Schneider v. Wells Fargo Bank, NA

IN THE

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF ILLINOIS

PEORIA DIVISION

AMY JOAN SCHNEIDER et al,

Plaintiffs,

v. Case No. 1:19-cv-01297-JEH-RLH

WELLS FARGO BANK, NA et al,

Defendant.

Order

Now before the Court is Defendants’ Motions to Dismiss for Failure to State

a Claim, (D. 81 & D. 83), and Plaintiffs’ Motion for Leave to File a Fourth Amended

Complaint, (D. 84).1 For the reasons stated, infra, the Motions to Dismiss, (D. 81 &

D. 83), are GRANTED and the Plaintiffs’ Motion for Leave to File a Fourth

Amended Complaint, (D.84), is DENIED.

I

Plaintiffs, pro se, commenced this lawsuit on September 9, 2019, against

Wells Fargo, U.S. Bank, several mortgage servicers, bank employees, and

mortgage companies alleging various causes of action arising primarily from the

Defendants’ engagement with Plaintiffs in 2009 and the property they purchased

in Normal, Illinois, including the management of the mortgage and payment plan

for the property. See (D. 1). In 2010, Wells Fargo filed a foreclosure action against

Plaintiffs in the Circuit Court of the Eleventh Judicial Circuit of Illinois and the

Court stayed proceedings in this case pending the resolution of the ongoing

foreclosure action on March 10, 2020, and granted Plaintiffs’ motion for leave to

1 Citations to the electronic docket are abbreviated as “D. ___ at ECF p. ___.”

amend their Complaint for a second time. (D. 23). On the same day, Plaintiffs filed

their second amended Complaint. (D. 24). Four years later, after receiving notice

that the state court case had concluded with the entry of Judgment for Foreclosure

and Sale in the Foreclosure Action on August 28, 2024, this Court lifted its stay on

October 2, 2024. See 10/02/2024 Text Order; (D. 63-4). On October 11, 2024,

Plaintiffs filed a Motion for leave to file a third amended Complaint which the

Court granted on January 14, 2024. (D. 71). Seven days earlier, on January 7, 2025,

Plaintiffs filed an Emergency Motion for a Temporary Restraining Order and

Preliminary Injunction seeking to enjoin the foreclosure sale of the property at

issue, (D. 63), which the Court denied on January 14, 2025. (D. 71). Also on January

14, 2025, Plaintiffs filed a Renewed Motion for Preliminary Injunction which the

Court denied on the same day. (D. 73 & 74). One day later, the Plaintiffs filed an

Emergency Motion for Stay which the Court also denied as successive. See

01/15/2025 Text Order. On February 18, 2025, the Defendants filed Motions to

Dismiss the third amended Complaint, (D. 81 & D. 83), and, on the same day, the

Plaintiffs filed a Motion for Leave to file a Fourth Amended Complaint. (D. 84).

The parties subsequently filed their Responses and Replies in opposition to the

Motions to Dismiss and the Motion for Leave to file a Fourth Amended Complaint.

The issues are now fully briefed.

II

According to the third amended Complaint, the Plaintiffs filed this action

for “breach of contract, fraud, violations of federal statutes, and other claims

arising from the wrongful foreclosure process and improper mortgage

assignments.” (D. 72 at ECF p. 1). Plaintiffs allege that, in 2002, they entered into a

mortgage loan agreement with Wells Fargo for property located on 205 Saratoga

Road, Normal, Illinois. Id. at ECF p. 2. In 2009 and 2010, Plaintiffs claim they sought

a modification of the loan under the Home Affordable Modification Program

(“HAMP”), and that Wells Fargo offered a Trial Period Plan (“TPP”), which

required Plaintiffs to comply with timely payments, among other requirements,

and provide other documentation. Id. at ECF p. 3. Plaintiffs allege, despite their

compliance, Wells Fargo subsequently failed to provide a permanent loan

modification and initiated foreclosure proceedings. Id. Plaintiffs allege they

continued to participate in the HAMP until 2011 and that Wells Fargo engaged in

“fraudulent conduct by providing false assurance of a pending loan modification,

while simultaneously pursuing foreclosure actions (‘dual tracking’).” Id. Those

foreclosure actions were finalized on August 28, 2024, when the “Illinois 11th

Circuit granted U.S. Bank and Nationstar’s motion for summary judgment, issuing

orders of default, foreclosure, and sale.” Id. As a result, Plaintiffs allege Wells

Fargo’s “dual tracking actions directly resulted in Plaintiffs’ wrongful foreclosure

and financial harm”, leading to the instant cause of action. Id. Plaintiffs allege that

these wrongful actions resulted in their suffering “financial losses, emotional

distress, and wrongful foreclosure as a direct result of Defendants’ actions.” Id.

