Commercial Banking, Collections, and Bankruptcy

Dist. Ct. did not err in dismissing for failure to state cause of action plaintiff’s claim that defendant breached mortgage agreement and violated Illinois Consumer Fraud and Deceptive Business Practices Act (Act) by charging plaintiff $20 for visual, drive-by inspection of her residence, after plaintiff had defaulted on her mortgage loan. While plaintiff asserted that said fee was improper under mortgage contract because defendant knew or should have known that she already had occupied her property that was subject of said mortgage, and that said fee had violated HUD regulations, plaintiff failed to allege that parties intended to incorporate HUD regulations into mortgage agreement. Moreover, mortgage agreement expressly allowed lender to charge inspection fee as necessary expenditure to protect value of property after plaintiff’s default. With respect to plaintiff’s claim under Act, plaintiff failed to allege that inspection fee offended public policy, was oppressive or caused her substantial injury.

Dist. Ct. did not err in granting defendant-creditor’s motion for summary judgment in plaintiff-debtor action, alleging that defendant violated Fair Credit Reporting Act (FCRA) by initiating collection efforts on debt by acquiring type of credit information called plaintiff’s “propensity-to-pay,” under circumstances where plaintiff had previously received discharge of debt under bankruptcy. Ct. of Appeals initially found that plaintiff had standing to bring instant lawsuit, where allegations in her complaint resembled harm associated with intrusion upon seclusion that related to allegations of invasion of privacy. However, plaintiff failed to prevail on merits of her negligence claim under FCRA, where plaintiff failed to proffer evidence showing that defendant’s actions caused her to incur either pecuniary or non-pecuniary harm, since: (1) plaintiff disavowed any loss of credit, housing, employment, money or insurance that arose out of defendant’s actions; and (2) plaintiff could provide only conclusory statements that defendant’s conduct caused her stress and anger. Moreover, with respect to plaintiff’s claim that defendant willfully violated section 1681b(a)(3)(A) by procuring “consumer report” when underlying debt had been discharged, plaintiff could not establish said violation, since: (1) defendant lacked actual knowledge of plaintiff’s prior bankruptcy at time defendant had obtained plaintiff’s propensity-to-pay score; and (2) defendant could reasonably have relied on its own procedures to obtain bankruptcy information about plaintiff’s debt.

Dist. Ct. did not err in finding that plaintiff made commercially reasonable efforts to remove or release its lien that it had on defendant’s property, where defendant needed to refinance said property to meet its indebtedness to plaintiff at issue in forbearance agreement on different loan to which defendant had defaulted. While plaintiff never released said lien, record showed that Dist. Ct. had properly considered circumstances surrounding parties’ actions, especially where plaintiff had emailed defendant to seek assurance that any proceeds from refinancing of property that was subject of lien would be applied to required payment under forbearance agreement, and defendant had failed to provide sufficient proof that it was working on said necessary refinancing. As such, it was reasonable for plaintiff to request such assurance of refinancing before removing said lien. Moreover, there was nothing in forbearance agreement that imposed unqualified obligation for plaintiff to remove said lien. Dist. Ct. also did not err in confirming judicial sale of property at issue in forbearance agreement, where Dist. Ct. could properly find that plaintiff did not breach forbearance agreement.

Dist. Ct. did not err in granting defendant HUD’s motion for summary judgment in conversion action by plaintiffs-former managers of condemned housing development seeking $2.7 million reserve fund held by defendant for use in maintaining said condemned property. In order to have tortious conversion of property claim, plaintiffs must first establish that money in reserve fund is its property, and plaintiff failed to establish ownership of said fund, where contracts between plaintiffs and defendant did not address ownership of fund after plaintiffs no longer operated housing development, and where possibilities of ownership of fund included plaintiffs, City of Joliet that condemned property, U.S. Treasury and/or tenants. Fact that plaintiff gave defendant security in whatever property interest they possessed in fund, or that plaintiffs treated additions to fund as taxable income did not require different result.

