Weston v. DB Private Wealth Mortg.
| Docket Number | 22 CV 6139 |
| Decision Date | 31 July 2023 |
| Parties | Pamela Weston, Plaintiff, v. DB Private Wealth Mortgage, Ltd., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Defendant DB Private Wealth Mortgage seeks to foreclose on a property that plaintiff Pamela Weston will inherit if her husband dies before her. DB has filed two foreclosure actions in state court. After both were filed, Pamela sued in federal court alleging tortious interference with a testamentary and economic expectancy and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. DB moves to stay this case pending resolution of the foreclosure in state court. DB also moves in the alternative to dismiss for failure to state a claim. The motion to stay is denied, but the motion to dismiss is granted.
Federal courts have a “virtually unflagging obligation...to exercise the jurisdiction given [to] them.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). Although a federal court may abstain from deciding a case when there are parallel state-court and federal-court lawsuits, it may do so only under “exceptional circumstances.” Adkins v. VIM Recycling, Inc., 644 F.3d 483, 496 (7th Cir. 2011). Abstention is the “exception, not the rule.” Colorado River, 424 U.S. at 813.
The court's “task in [such] cases... is not to find some substantial reason for the exercise of federal jurisdiction... rather, the task is to ascertain whether there exist ‘exceptional' circumstances, the ‘clearest of justifications,' that can suffice under Colorado River to justify the surrender of that jurisdiction.” Moses H Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26 (1983).
Courts considering abstention under the Colorado River doctrine must conduct a two-part inquiry. Clark v. Lacy, 376 F.3d 682, 685 (7th Cir. 2004). First, the court asks whether the federal and state actions are parallel. Id. If they are not, the doctrine does not apply. Id. But if they are, the court must weigh ten non-exclusive factors to determine whether abstention is justified. Id. Only the “clearest of justifications” will warrant a stay. Colorado River, 424 U.S. at 819; Lumen Const., Inc. v. Brant Constr. Co., Inc., 780 F.2d 691, 697-98 (7th Cir. 1985) (stay, not dismissal, is appropriate disposition when court abstains).
“To survive a motion to dismiss, a plaintiff need allege ‘only enough facts to state a claim to relief that is plausible on its face.'” Barwin v. Vill. of Oak Park, 54 F.4th 443, 453 (7th Cir. 2022) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court reviewing a Rule 12(b)(6) motion to dismiss accepts as true all well-pled facts alleged in the complaint and draws all reasonable inferences in plaintiff's favor. Gociman v. Loyola Uni. of Chi., 41 F.4th 873, 881 (7th Cir. 2022). “Legal assertions or recital of the elements of a cause of action supported by mere conclusory statements,” however, do not receive the presumption of truth. Vesely v. Armslist LLC, 762 F.3d 661, 664-65 (7th Cir. 2014) (citation and quotations omitted).
Plaintiff Pamela Weston and her husband Roger Weston have a prenuptial agreement that grants Pam (the name she uses in the complaint) an expectancy interest in a Winnetka, Illinois property. [1] ¶¶ 1, 2.[1]The property has been a marital home for Pam and Roger, and the source of many fond memories and important family events. [1] ¶ 1. Roger is ten years older than Pam-he was 79 at the time the complaint was filed-and the couple's estate and long-term financial planning is based on the expectation that Pam will outlive Roger. [1] ¶ 2. Roger's estate plan set out that Pam would be granted fee simple ownership of the property, free and clear of any liens and mortgages, when Roger died. [1] ¶¶ 2, 7.
From no later than 2009 until late 2017, the couple's trusted confidant, Sultan Issa, was part of an embezzlement scheme. [1] ¶ 3. As part of the scheme, Issa secretly forged loan documents purporting to grant a first mortgage against the Westons' property to defendant DB Private Wealth. [1] ¶ 4. Issa used the loan proceeds received from DB Private Wealth for his own purposes. [1] ¶ 5.
