FirstMerit Bank, N.A. v. Ferrari

• Decision Date: 16 October 2014
• Docket Number: 13 C 6625
• Citation: 71 F.Supp.3d 751
• Parties: FirstMerit Bank, N.A., Plaintiff/Counter–Defendant, v. Maria Ferrari, Juan Salgado, Robert Ferrari, and 2425 W. Cortland Properties, Inc., Defendants/Counter–Plaintiffs.
• Court: U.S. District Court — Northern District of Illinois

71 F.Supp.3d 751

FirstMerit Bank, N.A., Plaintiff/Counter–Defendant

v.Maria Ferrari, Juan Salgado, Robert Ferrari, and 2425 W. Cortland Properties, Inc., Defendants/Counter–Plaintiffs.

13 C 6625

United States District Court, N.D. Illinois, Eastern Division.

Signed October 16, 2014

David F. Standa, Locke Lord LLP, Chicago, IL, for Plaintiff/Counter–Defendant.

Michael S. Pomerantz, Andrew Allen Jacobson, Michelle Anne Miner, Bryan D. King, John M. Kraft, Brown, Udell, Pomerantz & Delrahim, Ltd., Chicago, IL, Daniel L. Braun, Bradshaw, Fowler, Proctor & Fairgrave PC, Des Moines, IA, for Defendants/Counter–Plaintiffs.

Memorandum Opinion and Order

Gary Feinerman, United States District Judge

FirstMerit Bank, N.A., brought this suit for mortgage foreclosure and breach of promissory note against Maria Ferrari, Juan Salgado, Robert Ferrari, and 2425 W. Cortland Properties, Inc. (“Cortland Properties”), a corporation of which Robert and Maria are officers. Doc. 1. Defendants answered and counterclaimed, alleging violations of 42 U.S.C. § 1981 and the Equal Credit Opportunities Act (“ECOA”), 15 U.S.C. § 1691 et seq. Doc. 41. FirstMerit has moved to dismiss the counterclaims under Federal Rule of Civil Procedure 12(b)(6). Doc. 45. The motion is granted in part and denied in part.

Background

In resolving the motion to dismiss, the court assumes the truth of the counterclaims' factual allegations, though not their legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir.2012). The court must also consider “documents attached to the [counterclaims], documents that are critical to the [counterclaims] and referred to in [them], and information that is subject to proper judicial notice,” along with additional facts set forth in Defendants' brief opposing dismissal, so long as those facts “are consistent with the pleadings.” Geinosky v. City of Chicago, 675 F.3d 743, 745 n. 1 (7th Cir.2012). The facts are set forth as favorably to Defendants as these materials allow. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir.2012).

This suit arises out of a promissory note executed by Cortland Properties in favor of Midwest Bank and Trust Company on April 30, 2010. Doc. 1 at ¶ 8; Doc. 1–1 at 1–4. The note is secured by personal guarantees from Robert and Maria, and also by a mortgage signed by Maria and Salgado on property located in Lombard, Illinois (“Lombard property”). Doc. 1 at ¶ 10; Doc. 1–1 at 16–28; Doc. 1–2 at 1–10. When regulators closed Midwest Bank and Trust, FirstMerit obtained the note pursuant to a purchase and assumption agreement with the Federal Deposit Insurance Corporation (“FDIC”). Doc. 1 at ¶ 11.

Cortland Properties failed to make timely payments on the note when it came due in June 2012. On June 5, 2012, FirstMerit entered into a forbearance agreement with Cortland Properties, Robert, and Maria to extend the note's maturity date by one year. Id. at ¶ 9; Doc. 1–1 at 6–14. At the end of the extended period, Cortland Properties again failed to make the required payments. Doc. 1 at ¶¶ 13–16. FirstMerit then brought this suit to foreclose on the Lombard property, id. at ¶¶ 17–19, and to hold Robert and Maria Ferrari liable for breaching their guarantees, id. at ¶¶ 20–35.

Defendants' counterclaims allege the following. Between December 2013 and February 2014, FirstMerit and Defendants engaged in settlement discussions concerning the Cortland Properties debt. Doc. 41 at p. 11, ¶ 10. The parties agreed that Robert would give FirstMerit the proceeds from the sale of condominium units that were the subject of another mortgage dispute, and that in return FirstMerit would release Defendants from any liability under the note, mortgage, and the two personal guarantees. Ibid. FirstMerit, however, refused to consummate the settlement because Salgado, one of the mortgagors, is Hispanic. Id. at pp. 12–13, ¶¶ 11, 17, 25. To support their submission that FirstMerit's decision was based on Salgado's race, Defendants allege that on April 5, 2012, a FirstMerit loan officer told a Hispanic business partner of Robert's: “We normally don't give loans to Hispanics.” Id. at p. 11, ¶ 9.

