Lowry et al v. Wells Fargo Bank, N.A.

Filing 26

MEMORANDUM Opinion and Order Signed by the Honorable Rebecca R. Pallmeyer on 9/2/2016. Mailed notice. (etv, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BURTON LOWRY and KATHIE LOWRY,
Plaintiffs,
v.
WELLS FARGO BANK, N.A.,
Defendant.

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No. 15 C 4433
Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER
Plaintiffs Burton and Kathie Lowry purchased a home in Antioch, Illinois in July 2004,
financing the purchase with a mortgage loan from Defendant Wells Fargo Bank. Burton Lowry
lost his job in April 2009, making it difficult for Plaintiffs to maintain their monthly mortgage
payments. The Lowrys made multiple calls to the Bank to avoid foreclosure by way of a loan
modification or “short sale,” but Wells Fargo never gave them a definitive response before the
Lowrys defaulted and the Bank initiated foreclosure proceedings in October 2009. The Lowrys
vacated their home shortly thereafter, a foreclosure judgment was entered in June 2010, and
the property sold at a sheriff’s sale two months later. That sale was never confirmed, however,
and the Bank vacated the foreclosure judgment without explanation in March 2012. That same
month, with the Bank’s approval, the Lowrys moved back into their home, where they live to this
day.
With the foreclosure vacated, the Lowrys made another attempt to save their home in
the summer of 2013. They agreed to resume their mortgage payments—on a trial basis—for
the first time since 2009.

The Bank assured them that the trial period would lead to a

permanent modification with a reduced loan balance. At the close of the trial period, however,
the Bank notified Plaintiffs that their loan balance had increased. They declined the Bank’s
modification offer in October 2013. In the meantime, during the trial payment period, the Lowrys
also filed a counterclaim in the Bank’s state-court foreclosure action, which was reopened after

the Bank vacated the default judgment in March 2012. The Lowrys raised a claim under the
Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 515/1 et seq. (“ICFA”).
Plaintiffs later dismissed the counterclaim and re-filed it, along with two additional state-law
claims for fraudulent misrepresentation and fraudulent concealment, as an independent case in
this court in May 2015. 1 Defendant moved to dismiss, arguing that Plaintiffs’ complaint failed to
meet the heightened pleading standard for fraud-based claims under Federal Rule of Civil
Procedure 9(b) and that they have also failed to plead an ICFA claim.

For the reasons

explained below, Defendant’s motion [14] is granted in part and denied in part.
BACKGROUND
The complaint alleges the following facts, presumed to be true for purposes of this
motion. The Lowrys bought their house (the “Property”) in Antioch, Illinois in 2004 and made
regular mortgage payments to Wells Fargo until 2009. (Compl. [1] ¶ 34.) That April, Burton, an
electrical engineer by trade, lost his job. (Id. ¶ 36.) The Lowrys quickly sought to cut their
losses, and listed their home for sale on April 15, 2009. (Id. ¶ 37.) By June they had lowered
their asking price from $199,000 to $179,000, but still found no buyer. (Id.) In the meantime,
the family covered their mortgage payments in May, June, and July 2009 by dipping into
savings.

(Id. ¶ 39.)

They also temporarily relocated to Utah, where they have family

connections and where Burton hoped to find temporary employment. (Id. ¶ 38.)
While in Utah, the Lowrys reached out to Wells Fargo to discuss mitigation options.
First, Burton called the Bank to cancel automatic debit payments on June 17, 2009. (Id. ¶ 40.)
During that call, he also asked whether Defendant would accept a short sale on the Property. In
response, the Bank’s representative asked that Plaintiffs fax a listing agreement and a letter

1

The court has jurisdiction over these state-law claims because the parties are
diverse. The Lowrys alleges that the amount in controversy “exceeds $75,000.” (Compl. ¶ 3.)
They are citizens of Illinois, and Wells Fargo is a citizen of South Dakota. (Id. ¶ 2.) The Bank
has not challenged the court’s subject-matter jurisdiction.

2

authorizing an agent to assist with a potential short sale, which the Lowrys did. 2 (Id.) The
Lowrys’ second contact with the Bank was a call on July 3, 2009, from Kathie Lowry, requesting
a loan modification. (Id. ¶ 42.) Apparently in response to the Lowrys’ calls, Wells Fargo sent
Plaintiffs a letter—received on July 28, 2009—requesting the family’s financial information in
order to “determine the best option available to keep the home.” (Id. ¶ 61.) The letter also
instructed the Lowrys to call 1-800-416-1472. (Id.) The complaint does not say whether the
Lowrys submitted the requested information or called that number.
On August 17, 2009, Burton again called the Bank.

He spoke to someone in the

liquidation department—the department responsible for short sales—who gave him a list of
documents required before the Bank could authorize a short sale. (Id. ¶ 46.) Plaintiffs faxed
those materials to Wells Fargo the same day, including a “Borrower Financial Information
Form,” listing the Lowrys’ household income, expenses, and hardships. (Id. ¶ 47.) The Lowrys
faxed the Bank a $160,000 short-sale 3 offer from a prospective buyer the next day, August 18,
2009, along with some of the documents necessary for that offer’s approval. (Id. ¶ 49.) They
faxed the remaining documents on August 19. On August 20, the Lowrys faxed to the Bank
documentation for a second short-sale offer of $137,500 (Id. ¶ 51), and then followed up on
September 2, 2009 to alert the Bank that the prospective buyer had increased the offer to
$140,000. (Id. ¶ 56.) Burton called Defendant on August 20 to discuss the short-sale offers and
spoke with “Brandon” in the liquidation department. Brandon informed Burton that the Lowrys
were “set up” for a short sale and would be assigned a “negotiator” no later than August 24. (Id.
¶ 52.) The Lowrys received another letter from the Bank on August 21, 2009, stating that the
Bank had received their “request for assistance” and that the Bank would give them a final

2

The complaint does not say when the Lowrys faxed these materials.

3

The complaint does not say what the mortgage balance was at this point, but
Lowrys owed $158,000 in January 2012. (Compl. ¶ 83(c).)

3

decision in 45-60 days. (Id. ¶ 53.) It is not clear whether this letter was referring to Plaintiffs’
short-sale offers or their request for a loan modification.
The parties next interacted on August 24, 2009. On that day, Burton called the Bank,
and “Sandy” in the liquidation department informed him that the Bank had assigned Edward
Nornes to be the Lowrys’ negotiator.

Sandy asked Burton to provide Nornes with several

documents, including proof of Plaintiffs’ income, which they had already faxed to the Bank one
week earlier. (Id. ¶ 54.) According to Sandy, Nornes had ordered an appraisal of the property
and would be in touch with the Lowrys within two or three weeks after receiving the appraisal.
(Id. ¶ 55.) Sandy predicted that the process would be complete in approximately thirty days.
(Id.)
Plaintiffs never heard from Nornes. Nor did the Bank ever respond to either short-sale
offer. (Id. ¶ 57.) The Lowrys did, however, receive another letter from the Bank on or around
September 1, 2009, telling them to call 1-877-255-6505. The writer of this letter is not identified
in the complaint, but the letter promised that, if the Lowrys provided the loan number and their
income information and made an initial payment calculated based on their circumstances, they
would “Get an immediate decision and your new affordable mortgage payment.” (Id. ¶ 62.) The
Lowrys did not call the number because they were waiting to hear from the Bank regarding their
short-sale offers, and because they had already provided the requested information weeks
earlier. (Id. ¶ 63.) Plaintiffs never received an answer regarding either their request for a loan
modification or their short-sale offers. (Id. ¶ 64.)
On September 21, 2009, the Lowrys met with a bankruptcy attorney in Utah. (Id. ¶ 58.)
They filed Chapter 7 bankruptcy on October 1, 2009, and received a discharge on January 12,
2010. (Id. ¶ 59.) In the interim, Defendant started the foreclosure process against Plaintiffs. In
a letter dated October 5, 2009, the Bank advised that the Lowrys’ “loan file had been referred to
our attorney with instructions to initiate foreclosure proceedings.” (Id. ¶ 65.) By December 21,
2009, the Lowrys, who were still in Utah, “had given up hope of saving their house.” (Id. ¶ 68.)

