Integra Bank, National Association v. Hillgaymer, et al
Filing
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MEMORANDUM Opinion and Order Signed by the Honorable Sharon Johnson Coleman on 12/2/2013:Mailed notice(rth, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FEDERAL DEPOSIT INSURANCE
CORPORATION, as Receiver for INTEGRA
BANK, NATIONAL ASSOCIATION, successor
in interest to PRAIRIE BANK AND TRUST
COMPANY, a national banking association,
Plaintiff,
v.
DEBORAH HILLGAMYER, et al,
Defendants.
DEBORAH HILLGAMYER,
Counter-Plaintiff
v.
FEDERAL DEPOSIT INSURANCE
CORPORATION, as Receiver for INTEGRA
BANK, NATIONAL ASSOCIATION, successor
in interest to PRAIRIE BANK AND TRUST
COMPANY, a national banking association,
BRADLEY M. STEVENS; PATRICIA A.
TYNSKI; and SUSAN NIBLACK,
Counter-Defendants.
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Case No. 11-cv-7502
Judge Sharon Johnson Coleman
MEMORANDUM OPINION AND ORDER
Counter-defendants Federal Deposit Insurance Corporation (“the FDIC”), as receiver for
Integra Bank (“Integra”), Patricia Tynski (“Tynski”) and Bradley M. Stevens (“Stevens”) move
to dismiss counter-plaintiff, Deborah Hillgamyer’s (“Hillgamyer”) counter-complaint. For the
following reasons, the FDIC’s motion to dismiss is denied, Tynski’s motion to dismiss is granted
in part and denied in part, and Stevens’ motion to dismiss is granted.
Background
Integra made two loans to Hillgamyer and her husband, Henry Hillgamyer, (collectively
“the Hillgamyers”) to secure a mortgage on a residence located at 4040 Linden, Western Springs,
Illinois. The first loan was issued on April 12, 2006, for $405,000 and the second loan was
issued on June 21, 2007, for $100,000. The Hillgamyers eventually defaulted on both loans. On
December 3, 2008, Integra filed a complaint to foreclose mortgage against the Hillgamyers in the
Circuit Court of Cook County. Summary judgment and judgment of foreclosure and sale was
entered against the Hillgamyers on December 2, 2009. Subsequently, Integra purchased the
property at auction and the circuit court entered an order confirming the sheriff’s report of sale
and distribution on March 15, 2010. Integra then sold the property to a third party.
On April 20, 2011, Hillgamyer filed a petition to vacate judgment of foreclosure pursuant
to Section 2-1401 of the Illinois Code of Civil Procedure, alleging that she never signed for any
of the loans. She claims that the first loan does not contain her signature, that her signature was
forged on the second loan and that she was unaware of the foreclosure proceedings until after her
husband’s death on March 2, 2011. The FDIC was appointed as receiver for Integra on
September 26, 2011, and subsequently removed the case to the Northern District of Illinois.
Hillgamyer filed a proof of claim with the FDIC on November 1, 2011. Notice of disallowance
of Hillgamyer’s claim was issued on April 11, 2012.
On June 28, 2012, Hillgamyer filed the instant counter-complaint against counterdefendants the FDIC, Tynski, Bradley M. Stevens and Susan Niblack. Hillgamyer alleges that
she sustained damages in the amount of $605,000 and alleges slander of title, conversion, taking
without just compensation, violation of the Illinois Notary Public Act, negligent training,
negligent supervision, violation of the Illinois Consumer Fraud Act.
The FDIC, Tynski and Stevens now move to dismiss Hillgamyer’s counter-complaint
pursuant to Fed.R.Civ.P. 9(b), 10(b), 12(b)(1) and 12(b)(6).
Legal Standard
In order to survive a motion to dismiss, a complaint must contain sufficient factual
allegations to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.
Id. When ruling on a motion to dismiss, courts accept all well-pleaded allegations in the
complaint as true, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), and draw all
reasonable inferences in favor of the plaintiff. Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 633
(7th Cir. 2007).