The third amended Complaint alleges eight counts that respectively include

breach of contract, fraudulent misrepresentation, negligent misrepresentation,

violation of the Real Estate Settlement Procedures Act (“RESPA”), unjust

enrichment, violation of the Illinois Consumer Fraud and Deceptive Business

Practices Act (“ICFA”), unclean hands, and violating dual tracking regulations. Id.

at ECF p. 4-10. The Defendants have moved to dismiss all counts. (D. 81 & 83).

A

As an initial matter, Wells Fargo contends that the Court lacks subject matter

jurisdiction over the case and has moved to dismiss pursuant to Federal Rule of

Civil Procedure 12(b)(1). (D. 82 at ECF p. 5-8). A Motion to Dismiss pursuant to

Federal Rule of Civil Procedure 12(b)(1) is a challenge to a court’s subject matter

jurisdiction. FED. R. CIV. P. 12(b)(1). “As the party invoking federal jurisdiction, a

plaintiff bears the burden of establishing the elements of Article III standing.” Silha

v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015) (citing Lujan v. Def’s of Wildlife, 504

U.S. 555, 561 (1992)). “In evaluating a challenge to subject matter jurisdiction, the

court must first determine whether a factual or facial challenge has been raised.”

Id. (citing Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir 2009)).

“A factual challenge contends that ‘there is in fact no subject matter jurisdiction,’

even if the pleadings are formally sufficient.” Id. (emphasis in original).

That is what Wells Fargo appears to assert here, a factual challenge,

surmising that “Plaintiffs’ claims are barred by the Anti-Injunction Act and must

be dismissed for want of subject matter jurisdiction.” (D. 82 at ECF p. 8). In

addition, Wells Fargo contends that the “Roomer-Feldman Doctrine and Younger

Abstention Doctrine” bars this Court from jurisdiction because the Plaintiffs’

“claims are a direct challenge to the Foreclosure Action and Plaintiffs seek to

overturn the Final Judgment to obtain a loan modification”. Id. at ECF p. 6. True,

among other forms of relief, the Complaint requests “Injunctive Relief: Enjoining

Defendants from pursuing the foreclosure loan while modifications are under

review” and “Equitable Relief: Specific Performance of loan modification

agreements.” (D. 72 at ECF p 9-10). Wells Fargo correctly points out that granting

such relief would likely contravene the Anti-Injunction Act which states, “A court

of the United States may not grant an injunction to stay proceedings in a State

court except as expressly authorized by Act of Congress, or where necessary in aid

of its jurisdiction, or to protect or effectuate its judgments.” Vendo Co. v. Lektro-

Vend Corp., 433 U.S. 623, 630 (1977) (citing 28 U.S.C. § 2283). That “Act is an

absolute prohibition against any injunction of any state-court proceedings, unless

the injunction falls within one of the three specifically defined exceptions in the

act.”2 Id. However, as Plaintiffs point out, they allege “independent post-

foreclosure misconduct”, which gave rise to the other causes of action in the third

amended Complaint. (D. 87 at ECF p. 2). Therefore, allowing those claims, and the

other forms of relief sought to proceed in the absence of this Court issuing an

injunction, does not contravene the Act’s purpose or deprive this Court of subject

matter jurisdiction over the matter. See Vendo Co., 433 U.S. at 630 (“The Act’s

purpose is to forestall the inevitable friction between the state and federal courts

that ensues from the injunction of state judicial proceedings by a federal court.”).

Despite Wells Fargo’s assertion that this Court lacks subject matter jurisdiction

pursuant to the prohibitions set forth by the Anti-Injunction Act, (D. 82 at ECF p.

7) (citing Adkins v. Nestlé Purina PetCare Co., 779 F.3d 481, 483 (7th Cir. 2015)), that

case does suggest or even discuss the issue of subject matter jurisdiction. To the

contrary, in that case, an injunction had already been issued. Id. at 483. Therefore,

Wells Fargo’s assertion—without citation to any authority in direct support—that

the claims are barred and “must be dismissed for want of subject matter

jurisdiction” in a case where the Court has not issued an injunction, is without

merit.

