IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

U.S. BANK NATIONAL ASSOCIATION, )

AS TRUSTEE RELATING TO J.P. )

MORGAN MORTGAGE ACQUISITION )

CORP. 2005-FRE1 ASSET BACKED )

PASS-THROUGH CERTIFICATES, )

SERIES 2005-FRE1, )

)

Plaintiff, )

) 12 C 5057

vs. ) Hon. Marvin E. Aspen

)

CHERYLE A. COLLINS-FULLER T., )

HEYWOOD FULLER T., KEYBANK )

NATIONAL ASSOCIATION, )

MORTGAGE ELECTRONIC )

REGISTRATION SYSTEMS, INC. AS )

NOMINEE FOR FREMONT )

INVESTMENT AND LOAN, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Court Judge:

Presently before us is a motion for voluntary dismissal filed by Plaintiff U.S. Bank 

National Association pursuant to Federal Rule of Civil Procedure 41(a)(2). (Dkt. No. 149.) As 

set forth below, we lack subject matter jurisdiction and thus dismiss Plaintiff’s complaint. We 

also order Defendants to submit an additional brief addressing their failure to serve process on 

non-party Litton Loan Servicing, on or by March 25, 2015.

BACKGROUND

Plaintiff filed this foreclosure action on June 26, 2012, claiming diversity jurisdiction. 

(Compl. ¶¶ 3–5.) Plaintiff alleged that it is a national association chartered under the laws of 

Ohio, with its principal place of business located there. (Id. ¶ 3.) Plaintiff stated that the 
homeowners/debtors, Cheryle Collins-Fuller T. and Heywood Fuller T. (“Defendants”), are 

citizens of Illinois. (Id. ¶ 4.) Plaintiff further alleged that defendant KeyBank National 

Association (“Keybank”) is a North Carolina citizen, while defendant Mortgage Electronic 

Registration Systems, Inc. (“MERS”) is a California citizen.1 (Id. ¶ 5.) Plaintiffs also asserted 

that the amount in controversy exceeds $75,000, thus fulfilling the requirements for diversity 

jurisdiction. (Id. ¶¶ 2, 10(j).) See 28 U.S.C. § 1332(a). 

Plaintiff has alleged that it “is the legal holder of the indebtedness and the owner of the 

mortgage given as security” by Defendants and, as such, is entitled to foreclose on the residential 

property at issue because of their default. (Id. ¶ 10(n), (p), (s).) Plaintiff also alleged that 

Keybank has been joined as a party because it holds a junior lien on the property pursuant to a 

separate mortgage entered into between Defendants and Keybank. (Id. ¶ 10(l).) 

According to Plaintiff, recent investigation revealed that Keybank is not a citizen of 

North Carolina as previously pled. Plaintiff contends that Keybank is, in fact, a fellow citizen of 

Ohio. In the present motion, Plaintiff seeks to voluntarily dismiss this action under Rule 41(a)(2) 

due to the lack of diversity jurisdiction. 

Defendants oppose the motion on several grounds. Defendants decry Plaintiff’s lack of 

due diligence in failing to investigate Keybank’s citizenship at the outset. (Resp. at 1–3.) They 

argue that Keybank is a dispensable party and should be dismissed under Rule 21, thus reviving 

diversity of the parties and our jurisdiction over the case. (Id. at 1, 6.) Defendants also contend 

that they have raised federal questions in their counterclaims and other filings, entitling them to 

stay here in federal court. (Id. at 1–2, 4–6.) 

1 Both Keybank and MERS were served at the inception of the lawsuit. (See Dkt. Nos. 5–6 

(returned, executed summonses).) Neither entity has filed an appearance or an answer.

2

 
STANDARD OF REVIEW

Rule 41(a)(2) provides that “an action may be dismissed at the plaintiff’s request only by 

court order, on terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2). For cases 

involving counterclaims, the rule further provides that dismissal may occur “over the defendant’s 

objection only if the counterclaim can remain pending for independent adjudication.” Id. 