Discussion
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1. The FDIC’s Motion to Dismiss Pursuant Fed.R.Civ.P. 12(b)(1)
The FDIC argues this court lacks jurisdiction pursuant to Rule 12(b)(1) because
Hillgamyer’s counter-complaint is time barred under 12 U.S.C. 1821(d)(6). The Financial
Institutions, Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) Pub. L. No. 101-73, §
183 et seq. established a procedure for all claims against failed institutions. FIRREA requires a
claimant to first file a claim directly to the FDIC as receiver and allow the administrative process
to run before filing a lawsuit or continuing litigation. 12 U.S.C. § 1821(d)(3)(A). The FDIC has
180 days to make a decision to allow or disallow the claim. 12 U.S.C. § 1821(d)(5)(A)(ii). If the
FDIC does not issue a decision on the claim by the end of the 180 days and there is no agreed
upon extension, the claim is deemed denied. 12 U.S.C. § 1821(d)(6)(B). In order to preserve
their rights, a claimant must “file suit on such claim (or continue an action commenced before
the appointment of the receiver)” in the district court within 60 days after the claim is denied or
within 60 days after of the 180-day period ends, whichever comes first. 12 U.S.C. § 1821(d)(6).
Hillgamyer filed her proof of claim against the FDIC on November 1, 2011. The FDIC
had 180 days from that date, until April 29, 2012, to issue its decision. The FDIC mailed its
notice of disallowance on April 11, 2012. The Court notes that in the absence of a decision from
the FDIC, Hillgamyer was required to file suit or continue an action commenced before the
FDIC was appointed receiver on or before June 28, 2012. Indeed, Hillgamyer’s countercomplaint was filed June 28, 2012.
Hillgamyer allegedly never received notice of disallowance 1 and argues that the FDIC
failed to meet notice requirements of Section 1821. Mailing of the notice of disallowance is
sufficient when it is mailed to the last address of the claimant which appears: 1) on the
depository institution’s books, 2) in the claim filed by the claimant, or 3) in the documents
submitted in proof of the claim. 12 U.S.C. § 1821(d)(5)(A)(iii). The FDIC mailed its notice of
disallowance to the address listed on Hillgamyer’s proof of claim. Moreover, in most cases,
whether a claimant actually receives notice is immaterial. Miller v. F.D.I.C., 2011 WL 4538685
at *7 (N.D. Ill. Sept. 29, 2011) (finding the date of mailing of the notice of disallowance triggers
60-day period within which a claimant must file suit or continue underlying action, even where
notice of disallowance was allegedly never received).
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Hillgamyer’s notice of disallowance was returned as undeliverable. (Dkt # 29-2 at p. 2.)
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Generally, the notice of disallowance triggers the 60-day period within which a claimant
must “file suit on such claim (or continue an action commenced before the appointment of the
receiver)” in the district court. 12 U.S.C. § 1821(d)(6). Indeed, the Seventh Circuit has spoken
directly on the issue of when the 60-day period to file a lawsuit or continue an action begins,
stating:
Section 1821(d)(6)(A) unambiguously describes two different dates, the earlier of
which starts the clock ticking on the 60-day period during which a creditor must
file suit on a claim. The first is “the date of any notice of disallowance of such
claim....” Section 1821(d)(6)(A)(ii). The second date, which ordinarily will fall
later than the first, is an outer limit unrelated either to the date of disallowance or
to notice of such a decision. It falls at the end of the 180 days in which the
receiver is to make a determination on a claim. Section 1821(d)(6)(A)(i). If the
receiver decides and disallows a claim before its statutory 180–day deadline has
elapsed, the second date never comes into play.
Capitol Leasing Co. v. FDIC, 999 F.2d 188, 192 (7th Cir. 1993). However, the Court finds the
facts of this case compelling and distinguishable to justify a divergence from the rule that the
date of mailing triggers the 60-day period within which a claimant must initiate or continue suit
where, as here, counsel for the FDIC did not know and, in fact, affirmatively represented to the
Court that the FDIC had not issued a decision thirty days after the notice was mailed.
On May 11, 2012, the parties appeared for a status hearing at which time counsel for
Hillgamyer explained that the FDIC had not responded within the 180-time period to allow or
deny the claim and that Hillgamyer wished to “proceed forward on the underlying issues.” (Dkt #
62 at p. 2). Indeed, counsel for the FDIC stated that counsel was “still waiting for the FDIC to
make a final determination,” that counsel was “not aware of a final determination on
[Hillgamyer’s] claim” and that counsel was “not aware of whether [the FDIC had] notified the
claimant in regards to their determination” despite attempts to contact the FDIC. (Id.) Upon
inquiry by the Court, counsel for the FDIC stated counsel had called and emailed the FDIC but
the FDIC had not given “any sort of information in regards to their decision on this claim.” (Id.
at pp. 2-3.) The parties appeared again for status on June 11 (sixty-one days after the FDIC
issued its notice of disallowance) and neither addressed the existence of the FDIC’s notice of
disallowance. (Dkt # 63.)