4

They called the Bank that day to inform Defendant that the property was vacant and the utilities
had been shut off. (Id. ¶ 67.)
The Bank filed a state foreclosure action in Waukegan, Illinois, on February 8, 2010,
alleging that the Lowrys owed $187,721.60 on their loan. (Id. ¶ 71.) The Bank’s attorneys
signed the court documents using “facsimile signatures” (i.e., “the attorney did not personally
sign the document with ink pen.”). (Id. ¶ 72.) The Bank’s attorneys also drafted affidavits
“utilizing assembly-line methods, and lacking personal knowledge of the Lowrys account.” (Id.
¶ 73.) For instance, Plaintiffs point to the affidavit of Anne Neely, the Bank’s Vice President of
Loan Documentation. (Id.) Neely’s affidavit includes a separate signature page for the notary,
“a practice that has since been banned by Illinois Supreme Court Rule 113 4 as indicative of
notorial/jurat fraud.” (Id. ¶ 74.) The Nineteenth Judicial Circuit Court in Waukegan, Illinois
issued a default judgment in the foreclosure action in June 2010, and the property sold at a
sheriff’s sale in September of that year. (Id. ¶ 75.) The complaint does not identify the buyer.
Wells Fargo never moved to “confirm” the sale, however, and as a result the Lowrys continued

4

Rule 113, adopted in February 2013, forbids the use of a separate notary
signature page. The committee notes to Rule 113 explain that
Paragraph (c) addresses some of the many issues that arise from document
handling procedures by lenders and servicers. Illinois courts, along with courts
nationwide, have faced issues relating to “robo-signing” practices at major
lenders, where affidavits were not properly notarized or where the affiant did not
actually review any of the pertinent loan records. In addition to questionable
document handling procedures, circuit courts have dealt with prove-up affidavits
that come in varied forms, many of which do not properly address the
foundational requirements necessary for establishing the accuracy of
computerized business records nor the correct amount due and owing under the
mortgage and note. Paragraph (c)(2) identifies the minimum requirements
necessary for a prove-up affidavit submitted by the mortgagee for entry of a
judgment of foreclosure and Form 1 gives a form affidavit that should be used.
No judgment of foreclosure will be entered without compliance with Paragraph
(c). . . .
Ill. Sup. Ct. R. 113(c), Committee Note.

5

to receive “notices of proceedings,” such as a “Notice of Hearing” that reached them in October
2010. (Id. ¶ 76.)
Notices continued to arrive in the following months.

Confused, Plaintiffs called the

Bank’s foreclosure counsel, Pierce and Associates (“Pierce”), on April 4, 2011. (Id. ¶ 77.)
Someone at the law firm told the Lowrys that the property had “gone to sell” and that the firm
was “waiting for an affidavit from Wells Fargo.” (Id.) Later that month, the Lowrys moved back
to northern Illinois, where Burton had found a new job. They rented a home for $1200 per
month. (Id. ¶ 80.) They continued to receive mailings regarding the Property throughout the
remainder of 2011, including letters from the Bank regarding taxes and escrow as well as letters
from the Pierce law firm, concerning more “court continuances.” (Id. ¶ 81.) The Lowrys were
perplexed by these communications, which “made it appear as if they still owned the house,
which they had been told was ‘sold.’” (Id. ¶ 82.) Matters came to a head when, on January 4,
2012, the Lowrys received a notice from the Bank, asking whether the Property was vacant. (Id.
¶ 83.) Not only had Plaintiffs vacated the Property more than two years earlier, but they had
advised the Bank at the time and had never suggested they had returned. (Id. ¶ 67.) The
Lowrys responded by placing several calls to both Defendant and Pierce on January 20, 2012,
seeking to clarify who owned the Property.

But Bank representatives gave contradictory

answers. On the one hand, a woman at Wells Fargo named “Maria” told the Lowrys that she
“did not think they could rescind the sale” and a law firm employee, “Page,” stated that the
Property “went to sale in September 2010,” and that although “no final approval was being
given, . . . Wells Fargo owns it now.” (Id. ¶ 83(b), (f).) On the other hand, “Charlene” at Wells
Fargo told them that the Property was “still in [the Lowrys’] name.” (Id. ¶ 83(h).) The Lowrys’
final call of the day was to lawyer Nick Blaul at Pierce, who told Plaintiffs that “it is up to Wells
Fargo to possibly see if they [the Lowrys] have any options.” (Id. ¶ 83(m).) Blaul nevertheless
promised that he would email a “payoff letter” to Burton, but he never did. (Id.)

6

Three days later, on January 23, 2012, the Lowrys received another notice from the
Circuit Court, this one notifying Plaintiffs that a “case management conference” had been
continued from December 2011 to December 2012. (Id. ¶ 84.) 5 Following up on this notice,
Plaintiffs called Defendant’s foreclosure counsel again on February 27, 2012. During this call,
Burton asked whether the family could “just move back in,” and was told that the Lowrys “had
every right to do that.” (Id. ¶ 86.) A Pierce employee also told Burton that Plaintiffs could
remain there until thirty days after “all is finalized” with the sale. (Id.) Before returning to the
Property, Plaintiffs called Wells Fargo on February 28, 2012. Two different Bank employees
told the Lowrys that, contrary to the assurances from the Bank’s lawyers, Plaintiffs were not
permitted to return to their house in Antioch. (Id. ¶¶ 90-92.) Burton nevertheless called the
Bank again the next day and spoke with Kaylee Kinder in Loan Processing Services. Kinder
authorized the Lowry’s return to the Property and mailed them the keys to the house via
overnight mail. (Id. ¶ 93.) The Lowrys moved back in on March 5, 2012. (Id. ¶ 94.)
Within days of returning to the Property, the Lowrys received notice that Wells Fargo
was moving to vacate the foreclosure judgment.

(Id.)

When Plaintiffs called and asked

foreclosure counsel why this was happening, the Lowrys were told “they are vacating because it
has taken so long, they would have to start all over on the proceedings.” (Id. ¶ 95.) Plaintiffs
allege that the real motivation for the dismissal was regulatory activity stemming from
settlements the Bank had reached with the federal government in 2011 and 2012 related to
Wells Fargo’s foreclosure servicing activities. (Id. ¶ 133.) In any event, the state court vacated
the judgment on September 20, 2012. (Id. ¶ 95.)
In the months that followed, the Lowrys and Wells Fargo renewed their loan-modification
discussions while the Lowrys lived in their home without paying rent or mortgage payments.
The Bank sent the Lowrys two “virtually identical” letters, one dated October 20, 2012, the other

5

The reason for such a lengthy delay is not explained.

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dated November 20, 2012, both asking Plaintiffs if they were “[f]inding it difficult to keep up with
[their] mortgage payments?” The October letter instructed the Lowrys to “respond by November
19, 2012,” and the Lowrys complied, calling Wells Fargo on that date to ask for loanmodification assistance. (Id. ¶¶ 99-100.) The Lowrys faxed the Bank 18 pages of “Mortgage
Payment Assistance Documentation” and a “Homeowner Assistance Form,” which contained
information related to their income, expense, and hardship on January 9, 2013. (Id. ¶ 102.)
They later received two additional letters, both dated January 9, 2013.

One

acknowledged receipt of the documents the Lowrys had faxed that day, and represented that
the Bank would review the materials to determine whether a loan modification was appropriate.
The second letter asked the Lowrys to “call [Defendant] immediately” to provide information that
was already included in the Lowrys’ January 9, 2013 fax. (Id. ¶¶ 103-104.) Plaintiffs allege that
these inconsistent letters were computer-generated and neither drafted nor reviewed by a
human being. (Id. ¶ 106.)
Nine days later, the Bank sent another letter, providing the Lowrys with a “single point of
contact” for avoiding foreclosure: Brittainni Hill. (Id. ¶ 108.) The Lowrys called Hill on January
23, 2013. (Id. ¶ 109.) Hill asked for additional documents during the call. That same day,
Wells Fargo sent four different letters to Plaintiffs. Two of the letters stated that Plaintiffs “may
be experiencing financial problems that could result in . . . foreclosure,” and listed five
alternatives: a repayment plan, loan modification, a partial claim, a short sale, and a “deed-inlieu.” (Id. ¶¶ 110, 112.) A third letter thanked the Lowrys for sending unidentified documents to
the Bank and promised them that the Bank would follow up with more information. This letter
also included a reminder that “it’s important for you to be making your regular mortgage
payments until you hear from us.” (Id. ¶ 111.) Finally, Wells Fargo sent a fourth letter under the
subject line “Additional documentation needed for your request for mortgage assistance.” (Id. ¶
115.) This letter stated that the Homeowner Assistance Form the Lowrys had submitted just
two weeks prior was no longer used by Defendant.

