McNeal v. J.P. Morgan Chase Bank, N.A. et al

Filing 39

MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 11/17/2016: Defendants' motions to dismiss, 16 , 18 , 20 , are granted. The complaint is dismissed without prejudice. Plaintiff has leave to file an amended complaint b y December 8, 2016. If plaintiff does not file an amended complaint, this dismissal will convert to a dismissal with prejudice as to plaintiff's claims against JPMorgan Chase Bank, N.A., Chase Home Finance LLC, Federal National Mortgage Associat ion, and plaintiff's RICO claim against JPMorgan Chase & Co. The dismissal of JPMorgan Chase & Co. for the remaining claims will be without prejudice for the lack of standing. [For further detail see attached order.] Notices mailed by Judicial Staff. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MERLYN MCNEAL,
Plaintiff,

No. 16 CV 3115

v.
J.P. MORGAN CHASE BANK, N.A.,
CHASE HOME FINANCE LLC, J.P.
MORGAN CHASE & CO., and FEDERAL
NATIONAL MORTGAGE ASSOCIATION,

Judge Manish S. Shah

Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Merlyn McNeal bought a home financed by an adjustable-rate
mortgage loan. She alleges that the handling of her mortgage—assignment,
assessment of fees, escrow calculations, foreclosure, and communication about the
mortgage—was unlawful in a variety of ways and sues defendants JPMorgan Chase
Bank, N.A., Chase Home Finance LLC, JPMorgan Chase & Co., and Federal
National Mortgage Association (Fannie Mae).1 She brings claims against the Chase
defendants under the Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. § 1962(c), and the Real Estate Settlement Procedures Act, 12 U.S.C.
§ 2605(e). She brings claims against all defendants for violations of the Illinois
Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/2, violations of the
Residential License Mortgage Act, 205 ILCS 635/1-3, breach of contract, and unjust
Although the caption uses “J.P. Morgan,” defendants’ filings use “JPMorgan.” The court
follows defendants’ spelling.
1

enrichment. The defendants move to dismiss all claims under Federal Rule of Civil
Procedure 12(b)(6), and JPMorgan Chase & Co. also moves to dismiss the claims
against it under Federal Rule of Civil Procedure 12(b)(1). For the following reasons,
the defendants’ motions to dismiss are granted.
I.

Legal Standards
To survive a motion to dismiss under Federal Rule of Civil Procedure

12(b)(6), a complaint must contain factual allegations that plausibly suggest a right
to relief. Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). Claims sounding in fraud
are subject to the heightened pleading standard set forth in Federal Rule of Civil
Procedure 9(b), which requires a plaintiff to describe the “who, what, when, where,
and how of the fraud.” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 948 (7th Cir.
2013). The court must construe all factual allegations as true and draw all
reasonable inferences in the plaintiff’s favor, but the court need not accept legal
conclusions or conclusory allegations. Id. at 946. A plaintiff’s failure to respond to
an argument raised in a motion to dismiss forfeits any argument on that issue. See
Alioto v. Town of Lisbon, 651 F.3d 715, 721 (7th Cir. 2011) (“[A] litigant effectively
abandons the litigation by not responding to alleged deficiencies in a motion to
dismiss.”); Lekas v. Briley, 405 F.3d 602, 614 (7th Cir. 2005); Kirksey v. R.J.
Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999) (“An unresponsive
response is no response.”).
McNeal has attached multiple documents to her complaint, including her
mortgage, the note, an assignment of the mortgage, a loan modification agreement,
and other communications between McNeal and “Chase.” (The letters refer to just
2

“Chase” but appear to be from JPMorgan Chase Bank.) The documents will be
considered because “documents that are attached to the complaint, documents that
are central to the complaint and are referred to in it, and information that is
properly subject to judicial notice” may be considered on a motion to dismiss.
Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013); Fed. R. Civ. P. 10(c).2 Two
of JPMorgan Chase Bank’s exhibits, which ordinarily would not be considered, see
Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998), are central to McNeal’s
claim that the Chase defendants failed to timely respond to her written requests,
and so will be considered. McNeal attaches to her complaint her letters to
JPMorgan Chase Bank, [1-4] and [1-10],3 and JPMorgan Chase Bank attaches two
letters in January and February 2016 responding to McNeal. [17-5]; [17-6]. McNeal
does not dispute the response letters’ authenticity or argue that they cannot be
considered at this stage. A plaintiff cannot thwart consideration of a relevant,
central document by failing to attach or reference it. See 188 LLC v. Trinity Indus.,
Inc., 300 F.3d 730, 735 (7th Cir. 2002).
II.

Background
In June 2007, Merlyn McNeal obtained a $261,000 adjustable-rate mortgage

from BNC Mortgage, Inc. to purchase a residence in Country Club Hills, Illinois.

Exhibit 8 filed by McNeal (an escrow shortage statement) was incomplete. [1-8].
JPMorgan Chase Bank submitted a complete copy of the document with its motion to
dismiss. [17-4]. McNeal did not deny that the bank’s exhibit was, in fact, a complete copy of
her Exhibit 8, and therefore I use defendant’s version when evaluating the sufficiency of
plaintiff’s complaint.
2

3

Bracketed numbers refer to entries on the district court docket.

