Medrano v. Ocwen Loan Sericing, LLC et al

Filing 69

MEMORANDUM OPINION AND ORDER. Signed by the Honorable Harry D. Leinenweber on 1/31/2017:Civil case terminated. Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

GUILLERMO R. MEDRANO,
Plaintiff,
v.

Case No. 16 C 898

OCWEN LOAN SERVICING, LLC,
BAYVIEW LOAN SERVICING, LLC,
MRF ILLINOIS, ONE LLC, and
BAYVIEW ASSET MANAGEMENT LLC,

Judge Harry D. Leinenweber

Defendants.

MEMORANDUM OPINION AND ORDER
Before the Court are the Defendants’ Motions to Dismiss
[ECF Nos. 44 and 46].
grants

the

Motions

For the reasons stated herein, the Court
and

dismisses

Medrano’s

Complaint

with

prejudice.
I.

BACKGROUND

Plaintiff Guillermo Medrano (“Medrano”) filed this lawsuit
in early 2016, complaining of conduct that took place after the
Defendants

in

this

case

brought

a

mortgage

foreclosure

against him in the Circuit Court of Cook County.

suit

According to

Medrano, the Defendants – Bayview Asset Management, LLC (“BAM”),
its

wholly-owned

subsidiary,

Bayview

Loan

Servicing,

LLC

(“Bayview”), MRF Illinois One, LLC, Ocwen Financial Corporation
(“Ocwen Financial”), and its wholly-owned subsidiary, Ocwen Loan

Servicing, LLC (“Ocwen”) – engaged in a series of “fraudulent
assignments” of Medrano’s mortgage loan.
Compl.) ¶¶ 37-68, 95-97, 108, and 121.

See, ECF No. 30 (Am.
They also charged him

“bogus” property inspection fees while he was in default.
¶¶ 51, 54, 65-68, 95, 109, 121, and 133-34.

Id.

To benefit from

their alleged fraudulent assignments and assessment of fees, the
Defendants refused to “properly review and approve Plaintiff for
a loan modification.”

Id. ¶¶ 67-70.

Instead, they foreclosed

on and sold Medrano’s mortgaged property.
Medrano contends that the Defendants’ conduct runs afoul of
both federal and state law.
Defendants

violated

the

In particular, he alleges that the

Racketeer

Influence

and

Corruption

Organizations Act (“RICO”) by fraudulently assigning his loan
and

charging

him

fees;

that

Ocwen

violated

the

Real

Estate

Settlement Procedures Act (“RESPA”) by obtaining a foreclosure
judgment against him while he was being reviewed for a loan
modification; and that Ocwen and Bayview discriminated against
him, a Hispanic, by failing to review his application for a loan
modification, thus violating the Equal Credit Opportunity Act
(“ECOA”).

Medrano also brings two causes of action predicated

on state law.
At bottom, the gravamen of Medrano’s Complaint is that the
Defendants

“fraudulently

procured
- 2 -

a

foreclose

[sic]

judgment”

against him.

Am. Compl. ¶¶ 65, 67.

Medrano’s alleged injuries

stem from this foreclosure and the subsequent sale of his home
pursuant to the judgment.

For example, Medrano complains that

he has been harmed “because he has to incur attorney fees to
defend the Foreclosure, his home has been sold, and he has had
the

fees

assessed

to

his

account

based

on

the

Defendants[’]

scheme to defraud and he has loss [sic] equity in his home.”
Id. ¶ 99.
Medrano is at least correct in stating that the Defendants
obtained a foreclosure judgment against him.

On November 24,

2014 – more than a year before Medrano filed his current lawsuit
– the Circuit Court entered a default judgment of foreclosure
and

sale

in

Medrano’s

case.

(“Foreclosure Judgment”).
as

“fully

dispositive

of

See,

ECF

No.

17,

Ex.

A

The court characterized its judgment
the

interest

of

all

defendants,”

including Medrano, and found that the creditors, Defendants in
this case, were owed $199,188.67.

Id. ¶ 2.

In accordance with

the Circuit Court’s order, the mortgaged property was then sold
to satisfy the debt.

