Golbeck v. Johnson, Blumberg, and Associates, LLC.
1:16-cv-06788
N.D. Ill.Jul 19, 2017Background
- In April 2013 Golbeck executed a mortgage and note with Chase; he defaulted in January 2014 and entered a trial payment plan in July 2014, making the required trial payments.
- Chase transferred servicing to Seterus effective December 1, 2014; Chase sent an unsigned Loan Modification Agreement (LMA) to Golbeck on November 20, 2014 and requested Golbeck sign and return by December 2, 2014. Chase never signed the LMA; Golbeck signed and returned his copy.
- The LMA and cover materials stated escrow requirements would be reinstated and that the modification would be effective upon full execution by both parties; Golbeck did not establish the escrow account or pay the escrow portion ($591.42/month).
- Golbeck alleges Chase failed to transfer his December 1, 2014 payment to Seterus and that Seterus thereafter refused to recognize the LMA, treated him as delinquent, assessed fees, and threatened foreclosure; Golbeck continued to tender reduced payments to Seterus.
- Procedural posture: Golbeck filed an amended complaint asserting breach of contract (Chase, Seterus), FDCPA (Seterus, Johnson Blumberg), ICFA (Chase, Seterus), and RESPA claims (Chase, Seterus). Chase and Seterus moved to dismiss; the Court granted the motions and permitted limited leave to amend for claims not dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the LMA / breach of contract | Golbeck: he satisfied the trial conditions and signing/returning the LMA made the modification binding without Chase’s signature | Chase/Seterus: the LMA required full execution by both parties and escrow funding; Chase never signed; Golbeck did not perform escrow obligations | Court: No contract formed because lender signature/full execution was required; dismissal of breach claims (Counts I, II) |
| Application of payments / alleged failure to transfer payment | Golbeck: Chase failed to transfer Dec. 1, 2014 payment to Seterus and/or misapplied payments | Chase: record attachments show the payment was transferred; plaintiff offers only ‘‘information and belief’’ contrary to his own exhibits | Court: Plaintiff’s attachments undermine his theory; RESPA/contract claim based on non-transfer dismissed |
| FDCPA liability (Seterus) | Golbeck: Seterus misrepresented debt status, amounts, and threatened foreclosure while he was current under the LMA | Seterus: FDCPA claims rest on existence and enforceability of the LMA and on factual default; plaintiff did not plead an enforceable LMA or full performance | Court: FDCPA claims fail because they depend on an unenforceable LMA and on facts showing plaintiff was in default; Count IV dismissed |
| RESPA claims (transfer obligations and error/QWR responses) | Golbeck: Chase/Seterus violated 12 C.F.R. §§ 1024.33, 1024.35, 1024.36, 1024.38 by failing to transfer payment, timely transfer loss-mitigation info, acknowledge notices, and by furnishing adverse info | Defendants: §1024.38 provides no private right of action; plaintiff failed to plead actual damages from alleged RESPA violations; documentary record contradicts non-transfer allegation | Court: §1024.38 claims dismissed with prejudice; §§1024.33/1024.35/1024.36 claims dismissed for failure to plead actual damages or plausible non-transfer; amendments largely denied |
| ICFA claims (Chase and Seterus) | Golbeck: defendants’ conduct (misrepresenting escrow, refusing to honor LMA, collecting fees) was deceptive/unfair and caused economic harm | Defendants: ICFA allegations track failed contract/RESPA claims and do not allege distinct deceptive acts or cognizable pecuniary injury; acts were authorized by the underlying mortgage when borrower was in default | Court: ICFA claims dismissed because they duplicate contract claims or lack distinct deceptive conduct and actual pecuniary loss |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a claim plausible on its face)
- Ashcroft v. Iqbal, 556 U.S. 662 (labels and conclusions insufficient; plausibility standard)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.) (distinguishing binding trial-period plans where lender countersigned)
- TAS Distrib. Co. v. Cummins Engine Co., 491 F.3d 625 (7th Cir.) (elements of breach of contract in Illinois)
- Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614 (7th Cir.) (court accepts well-pleaded allegations on motion to dismiss)
- Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732 (7th Cir.) (ICFA requires actual pecuniary loss)