MEMORANDUM OPINION AND ORDER
Plaintiffs Anita and Sheldon Drobny filed a pro se сomplaint arising out of two lawsuits that JP Morgan Chase Bank, NA
This matter is before the Court on two motions to dismiss filed by the Codilis Defendants [18] and the Chase Defendants [21]. Defendants seek dismissal of all claims brought against them. For the following reasons, the Court grants the motions [18 and 21] and dismisses Plaintiffs’ complaint. At this time, the dismissal is without prejudice and subject to the further explanation set forth on pages 19 and 20 below.
I. Factual Background
On September 25, 2008, following Washington Mutual Bank’s failure, JPMorgan Chase Bank (“Chase”) acquired Washington Mutual Bank’s “banking assets” from FDIC. (Cplt. ¶¶ 1-3.) According to the complaint, litigation between Washington Mutual Bank’s “parent company” and Chase concеrning the transaction continues. (Id. ¶¶4-9.) The FDIC’s inspector general, the FBI, and others are “reportedly probing the sale” and other “bailouts” as well. (Id. ¶ 6.) Following the acquisition, in order for Chase to file foreclosure lawsuits more quickly and save costs, the FDIC and Chase failed to “properly transfer” the Washington Mutual Bank mortgages, and Chase further “chose to deny many reasonable modifications.” (Cplt. ¶¶ 10, 11, 37.) Consequently, certain undescribed foreclosure lawsuits — -not involving Plaintiffs — were filed “without the required legal documentation or submitted with improperly forged assignments,”
Plaintiffs are a married couple with more than eighty years’ accounting experience between them. (Cplt. ¶¶ 22, 23, 44.) They further are “experts in the field of mortgage modifications.” (Id.) Plaintiff Anita Drobny obtained a $680,000 mortgage loan originated by Washington Mutual Bank in 2007. (Cplt. ¶ 24.) In May 2009, due to adverse financial circumstances, Ms. Drobny requested to modify her mortgage loan from a fifteen-year amortization period to a thirty-year period, which meant that her monthly payment would be reduced and the term of her loan would be extended from 15 to 30 years. (Cplt. ¶¶ 25, 26.) Ms. Drobny completed a loan modification application, but Chase advised that it was not received, so she submitted another application in October 2009. (Id. ¶¶ 27, 28.) Chase аdvised that application also was not received, at which point Ms. Drobny wrote a complaint letter to her congresswoman. (Id. ¶¶ 29, 30.)
Ms. Drobny submitted a new application to Chase on December 21, 2009. (Cplt. ¶ 31.) Although a Chase representative alleged assured Ms. Drobny that the loan would be modified, Chase instead filed a foreclosure lawsuit against Ms. Drobny in May 2010. (Id. ¶¶ 30-33.)
Ms. Drobny’s letter to her congresswoman, attached to Plaintiffs’ complaint, contradicts Ms. Drobny’s assertions that Chase failed to respond to her loan modification applications, then later promised to modify her loan. (Cplt. Exh. C.) According to the letter, which is dated December 2, 2009, Chase did inform her that her loan modification request was denied. (Id. Exh. C at 2, 3.) Among other things, Chase advised that Ms. Drobny’s income was “insufficient for the loan.” (Id. at 3, 4.) Although Ms. Drobny alleges that Chase later promised to modify her loan, she says she supplied “the same supporting documents that had previously been sent,” i.e., the materials that Chase reviewed when it denied her application a few weeks earlier for insufficient income. (Cplt. ¶ 31; Exh. C at 2, 3.)
The first foreclosure complaint was signed by a Codilis lawyer and named both Anita and her husband Sheldon. (Id. ¶ 33; Id. Exh. E at 2.) According to the complaint, the May 2010 foreclosure complaint was “false” due to Chase’s failure to receive and record an assignment of mortgage and because the indorsement was forged. (Cplt. ¶ 36.) As to Ms. Drobny’s mortgage, the instrument did not attach any assignment from Washington Mutual Bank to Chase, nor was any assignment recorded in Lake County, Illinois. (Cplt. ¶ 33.) As to Ms. Drobny’s note, although the note does bear an indorsement in blank, the indorsement is “false” and is a “robo signed forgerfy],” to aid in a “criminal enterprise.” (Cplt. ¶ 33.) Someone either used a “signature stamp” or “photo shopped” the signature on the indorsement, without the signer’s authority. (Id. ¶ 37.) Plaintiffs base their allegations regarding the indorsement on an unattributed “determin[ation]” that “[t]he signature stamp for the blank endorsement by Cynthia A. Riley has been reported as the one most commonly used by the people that forged that endorsemеnt.” (Id. ¶¶ 33, 36.) Eventually these “legal deficiencies” let to a “voluntary dismissal of the complaint” without prejudice (Id. ¶ 42.)
