Tyler v. Bank of N.Y. Mellon
| Decision Date | 26 May 2020 |
| Docket Number | No. 19 CV 7863,19 CV 7863 |
| Parties | TIMOTHY R. TYLER AND STEPHANIE M. TYLER, Plaintiffs, v. BANK OF NEW YORK MELLON, et al., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiffs Timothy and Stephanie Tyler tried to modify the mortgage on their home. They allege that their loan servicers, defendants Bank of America and Residential Credit Solutions, among others, promised them a modification under the federal Home Affordable Modification Program if they met certain conditions. But the loan servicers failed to offer a HAMP modification and instead threatened to foreclose on the Tylers' home. The Tylers bring claims under the Illinois Consumer Fraud and Deceptive Business Practices Act, as well as claims of unjust enrichment and promissory estoppel. Bank of America moves to dismiss the complaint under Rules 12(b)(1) and 12(b)(6), and RCS moves to dismiss under Rule 12(b)(6). For the reasons discussed below, the motions are granted.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) tests the jurisdictional sufficiency of the complaint. Bultasa Buddhist Temple of Chi. v. Nielsen, 878 F.3d 570, 573 (7th Cir. 2017). In evaluating a facial attack on standing in a 12(b)(1) motion, I accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the plaintiffs. Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015). If the attack is a factual one, I may look beyond the jurisdictional allegations of the complaint and examine extrinsic evidence. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009).
To survive a motion to dismiss under Rule 12(b)(6), a complaint must state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). The complaint must contain "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In reviewing a motion to dismiss, I construe all factual allegations as true and draw all reasonable inferences in the plaintiffs' favor. Sloan v. Am. Brain Tumor Ass'n, 901 F.3d 891, 893 (7th Cir. 2018).
On a 12(b)(6) motion, I may only consider allegations in the complaint, documents attached to the complaint, documents that are both referred to in the complaint and central to its claims, and information that is subject to proper judicial notice. Reed v. Palmer, 906 F.3d 540, 548 (7th Cir. 2018) (quoting Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012)). RCS and Bank of America attach the following documents to their motions, which I consider because they are referenced in and central to the complaint: a letter from Bank of America transferring the loan to RCS, [8-1] at 2; [18-4] at 2; two letters from RCS approving the Tylers for a trial loan modification, [8-4] at 2; [18-6] at 2, 5; the signed modification agreement, [8-5] at 2-8; [18-7] at 2-12; [18-8] at 2-10; a letter from RCS denying the Tylers apermanent modification, [8-6] at 2; [18-9] at 2; a letter transferring the loan to Ditech, [18-5] at 2; and an executed loan modification agreement with Ditech. [8-3] at 2; [18-10] at 2-7. The Tylers do not object to consideration of these exhibits.
In 2006, Timothy Tyler purchased a home in Matteson, Illinois. [1] at 2 ¶ 1.1 He obtained a mortgage with Countrywide Mortgage. [1] at 2 ¶ 1. Two years later, Shapiro Kreisman and Associates, LLC initiated a foreclosure action against Timothy and Stephanie Tyler. [1] at 2 ¶ 2.
In 2009, the Tylers started a loan modification process with Bank of America. [1] at 2 ¶ 3.2 Over the next six years, the Tylers' account was transferred multiple times to different loan servicers. [1] at 2 ¶ 4. Throughout that time, Bank of America and RCS refused to give the Tylers a loan modification under HAMP. [1] at 2 ¶ 5.3
In December 2015, the Tylers entered into a loan modification agreement with RCS, acting on behalf of Bank of America. [1] at 2 ¶ 7. They received a letter stating that Bank of America was the master servicer and made all decisions about modification and enforcement. [1] at 2 ¶ 6. The new loan had a $5,110 monthly payment, and interest and fees added to the principle. [1] at 2 ¶ 7. That month, the Tylers made three disputed payments meant to cover their October, November, and December payments, totaling $15,326.88. [1] at 2 ¶ 8. In February 2016, RCS told the Tylers that they were ineligible for all modification programs available on their mortgage. [1] at 2 ¶ 8.
In April 2016, Ditech took over servicing the Tylers' mortgage. [1] at 3 ¶ 9. Ditech told the Tylers that Bank of America had rejected the December 2015 loan modification, and that the Tylers should apply for a new modification. [1] at 3 ¶ 9. The Tylers were also told that they had forfeited their previous three payments. [1] at 3 ¶ 9.
