11-9106.131-JCD January 23, 2013

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

KEITH WILLIAMS and )

STANDARD BANK AND TRUST COMPANY )

AS TRUSTEE u.t.a. dated 10-06-1993 )

a.k.a. Trust No. 14086, )

)

Plaintiffs, )

)

v. ) No. 11 C 9106

)

QUANTUM SERVICING CORPORATION and )

MORTGAGE ELECTRONIC REGISTRATION )

SYSTEMS, INC., )

)

Defendants. )

MEMORANDUM OPINION

Before the court are the motions of defendants Quantum

Servicing Corporation and Mortgage Electronic Registration Systems,

Inc. to dismiss the First Amended Complaint or stay the action and

the plaintiffs’ motion for leave to file a Second Amended

Complaint. For the reasons explained below, the defendants’

motions are granted in large part and the plaintiffs’ motion is

denied.

BACKGROUND

Plaintiff Standard Bank and Trust Company (the “Bank as

Trustee”) is the trustee of a land trust formed by plaintiff Keith

Williams to hold title to his house. On June 11, 2007, the house

was mortgaged with American Home Mortgage Corporation (“American
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Home”). As part of this transaction, Williams and the Bank as 1

Trustee signed a note (the “Note”) in favor of American Home, and

the Bank as Trustee signed a mortgage (the “Mortgage”) conveying a

security interest in the house. The Mortgage identifies American

Home as Lender and states that defendant Mortgage Electronic

Registration Systems, Inc. (“MERS”) “is a separate corporation that

is acting solely as a nominee for Lender and Lender’s successors

and assigns. MERS is the mortgagee under this Security

Instrument.” (The Note is attached as Exhibit A, and the Mortgage

is attached as Exhibit B, to plaintiffs’ First Amended Complaint.)

Shortly thereafter, American Home sold the Note and the

Mortgage to Société Générale, a French bank. The servicer of the

loan, however, which apparently was American Home Mortgage

Servicing, Inc., remained the same at that point. From September

1, 2007 onward, defendant Quantum Servicing Corporation (“Quantum”)

has represented itself (falsely, it is alleged) to plaintiffs as

the servicer of the Note and Mortgage. Quantum sent Williams

statements each month, and Williams made mortgage payments to

Quantum. (First Am. Compl. ¶ 21.) 

On January 20, 2010, Quantum recorded what plaintiffs deem a

“purported” “Loan Modification Agreement (the “Agreement”) between

the Bank as Trustee and Quantum; the Agreement identifies Quantum

as Lender. Plaintiffs allege that Quantum “induced Plaintiffs into

American Home was originally named as a defendant in this case, but 1/

plaintiffs have dismissed their claims against it. 
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signing” the Agreement by making the false representation to them

that it is the servicer. (First Am. Compl. ¶ 21.) It is alleged

that no Assignment or other transfer of the Note or Mortgage to

Quantum had been recorded as of the date when the Agreement was

recorded. (First Am. Compl. ¶ 17.) It is plaintiffs’ position

that the Agreement is void and conveyed nothing to Quantum and that

Quantum is neither the owner nor legal holder of the Note or

Mortgage. (First Am. Compl. ¶ 33.) 

Subsequently, on October 8, 2010, in preparation for a

foreclosure action against plaintiffs, Quantum recorded what

plaintiffs deem a “purported” Assignment of Mortgage wherein MERS

assigned the Mortgage to Quantum. According to plaintiffs, the

Assignment of Mortgage “was signed by two employees of Quantum who

falsely claimed to sign on behalf of MERS when in fact they had no

authority to do so.” (First Am. Compl. ¶ 34.) On February 9,

2011, Quantum filed a “Complaint to Foreclose Mortgage” against

plaintiffs in the Circuit Court of Cook County. Williams and the

Bank as Trustee moved to dismiss the action on the ground that

Quantum has no standing to foreclose because it is not the “holder”

of the mortgage. The motion was denied, and a motion to reconsider

that ruling was also denied. 

Then, on December 22, 2011, plaintiffs brought the instant

action in this court. The First Amended Complaint contains five

counts. Count I alleges that Quantum violated the Fair Debt
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Collection Practices Act by making false representations that the

mortgage payments were owed to Quantum. Count II is a quiet-title

claim against Quantum and MERS. Count III alleges that Quantum

violated the Illinois Uniform Deceptive Trade Practices Act by

“falsely holding itself out as the servicer of the Note and the

Mortgage and wrongfully collecting mortgage payments.” (First Am.

Compl. ¶ 45.) Counts IV and V are claims against Quantum for,

respectively, slander of title and unjust enrichment. Plaintiffs

seek actual, statutory, and punitive damages, restitution in the

amount of $100,000.00, reasonable attorney’s fees and costs, and an

order enjoining Quantum from representing itself as the servicer or

as mortgagee and from attempting to collect the subject debt. They

also seek a declaration that Quantum and MERS do not have any

interest in the subject property and that they are entitled to none

of the rights and remedies accorded to mortgagees.

