U.S. Bank, National Association v. Collins-Fuller T. et al

Filing 124

MEMORANDUM Opinion and Order. Signed by the Honorable Marvin E. Aspen on 3/24/2014:Judicial staff mailed notice(gl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF
ILLINOIS EASTERN DIVISION
U.S. BANK NATIONAL ASSOCIATION, )
)
AS TRUSTEE RELATING TO J.P.
MORGAN MORTGAGE ACQUISITION )
)
CORP. 2005-FRE1 ASSET BACKED
)
PASS-THROUGH CERTIFICATES ,
)
SERIES 2005-FRE1,
)
)
Plaintiff,
)
12 C 5057
)
Hon. Marvin E.
vs.
Aspen
)
CHERYLE A. COLLINS-FULLER T.,
)
HEYWOOD FULLER T., KEYBANK
)
NATIONAL ASSOCIATION,
)
MORTGAGE ELECTRONIC
)
REGISTRATION SYSTEMS, INC. AS
)
NOMINEE FOR FREMONT
)
INVESTMENT AND
)
LOAN,
)
)
Defendants.
MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, District Court Judge:
Presently before us is a Motion for Judgment on the Pleadings filed by Defendants
Cheryle A. Collins-Fuller T. and Heywood Fuller T. (“Defendants”), seeking dismissal of this
foreclosure action pursuant to Federal Rule of Civil Procedure 12(c). (Dkt. No. 103.) As set
forth below, we deny the motion. We also very briefly address and deny several other pending
motions, including Plaintiff’s motion for summary judgment.
BACKGROUND
Defendants borrowed $232,000 on approximately August 15, 2005 from Fremont
Investment and Loan. (Compl. ¶ 10.) Defendants executed an Adjustable Rate Note in favor of
Fremont for the loan and a Mortgage, granting Fremont a security interest for the Note in real

propert y located in Naperville, Illinois (“Propert y”). (Id.) Plaintiff alleges that
Defendants are in default due to their failure to pay required monthly installments as of February
2011. (Id.
¶ 10(j).) Plaintiff further alleges that it “is the legal holder of the indebtedness and the owner of
the mortgage given as security” and, as such, is entitled to foreclose on the Property. (Id.
¶ 10(n), (p), (s).) With its complaint, Plaintiff submitted copies of the pertinent Note, Mortgage,
and Assignment of Mortgage. (Compl., Exs. 3–5.)
Defendants, acting pro se at the time, answered the complaint on June 3, 2013.
(Dkt. No. 63.) Plaintiff subsequently moved for summary judgment and for appointment of a
special commissioner on June 27, 2013. (Dkt. No. 73.) After summary judgment briefing
concluded, Defendants obtained counsel, who filed an appearance on October 25, 2013.
Defendants then filed the instant motion, seeking judgment on the pleadings due to purported
deficiencies with Plaintiff’s complaint.
STANDARD OF REVIEW
Under Rule 12(c), a party may seek judgment on the pleadings “[a]fter the pleadings have
closed—but early enough not to delay trial.” Fed. R. Civ. P. 12(c); see Buchanan-Moore v. Cty.
of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). When reviewing Rule 12(c) motions, we
employ the same standards applicable to motions brought under Rule 12(b)(6). BuchananMoore, 570 F.3d at 827 (citing Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir.
2007)); see Adams v. City of Indianapolis, 742 F.3d 720, 727–28 (7th Cir. 2014); Northern Ind.
Gun & Outdoor Shows, Inc. v. South Bend, 163 F.3d 449, 452 (7th Cir. 1998). Accordingly, for
purposes of this motion, we must accept all well-pleaded allegations in the complaint as true and
draw all reasonable inferences in the plaintiff’s favor. Adams, 742 F.3d at 728; Thompson v. Ill.
Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir. 2002); Jafri v. Chandler LLC, — F.
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Supp. 2d — , 2013 WL 5513238, at *1 (N.D. Ill. Oct. 4, 2013). We ma y grant a motion for
judgment under Rule 12(c) “[o]nly when it appears beyond a doubt that the plaintiff cannot
prove an y facts to support a claim for relief and the moving party demonstrates that there are no
material issues of fact to be resolved.” Supreme Laundry Serv., L.L.C. v. Hartford Cas. Ins. Co.,
521 F.3d 743, 746 (7th Cir. 2008) (internal quotation omitted); Beiles v. City of Chi. — F. Supp.
2d — , 2013 WL 6571165, at *2 (N.D. Ill. Dec. 13, 2013).
ANALYSIS
Defendants argue that Plaintiff’s complaint fails to state a claim for relief for two reasons.
Defendants first assert that Plaintiff lacks standing to foreclose on the Property because it is not
the legal holder of the Note, which was neither indorsed nor assigned to Plaintiff. (Mem. at 5–
10; Reply at 4–8.) Defendants also contend that Plaintiff’s complaint fails to comply with the
requirements of the Illinois Mortgage Foreclosure Law (“IMFL”), necessitating judgment in
their favor. We address each argument in turn.
A.