The FDIC moved to dismiss Hillgamyer’s counter-complaint on April 24, 2013, more
than one year after the FDIC allegedly disallowed Hillgamyer’s claim. The FDIC now suggests
that Hillgamyer could have easily determined the status of her claim at any time simply by
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checking its daily-updated website, (Dkt # 59, FDIC reply brief, at p. 3), underscoring the fact
that counsel for the FDIC could have determined the status of the claim at any time as well.
Notably, counsel for the FDIC previously appeared before this Court and affirmatively
represented that the FDIC had not issued a decision. Where, as here, the FDIC’s left hand did not
know what its right hand was doing, the FDIC cannot now argue it should benefit from its own
lack of due diligence.
For the foregoing reasons, the Court finds that Hillgamyer’s claim was deemed denied on
April 29, 2012, 180 days after Hillgamyer filed her proof of claim. Thus, Hillgamyer timely filed
her counter-claim on June 28, 2012, within the 60 day period to do so, and the FDIC’s motion to
dismiss is respectfully denied.
2. Tynski’s motion to dismiss pursuant Fed.R.Civ.P. 10(b) and 12(b)(6)
Hillgamyer’s counter-complaint alleges Tynski negligently and knowingly notarized a
mortgage document as Hillgamyer’s, although Hillgamyer did not sign or affirm she signed any
of the documents, and that Tysnki “otherwise participated in the loss of use of her property,
slander of title, conversion, taking without just compensation, violation of the Illinois Notary
Public Act and violation of the Illinois Consumer Fraud Act.” (Counter-Compl. at p. 3.)
a. Rule 10(b)
Tyski argues that Hillgamyer’s complaint should be dismissed in its entirety for failure to
comply with Rule 10(b). However, such a measure is uncalled for under the circumstances. Rule
10(b) requires a party to “state its claims or defenses in numbered paragraphs, each limited as far
as practicable to a single set of circumstances. … If doing so would promote clarity, each claim
founded on a separate transaction or occurrence – and each defense other than a denial – must be
stated in a separate count or defense.” Fed.R.Civ.P. Rule 10(b). The purpose of Rule 10(b) is to
give defendants fair notice of the claims against them and the grounds supporting the claims.
Intercom Ventures, LLC v. FasTV, Inc., 2013 WL 2357621 (N.D. Ill. May 28, 2013). It is well
within the courts discretion to dismiss a complaint for violating Rule 10(b), however,
noncompliance is rarely a basis for dismissing a complaint unless the complaint is not
understandable and does not provide defendants with fair notice of the claims asserted against a
defendant. Landmark Document Servs., LLC v. Omega Litig. Solutions, LLC, 05 C 7300, 2006
WL 2861098 (N.D. Ill. Sept. 29, 2006) (internal quotations omitted). Although Hillgamyer’s
counter-complaint lumps all her claims against Tynski into a single paragraph, it is not difficult
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to identify the various claims made against her. See id. A more appropriate remedy may be to
move for a more definite statement under rule 12(e). Therefore, Tynski’s motion to dismiss
pursuant to Rule 10(b) is denied.
b. Rule 12(b)(6)
Tynski argues that Hillgamyer’s claims of conversion, taking without just compensation
and violation of the Illinois Consumer Fraud Act should be dismissed pursuant to Fed.R.Civ.P.
12(b)(6). Tysnki’s Rule 12(b)(6) argument does not address Hillgamyer’s claims for slander of
title and violation of the Illinois Notary Public Act.
To state a claim of conversion under Illinois law, Hillgamyer must establish that: (1) she
has a right to the property; (2) she has an absolute and unconditional right to the immediate
possession of the property; (3) she made a demand for possession; and (4) the defendant
wrongfully and without authorization assumed control, dominion, or ownership over the
property. Loman v. Freeman, 890 N.E.2d 446, 461 (Ill. App. Ct. 2008). Real property, which is
what Hillgamyer alleges was converted, cannot be the subject of a conversion claim, therefore
her claim for conversion fails as a matter of law. Elesh v. Ocwen Loan Servicing, LLC, 2013 WL
1707934 at *2 (N.D. Ill. Apr. 19, 2013); see also Thomas v. Urban P’ship Bank, 2013 WL
1788522 at * 10 (N.D. Ill. Apr. 26, 2013) (the law does not permit a conversion claim when only
real property is at issue).
