Bartucci et al v. Wells Fargo Home Mortgage
Filing
54
MEMORANDUM Opinion and Order Signed by the Honorable Marvin E. Aspen on 11/10/2015: Defendant's motion to dismiss 44 is granted in part and denied in part. Defendant's motion to dismiss Counts II and V is denied and Defendant's motion to dismiss Counts I, III, IV, VI and VII is granted. Mailed notice(mad, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LOUIS G. BARTUCCI,
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
WELLS FARGO BANK N.A.,
Defendant.
Case No. 14 CV 5302
Judge Marvin E. Aspen
MEMORANDUM OPINION AND ORDER
Presently before us is Defendant Wells Fargo Bank N.A.’s motion to dismiss a sevencount complaint filed by Plaintiff Louis G. Bartucci. Plaintiff’s complaint alleges: (1) violation
of the Fair Housing Act (“FHA”), 42 U.S.C. § 3605; (2) violation of the Equal Credit
Opportunity Act (“ECOA”), 15 U.S.C. § 1691; (3) a claim for declaratory judgment;
(4) violation of 42 U.S.C. § 1983; (5) violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act (“ICFA”), 815 ILCS 505/2; (6) breach of the Illinois implied covenant of
good faith and fair dealing; and (7) a claim for promissory estoppel.
Defendant moves to dismiss all counts. For the following reasons, Defendant’s motion to
dismiss is granted in part, and denied in part.
BACKGROUND
In 2007, Plaintiff obtained a loan from Defendant for the purchase of a residential
property. (Am. Compl. ¶ 6.) From 2008 to 2009, Plaintiff faced financial difficulties meeting
his mortgage payments. (Id. ¶ 8.) Plaintiff submitted paperwork to Defendant to modify his loan
under the Home Affordable Mortgage Program (“HAMP”), a federal program that assists
eligible homeowners who face financial hardships with loan modifications. (Id. ¶ 11.) In 2010,
1
while Plaintiff’s application for a home loan modification was still pending, Defendant served
Plaintiff with a mortgage foreclosure complaint and summons. (Id. ¶ 14.)
From 2010–2013, Plaintiff continued to contact Defendant in regards to his loan
modification request. (Id. ¶ 15.) Plaintiff alleges that during the loan modification process, he
disclosed his national origin on mandatory loan paperwork. (Id. ¶ 16.) In June 2013, Defendant
denied Plaintiff’s loan modification request citing his negative net present value. (Id. ¶ 18.)
Soon thereafter, Plaintiff appealed Defendant’s denial of his HAMP modification. (Id. ¶ 19.)
Plaintiff alleges that he made several telephone calls in 2013 to Defendant’s
representatives concerning his loan modification denial, but that Defendant’s representatives told
Plaintiff that they could not understand him because of his accent, that he needed to call back,
and then hung up on him without any warning. (Id. ¶ 24.) Further, Plaintiff alleges that while
attending a seminar hosted by Defendant, a representative told Plaintiff “that he would probably
have had an easier time obtaining a loan modification if he were in fact much younger.”
(Id. ¶ 25.) On another occasion, Plaintiff alleges that one of Defendant’s representatives
expressed that Plaintiff’s age factored into the denial of his loan modification request. (Id. ¶ 47.)
STANDARD OF REVIEW
A motion to dismiss under Federal Rule of Civil Procedure 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). To survive a motion to dismiss, the complaint must contain
a “short and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2). Specifically, “a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly,
2
540 U.S. 544, 555, 127 S. Ct. 1955, 1964– 65 (2007)). The plausibility standard “is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id. Thus, while a complaint need not give “detailed factual allegations,” it must
provide more than “labels and conclusions, and a formulaic recitation of the elements of a cause
of action.” Twombly, 540 U.S. at 545, 127 S. Ct. at 1964–65; Killingsworth v. HSBC Bank
Nevada, N.A., 507 F.3d 614, 618–19 (7th Cir. 2007). The statement must be sufficient to provide
the defendant with “fair notice” of the claim and its basis. Twombly, 540 U.S. at 545, 127 S. Ct.
at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 102 (1957)); Tamayo v.
Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). In evaluating a motion to dismiss, we must
accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in
the plaintiff’s favor. Thompson v. Ill. Dep’t of Prof’l Reg., 300 F.3d 750, 753 (7th Cir. 2002).
ANALYSIS
Plaintiff brings both federal and state law claims. We will begin with an analysis of his
federal claims.