On October 28, 2016, while the case before

this Court was pending, the Circuit Court entered a final order
confirming the sale and approving of the distribution of the
proceeds.

See, ECF No. 67, Ex. A (“Order Confirming Sale”).

- 3 -

Medrano

neither

contested

the

Foreclosure

appealed the Order Confirming Sale.

Judgment

nor

Instead, he complains of

the actions of the parties involved in his mortgage foreclosure
by bringing this federal suit.
II.
As

discussed

subject

matter

below,

ANALYSIS

the

jurisdiction

Court
over

questions
Medrano’s

whether
suit

jurisdictional limitation imposed by Rooker-Feldman.
the

Court

ultimately

concludes

that

it

has

it

has

given

the

Although

jurisdiction,

it

finds that Medrano’s federal claims are barred by res judicata
as a result of the judgment rendered against him in the state
foreclosure case.

It therefore relinquishes jurisdiction over

his state-law claims and dismisses the case in its entirety.
See, Groce v. Eli Lilly & Co., 193 F.3d 496, 501 (7th Cir.
1999).
A.
When

Rooker-Feldman

Jurisdiction
applies

to

a

claim,

district

and

federal appellate courts are divested of their power to address
any issue related to that claim, including res judicata.
Garry v. Geils, 82 F.3d 1362, 1365 (7th Cir. 1996).

See,

The Court

thus first looks to see if Rooker-Feldman bars it from hearing
Medrano’s case.

- 4 -

Simply put, Rooker-Feldman precludes lower federal courts
from deciding claims that seek review of state-court judgments.
See, e.g., Brown v. Bowman, 668 F.3d 437, 442 (7th Cir. 2012).
As the Supreme Court said in the cases from which the doctrine
derived its name, the United States Supreme Court is the only
federal court that may review such judgments.

See, Rooker v.

Fid. Tr. Co., 263 U.S. 413, 415-16 (1923); D.C. Court of Appeals
v. Feldman, 460 U.S. 462, 482 n.16 (1983).

However, as the

Supreme Court has also explained, Rooker-Feldman is a narrow
doctrine.

See, Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,

544 U.S. 280, 284 (2005).

It strips lower federal courts of

their jurisdiction only where “state-court losers” bring suits
“complaining

of

injuries

caused

by

state-court

judgments

rendered before the district court proceedings commenced.”

Id.

Moreover, the “state-court losers” must be “inviting district
court review and rejection of those [state-court] judgments” in
their federal suits.

Id.

Such invitations are extended both when a plaintiff seeks
to set aside a state-court judgment and when his claims are
“inextricably

intertwined”

Brown, 668 F.3d at 442.

with

that

judgment.

See,

e.g.,

“The determination of whether a federal

claim is ‘inextricably intertwined’ hinges on whether it alleges
that the supposed injury was caused by the state court judgment
- 5 -

or,

alternatively,

whether

the

federal

claim

alleges

an

independent prior injury that the state court failed to remedy.”
Id.

Moreover,

the

plaintiff

must

have

had

a

reasonable

opportunity to raise the issue in state-court proceedings.

See,

id.; Long v. Shorebank Dev. Corp., 182 F.3d 548, 557-58 (7th
Cir. 1999) (“[A]n issue cannot be inextricably intertwined with
a

state

reasonable

court

judgment

opportunity

to

if

the

raise

plaintiff
the

issue

did
in

not

have

state

a

court

proceedings.”).
In this case, Medrano does not contest that his claims are
“inextricably intertwined” with the Circuit Court’s foreclosure
judgment.

This is because the injuries Medrano complains of –

the attorney fees expended to defend the foreclosure suit, the
debt deemed owing to the Defendants, and the sale of the home to
satisfy that debt – all flow from the court’s judgment.
The Circuit Court determined the amount of the debt and
ordered the sale of the home.

The debt assessment and the loss

of the property are thus injuries caused by the court.