Standing

“To recover on a promissory note under Illinois law, a plaintiff must show that (1) a
defendant executed the promissory note; (2) the plaintiff is the holder of the note; and (3) the
defendant has no viable defense.” Land O’Lakes Purina Feed, LLC v. WelkCo, LLC, No. 10 C
981, 2011 WL 1465632 at *2 (S.D. Ill. Apr. 18, 2011). Defendants claim that they are entitled to
judgment because Plaintiff cannot establish the second element, standing. As Defendants point
out, the Note attached to the complaint evidences the debt owed to Fremont but does not include
an indorsement, assignment, or proof of transfer of the Note from Fremont to Plaintiff.
In response, Plaintiff contends that its production of a copy of the unindorsed Note with
the complaint demonstrates that it possesses the Note. (Resp. at 2–6.) Plaintiff argues that it
obtained the Note—along with standing to enforce it as a nonholder in possession with the rights
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of a holder—b y virtue of an assignment from Fremont and pursuant to the Illinois Uniform
Commercial Code. (Id. at 3–5 (citing 810 ILCS 5/3-203, 3-301).)
For purposes of the present motion, we agree with Plaintiff. At this stage, we accept as
true Plaintiff’s allegation that it “is the legal holder of the indebtedness and the owner of the
mortgage given as security.” (Id. ¶ 10(n).) Although Plaintiff does not describe any transfer of
the Note from Fremont in the complaint, it alleges that it is the holder of the debt, i.e. the
Note.1Plaintiff attached a copy of the Note with its complaint, and we cannot discredit the
allegation that it owns the Note. See, e.g., Land O’Lakes Purina Feed, LLC, 2011 WL 1465632,
at *3 (presuming at the motion to dismiss stage that plaintiff acquired full interest in an
allegedly transferred note that it attached to the complaint). Moreover, under Illinois law,
“possession of a note, albeit unendorsed, can be sufficient to confer standing to enforce it.”
HSBC Bank USA, N.A. v. Hardman, 12 C 481, 2013 WL 515432, at *4 (N.D. Ill. Feb. 12, 2013)
(further explaining how a nonholder in possession with rights of a holder may enforce an
unindorsed note);
Deutsche Bank Nat’l Trust Co. v. Christian, 12 C 3613, 2013 WL 6283584, at *2–3 (N.D. Ill.
Dec. 4, 2013) (same); see also Parkway Bank & Tr. Co. v. Korzen, 13-380, 2013 Ill. App. 13030,
2 N.E.3d 1052, ¶ 24 (1st Dist. Sept. 23, 2013) (noting that “the mere fact that a copy of the note
is attached to the complaint is itself prima facie evidence that the plaintiff owns the note” and is
sufficient to show a plaintiff’s standing); Martin v. Martin, 174 Ill. 371, 374, 51 N.E. 691, 692
(Ill. 1898) (“The possession of an unindorsed note is prima facie evidence of ownership in the
holder.”).

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We acknowledge that this allegation appears inconsistent with Plaintiff’s current position that it
is a nonholder in possession of the Note.
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We previously addressed a similar issue in U.S. Bank National Association v. Carroll, 11
C 6535, 2013 WL 3669320, at *2–3 (N.D. Ill. July 12, 2013). There, the bank asserted at
summary judgment that its possession of an unindorsed note served as prima facie evidence that
it owned and could enforce the note. (Id.) Citing Hardman, we stated that “a copy of the
unindorsed [n]ote may suffice for purposes of establishing standing at the motion to dismiss
stage.” (Id. at *3.) We further stated, however, that possession of the unindorsed note was not
sufficient to establish ownership for summary judgment purposes. (Id.) We explained that the
Illinois UCC required additional proof of transfer from the holder before a nonholder in
possession of an unindorsed note could exercise the rights of the holder. (Id.) Consistent with
the above authorities, we hold that Plaintiff has sufficiently alleged standing to enforce the Note,
and we deny Defendants’ motion for judgment on the pleadings.
Based on our reasoning in Carroll, however, we conclude that Plaintiff’s pending
summary judgment motion simply cannot succeed due to Plaintiff’s failure to produce—either in
the complaint or in the summary judgment briefing—a copy of the Note bearing an indorsement,
or adequate evidence of the underlying transaction between Fremont and Plaintiff that allegedly
transferred the Note. Given this unresolved, material fact question, as well as counsel’s relatively
recent appearance on behalf of Defendants, we deny the summary judgment motion.2We also
deny several related motions without prejudice in light of this holding, including Plaintiff’s
Motion to Appoint Special Commissioner and Defendants’ three pro se motions requesting
discovery.

