Choi v. Kondaur Capital Corp.
| Decision Date | 22 March 2022 |
| Docket Number | 21 C 1895 |
| Parties | ROBERT CHOI, Plaintiff, v. KONDAUR CAPITAL CORPORATION, AS SEPARATE TRUSTEE OF MATAWIN VENTURES TRUST SERIES 2013-3 Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
In this lawsuit, Plaintiff Robert Choi (“Choi”) brings claims relating to Defendant Kondaur Capital Corporation's (“Kondaur”) servicing of his mortgage loan. These parties have already spent almost six years in litigation in Illinois state court, where almost all of Choi's claims were dismissed with prejudice. The state court did allow one of Choi's claims to proceed: that Kondaur did not respond to Choi's loss mitigation application within the time required by a provision in a regulation referred to as "Regulation X, ” 12 C.F.R. § 1024.41. The court set that claim for trial but Choi voluntarily dismissed his single remaining claim on the eve of trial. A year later, Choi refiled suit against Kondaur in state court. As Choi's claims arise under federal law, Kondaur removed the case to this court.
Choi's two-count complaint against Kondaur is focused on its alleged violations of § 1024.41, which Choi believes gives rise to a claim under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Pub. L No. 111-203, 124 Stat. 1376, and the Consumer Financial Protection Bureau (“CFPB”) (Count I); as well as the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. (Count II). RESPA imposes duties on lenders and servicers of federally related mortgages, and creates a private right of action for violations. 12 U.S.C. § 2605(f). In 2010, the Dodd-Frank Act created the CFPB and granted the agency authority to implement and enforce various consumer protection statutes, including RESPA; Dodd-Frank also amended RESPA to impose additional restrictions on mortgage servicers. See Dodd-Frank, §§ 1011-1100H, 1463. The CFPB then amended Regulation X, 12 C.F.R. § 1024 et seq., which implements RESPA, to reflect these changes. See Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act, 78 Fed.Reg. 10, 696, 10, 702- 03 (Jan. 10, 2014). Section 1024.41 of Regulation X concerns loss mitigation procedures, and expressly provides that borrowers may enforce violations through RESPA's right of action.[1] 12 C.F.R § 1024.41(a).
Kondaur now moves to dismiss the complaint in its entirety. As explained here, the motion [4] is granted.
At this stage, the court considers only “the complaint itself documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice.” Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). Court filings not subject to reasonable dispute may be judicially noticed, so the court considers the state court filings attached to the complaint and the parties' briefing. Parungao v. Cmty. Health Sys., Inc., 858 F.3d 452, 457 (7th Cir. 2017). When considering Plaintiff Choi's complaint, the court draws all reasonable inferences in his favor and accepts as true all well-pleaded facts. McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). This presumption of truth does not, however, extend to the complaint's numerous legal conclusions. Id.
The court summarizes only the relevant facts. In 2000, Robert Choi and his wife Olga F. Chtiguel (collectively, the “Chois”) purchased a single-family house in Ingleside, Illinois for $113, 000.000. (Compl., Ex. 1 to Def.'s Notice of Removal [1-1] (hereinafter “Compl.”), at ¶¶ 13- 14.) In 2003, the Chois refinanced their mortgage loan into a “federally related” Department of Housing and Urban Development (“HUD”) and Federal Housing Administration (“FHA”) loan with National City Bank. (Id. ¶ 14.) Then, in 2009, PNC Bank (“PNC”) purchased National City and transferred the Chois' loan to PNC. (Id. ¶ 15.) Meanwhile, in the aftermath of the 2008 financial crisis, the Chois' business (a sewing manufacturing company) fell on hard times. (Id. ¶¶ 13, 19.) By April 2012, the Chois had “exhausted their savings, ” and were not “able to pay their mortgage.” (Id. ¶ 19.) Although Plaintiff is not explicit about this, it appears the Chois defaulted on their mortgage; on September 19, 2012, PNC filed a foreclosure complaint in the Circuit Court of Lake County, Illinois, Case No. 2012 CH 4742, alleging an outstanding $60, 910.70 loan balance. (Id. ¶¶ 19, 49.) See https://circuitclerk.lakecountyil.gov/publicAccess (last visited March 15, 2022).
At an unspecified time, Choi contacted a HUD-certified Consumer Credit Counseling Services (“CCCS”) agency in Woodstock, Illinois, to assist him in communicating with PNC about a potential loan modification. (Id. ¶ 19.) Choi submitted multiple loan modification applications through the CCCS agency, which PNC repeatedly rejected. (Id. ¶ 22.)[2] Then, on October 30, 2013, PNC “sold the loan” and was no longer the “legal holder of the loan.” (Id.) The details on this loan sale are fuzzy. On December 8, 2013, Plaintiff alleges, PNC received $73, 663.94 from HUD “for the loan, ” and on February 14, 2014, the “loan was transferred to Kondaur.” (Id. ¶¶ 22- 23.) The complaint does not clarify who transferred the loan, or who held the loan from October to February.