See,

Schuh v. Druckman & Sinel, L.L.P., 2008 U.S. Dist. LEXIS 15079,
at *19-22 (S.D.N.Y. Feb. 29, 2008) (noting that the plaintiffs
“do not allege that the defendants unilaterally commandeered the
title to their home [or] put the property up for auction. . . .
Rather, these events occurred as a result of the judgment of
- 6 -

foreclosure

being

entered

against

plaintiffs”);

Spencer

v.

Mortg. Acceptance Corp., No. 05 C 356, 2006 U.S. Dist. LEXIS
31668, at *12-15 (N.D. Ill. May 4, 2006) (concluding that the
plaintiff’s claims arose from the foreclosure judgment entered
against her because “her claimed injury in the present matter is
the loss of the Property at a judicial sale”).
As for the attorney’s fees, the Seventh Circuit has said
that in circumstances like these, “[t]he need to litigate was
not a loss independent of the state court’s decision.”
v. Steel, 773 F.3d 884, 886-87 (7th Cir. 2014).

Harold

Medrano here

alleged that the Defendants “fraudulently assigned” his loan,
implying that they did not own the loan when they instituted the
foreclosure suit against him.
Medrano,

like

the

If the allegation is true, then

plaintiff

decision in his favor.”

in

Id.

Harold,

“was

entitled

the

a

Therefore, “[n]o injury occurred

until the state judge ruled against [the plaintiff].”
Furthermore,

to

injuries

caused

by

the

Id.

Circuit

judgment subsume other wrongs Medrano alleged.

Court’s

For instance,

the amount of money that the Circuit Court determined was owed
to the Defendants presumably included the property inspection
fees

that

Medrano

calls

“bogus,”

“improper,”

or

“excessive.”

Similarly, the foreclosure sale that the court ordered mooted

- 7 -

Medrano’s application for a loan modification and extinguished
any equity he had in the property.
Medrano also had reasonable opportunity to raise the issues
in state court.

For example, Illinois law allows for fraud to

be pleaded as a defense in a foreclosure action.

See, Henry v.

Farmer City State Bank, 808 F.2d 1228, 1235 (7th Cir. 1986)
(“The

Henrys’

substantiated,

allegations
would

have

of
been

fraud
a

and

complete

forgery,
defense

to

if
the

foreclosure proceedings.”); Bartucci v. Wells Fargo Bank N.A.,
No. 14 CV 5302, 2016 U.S. Dist. LEXIS 38864, at *11 (N.D. Ill.
Mar. 24, 2016) (“Plaintiff was entitled to raise any claims as
to fraud in the state foreclosure action.”).

Medrano thus was

able to bring his claim of fraudulent assignments to fight the
foreclosure.

See, e.g., Sheikhani v. Wells Fargo Bank, 526 F.

App’x 705, 707 (7th Cir. 2013) (“[N]o state law prevented a
challenge in the foreclosure proceedings to the validity of the
assignment to Wells Fargo.”).
of

injuries

caused

by

He did not and instead complains

the

foreclosure

here.

In

such

circumstances, the first prong of Rooker-Feldman – invitation to
review and reject a state-court judgment – is satisfied.
Nonetheless,

Medrano

argues

that

Rooker-Feldman

does

not

apply because he “filed the present action while the[] statecourt proceedings were still pending” and Plaintiff “still ha[s]
- 8 -

an appeal pending.”

Medrano’s contention that he has a pending

appeal in state court is puzzling.

There is no appeal on the

record of Medrano’s foreclosure case, pending or otherwise.

It

is true, however, that Medrano commenced this lawsuit before the
state court issued its Order Confirming Sale, even if the suit
was filed after the Foreclosure Judgment.
Illinois

law

is

clear

that

absent

special

certifying

language, a judgment of foreclosure is an interlocutory order
that cannot be appealed.

See, EMC Mortg. Corp. v. Kemp, 367

Ill. Dec. 474, 476 (2012).

This is because “although a judgment

of foreclosure is final as to the matters it adjudicates, a
judgment foreclosing a mortgage, or a lien, determines fewer
than all the rights and liabilities in issue.” Id.

After a

foreclosure judgment is issued, a mortgagor like Medrano still
has the opportunity to redeem the property from the foreclosure
or reinstate the mortgage by “curing all defaults.”