The defendants move to dismiss or stay the action pursuant to

the Younger and Colorado River abstention doctrines and

alternatively to dismiss pursuant to Federal Rule 12(b)(6) for

failure to state a claim. Plaintiffs have responded and have 2

filed a motion for leave to file a Second Amended Complaint that

would add a Count VI, a federal antitrust claim pursuant to the

Sherman Act against Quantum and MERS.3

Quantum briefed its motion; MERS filed a separate motion that adopts

2/

the arguments in Quantum’s briefs. 

 We took plaintiffs’ motion under advisement without requiring briefs. 3/
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DISCUSSION

Defendants’ primary argument is that in light of the pending

state-court foreclosure proceeding, we should dismiss or stay this

action pursuant to the abstention doctrines set forth in Younger v.

Harris, 401 U.S. 37 (1971), and Colorado River Water Conservation

District v. United States, 424 U.S. 800 (1976). 

Younger does not fit this case. Plaintiffs point out that the

Court of Appeals has stated that Younger abstention “is appropriate

only when there is an action in state court against the federal

plaintiff and the state is seeking to enforce the contested law in

that proceeding.” Forty One News, Inc. v. County of Lake, 491 F.3d

662, 665 (7th Cir. 2007). In the state-court proceeding against

plaintiffs, the state is not seeking to enforce any of its laws.

Defendants do not argue otherwise, and they fail to address Forty

One News. Instead, they ask to us to follow a Kentucky districtcourt opinion that applied the Younger doctrine in a similar case.

We decline to do so; we are bound by Seventh Circuit law. 

Colorado River, however, does apply. The Colorado River

abstention doctrine “permits a district court to dismiss or stay an

action when there is an ongoing parallel action in state court.”

LaDuke v. Burlington N. R.R. Co., 879 F.2d 1556, 1558 (7th Cir.

1989). The principles underlying the doctrine “‘rest on

considerations of wise judicial administration, giving regard to

conservation of judicial resources and comprehensive disposition of
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litigation.’” Id. (quoting Colorado River, 424 U.S. at 817) (some

internal quotation marks and brackets omitted). The mere fact of

pending state-court litigation is insufficient; our “virtually

unflagging obligation” to exercise jurisdiction means that

abstention must be limited to “exceptional” circumstances. 

Colorado River, 424 U.S. at 817-18; LaDuke, 879 F.2d at 1558. 

The first step in the analysis is to determine whether the

concurrent state and federal actions are actually parallel. 

LaDuke, 879 F.2d at 1559. “Suits are parallel when substantially

the same parties are contemporaneously litigating substantially the

same issues in another forum.” Id. (internal quotation marks

omitted). This suit and the state-court suit are parallel.

Although MERS is not a party to the state-court suit, the parties

are substantially identical. MERS’s interests are aligned with

Quantum’s, and “formal symmetry” is not required for suits to be 4

sufficiently parallel. See Clark v. Lacy, 376 F.3d 682, 686 (7th

Cir. 2004). The salient question is whether “there is a

substantial likelihood that the state court litigation will dispose

of all claims presented in the federal case.” TruServ Corp. v.

Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005) (brackets

omitted). The central issue in both cases, and the issue on which

plaintiffs’ state and federal claims are premised, is whether

Quantum has the right to foreclose on the subject property based on

The only claim in this suit to which MERS is named as a defendant is 4/

the quiet-title claim. 
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the mortgage securing the debt owed by Williams. It is very likely

that the state-court proceeding will dispose of all the claims

presented in the instant case. 

Where, as here, there are parallel federal and state

proceedings, we consider the following non-exclusive factors to

determine whether we should abstain:

1) whether the state has assumed jurisdiction over

property; 2) the inconvenience of the federal forum; 3)

the desirability of avoiding piecemeal litigation; 4) the

order in which jurisdiction was obtained by the

concurrent forums; 5) the source of governing law, state

or federal; 6) the adequacy of state-court action to

protect the federal plaintiff’s rights; 7) the relative

progress of state and federal proceedings; 8) the

presence or absence of concurrent jurisdiction; 9) the

availability of removal; and 10) the vexatious or

contrived nature of the federal claim.

LaDuke, 879 F.2d at 1559. These factors are “‘to be applied in a

pragmatic, flexible manner with a view to the realities of the case

at hand.’” Id. (quoting Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 21 (1983)). “[T]he weight given to any

particular factor will vary greatly from case to case, depending on

the particular factual setting of the case at hand,” and we should

also consider any “special factors counselling for or against the

exercise of jurisdiction” in the case before us. LaDuke, 879 F.2d

at 1559 (internal quotation marks omitted). 

The majority of the factors enumerated by the Seventh Circuit,
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taken together, weigh strongly in favor of abstention. Factors 5

one and four weigh in favor of abstention: the state court assumed

jurisdiction over the property at issue in both cases, and it did

so several months before plaintiffs filed the instant case. Factor

seven slightly favors abstention: the state-court case has

progressed a bit further than the instant case, beyond a motion to

dismiss and a motion to reconsider the denial of that motion, but

nothing significant has happened since then. Factor 5, which

favors abstention when state law governs the outcome of a suit,

Caminiti & Iatarola, Ltd. v. Behnke Warehousing, Inc., 962 F.2d

698, 702 (7th Cir. 1992), favors abstention here because the issue

of Quantum’s interest in the subject property is one of Illinois

mortgage-foreclosure law, see 735 ILCS 5/15-1501 et seq.