The Codilis Defendants allegedly falsely stated at ¶ 3(N) of the foreclosure complaint that Chase had the capacity to foreclose as mortgagee, but Chase was not actually WaMu’s assignee because it had not received or a recorded an assignment of the mortgage. According to the complaint, the Codilis Defendants knew or
Following the voluntary dismissal of the May 2010 foreclosure, Ms. Drobny again attempted to have Chase modify the mortgage with the assistance of two agencies. (Cplt. ¶ 43.) However, Chase “failed to approve or disapprove” the applicatiоn. (Id. ¶ 44.) Based on the foregoing, Plaintiffs believe that Chase is “treating the [Washington Mutual Bank] mortgages differently] than those that originated from [Chase],” in order to avoid “the cost of servicing those loans and making modifications.” (Id. ¶ 45.)
In March 2012, Chase filed a second foreclosure lawsuit against the Drobnys, also signed by the Codilis Defendants. (Cplt. ¶ 46; Id. Exh. G.) The complaint attached an affidavit prepared by Robert C. Schoppe of the FDIC, attesting that the FDIC sold the WaMu mortgages to Chase. (Id. ¶ 46; Exh. F.) According to Plaintiffs’ complaint in this lawsuit, the affidavit “has no force of law in Illinois or any other state” and was “intended to prove that the mortgage was legally owned by [Chase] despite the forged endorsement and lаck of assignment.” (Id. ¶¶ 46, 47.) By signing the affidavit, Schoppe facilitated Chase’s “criminal enterprise”; by using the affidavit, Chase meant to deceive “the courts and the thousands of foreclosures [sic] they were planning to pursue.” (Id.)
Plaintiffs contend that Chase’s foreclosure actions destroyed their credit and caused damages exceeding $10,000,000. In Count I (“RICO Section 1962(a)”), Plaintiffs contend that all Defendants “conducted and participated in the conduct of their affairs through a pattern of racketeering activity,” all related by purpose, • victims and participants, in violation of §§ 1962(a) and 1962(c) of RICO. (Cplt. ¶¶ 48, 51, 52.) Plaintiffs continue that “these illegal acts were accomplished by use of the United States Mail and through telecommunications,” and that Chase is a “continuing enterprise” which is “separate and distinct from the pattern of racketeering activity * * (Id. ¶¶ 40, 49.) The allegedly illegal acts occurred over a period of years through Chase’s “mortgage acquisition of [Washington Mutual Bank] from the FDIC,” as “facilitated by use of the United States mails and wires * * * in violation of 18 U.S.C. §§ 1341 and 1343.” (Id. ¶¶ 50, 51.) In Count II (“RICO Section 1962(b)”), Plaintiffs allege that Jamie Dimon, as “Chairman and CEO of [Chase], supervised and orchestrated the corrupt activities of [Chase].” (Cplt. ¶ 53.) Plaintiffs repeat that the previously described conduct “had the same purpose, the same participants, and the same victims,” was “facilitated by use оf the United States mails and wires,” and “constituted a pattern of racketeering activity.” (Id. ¶¶ 53, 54.) As a result, Plaintiffs say, Chase “has falsely foreclosed Anita’s residence,” in violation of § 1962(b) of RICO. In Count III, Plaintiffs allege that the Codilis Defendants and Robert Schoppe violated § 1962(c) by conspiring to help Chase conduct its racketeering activities in violation of RICO. Counts IV-VI are pendent state law claims for fraud, intentional infliction of emotional distress, and violations of the Illinois Consumer Fraud and Deceptive
II. Legal Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the suit. See Gibson v. City of Chicago, 910' F.2d 1510, 1520 (7th Cir.1990) (citations omitted). To survive a Rule 12(b)(6) motion to dismiss, a complaint must satisfy the requirements of Rule 8. Fed.R.Civ.P. 8. First, the complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed.R.Civ.P. 8(a)(2), such that the defendant is given “fair notice of what the * * * claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly,
W/here a complaint sounds in fraud, the allegations of fraud must satisfy the heightened pleading requirements of Rule 9(b). Fed.R.Civ.P. 9(b); see also Borsellino v. Goldman Sachs Group, Inc.,
Plaintiffs base their RICO claim on allegations of mail and wire fraud under 18 U.S.C. §§ 1341 and 1343. Insofar as Rule 9(b) applies to all “averments of fraud,” and not simply standalone claims of fraud, Plaintiffs’ RICO claim will be viewed under the heightened pleading standard of Rule 9(b). Borsellino,
III. Analysis
Plaintiffs’ complaint sets forth three federal civil RICO claims as well as various state and common law claims against Defendants. Defendants have moved to dismiss Plaintiffs’ RICO claims, arguing that Plaintiffs failed to sufficiently plead a RICO violation. Even before turning tо the specifics of the federal RICO claims, there are obvious problems with Plaintiffs’ grievances regarding Ms. Drobny’s mortgage loan.
