Kane v. Bank of Am., N.A.

338 F.Supp.3d 866

Thomas H. KANE, Plaintiff,

v.BANK OF AMERICA, N.A., and Wells Fargo Bank, N.A., Defendants.

13 C 8053

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

Signed March 9, 2018

Erica Crohn Minchella, Minchella & Associates, Ltd., Skokie, IL, 1st. Keelan Darren Kane, Attorney at Law, Chicago, IL, for Plaintiff.

Lucia Nale, Michelle V. Dohra, Tyler Donald Alfermann, Mayer Brown LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Gary Feinerman, United States District Judge

Thomas Kane alleges in this suit that Bank of America and Wells Fargo Bank committed common law fraud and violated the Illinois Consumer Fraud Act ("ICFA"), 815 ILCS 505/1 et seq. , in connection with their processing and denial of his requests for a mortgage modification. Doc. 55. The court stayed the suit under the doctrine set forth in Colorado River Water Conservation District v. United States , 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), pending resolution of an earlier filed foreclosure case in Illinois state court. Docs. 144-145 (reported at 2017 WL 2243055 (N.D. Ill. May 23, 2017) ). After the state case concluded, the Banks moved under Federal Rule of Civil Procedure 12(c) for judgment on the pleadings on the ground that the state judgment precludes Kane’s claims here. Doc. 149. The motion is granted.

Background

As on a Rule 12(b)(6) motion, the court on a Rule 12(c) motion assumes the truth of the operative complaint’s well-pleaded factual allegations, though not its legal conclusions. See St. John v. Cach, LLC , 822 F.3d 388, 389 (7th Cir. 2016) ; Adams v. City of Indianapolis , 742 F.3d 720, 727-28 (7th Cir. 2014). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Kane’s brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted); see also N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend , 163 F.3d 449, 452 (7th Cir. 1998). Among the matters subject to proper judicial notice are state court filings and judicial decisions. See Young-Smith v. Holt , 575 F. App'x 680, 682 (7th Cir. 2014) ; In re Salem , 465 F.3d 767, 771 (7th Cir. 2006). The facts are set forth as favorably to Kane as those materials allow. See Pierce v. Zoetis, Inc. , 818 F.3d 274, 277 (7th Cir. 2016). In setting forth the facts at this stage, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A. , 610 F.3d 382, 384 (7th Cir. 2010).

In 2006, Kane took out a $470,000 loan from Wells Fargo and secured it with a mortgage on his home. Doc. 55 at ¶¶ 86, 90. Wells Fargo transferred the mortgage to Bank of America, but continued to service it. Id. at ¶¶ 66-67. Kane sought a loan modification in 2009. Id. at ¶¶ 92-93. Thus began a long back-and-forth between Kane and the Banks over whether and how they might modify his repayment terms. Id. at ¶ 76. In the end, the Banks denied all of Kane’s requests and proceeded with foreclosure. Id. at ¶ 85.

Litigation commenced in March 2011, when Bank of America filed a foreclosure case against Kane in the Circuit Court of Cook County, Illinois. Bank of Am., N.A. v. Kane , No. 2011 CH 11338 (Cir. Ct. Cook Cnty., Ill.) (complaint reproduced at Doc. 124-1 at 6-40). Well over two years later, in November 2013, Kane brought this suit against the Banks in federal court, alleging common law fraud and violations of the ICFA, the Racketeer and Corrupt Organizations Act ("RICO"), and the Fair Debt Collection Practices Act ("FDCPA"). Doc. 1. The gist of Kane’s suit was and remains that the Banks strung him along without intending to modify his loans in order to milk extra late fees and interest from him.

This suit was initially assigned to Judge Marovich, who granted in part and denied in part the Banks' motion to dismiss. Doc. 23 (reported at 2014 WL 4198295 (N.D. Ill. Aug. 25, 2014) ). Kane then sought and obtained permission to file an amended complaint that did not include the RICO claims, the FDCPA claims, and some of the originally pleaded fraud claims. Doc. 40 (reported at 2015 WL 3798142 (N.D. Ill. June 17, 2015) ). The following day, the case was reassigned to the undersigned judge. Doc. 41. Kane then moved for reconsideration of Judge Marovich’s rulings insofar as they precluded him from re-pleading his RICO claims. Doc. 44. The court denied that motion, Doc. 54, and Kane filed a second amended complaint, Doc. 55, which the Banks answered, Doc. 60. The court then urged the parties to get moving on discovery, which had only recently begun. Docs. 46, 61, 68.

