Dolegiewicz v. U.S. Bank Trust, N.A.
MEMORANDUM Opinion and Order. Signed by the Honorable Harry D. Leinenweber on 2/8/2018. Mailed notice. (pk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
Individually and on behalf of
all others similarly
Case No. 17 C 4737
U.S. BANK TRUST, N.A., as
Trustee for LSF9 Master
Participation Trust; and
CALIBER HOME LOANS, INC., a
Judge Harry D. Leinenweber
MEMORANDUM OPINION AND ORDER
The Plaintiff, Mariusz Dolegiewicz (“Plaintiff”), defaulted
on his mortgage loan by failing to make the required payments
and failing to maintain casualty insurance coverage.
is owned by U.S. Bank Trust, N.A. (“Trustee”) and serviced by
is exactly what it sounds like:
Caliber, as it was authorized to do under the
ordered periodic property inspections.
“Lender placed insurance
insurance purchased by the
Plaintiff acknowledges that Defendants were within their rights
Defendants overcharged him for insurance which he says amounts
expense reimbursements, payment of reinsurance premiums with no
Plaintiff also alleges that the Defendants charged him fees for
unnecessary inspections, and fees for inspections that did not
Based on the forgoing, Plaintiff has filed a five-count
contract (Count I); (2) implied covenant of good faith and fair
dealing (Count II); (3) unjust enrichment (Count III); (4) truth
in lending (Count IV); and (5) Federal Debt Collection Practices
Act (Count V).
Count I – Breach of Contract
Defendant has filed a Motion to Dismiss based in large part
Insurance Co., 735 F. 3d 601 (7th Cir. 2015).
In this case, the
plaintiff, like the Plaintiff here, did not make his mortgage
The defendant, as the Defendants did here,
- 2 -
obtained lender placed insurance with an affiliate, and charged
him for the premiums.
The plaintiff, as does the Plaintiff here, contended
As is the case here, the premiums charged
fraud, and breach of contract, while the Plaintiff in this case
did not charge the Defendants with either type of fraud but only
with breach of contract.
As we shall see, it doesn’t make any
The Seventh Circuit affirmed the trial court’s dismissal
for the reason that “[the plaintiff] failed to state any viable
With regard to the plaintiff’s allegation that the
excessive premium constituted an illegal kickback, the court had
this to say:
But simply calling the commission a kickback doesn’t
make it one.
The examples listed in the foregoing
passage from Johnson all describe the traditional
understanding of a kickback:
an agent, charged with
acting for the benefit of a principal, accepts
something of value from a third party in return for
steering the principal’s business to the third party.
The defining characteristic of a kickback is divided
But Wachovia was not acting on behalf of
Schilke or representing her interests.
- 3 -
requirement is for the lender’s protection:
these insurance policies and renewals of the policies
must include what is known as a Standard Morgtagee
Clause to protect Lender.
The form of all policies
and renewals must be acceptable to Lender.
will have the right to hold the policies and
renewals.” (Emphasis added.) The agreement also gives
the lender broad discretion to act to protect its own
interest in the property: “Lender may do and pay for
whatever it deems reasonable or appropriate to protect
the Lender’s rights in the Property.” (Emphasis
reiterated the point:
“Failure to provide [proof of
insurance] may result in a policy being purchased by
us at your expense to protect our interest.”
Wachovia conspicuously reminded Schilke that lenderplaced insurance would be much more expensive than her
own insurance coverage.
Wachovia was not subject to
divided loyalties; rather, it was subject to an
undivided loyalty to itself, and it made this clear
from the start.
The commission for the lender-placed
insurance was not a kick back in any meaningful sense.
This proved to be important to the Seventh Circuit when it
ruled on the claim for breach of contract.
First the court
“that there was no prevision in the mortgage agreement allowing
Wachovia [the lender] to receive kickbacks.”
Then it noted that
plaintiff’s claim “might loosely be read to allege . . . bad
faith, but it does not do so plausibly,” which put the claim in
violation of the plausibility standard explained in Iqbal and
See, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
- 4 -
Here, as in Cohen, Defendants had a contractual right to
obtain insurance in the event the mortgagor failed to do so.
The Plaintiff, the mortgagor here, did not do so after multiple
higher than Plaintiff could himself purchase and he would not
Defendants would receive (or pay) a commission which would be
chargeable to him.
He failed to heed the warnings so Defendants
purchased insurance to protect their interest in the property.