8

As a result, Plaintiffs would have to

resubmit the information on the new Uniform Borrower Assistance Form. (Id.) According to
Plaintiffs, the new form allowed for “further automation and lack of meaningful human
involvement.” (Id. ¶ 117.) The four letters mailed to the Lowrys on January 23 were followed by
yet another letter, this one dated January 24, 2013. It was from Hill, who wrote to “formally
introduce” herself. The letter made no mention of the phone conversation between Hill and the
Lowrys just one day earlier, nor did it refer to any of the letters sent the previous day. (Id.
¶ 118.) The Lowrys again sent their information to the Bank on February 21, 2013, this time on
the Uniform Borrower Assistance Form. (Id. ¶ 120.)
Four days later, on February 25, 2013, the Bank sent a request for additional
information, and the Lowrys submitted those materials on March 27, 2013. (Id. ¶ 121.) The
Bank acknowledged receipt in a letter written the next day. (Id. ¶ 122.) On May 14, 2013, Hill
wrote to inform Plaintiffs that she was “not able to help [them] find a mortgage assistance
solution.” She went on to say that the “normal collection” process would therefore resume. (Id.
¶ 124.) Bizarrely, the Bank sent Plaintiffs another letter that day, this one also signed by Hill,
listing alternatives to foreclosure.

And the next day, on May 15, 2013, the Bank sent yet

another letter, thanking the Lowrys for sending unspecified documentation and reiterating the
document request the Bank had initially mailed on January 9, 2013.

(Id. ¶ 126.)

Burton

attempted to follow up with Hill via phone on June 13 and June 17, 2014. (Id. ¶ 131.) He left
voicemails, but never received a return call.
The Plaintiffs’ next move was to ask the state court in Waukegan for additional time to
respond to the Bank’s complaint on June 20, 2013. (Id. ¶ 134.) (It is unclear from the complaint
what, if anything, had transpired in state court since the foreclosure judgment was vacated in
September 2012 or when the complaint at issue had been filed.) Through counsel, the Lowrys
filed an answer and a counterclaim under the ICFA on September 4, 2013. (Id. ¶ 136.) They
later voluntarily dismissed the counterclaim and refiled it as part of the complaint in this case.
(Id. ¶¶ 137-38.)

9

In the interim, the parties made yet another attempt at resolving Plaintiffs’ debt. On an
unspecified date after June 20, 2013, the Bank asked the Lowrys to reapply for a loan
modification. (Id. ¶ 139.) On May 29, 2014, the Bank offered the Lowrys a Trial Period Plan
(“TPP”), which would require Plaintiffs to make three trial payments before receiving a
permanent modification of their mortgage. (Id. ¶¶ 141, 143.) The Bank assured the Lowrys that
any modification would include a reduction in their indebtedness such that they would owe
“about the same” amount as when they defaulted (i.e., $187,721.60). (Id. ¶¶ 71, 140, 144.)
Plaintiffs made three payments pursuant to the TPP on July 1, August 1, and September 1,
2014. (Id. ¶ 142.) To their dismay, the permanent modification proposed by the Bank on
October 16, 2014 was “far greater than the Lowrys’ indebtedness at the time of their default and
included all interest accrued.”

(Id. ¶ 145.)

Plaintiffs declined the proposed modification.

Contrary to the Bank’s alleged verbal assurances, the TPP Notice—the document the Lowrys
signed in order to participate in the TPP—does disclose that “[a]ny difference between the
amount of the trial period payments and your regular mortgage payments will be added to the
balance of your loan along with any other past due amounts as permitted by your loan
documents.” (Id. ¶ 152.) That information appears only in the FAQ section of the document,
several pages behind the signature page, but page one of the Notice refers to the FAQ section
as one of three attached documents. (Id. ¶ 151.)
Plaintiffs filed this action in May 2015.
contains three counts:

Their 57-page, 329-paragraph complaint [1]

a claim under the ICFA, a common-law claim for fraudulent

misrepresentation, and another common-law claim for fraudulent concealment. The commonlaw claims are based on statements the Bank made to Plaintiffs regarding their ownership of the
property and their foreclosure alternatives.

10

DISCUSSION
Defendant moves to dismiss [14], arguing that “Plaintiffs fail to meet Rule 9(b)’s
heightened pleading standard, dooming both fraud-based counts, and fail to allege an ICFA
violation or any actual damages as required by the statute.” (Def.’s Mem. [15] at 2.)
1.

Legal standard
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not

its merits. To survive a Rule 12(b)(6) motion, a complaint must overcome “two easy-to-clear
hurdles”: (1) “the complaint must describe the claim in sufficient detail to give the defendant fair
notice of what the claim is and the grounds on which it rests”; and (2) “its allegations must
plausibly suggest that the plaintiff has the right to relief, raising that possibility above a
speculative level.” Tamayo v. Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008) (internal
quotation marks omitted). For purposes of a motion to dismiss, the court takes all facts alleged
by the plaintiff as true and draws all reasonable inferences from those facts in the plaintiff’s
favor. Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011).
2.

ICFA
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., 201 Ill. 2d 403, 416, 775 N.E.2d 951, 960 (Ill.
2002)). An ICFA claim may be premised on either deceptive or unfair practices. See Robinson,
201 Ill. 2d 416, 775 N.E.2d at 960. In either case, the Lowrys must allege that “(1) a deceptive
act or unfair practice occurred, (2) the defendant intended for plaintiff to rely on the deception,
(3) the deception occurred in the course of conduct involving trade or commerce, (4) the plaintiff
sustained actual damages, and (5) such damages were proximately caused by the defendant’s
deception.” Dubey v. Pub. Storage, Inc., 395 Ill. App. 3d 342, 353, 918 N.E.2d 265, 277 (1st
Dist. 2009) (citing White v. DaimlerChrysler Corp., 368 Ill. App. 3d 278, 283, 856 N.E.2d 542,

11

546-47 (1st Dist. 2006)). “The actual damage element of a private ICFA action requires that the
plaintiff suffer ‘actual pecuniary loss.’” Su Yeun Kim v. Carter's Inc., 598 F.3d 362, 365 (7th Cir.
2010) (quoting Mulligan v. QVC, Inc., 382 Ill.App.3d 620, 628, 888 N.E.2d 1190, 1197 (1st Dist.
2008)).
The Lowrys’ complaint alleges that Defendant engaged in both unfair and deceptive
practices. (Compl. ¶ 303 (“Defendant Wells Fargo, [sic] committed unfair and deceptive acts,
beginning prior to the Lowrys’ loan default, and continuing to this day.”).) The complaint follows
a peculiar format.

In addition to a 152-paragraph recitation of facts, it contains eighteen

“specifications,” each of which reiterates portions of the facts section. Finally, the complaint’s
three counts reiterate some or all of the “specifications.”

According to Plaintiffs, each

specification “constitutes a separate and distinct allegation of wrongful conduct.” (Compl. at 31
n.5.) The court therefore attempts here to analyze each specification individually.
All eighteen of the specifications are “incorporated and re-allege[d]” in the ICFA count
(id. ¶ 303), but Plaintiffs do not make any distinction between those acts they claim were
“deceptive” versus those that were simply “unfair.” As the court reads the complaint however,
six of the eighteen specifications appear to allege deceptive or fraudulent activities—
Specifications 13 through 18. 6 The first twelve specifications allege unfair treatment, which
Plaintiffs claim, “violate[d] public policy, and . . . proximately caused injury in fact to the property
of Plaintiffs . . . and damaged the health of Plaintiff Kathie Lowry.” (Compl. ¶¶ 313-15.)
Allegations of unfair acts under the ICFA are subject to Rule 8(a)'s general pleading
standard, while allegations of deceptive acts "sound[] in fraud" and are therefore subject to Rule
9(b)'s heightened pleading standard. See Pirelli Armstrong Tire Corp. Retiree Med. Benefits
Trust v. Walgreen Co., 631 F.3d 436, 446 (7th Cir. 2011). Rule 9(b) requires a party alleging

6

This interpretation is consistent with the fact that Plaintiffs cite only these six
specifications to support their fraudulent misrepresentation and fraudulent concealment claims.
(See Compl. ¶¶ 316-29.)