3

The interest rate was set at 9.125% for the first two years and capped at 16.215%
thereafter. Under the mortgage note, payments were to be made to Chase Home
Finance, LLC. (Chase Home Finance merged with JPMorgan Chase Bank—the
parties do not address any relevant distinction between the two for the purposes of
these motions.) In February 2013, McNeal’s mortgage was assigned from Mortgage
Electronic Registration Systems, Inc.—as nominee for BNC—to JPMorgan Chase
Bank in February 2013. [1-3]. McNeal alleges that this assignment was fraudulent
and that soon after she entered into the mortgage, Fannie Mae became (and is
currently) the owner of McNeal’s loan. McNeal does not provide any factual detail to
explain the basis for this allegation. However, attached to the complaint are
JPMorgan Chase Bank communications (in 2015) that reference Fannie Mae as the
owner of McNeal’s mortgage loan. See [1-5] at 2; [1-6] at 5. (JPMorgan Chase Bank
and Fannie Mae are notably silent on this issue in their briefs, but ultimately it is
not relevant to the disposition of their motions.)
In March 2013, JPMorgan Chase Bank filed a foreclosure complaint against
McNeal in the Circuit Court of Cook County. McNeal responded to the lawsuit and
applied to JPMorgan Chase Bank for assistance with a loan modification. Around a
year later, summary judgment was entered against McNeal in the foreclosure
action. In May 2015, JPMorgan Chase Bank offered McNeal a three-month trial
period payment plan to begin in July 2015, which if successful would lead to a loan
modification. When she was offered the trial period plan, McNeal was informed that
her current escrow shortage was $773.78. [1-5] at 5. McNeal and JPMorgan Chase

4

Bank entered into a loan modification agreement in early November 2015. [1-7]. A
few weeks later, JPMorgan Chase Bank sent McNeal an escrow shortage statement,
stating that her escrow would reach a $3,989.74 shortage in 2016. [1-8]. A month
later, McNeal sent JPMorgan a letter, seeking information on her mortgage
servicing. [1-10]. JPMorgan Chase Bank responded in January 2016. [1-11]. McNeal
also sent the bank two letters (one in December 2014, one in December 2015) which
are the subject of her RESPA claim. [1-4]; [1-10]. JPMorgan Chase Bank responded
in January and February 2016. [17-5]; [17-6].
Although McNeal avoided foreclosure and received a loan modification, she
alleges that the defendants’ handling of her mortgage and loan modification was
fraudulent, deceptive, and unfair, and she sued within a few months of entering into
the loan modification agreement.
III.

Standing
Under Rule 12(b)(1), “the district court must accept as true all material

allegations of the complaint, drawing all reasonable inferences therefrom in the
plaintiff’s favor, unless standing is challenged as a factual matter.” Remijas v.
Neiman Marcus Grp., LLC, 794 F.3d 688, 691 (7th Cir. 2015). As the party invoking
federal jurisdiction, McNeal bears the burden of alleging that she has suffered a
concrete and particularized injury that is fairly traceable to the challenged conduct
and that is likely to be redressed by a favorable judicial decision. Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560–61 (1992).
JPMorgan Chase & Co. moves to dismiss all claims against it under Rule
12(b)(1), arguing that McNeal lacks standing to sue JPMorgan Chase & Co. because
5

her alleged injuries are based on unauthorized fees, mortgage foreclosure, or escrow
payments. Because there are no allegations tracing these injuries to JPMorgan
Chase & Co. (as opposed to JPMorgan Chase Bank, as loan servicer, or Fannie Mae,
as possible owner of the mortgage), JPMorgan Chase & Co. maintains that
McNeal’s alleged injuries are therefore not traceable to or redressable by JPMorgan
Chase & Co., a holding company. McNeal offers no response and fails to
acknowledge JPMorgan Chase & Co.’s separate motion to dismiss in its entirety.
See [31] at 1. McNeal has failed to meet her burden to establish standing for her
claims against JPMorgan Chase & Co., and she has forfeited any argument that she
has standing for those claims. See Alioto, 651 F.3d at 721; Lekas, 405 F.3d at 614.
However, courts have an independent obligation to assure that standing exists,
Summers v. Earth Island Institute, 555 U.S. 488, 499 (2009), and “the standing
inquiry requires careful judicial examination of a complaint’s allegations to
ascertain whether the particular plaintiff is entitled to an adjudication of the
particular claims asserted.” Int’l Primate Prot. League v. Administrators of Tulane
Educ. Fund, 500 U.S. 72, 77 (1991). McNeal does not have standing to bring her
RESPA, ICFA, RMLA, breach of contract, and unjust enrichment claims against
JPMorgan Chase & Co. because these claims all arise out of her mortgage, loan
modification, and loan servicing, but her complaint lacks allegations tying
JPMorgan Chase & Co. to these actions. In her RICO claim, however, McNeal
alleges that JPMorgan Chase & Co. is part of an enterprise that caused her harm.
These allegations are sufficient—albeit barely—to allege Article III standing. See

6

Lujan, 504 U.S. at 561 (“At the pleading stage, general factual allegations of injury
resulting from the defendant’s conduct may suffice, for on a motion to dismiss we
presum[e] that general allegations embrace those specific facts that are necessary to
support the claim.”) (marks omitted). McNeal has standing to assert the RICO claim
against JPMorgan Chase & Co., but her other claims against JPMorgan Chase &
Co. are dismissed without prejudice for lack of standing. See Remijas, 794 F.3d at
697.
IV.