See, ILCS

735 ILCS 5/15-1602, 5/15-1603; HSBC Bank USA, N.A. v. Townsend,
793 F.3d 771, 775 (7th Cir. 2015).

Even after the property has

been sold, the state court still may “vacate the judicial sale
and,

in

rare

cases,

the

underlying

judgment.”

Id.

at

777

(quoting Wells Fargo Bank, N.A. v. McCluskey, 376 Ill. Dec. 438,
445-46 (2013)).

However, the law is not as clear on whether

- 9 -

interlocutory, nonappealable rulings like foreclosure judgments
are outside of the scope of Rooker-Feldman.
Two Seventh Circuit opinions are in tension with each other
when it comes to this question.

In TruServ Corp. v. Flegles,

Inc., 419 F.3d 584, 591 (7th Cir. 2005), the court held that “an
interlocutory

ruling

does

not

evoke

the

doctrine or preclude federal jurisdiction.”

[Rooker-Feldman]
The holding has

been questioned elsewhere in this circuit, albeit only in dicta.
As Judge Easterbrook said in writing for the court in Harold,
773 F.3d at 885-86, “[t]he principle that only the Supreme Court
can

review

the

decisions

by

the

state

judiciary

in

civil

litigation is as applicable to interlocutory as to final statecourt decisions.”

Id. at 886.

Courts relying on either TruServ or Harold have come to
differing

conclusions

about

whether

a

district

exercise jurisdiction in a case like Medrano’s.

court

may

A vast majority

of courts in our district have leaned on TruServ and found that
Rooker-Feldman does not apply when the federal suits commenced
before the state courts issued the orders confirming sale.

See,

Hodges v. CIT Grp. (In re Hodges), 350 B.R. 796, 801-03 (Bankr.
N.D. Ill. 2006) (“Rooker-Feldman does not deprive this court of
jurisdiction. . . .

The state court had entered a judgment of

foreclosure, true enough. But a judgment of foreclosure does not
- 10 -

end a mortgage foreclosure case in Illinois.”); Vangsness v.
Deutsche Bank Nat’l Tr. Co., No. 12 C 50003, 2012 U.S. Dist.
LEXIS 169388, at *3-5, *8 (N.D. Ill. Nov. 29, 2012); Garavito v.
Suntrust Mortg., Inc., No. 11 C 6056, 2013 U.S. Dist. LEXIS
30192,

at

*3,

*8

(N.D.

Ill.

Mar.

6,

2013);

Andrews

v.

CitiMortgage, Inc., No. 13 C 8513, 2014 U.S. Dist. LEXIS 77114,
at *2-3 (N.D. Ill. June 6, 2014) (Leinenweber, J.); Vazquez v.
J.P. Morgan Chase Bank, N.A., No. 13-cv-04749, 2014 U.S. Dist.
LEXIS 124802, at *10-11 (N.D. Ill. Sep. 8, 2014); Bolden v.
Wells Fargo Bank, N.A., No. 14 C 403, 2014 U.S. Dist. LEXIS
161521,

at

*7

(N.D.

Ill.

Nov.

18,

2014);

Schuller

v.

Am.’s

Wholesale Lender, No. 14 C 4097, 2015 U.S. Dist. LEXIS 119464,
at *6 (N.D. Ill. Sep. 9, 2015); Berry v. Wells Fargo Bank N.A.,
No. 15 C 5269, 2015 U.S. Dist. LEXIS 166660, at *6-7 (N.D. Ill.
Dec. 14, 2015); Lihter v. Pierce & Assocs., No. 16 C 50080, 2016
U.S. Dist. LEXIS 123788, at *5-6 (N.D. Ill. Sep. 13, 2016).
But adherence to Truserv has not been uniform.

Some judges

have found that district courts have no jurisdiction to hear a
case where a foreclosure judgment was issued before the filing
of the federal suit.

See, Carpenter v. PNC Bank, N.A., 633 F.

App’x 346, 347 (7th Cir. 2016); Taylor v. Fannie Mae, 374 F.3d
529, 532-36 (7th Cir. 2004); Byrd v. Homecomings Fin. Network,
407

F.Supp.2d

937,

940-41,

943-44
- 11 -

(N.D.

