must register a dispute with the credit reporting agency who then has a responsibility under
§1681i(a) to pass information regarding the dispute on to the information furnisher. Jeffries

citing Nelson v. Chase Manhattan Mortgage Co., 282 F.2d 1057, 1060 (9"" Cir. 2002).

Therefore, the information furnisher’s obligation to investigate and report is not triggered when a

consumer directly contacts the creditor about a dispute. Dumas v. Dovenmuehie Mortgage, Inc.

2005 WL 152 8262 (N.D.IIL. 2005).

Therefore, the Plaintiff's allegations that he complained directly to the Defendant here do
not entitle the Plaintiff to relief against the Defendant nor do the allegations comport with the
specific requirements of the FCRA. Thus, Count II of the Plaintiff's Complaint should be
dismissed.

Cc. Count II: The Plaintiffs breach of contract claim is pre-empted
by the FCRA

The Plaintiff, rather vaguely, asserts that the Defendant’s conduct has denied the Plaintiff
the benefit of his previous agreements and forced him to make payments on loans he did not
think he should pay. (Exhibit A.) However, the law is clear that the Plaintiff's breach of
contract claim is pre-empted by the FCRA.

In Purcell v. Bank of America, 659 F.3d 622 (7" Cir. 201 1), the debtor plaintiff brought
an action against a bank in state court for violation of the FCRA and asserted various Illinois
common law claims. The defendant bank removed the suit to federal court and moved for
judgment in its favor and the trial court dismissed the federal claim. Id at 623-624. The
plaintiffs common law state claims were dismissed without prejudice to re-filing in state court
and the defendant appealed. Id. The defendant contended that the plaintiff's state law counts
were entirely pre-empted by §1681t(b) of the FCRA given that the section stated no requirement

or prohibition may be imposed under the laws of the state (1) with respect to any subject matter


Furthermore, the Plaintiff's allegations of breach of contract, defamation and fraud are
entirely pre-empted by the FCRA and further do not comport with proper Illinois common law
pleading standards.

Therefore, the Plaintiff's six-count Complaint against the Defendant should be dismissed
with prejudice pursuant to Federal Rule of Civii Procedure 12(b)(6).

WHEREFORE, Defendant PNC BANK, NA, respectfully requests this Honorable Court
to dismiss Plaintiff JEFF FOSTER’s Complaint with prejudice and for any further relief this

Court deems fair and just.

Respectfully submitted,

SANCHEZ DANIELS & HOFFMAN LLP

By: /s/ Gerald M. Dombrowski
Attorneys for Defendant
PNC BANK, NA

Gerald M. Dombrowski #06210375
SANCHEZ DANIELS & HOFFMAN LLP.
333 W. Wacker Drive, Suite #500
Chicago, Illinois 60606

312/641-1555

10


involving trade or commerce; (4) actual damage to the plaintiff; and (5) such damages were
proximately caused by the deception. Oliviera v. Amoco Oil Co., 201 IIl.2d 134, 149, 776
N.E.2d 151, 160 (2002). An action under the Consumer Fraud Act must be pleaded with the
same specificity that has always been a prerequisite to an action for common law fraud. Paul H.

Schwendener, Inc. v. Larrabee Commons Partners, 338 Ill_App.3d 19, 30, 787 N.E.2d 192, 201

(2003). Additionally, the complaint must state with particularity and specificity the deceptive
manner of the defendant’s acts or practices, and the failure to make such allegations requires the

dismissal of the complaint. Robinson v. Toyota Motor Credit Corp., 201 Ill.2d 403, 419, 775

N.E.2d 951, 961 (2002).