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fraud to “state with particularity the circumstances constituting fraud.” FED. R. CIV. P. 9(b). This
“ordinarily requires describing the ‘who, what, when, where, and how’ of the fraud, although the
exact level of particularity that is required will necessarily differ based on the facts of the case.”
AnchorBank, FSB v. Hofer, 649 F.3d 610, 615 (7th Cir. 2011) (citation omitted).
A.

Unfair Practice

The court turns first to Plaintiffs’ claims of unfairness. To determine whether a practice
is unfair, Illinois courts consider three factors: “(1) whether the practice offends public policy; (2)
whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial
injury to consumers.” Robinson, 201 Ill. 2d at 417-18, 775 N.E.2d at 961 (citing FTC v. Sperry &
Hutchinson Co., 405 U.S. 233, 244 n.5 (1972)). A practice may be unfair “because of the
degree to which it meets one of the criteria or because to a lesser extent it meets all three.” Id.
A practice offends public policy if it violates a standard of conduct contained in an existing
statute or common law doctrine that typically applies to such a situation. Elder v. Coronet Ins.
Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312, 1316, (1st Dist. 1990); 3525 N. Reta, Inc. v. FDIC,
No. 10 C 3087, 2011 WL 62128, at *6 (N.D. Ill. Jan. 6, 2011). For instance, “a plaintiff may
predicate an ICFA unfairness claim on violations of other statutes or regulations . . . that
themselves do not allow for private enforcement.” Boyd v. U.S. Bank, N.A., 787 F. Supp. 2d
747, 753 (N.D. Ill. 2011).
i.

Specifications 1, 4, 5, 6, and 11: Loan Modification Review

In Specifications 1, 4, 5, 6, and 11, Plaintiffs assert that Defendant violated the ICFA by
failing to evaluate their eligibility for a loan modification pursuant to the terms of the Home
Affordable Mortgage Program (“HAMP”). (Comp. ¶¶ 153-64, 173-85.) HAMP is “a federal
initiative that gives loan servicers incentives to accept lower payments from homeowners at risk
of foreclosure.” Calhoun v. Citimortgage, Inc., No. 14-1674, 580 F. App’x 484, 485 (7th Cir.
2014). The U.S. Department of the Treasury implemented HAMP to help homeowners avoid
foreclosure amidst the sharp decline in the nation’s housing market in 2008. Wigod v. Wells

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Fargo Bank, N.A., 673 F.3d 547, 554 (7th Cir. 2012).

Failure to honestly and effectually

implement HAMP guidelines constitutes an unfair business practice under the ICFA. Id. at 57475.
Supplemental Directive 09-01 of HAMP offers the following guidance: “All loans that
meet the HAMP eligibility criteria and are either deemed to be in imminent default 7 . . . or 60 or
more days delinquent must be evaluated using a standardized NPV 8 test that compares the
NPV result for a modification to the NPV result for no modification.” U.S. Dep’t of the Treasury,
Home Affordable Modification Program Supplemental Directive 09-01 (Apr. 6, 2009) (hereinafter
“Supplemental Directive 09-01”). This directive requires servicers to conduct NPV tests in
certain circumstances, but only after “work[ing] with the borrower to obtain the borrower’s
financial and hardship information and to determine if the HAMP is appropriate.” Id.
Defendant argues that the only failure here was that of Plaintiffs, who never followed up
on the September 1, 2009 letter from the Bank. That letter asked the Lowrys to call and provide
information in order to receive a modification. The Lowrys admit that they received a letter in
September 2009, but did not call the Bank because they “were waiting to receive a decision on
their pending short-sale offer.” (Compl. ¶ 62-63.) More importantly, at that point, the Lowrys
had already requested a loan modification and had already provided the Bank with the
information it sought. (Id. ¶ 63.) Throughout the relevant time period, the Bank repeatedly
issued redundant information requests to the Lowrys. It cannot fault Plaintiffs for failing to
provide materials that they had already supplied.

7

“A borrower that is current or less than 60 days delinquent who contacts the
servicer for a modification, appears potentially eligible for modification, and claims a hardship
must be screened for imminent default. The servicer must make a determination as to whether
a payment default is imminent based on the servicer’s standards for imminent default and
consistent with applicable contractual agreements and accounting standards.” Supplemental
Directive 09-01 at 3-4.
8

Net present value (“NPV”) is “[t]he present value of net cash flow from a project,
discounted by the cost of capital.” Black’s Law Dictionary (10th ed. 2014).

14

The Bank also argues that Plaintiffs’ ICFA claim fails because it “allege[s] no plausible
damages.” (Def.’s Mem. at 6.) But, as Plaintiff points out, the Bank’s position is inconsistent
with Seventh Circuit caselaw. In Wigod, the district court dismissed an ICFA claim for, among
other things, the failure to allege “actual damages.” The Court of Appeals reversed, holding that
allegations that the defendant bank’s practices prevented Plaintiff from saving her home, “or at
least cut[ting] her losses” were sufficient to survive a motion to dismiss. Wigod, 674 F.3d at 575
(citing Boyd, 787 F. Supp. 2d at 754 (allegations of “damage to [homeowner’s] credit” and “the
inability ‘to fairly negotiate a plan to stay in [his] home’” sufficient to support damages under the
ICFA)). Here, Plaintiffs have alleged that Defendant’s failure to assess their eligibility for loan
modification in 2009 prevented the Lowrys from “avoiding foreclosure” and saving their home.
(Compl. ¶ 182.) That is enough to state a claim for damages under the ICFA. See Wigod, 674
F.3d at 575.
The Bank raises two additional arguments related to this issue for the first time in its
reply brief: (1) Plaintiffs’ ICFA claim cannot rely on the Bank’s alleged HAMP violations in July
2009 and thereafter because the Lowrys were ineligible for HAMP relief after leaving their home
“vacant” in May 2009; and (2) the Bank’s alleged failure to consider Plaintiffs for a loan
modification could not have caused them to lose their home because by then they “admit they
were not interested in ‘saving their house.’” (Reply at 5.)
Even if these arguments were not waived by Defendant’s failure to timely raise them,
see Amerson v. Farrey, 492 F.3d 848, 852 (7th Cir. 2007) (“Arguments raised for the first time in
a reply brief are waived.”), neither holds water. Regarding the Lowrys’ HAMP eligibility, the
Bank is correct that borrowers are eligible for HAMP relief only if their house is not “vacant.”
See Supplemental Directive 09-01. But the Bank gets the timing here wrong. The Lowrys
“temporarily relocated to Utah” in May 2009 (Compl. ¶ 38), but a temporary departure does not
render the Property “vacant.” See Myers v. Merrimack Mut. Fire Ins. Co., 788 F.2d 468, 471
(7th Cir. 1986) (“‘[V]acant’ means entirely empty (i.e., lack of animate or inanimate objects)”).

15

The Property was not vacant until December 21, 2009, when Plaintiffs “g[ave] up on saving their
house.” (Compl. ¶¶ 67, 68.) The Bank’s assertion that the Lowrys had no interest in keeping
their house at the time they sought loan modification is therefore misleading, as the modification
attempts (underlying Specifications 1, 4, 5, 6, and 11) all occurred before December 2009. The
fact that Plaintiffs had “given up hope” of holding onto their home in December 2009 in no way
supports Defendant’s contention. To the contrary, the complaint fairly reveals that Plaintiffs
were actively seeking foreclosure alternatives through the fall of 2009.
ii.