Ill.

2005).

For

example, in Carpenter, 633 F. App’x at 347, the appellate court
recognized that “Carpenter’s [foreclosure] judgment may not yet
be appealable under state law.”

But relying on Harold, the

court concluded that “that distinction does not help Carpenter
here” and applied Rooker-Feldman to bar her federal suit.
also,

Garavito,

2013

U.S.

Dist.

LEXIS

30192,

at

See

*11-13

(reasoning that “the purposes behind the Rooker-Feldman doctrine
would be served by allowing an Illinois foreclosure judgment to
satisfy the finality requirement” but declining to apply RookerFeldman because of TruServ).
It appears then that whether Rooker-Feldman applies in a
case

like

this

one

is

an

unsettled

issue

in

this

circuit.

Arguments can be made on both sides, but in this Court’s best
judgment, Rooker-Feldman bars the lawsuit here.
the

latest

Seventh

directly on point.

Circuit

opinion

on

the

Carpenter is

issue,

and

it

is

Moreover, the Court is persuaded by the

reasoning behind Judge Easterbrook’s dictum that Rooker-Feldman
should apply to interlocutory and final orders alike:

“A truly

interlocutory decision should not be subject to review in any
court; review is deferred until the decision is final.”

Harold,

773 F.3d at 886 (emphasis in original).
The Court recognizes that it has taken a contrary position
previously.

See, Andrews, 2014 U.S. Dist. LEXIS 77114, at *2-3.
- 12 -

However, that ruling preceded the issuance of Harold.
having

the

benefit

of

Harold,

the

Court

has

agreement with Judge Easterbrook on this issue.

Since

indicated

its

For instance,

the Court stated in its oral ruling in Frencher v. Caliber Home
Loans, No. 16 C 01550, Dec. 7, 2016, that the disputed issue was
“foreclosed

from

review

doctrine . . . because

by

this

the

Court

state

by

the

Rooker-Feldman

court’s

ruling

was

interlocutory and not subject to review in any court.”
In short, the Court finds that Rooker-Fedlman bars it from
exercising

jurisdiction

in

this

case.

It

thus

dismisses

Medrano’s Complaint with prejudice on FED. R. CIV. P. 12(b)(1)
grounds.
B.

Preclusion

Although the Court concludes that it does not have subject
matter

jurisdiction

in

this

case,

given

the

uncertainty

in

Seventh Circuit case law surrounding the issue, the Court next
considers whether Medrano’s claims are barred by res judicata as
a result of the foreclosure judgment.

Since an Illinois state

court rendered the judgment against Medrano, the Court consults
the preclusion law of Illinois to determine whether res judicata
applies.

See, Arlin-Golf, LLC v. Vill. of Arlington Heights,

631 F.3d 818, 821 (7th Cir. 2011).

Under Illinois law, the

doctrine acts as a bar to subsequent claims when:
- 13 -

“(1) there

was

a

final

judgment

on

the

merits

rendered

by

a

court

of

competent jurisdiction, (2) there is an identity of cause of
action,

and

privies.”

(3)

there

is

an

identity

of

parties

or

their

River Park v. City of Highland Park, 184 Ill. 2d 290,

302 (1998).
Identical
federal

parties

lawsuit

and

or

the

their

privies

state-court

are

present

action.

in

Medrano

this

was

a

defendant in the foreclosure action, and he is the Plaintiff
here.

The Defendants he sues in this case – Bayview, BAM,

Ocwen,

Ocwen

Financial,

and

MRF

Illinois

One

–

were

the

plaintiffs or plaintiffs’ privies in Medrano’s foreclosure case.
Bayview, a wholly-owned subsidiary of BAM, filed the complaint
to

foreclose

on

Medrano’s

property.

Am.

Compl.

¶¶

7,

39.

Bayview then transferred the right to service the loan to Ocwen,
a

wholly-owned

Ex. 8.

subsidiary

of

Ocwen

Financial.

Am.

Compl.,

Ocwen subsequently requested that MRF Illinois One be

substituted as a party plaintiff in Medrano’s foreclosure case.
Id.

