
because she believed that doing so would make her eligible for a loan modification. See Wigod,
673 F.3d at 566 (“A lost opportunity can constitute a sufficient detriment to support a promissory
estoppel claim.”). As a result of making those payments, McGann defaulted on her mortgage
obligations, which resulted in PNC’s ultimately instituting foreclosure proceedings. McGann
has thus sufficiently alleged the she detrimentally relied on PNC’s representations concerning a
HAMP loan modification.
PNC also notes that the statute of frauds precludes McGann from recovering on her

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promissory estoppel claim because she has no signed writing from PNC evidencing that it agreed
to offer her a HAMP loan modification. The statute of frauds is an affirmative defense, see Fed.
R. Civ. P. 8(c)(1), which PNC did not raise in its answer to McGann’s amended complaint. See
Brunswick Leasing Corp. v. Wis. Cent., Ltd., 136 F.3d 521, 530 (7th Cir. 1998) (“As a general
matter, an affirmative defense that is not timely pleaded is waived.”). Nevertheless for the sake
of completeness, the court will consider the effect of the statute of frauds on McGann’s
promissory estoppel claim. The Illinois statute of frauds requires a writing signed by the party to
be charged for contracts conveying an interest in land. See 740 ILL. COMP. STAT. 80/2; John O.
Schofield v. Nikkel, 731 N.E. 2d 915, 925, 314 Ill. App. 3d 771, 247 Ill. Dec. 142 (Ill. App. Ct.
2005); see also Robinson v. BDO Seidman, LLP, 854 N.E. 2d 767, 773, 367 Ill. App. 3d 366,
305 Ill. Dec. 175 (Ill. App. Ct. 2006) (the statute of frauds is applicable to promissory estoppel
claims). An exception to the statute of fraud occurs when a party partially performs, which can
bar invoking the statute of frauds where it would “be impossible or impractical to place the
parties in status quo or restore or compensate the performing party for the value of his
performance.” McInerney v. Charter Golf, Inc., 680 N.E.2d 1347, 1352, 176 Ill. 2d 482, 223 Ill.
Dec. 911 (Ill. 1997) (internal quotation marks omitted). McGann’s case falls squarely within the
part performance exception to the statute of frauds. For over one year, McGann abided by
PNC’s employees’ requests for documentation and made eight TPP payments with the
expectation that she would become eligible for a home loan modification. Although no writing
exists embodying this promise, McGann’s part performance precludes application of the statute
of frauds. Accordingly, PNC’s motion for judgment on the pleadings is denied with respect to
count III.

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III.

Illinois Consumer Fraud and Deceptive Business Practices Act (Count IV)
McGann alleges that the PNC is liable for damages under the Illinois Consumer Fraud

and Deceptive Business Practices Act (“ICFA”) for engaging in a deceptive or unfair practice by
misrepresenting that it would offer McGann a HAMP loan modification. PNC contends that
McGann cannot maintain her ICFA claim because it never had an obligation to offer her a
permanent home loan modification under HAMP.
The ICFA “‘is a regulatory and remedial statute intended to protect consumers,
borrowers, and business persons against fraud, unfair methods of competition, and other unfair
and deceptive business practices.’” Siegel v. Shell Oil Co., 612 F.3d 932, 934 (7th Cir. 2010)
(quoting Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960, 201 Ill. 2d 403, 266 Ill.
Dec. 879 (Ill. 2002)). Under the ICFA, a plaintiff can maintain a claim that is premised on either
deceptive or unfair practices. See Robinson, 775 N.E.2d at 960. The parties dispute whether
PNC engaged in a deceptive practice or unfair act in connection with McGann’s request for a
HAMP loan modification.
A.

Deceptive Practice

McGann first alleges that PNC engaged in a deceptive practice by misrepresenting that it
would approve her for a permanent home loan modification if she continued to make TPP
payments and submitted further documentation. McGann alleges that PNC defrauded customers
with the false promise of a HAMP loan modification and made negligent or intentional
representations that constituted fraud in the inducement. See Am. Compl. ¶ 2, 140. Because
McGann alleges fraudulent activity, the heightened pleading standard of Rule 9(b) applies. See
Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 446–47

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(7th Cir. 2011). To satisfy Rule 9(b)’s pleading threshold, the pleader must detail “the identity
of the person who made the misrepresentation, the time, place and content of the
misrepresentation, and the method by which the misrepresentation was communicated to the
plaintiff.” Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1078 (7th Cir.
1997) (internal quotation marks omitted); Vicom, Inc. v. Harbridge Merchant Servs., Inc., 20
F.3d 771, 777 (7th Cir. 1994).
Under the ICFA, “a statement is deceptive if it creates a likelihood of deception or has
the
capacity to deceive.” Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 938 (7th Cir. 2001). An
IFCA claim does not require “proof of intent to deceive”; rather, a plaintiff only needs to allege
“that the defendant committed a deceptive or unfair act and intended that the plaintiff rely on that
act.” Wigod, 673 F.3d at 575. To show a deceptive practice under the ICFA, McGann must
demonstrate “(1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the
plaintiff rely on the deception; and (3) the deception occurred in the course of trade or
commerce; and (4) the consumer fraud proximately caused the plaintiff’s injury.” Rickher v.
Home Depot, Inc., 535 F.3d 661, 665 (7th Cir. 2008) (internal quotation marks omitted).
According to the amended complaint, McGann spoke with PNC representatives for close
to one year who advised her to continue making TPP payments and to send documentation that
PNC needed in connection with considering her loan modification request. McGann details
specific instances where PNC employees discussed the prospect of her loan modification and
when those conversations occurred. McGann submitted the requested documentation but PNC
continued to identify deficiencies with her request. Although PNC addressed its correspondence

