929 F. Supp. 2d 839
N.D. Ill.2013Background
- Chase acquired WaMu’s banking assets from the FDIC on September 25, 2008.
- Plaintiffs allege Chase foreclosed on their home using improper documentation, including alleged lack of a WaMu mortgage assignment and a forged note indorsement.
- Plaintiffs claim Chase and Codilis defendants conspired in a RICO enterprise and that Schoppe of the FDIC executed an affidavit of assignment to Chase.
- Ms. Drobny sought loan modifications, but Chase denied or mishandled requests, with a December 2, 2009 letter indicating denial for insufficient income.
- Plaintiffs assert state-law claims for fraud, consumer fraud, and emotional distress in addition to the federal RICO counts; the court dismisses these claims without prejudice pending amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs plead a RICO predicate act with sufficient specificity | Drobny plaintiffs contend forged indorsement and fraudulent filings show predicate acts. | Chase/Codilis argue no valid predicate acts are pled with particularity and filings alone are not mail/wire fraud. | RICO predicate acts not pled with particularity; claim fails. |
| Whether the complaint shows a pattern of racketeering and a distinct enterprise | Plaintiffs allege a long-running scheme involving multiple foreclosures and parties. | Defendants argue there is a single, self-contained scheme with plaintiffs as sole victims and no clear enterprise. | No pattern or identifiable enterprise; RICO claims fail. |
| Whether Chase had proper standing/assignment to foreclose given WaMu's FDIC transfer | Plaintiffs claim no valid WaMu assignment to Chase and forged endorsements undermine foreclosure. | FDIC transfer authorized by law; no separate assignment required; indorsement may be blank and enforceable. | No assignment requirement; Chase validly holds in-blank indorsement; foreclosure proper. |
| Whether the complaint states a federal RICO claim and thus federal jurisdiction remains | RICO claims should survive to address nationwide banking misconduct. | RICO claims are legally insufficient under Rule 8 and 9(b). | RICO claims dismissed for failure to plead fraud with particularity and pattern; jurisdiction not retained. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim for relief)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading requires more than mere conclusory statements)
- Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502 (7th Cir. 2007) (fraud-based RICO claims require heightened Rule 9(b) pleading)
- Reves v. Ernst & Young, 507 U.S. 170 (U.S. 1993) (purpose and role of participants in a RICO enterprise)
- Slaney v. International Amateur Athletic Federation, 244 F.3d 580 (7th Cir. 2001) (pattern requirement in RICO; multiple acts required for a pattern)