In Sklodowski v. Countrywide Home Loans, Inc., 358 Ill.App.3d 696, 832 N.E.2d 189

(2005), the plaintiff brought an action against his mortgage holder, inter alia, for violation of the
Consumer Fraud Act based on the mortgage holder’s delay of an escrow money refund to the
plaintiff. The court, in granting the defendant’s motion to dismiss, held that what the plaintiff
calls consumer fraud or an unfair deceptive act is simply an allegation that the defendant failed to
fulfill its contractual obligations. Id. at 704. The court further held that a mere breach of
contract count clothed in a violation of the Consumer Fraud Act is not appropriate and will not
withstand a motion to dismiss. Id. at 704-705. The court held that a naked breach of contract
claim does not support a Consumer Fraud Act Claim and thus, the plaintiffs claim as to the
Consumer Fraud Act could not stand. Id. at 704.

Here, the Plaintiff alleges the Defendant’s failure to credit his payments and forcing him
to make additional deposits into his escrow account was somehow a violation of the Consumer

Fraud Act. Such a claim does not state a cause of action.


regulated under . . . “(F) §1681s-2 of this title, relating to the responsibility of a person to furnish
information to consumer reporting agencies.” Id. at 623. The district court decided to adjudicate
the federal offense — and rejected it, holding that the word “laws” in §1681t(b) is limited to state
statutes, leaving claims based on state common law free to proceed. Id. The court, in holding
that the plaintiffs cause of action, including the defamation, invasion of privacy and negligence
counts, should be dismissed, stated:

The specific—over—general cannon gets us nowhere and does not

offer a good reason to depart from the norm that courts do not read

old statutes to defeat the operation of newer ones — and using

§1681h(a) to preserve state-law claims that come within the scope

of §1681s-2 would defeat the 1996 decision that administrative

action rather than litigation is the right way to deal with false

reports to credit agencies.
Id. at 626.

Here, given that FCRA would apply to the dispute between the Plaintiff and the
Defendant, the Plaintiffs breach of contract claim is entirely pre-empted and should be
dismissed as a matter of law.

D. Count IV: The Plaintiffs Illinois Consumer Fraud and Deceptive
Business Practices Act claim should be dismissed as it does not apply
and is pre-empted by FCRA

The Plaintiff briefly pleads that the Defendant’s particular actions in failing to credit
payments to his account and requiring the Plaintiff to make additional deposits into his escrow
accounts constituted unfair and deceptive acts and practices as defined in the Illinois Consumer
Fraud and Deceptive Business Practices Act, 815 ILCS 505/2. (Consumer Fraud Act) (Exhibit
A)

To adequately plead a private cause of action for a violation of §2 of the Consumer Fraud

Act, a plaintiff must allege (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 conduct


Here, the Plaintiff merely spells out an ongoing dispute he has had with the Defendant
regarding his mortgage, his insurance, his escrow, and disputes over payments he believes he
made to the Defendant throughout the life of his mortgage. (Exhibit A.) The Plaintiff fails to
meet the elements of pleading common law fraud in Illinois given that the Plaintiff did not rely
on any statements from the Defendant and there was no inducement by the Defendant to have the
Plaintiff act in any specific manner. The heart of the Plaintiff's Complaint alleges he was not
given more favorable terms on his mortgage. This does not constitute fraud.

Moreover, the Purcell case specifically held that common law counts, similar to fraud
counts, could not withstand a motion to dismiss in federal court as they are pre-empted by the
FCRA.

Therefore, Count VI of the Plaintiff's Complaint at Law should be dismissed.

CONCLUSION

The Plaintiffs six-count Complaint alleging various violations of the FCRA and the
Illinois Consumer Fraud and Deceptive Business Practices Act and Illinois common law all fail
to state a cause of action for which this Court could grant relief. The FCRA and the FCBA
simply do not provide the Plaintiff with relief or with a particular cause of action given that the
proper steps were not taken by the Plaintiff to implicate either Act.

Moreover, the Illinois Consumer Fraud and Deceptive Business Practices Act does not
apply given that the allegations within the body of the Plaintiff's Complaint do not fall under

consumer fraud or under the definition of unfair deceptive acts within the Act itself.


