Antitrust Law Daily Wrap Up, ANTITRUST—NDIll: Mortgage Holder Can Challenge Alleged Misrepresentation of Mortgage Servicer But Not Under Antitrust Laws, (Apr 29, 2013)

By Jody Coultas, J.D.

Although a mortgage holder failed to state an antitrust claim against Urban Partnership Bank and others for allegedly sending false bills and attempting to collect on these false bills by threatening foreclosure, the mortgage holder’s claims under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and the Illinois Uniform Deceptive Trade Practices Act (UDTPA) survived a motion to dismiss, according to the federal district court in Chicago (Thomas v. Urban Partnership Bank, April 26, 2013, Feinerman, G.).

ShoreBank serviced the mortgage holder’s loan for the first several years, until Residential Credit Solutions, Inc. (RCS) sent a letter to the mortgage holder notifying her that RCS would now be servicing the loan. Although the letter was silent on the issue, the mortgage holder alleged that Fannie Mae had purchased the loan from ShoreBank and that RCS was servicing the loan on Fannie Mae’s behalf. When ShoreBank went into receivership, the FDIC and Urban entered into an agreement in which Urban purchased assets held by ShoreBank.

The mortgage holder sued Urban for holding itself out as the holder of the mortgage loan, by demanding payments under the loan, and by threatening to foreclose on the property.

Urban’s motion to dismiss the mortgage holder’s antitrust claims was granted by the court. The mortgage holder attempted to allege an unreasonable combination or conspiracy in restraint of trade or commerce in violation of Section 1 of the Sherman Antitrust Act by and between Urban and RCS to send false bills and to collect on these false bills by threatening wrongful foreclosure. However, the mortgage holder did not defend her view that a conspiracy to commit fraud among two participants in a market is a "conspiracy in restraint of trade" within the meaning of the Sherman Act, or that increased loan prices that result from a borrower’s lower credit rating that result in turn from such fraud constitute "antitrust injury." The mortgage holder failed to defend the claims. Claims that a plaintiff fails to defend in opposing a Rule 12(b)(6) motion are deemed abandoned and thus are dismissed with prejudice, the court explained.

State Unfair Trade Practices Claims. Urban alleged that the UDTPA claim required the mortgage holder to allege that she was a borrower or a prospective borrower who may do business with a lender and was damaged by the purported deceptive trade practices concerning the loan. However, there was no such requirement. The mortgage holder also sufficiently alleged a future harm from foreclosure to support injunctive relief under the UDTPA. Therefore, the mortgage holder stated a UDTPA claim against the banks.

The mortgage holder also stated an ICFA claim against the banks. Urban’s argument that the ICFA claim was fatally conclusory was itself fatally conclusory, untethered to the particulars of either the ICFA or this litigation.

The case is No. 12 C 6257.

Attorneys: Robert Lee Stone (Property Rights Law Group, P.C.) for Barbara Thomas. Ronald A. Damashek (Stahl, Cowen, Crowley, Addis LLC) for Urban Partnership Bank.

Companies: Urban Partnership Bank; Residential Credit Solutions, Inc.; ShoreBank; Fannie Mae

Cases: Antitrust StateUnfairTradePractices IllinoisNews