Rule 12(b)(6)
A.

Racketeer Influenced & Corrupt Organizations Act

McNeal asserts that the Chase defendants violated RICO, 18 U.S.C.
§ 1962(c), by engaging in an enterprise to create fraudulent mortgage assignments
and collect improper fees through mail and wire fraud. RICO “is a unique cause of
action that is concerned with eradicating organized, long-term, habitual criminal
activity,” and it “does not cover all instances of wrongdoing.” Gamboa v. Velez, 457
F.3d 703, 705 (7th Cir. 2006). Section 1962(c) makes it “unlawful for any person
employed by or associated with any enterprise engaged in, or the activities of which
affect, interstate or foreign commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise’s affairs through a pattern of
racketeering activity or collection of unlawful debt.” To state a § 1962(c) claim, a
plaintiff must “demonstrate (1) conduct (2) of an enterprise (3) through a pattern (4)
of racketeering activity.” Rao v. BP Prods. N. Am., Inc. 589 F.3d 389, 399 (7th Cir.
2009). The Chase defendants contend that McNeal fails to allege the conduct and

7

enterprise elements and that she fails to satisfy the particularity requirement for
alleging fraud under Federal Rule of Civil Procedure 9(b).
McNeal’s allegations are inconsistent, lack particularity, and fail to state a
§ 1962(c) claim. Under RICO, an “enterprise” includes “any individual, partnership,
corporation, association, or other legal entity, and any union or group of individuals
associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). This definition is
to be interpreted broadly but “requires a plaintiff to identify a ‘person’—i.e., the
defendant—that is distinct from the RICO enterprise.” United Food & Commercial
Workers Unions & Emp’rs Midwest Health Ben. Fund v. Walgreen Co., 719 F.3d 849,
853 (7th Cir. 2013) (citing Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158,
161 (2001)). This is because RICO “liability depends on showing that the defendants
conducted or participated in the conduct of the ‘enterprise’s affairs,’ not just their
own affairs.” Reves v. Ernst & Young, 507 U.S. 170, 185 (1993); see also Baker v.
IBP, Inc., 357 F.3d 685, 692 (7th Cir. 2004) (“Without a difference between the
defendant and the ‘enterprise’ there can be no violation of RICO.”).
In McNeal’s RICO count, she alleges that “Chase and its employees”
conducted the “Chase enterprise” to fraudulently assignment mortgages, to
fraudulently foreclose on McNeal, and to charge McNeal improper fees through use
of wire and mail fraud. [1] ¶¶ 80–83; see also [1] ¶¶ 70–71. Other allegations of her
complaint, however, state that JPMorgan Chase & Co., JPMorgan Chase Bank,
Chase Home Finance, and Fannie Mae are the “enterprise,” plus their “directors,
employees, and agents,” property preservation vendors, and real-estate brokers who

8

valued properties. [1] ¶ 68. McNeal also alleges that the “persons” involved were
JPMorgan Chase & Co., JPMorgan Chase Bank, Chase Home Finance, and Fannie
Mae.4 [1] ¶ 67. But in response to the motions to dismiss—which argued that she
improperly alleged persons indistinct from the enterprise—McNeal contends that
she actually alleged that JPMorgan Chase Bank was the “person” and JPMorgan
Chase & Co. was the “enterprise.” [31] at 3.
In certain circumstances, a parent and subsidiary may be sufficiently distinct
to satisfy the person-enterprise distinction, see, e.g., Haroco, Inc. v. American
National Bank & Trust Co., 747 F.2d 384, 400 (7th Cir. 1984), but merely alleging
that a pattern of predicate acts were committed by a corporation that has agents or
affiliates is insufficient to state a RICO claim. Emery v. American Gen. Fin., Inc.,
134 F.3d 1321, 1324 (7th Cir. 1998). Instead, “the firm must be shown to use its
agents or affiliates in a way that bears at least a family resemblance to the
paradigmatic RICO case in which a criminal obtains control of a legitimate (or
legitimate-appearing) firm and uses the firm as the instrument of his criminality.”
Id.
McNeal’s allegations—even if clarified in McNeal’s response brief—do not
sufficiently allege a distinction between the persons and enterprise. Instead, she
Although Fannie Mae is mentioned in some of McNeal’s RICO-related allegations, McNeal
does not direct the RICO claim against Fannie Mae. Fannie Mae is not named in the actual
count (including the header, unlike in other claims brought against all defendants). See [1]
at 16; compare [1] at 20. The defendants briefed the motions to dismiss as if McNeal had
not named Fannie Mae in the RICO claim, and McNeal’s response brief only refers to the
Chase defendants in the context of her RICO claim. [31] at 3–4. In any event, the complaint
refers to Fannie Mae as both a person and part of the enterprise and so its alleged role still
presents a lack of distinction between the persons and the enterprise.
4