Wells Fargo similarly asserts, without citation to any authority, that the

Court also lacks subject matter jurisdiction pursuant to the Rooker-Feldman

doctrine and the Younger abstention doctrine. (D. 82 at ECF p. 7). For the Rooker-

Feldman doctrine to apply, however, the “state-court judgment must have become

final before the federal proceedings began,” Gilbank v. Wood Cty. Dep’t of Hum.

Servs., 111 F.4th 754, 766 (7th Cir. 2024), and Defendants concede that “the state

court entered Judgment for Foreclosure and Sale (the ‘Final Judgment’)” on

2 The Plaintiffs do not cite to any act authorizing such an injunction in this case and, accordingly, the

Court declines to engage in such an analysis. See United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir.

1991) (“perfunctory and undeveloped arguments, and arguments that are unsupported by pertinent

authority, are waived”).

August 28, 2024. (D. 82 at ECF p. 4.) The instant action began in 2019, well before

the state court judgment became final on August 28, 2024. Accordingly, the Rooker-

Feldman doctrine is inapplicable here, and the Younger abstention doctrine is

similarly inapplicable because the state-court proceeding is no longer ongoing. See

Brown v. Vancil, 2024 WL 4275961, at *10 (C.D. Ill. 2024) (citing Tr. & Inv. Advisers,

Inc. v. Hogsett, 43 F.3d 290, 295 (7th Cir. 1994) (discussing the requirement that

state-court proceedings be ongoing for Younger abstention to be applicable)).

Therefore, the Court finds the Plaintiff has asserted adequate bases for subject

matter jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1332. (D. 72 at ECF

p. 2); see also Silha, 807 F.3d at 173.

B

Federal Rule of Civil Procedure 12(b)(6) governs whether a complaint fails

to state a claim. FED. R. CIV. P. 12(b)(6). Federal Rule of Civil Procedure 8(a)(2)

provides that a complaint must include “a short and plain statement of the claim

showing that the pleader is entitled to relief”. FED. R. CIV. P. 8(a)(2). 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 (2009) (quoting Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Id. at

663. A plaintiff “must give enough details about the subject-matter of the case to

present a story that holds together.” Swanson v. Citibank, N.A., 614 F.3d 400, 404

(7th Cir. 2010). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic

recitation of the elements of a cause of action will not do.’” Ashcroft, 556 U.S. at 678

(quoting Twombly, 550 U.S. at 555 (2007)). Similarly, a complaint that “tenders

‘naked assertion[s]’ devoid of ‘further factual enhancement’” will not survive a

motion to dismiss. Id.

i

In Count One, Plaintiffs allege breach of contract against Wells Fargo and

successor services. (D. 72 at ECF p. 4-5). They state that “Wells Fargo breached its

contract by failing to offer permanent loan modification under the TPP, despite

Plaintiffs’ full compliance” and that “successor services Nationstar and U.S. Bank

continued wrongful foreclosure without proper assignment of the mortgage.” Id.

In response, the Defendants contend that Plaintiffs’ breach of contract claim is

time-barred. (D. 82 at ECF p. 8).

In Illinois, “courts follow a strict interpretation of the meaning of a written

agreement for purposes of the statute of limitations.” Portfolio Acquisitions, L.L.C.

v. Feltman, 909 N.E.2d 876, 647 (Ill. App. Ct. 2009) (citing Brown v. Goodman, 489

N.E. 2d 854, 856 (Ill. App. Ct. 1986)). “A contract will only be deemed written if

parties are identified and all the essential terms are in writing and ascertainable

from the instrument itself. If resort to parol evidence is necessary to identify the

parties or essential terms, the contact is considered an oral contract for purposes

of the statute of limitations.” Id. In this case, Defendants aver that “Plaintiffs allege

the breach of an oral contract subject to Illinois’ five-year limitations period for

actions based on unwritten contracts” and because the “breach of contract claim

admittedly arose in February 2011 when they withdrew from the loan

modification process” they were required to bring the claim “on or before

February 2016.” (D. 95 at ECF p. 3) (citing 735 ILL. COMP. STAT. §§ 5/13-205 & 5/13-

206). The Plaintiffs contend that the TPP agreement “and correspondence from

Wells Fargo establish a written contract, making the ten-year statute” of

limitations applicable. (D. 96 at ECF p. 2) (emphasis added). That Plaintiffs rely on

correspondence—outside of the four corners of the alleged TPP agreement—to

provide the evidence in support of Plaintiffs’ belief that “Wells Fargo and its

representatives . . . engaged in fraudulent conduct by providing false assurances

of a pending loan modification, while simultaneously pursuing the foreclosure

actions” confirms that its breach of contract claim is properly considered an oral

contract for purposes of the statute of limitations. (D. 72 at ECF p. 3). Indeed, they

assert, based on “recently discovered internal communications” from Wells Fargo

employees, that the modification of the loan was nearly complete, but that Wells

Fargo had already terminated the modification process and “kept [Plaintiffs]

under the belief that their modification was still pending.” Id.; (D. 82 at ECF p. 3 &