I. Plaintiff’s Federal Claims
A. Count I – Violation of Fair Housing Act 42 U.S.C. § 3605
Plaintiff contends that Defendant violated § 3605 of the FHA, which makes it “unlawful
for any person or other entity whose business includes engaging in residential real estate-related
transactions to discriminate against any person in making available such a transaction, or in the
terms of conditions of such a transaction, because of . . . national origin . . . .”
42 U.S.C. § 3605(a). A plaintiff may prove a violation of the FHA under two theories: (1)
disparate treatment or (2) disparate impact. Daveri Development Group, LLC v. Village of
Wheeling, 934 F. Supp. 2d 987, 996 (N.D. Ill. March 21, 2013). Here, Plaintiff alleges that
3
Defendant engaged in disparate treatment when it denied him a loan modification based on his
national origin. To survive a motion to dismiss, a FHA claim must allege discrimination related
to the terms, conditions, privileges, or provisions of services of a dwelling. Swanson v. Citibank,
N.A., 614 F.3d 400, 405 (7th Cir. 2010). Specifically, Plaintiff must plead: (1) the type of
discrimination he believes occurred; (2) by whom; (3) and when. Id. (finding that plaintiff’s
FHA claim survived a motion to dismiss when she alleged that she was discriminated against
based on her race, by a named manager at Citibank, in connection with her efforts in early 2009
to obtain a home-equity loan). Finally, to support his disparate treatment allegation, Plaintiff
must allege that he was treated differently than other applicants based on his national origin.
Wigginton v. Bank of America Corp., 770 F.3d 521, 522 (7th Cir. 2014) (granting defendant’s
motion to dismiss FHA claim because plaintiff failed to allege that someone else had been
treated differently).
Plaintiff alleges that Defendant violated § 3605 of the FHA when it denied him a loan
modification request because of his national origin. (Am. Compl. ¶ 33.) Plaintiff alleges that
Defendant was aware of his national origin based on required disclosures on various loan
applications. (Am. Compl. ¶¶ 28–30). Additionally, Plaintiff asserts that in 2013, in connection
with his HAMP loan modification request, Defendant’s representatives frequently hung up the
phone on him claiming that his accent was too difficult to understand. (Id. ¶¶ 31–33). We find
that Plaintiff’s allegations are insufficient to survive a motion to dismiss. Plaintiff fails to
identify specific individuals who hung up on him and fails to allege that he was treated
differently than other loan applicants.
Accordingly, we grant Defendant’s motion to dismiss Count I.
4
B. Count II – Violation of Equal Credit Opportunity Act 15 U.S.C. § 1691
Plaintiff alleges that Defendant violated § 1691 of the ECOA that prohibits creditors from
discriminating against any credit applicant “with respect to any aspect of a credit transaction [ ]
on the basis of . . . national origin . . . or age.” 15 U.S.C. § 1691(a). To survive a 12(b)(6)
motion to dismiss an ECOA claim, Plaintiff must allege that he was an applicant, as defined by
the ECOA 1, and that Defendant treated him less favorably because of his national origin or age.
FirstMerit Bank, N.A. v. Ferrari, 71 F. Supp. 3d 751, 755 (N.D. Ill. Oct. 16, 2014); New
Louisiana Holdings, LLC v. Arrowsmith, No. 11 C 5031, 2012 WL 6061710, at *6 (N.D. Ill.
Dec. 4, 2012).
Similar to a FHA claim, to survive a motion to dismiss on an ECOA claim, Plaintiff must
simply present a “plausible scenario, . . . even though it may not accurately describe what
actually occurred.” FirstMerit Bank, N.A., 71 F. Supp. 3d at 755 (holding that ECOA complaint
survived a motion to dismiss when complaint alleged that Bank refused to finalize settlement
because individual was Hispanic and that Bank’s loan officer made biased comments about
doing business with Hispanics).
Plaintiff alleges that Defendant discriminated against him based on his national origin
when Defendant hung up the phone on him and refused to provide him information concerning
his loan because of his accent. Plaintiff alleges that Defendant discriminated against him based
on age when Defendant’s representatives told him he would have “an easier time obtaining a
loan modification if he were in fact much younger.” (Am. Compl. ¶ 43, 47.) These allegations
present a plausible scenario in which Plaintiff was unlawfully discriminated against based on his
national origin or age.
1
Defendant does not argue that Plaintiff was not an applicant under the ECOA, so we focus on
the second prong of the analysis; whether Plaintiff has sufficiently alleged that he was treated
less favorable based on his national origin or age.
5
For the reasons stated above, we deny Defendant’s motion to dismiss Count II.
