Stone v. Washington Mut. Bank
| Decision Date | 19 August 2011 |
| Docket Number | Case No. 10 C 6410 |
| Parties | CYNTHIA A. STONE; PATRICIA MARTINEZ; JOSE A. CRUZ, JR.; ELEDIA TORRES; RONDELL MUHAMMAD; SHARON MUHAMMAD; JAMES M. AMI; SHARON K. AMI; BETTYE JEAN BROWN; MOHSIN M. DHANJI; WAHIDA M. DHANJI; DONNA R. LOVE; EDWARD REVIS; and EXIQUIO CAMACHO, individually and on behalf of all others similarly situated, Plaintiffs, v. WASHINGTON MUTUAL BANK; J.P. MORGAN-CHASE & CO.; DLJ MORTGAGE CAPITAL, INC.; DLJ CAPITAL CORP.; CREDIT SUISSE; CREDIT SUISSE (USA), INC.; CREDIT SUISSE GROUP AG; DOUGLAS ROSEMAN; PATRICK A. REMMERT; ANDREW KIMURA; LORI M. RUSSO; BRUCE KAISERMAN; ANGELO BULONE; MICHAEL CRISCITO; JAMES D. CRISCITO; LUBOMIR PENEV; TERENCE DOLCE; SELECT PORTFOLIO SERVICING, INC.; TIMOTHY O'BRIEN; CODILIS & ASSOCIATES P.C.; ERNEST J. CODILIS, JR.; JEANELLE GRAY; CHRISTINA ALLEN; KLUEVER & PLATT LLC; JASON D. ALTMAN; CITIBANK N.A.; WELLS FARGO BANK; BANK OF AMERICA N.A.; PNC BANK N.A.; U.S. BANK N.A.; and HSBC BANK (USA) N.A., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Cynthia Stone and thirteen other current or former homeowners have sued various entities in connection with their mortgage loans. They contend that the defendants engaged in a multi-year conspiracy to fraudulently foreclose on their homes. They assert claims under federal and state law. Defendants have filed eleven separate motions to dismiss plaintiffs' claims. The Court addresses these motions collectively and, for the reasons stated below, grants them in part and denies them in part.
The Court takes the following facts from plaintiffs' first amended complaint and state court records relating to the underlying foreclosure actions. See Anderson v. Simon, 217 F.3d 472, 474-75 (7th Cir. 2000) ().
Though plaintiffs' complaint is not a model of clarity, it appears to allege that the foreclosure actions are fraudulent because the defendant banks have "bifurcated" plaintiffs' loans by selling their mortgage notes to other entities. See id. ¶ 2. This alleged scheme allows defendants to obtain multiple repayments for each mortgage loan. Each defendant bank receives money once when it sells a mortgage note to investors in mortgage-backed securities, and again after it prevails in a foreclosure lawsuit and sells the collateral. Id. Plaintiffs allege that the banks that filed the foreclosure lawsuits are "straw man plaintiffs" because they hold no legal interest in the mortgage note or the underlying property. Id. ¶ 68. They also contend that defendants decide which bank will serve as plaintiff in each foreclosure lawsuit based upon "which bank has contributed the most into the association-in-fact, . . . which bank needs to avoid tax liability, and . . . which bank needs to avoid legal liability." Id.
Plaintiffs also assert that the defendant banks filed fraudulent affidavits during the foreclosure actions to conceal the fact that they lacked an enforceable interest in the underlying properties. See id. ¶¶ 4, 10, 12, 14, 17, 21, 28, 32, 36. Individuals known colloquially as "robo-signers" signed these affidavits despite having no personal knowledge of the facts contained in them. See id. ¶ 70. Based in large part on such affidavits, plaintiffs allege, seven of the nine foreclosure actions against plaintiffs proceeded to judgments in favor of the defendant banks. By contrast, the foreclosure action against Stone resulted in a judgment that was later vacated, and the Muhammads' foreclosure case proceeded to judgment but was dismissed following a judicial sale of the property. The state court dismissed Brown's foreclosure case priorto judgment.