96 at ECF p. 3). By Plaintiffs own assertions then, evidence outside of the alleged

TPP agreement is necessary to prove the breach of contract claim because they are

relying on Wells Fargo’s internal correspondence to prove the breach of contract

claim. That Plaintiffs must rely on parol evidence to allege their claim is doubly

confirmed by the fact that Plaintiffs have not identified a term of the TPP

agreement itself that it alleges was violated. Accordingly, the Court agrees that the

breach of contract claim is barred by the five-year statute of limitations because it

began accruing in 2011 at the latest, and the instant cause of action was filed in

2019. See Portfolio Acquisitions, L.L.C., 909 N.E.2d at 647 (citing Brown, 489 N.E. 2d

at 856); (D. 1).

To overcome the statute of limitations, Plaintiffs allege that fraudulent

concealment “tolls the statute since Wells Fargo misrepresented its reasons for

denying the modification and when or how it ended.” (D. 96 at ECF p. 3) (citing

735 ILL. COMP. STAT. § 5/13-215). But, for tolling under fraudulent concealment to

apply, a Plaintiff must plead “affirmative acts or representations calculated to lull

or induce a plaintiff into delaying the filing of his claim or preventing him from

discovering the claim.” Henderson Square Condo. Ass’n v. LAB Townhomes, LLC, 46

N.E.3d 706, 717 (Ill. 2015). Here, Plaintiff alleges that Wells Fargo mispresented the

reasons for denying the modification and relies on internal Wells Fargo

communications concerning the processing of the loan modification to do so, (D.

96 at ECF p 2-3), but that is not the same as alleging affirmative facts that indicate

Wells Fargo took actions to delay Plaintiffs’ filing of the instant claim or that were

designed to prevent the Plaintiffs from discovering it. Plaintiffs’ fraudulent

concealment argument is based on the very acts that they contend constitute the

breach of contract, and that cannot serve as the basis for tolling the statute of

limitations. See Obiefuna v. Hypotec, 451 F. Supp. 3d 928, 941 (S.D. Ind. 2020). To the

extent Plaintiffs suggest that it had some right to access and review Wells Fargo’s

internal correspondence from 2010 or that Wells Fargo’s failure to disclose internal

correspondence as matter of course constituted fraudulent concealment, the Court

is unmoved, even assuming that Plaintiffs may have been entitled to such access

later on through discovery. The facts alleged simply provide no indication that

Wells Fargo took “affirmative acts” or made “representations” to the Plaintiffs that

induced them to wait nearly nine years to file the instant case, and, therefore, the

Plaintiffs’ attempt to toll the statute of limitations by claiming fraudulent

concealment is unavailing. See Henderson Square Condo. Ass’n, 46 N.E.3d at 717.

Given the foregoing, because the Court concludes the claim is barred by the five-

year statute of limitations, any future amendments would be futile and the

Plaintiffs breach of contract claim is dismissed with prejudice. See Cardenas v. City

of Chi., 646 F.3d 1001, 1007-08 (7th Cir. 2011) (dismissal with prejudice appropriate

where any refilling would be time-barred); Moore v. State of Ind., 999 F.2d 1125,

1128 (7th Cir. 1993) (citing Villa v. City of Chi., 924 F.2d 629, 632 (7th Cir. 1991))

(“[T]he court should not allow the plaintiff to amend his complaint when to do so

would be futile.”).

ii

In Counts Two and Three and Five, the Plaintiffs allege fraudulent

misrepresentation, negligent misrepresentation, and unjust enrichment. (D. 72 at

ECF p. 5-8). In response, Wells Fargo asserts that these claims are time-barred. (D.

82 at ECF p. 10-12). For the reasons set forth below, the Court agrees with Wells

Fargo that the claims are time-barred.