C. Count III - Declaratory Judgment 28 U.S.C. § 2201
Plaintiff seeks a declaratory judgment affirming various rights under HAMP pursuant to
the Declaratory Judgment Act, 28 U.S.C. § 2201, which enables a party “to ‘clarify[ ] and settl[e]
the legal relations at issue’ and to ‘terminate and afford relief from uncertainty, insecurity, and
controversy giving rise to the proceeding.” Amari v. Radio Spirits, Inc., 219 F. Supp. 2d 942,
944 (N.D. Ill. Sept. 12, 2002) (citing Tempco Elec. Heater Corp. v. Omega Eng’g, Inc.,
89 F.2d 746, 747 (7th Cir. 1995)). The purpose of the Act is “to avoid accrual of avoidable
damages to one not certain of his rights and to afford him an early adjudication, without waiting
until his adversary should see fit to begin suit.” Nucor Corp. v. Aceros Y Maquilas de Occidente,
S.A. de C.V., 28 F.3d 572, 577 (7th Cir. 1994) (citing Cunningham Bros., Inc. v. Bail, 407 F.2d
1165, 1167 (7th Cir. 1969)).
Federal courts may issue declaratory judgments only in cases of “actual controversy.”
Int’l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1210 (7th Cir. 1980). A justiciable “actual
controversy” exists only when a private right of action is available. Schilling v. Rogers,
363 U.S. 666, 677, 80 S. Ct. 1288, 1296 (1960) (citing Skelly Oil Co. v. Phillips Petroleum Co.,
339 U.S. 667, 671, 70 S. Ct. 876, 879 (1950)); see also Villasenor v. American Signature, Inc.,
No. 06 C 5493, 2007 WL 2025739, at *6 (N.D. Ill. July 9, 2007) (finding that where there is no
private right of action available for an alleged statutory violation, a declaratory judgment claim
cannot proceed).
Plaintiff asks us to enter a declaratory judgment that clarifies the parties’ rights and
obligations under HAMP; declares that Plaintiff qualifies for a loan modification under HAMP;
and declares that Defendant did not properly consider Plaintiff for a loan modification under
6
HAMP. (Am. Compl. ¶ 58.) The Seventh Circuit, however, has held that HAMP contains no
private right of action. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 555 (7th Cir. 2012);
Baginski v. JP Morgan Chase Bank N.A., No. 11 C 6999, 2012 WL 5989295, at *3
(N.D. Ill. Nov. 29, 2012). Because the Declaratory Judgment Act provides no relief unless there
is a justiciable controversy between the parties, and because no private right of action exists
under HAMP, we grant Defendant’s motion to dismiss Count III 2.
D. Count IV- Violation of 42 U.S.C. § 1983
Plaintiff brings a fourth claim alleging that Defendant violated 42 U.S.C. § 1983. We
grant Defendant’s motion to dismiss Count IV because Plaintiff has not demonstrated that
Defendant was acting under the color of law.
Section 1983 provides that “[e]very person who, under color of any statute, ordinance,
regulation, custom, or usage, of any State” deprives a person of his federal constitutional or
statutory rights shall be liable in an action at law. 42 U.S.C. § 1983. To survive a motion to
dismiss a § 1983 claim, a plaintiff must allege facts which show that the defendant deprived him
of a right secured by the Constitution or any law of the United States and that the deprivation of
that right resulted from the defendant acting under color of law. Lekas v. Briley, 405 F.3d 602,
606 (7th Cir. 2005) (citing Brokaw v. Mercer Cty., 235 F.3d 1000, 1009 (7th Cir. 2000)
(emphasis added)). Non-state actors may be found to act under color of state law when they
have conspired or acted in concert with state actors to deprive a person of his civil rights.
Adickes v. S.H. Kress & Co., 398 U.S. 144, 152, 90 S. Ct. 1598, 1605 (1970). In other words, for
a private individual to act under color of law, there must be evidence of a concerted effort
2
Plaintiff broadly contends that his claim is not seeking to enforce HAMP but instead is based on
civil rights violations, specifically, Defendant’s failure to provide an accounting as to how
Defendant determined ineligibility under HAMP. (See Reply-Mot. to Dismiss at 5–6.) Despite
Plaintiff’s blanket assertion that he seeks a declaratory judgment based on civil rights violations,
Plaintiff cites only to HAMP for both enforcement and relief. (Am. Compl. ¶¶ 56–57.)
7
between a state actor and that private individual. Fries v. Helsper, 146 F.3d 452, 457
(7th Cir. 1998).