Attorney ID #06210375 PNC-81931 GMD/NCB

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JEFF FOSTER, )
Plaintiff, )
v. ) No. — 12-cv-03130
)
PNC BANK, NA, )
Defendant. )

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT
PNC BANK’S MOTION TO DISMISS PURSUANT TO RULE 12(b)(6)

NOW COMES Defendant PNC BANK, NA, by and through its attorneys, Gerald M.
Dombrowski of Sanchez Daniels & Hoffman LLP and for its Memorandum of Law in Support of
its Motion to Dismiss, states as follows:

Defendant, PNC BANK, NA asserts that Plaintiff, JEFF FOSTER, has failed to state a
claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) and
in support of Defendant’s Motion to Dismiss, Defendant presents this Memorandum of Law to
this Court.

PLEADINGS

The Plaintiff has filed a six-count Complaint against his mortgage holder, Defendant
PNC Bank, asserting various claims regarding his mortgage and lending history with PNC Bank
and its predecessor. (See attached Complaint incorporated herein as Exhibit A.) Count I asserts
the Defendant violated the Fair Credit Billing Act, 15 USC 1666, et seg., Count II alleges the
Defendant violated the Fair Credit Reporting Act, 15 USC 1681n, Count II alleges a breach of

contract between the Plaintiff and Defendant involving the Plaintiff's mortgage, Count IV asserts


Moreover, the Plaintiffs claim under the Consumer Fraud Act cannot stand given that the
FCRA pre-empts any breach of contract claim even though the breach of contract claim may be
disguised under the Consumer Fraud Act.

E. Count V: Plaintiff’s defamation count is entirely pre-empted

In Purcell, supra, the court specifically ruled that common law counts such as
defamation, invasion of privacy and negligence are pre-empted by the FCRA and will not
survive a motion to dismiss. Count V alleges that the defendant disseminated false and
inaccurate information regarding the plaintiff's credit history to credit reporting agencies and
thus defamed him by publishing those reports.

The Purcell case clearly held that state law counts such as defamation should be
dismissed along with the FCRA allegations if warranted given that preserving the state law
claims that come within the scope of the FCRA would defeat the decision that administrative
action rather than litigation is the right way to deal with false reports to credit agencies. Id. at
626. Here, there is no just reason why the defamation allegation in Count V should survive.

F. Count VI: Plaintiff's common Jaw fraud count should be dismissed

Under Illinois law, the elements of common law fraud are: (1) a false statement of
material facts; (2) defendant’s knowledge that the statement was false; (3) defendant’s intent that
the statement induce the plaintiff to act; (4) plaintiff's reliance upon the truth of the statement;
and (5) plaintiff's damages resulting from reliance on the statement. Connick v. Suzuki Motor
Company, Ltd., 174 T1l.2d 482, 496, 675 N.E.2d 584, 591 (1996). A successful common law
fraud complaint must allege, with specificity and particularity, facts from which fraud is the
necessary or probable inference, including what misrepresentations were made, when they were

made, who made the misrepresentations and to whom they were made. Id.


Moreover, the FCBA requires that the Plaintiff submit his dispute to the address at
Defendant PNC that is set out in the Plaintiff's monthly statements so that the Defendant would
be specifically on notice of any alleged billing errors. The Plaintiff does not assert anywhere in
his Complaint that he followed the proper procedure under §1666(a) in sending his dispute to the
proper address at PNC. Bare allegations that he had a dispute with PNC and that he toid the
Defendant of his stance does not satisfy the specific requirements of the FCBA. Thus, Count I of
the Plaintiff's Complaint should be dismissed.

B. Count II: The Plaintiff fails to state a cause of action pursuant to the
Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) places various requirements on consumer credit
reporting agencies, furnishers of credit information to consumer credit reporting agencies and
users of consumer credit reports. Jeffries at 5. The Plaintiff alleges that the Defendant
repeatedly made false reports to various credit reporting agencies that the Plaintiff was
delinquent in his payments and that the Plaintiff repeatedly demanded the Defendant cease in
making these allegedly false reports to the credit agencies in violation of the FCRA. (Exhibit A.)