In Illinois, a five-year statute of limitations applies to claims of fraudulent

misrepresentation. See Gillespie Cmty. Unit Sch. Dist. No. 7, Macoupin Cty. v. Wight

& Co., 4 N.E.3d 37, 49 (Ill. 2014). The same five-year limit applies to actions alleging

negligent misrepresentation and unjust enrichment. See Ko v. Eljer Indus. Inc., 678

N.E.2d 641, 646 (Ill. App. Ct. 1997) (finding five-year limit applies to negligent

misrepresentation claim); CitiMortgage, Inc. v. Parille, 49 N.E.3d 869, 884 (Ill. App.

Ct. 2016) (finding five-year limit applies to unjust enrichment claims). Here, most

favorably, the Plaintiffs allege fraudulent misrepresentations and negligent

misrepresentations that occurred in 2009 through 2011. (D. 72 at ECF p. 5-7).

Similarly, the Plaintiffs allege unjust enrichment arising out of the same alleged

conduct. Id. The instant action was not filed until 2019, well beyond the five-year

statutory limit. (D. 1). Accordingly, the Court agrees that the fraudulent

misrepresentation claim, the negligent misrepresentation claim, and the unjust

enrichment claim, are time-barred. Therefore, because Counts Two, Three, and

Five fall irreparably beyond the five-year statutory limit, Plaintiffs claims are

dismissed with prejudice. See Cardenas, 646 F.3d at 1007-08 (7th Cir. 2011)

(dismissal with prejudice appropriate where any refiling would be time-barred);

Moore v. State of Ind., 999 F.2d 1125, 1128 (7th Cir. 1993) (citing Villa v. City of Chi.,

924 F.2d 629, 632 (7th Cir. 1991)) (“[T]he court should not allow the plaintiff to

amend his complaint when to do so would be futile.”).

iii

In Count Four and Eight, the Plaintiffs allege violations of the Real Estate

Settlement Procedures Act (“RESPA”) by “failing to respond timely to Qualified

Written Requests (QWRs), wrongly charged escrow fees, and engaging in dual

tracking” and a “violation of dual tracking regulations” by “pursuing foreclosure

while processing modification applications,” respectively.3 (D. 72 at ECF p. 8-9).

In response, Wells Fargo contends that the RESPA claims are time-barred. (D. 95

at ECF p. 5-6). For the reasons set forth, the Court agrees these claims are time-

barred.

Actions brought pursuant to the RESPA are governed by a statute of

limitations set forth in 12 U.S.C. § 2614. See Whitley v. Taylor Bean & Whitacker

Mortg. Corp., 607 F. Supp. 2d 885, 900 (N.D. Ill. 2009); Obiefuna v. Hypotec, Inc., 451

F. Supp. 3d 928, 940 (N.D. Ind. 2020). It reads in relevant part:

Any action pursuant to the provisions of section 2605,

2607, or 2608 of this title may be brought in the United

States district court or in any other court of competent

jurisdiction, for the district in which the property

involved is located, or where the violation is alleged to

have occurred, within 3 years in the case of a violation of

section 2605 of this title and 1 year in the case of a

violation of section 2607 or 2608 of this title from the date

of the occurrence of the violation . . ..

12 U.S.C. § 2614.

The Plaintiff does not identify which section within 12 U.S.C. § 2614 it

believes was violated. However, given their pro se status, the Court construes the

Plaintiffs’ Complaint as alleging a violation of 12 U.S.C. § 2605 which speaks to

Qualified Written Requests, § 2605(e)(B), the administration of escrow accounts, §

2605(g), and also includes the prohibition on dual tracking, § 2605(f).4 Therefore,

because Counts Four and Eight both allege violations that fall within the ambit of

12 U.S.C. § 2605, the Court applies the three-year statutory limit to Plaintiffs’

3 Plaintiffs allege that the “Defendants violated 12 C.F.R. § 1024.41 by engaging in dual tracking, pursuing

foreclosure while processing modification applications.” (D. 72 at ECF p. 9). This regulation is made

enforceable pursuant to the RESPA under 12 U.S.C. §§ 2605(f), 2614. See 12 C.F.R. § 1024.41(a).

4 See 12 C.F.R. § 1024.41(a).

causes of action. See 12 U.S.C. § 2614. In this case, the Plaintiffs complain of a failure

to timely respond to Qualified Written Requests (“QWRs”), wrongly charged

escrow fees, and dual tracking. (D. 72 at ECF p. 8-9). However, the Complaint does

not identify a single instance of a wrongly charged escrow fee or any writing that

it believes qualified as a QWR. See Friend v. Valley View Cmty. Unit Sch. Dist. 365U,

789 F.3d 707, 711 (7th Cir. 2015) (“judges are not like pigs hunting for truffles

buried in [the record].”) (citing United States v. Dunkel, 927 F.3d 955, 956 (7th Cir.

