Fletcher v. OneWest Bank, FSB
2011 U.S. Dist. LEXIS 72562
N.D. Ill.2011Background
- Fletcher obtained a July 7, 2006 mortgage; OneWest Bank, FSB, serviced the loan.
- Facing financial difficulty in Aug. 2008, Fletcher sought mortgage modifications beginning Feb. 2009.
- OneWest did not respond until Oct. 2009, advising Fletcher to miss payments to qualify for HAMP and reapply.
- Fletcher relied on this advice and missed payments in Nov.–Dec. 2009; she applied for a HAMP modification in Dec. 2009.
- HAMP guided a Trial Period Plan (TPP) in Jan. 2010; Fletcher began trial payments Feb. 2010 and provided required documents by Feb. 25, 2010.
- OneWest later claimed Fletcher did not qualify for HAMP but offered a permanent modification outside HAMP; Fletcher rejected it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has jurisdiction / mootness | Fletcher alleges delay-caused damages despite offer of alternative modification. | Post-offer mootness under Holstein when plaintiff seeks damages fully compensated. | Not moot; some fees/damages plausibly tied to delay remain. |
| Whether Fletcher states a breach of contract claim | Promises to consider application and determine eligibility constituted breach. | TPP does not promise a modification; lack of consideration and damages limit claim. | Plaintiff adequately pleads contract, including consideration and damages. |
| Whether promissory estoppel supports Fletcher | Reliance on OneWest's promise to consider and respond was reasonable and detrimental. | Reliance on promises not clearly defined; may be unreasonable. | Promissory estoppel viable; reliance reasonable given promises to consider and respond. |
| Whether IV.CFDBA claims are preempted or permissible | State unfair practices claims survive post- Ocwen unless fully preempted by federal law. | Ocwen preempts claims contesting federal servicing guidelines; basic state remedies may remain. | Claims that sound in state fraud/contract are not preempted; some servicing-practice claims preempted. |
| Whether misrepresentation about default status constitutes fraud | Misstatement of law or misrepresentation of qualification for modification was deceptive. | Misrepresentation as misstatement of law or guidance; may not be actionable. | Fraud claim survives to extent it reflects deceptive guidance about qualification under HAMP. |
Key Cases Cited
- Ocwen Loan Servicing, LLC Mortg. Servicing Litig., 491 F.3d 638 (7th Cir. 2007) (HOLA preemption limited to certain mortgage terms; basic state remedies allowed)
- Holstein v. City of Chicago, 29 F.3d 1145 (7th Cir. 1994) (mootness inquiry under Rule 12(b)(1) when defendant cures injury)
- Randels v. Best Real Estate, Inc., 243 Ill.App.3d 801 (Ill. App. Ct. 1993) (deceptive practices and misrepresentation; Illinois Appellate authority)