Plaintiffs allege economic and emotional injuries resulting from the foreclosure actions brought against them. See id. ¶ 56. They seek relief based upon defendants' violations of federal criminal statutes (count one), state laws regarding conspiracy, unjust enrichment, and intentional infliction of emotional distress (count two), the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 (count three), 42 U.S.C. § 1983 (count four), and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1962(a)-(d) (). In count five, plaintiffs seek certification of this lawsuit as a class action under Federal Rule of Civil Procedure 23.
Defendants have moved to dismiss plaintiffs' amended complaint under, inter alia, Rules 12(b)(1) and 12(b)(6). In addressing these arguments, the Court accepts plaintiffs' allegations as true and draws reasonable inferences in their favor. Parish v. City of Elkhart, 614 F.3d 677, 679 (7th Cir. 2010); Johnson v. Apna Ghar, Inc., 330 F.3d 999, 1001 (7th Cir. 2003).
The party asserting jurisdiction bears the burden of persuasion under Rule 12(b)(1). United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003). The Court may consider evidence outside of the complaint in assessing whether it has subject matter jurisdiction. Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995).
To survive defendants' motions to dismiss under Rule 12(b)(6), plaintiffs must provide "a short and plain statement" showing that they are entitled to relief. Fed. R. Civ. P. 8(a)(2). Though a complaint need not contain "detailed factual allegations, . . . aformulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, plaintiffs must provide "enough facts to state a claim to relief that is plausible on its face." Id. at 570. A complaint fails to state a plausible claim "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). Additionally, to the extent that plaintiffs allege fraud or mistake by defendants, plaintiffs "must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b).
In count one, plaintiffs seek damages and injunctive relief for defendants' alleged violation of 18 U.S.C. §§ 1341, 1343 (wire fraud), 18 U.S.C. § 1344 (bank fraud), 18 U.S.C. § 1951 (), 18 U.S.C. § 1952 (racketeering), 18 U.S.C. 1956 (money laundering), 18 U.S.C. § 2314 (), and 18 U.S.C. § 2315 (). Am. Compl. ¶¶ 95-102. Defendants argue that count one must be dismissed because no private right of action exists under any of these statutes. See, e.g., Def. HSBC Bank (USA) N.A.'s Mem. of Law in Supp. of its Mot. to Dismiss at 7-8.
Plaintiffs do not appear to argue that these statutes explicitly or implicitly provide for a private right of action. In fact, it is clear that they do not. See Wisdom v. First Midwest Bank, 167 F.3d 402, 409 (8th Cir. 1999) (18 U.S.C. §§ 1341, 1343, and 1951); Park Nat'l Bank of Chicago v. Michael Oil Co., 702 F. Supp. 703, 704 (N.D. Ill. 1989) (18 U.S.C. § 1344); Kissi v. Panzer, 664 F. Supp. 2d 120, 127 (D.D.C. 2009) (18 U.S.C.§ 1952); Schwartz v. F.S. & O. Assocs., Inc., No. 90 CIV 1606 (VLB), 1991 WL 208056, at *2-3 (S.D.N.Y. Sept. 27, 1991) (18 U.S.C. § 1956); Cooper v. North Jersey Trust Co. of Ridgewood, New Jersey, 226 F. Supp. 972, 980 (S.D.N.Y. 1964) (18 U.S.C. § 2314); Boyd v. Wilmington Trust Co., 630 F. Supp. 2d 379, 385 (D. Del. 2009) (18 U.S.C. § 2315). In opposing defendants' motions to dismiss, plaintiffs suggested that they did not intend to plead a separate claim in count one. See Answer to Codilis Mem. at 13-14; see also id. at 14 (). For these reasons, defendants are entitled to dismissal of count one.
In count four, plaintiffs allege that defendants' scheme to foreclose on and seize their property deprived them of due process and equal protection of the law. They seek damages, injunctive relief, and restitution pursuant to 42 U.S.C. § 1983. Defendants respond that plaintiffs' complaint fails to allege that defendants acted under color of state law or deprived plaintiffs of a federal right.
Plaintiffs do not allege that defendants are government officials or entities. "[A]lthough private persons may be sued under [section] 1983 when they act under color of state law, they may not be sued for 'merely private conduct, no matter how discriminatory or wrongful.'" London v. RBS Citizens, N.A., 600 F.3d 742, 746 (7th Cir. 2010) (quoting Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999)). ...
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