PNC Bank, National Association v. Tyre Works-Hoffman, L.L.C. et al

Filing 31

MEMORANDUM Opinion and Order. Signed by the Honorable Marvin E. Aspen on 2/25/2013:Judicial staff mailed notice(gl, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

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PNC BANK, NATIONAL ASSOCIATION,
successor to National City Bank, successor to Mid )
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America Bank, fsb, successor to EFS Bank,
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Plaintiff,
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v.
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TYRE WORKS-HOFFMAN, LLC, JULES D.
NOTTOLINI, MARYLYN A. NOTTOLINI, a/k/a )
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MARILYN A. NOTTOLINI, MICHAEL D.
EANNARIANO, AGNES EANNARIANO, JOHN )
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S. MCDOUGALL, and GINA MCDOUGALL,
)
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Defendants.
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Case No. 1:12-cv-07499
Judge Marvin E. Aspen

MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, District Court Judge:
Plaintiff PNC Bank, National Association (“PNC”) brings suit for mortgage foreclosure
and other relief against Defendants Tyre Works-Hoffman, LLC (“Tyre Works”), Jules D.
Nottolini, Marylyn A. Nottolini a/k/a Marilyn A. Nottolini, Michael D. Eannariano, Agnes
Eannariano, John S. McDougall, and Gina McDougall (collectively “Defendants”). Defendants
move to dismiss two counts of the complaint for failure to state a claim upon which relief can be
granted. For the following reasons, we deny Defendants’ motion.
For the purposes of this motion, we draw all facts from the complaint and its supporting
exhibits. See Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir. 2002)

(citation omitted); Fed. R. Civ. P. 10(c) (“[a] copy of any written instrument which is an exhibit
to a pleading is a part thereof for all purposes.”).
PNC has filed a five-count complaint and eight accompanying exhibits. In Counts I and
II, PNC seeks to foreclose two mortgages executed by Tyre Works and the individual
defendants. Defendants move to dismiss Counts I and II of the complaint under Rule 12(b)(6).1
PNC is a national bank association organized under the laws of Delaware with its
principal place of business in Pennsylvania. (Compl. ¶ 4.) PNC is the successor to National City
Bank, Mid America Bank, fsb, and Elgin Financial Savings Bank (“EFS Bank”). (Id., Ex. A.)
Tyre Works is an Illinois limited liability company organized under the laws of Illinois with its
principal place of business in Illinois. (Id. ¶ 5.) The individual defendants are citizens and
residents of the State of Illinois. (Id. ¶¶ 5–11.)
I.

The $49,000 Loan
Plaintiff alleges that Defendants J. Nottolini and M. Nottolini executed a mortgage

(“Mortgage 1”) in favor of Plaintiff on January 30, 1999 to secure debt owed by Tyre Works to
Plaintiff. (Compl. ¶ 13.) Mortgage 1 pledged to Plaintiff a first-position mortgage lien interest
against “the property commonly known as 790 Barrington Road, Hoffman Estates, Illinois
60194” (“the Property”). (Compl., Ex. C.) Mortgage 1 incorporated a promissory note dated
January 30, 1999 in the original principal amount of $100,000. (Id.)
Plaintiff further alleges that on or about August 6, 2008, Tyre Works executed a
promissory note in favor of Plaintiff in the original principal amount of $49,000 (“Note 1”).
(Compl. ¶ 12, Ex. B.) Note 1 provides that it is secured by “any and all other mortgages”
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 Counts III, IV, and V are breach of contract claims against Mr. Eannariano, Mr. McDougall,
and Tyre Works, respectively. Defendants do not seek to dismiss these counts.
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evidencing a security interest in favor of Plaintiff, “including but not limited to” Mortgage 1.
(Compl., Ex. B.) Plaintiff alleges in Count I that Tyre Works has not paid real estate taxes for
the Property as required by Note 1. (Compl. ¶ 25.) Plaintiff thus seeks a judgment of
foreclosure and sale of the Property due to Tyre Works’s non-payment. (Id.)
II.

The $659,798.72 Loan
Plaintiff alleges that on or about March 4, 2003, defendants Mr. and Mrs. McDougall and

Mr. and Mrs. Eannariano executed a mortgage (“Mortgage 2”) in favor of Plaintiff to secure debt
owed to Plaintiff. (Compl. ¶ 19.) Mortgage 2 pledged to Plaintiff a second-position mortgage
lien interest against the Property. (Id.) Mortgage 2 incorporated a promissory note dated March
4, 2003 in the original principal amount of $670,000. (Compl., Ex. G.)
Plaintiff further alleges that on or about August 6, 2008, defendants Mr. and Mrs.
McDougall and Mr. and Mrs. Eannariano executed a promissory note in favor of Plaintiff in the
original principal amount of $659,798.72 (“Note 2”). (Compl. ¶ 18, Ex. F.) Note 2 provides that
it is secured by “any and all other mortgages” evidencing a security interest in favor of Plaintiff,
“including but not limited to” Mortgage 2. (Compl., Ex. F.)
Plaintiff alleges in Count II that defendants Mr. and Mrs. McDougall and Mr. and Mrs.
Eannariano have not paid real estate taxes for the Property as required under the terms and
provisions of Note 2 and Mortgage 2. (Compl. ¶ 21.) Plaintiff seeks a judgment of foreclosure
and sale as a result of the alleged default.