2

Because of this gaping evidentiary problem with Plaintiff’s summary judgment proof, a separate
opinion addressing that motion is unnecessary. In the interests of efficiency and clarity, we
elect to summarily dismiss that motion without prejudice as to refiling, rather than address its
merits in detail.
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B.

Sufficiency of the Foreclosure Allegations

In their motion, Defendants also claim that Plaintiff failed to satisfy the pleading
requirements set forth in the IMFL, 735 ILCS 5/15-1504(a). Section 15-1504(a) provides that a
foreclosure complaint “may be in substantially” the form of the complaint set forth by the
statute. 735 ILCS 5/15-1504(a). The IMFL’s form complaint includes a list of allegations that a
plaintiff may plead in a complaint to foreclose. Id. The statute also specifically requires a
plaintiff to attach copies of the mortgage and note.3See 735 ILCS 5/15-1504(a)(2); see Christian,
2013 WL 6283584, at *2; Ocwen Loan Servicing LLC v. Kroening, 10 C 4692, 2011 WL
5130357, at *4 (N.D. Ill. Oct. 28, 2011); Ocwen Fed’l Bank, FSB v. Harris, 99 C 658, 2000 WL
1644377, at *2 (N.D. Ill. Oct. 24, 2000); see Korzen, 2013 Ill. App. 13030, 2 N.E.3d 1052, ¶ 26
(emphasizing that Illinois law does not require production of any specific documentation for
foreclosure “other than the copy of the mortgage and note attached to the complaint”). Under the
IMFL, pleadings that follow the proposed form complaint “are deemed and construed to include”
an allegation “that the exhibits attached are true and correct copies of the mortgage and note.”
735 ILCS 5/151504(c)(2).
Defendants contend that Plaintiff’s complaint fails to state a claim for relief because the
attached copy of the Note is incomplete. The Note plainly references and instructs the parties to
consult a rider—“*SEE ADJUSTABLE RATE NOTE RIDER ATTACHED HERETO AND
MADE A PART HEREOF*”—but no rider is attached or otherwise located in the record.
(Compl., Ex. 4, Note ¶ 2 (emphasis in original).) Although Plaintiff dismisses this argument as

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The IMFL does not require plaintiffs to provide the original loan documents at any time; copies
suffice. Korzen, 2013 Ill. App. 13030, 2 N.E.3d 1052, at ¶ 32 (reaffirming that “production of
the original note in open court, rather than simply relying on the copy attached to the complaint,
is not a required element of proof in a foreclosure case”); First Fed’l Savings & Loan Assoc. of
Chi. v. Chi. Title & Trust Co., 155 Ill. App. 664, 665, 508 N.E.2d 287, 288–89 (1st Dist. 1987).
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having no legal effect, (Resp. at 2), it does not dispute that the cop y of the Note is incomplete.

Under the circumstances, we find that Plaintiff may rely on the incomplete Note to state a
claim for foreclosure under the IMFL. Plaintiff provided copies of the Note and the Mortgage,
which are deemed true and correct, and it substantially followed the form complaint set out by
the IMFL. Even with the rider missing, Defendants have sufficient information from which to
comprehend the complaint and defend the action, as required b y Rule 8. Fed. R. Civ. P. 8(a);
see, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S. Ct. 1937, 1949–50 (2009); Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007). We consider the omission of the
Note’s rider to be a technical defect that could be remedied by Plaintiff. As such, judgment on
the pleadings is not warranted. See Supreme Laundry Serv., L.L.C., 521 F.3d at 746 (authorizing
grant of a Rule 12(c) motion “[o]nly 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”).
As with the indorsement question discussed earlier, however, we conclude that Plaintiff
cannot rely on an incomplete copy of the Note to ultimately prevail. Evidence concerning the
Note is integral to Plaintiff’s burden of proof, and the rider may include information necessary
for the parties to ascertain all of the contract terms and potential damages. Moving forward,
Plaintiff must produce a complete copy of the Note or, if appropriate, explain why the rider is
unavailable.

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CONCLUSION
For the reasons set forth above, we deny Defendants’ Motion for Judgment on the
Pleadings. (Dkt. No. 103.) As explained, we also deny Plaintiff’s motion for summary judgment
(Dkt. No. 73) without prejudice. We deny several additional motions without prejudice in light
of this holding, including Plaintiff’s Motion to Appoint Special Commissioner (Dkt. No. 76) and
Defendants’ three pro se motions requesting discovery (Dkt. Nos. 95, 97, and 99).4
It is so ordered.
Dated: Chicago, Illinois
March 24, 2014

Marvin E. Aspen
United States District
Judge

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The case is set for a status hearing on April 24, 2014 at 10:30 a.m.
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