First, as to Chase’s failure to supply a mortgage assignment, there is no such requirement, as made clear both by federal and state law. Federally, the FDIC, as receiver of Washington Mutual Bank, was empowered to transfer the Bank’s assets without an assignment.
Second, Plaintiffs’ allegations regarding the “forged” or “robo signed” note indorsement are speculative. Plaintiffs contend there is an unattributed “determin[ation]” that the signature of the person making the indorsement, Cynthia A. Riley, was “one of many robo signed forgeries by [Chase] to aid in [its] criminal enterprise.” Plaintiffs rely on unidentified “reporting” by unidentified people for the proposition that Ms. Riley’s name is commonly forged: “[t]he signature stamp for the blank endorsement by Cynthia A. Riley has been reported as the one most commonly used by the people that forged that endorsement.” Plaintiffs also conclude incorrectly that the indorsement must be forged because “only the FDIC could have made such a blank indorsement,” when in fact a note may be indorsed by its holder. 810 ILCS 5/3-205(b).
To bolster their allegations, in their response brief, Plaintiffs contend that the indorsement may have been forged because the FDIC “already owned the mortgages after it seized WAMU’s assets,” so the indorsement was “unnecessary.” Plaintiffs continue that the indorsement was “undated,” which somehow “adds suspicion * * * because * * * the date the FDIC took over WAMU was a key date regarding WAMU’s authority to endorse the mortgage note.” Though it “is possible” the indorsement is authеntic, Plaintiffs go on, it is “unlikely that WAMU immediately blank endorsed every mortgage it owned before any transfer.” Plaintiffs further assert there are other court cases challenging indorsements as “fabrications” or “photo-shopped” and that a foreclosure defense attorney complained of improper “foreclosure affidavits” in a television interview. Plaintiffs conclude that the challenged indorsements were part of a “scheme to give the illusion of authentic transfer and mislead courts as well as victims.”
Although Plaintiffs claim that their forgery allegations have a reasonable basis, Plaintiffs confuse their obligation to state a “plausible” claim with the obligation to allege actual facts, not merely facts that may “plausibly” be true. See Ashcroft v. Iqbal,
Third, and perhaps most troubling, are Plaintiffs’ allegations regarding Chase’s failure to offer a modification of Ms. Drobny’s loan. According to the complaint, Ms. Drobny applied for a loan modification several times, was initially ignored, and then eventually was “assured” by a Chase employee that her loan would be modified, but Chase instead filed a foreclosure lawsuit. However, according to Ms. Drobny’s December 2, 2009 letter to her congresswoman, which was attached to Plaintiffs’ complaint, Chase did inform her that her loan modification request was denied. Among other things, Ms. Drobny states in her letter that Chase advised that Ms. Drobny’s income was “insufficient for the loan.” Thus, the allegation that Ms. Drobny applied for a loan modification just a few weeks later, on December 21, 2009, with “the same supporting documents that had previously been sent” and expecting a different result, casts considerable doubt on Plaintiffs’ claims.
In their response brief, Plaintiffs acknowledge that Chase did deny Ms. Drobny’s loan modification after all. Plaintiffs now claim that the denial was “verbal” and not “formal” and further was “in violation of the Home Affordable Modification Program (HAMP) critеria.” Because an “incompetent” Chase representative “misled” Ms. Drobny regarding the HAMP income criteria and denied the application in violation of those criteria, Chase should be “subject to harsh penalties.” Plaintiffs cannot rescue their complaint with new, conflicting assertions in their response brief. See, e.g., Bissessur v. Indiana University Bd. of Trustees,
A. RICO Claims
A RICO claim “is a unique cause of action that is concerned with eradicating organized, long-term, habitual criminal activity.” Jones v. U.S. Bank Nat. Ass’n, 10 C 0008,
In order to establish a RICO claim based on a “pattern of racketeering activity,” a plaintiff must plеad at least two separate predicate acts of racketeering within a 10-year time period. 18 U.S.C. § 1961(5); Jones,
Plaintiffs fail to plead that Defendants committed predicate acts of mail or wire fraud for three reasons. First, “filing and prosecuting a complaint is not considered mail or wire fraud or a predicate act under RICO.” Carthan-Ragland v. Standard Bank & Trust, 11 C 5864,
Second, Plaintiffs do not allege predicate acts of mail and wire fraud because they admit that they did not detrimentally rely upon the alleged fraud. When mail fraud forms the basis for a RICO claim, the claim fails unless the plaintiff establishes that “a person of ordinary prudence and comprehension would rely on the misrepresentations.” Associates in Adolescent Psychiatry, S.C. v. Home Life Ins. Co.,