9

alleges that members of a corporate family were both the persons and the
enterprise. But “[a] parent and its wholly owned subsidiaries no more have
sufficient distinctness to trigger RICO liability than to trigger liability for
conspiring in violation of the Sherman Act, unless the enterprise’s decision to
operate through subsidiaries rather than divisions somehow facilitated its unlawful
activity, which has not been shown here.” Bucklew v. Hawkins, Ash, Baptie & Co.,
LLP., 329 F.3d 923, 934 (7th Cir. 2003) (citation omitted) (collecting cases); see also
Bachman v. Bear, Stearns & Co., 178 F.3d 930, 932 (7th Cir. 1999) (“A firm and its
employees, or a parent and its subsidiaries, are not an enterprise separate from the
firm itself.”); Fitzgerald v. Chrysler Corp., 116 F.3d 225, 226 (7th Cir. 1997) (“Read
literally, RICO would encompass every fraud case against a corporation, provided
only that a pattern of fraud and some use of the mails or of telecommunications to
further the fraud were shown; the corporation would be the RICO person and the
corporation plus its employees the ‘enterprise.’”).
Moreover, even if McNeal had sufficiently pled the existence of a distinct
enterprise, she did not adequately allege that the Chase defendants (and their
employees and agents) were conducting the affairs of a criminal enterprise, rather
than their own affairs (even if unlawful). At best, McNeal’s allegations amount to
an argument that affiliates within the JPMorgan Chase corporate family unlawfully
carried out their mortgage-related businesses. This is insufficient to allege a RICO
claim. See, e.g., United Food, 719 F.3d at 855 (“Nor does the fact that [defendants’]
activities were by all appearances illegal indicate that the companies were acting on

10

behalf of a distinct enterprise.”); Baker, 357 F.3d at 691 (conduct and enterprise
elements not sufficiently alleged where “[t]he nub of the complaint is that
[defendant] operates itself unlawfully”).
The complaint also lacks allegations outlining the enterprise, instead just
generally referencing the “Chase enterprise.” McNeal provides no allegations
concerning its structure, duration, or organization, other than vaguely alluding to
the corporate affiliation between the Chase defendants and alleged predicate acts.
This is insufficient to allege a RICO enterprise. See Stachon v. United Consumers
Club, Inc., 229 F.3d 673, 675 (7th Cir. 2000) (“[A] RICO enterprise is more than a
group of people who get together to commit a pattern of racketeering activity, there
must be an organization with a structure and goals separate from the predicate acts
themselves.”) (citations and marks omitted); Richmond v. Nationwide Cassel L.P.,
52 F.3d 640, 645 (7th Cir. 1995) (“[A] nebulous, open-ended description of the
enterprise does not sufficiently identify this essential element of the RICO
offense.”). McNeal’s allegations (even of unlawful conduct) are insufficient to allege
a § 1962(c) claim. See, e.g., Gamboa, 457 F.3d at 705. (RICO “does not cover all
instances of wrongdoing” but instead “is a unique cause of action that is concerned
with eradicating organized, long-term, habitual criminal activity.”).5

McNeal also fails to meet the particularity requirements for alleging fraud claims under
Federal Rule of Civil Procedure 9(b). In the context of a RICO claim, the plaintiff “must, at
a minimum, describe the predicate acts [of fraud] with some specificity and state the time,
place, and content of the alleged communications perpetrating the fraud” and “plead
sufficient facts to notify each defendant of his alleged participation in the scheme.” Goren v.
New Vision Int’l, Inc., 156 F.3d 721, 726 (7th Cir. 1998) (citations omitted). McNeal’s
allegations regarding the “persons” and “enterprise” are inconsistent, and while McNeal
5

11

B.

Real Estate Settlement Practices Act

McNeal alleges that the Chase defendants violated the Real Estate
Settlement Practices Act (RESPA), 12 U.S.C. § 2605(e), by failing to respond to
McNeal’s “qualified written requests” for information relating to her mortgage in
December 2014 and in December 2015. While McNeal brings the RESPA claim
against the “Chase” defendants, her complaint and brief acknowledge that RESPA
claims impose obligations on a loan servicer, which here (as McNeal alleges) is
JPMorgan Chase Bank. Nothing in her RESPA allegations is directed at JPMorgan
Chase & Co.
McNeal fails to state a RESPA claim against JPMorgan Chase Bank. Section
2605(e) requires a loan servicer to promptly respond to a borrower’s “qualified
written request” regarding an account error or request for information. However,
§ 2605(f) “indicates that the statute was intended to redress actual damages caused
by the failure of the loan servicer to provide information to the borrower.” Diedrich
v. Ocwen Loan Servicing, LLC, No. 15-2573, 2016 WL 5852453, at *4 (7th Cir. Oct.
6, 2016). For these reasons, actual damages are an essential element of a RESPA
claim. Id. at *5–7. McNeal fails to allege any actual damages, only alleging that she
is entitled to statutory damages and her litigation expenses for the instant action.

alleges that the 2013 mortgage assignment to JPMorgan Chase Bank was fraudulent and
that she was assessed improper fees, she fails to allege how to the specific defendants
allegedly participated in a racketeering scheme. Instead, she clumps the “Chase”
defendants in a vague scheme of mail fraud without explaining any of the defendants’
specific roles in an enterprise or their conduct in coordinating the predicate acts. McNeal
fails to allege the “who, what, when, where, and how of the fraud” as required under Rule
9(b). Cincinnati Life, 722 F.3d at 948.