Specifications 2, 3, and 7: Other Foreclosure Alternatives

Specifications 2, 3, and 7 claim that Defendant acted unfairly by failing to either process
Plaintiffs’ short-sale offers or tender a deed-in-lieu of foreclosure. In its motion to dismiss,
Defendant argues that it was under no obligation to do either of these things. (Mem. at 8-10.)
This is particularly true, the Bank contends, because the Lowrys cut these processes short
when they filed for bankruptcy just 37 days after Defendant informed them that the short-sale
review process would take approximately 30 days. (Id. at 8.) In response, Plaintiffs point to
Supplemental Directive 09-01, which explains:
If the NPV result for no modification is greater than [the] NPV result for the
modification scenario, the modification result is deemed “negative” and the
servicer has the option of performing the modification in its discretion. . . . If a
modification is not pursued when the NPV result is ‘negative,’ the servicer must
consider the borrower for other foreclosure prevention options, including
alternative modification programs, deeds-in-lieu, and preforeclosure sale
programs.
Supplemental Directive 09-01 at 4.
Plaintiffs are correct that this language requires lenders to consider modification
alternatives—but the provision makes clear that the requirement is imposed only “[i]f a
modification is not pursued when the NPV test is ‘negative.’” As noted, the complaint alleges
that Defendant never performed the NPV test or otherwise screened Plaintiffs’ eligibility for
HAMP. Importantly, Plaintiffs do not allege that, had the Bank performed the NPV test, the
result would have been negative. Based on the allegations in the complaint, the Bank had no

16

obligation to consider the Lowrys for other foreclosure prevention options. Specifications 2, 3,
and 7 do not state ICFA claims.
iii.

Specification 9: Failure to Issue Payoff Letter

In Specification 9, Plaintiffs allege that Defendant failed to send a “Payoff Letter” in
violation of 735 ILCS 5/15-1505.5, which requires lenders to provide payoff statements to
borrowers in foreclosure who request such a letter in writing. The Lowrys admit that they did not
submit a written request, but they argue that “Wells waived that [requirement] when its attorneys
promised to send the Lowrys a payoff statement.” (Pls.’ Resp. at 11 (citing Compl. ¶ 84(m)).)
But even assuming that the Bank violated 735 ILCS 5/15-1505.5, Specification 9 cannot sustain
an ICFA claim, as Plaintiffs have not alleged that the violation caused them any harm.
iv.

Specification 12: “Ersatz Single Point of Contact”

Specification 12 suffers from the same defect as Specification 9. In it, Plaintiffs complain
that Hill, Defendant’s supposed “single point of contact” with Plaintiffs, played “virtually no dayto-day role” in the Lowrys’ dealings with the Bank. Hill’s alleged failure to follow up may have
been sloppy, but Plaintiffs do not allege that her actions (or lack thereof) caused them actual
pecuniary harm. Furthermore, it is unclear how Hill’s actions could have caused pecuniary
harm, given that she first became involved in January 2013. At that point, the Lowrys had
already declared bankruptcy and Hill apparently played no role in Plaintiffs’ TPP.

Thus,

although communications from Hill were at times contradictory and confusing, an ICFA claim
cannot be predicated on her failings as alleged in the complaint.
v.

Specification 10: Consent Decree and National Mortgage Settlement

Specification 10 alleges that Defendant violated the ICFA by failing to live up to the
terms of settlements reached in two other matters involving the Bank: an April 2011 consent
decree stemming from a federal interagency review conducted by the Office of the Comptroller

17

of the Currency 9, and a March 2012 settlement agreement from a suit filed by the Department of
Justice and 49 attorneys general against the Bank and other mortgage providers. The latter is
widely referred to as the “National Mortgage Settlement.”
Defendant argues that Plaintiffs, who were not parties to these agreements, “lack
standing to enforce them.” (Mem. at 10.) Although that is true, see Rehbein v. CitiMortgage,
Inc., 937 F. Supp. 2d 753, 762 (E.D. Va. 2013), Defendant’s argument misses the mark.
Plaintiffs do not seek to “enforce” the settlements. Instead, they point to Defendant’s alleged
violation of the terms of those settlements as evidence of the Bank’s unfairness as defined by
the ICFA. Defendant also points out that it “did not admit any misconduct in either settlement.”
(Reply at 13.) But this argument is also a canard. Plaintiffs’ invocation of the settlements has
nothing to do with the wrongdoing alleged in those cases. What Plaintiffs do claim is (1) that
Defendant’s actions in this case run afoul of the terms of the settlements; and (2) that those
actions are therefore “unfair” under the ICFA. Although the court is unable to find an ICFA case
predicated on these high-profile settlements, the court is nonetheless satisfied that mortgage
practices in contravention of their terms “offend public policy” and are “unscrupulous.” They are
therefore unfair practices within the scope of the ICFA. In fact, the Executive Summary of the
National Mortgage Settlement describes the mortgage practices that it proscribes in exactly
those terms.
Misconduct

See Executive Summary of Multistate/Federal Settlement of Foreclosure
Claims,

available

at

http://www.nationalmortgagesettlement.com/additional-

information, last visited September 2, 2016 (describing the banks’ foreclosure practices that
precipitated the settlement as “misconduct” and “unfair”). The Bank’s communications were
contradictory and nonresponsive and run afoul of HAMP guidance. Specification 10 states an
ICFA claim.

9

Consent Order, available at https://www.occ.gov/news-issuances/news-releases/
2011/nr-occ-2011-47k.pdf, last visited September 2, 2016.

18

vi.

Specification 8: “Fraudulent 10 Processing of Foreclosure Case”

Specification 8 alleges that the Bank acted improperly in two ways: (1) the Bank “utilized
assembly-line methods and ignored jurat requirements in violation of state laws in its processing
of Plaintiffs’ foreclosure” (Compl. ¶ 197); and (2) the Bank’s “Motion to Vacate Judgment
constituted an attempt to purge tainted documents from the record and absolve itself of the
consequences of filing false and misleading documents.” (Compl. ¶ 200.) The documents in
question were “tainted,” Plaintiffs allege, because they were “robosigned” or “contain[ed]
facsimile (not signed in ink) signatures” and the signatories lacked any personal knowledge of
the information contained in the documents they “signed.” (Id.)
The Bank urges that, even if these actions constituted an unfair practice, Specification 8
falls short of raising an ICFA claim because it fails to allege any damages that resulted. (Def.’s
Mem. at 9.) “To the contrary,” the Bank argues, “the free use of a $185,000 house is the
opposite of actual damages.” (Id. (internal citation omitted).) Further, the Bank urges, “Plaintiffs
abandoned the property months before Wells Fargo instituted foreclosure proceedings and can
allege no damages as a result.” (Id.)
As explained earlier, the Bank’s repeated assertion that the Lowrys “abandoned the
property months before Wells Fargo instituted foreclosure proceedings” is inaccurate.

The

Lowrys allege that they vacated the Property in December 2009. (Compl. ¶ 67.) Foreclosure
proceedings commenced two months before that. (Id. ¶ 65.) Furthermore, the Bank ignores the
damages explicitly alleged in Specification 8: “Plaintiffs were damaged by the assembly-line
methodology, because the employment of these extra-judicial methods diminished Plaintiffs’
opportunity to obtain mortgage relief . . . .” (Compl. ¶ 201.) The Lowrys claim that the Bank

10

Although Specification 8 is captioned as the “fraudulent” processing of Plaintiffs’
foreclosure, the court reads the allegations therein as describing “unfair” rather than “deceptive”
practices for purposes of the ICFA.

19

employed these methods because it “preferred . . . foreclosure . . . for its own pecuniary gain.”
(Id. ¶ 195.)
Plaintiffs’ Specification 8 pleads unfair acts in violation of, among other things, state law,
see Ill. Sup. Ct. R. 113(c), and the terms laid out in the National Mortgage Settlement, Ex. A. to
National Mortgage Settlement ¶ I(A)(1).

Furthermore, the Lowrys have adequately alleged

damages stemming from these acts, namely that the Bank’s violations interfered with the
Lowrys’ efforts to avoid foreclosure.
Not all of Specification 8 is adequately pleaded, however.

The portion of this

specification that depends on the Bank’s actions in vacating the foreclosure order in 2012 (i.e.,
Compl. ¶ 200) fails to state a claim. The purported damages in this specification resulted from
the Bank’s so-called “assembly-line methodology,” not the Bank’s efforts to cover up their
alleged misdeeds. The complaint does not allege any damages that plausibly resulted from the
reopening of the foreclosure case.
B.

Deceptive Practice

The court now moves to the complaint’s fraud-based claims. To show a deceptive
practice under the ICFA, Plaintiffs 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). “[P]roof of intent to deceive” is not required; rather, a plaintiff
needs only to allege “that the defendant committed a deceptive . . . act and intended that the
plaintiff rely on that act.” Wigod, 673 F.3d at 575. The ICFA defines deceptive practices as
those that involve “the use or employment of any deception, fraud, false pretense, false
promise, misrepresentation or the concealment, suppression or omission of any material fact,
with intent that others rely upon the concealment, suppression or omission of such material fact
. . . in the conduct of any trade or commerce . . . .” 815 ILCS 505/2.