1991)); see also Ashcroft, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555) (A

complaint that “tenders ‘naked assertion[s]’ devoid of ‘further factual

enhancement’” will not survive a motion to dismiss.). The Court, therefore,

assumes that the alleged misconduct regarding the QWRs and wrongly charged

escrow fees occurred from 2009 to 2011, along the same timeline that the purported

dual tracking violation occurred. (D. 72 at ECF p. 3). Given that, it is evident that

these claims also fall well beyond the three-year statutory limit because the instant

cause of action was filed in 2019.5 Accordingly, Counts Four and Eight are

dismissed with prejudice. See Cardenas v. City of Chi., 646 F.3d 1001, 1007-08 (7th

Cir. 2011) (dismissal with prejudice appropriate where any refilling would be

time-barred); Moore v. State of Ind., 999 F.2d 1125, 1128 (7th Cir. 1993) (citing Villa

v. City of Chi., 924 F.2d 629, 632 (7th Cir. 1991)) (“[T]he court should not allow the

plaintiff to amend his complaint when to do so would be futile.”).

iv

5 Plaintiffs’ Response to the Motion to Dismiss the RESPA-related claims cites to their Motion for Leave to

file a Fourth Amended Complaint that is currently pending before the Court, but it is not the operative

Complaint. See, e.g. (D. 87 at ECF p. 6-9). This contravenes the axiomatic principle “that the complaint

may not be amended by the briefs in opposition to a motion to dismiss . . ..” Thomason v. Nachtrieb, 888

F.2d 1202, 1205 (7th Cir. 1989) (citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir.

1984)). Therefore, the Court will not consider the facts raised in the proposed fourth amended Complaint

for purposes of ruling on the Motion to Dismiss.

In Count Six, the Plaintiffs allege that the Defendants violated the Illinois

Consumer Fraud and Deceptive Practices Act (“ICFA”) because they “engaged in

deceptive business practices in violation of ICFA.” (D. 72 at ECF p. 9). In response,

Wells Fargo argues that the claim is time-barred.6 As to whether the claim is time-

barred, the Court agrees.

The Plaintiffs allege misconduct from 2009 to 2011 when Plaintiffs

unsuccessfully sought a loan modification. (D. 72 at ECF p. 3). “The statute of

limitations for an ICFA claim is three years ‘and begins to run when the cause of

action accrues.’” Himan v. Thor Indus., Inc., 2022 WL 683650, at *11 (N.D. Ind. 2022)

(citing Kopely Grp. V., L.P. v. Sheridan Edgewater Props., Ltd., 876 N.E.2d 218, 231 (Ill.

App. Ct. 2007)). In this case, Plaintiffs’ ICFA claim began accruing in 2011, at the

latest, when they allege they were wrongfully denied the loan modification. (D. 72

at ECF p. 3). Accordingly, the instant cause of action was required to be brought

some time prior to the close of 2014. This case was not filed until 2019. (D. 1). No

fact can change that over a decade has passed since the alleged misconduct

occurred, and, therefore, Count Six is dismissed with prejudice. See Cardenas v. City

of Chi., 646 F.3d 1001, 1007-08 (7th Cir. 2011) (dismissal with prejudice appropriate

where any refilling would be time-barred); Moore v. State of Ind., 999 F.2d 1125,

1128 (7th Cir. 1993) (citing Villa v. City of Chi., 924 F.2d 629, 632 (7th Cir. 1991))

(“[T]he court should not allow the plaintiff to amend his complaint when to do so

would be futile.”).

v

In Count Seven, the Plaintiffs allege unclean hands because the Defendants

“proceed[ed] with foreclosure actions despite lacking standing.” (D. 72 at ECF p.

6 The Court note that it appears Plaintiffs did not raise any arguments in support of the ICFA claims in

their opposition to the Motion to Dismiss. As a result, the Court suspects the claim may have been

wavier. See Lekas v. Briley, 405 3d. 602, 614-15 (7th Cir. 2005) (finding waiver where plaintiff failed to

present legal arguments in response to the defendants’ motion to dismiss).

9). In response, Wells Fargo argues that “the doctrine of unclean hands is an

affirmative defense and does not give rise to a cause of action for affirmative

relief.” (D. 82 at ECF p. 19-20). As to the latter point, the Court agrees.

“The doctrine of ‘unclean hands’ is an affirmative defense.” Jameson Real Est.