Plaintiffs also cannot establish fraud because the complaint exhibits show that the Chase was the assignee of their mortgage. The affidavit of the FDIC receiver, Robert Schoppe, states that “JP Morgan chase acquired * * * all loans and all loan commitments, of Washington Mutual * * * * [0]n September 25, 2008, JP Morgan Chase became the owner of the loans and loan commitments of Washington Mutual.” “[W]hen a written instrument contradicts allegations in the complaint to which it is attached, the exhibit trumps the allegations.” N. Indiana Gun & Outdoor Shows, Inc. v. City of S. Bend,
Even mоre glaringly, Plaintiffs fail to allege predicate acts of mail or wire fraud because they do not allege fraud with particularity under Rule 9(b). They do not allege when the false documents were transmitted, who mailed or wired them, or why they believe that person had an intent to defraud. The complaint includes nothing beyond “loose references” to serving misleading documents by mail; it does not identify which Defendants committed which acts of fraud or why they had an intent to defraud. Plaintiffs thus fail to plead wire and mail fraud with particularity. See Freedom Mortg. Corp.,
Furthermore, a single alleged scheme targeted at one victim is not a “pattern of racketeering activity,” even if the alleged scheme requirеd several acts of mail and wire fraud to inflict the injury. Slaney,
Finally, a RICO complaint must identify the enterprise. Crichton v. Golden Rule Ins. Co.,
In sum, while Plaintiffs insist that their RICO allegations are sufficient, the complaint fails to identify predicate acts, does not dеscribe any pattern, and does not identify each Defendant’s role in the enterprise. Only boilerplate recitations are supplied, followed by the assertion of a conspiracy to avoid the cost of servicing Washington Mutual’s loans and making modifications. These allegations are not enough to state a cause of action under RICO.
B. State Law Claims
In their complaint, Plaintiffs allege that this action arises under RICO and that the Court has supplemental jurisdiction over the claims arising under Illinois law pursuant to 28 U.S.C. § 1367. Plaintiff further alleges that venue is proper in this district because all of the Defendants reside and transact their affairs in this district.
Plaintiffs have not stated a federal claim, and the Cоurt must now decide whether to retain jurisdiction over then-state law claims. See 28 U.S.C. § 1367(c)(3). The Seventh Circuit, animated by the principle of comity, consistently has stated that “it is the well-established law of this circuit that the usual practice is to dismiss without prejudice state supplemental claims whenever all federal claims have been dismissed prior to trial.” Groce v. Eli Lilly,
In Wright v. Associated Ins. Cos.,
Based on the foregoing discussion, all of Plaintiffs’ claims, at least as currently cast, are subject to dismissal. Plaintiffs whose complaints are dismissed through a successful Rule 12(b)(6) motion generally are allowed an opportunity to replead. See, e.g., Smith v. Union Pac. R. Co.,
IV. Conclusion
For these reasons, the Court grants the motions to dismiss [18 and 21] filed by the Codilis Defendants [18] and the Chase Defendants [21], Plaintiffs’ federal claims are dismissed with leave to replead within 21 days if they believe that they can cure the pleading deficiencies identified above. If Plaintiffs decide not to replead, Plaintiffs’ federal claims will be dismissed with prejudice and the Court will decline to exercise supplemental jurisdiction over Plaintiffs’ state law claims and dismiss those claims without prejudice.
Notes
. The following facts are taken frоm Plaintiffs’ complaint. The Court accepts the allegations in the complaint as true for present purposes. See, e.g., Singer v. Pierce & Assocs., P.C.,
. Plaintiffs allege Chase acquired Wаshington Mutual Bank's “banking assets” on September 25, 2008. (Cplt. ¶3.) The sale was accomplished through a purchase and assumption agreement, which is posted on the FDIC’s website (www.fdic.gov/about/freedom/ Washington-MutualJP-and-A.pdf) and may be judicially noticed. See, e.g., Tirado v. U.S. Bank, N.A., No. 12-cv-00122-RMW,
. Even if Plaintiffs’ allegations were not deemed too speculative, as demonstrated below, Plaintiffs' federal RICO claims fall far short of meeting the pleading standards.
. The complaint presents additional obstacles unique to two cited RICO sections. First, any claim based on § 1962(a) fails for the further reason that the complaint does not allege receipt of income from a pattern of racketeering activity, and the use оf that income in the operation of an enterprise. Stone,
. In order for diversity jurisdiction to exist, each defendant must be a citizen of a different state from each plaintiff. See Owen Equipment & Erection Co. v. Kroger,