Permitting a plaintiff to voluntarily dismiss an action without prejudice, under Rule 41(a)(2), is 

within our sound discretion. Tolle v. Carroll Touch, Inc., 23 F.3d 174, 177 (7th Cir. 1994). In 

evaluating such a motion, we consider four factors to ensure that the defendant is not prejudiced: 

“[t]he defendant’s effort and expense of preparation for trial, excessive delay and lack of 

diligence on the part of the plaintiff in prosecuting the action, insufficient explanation for the 

need to take a dismissal, and the fact that a motion for summary judgment has been filed by the 

defendant.” Kunz v. DeFelice, 538 F.3d 667, 677–78 (7th Cir. 2008) (quoting Pace v. S. Express 

Co., 409 F.2d 331, 334 (7th Cir. 1969)). Additionally, we are free to impose such terms and 

conditions as necessary, including dismissal with prejudice. Ratkovich v. Smith Kline, 951 F.2d 

155, 157–58 (7th Cir. 1991); McCall-Bey v. Franzen, 777 F.2d 1178, 1184 (7th Cir. 1985)

(noting that a district court’s terms and conditions of dismissal are the “quid pro quo of allowing 

the plaintiff to dismiss his suit”). 

The particular Rule 41(a)(2) motion before us raises a jurisdictional question. 

“Jurisdiction is the ‘power to declare law,’ and without it the federal courts cannot proceed.” 

Hay v. Ind. State Bd. of Tax Comm’rs, 312 F.3d 876, 879 (7th Cir. 2002) (quoting Ruhrgas v. 

Marathon Oil Co., 526 U.S. 574, 577, 583, 119 S. Ct. 1563, 1567 (1999)); see also Wernsing v. 

Thompson, 423 F.3d 732, 743 (7th Cir. 2005) (further explaining that we have an independent 

and unwavering duty to confirm the existence of subject matter jurisdiction). Thus, while we 

3
keep in mind the guiding principles about voluntary dismissals, resolution of the motion 

ultimately turns on whether or not we have jurisdiction. 

ANALYSIS

We begin with the diversity jurisdiction question posed by Plaintiff, which is quite 

straightforward. Defendants raise additional arguments as to why we might continue to have

jurisdiction over this case, however, and we shall address each issue briefly. 

A. Diversity Jurisdiction

Federal courts have original jurisdiction over a case if: (1) the amount in controversy 

exceeds $75,000; and (2) all parties are of completely diverse citizenship. See 28 U.S.C. 

§ 1332(a). Complete diversity of citizenship exists when “no plaintiff is a citizen of the same 

state as any defendant.” LM Ins. Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 547 (7th Cir.

2008); see also Krueger v. Cartwright, 996 F.2d 928, 931 (7th Cir. 1993). According to the 

complaint, both Plaintiff and Keybank are national banking associations. (Compl. ¶¶ 3, 5.) 

For jurisdictional purposes, the citizenship of a national banking association is the state in 

which the bank has its main office, as indicated by its articles of association. Wachovia Bank, 

N.A. v. Schmidt, 645 U.S. 303, 318, 126 S. Ct. 941, 952 (2006); Hicklin Eng’g v. Bartell, 439 

F.3d 346, 348 (7th Cir. 2006); Hill v. Wells Fargo Bank, N.A., 946 F. Supp. 2d 817, 821 (N.D. 

Ill. 2013); see, e.g., Hertz Corp. v. Friend, 559 U.S. 77, 93–95, 130 S. Ct. 1181, 1192–94 (2010) 

(holding, with respect to corporations generally, that the principal place of business of a 

corporation for diversity purposes, or its “nerve center,” is “usually its main headquarters, a 

single place”). In its motion, Plaintiff acknowledges that the prior allegation of diversity of 

citizenship between the parties was erroneous. (Mot. ¶ 4; Reply at 1–2.) Plaintiff clarifies that 

Keybank is not a citizen of North Carolina but rather maintains its headquarters in Ohio. 