DB Private Wealth filed Issa's forged mortgage documents as an encumbrance on the property shortly after Issa submitted the documents to DB Private Wealth. [1] ¶ 8. After his conduct was uncovered, Issa admitted that he had forged the documents. [1] ¶ 9. He also admitted that he misappropriated more than $70 million dollars in funds from clients and financial institutions; provided financial institutions with fraudulent loan documents and forged fraudulent authorizations purportedly in the name of Roger, Pam, and Roger's various business entities; and lied to them about the use, status, and safety of their invested funds. [1] ¶ 10. To continue and conceal his scheme, Issa created and provided false and misleading account statements and made Ponzi-type payments to cover up his fraud. [1] ¶ 10. DB Private Wealth, through its affiliate Deutsche Bank, received a restitution order against Issa for more than $4 million. [1] ¶ 11. Plaintiff alleges upon information and belief that the order covers the funds from the forged loan. [1] ¶ 11.
In 2018, DB filed for foreclosure against the Roger Weston Revocable Trust, Roger Weston, the property, and unknown owners and non-record claimants. [15-2] at 2. Pam Weston was not included as a defendant in this foreclosure action.[2]On September 1, 2022, Weston[3]sent a formal demand letter to DB requesting that it dismiss its foreclosure action and release Issa's forged mortgage against the property. [1] ¶ 13.
After receiving Weston's demand letter, DB filed a new and separate foreclosure action. [1] ¶ 14; [25-1] at 4 (DB's motion for leave to file amended complaint, with copy of initial 2022 foreclosure action attached).[4] On September 21, 2022, Weston provided DB with an amended demand letter setting forth documents and additional details about Issa's admissions regarding his forgery. [1] ¶ 15. Weston also renewed her demand that DB cease its foreclosure proceedings and release the forged mortgage. [1] ¶ 15. Weston sued DB in this court, alleging tortious interference with a testamentary expectancy, tortious interference with an economic expectancy, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. [1] ¶¶ 44-67.
Defendants argue that, pending the outcome of the state-court foreclosure proceedings, I should abstain from deciding this case under the Colorado River doctrine. In the alternative, they argue that I should dismiss for failure to state a claim.
Under the Colorado River abstention doctrine, I first ask whether the federal-and state-court cases are parallel. Clark, 376 F.3d at 685. If, and only if, they are, I proceed to analyze ten non-exclusive factors to see if abstention is justified. Id.
Suits are parallel when “substantially the same parties are contemporaneously litigating substantially the same issues in another forum.” Id. at 686 (7th Cir. 2004).
I examine “whether the suits involve the same parties, arise out of the same facts and raise similar factual and legal issues.” Adkins, 644 F.3d at 499 (quoting Tyrer v. City of South Beloit, 456 F.3d 744, 752 (7th Cir. 2006)). Cases can be parallel even if there is not “formal symmetry” between the two actions. Id. But there should be a “substantial likelihood that the state litigation will dispose of all claims presented in the federal case.” Id. (citation omitted).
Weston argues that the cases can't be parallel because they involve different parties. [21] at 12. The 2022 foreclosure suit was filed against the Roger Weston Revocable Trust, Roger Weston, the property, and unknown owners and non-record claimants. [25-1] at 4.[5] Pam Weston is not named as a defendant. DB downplays this fact. It says that it moved in April 2023 to add her as a defendant in the 2022 foreclosure action, so Weston's absence in the state suit “may soon be a moot point.” [25] at 7; [25-1] (motion to add Weston as defendant). But DB waited to file the motion to add her as a defendant not only until after Weston filed her suit, but until after she filed a response brief noting her absence. Compare [21] (filed 3/31/23), with [251] (filed 4/17/23). More importantly, there's no guarantee that the state court will grant DB's motion, in which case, Weston would continue to be absent from the state case.
Weston acknowledges that Colorado River doesn't require the parties to be identical, and that it just requires that their interests be substantially the same. [21] at 12.
But she says DB hasn't demonstrated similarity of interests. “Other than Roger being Pam's husband, there is little evidence before this Court about the Weston Defendants, making it difficult to assess whether the Weston Defendants have interests that are aligned with Pam,” she says. [21] at 12. The filings themselves provide information about the parties' interests, though. The Weston defendants' affirmative defenses and counterclaims in the 2018 foreclosure action make clear that they want DB's mortgage to be found invalid and unenforceable, and they want DB to be found liable for damages they say resulted from the allegedly improper conduct. [15-1]. Pamela Weston shares those interests. [1]; [21]. The parties are therefore substantially the same.
DB next argues that the legal and factual issues in the cases are substantially similar,...
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