20

Specifications 13 through 18 involve deceptive acts. These allegations “sound[] in fraud”
and are therefore subject to Rule 9(b)’s heightened pleading standard. See Pirelli Armstrong
Tire Corp. Retiree Med. Benefits Trust, 631 F.3d at 446.
i.

Specifications 13 & 16: “Defendant’s Misrepresentations Concerning
the Foreclosure and Legal Ownership of Plaintiffs’ Property” &
“Defendant’s Misrepresentations Concerning Home Ownership
Rights”

In Specification 13, Plaintiffs claim that Defendant made “multiple and repeated
misrepresentations concerning the ownership of the property.” (Compl. ¶ 239.) First, on April 3,
2011, Defendant “falsely told Plaintiffs the property had ‘gone to sell.’” (Id. ¶ 240.) On January
20, 2012, the Bank told the Lowrys that “Wells Fargo owns [the house] now.” (Id. ¶ 242.) But
on February 27, 2012, Defendant “conceded that Plaintiffs had ‘every right’ to occupy the
property.” (Id. ¶ 243.) According to Plaintiffs, these “misrepresentations . . . denied [Plaintiffs]
the use of their property . . . , while Defendant controlled and possessed the property without
benefit of a court order.” (Id. ¶ 245.) Specification 16 is based on related allegations that
Defendant told the Lowrys “that Wells Fargo owned the Lowrys’ house, that the house was sold,
that the Lowrys could not rescind the sale and that the Lowrys had no workout options,” all of
which Plaintiffs allege were false. (Id. ¶ 278.) As a result of these statements, the Lowrys
allegedly suffered three forms of damage: (1) they unnecessarily rented a home in the same
town as the one they still owned; (2) they “were damaged emotionally and through anxiety and
uncertainty”; and (3) they lost “the opportunity to resolve their foreclosure.” (Id. ¶ 285.)
The Bank argues that these allegations do not state a claim because the Bank’s
statements were accurate: “Informing Plaintiffs the house ‘sold’ following a Sheriff’s sale is not
misleading, since a Sheriff’s sale is the only sale in the foreclosure process.” (Def.’s Reply at 8
(emphasis in original).) Furthermore, “Plaintiffs neither establish [n]or even suggest a duty on
behalf of Wells Fargo’s counsel . . . to invite the Lowrys to re-inhabit the Property . . . . Wells
Fargo’s foreclosure counsel purportedly told Plaintiffs they could move back into the Property,

21

and they relied on that information to their benefit.”

(Def.’s Mem. at 11-12 (emphases in

original).)
The Bank is correct that the Property had “sold” at a sheriff’s sale. It is also true that the
Bank had no obligation to tell the Plaintiffs that they could remain in the Property, see Wigod,
673 F.3d at 572 (discussing lack of fiduciary duty in mortgagor-mortgagee relationship), and
Plaintiffs never asked about their right to inhabit the Property until a week before moving back
into it. But the Bank could have committed a deceptive act as defined by the ICFA even without
violating any fiduciary duty to the Lowrys. See 815 ILCS 505/2 (defining “deceptive acts” under
the ICFA).

More importantly, Defendant ignores two of Plaintiffs’ allegations regarding

statements made by a Bank official and a Pierce attorney, both on January 20, 2012: the first,
made by “Page” at Pierce, asserted that the Bank owned the property; the second, made by
“Maria” at Wells Fargo, suggested that the Lowrys could no longer “rescind” the sale. Both of
these statements appear to conflict with Illinois law.
First, regarding the Plaintiffs’ property rights, “Section 15-1404 of [Illinois’s] Foreclosure
Law provides that the interests of the borrower are terminated by the judicial sale, ‘provided the
sale is confirmed.’ Thus, it is the confirmation of the sale that ultimately divests the borrower of
her property rights.” Wells Fargo Bank, N.A. v. McCluskey, 376 Ill. Dec. 438, 447, 999 N.E.2d
321, 330 (Ill. 2013) (quoting 735 ILCS 5/15-1404).
however, was never confirmed.

The sale of the Property in this case,

(Compl. ¶ 75 (“Wells Fargo never moved to confirm the

Sheriff’s sale.”)) The Lowrys’ property rights therefore remained intact.
Illinois law also grants homeowners a “special right to redeem, for a period ending 30
days after the date the sale is confirmed,” so long as the purchaser at the foreclosure sale was
a mortgagee and the sale price was less than the sum of the borrower’s debts and the
mortgagee’s costs incurred in the foreclosure process. 735 ILCS 5/15-1603. If these conditions
are met, homeowners may save their property by paying the mortgagee the sum described 735
ILCS 5/15-1603. The facts alleged in the complaint suggest that both of these conditions were

22

met here: the Bank apparently purchased the Property at the sheriff’s sale (Compl. ¶ 83(b) (on
January 20, 2012, a Pierce lawyer told Plaintiffs that the house sold at a sheriff’s sale and
“Wells Fargo owns it now”), and the court can assume the purchase price was less than what
the Lowrys owed (Compl. ¶¶ 71, 258 (Plaintiffs owed $187,721.60 at the time of default on a
property they allege was “worth $138,000”—they do not state the source of this purported
value).) As the sale was never confirmed, Plaintiffs maintained a right to redeem at the time
they were told otherwise by the Bank.
Plaintiffs have alleged specific deceptive statements, who supposedly made them, and
when, where, and how those statements were made. These misrepresentations also caused
purported pecuniary damages to the Lowrys (i.e., they continued to unnecessarily rent a home
near the Property after the statements were made). These allegations are sufficient to support
an ICFA claim, even under the heightened pleading standard of Rule 9(b). The court notes,
however, that Plaintiffs’ emotional suffering, cited in Specification 16 (Compl. ¶ 285), cannot be
the basis of an ICFA claim. See Kim, 598 F.3d at 365.
ii.

Specifications 14 & 18:
“Defendant’s Misrepresentations
Concerning the non-HAMP TPP” & “Failure to Disclose the ‘Basic
Facts’ of the non-HAMP Trial Period Plan”

Specifications 14 and 18 allege that Defendant made material misrepresentations to the
Lowrys regarding their TPP and intentionally “concealed” the TPP’s terms from Plaintiffs.
(Compl. ¶¶ 246-62, 297-302.) Defendant offered Plaintiffs a TPP via a letter dated May 29,
2014 (“TPP Notice”). (Id. ¶ 141.) Prior to receiving the TPP Notice, the Lowrys were assured
by the Bank’s lawyer (who is not identified by name) that, after completing the TPP, Plaintiffs
would receive a permanent loan modification on their mortgage. The lawyer further assured the

23

Lowrys “that any such plan would include a reduction in the Lowrys’ indebtedness.” 11 (Id. ¶
140.) Based on these assurances, the Lowrys agreed to the terms of the TPP and made three
payments of $1670.40 between July and September 2014. (Id. ¶ 142.) At the conclusion of the
TPP, Plaintiffs were alarmed to learn that the proposed permanent modification, dated October
16, 2014, resulted in their owing much more “than the Lowrys’ indebtedness at the time of their
default and included all interest accrued pursuant to the Terms of the Note.” (Id. ¶ 145.) In its
foreclosure complaint, the Bank alleged that Defendant’s debt totaled $187,721.60 (id. ¶ 71),
but under the terms of the October 2014 modification, they would have owed $276,693.38 (id. ¶
258).
Plaintiffs acknowledge that the TPP Notice contained an “FAQ” section, which explained
that “all of the Lowrys’ principal would be capitalized,” and that the FAQ section was referred to
on the first page of the Notice. They nevertheless argue that the Bank “hid” this term by placing
it several pages after the signature page, rendering the disclosure deceptive and unfair. (Pls.’
Resp. at 12-13.)
Defendant argues that the Lowrys’ allegation that the Bank concealed or lied about the
key terms of the TPP “is contradicted by the TPP itself. The information appears, as Plaintiffs
allege, on page six of the eight-page document, as part of the ‘Frequently Asked Questions.’”
(Def.’s Mem. at 12.) Defendant contends that “Plaintiffs[‘] sole argument is that this information
belonged on the first three pages of the document, not on page six.”