Plaintiff alleges that Defendant violated 42 U.S.C. § 1983 when Defendant, acting under
the color of law, denied his requests for a loan modification because of his national origin and
age. (Am. Compl. ¶ 61.)
Plaintiff boldly alleges that the Defendant “was acting under color of state and federal
law when it denied his several requests for loan modification” yet states no facts to support such
a claim. (Am. Compl. ¶ 61.) Plaintiff does not assert that Defendant is a state actor or conspired
or acted in concert with state actors and therefore does not allege enough facts to support a
§ 1983 claim. Accordingly, we grant Defendant’s motion to dismiss Count IV.
II. Plaintiff’s State Law Claims
A. Count V - Illinois Consumer Fraud and Deceptive Business Practices Act
Plaintiff alleges that Defendant violated the ICFA, which prohibits: “unfair or deceptive
acts or practices, including but not limited to the use or employment of any deception [or]
fraud . . . .” ILCS.
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.” Robinson v. Toyota Motor Credit Corp., 2011 Ill. 2d 403, 416–17,
775 N.E.2d 951, 960 (2002).
The statute provides redress not only for deceptive business practices, but also for
business practices that, while not deceptive, are unfair. Boyd v. U.S. Bank, N.A. ex rel.,
787 F.Supp. 2d 747, 751 (N.D. Ill. April 12, 2011); Robinson, 2011 Ill. 2d at 417, 775 N.E.2d at
8
960. Plaintiff alleges that Defendant engaged in both deceptive and unfair conduct.
(Am. Compl. ¶¶ 70–71).
The correct legal standard for a motion to dismiss under an ICFA claim differs for claims
alleging deceptive conduct and claims alleging unfair conduct. Windy City Metal Fabricators &
Supply, Inc., v. CIT Tech. Fin. Servs. Inc., 536 F.3d 663, 659 (7th Cir. 2008). Because Plaintiff
alleges both deceptive and unfair conduct, we will analysis each component of the claim under
the appropriate standard of review.
Where Plaintiff alleges deceptive conduct, the heightened 9(b) rule applies. Pirelli
Armstrong Tire Corp. Retiree Medical Benefits Trust v. Walgreen Co.,
631 F.3d 436, 441(7th Cir. 2011) (citing Davis v. G.N. Mortg. Corp., 396 F.3d 869, 883 (7th Cir.
2005)); DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). To meet this heightened
pleading standard, plaintiff must allege the “who, what, when, where and how” of the alleged
deceptive conduct. Pirelli Armstrong Tire, 631 F.3d at 441. More specifically, 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.” McGann v. PNC Bank, Nat. Ass’n, No. 11 C 06894, 2013 WL 1337204, at *5
(N.D. Ill. 2013 March 29, 2013) (citing Gen. Elec. Capital Corp. v. Lease Resolution Corp.,
128 F.3d 1074, 1078 (7th Cir. 1997); Vicom, Inc. v. Harbridge Merchant Servs., Inc.,
20 F.3d 771, 777 (7th Cir. 1994)).
To state an ICFA deceptive conduct claim, a plaintiff must allege: “(1) a deceptive act or
practice by the defendant, (2) the defendant’s intent that the plaintiff rely on the deception, (3)
the occurrence of the deception in the course of conduct involving trade or commerce, and (4)
actual damage to the plaintiff (5) proximately caused by the deception.” Avery v. State Farm
9
Mut. Auto. Ins. Co., 216 Ill. 2d 100, 180, 835 N.E.2d 801, 850 (Ill. 2005). District courts have
held that a loan servicer’s alleged failure to consider plaintiff’s eligibility for a HAMP
modification is a sufficient predicate for an ICFA claim. Boyd, 787 F. Supp. 2d at 752.
Additionally, an ICFA 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. As to damages, courts have held that the
inability to fairly negotiate a plan to stay in the home constitutes economic damages under the
ICFA. Boyd, 787 F. Supp at 754.
Plaintiff alleges that Defendant engaged in deceptive conduct when various
representatives assured him that he would qualify for a HAMP loan modification, provided him
differing information as to the status of his loan modification, gave him explanations that led to
dead-ends and excuses as to why his loan modification was not being processed or granted, and
created “nonsensical tasks” for Plaintiff to complete in order to be eligible for a loan
modification. (Am. Compl. ¶¶ 68–71.) Plaintiff alleges Defendant had “motive [to make]. . .
and stands to profit,” (Am. Compl. ¶ 72), from the deceptive communications and that as a result
of his reliance on Defendant’s unfair and deceptive conduct, he incurred actual damage in the
form of monetary losses and the imminent loss of his property to foreclosure. (Id. ¶¶ 83–84).