Defendants claim that FirstMerit's conduct violates the ECOA, which makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction ... on the basis of race,” 15 U.S.C. § 1691(a)(1), and 42 U.S.C. § 1981(a), which gives to “all persons within the jurisdiction of the United States ... the same right ... to make and enforce contracts.” Doc. 41 at pp. 12–13, ¶¶ 12–27.

Discussion

To survive a Rule 12(b)(6) motion, a complaint “must contain ‘enough facts to state a claim to relief that is plausible on its face’ and also must state sufficient facts to raise a plaintiff's right to relief above the speculative level.” Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602 (7th Cir.2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “A claim has facial plausibility ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Ibid. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). The Seventh Circuit has made clear that neither Twombly nor Iqbal “cast doubt on the validity of Rule 8 of the Federal Rules of Civil Procedure,” Swanson v. Citibank, N.A., 614 F.3d 400, 403 (7th Cir.2010), which provides in relevant part that “[a] pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

Exactly what “a short and plain statement” must contain to clear the plausibility threshold varies from case to case. As the Seventh Circuit explained in Swanson, “[a] more complex case involving financial derivatives ... or antitrust violations will require more detail, both to give the opposing party notice of what the case is all about and to show how, in the plaintiff's mind at least, the dots should be connected.” 614 F.3d at 405. In more “straightforward” case involving discrimination, by contrast, “[a] plaintiff who believes that she has been passed over for a promotion because of her sex will be able to plead that she was employed by Company X, that a promotion was offered, that she applied and was qualified for it, and that the job went to someone else. That is an entirely plausible scenario, whether or not it describes what ‘really’ went on in this plaintiff's case.” Id. at 404–05.

This case falls squarely on the “straightforward” side of the line. Defendants allege that they engaged in settlement discussions with FirstMerit; that they reached a basic settlement agreement; and that FirstMerit refused to consummate the settlement because Salgado is Hispanic. Defendants buttress their claim with an allegation that a FirstMerit loan officer made a biased comment to Robert's business partner about doing business with Hispanics. As in Swanson, Defendants' claim presents a plausible scenario and thus is sufficient to survive dismissal, even though it may not accurately describe what actually occurred. Swanson is a Fair Housing Act case, but there is no reason why a simple discrimination claim under the ECOA or § 1981 (or any other statute prohibiting discrimination) should treated differently for pleading purposes than one under the FHA. See Carlson v. CSX Transp., Inc., 758 F.3d 819, 827 (7th Cir.2014) (“A complaint alleging sex discrimination under Title VII need only aver that the employer instituted a (specified) adverse employment action against the plaintiff on the basis of her sex.”) (internal quotation marks omitted); Luevano v. Wal–Mart Stores, Inc., 722 F.3d 1014, 1028 (7th Cir.2013) (same). Accordingly, the fact that FirstMerit might have other, plausible justifications for not entering into a settlement agreement does not on its own defeat Defendants' counterclaims at the Rule 12(b)(6) stage.

During briefing on this motion, another judge in this District dismissed materially identical counterclaims in FirstMerit Bank, N.A. v. Stave Properties, Inc., 29 F.Supp.3d 1151, 2014 WL 3339563 (N.D.Ill. July 9, 2014). That case involved a promissory note issued by Stave Properties and secured by personal guarantees and mortgages from Robert Ferrari (the same Robert Ferrari in this case) and his business partner (the same business partner who was allegedly told by a FirstMerit loan officer that FirstMerit did not give loans to Hispanics). Like Defendants here, Ferrari and his partner counterclaimed under the ECOA and § 1981, alleging that FirstMerit failed to consummate a settlement due to bias against Hispanics—bias confirmed by the loan officer's racial remark. Id. at 1152–54 at *1. Stave Properties dismissed the counterclaims under Twombly and Iqbal . Id. at ––––, at *2. FirstMerit asks for the same result here. Doc. 54 at 2. The court declines the request due to its respectful disagreement with Stave Properties.

Stave Properties began by chiding the defendants there for “ignor [ing]” the fact that, as in this case, FirstMerit granted the defendants a forbearance in June 2012, two months after the loan officer's racial remark in April 2012. 29 F.Supp. 3d at 1153, 2014 WL 3339563 at *1. This court agrees that a factfinder might conclude that because FirstMerit agreed to give Defendants favorable treatment in June 2012, the loan officer might not really have said (or perhaps meant) what Defendants allege the officer said in April 2012. More to the point, a factfinder might conclude that because FirstMerit was willing to cut Defendants a break in 2012, it is unlikely that FirstMerit scuttled the settlement process on account of Salgado's race in 2014. But these are just permissible inferences that a jury may draw, not inferences that the court must or even may draw at the pleading stage. See Perez v. Thorntons, Inc., 731 F.3d 699, 709 (...