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to Evans, at no time did PNC or its employees raise issues regarding McGann’s borrower status
or the requirement that Evans reside at the property. McGann alleges that she had numerous
conversations beforehand with PNC employees who were aware that McGann was seeking the
loan modification, making the mortgage payments, and resided at the property. At the direction
of PNC’s employees, McGann also made eight total payments under the TPP Agreement even
though it only called for three payments, which, as noted, ultimately led to her default on the
mortgage. These allegations provide the requisite specificity to show that PNC engaged in a
deceptive practice by misrepresenting whether it would approve McGann’s HAMP loan
modification.11
B.

Unfair Practice

McGann also alleges that PNC committed an unfair practice under ICFA.12 To show that
PNC’s practice was “unfair” under the ICFA, “the practice must offend public policy; be
immoral, unethical, oppressive, or unscrupulous; or cause substantial injury to consumers.” See
Rickher, 535 F.3d at 665 (internal quotation marks omitted). “All three criteria do not need to be
satisfied to support a finding of unfairness. A practice may be unfair because of the degree to

11

PNC also argues that it never promised anything to McGann because it addressed
correspondence to Evans, and that McGann was not qualified for the loan modification because she was
not the borrower for the property. McGann’s allegations that she spoke with PNC employees about a
loan modification for the property belie these arguments. While PNC addressed correspondence to Evans
instead of McGann, the telephone calls support McGann’s position that PNC knew that it was dealing
with her, not Evans, and PNC’s employees made representations about McGann’s prospect of a loan
modification, not those of Evans.
12

McGann’s allegations regarding unfair practices do not implicate fraud and thus need not meet
Rule 9(b)’s heightened pleading requirement. See Windy City Metal Fabricators & Supply v. CIT Tech.
Fin. Servs., Inc., 536 F.3d 663, 670 (7th Cir. 2008) (“Because neither fraud nor mistake is an element of
unfair conduct under Illinois’ Consumer Fraud Act, a cause of action for unfair practices under the
Consumer Fraud Act need only meet the notice pleading standard of Rule 8(a), not the particularity
requirement in Rule 9(b).”).

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which it meets one of the criteria or because to a lesser extent it meets all three.” Robinson, 775
N.E. 2d at 961 (internal quotation marks omitted).
In support of her position, McGann points to her year-long endeavor to obtain a home
loan modification and abide by PNC’s directions. McGann argues that the during this process,
PNC failed to adhere to HAMP’s guidelines. See Boyd v. U.S. Bank, N.A., 787 F. Supp. 2d 747,
753 (N.D. Ill. 2011) (“[A] plaintiff may predicate an ICFA unfairness claim on violations of
other statutes or regulations, like HAMP . . . that themselves do not allow for private
enforcement.”). The Treasury Department’s directive implementing HAMP provided in part,
A servicer may receive calls from current or delinquent borrowers directly inquiring
about the availability of the HAMP. In that case, the servicer should work with the
borrower to obtain the borrower’s financial and hardship information and to
determine if the HAMP is appropriate. If the servicer concludes a current borrower
is in danger of imminent default, the servicer must consider an HAMP modification
. . . Servicers must use reasonable efforts to contact borrowers facing foreclosure to
determine their eligibility for the HAMP, including in-person contacts at the
servicer’s discretion.
Boyd, 787 F. Supp. 2d at 753 (emphasis in original) (quoting U.S. Dep’t of Treasury, HAMP
Supplemental Directive No. 09–01, at 14 (Apr. 6, 2009)).
Here, McGann’s allegations belie that PNC worked with her to determine if she qualified
for a HAMP loan modification. That PNC accepted payments under the TPP Agreement from
McGann, informed her that it needed documents that she already submitted, and ultimately
abruptly denied her request multiple times shortly after reassuring her application was still under
review evidence a lack of communication indicative of unfair practices. Indeed, PNC brought
foreclosure proceedings against McGann while she was still trying to obtain a HAMP loan
modification. McGann has thus sufficiently alleged a violation of the ICFA. Accordingly,
PNC’s motion for judgment on the pleadings as to count IV is denied.
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CONCLUSION
PNC’s motion for judgment on the pleadings is granted with respect to count I and denied
with respect to counts III and IV.

Dated: March 29, 2013

Enter:

_____________________________
JOAN HUMPHREY LEFKOW
United States District Judge

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