LLC v. Ahmed, 129 N.E.3d 128, 148 (Ill. App. Ct. 2018) (citing Long v. Kemper Life Ins.

Co., 553 N.E.2d 439, 218 (Ill. App. Ct. 1990)). Unclean hands “do[es] not give rise

to a cause of action for affirmative relief.” Keating v. City of Waukegan, 2024 WL

2882581, at *12 (N.D. Ill. 2024). “The doctrine of unclean hands ‘reduce[s] to the

principle that a court will not entertain a claim or defense that would create a

greater legal wrong than vindicating the claim or defense would avert.” Id. (citing

Schlueter v. Latek, 683 F.3d 350, 355-56 (7th Cir. 2012)). The doctrine is inapplicable

at this juncture and does not give rise to a cause of action for affirmative relief.

Accordingly, because no allegation can overcome the fact that unclean hands is

not a cause of action, Count Seven is dismissed with prejudice for failing to state a

claim upon which relief can be granted. See Kamelgard v. Macura, 585 F.3d 334, 339

(7th Cir. 2009) (citing Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 399 (1981)

(“A dismissal for failure to state a claim is dismissal on the merits . . . and normally

with prejudice . . ..”); Moore v. State of Ind., 999 F.2d 1125, 1128 (7th Cir. 1993) (citing

Villa v. City of Chi., 924 F.2d 629, 632 (7th Cir. 1991)) (“[T]he court should not allow

the plaintiff to amend his complaint when to do so would be futile.”).

III

On February 18, 2025, the Plaintiff filed a Motion for Leave to file a Fourth

Amended Complaint (“FAC”). (D. 84). The proposed FAC alleges six causes of

action. (D. 84-1 at ECF p. 23-47). Count One alleges breach of contract, Count Two

alleges violations of the RESPA, Count Three alleges fraudulent

misrepresentation, Count Four alleges violations of the Fair Debt Collection

Practices Act (“FDCPA”), Count Five seeks a declaratory judgment, and Count Six

is a cause of action to quiet title. Id. As it relates to the third amended Complaint,

the operative Complaint, the proposed FAC would add three causes of action

(FDCPA, declaratory judgment, and quiet title), and remove four causes of action

(negligent misrepresentation, unjust enrichment, unclean hands, and the ICFA).

Compare (D. 72) with (D. 84-1). For the reasons that follow, the Court DENIES the

Motion for Leave to file a Fourth Amended Complaint. (D. 84).

A

When a party seeks to amend its complaint, Federal Rule of Civil Procedure

15 governs. See FED. R. CIV. P. 15. Relevantly, here, Federal Rule of Civil Procedure

15(a)(2) provides in part that the Court should freely give leave to a party to amend

its pleading “when justice so requires.” See Fed. R. Civ. P. 15(a)(2). However, leave

to amend may be denied where there is undue delay, bad faith on the movant’s

part, repeated failure to cure deficiencies by amendments previously allowed,

undue prejudice to the opposing party if the amendment is allowed, or futility.

Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010) (citations omitted). In

general, Federal Rule of Civil Procedure 15(a)(2) sets forth a “liberal standard for

amending pleadings.” Runnion ex rel. Runnion v. Girl Scouts of Greater Chi. and Nw.

Ind., 786 F.3d 510, 520 (7th Cir. 2015). However, “there must be an end sometime

to applications to amend”, and the Court has discretion to deny further

applications. Shall v. Henry, 211 F.2d 226, 231 (7th Cir. 1954). That is particularly

true when a Plaintiff has “ample opportunity to assert her proposed claims” or

where the “facts underlying the proposed new claims were known to” the Plaintiff

at the time of the filing. Aleshire v. Harris, N.A., 586 F. App’x 668, 672 (7th Cir. 2013).

The Seventh Circuit has emphasized that “[t]here must be a point at which a

plaintiff makes a commitment to the theory of its case.” J.P. Morgan Chase Bank,

N.A. v. Drywall Serv. & Supply Co., Inc., 265 F.R.D. 341, 347 (7th Cir. 2010) (citing

Johnson v. Methodist Med. Ctr. of Ill., 10 F.3d 1300, 1304 (7th Cir. 1993)).