We find that Plaintiff’s allegation as to deceptive conduct under the ICFA survive even a
heightened 9(b) analysis.
Next we consider Plaintiff’s allegations of unfair conduct. Claims alleging unfair
conduct under the ICFA are subject to a Rule 8(a) notice pleading standard. Windy City Metal,
536 F.3d at 670 (“Because neither fraud nor mistake is an element of unfair conduct under [the
10
ICFA], a cause of action for unfair practices under the [ICFA] need only meet the notice
pleading standard of Rule 8(a), not the particularity requirement in Rule 9(b).”).
For conduct to be considered unfair, we consider three factors: (1) whether the practice
offends public policy; (2) whether it is immoral, unethical, oppressive, or unscrupulous; and
(3) whether it causes substantial injury to consumers. Robinson, 201 Ill. 2d at 417–18,
775 N.E.2d at 961. The Seventh Circuit has held that a Plaintiff need not use the exact language
in his complaint to describe the three factors listed above. See Windy City Metal Fabricators,
536 F.3d at 672 (holding that plaintiff adequately stated a claim for relief when complaint
alleged conduct that could support the statutory definition of unfairness even if the complaint did
not specifically use the words “immoral, unethical, oppressive, or unscrupulous”). Plaintiff does
not use the word “unethical,” but does allege that Defendant’s representatives promised over the
telephone that he would receive a loan modification, yet ultimately denied him the request,
(Am. Compl. ¶ 71), allegations that, if taken as true, could be considered immoral and unethical.
For the reasons stated above, we deny Defendant’s motion to dismiss Count V.
B. Count VI - Breach of the Implied Covenant of Good Faith and Fair Dealing
Plaintiff alleges that Defendant breached the implied covenant of good faith and fair
dealing by “requiring [the Plaintiff] to extend to meet unreasonable expectations, go through
obstacles, and falsely promise that he would get a modification after fulfilling all tasks it
demanded of him.” (Am. Compl. ¶ 78.)
Under Illinois law, the covenant of good faith and fair dealing is not an independent
cause of action. Wilson v. Career Educ. Corp., 729 F.3d 665, 687 (7th Cir. 2013); Brooklyn
Bagel Boys, Inc. v. Earthgrains Refrigerated Dough Prods., Inc., 212 F.3d 373, 381
(7th Cir. 2000). Instead, the covenant only guides the construction of explicit terms in an
11
agreement. Id. Plaintiff has not alleged that he entered into an explicit agreement with
Defendant or that a contract between the parties exists. Therefore, Count VII is dismissed.
C. Count VII - Promissory Estoppel
Plaintiff also brings a state law promissory estoppel claim. Promissory estoppel is an
alternative means of obtaining contractual relief under Illinois law. Wigod, 673 F.3d at 566. To
establish the elements of a promissory estoppel claim, the plaintiff must prove that: (1) defendant
made an unambiguous promise to plaintiff, (2) plaintiff relied on such promise, (3) plaintiff’s
reliance was expected and foreseeable by defendants, and (4) plaintiff relied on the promise to its
detriment. Id. Under Illinois law, promissory estoppel is considered an equitable device wherein
a contract may be implied where none is found to exist for a lack of consideration. Dumas v.
Infinity Broadcasting Corp., 416 F.3d 671, 766 (7th Cir. 2005). A claim for promissory estoppel
will succeed only where all the other elements of a contract exist. Id. Thus, in order to succeed
on his claim of promissory estoppel, Plaintiff must present written evidence of an “unambiguous
promise” which, but for the existence of consideration, would constitute an enforceable
contractual agreement under Illinois law. Id.
Plaintiff does not present written evidence that Defendant unambiguously promised him a
loan modification. Instead, to support his claim, Plaintiff simply alleges that Defendant
“communicated to [Plaintiff] during several telephone conversations that [he] would be able to
qualify for a loan modification under his existing contract.” (Id. ¶ 81.) This assertion is not
specific enough to sufficiently plead that Defendant made an unambiguous promise to Plaintiff.
Therefore, we grant Defendant’s motion to dismiss Count VII.
12
CONCLUSION
For the aforementioned reasons, we deny Defendant’s motion to dismiss Counts II and V
and grant Defendant’s motion to dismiss Counts I, III, IV, VI and VII. It is so ordered.
______________________________
Marvin E. Aspen
United States District Judge
Dated: November 10, 2015
Chicago, Illinois
13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?