The next month, Ditech, on behalf of Bank of America, requested additional documentation to complete the loan modification review, which the Tylers provided. [1] at 3 ¶ 10. The Tylers took the request for additional information as a promise that, if they provided the requested documents, they would obtain a more favorable loan using the HAMP method. [1] at 3 ¶ 10. The Tylers allege that the defendants knew the couple would rely on their request for additional documents, but did not plan to offer them a HAMP modification. [1] at 3 ¶ 10. The defendants did not offer the Tylersa modification under HAMP, and tried to sell the house as part of the foreclosure action. [1] at 3 ¶ 10.
In July 2016, Shapiro Kreisman and Associates, LLC threatened to sell the house and presented a false affidavit in court that assessed attorney's fees and costs, insurance, preservation costs, interest, and taxes incurred on the property, bringing the Tylers' total mortgage to more than $600,000. [1] at 3 ¶ 11. The value of their home was $270,000. [1] at 3 ¶ 11.
That same month, RCS took over servicing the loan. [1] at 3 ¶ 12. RCS approved a loan modification with a new monthly payment of $2,491.70. [1] at 3 ¶ 12. In October 2016, the Tylers entered into another loan modification agreement with Ditech. [1] at 3 ¶ 14. Around the same time, the Tylers received a letter stating that their property would be sold. [1] at 3 ¶ 13. The Tylers have continued to pay under the terms of the agreement with Ditech. [1] at 3-4 ¶ 14.4
Because of the Tylers' reliance on the defendants' promises, the defendants made more than $400,000. [1] at 4 ¶ 15. The Tylers hired two attorneys and incurred more than $10,000 in legal fees. [1] ¶ 16.
The Tylers filed their first complaint on September 6, 2018, under the docket number 18-cv-06120 (N.D. Ill.). Dkt. No. 18-cv-06120, [2]. That complaint named Bank of New York Mellon, Bank of America Corp., and Shapiro Kreisman as defendants, and brought breach-of-contract, promissory-estoppel, ICFA, and FairDebt Collection Practices Act claims. On February 14, 2019, the Tylers filed an amended complaint naming the two Bank of America entities, RCS, and Ditech Financial, LLC as defendants. Dkt. No. 18-cv-06120, [25]. That complaint brought breach-of-contract, promissory-estoppel, and ICFA claims. Bank of America and RCS moved separately to dismiss the complaint. Dkt. No. 18-cv-06120, [33], [41]. On June 11, 2019, the Tylers filed a third amended complaint, naming the same four defendants. Dkt. No. 18-cv-06120, [47]. That complaint dropped the breach-of-contract claims, but added claims for unjust enrichment against each defendant, in addition to the ICFA and promissory-estoppel claims. RCS and Bank of America again moved to dismiss. Dkt. No. 18-cv-06120, [50], [52], [55]. On October 28, 2019, I dismissed the complaint without prejudice for lack of subject-matter jurisdiction because the Tylers had not adequately alleged Ditech's citizenship, despite being repeatedly told to do so. Dkt. No. 18-cv-06120, [62]. Because the court lacked jurisdiction, I did not reach any of the arguments RCS and Bank of America raised to dismiss the complaint on the merits.
On November 29, 2019, the Tylers filed the complaint at issue here, naming both Bank of America entities and RCS as defendants and bringing six claims. They bring one claim each against Bank of America and RCS under the ICFA (Counts I and IV), and one claim each of promissory estoppel (Counts II and V) and unjustenrichment (Counts III and VI). RCS and Bank of America move separately to dismiss all claims.5
Bank of America moves under Rule 12(b)(1) to dismiss Stephanie Tyler as a plaintiff. Since she was not a party to the mortgage, Bank of America says she does not have standing to assert any claims.
To establish Article III standing, a plaintiff must show that she suffered a concrete and particularized injury, caused by the actions of the defendant, that would likely be redressed by a favorable decision. Bria Health Servs., LLC v. Eagleson, 950 F.3d 378, 382 (7th Cir. 2020). The injury-in-fact standard requires a plaintiff to allege that the injury is both concrete and particularized. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1545 (2016). And the plaintiff must demonstrate standing for each claim she brings. Johnson v. U.S. Office of Pers. Mgmt., 783 F.3d 655, 661 (7th Cir. 2015).
It's unclear whether Bank of America intended its standing argument to be a facial or factual challenge; its brief notes both that the court should accept all well-pleaded allegations as true (referring to a facial challenge), but also observes that thecourt can look beyond the complaint (apparently referring to a factual challenge), and it relies on an extrinsic exhibit to make its argument. [18] at 12-13, 14-15. The Tylers treat Bank of America's argument as a facial challenge. [20] at 9-10.
Facially, the complaint sufficiently alleges that both plaintiffs...
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