11

(Id. (emphases in

The complaint also alleges that the Bank’s attorney “assured the Lowrys that
their indebtedness under the permanent modification would be ‘about the same’ as their
indebtedness when they defaulted on their loan.” (Compl. ¶ 144.) Defendant argues that this
allegation is “materially inconsistent” with Plaintiffs’ claim that they were told (and believed) that
their indebtedness would be reduced by the modification. (Def.’s Reply at 10 (citing Compl.
¶ 140).) But these allegations are entirely consistent with one another. The Lowrys owed
approximately $187,000 when they defaulted on their loan. They owed nearly $90,000 more
under the permanent loan modification offer from the Bank in 2014. Taken together, these
allegations indicate that the Lowrys signed the TPP Notice based on the assurance of
Defendant’s lawyer that they would owe roughly $187,000 under the modification, rather than
the $276,693.38 that the modification actually entailed.

24

original).) The Bank also urges that Specifications 14 and 18 should be dismissed regardless of
whether its actions were “deceptive,” because Plaintiffs fail to allege any “damages other than
‘anxiety and uncertainty,’ which do not satisfy the ICFA.” (Id.)
As an initial matter, Defendant’s characterization of Plaintiffs’ complaint is inaccurate.
The location of the notice is not the Lowrys’ “sole argument.” They also claim (1) that the Bank
misrepresented the TPP’s terms; and (2) that they inquired with the Bank about the mortgage
balance prior to signing the TPP, in a manner that informed Defendant “that the Lowrys were
entering the [TPP] under a mistake as to its terms.” (Compl. ¶ 299.) Defendant’s contention
that the Lowrys only purported damages were “anxiety and uncertainty” is also incorrect. To the
contrary, they allege that “Plaintiffs were damaged by making payments under an illusory
arrangement [i.e., the TPP].” (Id. ¶ 302.)
That said, Plaintiffs’ allegations in Specifications 14 and 18 do not satisfy the heightened
pleading requirements of Rule 9(b). Neither specification provides ‘the who, what, when, where,
and how” required for claims sounding in fraud.

For instance, in Specification 14, Plaintiffs

claim that “the Lowrys were assured, prior to receiving the Trial Period Plan Notice, that any
such plan would include a reduction in the Lowrys’ indebtedness.”

(Compl. ¶ 140.)

The

complaint contains two similar allegations, but none of the three indicate when these purported
assurances were made, who allegedly made them, or by what form of communication. Such
vague allegations are insufficient to satisfy Rule 9(b). Specification 18 fares no better. In it
Plaintiffs allege that “[t]he Lowrys, through counsel, inquired as to the mortgage balance when
they were about to enter the TPP.

Defendant knew that the Lowrys were entering the

transaction under a mistake as to its terms. Defendant knew that the Lowrys would reasonably
expect disclosure of the method of calculating the mortgage balance.” (Compl. ¶¶ 298-300.)
These vague assertions about the Bank’s knowledge are insufficient to state a claim for fraud.
Specifications 14 and 18 are dismissed.

25

iii.

Specification 15: “Defendant’s Misrepresentation Concerning Short
Sale”

Specification 15 alleges that, on August 24, 2009, the Bank’s employee “Sandy” told
Plaintiffs that a “negotiator” named Edward Nornes would contact them within thirty days
regarding an appraisal for a potential short sale. (Id. ¶ 264.) Plaintiffs never heard from Nornes
or anyone else at the Bank regarding their short-sale proposals. (Id. ¶ 268.) The Lowrys allege
that Sandy knew her comments were false and that she made them in order to induce the
Lowrys to forego other loss-mitigation alternatives because the Bank stood to benefit if Plaintiffs
defaulted. (Id. ¶ 269.) As a result, Plaintiffs claim they “los[t] the opportunity to resolve their
foreclosure” via other methods as early as September 1, 2009. (Id. ¶ 271.)
Defendant argues that these allegations do not state an ICFA claim for two reasons: (1)
Plaintiffs were not actually forced to defer their pursuit of alternative methods because they filed
for Chapter 7 bankruptcy just 37 days after the Bank told them the short-sale process would
take 30 days; and (2) Plaintiffs’ alleged damages (i.e., “deferring action on other loss mitigation
alternatives”) are “insufficient as a matter of law” because they are not “actual [pecuniary]
damages.” (Def.’s Reply at 6.)
But Defendant’s argument does not address Plaintiffs’ allegation that Bank
representatives falsely promised them that they would hear from someone within 30 days.
Plaintiffs’

subsequent

bankruptcy

filing

does

not

render

Defendant’s

purported

misrepresentation less false. Nor does it undercut the allegation that Defendant’s statements
led the Lowrys to “defer[] acting on other loss mitigation alternatives,” including, for example,
the possible immediate TPP offered in a September 1, 2009 letter. (Compl. ¶ 270.)
Defendant’s second contention is no more persuasive. To support its argument that
Plaintiffs’ damages are “insufficient as a matter of law,” Defendant cites to Rodriguez v. Chase
Home Fin., LLC, No. 10 C 05876CH, 2011 WL 5076346 (N.D. Ill. Oct. 25, 2011), a 2011 opinion
issued by another judge of this court. Rodriguez’s complaint was dismissed for failure to plead

26

“concrete” damages. Rodriguez alleged that, “[h]ad [she] known that her modified monthly
payments would have been . . . higher than the ‘estimated’ TPP payment . . . [she] would have
sought any number of other remedies available to her in order to save her home or to otherwise
mitigate her losses.” Id. at *3. This allegation was insufficient to state an ICFA claim, the court
held, because “the facts in the complaint only allow the inference that her decision to pursue the
modification prevented her from seeking some other unspecified relief. Without knowing what
that alleged relief would have been, the complaint does not put Chase or the Court on notice as
to how Rodriguez was actually damaged.” Id.
The Lowrys’ complaint is different. Plaintiffs have specified an alternative they deferred:
“the September 1, 2009 letter offering to issue an immediate TPP over the phone.” (Compl.
¶ 270.) This is enough to put the Bank on notice. Furthermore, the Seventh Circuit has held
that similar damages allegations are sufficient at the motion-to-dismiss phase. See Wigod, 673
F.3d at 575-76 (holding that allegations that plaintiff could have pursued foreclosure alternatives
were sufficient to plead an ICFA violation). Specification 15 states a deceptive practice claim
under the ICFA.
iv.

Specification 17: “Defendant’s Ambiguous, Misleading
Correspondence”

Specification 17 is the final ICFA allegation sounding in fraud.

It claims that

“Defendant’s history of correspondence reveals a methodology of ambiguity, including, but not
limited to, statements in three letters dated May 14 and 15, 2013, two letters dated January 9,
2013, and four letters dated January 23, 2013.” (Compl. ¶ 294.) As a result, Plaintiffs claim,
they “were damaged emotionally and through anxiety and uncertainty; by the loss of the
opportunity to resolve their foreclosure at that point in time; by increased indebtedness and
wrongful damage to their credit.”

(Id. ¶ 295.)

The Bank’s inconsistent and/or duplicative

communications were undoubtedly frustrating and confusing to the Lowrys. But they have not
identified a specific statement from these letters that harmed them, nor have they explained how

27

any of the statements induced them to act in a way that damaged them. The court concludes
that this vague allegation is insufficient to state a claim under the heightened standard
demanded by Rule 9(b). See Wigod, 673 F.3d at 569 (“Under the heightened federal pleading
standard of Rule 9(b) of the Federal Rules of Civil Procedure, a plaintiff alleging fraud . . . must
state with particularity the circumstances constituting fraud.

We have summarized the

particularity requirement as calling for the first paragraph of any newspaper story: ‘the who,
what, when, where, and how.’” (citing Windy City Metal Fabricators & Supply, Inc. v. CIT
Technology Financing Services, Inc., 536 F.3d 663, 668 (7th Cir. 2008))).
3.

Fraudulent misrepresentation and fraudulent concealment
Plaintiffs also raise common-law claims of fraudulent misrepresentation and fraudulent

concealment. As their names suggest, these causes of action sound in fraud. They, too, are
therefore subject to the heightened pleading standard of Rule 9(b). See Pirelli Armstrong Tire
Corp. Retiree Med. Benefits Trust, 631 F.3d at 446.
A.

