Richardson v. JPMorgan Chase Bank, N.A. (In re Jordan)
543 B.R. 878
| Bankr. C.D. Ill. | 2016Background
- Debtor Robert Jordan filed Chapter 7 (Feb 2015); Schedule D listed a mortgage on his residence held by Chase Mortgage.
- JPMorgan produced a 2011 note and mortgage showing original lender MoneyWorks (Teresa K. Christman) and assignments to State Bank of Lincoln and then to JPMorgan; relief from stay granted (June 8, 2015).
- Trustee sued (July 2015) to avoid the mortgage, alleging MoneyWorks was an unlicensed lender when the October 7, 2011 loan was made and thus the mortgage was void under Illinois law.
- JPMorgan moved to dismiss, arguing either Christman was licensed or, even if unlicensed, Illinois law does not render mortgages void for licensing violations.
- Public records produced a licensing printout from IDFPR showing a license from 2000–2013; NMLS records showed a lapse (June 7, 2011–Feb 13, 2012), creating a factual dispute about licensing on the mortgage date.
- During the case the Illinois legislature amended the RMLA (July 2015) to state that a mortgage shall not be invalid solely because a party was unlicensed, declaring the amendment "declarative of existing law." The Court treated the amendment as clarifying existing law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a mortgage obtained by an unlicensed lender is void under Illinois law | Trustee: Dina controls — mortgage is void as against public policy when lender unlicensed | JPMorgan: Even if lender unlicensed, mortgages are not invalid; 2015 RMLA amendment confirms no private right to void mortgages | Court: Dismiss — no cause of action to void mortgage solely for licensing violation; amendment clarifies existing law |
| Whether the 2015 RMLA amendment applies to this case | Trustee: His cause of action vested before amendment and cannot be retroactively divested | JPMorgan: Amendment is declarative of existing law and applies; Trustee never had the right | Court: Amendment clarifies prior law and applies; Trustee’s claim invalid |
| Whether factual dispute about licensing precludes dismissal | Trustee: NMLS shows license lapse on loan date — factual issue exists | JPMorgan: IDFPR printout shows license; but did not dispute NMLS | Court: Assumed facts in Trustee’s favor (license lapse) but held remedy still unavailable under clarified law |
| Whether bankruptcy court can enter final order | Trustee: Brought action as trustee; constitutional authority not challenged explicitly | JPMorgan: Consented to dismissal by motion; both parties impliedly consented | Court: Parties impliedly consented; court has authority to enter final order |
Key Cases Cited
- First Mortgage Co., LLC v. Dina, 11 N.E.3d 343 (Ill. App. Ct. 2014) (held mortgage by unlicensed lender void as against public policy)
- Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (U.S. 1989) (distinguishing jury-trial and constitutional rights in bankruptcy-related claims)
- Peterson v. Somers Dublin Ltd., 729 F.3d 741 (7th Cir. 2013) (bankruptcy court constitutional authority when creditor files a claim)
- K. Miller Const. Co., Inc. v. McGinnis, 938 N.E.2d 471 (Ill. 2010) (factors for determining whether statutory amendment clarifies or changes prior law)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (complaint must contain factual content plausibly suggesting entitlement to relief)