Meanwhile, Kane in the state foreclosure case asserted as affirmative defenses the same fraud-based theories underlying his claims in federal court. Doc. 124-1 at 57-122. Bank of America twice moved to strike those defenses, prompting Kane to amend twice more. Id. at 124; Doc. 124-2 at 2-113, 115, 117-183. Kane’s third and final amended affirmative defenses sounded in common law promissory fraud and violations of the ICFA, closely tracking the allegations of his federal complaint. Doc. 124-2 at 117-183. The state court struck those defenses with prejudice. Id. at 185, 187; Doc. 150-1.

Bank of America moved for summary judgment in the foreclosure case, Doc. 124-2 at 189, and the state court granted the motion, Doc. 133-1 at 5. The state court also issued a judgment for foreclosure and sale, and appointed a sale officer to auction the property. Id. at 9-13, 15; Doc. 150-3.

Following the entry of judgment, but before the judicial sale, Kane sold the mortgaged property and used the sale proceeds to pay off his loan. Doc. 153 at 7. On Bank of America’s motion, the state court dismissed the suit with prejudice given that "all amounts due under the subject loan have been paid off in full." Doc. 150-4. No appeal was filed within the time permitted by Illinois law. See Ill. Sup. Ct. R. 303(a)(1) (appeals from final civil judgments must be filed "within 30 days after the entry of the final judgment appealed from").

Discussion

The Banks contend that the state court’s judgment in the foreclosure case precludes Kane’s claims in this federal suit. The state court judgment’s preclusive effect is governed by Illinois law. See Matsushita Elec. Indus. Co., Ltd. v. Epstein , 516 U.S. 367, 373, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996) ; Burke v. Johnston , 452 F.3d 665, 669 (7th Cir. 2006). One variant of preclusion, res judicata or claim preclusion, "provides for the finality of rulings by barring the relitigation of claims or defenses that had been or could have been brought in a prior case." Smith Tr. & Sav. Bank v. Young , 312 Ill.App.3d 853, 245 Ill.Dec. 308, 727 N.E.2d 1042, 1045 (2000) ; see also Hicks v. Midwest Transit, Inc. , 479 F.3d 468, 471 (7th Cir. 2007) ; Wilson v. Edward Hosp. , 367 Ill.Dec. 243, 981 N.E.2d 971, 975 (2012).

Res judicata applies under Illinois law if: "(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." River Park, Inc. v. City of Highland Park , 184 Ill.2d 290, 234 Ill.Dec. 783, 703 N.E.2d 883, 889 (1998) ; see also Empress Casino Joliet Corp. v. Johnston , 763 F.3d 723, 727-28 (7th Cir. 2014). In addition, the party against whom res judicata is invoked must have had a "full and fair" opportunity to litigate the claim in the prior suit. Hicks , 479 F.3d at 471. Kane concedes that the third requirement, an identity of the parties or their privies, is satisfied, and he does not dispute that he had a "full and fair" opportunity to litigate his claims in state court. Doc. 153 at 8-9. The only disputes concern the first and second requirements, which are addressed in turn.

Final Judgment on the Merits. An order is final if it "either terminates the litigation between the parties on the merits or disposes of the rights of the parties, either on the entire controversy or a separate branch thereof." Wilson , 367 Ill.Dec. 243, 981 N.E.2d at 978. That an order resolves a "separate branch" of a suit, however, does not mean that it is immediately entitled to preclusive effect. Instead, to qualify as final for preclusion purposes, such an order must be "final and appealable." In re Cochrane’s Estate , 72 Ill.App.3d 812, 28 Ill.Dec. 836, 391 N.E.2d 35, 36 (1979) (emphasis added); see also Shaw v. Bretz , 2018 IL App (3d) 170291-U, ¶ 25, 2018 WL 1062658 (Ill. App. Feb. 22, 2018) ("We must determine whether the April 24, 2015, order was a final and appealable order under Illinois Supreme Court Rule 304(b)(1) for purposes of the application of res judicata. "); City of Naperville v. Ill. Fraternal Order of Police, Labor Council, F.O.P. Lodge No. 42 , 375 Ill.Dec. 293, 997 N.E.2d 296, 299 (Ill. App. 2013) ("Dismissals that are entered without prejudice are not final and appealable orders. As such neither res judicata nor collateral estoppel barred the City from raising again its contention that the parties' dispute was not subject to arbitration.") (citations omitted); People v. Taylor , 6 Ill.App.3d 961, 286 N.E.2d 122, 123 (1972) ("The denial of defendants' motion to dismiss the indictment was not a final and appealable order. It was an interlocutory order .... Res judicata does not apply to an interlocutory order.").

The "final and appealable" standard governing res judicata is akin to the standard used in Illinois to determine whether an appellate court has jurisdiction to review a trial court’s order. See Curtis v. Lofy , 394 Ill.App.3d 170, 333 Ill.Dec. 41, 914 N.E.2d 248, 261 (2009) ("The court disagrees that finality in the context of Rule 304(a)"—which permits a party to immediately appeal a final order regarding "fewer than all of...