Likewise, Hillgamyer’s taking without just compensation claim fails as a matter of law.
The Fifth Amendment provides that the government shall not take private property for public use
without just compensation. U.S. Const., amend. V. That prohibition is made applicable to the
states through the fourteenth amendment. Canel v. Topinka, 818 N.E.2d 311, 325 (Ill. 2004). The
Illinois Constitution likewise prohibits the taking of private property for public use without just
compensation. Id. Ill. Const.1970, art. I, § 15. However, the fifth amendment bars the State or
state actors from taking private property without paying for it. See Stop the Beach
Renourishment, Inc. v. Florida Dep’t of Envtl. Prot., 560 U.S. 702 (2010) (emphasis added).
Hillgamyer fails to allege Tynski’s actions amounted to government action or that Tynski was
acting as a government agent and therefore her takings claim fails.
Finally, Tysnki argues that Hillgamyer fails to allege a violation of the Illinois Consumer
Fraud and Deceptive Business Practices Act (“Consumer Fraud Act”) with specificity and
particularity as required by Rule 9(b). The Consumer Fraud Act prohibits the use of deceptive
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acts or practices in the conduct of trade or commerce. 815 ILCS 505/2. To state a claim under the
Consumer Fraud Act, Hillgamyer must allege facts showing: “(1) a deceptive or unfair act or
practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the deceptive or
unfair practice; and (3) the unfair or deceptive practice occurred during a course of conduct
involving trade or commerce.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 574 (7th Cir.
2012). To determine unfairness a defendant’s conduct must: (1) violate public policy; (2) be so
oppressive that the consumer has little choice but to submit; and (3) cause consumers substantial
injury. Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010).
Hillgamyer argues that her counter-complaint does not allege fraud, but merely an unfair
practice, and that she therefore properly meets the notice pleading requirements of Rule 8(a).
However, allegations in Hillgamyer’s counter-claim constitute fraudulent activity, namely that
Tynski notarized a mortgage document despite the fact that Hillgamyer did not sign or affirm to
Tynski that she signed the document. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits
Trust v. Walgreen Co., 631 F.3d 436, 447 (7th Cir. 2011). When a plaintiff in federal court
alleges fraud under the Consumer Fraud Act, the heightened pleading standard of Rule 9(b)
applies. Davis v. G.N. Mortg. Corp., 396 F.3d 869, 883 (7th Cir.2005). Having failed to meet this
standard, Hillgamyer’s claim that Tynski violated the Consumer Fraud Act necessarily fails.
3. Stevens’ motion to dismiss pursuant Fed.R.Civ.P. 9(b) and 12(b)(6)
Hillgamyer’s counter-complaint alleges Stevens negligently and/or intentionally
authorized its employees to accept and notarize two promissory notes and corresponding
mortgages as Hillgamyer’s although Hillgamyer did not sign or affirm she signed any of the
documents and that Stevens “otherwise participated in the loss of use of her property, slander of
title, conversion, taking without just compensation, violation of the Illinois Notary Public Act,
negligent training, negligent supervision, and violation of the Illinois Consumer Fraud Act.”
(Counter-Compl. at p. 3.) Stevens’ motion to dismiss was stricken without prejudice on March
15, 2013 for failure to properly notice the motion for presentment. Hillgamyer filed a response to
the motion on May 29, 2013. Stevens did not file a reply but the court has determined it requires
no further briefing on the matter and, in the interest of judicial economy, herein addresses
Stevens’ motion to dismiss. For the reasons and arguments put forth as to counter-defendant
Tynski, the Court also sua sponte dismisses Hillgamyer’s conversion and taking without just
compensation claims against Stevens.
