Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Homeowner’s unfair practices claim against mortgage servicer survives motion to dismiss, (Jan 28, 2014)

By Linda O’Brien, J.D., LL.M.

A homeowner sufficiently plead unfair practices claims against a mortgage loan and banking services provider for violations of the Illinois Consumer Fraud Act (ICFA) in relation to the servicing of his mortgage loan, the federal district court in Chicago has decided (Typpi v. PNC Bank, January 27, 2014, Bucklo, E.). However, the homeowner’s claim of deceptive conduct under the ICFA was dismissed for failure to state a claim.

Frank Typpi obtained a mortgage loan in 1990 to purchase a residence and made his scheduled monthly mortgage payments for the subsequent 21 years. PNC Bank acquired his mortgage loan in 2009. In January and September 2010, Typpi was notified by PNC Bank that his monthly mortgage payments were late. PNC also obtained lender-placed insurance on the property and deducted the cost from Typpi’s escrow account. Although Typpi continued to dispute the status of his loan and insurance on his property, in March 2011, PNC filed for foreclosure on the property, claiming Typpi was in default on the mortgage for failure to make the payments. In July 2011,Typpi gave a PNC representative a check for an amount to satisfy the remaining debt on the mortgage. PNC returned the check and subsequently obtained a default judgment of foreclosure and sale. The property was later sold at a judicial auction. In June 2012, a state court judge vacated the judgment of foreclosure and sale.

Typpi filed suit against PNC and its counsel, asserting various claims relating to PNC’s service of his mortgage loan, including violations of the ICFA. He alleged that PNC, through its counsel, continued to harass him through the state court lawsuit and engaged in other misconduct. The defendants moved to dismiss the complaint.

Unfair practice. The court determined that Typpi sufficiently pleaded an unfair practice under the ICFA. An unfair practice under the statute has been interpreted to mean where a defendant’s conduct gave the plaintiff no reasonable alternative to avoid a charge or penalty, according to the court. Typpi alleged that there were no means to avoid the lender-placed insurance fees, since the fees were deducted from his escrow account without his knowledge or authorization. His attempts to remedy the charges were frustrated by conflicting information from PNC representatives. Moreover, his allegation that PNC’s acceptance of his redemption payment only to return it before obtaining a judgment of foreclosure showed conduct that met the statutory definition of unfairness.

Deceptive conduct. However, the court found that Typpi did not sufficiently plead a claim under the ICFA that PNC engaged in deceptive conduct. To establish a claim for deceptive conduct, the plaintiff must show (1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the deception; (3) the deception occurred in the course of trade or commerce; and (4) the consumer fraud proximately caused the plaintiff’s injury. Because a claim for deceptive conduct sounds in fraud, a plaintiff is required to plead with particularity. In this case, Typpi failed to allege with specificity the dates of the communications, names of the persons who made the claimed deceptive communications, or the specific content of the information contained in those communications. His vague assertions without specific information were insufficient to state a claim for deceptive conduct. Thus, the defendants’ motion to dismiss this claim was granted.

The case is No. 13-CV-3930.

Attorneys: Mara Ann Baltabols (Sulaiman Law Group Ltd) for Frank Typpi. James M. Crowley (Crowley & Lamb, P.C.) for PNC Bank, National Association. David M. Schultz (Hinshaw & Culbertson) for Pierce & Associates P.C.

Companies: PNC Bank, National Association; Pierce & Associates P.C.

Cases: StateUnfairTradePractices IllinoisNews