The parties in this case thus are identical to those in the

foreclosure action.
In addition, the Circuit Court of Cook County, a court of
undisputed

competent

jurisdiction

in

the

foreclosure

matter,

rendered a final judgment on the merits when it entered the
Order Confirming Sale.

See, Kemp, 367 Ill. Dec. at 476 (holding
- 14 -

that the order confirming sale is a “final and appealable order
in a foreclosure case”).

The fact that the Order Confirming

Sale was issued after Medrano commenced his federal suit does
not put his action outside the scope of res judicata, unlike the
situation with Rooker-Feldman.

See, GASH Assocs. v. Rosemont,

995 F.2d 726, 728 (7th Cir. 1993) (“Equating the Rooker-Feldman
doctrine with preclusion is natural. . . .

But the two are not

coextensive.”); Exxon Mobil, 544 U.S. at 284 (“Rooker-Feldman
does

not

otherwise

doctrine . . .”).

override

or

supplant

preclusion

A court may decline to apply Rooker-Feldman

and yet find that res judicata precludes a case like Medrano’s
where

the

between

order

the

confirming

filing

of

the

the

foreclosure

federal

district court makes its ruling.

lawsuit

sale
and

was

the

issued

time

the

Lihter, a case decided in this

district just last year, did exactly that.

See, Lihter, 2016

U.S. Dist. LEXIS 123788, at *5-7.
Medrano nonetheless argues that “there has been no final
judgment on the merits in the Foreclosure Action because the
time

for

incorrect.

an

appeal

has

not

ended.”

But

this

is

factually

The time for an appeal ended on November 28 of last

year, 30 days from the date of the entry of the Order Confirming
Sale.

See, 735 ILCS 5/2-1401.

There was no appeal filed within

the permissible 30-day period; in fact, there has been no appeal
- 15 -

filed at all by the writing of this memorandum opinion.

Thus,

however unsettled “the law of Illinois [may be] on the question
of whether a pending appeal destroys the claim preclusive effect
of a judgment,” the issue matters not one bit for Plaintiff’s
case.

Rogers v. Desiderio, 58 F.3d 299, 302 (7th Cir. 1995).

In this case, the Order Confirming Sale is the final judgment.
Accordingly, Medrano’s claims are barred by res judicata if
there is an identity of cause of action between those claims and
his foreclosure lawsuit.

To determine whether there is such an

identity, this Court employs the transactional analysis used in
Illinois whereby “separate claims will be considered the same
cause of action for purposes of res judicata if they arise from
a single group of operative facts, regardless of whether they
assert different theories of relief.”
at 311.
which

River Park, 184 Ill. 2d

The claims so considered include those “based on facts

could

have

constituted

a

defense

or

counterclaim

to

a

prior proceeding if the successful prosecution of the second
action would nullify the initial judgment or would impair rights
established in the initial action.”
(internal quotation marks omitted).

Henry, 808 F.2d at 1232
In short, “the law of claim

preclusion in Illinois . . . precludes the sequential pursuit
not only of claims actually litigated, but of those that could

- 16 -

have been litigated.”

Dookeran v. Cty. of Cook, 719 F.3d 570,

576 (7th Cir. 2013) (internal quotation marks omitted).
The

Court

determine

considers

whether

they

Medrano’s

are

barred.

claims

one

Medrano’s

by

RICO

one

to

claim

is

centered on the allegations that the Defendants committed fraud
in handling his mortgage loan.

See, Am. Compl. ¶¶ 65-70 (tiled

“RICO Allegations, Scheme to Defraud”).

But, as evidenced by

the default foreclosure judgment entered against him, Medrano
did not raise any such allegations of fraud in state court.
Under such circumstance, the Seventh Circuit has found that the
plaintiff’s RICO claim is precluded by res judicata.
In

Henry,

808

their mortgage.
Henrys

then

F.2d

at

1230-31,

the

Henrys

defaulted

The bank sued for foreclosure and won. Id.

instituted

suit

in

the

district

court.

on
The

Like

Medrano, they alleged that the bank and others “had engaged in a
[] scheme of racketeering activity to defraud . . . through use
of the mails and interstate wires”.
¶¶ 65-92.