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In his motion to dismiss, Stevens argues that Hillgamyer fails to allege a violation of the
Consumer Fraud Act with specificity and particularity as required by Rule 9(b). Hillgamyer
again argues that she has alleged only an unfair practice and thus meets the pleading
requirements of Rule 8(a). However, Hillgamyer’s counter-claim against Stevens, like her
counter-claim against Tynski, alleges fraudulent activity in that Stevens authorized his
employees to accept and notarize documents as Hillgamyers when Hillgamyer alleges she did
not sign or affirm she signed the documents. As discussed above, Hillgamyer fails to allege facts
in her counter-complaint that meet the heightened pleading standard of Rule 9(b). See Davis, 396
F.3d at 883. Thus, Hillgamyer’s Consumer Fraud Act violation against Stevens fails.
Stevens also argues that Hillgamyer fails to state a claim under the Illinois Notary Public
Act (“Notary Act”) and fails to state a claim for negligent training and supervision pursuant to
Fed.R.Civ.P. 12(b)(6). The employer of a notary public can be liable for a notary’s misconduct if
the notary was acting within the scope of employment at the time of the misconduct and the
employer consented to the notary’s misconduct. 5 ILCS 312/7–102. The Illinois Supreme Court
has explained that the Notary Act requires an employer to have some knowledge of the notary’s
misconduct before it can be liable. Vancura v. Katris, 238 Ill.2d 352, 378–80 (2010). Moreover,
in order to hold an employer liable for negligent training or supervision of an employee, a
plaintiff must establish that the employer knew or should have known its employee behaved in a
dangerous or otherwise incompetent manner, and that the employer, having this knowledge,
failed to supervise the employee adequately, or take other action to prevent the harm. Id.
Hillgamyer counter-claim and reply brief do little more than re-allege that Stevens’
employees engaged in misconduct without alleging or providing any facts to show Stevens knew
or should have known of such misconduct. While well-pleaded facts in a complaint are accepted
as true, legal conclusions and conclusory allegations merely reciting the elements of the claim
are not entitled to this presumption. McCauley v. City of Chicago, 671 F.3d 611, 615 (7th Cir.
2011).
Hillgamyer urges the Court to rely upon Stevens’ sworn statement attached to the Circuit
Court foreclosure complaint as well as Stevens’ affidavit of prove up in support of the judgment
of foreclosure and sale filed with the Circuit Court in support of her claims. Stevens’ sworn
statement attached to the Circuit Court complaint states that he has read the original foreclosure
complaint and knows the contents are true. (Dkt. # 54-1 at p. 1.) Stevens’ affidavit of prove up
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states that he has reviewed Integra’s business records, that, according to the books and records,
the notes and mortgages were signed by the Hillgamyers, and that the Hillgamyers defaulted on
all notes and mortgages. (Dkt # 54-1 at p. 2-5.) However, this document is not attached to
Hillgamyer’s 2-1401 petition nor Hillgmayer’s counter-claim and is thus not properly submitted
to the court on a motion to dismiss. Moreover, neither document suggests that Stevens knew or
should have known that his employees were engaged in any alleged misconduct.
For the foregoing reasons, Hillgamyer fails to state a cause of action under the Notary
Act and negligent training and supervision and Stevens’ motion to dismiss is granted.
Conclusion
For the reasons stated above, the FDIC’s motion to dismiss pursuant to Fed.R.Civ.P
12(b)(1) is denied.
Tynski’s motion to dismiss is granted in part and denied in part. Tynski’s motion to
dismiss Hillgamyer’s counter-complaint pursuant to Fed.R.Civ.P. 10(b) is denied. Tysnki’s
motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) with respect to Hillgamyer’s claims of
conversion, taking without just compensation and violation of the Illinois Consumer Fraud Act is
granted. Hillgamyer’s conversion and taking without just compensation claims against Tynski
are dismissed with prejudice and Hillgamyer’s Illinois Consumer Fraud Act claim against Tynski
is dismissed without prejudice.
Stevens’ motion to dismiss is granted. Hillgamyer’s conversion and taking without just
compensation claims against Stevens are sua sponte dismissed with prejudice. Hillgamyer’s
Illinois Consumer Fraud Act, Illinois Notary Public Act and negligent training and supervision
claims are dismissed without prejudice.
Hillgamyer may amend her complaint to cure defects within 28 days or all claims
dismissed without prejudice in this order will be deemed dismissed with prejudice.
IT IS SO ORDERED.
___________________
Date: December 2, 2013
____________________________
Sharon Johnson Coleman
United States District Judge
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