12

[1] at 19. But “simply having to file suit” as a result of a loan servicer’s alleged
failure to respond to a qualified written request in violation of RESPA “does not
suffice as a harm warranting actual damages.” Diedrich, 2016 WL 5852453, at *6
(marks omitted). McNeal’s RESPA claim (based on either letter) fails to state a
claim because she does not allege that JPMorgan Chase Bank’s alleged failure to
comply with RESPA caused her actual damages.
There are other problems with McNeal’s RESPA claim. Her December 2014
letter, [1-4], is not a “qualified written request” because, as McNeal indeed alleges,
it “disputes a loan modification approval” that would require an increased monthly
payment. [1] ¶ 48. The letter expresses McNeal’s frustration with the offered loan
modification and presents several reasons for why she seeks a lower monthly
payment, but it does not ask Chase to correct any current errors with her mortgage
account or for other information. Moreover, in response to the motions to dismiss,
McNeal does not argue that the 2014 letter was a qualified written request. [31] at
4–5. For the December 2015 letter, [1-10], JPMorgan Chase Bank does not dispute
that it was a “qualified written request” but argues that it timely responded to
McNeal’s request with two letters supplying the requested information, which were
attached to its motion to dismiss. [17-5]; [17-6]. These letters are central to the
RESPA claim, are not challenged by McNeal, and establish that defendant timely
responded to the December 2015 letter. The RESPA claim is dismissed.

13

C.

Illinois Consumer Fraud & Deceptive Practices Act

For an Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/2,
(ICFA) claim based on deceptive practices,6 a plaintiff must allege: “(1) a deceptive
act or practice by the defendant, (2) the defendant’s intent that the plaintiff rely on
the deception, (3) the occurrence of the deception in the course of conduct involving
trade or commerce, and (4) actual damage to the plaintiff (5) proximately caused by
the deception.” Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill.2d 100, 180 (2005).
McNeal alleges that “Chase” and Fannie Mae violated the ICFA by charging
McNeal unnecessary property fees and default-related fees, and by increasing her
mortgage payment due to an escrow shortage in November 2015. She alleges that
she relied upon “these statements” misrepresenting amounts owed when she signed
the loan modification and made her monthly payments. The defendants argue that
McNeal has failed to plead the elements of an ICFA claim (and without sufficient
particularity) and that her exhibits show that she was not damaged.
McNeal has failed to state an ICFA claim with the requisite particularity.
She does not explain how Fannie Mae (or JPMorgan Chase & Co.) played a role in
the alleged fraud, and by process of elimination, the court (and defendants) are left
to guess that the “Chase” entity involved was JPMorgan Chase Bank, the servicer of
her mortgage, since the accusations relate to her loan modification and monthly
payments. Perhaps McNeal was confused because some of the complaint’s exhibits

Section 10a(a) of the act authorizes private causes of action for practices proscribed by
section 2. 815 ILCS 505/10a(a); Avery, 216 Ill.2d at 179.
6

14

are from “Chase” (without specifying which Chase entity). But merely alleging that
“Chase” took certain actions while trying to state a claim against three different
JPMorgan Chase entities and Fannie Mae is insufficient for the purposes of
Rule 9(b). See Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir.
2014) (“One of the purposes of the particularity and specificity required under Rule
9(b) is to force the plaintiff to do more than the usual investigation before filing
[her] complaint.”) (marks omitted).
McNeal, moreover, fails to allege the requisite elements for an ICFA claim.
There are two different parts to her ICFA claim—the allegedly unauthorized fees
and the escrow shortage. For the fee issue, even assuming that the fees were
unauthorized or unreasonable, McNeal alleges no actual damages, which is an
element of an ICFA claim. Avery, 216 Ill.2d at 180. In her complaint, she alleges
that she was injured by having her account assessed these fees, but she does not
allege that she ever paid any of these fees, and her prayer for relief only seeks
statutory damages, litigation expenses, and punitive damages. In response to the
motions to dismiss, McNeal points to the alleged corporate advance fees (for
property inspection, publishing sale, and costs related to sheriff’s sale) as of October
2015, [1] ¶ 62, and Exhibit 11, which is a response from “Chase” to McNeal’s
request for information detailing the corporate advance fees for McNeal’s account
since November 2008 through January 2016. [1-11]. McNeal does not allege or
argue that she ever paid any corporate advance fees, however, and Exhibit 11