Choi apparently believed that PNC continued to hold the loan during this time; on January 2, 2014, he submitted another completed loan modification application to PNC, which PNC again declined. (Id. ¶ 22.) At some point, Choi learned Kondaur owned the loan; around March 4, 2014, the Woodstock CCCS agency contacted Kondaur on Choi's behalf, and asked Kondaur to continue reviewing the January 2014 application that Choi had submitted to PNC. (Id. ¶ 24; Ex.
A to Compl. [1-1] at 41.) Kondaur told CCCS that before it would proceed with a modification, the borrower would be required to make a “down payment” in order “to bring the loan to a more current standing.” (Ex. A to Compl. at 41.) Shortly thereafter, on March 6, the CCCS agency “stepped aside from dealings with Kondaur” as a result, Plaintiff asserts, of concerns “about Kondaur's illegal payment demands for modification review.” (Compl. ¶ 25.)
On March 24, 2014, Choi himself submitted a loan modification application to Kondaur, using Kondaur's preprinted forms. (Id. ¶ 26.) Kondaur did not acknowledge receipt of the application. (Id.) Believing this to be a violation of a federal regulation, Choi contacted the Illinois Attorney General's Office, relaying his concerns about Kondaur's “conduct and down payment demands.” (Id. ¶ 27.) Plaintiff alleges that the AG's Office then contacted Kondaur, and on April 22, 2014, Kondaur's legal counsel informed the Office that Choi's application was “under review, ” pending receipt of Choi's 2013 Profit and Loss Statement (necessary to complete the application). (Id.; see Ex. B. to Compl. [1-1] at 42-43.) In an April 24, 2014 letter to Choi, Kondaur requested that Statement and additional documents. (Ex. C to Compl. [1-1] at 44-45.) Also on April 24, Choi had a telephone call with Kondaur's “representative Umetsu” (there are no further allegations about Umetsu) regarding what additional documents Choi “could provide” and “what requested documents were not eligible.” (Compl. ¶ 27.) On April 29, Choi submitted “the additional requested information and the 2013 P&L.” (Id.) After this date, Kondaur did not request any other documents, meaning, Choi alleges, that the application was “complete.” (Id. ¶ 28.) Kondaur never responded to this application, however, and instead continued the foreclosure action. (Id. ¶¶ 29-31.)
During this time, Kondaur continued to service the loan “by issuing and mailing monthly mortgage statements in attempt to collect money; by inquiring about home insurance and property taxes payments; [and] by issuing and mailing multiple Payoff Demands.” (Id. ¶ 35.) Kondaur's conduct included, according to the complaint, using “unconscionable means to distress Choi with money extortion, incorrect monthly mortgage statements, multiple different payoff demands and foreclosure.” (Id. ¶ 40.) Without offering specifics about the allegedly inaccurate statements and demands, Plaintiff asserts that Kondaur's methods were intended to “frustrate[ ] and distress[ ] Choi, ” so “he would either give into Kondaur's inflated payoff demands or give up the house in foreclosure.” (Id. ¶ 37.) Choi alleges that he sent numerous letters and made numerous calls to Kondaur requesting information about the application status and servicing of the loan. (Id. ¶ 33.) Plaintiff alleges, further, that “[h]ad Choi not relied on Kondaur's promises to fairly evaluate the application, ” Choi could have “opted for” other options of saving the house and ending foreclosure. (Id. ¶¶ 37, 44.)
After servicing the loan for almost one and a half years, Kondaur transferred the loan to Wilmington Savings Fund (“Wilmington”) on July 14, 2015. (Id. ¶ 34.) At some point (the complaint does not make clear), Choi submitted a new application to Wilmington, again assisted by the CCCS agency, and spent a year in the “loss mitigation process.” (Id. ¶¶ 34, 38.) Wilmington eventually offered a modified loan, which Choi accepted. (Id. ¶ 38.) On August 30, 2016, Wilmington “dismissed the foreclosure case and modified the loan.” (Id. ¶ 34.) According to Plaintiff, the modified loan was “inflated” by $19, 936.74 of “added fees” resulting from Kondaur's “delays” and “violations.” (Id. ¶¶ 38 70.) Additionally, under the modified loan, Choi will pay about $236, 640.00 to Wilmington in what he characterizes (without explanation) as “repayments, ” as compared to the $60,...
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