Id. at 1231; Am. Compl.

Their case was dismissed, and the Henrys appealed.

On appeal, the Seventh Circuit found that the district court
should

not

even

have

reached

the

question

plaintiffs stated a cause of action under RICO.
at 1232.

of

whether

the

Henry, 808 F.2d

The Henrys’ RICO claims, held the court, “are barred

by the doctrine of res judicata because they failed to raise
- 17 -

their fraud claims as a defense in the state court mortgage
foreclosure proceedings initiated by the Bank.”

Id.

The Seventh Circuit found the reasoning of Henry equally
applicable

where

a

plaintiff

failed

to

defend

the

previous

action and consequently, had a default judgment entered against
him.

See, Whitaker v. Ameritech Corp., 129 F.3d 952, 957 (7th

Cir. 1997) (“The fact that Whitaker failed to defend her case
does

not

alter

this

analysis

[of

Henry]

because

a

default

judgment in Illinois is a judgment on the merits and has the
same

preclusive

litigation”).

effect

as

Henry

and

a

judgment
Whitaker

resulting
thus

from

teach

that

arduous
where

allegations of fraud “go to the heart” of a previously decided
case and yet the plaintiff did not raise them, the plaintiff is
thereafter precluded from bringing a RICO claim based on such
allegations.
These two cases control here.

In his RICO claim, Medrano

complains that the Defendants “fraudulently procured a foreclose
[sic] judgment” against him.

Such allegations “go to the heart

of what was decided in the state court,” namely that far from
committing fraud, the Defendants were legitimately owed a sum of
money and that Medrano’s house properly was sold to satisfy that
debt.
the

Whitaker, 129 F.3d at 957.

contrary,

including

that

the

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Any cognizable argument to
Defendants

were

committing

fraud in pursuing foreclosure against Medrano, should have been
raised in the foreclosure action.

Medrano cannot be allowed to

bring such arguments now “in the disguise of civil RICO claims
in federal court.”
Medrano’s
allegations

Henry, 808 F.2d at 1237.

RESPA

and

underlying

ECOA

both

claims

of

these

fare

no

claims

better.

The

are

the

that

Defendants failed to “properly review” Medrano’s application for
a loan modification and instead foreclosed on and sold his home.
See, Am. Compl. ¶¶ 101-03, 152-53.
raised

such

arguments

in

the

However, Medrano should have

foreclosure

action

since

they

clearly affected whether the Defendants may foreclose on his
home.

He did not.

His claims now are barred by his failure

then.

See, e.g., Bartucci, 2016 U.S. Dist. LEXIS 38864, at *9

(dismissing an ECOA claim when “Plaintiff was entitled to raise
his

HAMP

[Home

Affordable

Modification

Program]

argument”

in

state court but did not); Ruffino v. Bank of Am., N.A., No. 13
C 50124, 2013 U.S. Dist. LEXIS 143151, at *1-4, *10-11 (N.D.
Ill. Oct. 3, 2013) (dismissing a RESPA claim when the plaintiff
alleged that the bank “did not have a right to initiate the
foreclosure
Bank,

FSB,

proceeding
2015

IL

against
App

plaintiff”);

(5th)

140086-U,

Downs
¶ 17

v.

OneWest

(“The

key

allegations in Downs’s lawsuit against the Bank were that the
Bank

violated

the

terms

of

the
- 19 -

mortgage,

did

not

own

the

mortgage,
procedures.
presented)

and

failed

to

follow

proper

to

foreclosure

She could have presented (and logically should have
her

evidence

and

her

arguments

during the foreclosure action. . . .
bother

mortgage

appear

and

contest

the

on

those

matters

However, Downs did not

foreclosure.

.

.

.

The

doctrine of res judicata clearly barred her lawsuit.”).
III.

CONCLUSION

For the reasons stated herein, the Defendants’ Motions to
Dismiss [ECF Nos. 44 and 46] are granted.

Plaintiff’s Complaint

is dismissed with prejudice.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: January 31, 2017

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