Fraudulent misrepresentation

The complaint identifies Specifications 13, 14, 15, and 16 as the bases for Plaintiffs’
fraudulent misrepresentation claim. The elements of a claim of fraudulent misrepresentation in
Illinois are: “(1) [a] false statement of material fact (2) known or believed to be false by the party
making it; (3) intent to induce the other party to act; (4) action by the other party in reliance on
the truth of the statement; and (5) damage to the other party resulting from that reliance.”
Dloogatch v. Brincat, 396 Ill. App. 3d 842, 847, 920 N.E.2d 1161, 1166 (1st Dist. 2009).
These elements overlap significantly with those required of a deceptive practice claim
under the ICFA. 12 The only relevant difference is that in order to also state a claim of fraudulent

12

To state an ICFA claim based on deceptive practices, a plaintiff must allege the
following elements: “(1) a deceptive act . . . occurred, (2) the defendant intended for plaintiff to
rely on the deception, (3) the deception occurred in the course of conduct involving trade or
commerce, (4) the plaintiff sustained actual damages, and (5) such damages were proximately
caused by the defendant’s deception.” Dubey, 395 Ill. App. 3d at 353, 918 N.E.2d at 277.

28

misrepresentation, one must allege that the defendant made a knowingly false statement, as
opposed to a “deceptive act” more generally.

Accordingly, the court’s fraudulent

misrepresentation analysis largely tracks its earlier discussion of these specifications under the
ICFA.
Specifications 13, 15, and 16 all adequately pleaded ICFA deceptive practice claims. In
each instance, the purported deceptive act was a false statement that the maker allegedly knew
to be false. These specifications therefore state claims of fraudulent misrepresentation as well.
Specification 14, however, falls short of Rule 9(b)’s heightened pleading standard for the
reasons discussed above. It fails to state a fraudulent misrepresentation claim for the same
reasons.
B.

Fraudulent concealment

Plaintiffs allege that Specifications 17 and 18 state claims for fraudulent concealment.
In addition to meeting the elements of fraudulent misrepresentation, a claim for fraudulent
concealment must also allege that the defendant intentionally omitted or concealed a material
fact that it was under a duty to disclose to the plaintiff. Weidner v. Karlin, 402 Ill. App. 3d 1084,
1087, 932 N.E.2d 602, 605 (3d Dist. 2010). A duty to disclose would arise if “plaintiff and
defendant are in a fiduciary or confidential relationship” or in a “situation where plaintiff places
trust and confidence in defendant, thereby placing defendant in a position of influence and
superiority over plaintiff.” Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 500, 675 N.E.2d 584,
593 (Ill. 1996).
Plaintiffs concede that the Bank was not a fiduciary under Illinois law. (Pls.’ Resp. at
15.) Instead, they attempt to proceed under a theory that Plaintiffs placed a “special trust” in
Defendant. The complaint alleges that
[a]s a major lender, Defendant’s affiliation with . . . HAMP placed the imprimatur
of the United States government on Defendant’s loss mitigation services, and
foreseeably caused Plaintiffs to place a special trust in Defendant beyond a mere
mortgagee-mortgagor or homeowner-mortgage servicer relationship.

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(Compl. ¶ 289.)
The plaintiff in Wigod made a nearly identical “special trust” argument under similar
facts, but the Seventh Circuit rejected it. The plaintiff in that case alleged that Wells Fargo had
violated the ICFA by refusing to modify her mortgage pursuant to HAMP guidelines. The district
court granted the bank’s motion to dismiss, based on the reasoning that HAMP does not create
a right of action. The Seventh Circuit reversed. It affirmed, however, the dismissal of the
plaintiff’s fraudulent concealment claim, which alleged that Wells Fargo “knowingly concealed
that it would (1) report her to credit rating agencies as being in default on her mortgage; and (2)
reevaluate her eligibility for a permanent modification in contravention of HAMP directives.” The
district court dismissed this claim due to "the absence of any fiduciary or other duty to speak" on
the part of Wells Fargo as a mortgagee.” The Court of Appeals agreed with the district court
that the plaintiff had failed to state a fraudulent concealment claim, holding that
Wells Fargo's participation in HAMP is not sufficient to create a special trust
relationship with Wigod and the roughly 250,000 other homeowners with whom it
entered TPP Agreements. The Illinois Appellate Court has recently stated that
the standard for identifying a special trust relationship is "extremely similar to that
of a fiduciary relationship."
Accordingly, state and federal courts in Illinois have rarely found a special
trust relationship to exist in the absence of a more formal fiduciary one.
Wigod, 673 F.3d at 571 (quoting Benson v. Stafford, 407 Ill. App. 3d 902, 919, 941 N.E.2d 386,
403 (1st Dist. 2010)). Plaintiffs have failed to state a fraudulent concealment claim in either
Specification 17 or 18.

Specification 18 is also insufficiently pled under Rule 9(b) for the

reasons discussed above.
4.

Leave to Amend

Defendant invites the court to dismiss Plaintiffs’ complaint with prejudice and deny them
leave to re-plead. (Def.’s Reply at 2, 14-15.) The Bank argues that “the doctrine of futility
should apply here [because a]fter 57 pages and more than 300 paragraphs, there should be no
‘second chance.’” (Id. at 14.) The court declines Defendant’s invitation.

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A court "should freely give leave [to amend pleadings] when justice so requires." FED. R.
CIV. P. 15(a)(2). This general rule is no less true after a court has granted a defendant’s motion
to dismiss. See also Foster v. DeLuca, 545 F.3d 582, 584 (7th Cir. 2008) ("District courts
routinely do not terminate a case at the same time that they grant a defendant's motion to
dismiss; rather, they generally dismiss the plaintiff's complaint without prejudice and give the
plaintiff at least one opportunity to amend her complaint."); Barry Aviation Inc. v. Land O'Lakes
Mun. Airport Comm'n, 377 F.3d 682, 687 (7th Cir. 2004) (stating that the general rule is that "the
district court should grant leave to amend after granting a motion to dismiss"). However, a court
should not grant leave to amend where "any amendment would be futile." See Stanard v.
Nygren, 658 F.3d 792, 797 (7th Cir. 2011). An amendment is futile if it would not survive a
motion to dismiss for failure to state a claim, General Elec. Capital Corp. v. Lease Resolution
Corp., 128 F.3d 1074, 1085 (7th Cir. 1997), or a motion for summary judgment, Bethany
Pharmacal Co. v. QVC, Inc., 241 F.3d 854, 860 (7th Cir. 2001).
Contrary to the Bank’s assertion, an amended complaint would not necessarily be futile
here. For instance, Specifications 14 and 18, which currently lack the necessary specificity to
satisfy Rule 9(b), might be revived if Plaintiffs can re-plead these allegations, including the “who,
what, when, and where” required of claims sounding in fraud. The court will not pre-emptively
deny Plaintiffs the opportunity to file an amended complaint that is consistent with the rationale
of this opinion.

Should Plaintiffs amend their complaint, however, they should heed the

guidance of Federal Rule of Civil Procedure 8, which calls for “a short and plain statement of the
claim showing that the pleader is entitled to relief.” The Lowrys’ unconventional use of so-called
“specifications,” which simply reiterate the facts that were previously enumerated, adds nothing
to the complaint but unwieldy volume. This redundancy is disfavored. See Waivio v. Bd. of Trs.
of the Univ. of Ill., No. 07-3695, 290 F. App'x 935, 937 (7th Cir. 2008) (describing a
“blunderbuss” complaint as one that does not satisfy the “short and plain statement”
requirement of Rule 8).

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CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss [14] is granted in part and
denied in part. Regarding Count I (ICFA), Defendant’s motion is granted as to Specifications 2,
3, 7, 9, 12, 14, 17, and 18. As it relates to the remaining specifications in Count 1, Defendant’s
motion is denied. Count II (fraudulent misrepresentation) is dismissed only insofar as it relies on
the claims raised in Specification 14.

Defendant’s motion to dismiss Count III (fraudulent

concealment) is granted. Any claim dismissed here is dismissed without prejudice to Plaintiffs’
later seeking leave to amend within 28 days.
Finally, though several of Plaintiffs’ claims may have merit, the court recognizes that
their substantial debt to the Bank remains unpaid. Continued litigation is costly. The parties are
urged to make a good faith effort to settle their dispute.
ENTER:

Dated: September 2, 2016

_________________________________________
REBECCA R. PALLMEYER
United States District Judge

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