15

explains that as part of the loan modification process, all of these fees were waived
and McNeal would not have to repay them. [1-11] at 1, 7.
McNeal contends that the fees were not actually waived and that this is a
factual issue that should not be decided upon a motion to dismiss. But even on a
motion to dismiss, the court may consider documents attached to the complaint and
central to McNeal’s claims. See Williamson, 714 F.3d at 436. McNeal attached to the
complaint and relied upon an exhibit which stated that all the corporate advance
fees were waived. There are no factual allegations in her complaint to dispute or
contradict this—McNeal points to none and provides no explanation to support her
contention that the fees were not waived. “A plaintiff may plead himself out of court
by attaching documents to the complaint that indicate that he or she is not entitled
to judgment.” In the Matter of Wade, 969 F.2d 241, 249 (7th Cir. 1992). McNeal has
done so here. See Thompson v. Illinois Dep’t of Prof’l Regulation, 300 F.3d 750, 754,
758 (7th Cir. 2002).
Regarding the escrow shortage, McNeal does not respond to the defendants’
arguments that her complaint fails to identify any deceptive statements about her
escrow payments and that her exhibits show she was told that her escrow payments
were not fixed and could change, even after loan modification. McNeal’s failure to
respond to these arguments forfeits any response that she could have made. See
Kirksey, 168 F.3d at 1041. And her allegations and exhibits do not show any
deceptive statements. For example, McNeal’s complaint cites to a paragraph from
JPMorgan Chase Bank explaining how McNeal’s trial period plan payments were

16

calculated, but McNeal omitted the sentence stating: “Your modified monthly
payment may change if your property taxes and insurance premiums change, as
permitted by law.” See [1] ¶ 52; compare [1-5] at 5. This exhibit also states that
after the loan modification, McNeal’s monthly principal and interest payments
would be fixed for the life of her mortgage, but that “Your new monthly payment
will also include an escrow for property taxes, hazard insurance and other escrowed
expenses, but your servicer will separately notify you of the escrow amount to
include with your monthly payment. If the cost of your homeowners insurance,
property tax assessment or other escrowed expenses increases, your monthly
payment will increase as well.” [1-5] at 6. Similarly, the loan modification
agreement explained that the escrow amounts were estimated and could change. [17] at 6–7. McNeal does not allege or argue that the $3,989.74 expected escrow
shortage for 2016 was the result of improper charges or fees to her escrow account,
and the escrow statement indicates that the only expected withdrawals were for
county tax and homeowners insurance. [1-8]; [17-4]. McNeal has failed to state a
deceptive practices claim based on either the fees or the escrow shortage, and
therefore this claim must be dismissed.
D.

Residential Mortgage License Act (& Illinois Consumer Fraud
Act)

McNeal alleges that BNC was not licensed when it originated her loan and
therefore that her mortgage is void and unenforceable and that she was damaged by
paying loan closing fees and her mortgage payments. From McNeal’s complaint and
response brief, it is not entirely clear whether she brings this claim under both the
17

Residential Mortgage License Act, 205 ILCS 635/1-3, and the ICFA. The allegations
in this count refer only to the RMLA,7 but the header also states “Illinois Consumer
Fraud Act (Unfair).” [1] at 21. McNeal argues in her response that she is also
asserting an unfair practice claim under the ICFA because it was unfair for BNC to
violate the RMLA licensing requirements and for BNC to give her a predatory loan
with a high interest. The defendants assert that McNeal’s allegations that BNC was
unlicensed are perfunctory and unsupported,8 and that under RMLA, there is no
private right of action to void mortgages obtained through unlicensed lenders.
1.

Residential Mortgage Licensing Act

McNeal fails to state a claim under the RMLA to void her mortgage based on
licensing requirements. ’’Originally, the RMLA was silent as to the existence of a
private right of action to enforce licensing requirements. See 205 ILCS 635/1-3; In re
Jordan, 543 B.R. 878, 883 (Bankr. C.D. Ill. 2016); Graham v. Midland Mortg. Co.,
406 F.Supp.2d 948, 952 (N.D. Ill. 2005). A private right of action under the RMLA
licensing requirements was implied in First Mortgage Co. v. Dina, which held—in a
foreclosure action—that a mortgage made by an unlicensed lender was void against
public policy. 2014 IL App (2d) 130567, ¶¶ 18–25. But due to a legislative
amendment, “Dina is no longer good law.” Fed. Nat’l Mortg. Ass’n v. Kimbrell, 2016
The parties’ joint initial status report also represents that this count is only brought under
§ 1-3 of the RMLA—it says nothing about a claim under the Illinois Consumer Fraud Act.
[36] at 2–3.
7

McNeal alleges that Exhibit 9 to her complaint is a certified copy of an Illinois
Department of Financial and Professional Regulation statement showing that BNC was not
licensed ([1] ¶ 113), but there are no records from the department attached to the
complaint. Exhibit 9 is a mortgage loan statement from JPMorgan Chase Bank. [1-9].