Bankruptcy Ct. did not err in granting creditor’s proof of claim in amount of $618,974 against debtor in bankruptcy proceeding, where creditor, who was business partner of debtor in failed LLC business, alleged that partners of said business had implied-in-fact contract to equalize capital contributions made to said business, and that said claim was necessary to achieve said equality. Ct. rejected debtor’s contention that relevant operating agreement precluded existence of implied-in-fact contract to equalize capital contributions, or that Bankruptcy Ct. erred in relying on extrinsic evidence to find that implied-in-fact contract existed among instant business partners. Use of extrinsic evidence was appropriate, where plain language of agreement did not demonstrate that it was complete expression of company’s members’ agreement. Fact that agreement limited members’ recovery to company’s assets upon dissolution did not require different result. Also, Dist. Ct. could properly look to fact that debtor sought equal contributions from other members for debtor’s $32,000 payment as evidence that members had entered into implied-in-fact equalization contract.

Magistrate Judge did not err in granting defendant-debt collector’s motion for summary judgment in plaintiff-debtor’s action, alleging that defendant violated Fair Debt Collection Practices Act (FDCPA) by seeking to collect on attorney's fees that were generated when defendant sought to collect on attorney fees that were provided for creditor in contract that plaintiff had signed with respect to payment of medical costs generated by her children. While plaintiff argued that violation occurred because defendant was attempting to collect for attorney fees that plaintiff did not owe, relevant provision in payment agreement stated that plaintiff had agreed to pay costs of collection on medical debt, including attorney fees. While plaintiff argued that defendant could not seek attorney fees incurred while attempting to collect on attorney fees incurred when seeking recovery on medical debt, term “costs of collection” in payment agreement broadly encompassed all costs with collection, including costs of collecting on attorney’s fees provided for in agreement. As such, defendant’s efforts to recover “fees-on-fees” did not violate FDCPA.

In successful action by plaintiff-bank, seeking recovery from defendant-title insurance company for breach of contract, breaches of fiduciary duty, negligence and negligent misrepresentation arising of scheme that resulted in losses to plaintiff from defaults on loans given to purchasers, who had little equity in subject condominiums, Dist. Ct. did not err in denying plaintiff’s request for prejudgment interest even though plaintiff was prevailing party. Under 12 USC section 1821(l), Dist. Ct. had discretion to decide whether prejudgment interest should be awarded at all. Moreover, section 1821(l) allowed Dist. Ct. to consider only prejudgment interest that would be appropriate, which allowed Dist. Ct. to consider state law that would have governed case, but for plaintiff- FDIC’s role as receiver of instant bank that made actual loans, especially where plaintiff’s claims against defendant are all state-law claims brought under federal jurisdiction by FIRREA. Also, Dist. Ct. could properly find that prejudgment interest was not appropriate under state law, since defendant was not entity that wrongfully withheld money from plaintiff. Dist. Ct. also did not err in denying plaintiff’s motion to amend judgment to increase damages awarded by jury, where issues of defendant’s causation were not sufficiently clear, so as to disturb jury’s verdict, which did not award all of plaintiff’s requested damages. Dist. Ct. erred, though, in finding that defendant was entitled to set-off of $500,000, which reflected amount that co-defendant agreed to pay plaintiff, where defendant failed to carry its burden of proving that any portion of settlement sum was attributable to same injuries for which defendant was found liable. (Partial dissent filed.)

Dist. Ct. lacked jurisdiction to consider plaintiff’s claim under Fair Debt Collection Practices Act (FDCPA), where plaintiff alleged that defendant-debt collector failed to provide complete written notice of her statutory rights within five days of defendant’s debt collection letter and failed to identify herself as debt collector or stated that she was attempting to collect debt in subsequent telephone call. Plaintiff lacked standing to pursue her FDCPA claim, where plaintiff could not show in response to defendant’s motion for summary judgment that she suffered concrete injury that was traceable to her purely procedural FDCPA violations. Moreover, plaintiff did not allege that she paid any money that she should not have paid or disputed, and plaintiff’s contention that she incurred only emotional harms arising out of instant alleged violations was insufficient to constitute injury in fact to support her standing to bring instant action.