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STANDARD OF REVIEW
It is well-settled that a motion to dismiss under Rule 12(b)(6) is meant to test the
sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910
F.2d 1510, 1520 (7th Cir. 1990). A court may grant a motion to dismiss under Rule 12(b)(6)
only if a complaint lacks “enough facts to state a claim for relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007). “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.” Ashcroft v. Iqbal,
556 U.S. 662, 663, 129 S. Ct. 1937, 1940 (2009).
Although a facially plausible complaint need not give “detailed factual allegations,” it
must allege facts sufficient “to raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555, 127 S. Ct. at 1964–65. “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678, 129 S. Ct. at
1949. In evaluating a motion to dismiss, we accept all well-pled allegations in the complaint as
true and draw all reasonable inferences in the plaintiff’s favor. Id. In addition to the allegations
in the complaint, courts are free to examine “documents incorporated into the complaint by
reference, and matters of which a court may take judicial notice” in evaluating a motion to
dismiss under Rule 12(b)(6). Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322,
127 S. Ct. 2499, 2509 (2007); Thompson, 300 F.3d at 753.
ANALYSIS
Defendants move to dismiss Counts I and II on two grounds. First, Defendants argue that
the complaint is deficient as a matter of law because Plaintiff does not specifically plead the date

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of the alleged defaults. (Mot. at 3–5.) Defendants argue that the date of default is a “necessary
element” of a foreclosure complaint, and that a complaint that does not allege the date of default
is fatally flawed. (Id.) Second, Defendants argue that Plaintiff lacks standing to sue because the
mortgage securing Note 1 grants a security interest to EFS Bank, not to Plaintiff. (Reply at 5.)
Neither argument has merit.
I.

The Date of Default
Plaintiff’s complaint follows, in large part, the form complaint provided by the Illinois

legislature in Section 15-1504(a) of the Illinois Mortgage Foreclosure Law (“IMFL”). (See
Compl. ¶¶ 24–28.) The IMFL sets out the statutory requirements for foreclosure actions in
Illinois, and requires, among other allegations, that the plaintiff attach a copy of the mortgage
and the note secured thereby. 735 ILCS 5/15-1504(a)(2); Deutsche Bank v. Tucker, No. 11 C
8062, 2012 WL 2872456, at *2 (N.D. Ill. July 12, 2012).
Section 15-1504(a) of the IMFL 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)
(emphasis added). The IMFL’s form complaint includes a list of allegations that a plaintiff may
plead in a complaint to foreclose. Id. Section 15-1504(a)(3)(J), for example, lists “statement as
to defaults, including, but not necessarily limited to, date of default…” as one of the allegations
in the form complaint. 735 ILCS 5/15-1504(a)(3)(J). Lastly, Section 15-1504(b) states, in
relevant part: “Required Information. A foreclosure complaint need contain only such statements
and requests called for by the form set forth in subsection (a) of Section 15-1504 as may be
appropriate for the relief sought.” 735 ILCS 5/15-1504(b).

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Defendants argue that the form complaint set forth in Section 15-1504(a) of the IMFL
provides the “absolute minimum guidelines necessary” for a sufficient complaint to foreclose a
mortgage, though they cite no persuasive authority for this proposition. (Mot. at 3.) As such,
Defendants argue that the absence of any allegation included in the IMFL’s form complaint is
fatal to a complaint for foreclosure.
Here, Plaintiff’s complaint does not include the date of Defendants’ alleged default.
Instead, Plaintiff alleges that default has occurred, and provides the unpaid balance as of May 16,
2012. (Compl. ¶¶ 24, 27.) According to Defendants, the date of default is a “necessary element”
to any foreclosure action, and without the allegation of date of default, “a reasonable probability
of success in a mortgage foreclosure action cannot be established.” (Mot. at 3.) We disagree.
We do not read the form complaint set forth by the IMFL as an attempt by the Illinois
legislature to establish strict pleading requirements, such that the omission of any of the listed
statements should result in dismissal. “[T]he framers of the IMFL clearly intended that
foreclosures should not be bogged down in motions over subtle procedural niceties that affect no
one’s substantive rights.” CitiMortgage, Inc. v. Schroedter, No. 11-ch-7639, 2011 WL 5077866,
at *4 (Ill. Cir. Aug. 30, 2011). Further, we believe that this reading of Section 15-1504(a) gives
effect to the plain meaning of the statute. If we were to adopt Defendants’ reading of the IMFL,
the words “may be substantially in the following form” would be rendered superfluous. 735
ILCS 5/15-1504(a); Buttita v. City of Chi., 9 F.3d 1198, 1204 (7th Cir. 1993) (“[I]n ascertaining
the meaning of a statute, the statute should be read as a whole with all relevant parts
considered.”).