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(Mot. ¶ 4 & Ex. 2 (FDIC printout showing the address of Keybank’s headquarters in Cleveland, 

Ohio); Reply at 1–2.) Defendants do not dispute the fact that Keybank is headquartered in and a 

citizen of Ohio. Nor do Defendants dispute the fact that Plaintiff is a citizen of Ohio. 

Accordingly, we find that diversity jurisdiction is lacking because both Plaintiff and defendant 

Keybank are citizens of Ohio. 

Defendants are understandably frustrated by Plaintiff’s mistake and this unwelcome 

development. They argue that Plaintiff should not be rewarded for its lack of due diligence prior 

to filing suit in 2012.2 (Resp. at 1–4.) Our jurisdiction, however, does not depend on the extent 

of a party’s pre-filing diligence or other such circumstances. See, e.g., U.S. v. Tittjung, 235 F.3d 

330, 335 (7th Cir. 2000) (“No court may decide a case without subject matter jurisdiction, and 

neither the parties nor their lawyers may stipulate to jurisdiction or waive arguments that the 

court lacks jurisdiction.”). That is, either we have subject matter jurisdiction under § 1332 or we 

do not. On the record before us, it is clear that we do not.

B. Propriety of Severance of Keybank as a Dispensable Party

In their opposition, Defendants contend that we should dismiss the non-diverse party, 

Keybank, as dispensable under Rule 21. Under Rule 21, we “may at any time, on just terms, add 

or drop a party” or “sever any claim against a party.” Fed. R. Civ. P. 21 (further providing that 

we should not dismiss an action due to misjoinder). Defendants correctly state that we can “use 

Rule 21 to dismiss a dispensable, non-diverse party in order to save diversity jurisdiction.” 

Dexia Credit Local v. Rogan, 60 F. Supp. 2d 1180, 1184 (N.D. Ill. 2009); see Newman-Green, 

Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832–33, 109 S. Ct. 2218, 2223 (1989); Scottsdale Ins. Co. 

v. Subscriptions Plus, Inc., 195 F.R.D. 640, 643–46 (W.D. Wis. 2000). We may do so only if a 

2 There is no suggestion or indication that Keybank has recently changed the location of its 

headquarters or that Plaintiff intentionally misrepresented Keybank’s citizenship.

5

 
party is unnecessary and/or dispensable as contemplated by Rule 19.3

 Dexia Credit Local, 60 F. 

Supp. 2d at 1184–85; see Ratajczak v. Beazley Solutions Ltd., 13 C 45, 2014 WL 3057158, at 

*1–2 (E.D. Wis. July 7, 2014); Scottsdale Ins. Co., 195 F.R.D. at 643–44; see also 7 Wright & 

Miller, Fed. Prac. & Proc. § 1685 (3d ed. 2013) (“Courts frequently employ Rule 21 to preserve 

diversity jurisdiction over a case by dropping a nondiverse party if the party’s presence in the 

action is not required under Rule 19.”).

Our analysis under Rule 19, which governs required joinder, involves two steps. See, 

e.g., Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477, 481 (7th Cir. 2001); Thomas v. United 

States, 189 F.3d 662, 666 (7th Cir. 1999). First, Rule 19(a) asks whether the party joined—here, 

Keybank—is necessary to the action. Dexia Credit Local, 60 F. Supp. 2d at 1184–85; see 

Ratajczak, 2014 WL 3057158, at *1–2. Keybank must be retained if “in [Keybank’s] absence, 

the court cannot accord complete relief among existing parties.” Fed. R. Civ. P. 19(a)(1)(A).4

 

Plaintiff argues that Keybank is a required party because we cannot grant Plaintiff complete 

relief in this foreclosure action without addressing (i.e., extinguishing) Keybank’s junior lien on 

the property. (Reply at 4–6; see Compl. at 5, ¶ G.) 

