Slip Opinion
N.D. Ill.Sep 7, 2016Background
- In 2007 Sean and Linda Stephens took an adjustable-rate mortgage from ING Bank, predecessor to Capital One, on a home in Elmhurst, IL.
- Capital One filed foreclosure on December 12, 2013 claiming missed payments from April–June 2013, but later admitted an interest-rate mistake and credited the account for those months.
- Capital One voluntarily dismissed the foreclosure on July 30, 2015; the Stephens then sued in state court asserting seven claims, later removing to federal court.
- Plaintiffs voluntarily dismissed several counts; Capital One moved to dismiss Counts II (breach of contract), VI (ICFA), and VII (RESPA), and other counts had been dismissed by plaintiffs or challenged.
- The district court granted dismissal of Count II (breach) and Count VII (RESPA) for failure to plead necessary facts (performance, causal damages, 120-day default showing), but denied dismissal of Count VI (ICFA).
- Remaining live claims after the decision were Count V (FDCPA) and Count VI (ICFA); court allowed plaintiffs leave to consider amending.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (Count II) | Stephens allege Capital One improperly accelerated the note and thus materially breached, and Stephens performed for Apr–Jun 2013 | Capital One says Stephens failed to allege they performed all contractual obligations (post-Jun 30, 2013) | Dismissed: plaintiffs failed to plead performance beyond June 30, 2013 and alleged only conclusory acceleration claim |
| RESPA, 12 C.F.R. §1024.41(f) (Count VII) | Capital One filed foreclosure while loan not in default for Apr–Jun 2013; foreclosing was improper | Capital One: plaintiffs don’t allege foreclosure occurred when delinquency was under 120 days, fail to plead actual damages, and claim is not ripe | Dismissed: plaintiffs did not allege facts showing the loan was <120 days delinquent when suit was filed and failed to plead causal actual damages; ripeness not required to show property loss but other pleading failures fatal |
| Actual damages under RESPA | Plaintiffs seek non‑pecuniary harms (mental anguish, time, fees, credit reporting) tied to wrongful foreclosure | Capital One: plaintiffs did not plead actual damages causally connected to any RESPA violation | Dismissed as part of RESPA ruling: complaint lacked allegations linking RESPA violation to actual damages |
| ICFA (Count VI) | Stephens allege deceptive/unfair acts — reporting valid debt despite disputes, failing to review accuracy, continuing foreclosure review — causing injury | Capital One argues isolated error and insufficient particularity for fraud/deception | Not dismissed: court found allegations adequate to plead unfairness (meets Rule 8 notice pleading), and potential for substantial consumer injury given defendant’s large consumer base; Rule 9(b) not required for unfair-practice theory |
Key Cases Cited
- McReynolds v. Merrill Lynch & Co., 694 F.3d 873 (7th Cir.) (pleading facts taken as true at motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court) (labels and conclusions insufficient)
- Johnstone v. Bank of Am., 173 F. Supp. 2d 809 (N.D. Ill.) (RESPA actual damages may include time and mental anguish when causally alleged)
- Catalan v. GMAC Mortg. Corp., 629 F.3d 676 (7th Cir.) (non-pecuniary damages can qualify as actual damages under RESPA)
- Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Financing Serv., 536 F.3d 663 (7th Cir.) (ICFA unfair-practice claims subject to Rule 8 notice pleading)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436 (7th Cir.) (Rule 9(b) particularity for fraud pleading)
- Batson v. Live Nation Entm’t, Inc., 746 F.3d 827 (7th Cir.) (analysis of unfair practices under ICFA)