However, §1681s-2(a) of the FCRA requires furnishers of credit information to provide
credit reporting agencies with accurate and complete information. Subsections (c) and (d)
provide, however, that this requirement may be enforced only by government officials and that
consumers are prohibited from bringing a cause of action based on any failure to comply with
Subsection (a). Jeffries at 5. Even courts that have recognized a private right of action for
consumers under Subsection (b) have held that the duties created by Subsection (b) arise only
after the furnisher receives notice from a consumer reporting agency that a consumer is disputing

credit information. Jeffries citing Dornhecker vy. Ameritech Corp., 99 F.Supp.2d 918,925

(N.D.IL 2000). Thus, assuming that §1681s-2(b) provides a private right of action, the consumer


creditors of open-end credit plans. 15 USC §1602(f). The term open-end credit plan is defined
as follows:

(A) plan under which the creditor reasonably contemplates

repeated transactions, which prescribes the terms of such

transactions, and which provides for a finance charge which

may be computed from time to time on the outstanding

unpaid balance. A credit pian which is an open-end credit

plan within the meaning of the preceding sentence is an

open-end credit plan even if credit information is verified

from time to time.
15 USC §1602(i).

Here, in taking the Plaintiff's factual allegations as true, there is no allegation that PNC

Bank reasonably contemplated repeated transactions beyond the initial mortgage-backed loan the
Plaintiff alleges he wanted to modify. Therefore, because Plaintiff's mortgage-backed home
loan is not an open-end credit plan, the claim related to billing errors pursuant to the FCBA must

be dismissed.

In Jeffries v. Dutton & Dutton, PC, 2006 WL 1343629 (N.D.IL 2006), the plaintiff had

secured two loans with the defendant bank, one secured by a first-lien mortgage and the other
secured by a second-lien mortgage. The plaintiff alleged various billing errors against the bank
and repeatedly contacted the bank and threatened legal action regarding the verification of
plaintiff's loan asserting the bank had no valid interest or claim in his property. Id. at 1-2. While
the Court held that the bank qualified as a creditor under the FCBA because it regularly extended
credit in connection with the sale of property, the billing error section of the FCBA only applied
to creditors of open-end credit plans. Id. at 6. The Court held that there was no allegation that
the bank reasonably contemplated repeated transactions and thus, the initial loans tied to the
plaintiff's property could not be considered an open-end credit plan. Here, the Plaintiff alleges

the same facts as in Jeffries and thus his Complaint must fail as a matter of law.



a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505-
2, et seg., Count V alleges common law defamation and Count VI alleges common law fraud.

The entirety of the Plaintiff's Complaint fails to state a cause of action as to any of the six
counts pled against the Defendant and should be dismissed with prejudice.

STANDARD OF REVIEW

A case resolved on a motion to dismiss pursuant to Rule 12(b)(6) does not ask whether
the Plaintiff will ultimately prevail but whether his Complaint was sufficient to cross the federal
court’s threshold. Skinner v. Switzer, 131 S.Ct. 1289 (2011). The requirement that a pleading
contain a short and plain statement of the claim showing that the pleader is entitled to relief does
not require detailed factual allegation, but demands more than unadorned “the defendant
unlawfully harmed me.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937 (2009). A pleading
that offers labels and conclusions or formulaic recitation of elements of a cause of action will not
do, nor does a complaint suffice if it tenders naked assertions devoid of further factual

enhancement. Id. at 679.

ARGUMENT

I. The Plaintiff Has Failed to State a Cause of Action as to Each of the Six
Counts Pled Against the Defendant

A. Count I: The Plaintiff has not properly pled a violation of the Fair
Credit Billing Act

The Plaintiff initially pleads in Count I that Defendant has violated the Fair Credit Billing
Act (FCBA), 15 USC §1666, et seg. asserting that the Plaintiff repeatedly notified the Defendant
of numerous billing errors and that the Defendant failed to timely and properly respond on

multiple occasions to each violation under the FCBA. (Exhibit A.) The FCBA only applies to