Our review of the Illinois Mortgage Foreclosure Law (“IMFL”) supports Plaintiff’s 

position. Under the IMFL, junior lienholders, such as Keybank, are not “necessary” defendants 

to a foreclosure action. 735 ILCS 5/15-1501(a); see React Fin. v. Long, 366 Ill. App. 3d 231, 

3 Courts typically conduct the Rule 20 permissive joinder analysis when resolving motions under 

Rule 21. See, e.g., Wilson v. Peslak, 04 C 2345, 2005 WL 1227316, at *1–2 (N.D. Ill. May 12, 

2005); Bailey v. N. Trust Co., 196 F.R.D. 513, 515 (N.D. Ill. 2000). The Rule 19 required 

joinder analysis applies, however, when diversity jurisdiction is in question, as here. See, e.g., 

Dexia Credit Local, 60 F. Supp. 2d at 1184–85; 7 Wright & Miller, Fed. Prac. & Proc. § 1685 

(3d ed. 2013). 

4 Rule 19(a) describes another circumstance in which a party must be joined in an action, but that 

situation does not apply here. Fed. R. Civ. P. 19(a)(1)(B). (See Reply at 4–5 (arguing that 

Keybank is necessary under Rule 19(a)(1)(A)).) 

6

 
235–36, 852 N.E.2d 277, 281 (3d Dist. 2006). Additional lienholders may be added to a 

foreclosure action by any party, or they may intervene in the action on their own behalf. 

735 ILCS 5/15-1501(b)(10); id. at 5/15-1501(e); React Fin., 366 Ill. App. 3d at 235–36, 852 

N.E.2d at 281. The IMFL importantly provides, however, that “any disposition of the mortgaged 

real estate shall be subject to . . . the interests of all other persons not made a party.” 735 

ILCS 5/15-1501(a). In other words, junior lienholders or other claimants need not be added to a 

foreclosure action by the plaintiff in order for the plaintiff to enforce its rights as against the 

mortgagor (i.e., the allegedly defaulting debtor). But if the plaintiff seeks to prioritize and 

adjudicate the interests of other claimants to the real estate (i.e., other lienholders), those other 

claimants must be included as parties. The foreclosure judgment cannot bind claimants who are 

not parties to the lawsuit. ABN AMRO Mortgage Group, Inc. v. McGahan, 237 Ill.2d 526, 537, 

931 N.E.2d 1190, 1198 (Ill. 2010) (noting that “a foreclosure proceeding does not bind the whole 

world”); React Fin., 366 Ill. App. 3d at 235–36, 852 N.E.2d at 281 (explaining that, if a “junior 

mortgagee becomes a party its interests are terminated by the proceedings . . . but a non-party’s 

interest is not affected”). 

Here, Plaintiff seeks judgment against the Defendants as well as “[a] finding that the 

interests of all named defendants [i.e., Keybank and MERS] are junior and subservient to the 

mortgage lien being foreclosed herein.” (Compl. at 5, ¶ G; see Reply at 4–6.) Plaintiff clearly 

seeks to adjudicate the priority of Keybank’s lien and bind it to any foreclosure judgment. To do 

so, Keybank must be included as a party under the IMFL. Because we cannot grant Plaintiff full 

relief without including Keybank, we conclude that Keybank is a necessary party under Rule 

7
19.

5

 Fed. R. Civ. P. 19(a)(1)(A). See Pac. Mut. Life Ins. Co. v. Am. Nat’l Bank & Tr. Co. of 

Chi., 642 F. Supp. 163, 167 (N.D. Ill. 1986) (“The object of this suit, like any foreclosure, is for 

all claims on the property to be resolved. Thus, we must determine the rights of the mortgagee 

against the mortgagor and vice versa, and the rights of the various lienors.”). 

Having found that Keybank is a required party—and acknowledging that its presence is 

not feasible under the rule because it destroys diversity—we turn to the second step in our 

analysis under Rule 19. Fed. R. Civ. P. 19(b); Welton Enters., Inc. v. Cincinnati Ins. Co., 

13 C 227, 2014 WL 856142, at *1 (W.D. Wis. Mar. 5, 2014); Dexia Credit Local, 60 F. Supp. 2d

at 1186; Godfrey v. Kamin, 194 F.R.D. 627, 629 (N.D. Ill. 2000); see Askew v. Sheriff of Cook 

Cty., Ill., 568 F.3d 632, 635 (7th Cir. 2009) (describing the Rule 19 analysis and noting that a 

necessary party cannot be joined “if joinder would destroy complete diversity or the court lacks 

personal jurisdiction over it”). This step asks if the non-diverse party is dispensable. Pursuant to

Rule 19(b), we “must determine whether, in equity and good conscience, the action should 

proceed among the existing parties [i.e., without the non-diverse party] or should be dismissed.” 