8

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IL App (3d) 140662-U, ¶ 27. Soon after Dina was decided, a legislative amendment
to the RMLA clarified that under the “existing law,” a “mortgage loan brokered,
funded, originated, serviced, or purchased by a party who is not licensed under this
Section shall not be held to be invalid solely on the basis of a violation under this
Section.” 205 ILCS 635/1-3(e). “[A]s the 2015 amendment makes clear, there is not
(and never has been) a right to avoid a mortgage that violates the RMLA.” Kimbrell,
2016 IL App (3d) 140662-U, ¶ 27; see Bank of N.Y. Mellon v. Robin, 2016 IL App
(2d) 151225-U, ¶ 55. The Illinois legislature’s swift repudiation of Dina indicates
that there was never a private right of action to void a mortgage based on a
violation of the RMLA licensing requirements.9
McNeal argues that because she alleged two violations of the RMLA (that
BNC originated her loan while unlicensed and that it gave her a predatory loan),
her allegations fall outside the scope of this amendment. While she cites various
provisions of the RMLA, they do not support McNeal’s argument that she has a
private right of action to enforce the RMLA’s licensing requirements and instead
actually reference the state’s authority to punish violators. See 205 ILCS 635/1-3(a1)(3) & 4-5.10

Because McNeal has no RMLA claim for violations of the licensing requirements even if
BNC were an unlicensed lender, the court need not address whether she sufficiently alleged
that BNC was unlicensed or address defendants’ assertions that BNC may have been
exempt from licensing requirements. McNeal also fails to state a RMLA claim against
JPMorgan Chase & Co. for the additional reason that she does not allege that it ever held
her mortgage (and she did not respond to this argument).

9

Under the RMLA, borrowers may have a private right of action against residential
mortgage licensees who violate the act’s lending procedures. See 205 ILCS 635/4-16 (private
right of action for lending procedure violations); 205 ILCS 635/5-6–5-16 (listing lending
10

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2.

Illinois Consumer Fraud Act

McNeal also argues that she has sufficiently alleged an unfairness claim
under ICFA because it was unfair for BNC to give her a predatory loan when BNC
was unlicensed in Illinois. Her complaint barely references the ICFA or allegations
of unfairness, however, and even assuming the truth of McNeal’s allegations
regarding BNC’s loan origination practices, she fails to state an ICFA claim against
any of the defendants in this case.
The ICFA provides that “[a]ny person who suffers actual damage as a result
of a violation of this Act committed by any other person may bring an action against
such person.” 815 ILCS 505/10a(a) (emphasis added). Under § 10, there is no
derivative liability under the ICFA. Zekman v. Direct Am. Marketers, Inc., 182 Ill.2d
359, 370 (1998) (“The plain language of section 10a(a) provides a private cause of
action against ‘such person’ that ‘committed’ the violation of the Act. The statute
does not provide for a cause of action against those who knowingly receive benefits
from the person committing the violation.”). McNeal does not allege that any of the
defendants were involved with the origination of her loan—her allegations solely
involve (an allegedly unlicensed) BNC’s origination of a predatory loan. By failing to
allege that the defendants violated ICFA, McNeal has failed to state an ICFA claim,
and it must be dismissed.

procedure violations). McNeal, however, does not reference these provisions, and in
response to the motions to dismiss, she does not argue that she brought such an action for
alleged violations of the lending procedures specified in §§ 5-6 through 5-16. Therefore she
has forfeited any such arguments. See Kirksey, 168 F.3d at 1041.

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E.

Breach of Contract

“Under Illinois law, the elements of a breach of contract cause of action are
(1) offer and acceptance, (2) consideration, (3) definite and certain terms, (4)
performance by the plaintiff of all required conditions, (5) breach, and (6) damages.”
Association Ben. Servs., Inc. v. Caremark RX, Inc., 493 F.3d 841, 849 (7th Cir.
2007). McNeal alleges: that she has a valid and enforceable mortgage contract with
JPMorgan Chase Bank and Fannie Mae in the form of a mortgage, note, and loan
modification; that she substantially performed her duties under the contract by
keeping the property occupied, secure, safe, and by making her payments; that
JPMorgan Chase Bank materially breached the note, mortgage, and loan
modification by charging unauthorized fees, failing to provide accurate repayment
figures, failing to maintain proper escrow calculations, failing to provide an
accurate accounting, and failing to conduct its affairs in good faith. [1] ¶¶ 122–24.
She also alleges that the defendants breached the express terms of the note and
mortgage and its implied duty of good faith and fair dealing by charging
unauthorized fees. [1] ¶ 125. Her alleged damages consist of the unauthorized fees,
some unspecified interest, damage to her credit report, loss of equity in her home,
and emotional distress and mental anguish. [1] ¶ 126. The defendants argue that
McNeal fails to allege their breach, her performance, and damages. McNeal does not
respond to most of these arguments, instead generally arguing that the court must
accept her allegations as true and that she has adequately pled a claim for breach of
contract. [31] at 8. This forfeits any arguments that McNeal could have brought in
response. See Alioto, 651 F.3d at 721; Kirksey, 168 F.3d at 1041.
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JPMorgan Chase Bank and Fannie Mae argue that McNeal cannot allege a
breach of contract claim based on the note and mortgage because she defaulted on
her payments (resulting in the foreclosure action) and therefore cannot allege that
she substantially performed her obligations. McNeal does not respond—
maintaining that “she alleged that she performed her duties under the contract by
keeping the property occupied and safe.” [31] at 8. Her lack of response forfeits any
argument to excuse her failure to perform—for example, such as arguing that her
failure to perform those conditions was excused by some earlier breach by the
defendants. Without alleging that she performed “all required conditions” or
explaining how her breach of contract claim survives despite her failure to perform,
McNeal cannot state a claim for the defendants’ breach of the note or mortgage
based on alleged breaches after her default.
Moreover, as far as her breach of contract claim is premised on being charged
default-related fees, McNeal cannot allege damages, since those fees have been
waived. See [1-11].11 Defendants argue that McNeal does not allege any facts
supporting the other premises for McNeal breach of contract claim, specifically how
defendants allegedly failed to provide proper escrow, repayment, and accounting
figures, or what contractual provisions were breached by such alleged failures.
Her alleged emotional distress and mental anguish are not recoverable damages for
breach of contract. See Parks v. Wells Fargo Home Mortg., Inc., 398 F.3d 937, 940–42 (7th
Cir. 2005) (breach of contract “does not support emotional damages” under Illinois law). The
defendants also argue for dismissal because the mortgage terms authorized JPMorgan
Chase Bank to charge McNeal default-related fees. McNeal argues that defendants have
not shown that such fees were reasonable and points to a number of dual charges occurring
on the same day. As McNeal cannot allege damages, however, this issue need not be
reached.
11

