Bartucci v. Wells Fargo Bank N.A.

LOUIS G. BARTUCCI, Plaintiff, v. WELLS FARGO BANK N.A., Defendant.

Case No. 14 CV 5302

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 24, 2016

Judge Marvin E. Aspen

MEMORANDUM OPINION AND ORDER

Presently before us is Defendant Wells Fargo Bank N.A.'s ("Wells Fargo") second motion to dismiss Plaintiff Louis G. Bartucci's ("Bartucci") seven-count complaint. (Dkt. No. 70.) Following Defendant's initial motion to dismiss, we dismissed five of the seven claims for failure to state a claim. (Dkt. No. 54.) Now, only two counts remain: (1) violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §1691 et seq., and (2) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS 505/2.

Defendant moves to dismiss the remaining two counts. For the following reasons, Defendant's motion to dismiss is granted based on the doctrine of res judicata.

BACKGROUND

In 2007, Plaintiff obtained a loan from Defendant for the purchase of a residential property. (Am. Compl. ¶ 6.) From 2008 to 2009, Plaintiff faced financial difficulties meeting his mortgage payments. (Id. ¶ 8.) Plaintiff submitted paperwork to Defendant to modify his loan under the Home Affordable Mortgage Program ("HAMP"), a federal program that assists eligible homeowners who face financial hardships with loan modifications. (Id. ¶ 11.) On January 12, 2010, while Plaintiff's application for a home loan modification was still pending, HSBC Bank USA, N.A., as Trustee for Defendant, commenced an action to foreclose Plaintiff's property in the Circuit Court of Cook County. (Id. ¶ 14.)

From 2010-2013, Plaintiff continued to contact Defendant in regards to his loan modification request. (Id. ¶ 15.) Plaintiff alleges that during the loan modification process, he disclosed his national origin on mandatory loan paperwork. (Id. ¶ 16.) In June 2013, Defendant denied Plaintiff's loan modification request citing his negative net present value. (Id. ¶ 18.) Soon thereafter, Plaintiff appealed Defendant's denial of his HAMP modification. (Id. ¶ 19.)

Plaintiff alleges that he made several telephone calls in 2013 to Defendant's representatives concerning his loan modification denial, but that Defendant's representatives told Plaintiff that they could not understand him because of his accent, that he needed to call back, and then hung up on him without any warning. (Id. ¶ 24.) Further, Plaintiff alleges that while attending a seminar hosted by Defendant, a representative told Plaintiff "that he would probably have had an easier time obtaining a loan modification if he were in fact much younger." (Id. ¶ 25.) On another occasion, Plaintiff alleges that one of Defendant's representatives expressed that Plaintiff's age factored into the denial of his loan modification request. (Id. ¶ 47.)

On April 3, 2015, the judicial sale of Plaintiff's property was confirmed in the Cook County foreclosure action. (Dkt. No. 71, Ex. B.) Plaintiff moved for reconsideration of that decision on May 18, 2015, asking the court to vacate the confirmation order on notice grounds and because this federal action "directly relates to the subject of the real estate and unlawful lending practices for which factual determinations and substantive rulings in the [state court matter] would or could have a direct and negative impact on [the federal action]." (Dkt. No. 71, Ex. C at 4.) The state court denied Plaintiff's motion for reconsideration. (Dkt. No. 71, Ex. D.) Plaintiff did not file an appeal.

STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is meant to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a motion to dismiss, the complaint 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). Specifically, "a 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, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 540 U.S. 544, 555, 127 S. Ct. 1955, 1964-65 (2007)). The plausibility standard "is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Thus, while a complaint need not give "detailed factual allegations," it must provide more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 540 U.S. at 545, 127 S. Ct. at 1964-65; Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618-19 (7th Cir. 2007). The statement must be sufficient to provide the defendant with "fair notice" of the claim and its basis. Twombly, 540 U.S. at 545, 127 S. Ct. at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 102 (1957)); Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Thompson v. Ill. Dep't of Prof'l Reg., 300 F.3d 750, 753 (7th Cir. 2002).

DISCUSSION

Defendant argues that Plaintiff's remaining two claims are barred based on res judicata, or alternatively, collateral estoppel. (Mot. at 3, 9.) Additionally, Defendant asserts that both claims should be dismissed under Section 15-509(c) of the Illinois Mortgage Foreclosure Law.(Mot. at 16.) Plaintiff argues that his complaint should not be dismissed because he did not and could not raise his remaining federal claims in the state law action. (Reply at 3.) We discuss each of Defendant and Plaintiff's contentions below.