Fed. R. Civ. P. 19(b). To answer this question, we consider the following factors: 

(1) the extent to which a judgment rendered in the person’s absence might 

prejudice that person or the existing parties;

(2) the extent to which any prejudice could be lessened or avoided by:

(A) protective provisions in the judgment;

(B) shaping the relief; or

(C) other measures;

(3) whether a judgment rendered in the person’s absence would be adequate; and

(4) whether the plaintiff would have an adequate remedy if the action were 

dismissed for non-joinder.

5 Defendants, for their part, have not articulated how we could afford full relief to Plaintiff 

without Keybank’s presence. Defendants make much of the fact that Keybank has not filed an 

answer or appearance. (Resp. at 4–5.) Keybank’s election not to contest Plaintiff’s allegations is 

not relevant to the separate question of whether Keybank is a required party to the action. 

8

 
Fed. R. Civ. P. 19(b); see Askew, 568 F.3d at 635; Estate of Alvarez v. Donaldson Co., Inc., 213 

F.3d 993, 995 (7th Cir. 2000); CIGNA Healthcare of St. Louis, Inc. v. Kaiser, 181 F. Supp. 2d 

914, 920–21 (N.D. Ill. 2002). 

As discussed above, judgment here in Plaintiff’s favor, without binding Keybank, would 

represent only a partial victory. Under the IMFL, we cannot fashion a judgment for Plaintiff 

without Keybank that would offer complete relief. Dispensing Keybank would require Plaintiff 

to initiate additional proceedings separately in state court to address the junior lien. We find that 

such a result would prejudice Plaintiff and would waste both the time and resources of the 

litigants and the courts. On the other hand, Plaintiff can pursue a full and adequate remedy in 

state court if we dismiss this action. Having considered the equitable factors identified above, 

we conclude that Keybank is an indispensable party. Because we cannot proceed without 

Keybank under Rule 19, we cannot dismiss it under Rule 21 as requested by Defendants. And 

because Keybank’s presence destroys diversity, we do not have jurisdiction under § 1332.

C. Defendants’ Federal Theories and Counterclaims 

In addition to their efforts to save diversity jurisdiction, Defendants contend that they 

have plead federal counterclaims and asserted other federal theories that either grant us 

jurisdiction over this case or preclude the Rule 41(a)(2) dismissal sought by Plaintiff. 

1. Defendants’ Tax Law Theory

Defendants argue, for example, that Plaintiff’s conduct should be scrutinized under 

Internal Revenue Code provisions or Internal Revenue Service rules. (Resp. at 1, 4–6.) 

Defendants presumably call upon § 1331, which grants us original jurisdiction over “all civil 

actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. 

We are not convinced that Defendants have raised a proper federal tax issue or that we would be 

9
authorized to hear such a claim but, in any event, we do not look to defense theories when 

assessing federal question jurisdiction. “The presence or absence of federal-question jurisdiction 

is governed by the ‘well-pleaded complaint rule,’ which provides that federal jurisdiction exists 

only when a federal question is presented on the face of the plaintiff’s properly pleaded 

complaint.” Rivet v. Regions Bank of La., 522 U.S. 470, 475, 118 S. Ct. 921, 925 (1998)

(quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429 (1987)); Metro. 

Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S. Ct. 1542, 1546 (1987); City of Chi. v. Comcast 

Cable Holdings, L.L.C., 384 F.3d 901, 904 (7th Cir. 2004). Even if a defense is based on federal 

law, such a defense cannot supply federal question jurisdiction if the complaint “itself rests on 

state or local law.” City of Chi., 384 F.3d at 904 (stressing that this principle holds true even 

where “the federal defense will be the only contested issue”); Rivet, 522 U.S. at 475, 118 S. Ct. 

at 925 (stressing same, even where the defense is anticipated by the complaint). Plaintiff’s 

complaint alleges only a state law claim under the IMFL and therefore does not provide a basis 

for federal question jurisdiction, regardless of Defendants’ tax theory.

2. Defendants’ Counterclaims against Litton

In opposition to Plaintiff’s motion for voluntary dismissal, Defendants also argue that we 

must retain jurisdiction over their federal counterclaims against non-party Litton Loan 

Servicing LP (“Litton Loan”).

6 In their answer, filed pro se on June 3, 2013, Defendants alleged 

6 To the extent that Defendants imply that their federal counterclaims would give us 

supplemental jurisdiction over the entire action under § 1367, we disagree. Under § 1367, in any 

action “where [we] have original jurisdiction,” we may exercise supplemental jurisdiction over 

claims that are related, even if we would not have had independent original jurisdiction over 

those claims (i.e., claims based on state law). 28 U.S.C. § 1367(a). Supplemental jurisdiction

does not flow the other way, however, such that we could exercise jurisdiction over an entire 

action brought under state law. See, e.g., 13D Wright & Miller, Fed. Prac. & Proc. § 3567

(3d ed. 2013) (“[S]upplemental jurisdiction does not—and cannot—operate to get a case into 

federal court.”) (emphasis in original).

10

 
that they are entitled to rescission based on the fraudulent and deceptive conduct of their loan 

servicer, Litton Loan. (See Ans. (Dkt. No. 63) at 6–8.) They purported to bring two 

counterclaims against Litton Loan, alleging violations of: (1) the IMFL; (2) the Illinois 

Consumer Fraud and Deceptive Practices Act; and two related federal statutes, (3) the Home 

Ownership Equity Protection Act (“HOEPA”); and (4) Regulation Z, which is the implementing 

regulation for the Truth in Lending Act (“TILA”). (Id. at 8–9; see also Aff. of Heywood Fuller 

T. (Dkt. No. 87) ¶¶ 4–26 (describing Defendants’ interactions with Litton Loan from April 2007 

through January 2011).) Defendants contend that we cannot grant Plaintiff’s motion unless we 

can separately adjudicate these counterclaims against Litton Loan. Fed. R. Civ. P. 41(a)(2). 

Defendants did not assert these counterclaims against Plaintiff, Keybank, or MERS. 

The counterclaims against Litton Loan do not defeat Plaintiff’s motion for voluntary 

dismissal, however, because they are not “counterclaims” at all. Counterclaims are governed by 

Rule 13, which states that a party may plead a counterclaim “against an opposing party” under 

certain circumstances. Fed. R. Civ. P. 13(a)(1), (b); see also Fed. R. Civ. P. 13(g) (allowing 

crossclaims against a co-party). Under Rule 13(h), non-parties may be added to a counterclaim 

but only if the counterclaim is also asserted against an existing party. “This means that a 

counterclaim . . . may not be directed solely against persons who are not already parties to the 

original action, but must involve at least one existing party.” 6 Wright & Miller, Fed. Prac. & 

Proc. § 1435 (3d ed. 2013); Transvision Techs. Holding, Inc. v. Knight, 04 C 2086, 2005 

WL 2373835, at *2 (S.D. Ind. Sept. 26, 2005) (“[C]ounterclaims can be brought only against an 

existing party.”); see Assoc. Pubs., Inc. v. Select Magazine, Inc., 85 C 7965, 1986 WL 4714, at 

*4 n.14 (N.D. Ill. Apr. 11, 1986). In this case, Defendants raised the counterclaim allegations 

against only Litton Loan, a non-party. Because Defendants did not assert these claims against 

11
any other party to the foreclosure action, they cannot rely on Rule 13(h) as a means to include 

Litton Loan in the litigation.