22

McNeal never alleges how the escrow statements are inaccurate or improper, and
she does not explain what repayment or accounting figures were inaccurate. These
barebones, conclusory allegations are insufficient to state a breach of contract claim.
See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). McNeal has failed to state
a claim for breach of contract.
F.

Unjust Enrichment

“[T]o state a cause of action based on a theory of unjust enrichment, a
plaintiff must allege that the defendant unjustly retained a benefit to the plaintiff’s
detriment, and that the defendant’s retention of the benefit violates the
fundamental principles of justice, equity, and good conscience.” Cleary v. Philip
Morris Inc., 656 F.3d 511, 516 (7th Cir. 2011) (quoting HPI Health Care Servs., Inc.
v. Mt. Vernon Hosp., Inc., 131 Ill.2d 145, 137 (1989)). McNeal alleges that “[a]s a
result of BNC not being registered under the RMLA, Chase and Fannie Mae has
been [sic] unjustly enriched by McNeal’s payments” and fees. [1] ¶ 128. Defendants
argue that unjust enrichment is not a separate cause of action under Illinois law
and that this claim fails because an express contract governs the parties’
relationship. McNeal does not respond to either argument, merely reciting the
elements of an unjust enrichment claim and stating that she has alleged such a
claim.
The Seventh Circuit has acknowledged recent “uncertainty whether under
Illinois law proof of unjust enrichment requires proving that the defendant has been
enriched at the expense of the plaintiff by having committed a tort, breach of
contract, or other unlawful act, or instead whether it is enough that it would be
23

‘unjust’ to allow the defendant to retain the benefit that he obtained at the
plaintiff’s expense.” Macon Cty., Ill. v. MERSCORP, Inc., 742 F.3d 711, 713–14 (7th
Cir. 2014) (citing Cleary, 656 F.3d at 516–19). That issue need not be reached,
however, because “[w]hen two parties’ relationship is governed by contract, they
may not bring a claim of unjust enrichment unless the claim falls outside the
contract.” Enger v. Chicago Carriage Cab Corp., 812 F.3d 565, 571 (7th Cir. 2016).
McNeal does not dispute that the parties’ relationship—including terms of
payment—is governed by contract. Moreover, given the express statement in the
RMLA amendment that a mortgage is not void merely because a broker was
unlicensed, McNeal cannot use unjust enrichment as a back door to void her
mortgage (or seek return of her payments) based on the RMLA licensing
requirements.
It is unlikely that plaintiff can cure all the deficiencies in her complaint
(particularly with respect to the RESPA and state-law claims). Nevertheless, the
dismissal of the complaint is without prejudice because “[d]istrict 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.” Foster v.
DeLuca, 545 F.3d 582, 584 (7th Cir. 2008).
V.

Conclusion
Defendants’ motions to dismiss, [16], [18], [20], are granted. The complaint is

dismissed without prejudice. Plaintiff has leave to file an amended complaint by
December 8, 2016. If plaintiff does not file an amended complaint, this dismissal
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will convert to a dismissal with prejudice as to plaintiff’s claims against JPMorgan
Chase Bank, N.A., Chase Home Finance LLC, Federal National Mortgage
Association, and plaintiff’s RICO claim against JPMorgan Chase & Co. The
dismissal of JPMorgan Chase & Co. for the remaining claims will be without
prejudice for the lack of standing.
ENTER:
___________________________
Manish S. Shah
United States District Judge

Date: 11/17/2016

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