Plaintiffs’ FDCPA claim is a question of federal law, but that

claim ultimately hinges on the same state-law issue, whether

Quantum has the right to foreclose. The FDCPA grants state and

federal courts concurrent jurisdiction to enforce its provisions,

15 U.S.C. § 1692k(d), so factor eight favors abstention. Factor

six also favors abstention because we have no reason to question

the adequacy of the state-court action to protect plaintiffs’

rights. Plaintiffs present a single-sentence argument that the

Cook County foreclosure courts are “burdened with a staggering

Factor two is neutral; the state and federal courts are both in the 5/

Chicago metropolitan area, and the parties would not have to commute a long

distance to either court.
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volume of cases” and “lack both the time and resources to address”

their FDCPA claim, Pls.’ Resp. at 14, but the Seventh Circuit has

rejected such conclusory contentions. See, e.g., Tyrer v. City of

S. Beloit, 456 F.3d 744, 757 (7th Cir. 2006) (“The insinuation that

Illinois courts will not live up to the standard of full and fair

adjudication of the issues is pure speculation that we expressly

disavow.” (internal quotation marks omitted)). And, as we

discussed above, the crux of the FDCPA claim is really a question

of Illinois law. 

Factor three, the desirability of avoiding piecemeal

litigation, weighs strongly in favor of abstention. “Piecemeal

litigation occurs when different tribunals consider the same issue,

thereby duplicating efforts and possibly reaching different

results.” LaDuke, 879 F.2d at 1560 (internal quotation marks

omitted). As discussed above, this court and the state court are

considering the same issue--Quantum’s right to foreclose on the

subject property--which results in a duplication of time and effort

and the potential for gamesmanship and conflicting rulings.

Plaintiffs point to Count VI, the federal antitrust claim they seek

leave to add to the complaint, and argue that it is a “question of

exclusive federal jurisdiction” and that “[t]o move the other

counts . . . to State court” would result in piecemeal litigation.

(Pls.’ Resp. at 14.) This argument misses the mark because

abstention would not mean that we would “move” anything to state
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court; we would simply stay this case until the state-court

proceeding has been resolved. Furthermore, Count VI does not yet 6

exist, and for reasons that dovetail with factor 10, which also

favors abstention, we will deny plaintiffs’ motion for leave to

amend the complaint to add that claim. Under Factor 10, we look at

whether the federal claim is vexatious or contrived. The timeline

of these cases leads us to believe that this suit is a contrived

reaction to the state-court foreclosure proceeding as well as to

plaintiffs’ setbacks therein. The FDCPA claim is premised on the

same basic allegation as plaintiffs’ state-law claims. The instant

motion for leave to file a second amended complaint to add an

antitrust claim seems to be another layer of contrivance--an

attempt to prevent the application of an abstention doctrine

instead of a serious assertion of a violation of the Sherman Act.7

Moreover, factor nine, the availability of removal, weighs in favor

of abstention because plaintiffs assert diversity jurisdiction and

therefore could have removed the state-court case to federal court

instead of creating this second action. 

 Plaintiffs’ assertion that it would be error to dismiss the complaint

6/

because they seek leave to add this Sherman Act claim also misses the mark. We

will not dismiss the complaint pursuant to Colorado River. See, e.g., CIGNA

Healthcare of St. Louis, Inc. v. Kaiser, 294 F.3d 849, 851 (7th Cir. 2002)

(district courts should stay, not dismiss, a case when abstaining under Colorado

River). We will merely stay this action pending the outcome of the state-court

foreclosure proceeding, and in the unlikely event that plaintiffs still wish to

seek leave to assert an antitrust claim after that proceeding is concluded, they

may do so at that point. 

It does not appear that the proposed Second Amended Complaint 7/

successfully states an antitrust claim, but because we have decided to stay this

proceeding, we need not discuss the deficiencies of the proposed claim at this

juncture. 
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Because nine of the ten enumerated factors favor abstention,

there are exceptional circumstances warranting a stay of this case

pursuant to the Colorado River doctrine. We need not address

defendants’ Rule 12(b)(6) arguments because dismissal on that basis

is sought only in the alternative to abstention. 

CONCLUSION

The defendants’ motions to dismiss or stay the action [36, 39]

are granted to the extent that this action is stayed pursuant to

the Colorado River abstention doctrine pending the outcome of the

state-court foreclosure proceeding. The plaintiffs’ motion for

leave to file a Second Amended Complaint [48] is denied without

prejudice. 

The parties are directed to notify the court when the

foreclosure proceeding in Cook County has been resolved.

DATE: January 23, 2013

ENTER: _________________________________________________

John F. Grady, United States District Judge