Thus, because the claims against Litton Loan do not constitute proper counterclaims 

under Rule 13, the provision of Rule 41(a) concerning counterclaims does not apply. Defendants 

are correct that Rule 41(a)(2) prohibits us from dismissing an action over a counterclaimant’s

objection unless “the counterclaim can remain pending for independent adjudication.” Fed. R. 

Civ. P. 41(a)(2). This limitation, however, protects only counterclaims. That is, it cannot be 

used to block voluntary dismissal due to the presence of any other type of claim, such as

crossclaims or third-party claims. See Salton, Inc. v. Philips Domestic Appliances & Pers. Care 

B.V., 391 F.3d 871, 876 (7th Cir. 2004) (noting that the language of Rule 41(a)(2) is specific as 

to counterclaims); Hartford Cas. & Ins. Co. v. Kanoski & Assocs., 09 C 3242, 2009 

WL 5166202, at *3 (C.D. Ill. Dec. 18, 2009) (stating that Rule 41(a)(2) “does not apply to 

crossclaims”); see also 9 Wright & Miller, Fed. Prac. & Proc. § 2365 (3d ed. 2013) (explaining 

that this provision applies only if the counterclaim is proper and not, for example, if the 

defendant plead affirmative defenses). Accordingly, the allegations against Litton Loan do not 

require that we deny Plaintiff’s motion.

In sum, we conclude that we lack subject matter jurisdiction over the complaint. We 

therefore grant the motion and dismiss Plaintiff’s complaint due to our lack of jurisdiction. 

3. Defendants’ Third-Party Claims against Litton

Although the state and federal claims against Litton Loan are not counterclaims under 

Rule 13, Defendants may have intended to assert them as third-party claims. Rule 14 governs 

third-party actions, which may be brought by a defendant against any non-party “who is or may 

be liable to it for all or part of the claim against it.” Fed. R. Civ. P. 14(a)(1); Federalpha Steel 

12
LLC Creditors’ Tr. v. Fed’l Pipe & Steel Co., 245 F.R.D. 615, 618 (N.D. Ill. 2007); Selective Ins. 

Co. of S.E. v. Homeworks Central, Inc., 12 C 4017, 2013 WL 1286982, at*2 (C. D. Ill. 

Mar. 26, 2013). In such claims, “the third-party defendant’s liability to the third-party plaintiff 

must derive from the plaintiff’s claim against the third-party plaintiff.” Selective Ins. Co. of S.E., 

2013 WL 1286982, at*2; Federalpha Steel LLC Creditors’ Tr., 245 F.R.D. at 618; see also 

Leasing Servs., LLC v. IAM Nat’l Pension Fund, 10 C 695, 2011 WL 4767599, at *1–2 (E.D. 

Wis. Oct. 5, 2011); Brown v. Walker, 06 C 218, 2007 WL 2265623, at *4 (N.D. Ind. Aug. 6, 

2007). To state a third-party claim in this case, Defendants must have plead that Litton Loan is 

liable to them for all or part of Defendants’ potential liability to Plaintiff. Based on the nature of 

Defendants’ pleading, it is unclear whether the allegations against Litton Loan constitute a 

proper third-party action. (See Ans. at 6–8; Aff. of Heywood Fuller T. ¶¶ 4–26.)

Nonetheless, assuming that the allegations qualify as a third-party claim, Defendants

have not complied with Rule 14’s service requirement. Under Rule 14(a)(1), the third-party 

plaintiff (i.e., Defendants) must provide the third-party defendant (i.e., Litton Loan) with formal 

service of process. Fed. R. Civ. P. 14(a)(1) (requiring service of summons and the third-party 

complaint on the non-party to be sued); Superkite PTY Ltd. v. Glickman, 12 C 7754, 2014 

WL 1202577, at *5 (N.D. Ill. Mar. 21, 2014) (dismissing third-party claim that had not been 

served); see also 6 Wright & Miller, Fed. Prac. & Proc. § 1455 (3d ed. 2013) (“Requirements of 

personal jurisdiction and service of process also must be satisfied.”). Under Rule 4, service of 

process must be completed within 120 days from the filing of a complaint, including a thirdparty complaint. Fed. R. Civ. P. 4(m); see, e.g., Manjarrez v. Georgia-Pac. LLC, 12 C 1257, 