B

In the Rushmore Defendants’ opposition to the proposed FAC, they argue

that it is “untimely as it comes 139 days after the stay was lifted” and “130 days

after seeking leave to file the operative Third Amended Complaint”. (D. 89 at ECF

p. 5). They also point out that Plaintiffs claim they obtained information in

discovery, “presumably in the state court since no discovery has occurred in this

case” and that “Plaintiffs provide no context as to how this newly discovered

evidence was obtained or the justification for waiting until now to request leave”

to file the FAC. Id. Moreover, they argue that the proposed FAC will cause undue

prejudice and that the FAC is made in bad faith. Id. at ECF p. 6. Indeed, this Court

has previously found that “this federal action was filed simply to harass the

Defendants or delay the foreclosure action.” (D. 23 at ECF p. 10).

As to the proposed FAC, the Court agrees that Plaintiffs have unduly

delayed and may be acting in bad faith. The proposed FAC is devoid of any

explanation as to why the Plaintiffs waited to file the Motion for Leave to file the

FAC until, and on the same day as, the Defendants’ Motions to Dismiss the third

amended Complaint. (D. 84). The Court suspects that timing is not mere

coincidence, and, instead, an effort to continue to prolong and obstruct the

litigation in this case that has been ongoing since 2019, all while the Court

considers the dispositive motions pending before it. In that respect, at least, there

is some evidence of bad faith as Plaintiffs waited until the very day dispositive

motions were filed to seek an amendment. (D. 81, D. 83 & D. 84). If the Plaintiffs

had provided some justifiable explanation for the delay, the Court may feel

differently, but there is none. In the FAC itself, the Plaintiffs state that the newly

discovered evidence is from 2023. (D. 84 at ECF p. 3). Since the discovery itself,

nearly two years have passed and several more months have passed since the

Plaintiffs filed their Motion for Leave to file the third amended Complaint on

October 11, 2024. (D. 42). And, “’the longer the delay, the greater the presumption

against granting leave to amend.’” Wilson v. Gundfos, 2017 WL 5001472, at *1 (N.D.

Ill. 2017) (citing King v. Cooke, 26 F.3d 720, 723 (7th Cir. 1994)). Plaintiffs have not

provided any evidence that there has been any newly discovered evidence in the

interim between the filing of the third amended Complaint and the proposed FAC,

nor is there any explanation for waiting 130 days after seeking leave to file the

third amended Complaint and filing the proposed FAC on the same day as

Motions to Dismiss were filed. (D. 42, D. 81, D. 83 & D. 84). Therefore, the facts

“underlying the proposed new claims” were at least known to the Plaintiffs at the

time they sought leave to file the third amended Complaint in October of 2024, but

the Plaintiffs still waited several months to file the proposed FAC, relying on the

same evidence that was available to them when leave was sought to file the third

amended Complaint. See Aleshire, 586 F. App’x at 672 (observing that the district

court did not abuse its discretion in denying the motion for leave to file a third

amended complaint where the Plaintiff knew of the facts and had ample

opportunity to assert them). Viewed through that lens and contrary to Plaintiffs’

assertion that they “promptly moved to amend upon discovering new evidence”

from 2023, (D. 98 at ECF p. 2), they did not seek leave to amend their complaint

the third time until October 11, 2024, and then waited until the Motions to Dismiss

the third amended Complaint were filed before seeking leave to file the FAC. This

is not representative of diligence, but undue delay. Indeed, at this stage in the

litigation, in a case that has been ongoing since 2019, allowing the proposed FAC

to move forward would mean “prejudice is more likely” because it “comes late in

the litigation and will drive the proceedings in a new direction”. Allen v. Brown

Advisory, LLC, 41 F.4th 843, 853 (7th Cir. 2022). Here, the Plaintiffs now seek to add

additional claims that include actions to quiet the title of the property at issue in

this case, and a declaratory judgment that the foreclosure proceedings were

unlawful, both of which will undoubtedly drive the proceedings in a new direction

and are a flagrant attempt to ask the Court to relitigate and insert itself into issues

that have already reached a final judgment in the state court foreclosure

proceeding.

With these circumstances in mind, the Court finds that the Plaintiffs have

unduly delayed in seeking leave to file the FAC and that the Plaintiffs may have

engaged in bad faith due to the timing, circumstances, and nature of their filing.

Accordingly, the Court denies the Motion for Leave to File a Fourth Amended

Complaint. (D. 84).

IV

For the reasons stated, supra, the Defendants’ Motions to Dismiss, (D. 81 &

83), are GRANTED and the case is dismissed with prejudice. Plaintiffs’ Motion for

Leave to file a Fourth Amended Complaint, (D. 84), is DENIED. The Clerk is

directed to enter judgment and close the case.

It is so ordered.

Entered on May 15, 2025

s/Jonathan E. Hawley

U.S. DISTRICT JUDGE