522 F.Supp.3d 417
N.D. Ill.2021Background:
- Inorio executed a 30-year mortgage with Wells Fargo in 2009 and later filed Chapter 13 bankruptcy in April 2012.
- Wells Fargo filed a proof of claim asserting arrears; a trustee filed a notice of final cure in March 2017 and the bankruptcy court entered a discharge in June 2017.
- After discharge, Wells Fargo sought to collect real estate taxes (2013–2016) and insurance amounts that Inorio alleges were discharged and for which Wells Fargo did not file postpetition Rule 3002.1(c) notices.
- Between December 2017 and July 2019 Inorio paid $24,681.62 to Wells Fargo; he alleges those payments were not posted and remain in Wells Fargo’s possession even after it ceased servicing the loan.
- Inorio sent three Requests for Information (RFIs) and two Notices of Error (NOEs) under Regulation X/RESPA; he alleges Wells Fargo failed to provide timely, substantive responses.
- Procedural posture: Wells Fargo moved to dismiss all six counts; the court granted dismissal of Counts IV–VI and denied dismissal as to Counts I–III.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Count I — Failure to respond to RFIs (RESPA/Regulation X) | Inorio: Wells Fargo failed to provide timely substantive responses to three RFIs, causing costs to prepare later NOEs. | Wells Fargo: Inorio failed to plead actual damages from the RFI non-responses. | Court: Denied dismissal — plaintiff alleged cognizable actual damages (costs of later NOEs). |
| Count II — Failure to respond to NOEs / failure to correct errors (RESPA/Regulation X) | Inorio: Wells Fargo failed to investigate/correct and retained funds, causing monetary harm. | Wells Fargo: (challenged damages/response content but withdrew some arguments); disputes existence of damage. | Court: Denied dismissal — allegations that servicer retained erroneous charges state RESPA damages. |
| Count III — Breach of note/mortgage (failure to apply/post payments) | Inorio: $24,681.62 paid over 17 months was not posted or returned; retention beyond a reasonable time breached contract. | Wells Fargo: Mortgage permits holding unapplied payments and discretion on application timing. | Court: Denied dismissal — factual dispute whether retention exceeded a reasonable time; sufficient to state breach claim. |
| Count IV — ICFA claim (fraud/deception for collecting discharged amounts) | Inorio: Wells Fargo engaged in fraud/deceptive practices by attempting to collect amounts uncollectible under the Bankruptcy Code. | Wells Fargo: Claim is preempted by the Bankruptcy Code. | Court: Granted dismissal — ICFA claim arises from alleged bankruptcy violations and is preempted. |
| Count V — Violation of bankruptcy discharge, confirmed plan, and Rule 3002.1 | Inorio: Wells Fargo violated the discharge, the Chapter 13 plan, and Rule 3002.1 by collecting/retaining postpetition amounts. | Wells Fargo: Violations of bankruptcy rules/plan are not standalone federal causes of action; remedies lie in bankruptcy court. | Court: Granted dismissal — no independent private cause of action in district court for violations of the Bankruptcy Rules or the discharge injunction; remedy is in bankruptcy forum. |
| Count VI — Unjust enrichment for retaining payments | Inorio: Wells Fargo was unjustly enriched by holding/using the payments. | Wells Fargo: Relationship governed by contract; adequate legal remedy exists (breach of contract). | Court: Granted dismissal — unjust enrichment unavailable where contract governs and plaintiff pleaded contract. |
Key Cases Cited
- Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328 (7th Cir. 2012) (pleading standard; accept well-pled facts and draw inferences for plaintiff)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility requirement for complaints)
- W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670 (7th Cir. 2016) (pleading standard on plausibility and disregarding conclusory allegations)
- Lesniak v. Bank of Am., N.A., 169 F. Supp. 3d 766 (N.D. Ill. 2015) (RESPA requires pleading actual damages)
- Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241 (11th Cir. 2016) (RESPA damages where servicer failed to refund erroneous charges)
- Marais v. Chase Home Fin. LLC, 736 F.3d 711 (6th Cir. 2013) (RESPA claim viable where misapplied payments caused financial harm)
- Int’l Prod. Specialists, Inc. v. Schwing Am., Inc., 580 F.3d 587 (7th Cir. 2009) (reasonableness of time to perform under contract is a factual question)
- Cox v. Zale Del., Inc., 239 F.3d 910 (7th Cir. 2001) (discharge injunction enforcement and remedy lies in bankruptcy court)
- Tanasi v. CitiMortgage, Inc., 257 F. Supp. 3d 232 (D. Conn. 2017) (RESPA damages for costs of preparing subsequent requests prompted by servicer violations)
- Bednar v. Pierce & Assocs., P.C., 220 F. Supp. 3d 860 (N.D. Ill. 2016) (state-law consumer claims preempted when they are predicated on bankruptcy-code violations)