2012 WL 4017951, at *4 (N.D. Ill. Sept. 12, 2012); Scherr v. Marriott Int’l, Inc., 08 C 2098, 

2009 WL 4015541, at *2 (N.D. Ill. Nov. 19, 2009).

13
Defendants filed their answer, which raised the claims against Litton Loan, on 

June 3, 2013. Treating those allegations as a third-party complaint, the deadline for service on 

Litton Loan was approximately October 2, 2013—well over a year ago. According to the 

docket, Defendants simply never served Litton Loan. 

Under Rule 4(m), we are required to extend the time for service of process if a plaintiff 

can show “good cause” for the failure to meet the deadline. Fed. R. Civ. P. 4(m). “Good cause

means a valid reason for delay, such as the defendant’s evading service.” Coleman v. Milwaukee 

Bd. of Sch. Dirs., 290 F.3d 932, 933–34 (7th Cir. 2002). On the other hand, “a pro se litigant’s 

ignorance of the 120-day time limit does not establish good cause under Rule 4.” McCullum v. 

Silver Cross Hosp., 99 C 4327, 2001 WL 696076, at *3 (N.D. Ill. Aug. 21, 2001); see WilliamsGuice v. Bd. of Educ. of City of Chi., 45 F.3d 161, 164 (7th Cir. 1995) (“Even uncounseled 

litigants must act within the time provided by statutes and rules.”). In the absence of good cause, 

we may exercise our discretion to either: (1) grant additional time for service; or (2) dismiss the 

action without prejudice. Fed. R. Civ. P. 4(m); see Coleman, 290 F.3d at 933–34; McCullum, 

2001 WL 696076, at *3. 

Consistent with Rule 4(m), we inform Defendants that they have failed to serve Litton 

Loan with process in the required timeframe. Indeed, they have not attempted to litigate any 

claim against Litton Loan at all in roughly twenty months. If Defendants wish to pursue any 

third-party claim against Litton Loan, they must file a short brief (not to exceed five pages) 

explaining their “good cause” for failing to effectuate service. This brief must be filed no later 

14
than March 25, 2015. If we do not find Defendants’ explanation compelling, we will dismiss the 

purported third-party complaint against Litton Loan and terminate this action in its entirety.7

CONCLUSION

Having concluded that we lack jurisdiction over Plaintiff’s complaint based on the IMFL, 

we dismiss Plaintiff’s complaint, without prejudice as to refiling in state court.

As to Defendants’ purported third-party claim against Litton Loan, which asserts federal 

claims, Defendants may file a short brief no later than March 25, 2015, explaining any good 

cause for their failure to comply with Rules 4(m) and 14(a). If they choose to do so, we will then 

consider whether to extend the time for service of process on Litton Loan. If no extension is 

warranted, we will dismiss this action in its entirety. It is so ordered.

 

Marvin E. Aspen

United States District Judge

Dated: March 9, 2015

Chicago, Illinois

7 We suspect that Defendants’ allegations against Litton Loan may suffer from pleading 

deficiencies as well, including potential statute of limitations difficulties. While we need not 

address these issues today, we add that TILA and HOEPA have relatively short statute of 

limitations periods. They also do not impose liability on loan servicers who were not the owner 

of the debt. See, e.g., Goode v. PennyMac Loan Servs., Inc. LLC, 14 C 1900, 2014 WL 6461689, 

at *9 (N.D. Ill. Nov. 18, 2014); Iroanyah v. Bank of Am., 851 F. Supp. 2d 1115, 1120 (N.D. Ill. 

2012); Sagan v. Option One Mortgage Corp., 03 C 4557, 2004 WL 1660625, at *3 (N.D. Ill. 

July 26, 2004). We encourage Defendants to explore these issues before attempting to proceed.

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