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The IMFL provides that the complaint “need only contain such statements . . . as may be
appropriate for the relief sought.” 735 ILCS 5/15-1504(c). Where, as here, a plaintiff has
substantially followed the form complaint set out by the IMFL, alleged that default occurred, and
provided a balance as of a particular date, the allegations of default are sufficient to survive a
motion to dismiss. See Fifth Third Mortg. Co.v. Galica, No. 10-ch-40880, 2011 WL 5077865, at
*1 (Ill. Cir. Oct. 5, 2011) (Under the IMFL, “the deemed allegations will be construed as part of
a complaint if the complaint ‘substantially’ follows the form complaint.”).
Accordingly, despite the minor discrepancy between the form complaint provided by the
IMFL and the complaint in this case, the complaint complies with the pleading requirements of
the IMFL. Further, Plaintiff has alleged sufficient facts to ensure that the Defendants receive
“fair notice of what the…claim is and the grounds upon which it rests.” Twombly, 550 U.S. at
555, 127 S. Ct. at 1964; see also Fed. R. Civ. P. 8(a). Defendants’ motion with respect to Count
I is denied.
II.

Standing
Defendants also challenge Plaintiff’s standing to foreclose on the property, arguing that

Note 1 “grants a security interest to Elgin Financial Savings Bank, not [to] Plaintiff.” (Reply at
5.)2 We hold that Plaintiff’s complaint and its attached exhibits are sufficient to demonstrate
standing at the motion to dismiss stage.

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Defendants raise this argument for the first time in their reply brief. Usually, arguments raised
for the first time in a reply brief are waived. James v. Sheahan, 137 F.3d 1003, 1008 (7th Cir.
1998). However, standing is a jurisdictional requirement that is not subject to waiver. U.S. v.
Hays, 515 U.S. 737, 742, 115 S. Ct. 2431, 2435 (1995); Nat’l Org. for Women, Inc. v. Scheidler,
510 U.S. 249, 255, 114 S. Ct. 798, 802 (1994). “The federal courts are under an independent
obligation to examine their own jurisdiction, and standing ‘is perhaps the most important of [the
jurisdictional] doctrines.’” Hays, 515 U.S. at 742, 115 S. Ct. at 2435.
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Despite Defendants’ claim that “the conveyance of the security interest is to…Elgin
[Financial Savings] Bank” and not to Plaintiff, Plaintiff has attached a merger certificate to its
complaint that demonstrates that Elgin Financial Savings Bank merged with Plaintiff. (Compl.,
Ex. A.)
We also reject Defendants’ contention that Plaintiff has failed to provide the original
promissory notes and therefore “cannot identify” when the mortgages went into default. (Mot. at
5.) The promissory notes that Plaintiff attached to its complaint specifically reference the
mortgages that Plaintiff seeks to foreclose, and the mortgages explicitly reference Defendants’
original indebtedness. (Compl., Ex. B, Ex. C, Ex. F, Ex. G.)
While it may be true that Plaintiff will eventually have to prove that it is the legal holder
of the original note, we do require evidentiary support at this time. Plaintiff’s allegation that it is
the successor of EFS Bank is enough to establish standing at the motion to dismiss stage. “There
is no law that every relevant document which counsel seeks to introduce as an exhibit at trial
must be attached to his pleading, and indeed, such a requirement would be unworkable and
imprudent.” Farm Credit Bank of St. Louis v. Biethman, 262 Ill. App. 3d 614, 622, 634 N.E.2d
1312, 1318 (5th Dist. 1994). Plaintiff’s complaint and supporting merger documents are
sufficient to state a claim to foreclose, since they allege that PNC is a successor to EFS Bank by
virtue of merger. See Standard Bank and Trust Co. v. Madonia, 964 N.E.2d 118, 123 (1st Dist.
2011) (plaintiff sufficiently pled that it was the mortgagee by attaching a copy of the mortgage
and note to its complaint, as well as merger documents); Land of Lincoln Savings & Loan v.
Mich. Ave. Nat’l Bank of Chi., 103 Ill. App. 3d 1095, 1106, 432 N.E.2d 378, 386 (3d Dist. 1982)
(where no assignment of note was made, and merger documents were presented, bank succeeded

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to the mortgage rights possessed by the mortgagee, as a matter of Illinois law); Olympic Fed. v.
Witney Dev. Co., 113 Ill. App. 3d 981, 447 N.E.2d 1371 (2nd Dist. 1983) (same).
CONCLUSION
For the reasons set forth above, we deny Defendants’ motion to dismiss Count I and II. It
is so ordered.

________________________________
Honorable Marvin E. Aspen
U.S. District Court Judge
Date: February 25, 2013

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