I. Res Judicata¹

Defendant alleges that as a result of the confirmation order entered by the state court in Plaintiff's foreclosure action, Plaintiff should be prohibited from proceeding with this federal action based on res judicata.² (Mot. at 3.)

According to the doctrine of res judicata, "a final judgment on the merits rendered by a court of competent jurisdiction acts as bar to subsequent suits between the parties involving the same cause of action." River Park, Inc. v. City of Highland Park, 703 N.E.2d 883, 889, 184 Ill.2d 290, 302 (Ill. 1998); see also 4901 Corp. v. Town of Cicero, 220 F.3d 522, 529 (7th Cir. 2000); Bryan v. Belvidere Nat. Bank, No. 4 C 500009, 2004 WL 1345096, at *4 (N.D. Ill. June 14, 2004). Because the initial judgment was rendered in Illinois state court werely on Illinois law in determining whether res judicata bars this action. 28 U.S.C. § 1738; In re Dollie's Playhouse, Inc., 481 F.3d 996, 1000 (7th Cir. 2007); Whitaker v. Ameritech Corp., 129 F.2d 952, 955-56 (7th Cir. 1997); Lyttle v. Killackey, 546 F. Supp. 2d 583, 590 (N.D. Ill. 2008). Under Illinois law, for res judicata to apply, three requirements must be met: (1) there was a final judgment on the merits rendered by a court of competent jurisdiction, (2) there is an identity of cause of action, and (3) there is an identity of parties or their privies. Chi. Title Land Trust Co. v. Potash Corp. of Saskatchewan Sales Ltd., 664 F.3d 1075, 1079 (7th Cir. 2011); Garcia v. Vill. of Mount Prospect, 360 F.3d 630, 635 (7th Cir. 2004); Lyttle, 546 F. Supp. 2d at 590; River Park, Inc., 703 N.E.2d at 339, 184 Ill.2d at 302. The parties do not dispute elements one and three; the state court's order approving sale was a final judgment rendered by a court of competent jurisdiction,³ and Plaintiff and Defendant (as privies of the plaintiff in the state foreclosure action) were parties in the state court suit.⁴ We focus, then, on the second element; whether there is identity of cause of action.

a. Identity of Cause of Action

In Illinois, courts rely on the "transactional test" to determine whether two causes of actions are the same for res judicata purposes. Arlin-Golf, LLC v. Vill. of Arlington Heights, 631 F.3d 818, 821 (7th Cir. 2011); Chi. Title Land Trust Co., 664 F.3d at 1080; Amari Co., Inc., v. Burgess, 955 F. Supp. 2d 868, 881 (N.D. Ill. 2012); Bryan, 2004 WL 1345096, at *4; River Parks, Inc., 703 N.E.2d at 891, 184 Ill.2d at 307. Under the transactional test, "claims are thesame 'if they arise from a single group of operative facts, regardless of whether they assert different theories of relief.'" In re Emerald Casino, Inc., 530 B.R. 44, 181-82 (N.D. Ill. 2014) (citing River Parks, Inc., 703 N.E.2d at 893, 184 Ill.2d at 310-11); see also Whitaker, 129 F.2d at 957 (barring plaintiff's RICO claim based on prior state court action where "allegations of fraud go to the heart" of both the state court and federal court action); Bryan, 2004 WL 1345096, at *4 (federal ECOA claim was barred due to state foreclosure action under doctrine of res judicata; "the facts behind [plaintiff's] federal claims [were] clearly related in time, space, origin and motivation to those at issue in the state court foreclosure proceeding"); Ruffino v. Bank of Am., N.A, No. 13 C 50124, 2013 WL 5519456, at *4 (N.D. Ill. Oct. 3, 2013) (dismissing plaintiff's federal claims under doctrine of res judicata where alleged false representations made by defendant supporting the federal claim also gave rise to the state court foreclosure action); Arlin-Golf, LLC, 631 F.3d at 822; Nowak v. St. Rita High Sch, 757 N.E.2d 471, 476, 197 Ill.2d 381, 391-92 (Ill. 2001) ("The transactional test provides that the assertion of different kinds or theories of relief still constitutes a single cause of action for purposes of res judicata if a single group of operative facts gives rise to the assertion of relief.") (internal citation omitted). Additionally, according to the Illinois Supreme Court, "the transactional test permits claims to be considered part of the same cause of action even if there is not a substantial overlap of evidence, so long as they arise from the same transaction." River Park, 703 N.E.2d at 893, 184...