While Plaintiff argues that this is notice pleading so it
is not necessary for him to go into great detail as to the
kickback allegations, nevertheless the Seventh Circuit noted, to
satisfy Iqbal and Twombly, it is necessary to state facts that
are more than consistent with a defendant’s liability.
sum and substance of the Plaintiff’s kickback allegations are:
individually under written and is placed without
regard to the borrower’s ability to afford the
coverage (Paragraph 13);
The borrowers have no say in selection of
policies or insurers (Paragraph 14);
The insurance charges are exorbitant, higher
than what a borrower would expect to pay and are less
comprehensive (Paragraph 15);
- 5 -
Instead of charging borrowers with the
actual cost, Defendants enter into agreements with
exclusive insurance companies which are disguised as
kickbacks (Paragraph 17); and
The kickbacks include unearned commissions,
premiums that carry no commensurate transfer of risk,
and free or below cost mortgage servicing functions
that the insurance provider performs for Defendants
labeling a matter a “kickback” does not make it so.
an agent, charged with acting for the benefit of a
return for steering the principal’s business to the third party.
The defining characteristic of a kickback is divided loyalties.”
But here, as in Cohen, the Defendants were not acting on behalf
of Plaintiff or representing his interests.
contractual right to do and they clearly explained this to him.
Defendants overcharged him for home inspections, which he also
inspect the property after default and charge the Plaintiff for
- 6 -
Defendants’ Motion to Dismiss on the breach of contract claim
that Defendants charged him with home inspections that did not
If it is true that Defendants charged Plaintiff with
inspection fees for fictitious inspections, such a claim could
easily stand as one for breach of contract.
inspections did not occur and thus his Complaint does not give
They cite Nationstar Mortgage, LLC v. Baronfeld,
requirement of Rule 9, while this case is a breach of contract
See, Paragraph E, infra.
The issue can be revisited at
the summary judgment stage.
claim, Count I, except to the extent that Plaintiff claims that
he was charged for non-existent, fictitious inspections.
Count II – Implied Covenant of Good Faith
Count II, implied covenant of good faith and fair dealing
is likewise dismissed except to the extent of the claim for nonexistent inspections.
As the Seventh Circuit noted in Cohen, to
possibility that a defendant has acted unlawfully.
- 7 -
allegations are ‘not only compatible with, but indeed are more
likely explained by lawful conduct the complaint fails to state
a plausible claim for relief.”
As pointed out above, Defendants
clearly had the right to purchase lender-placed insurance and to
denied with respect to the fictitious inspections.
Count III – Unjust Enrichment
The claim for unjust enrichment must likewise be dismissed
because Plaintiff has clearly pled the existence of a contract,
i.e., the mortgage and note.
Plaintiff argues that he has only
pled in the alternative but nowhere in his Complaint does he
bring into question the validity of his mortgage.
rel. Hartigan v. E & E Hauling, Inc., 153 Ill. 2d. 473, 497
There also is no allegation that Plaintiff paid any of
Count III is dismissed with prejudice.
Count IV – Truth in Lending Act
Plaintiff claims that the Defendants violated the Truth in
provisions giving Defendants the contractual right to purchase
- 8 -
insurance in the event borrower fails to maintain insurance.
Plaintiff admits, Regulation Z exempts insurance premiums from
documents allow the borrower to obtain insurance from an insurer
of his choice.
12 C.F.R. § 226.4(d)(2)(i).
and the note clearly allow this.
Here the mortgage
Adams v. GMAC Corp., 1994 WL
702639 (N.D, Ill. December 14, 1994).
Count IV (“TILA”) is
dismissed with prejudice.
Count V - Federal Debt Collection Practices Act
Count V attempts to allege a violation of the Federal Debt
Collection Practices Act (the “FDCPA”) based on the inspection
fees and the alleged kickbacks.
The “kickback” argument fares
inspection fees do not amount to a violation of FDCPA because
Defendants disclosed that they were charging for inspection fees
that were authorized by the mortgage agreement.
charge Borrower fees for services performed in connection with
property inspection fees and valuations fees.”
- 9 -
To the extent
that Plaintiff contends that the billing fees are false, based
This is not the
The FDCPA only makes illegal charges that are not owed
because the borrower never agreed to the debt.
To hold otherwise would create a triable FDCPA claim
Lender over the amount of an authorized charge.
Wilson v. Trott
Plaintiff did not agree to pay for fictitious investigations
which is what the Complaint alleges.
However, the FDCPA is a
fraud statute and therefore Rule 9’s requirement of specificity
applies (unlike in the breach of contract claim, see, infra).
The Complaint is short on specifics with regard to the FDCPA
claim as it relates to the fictitious inspections.
Therefore, unlike the Court’s ruling as to the
breach of contract, the Motion to Dismiss is granted without
For the reasons stated herein, the Court rules as follows:
Count I, except to the extent that Plaintiff claims
that he was charged for non-existent inspections, is dismissed;
- 10 -
Count II is dismissed with respect to the overcharges,
Count III is dismissed with prejudice;
Count IV is dismissed with prejudice; and
Count V is dismissed without prejudice.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
- 11 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?