UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

LLANO FINANCING GROUP, LLC, )

)

Plaintiff, )

) CAUSE NO. 2:15-CV-305 

vs. )

)

STEVE WENGER, CHRISTINE )

WENGER, and ASAP APPRAISAL )

SERVICE, INC., )

)

Defendants. )

OPINION AND ORDER

This matter is before the Court on the Motion to Dismiss

Amended Complaint Pursuant to Rules 12(b)(1) and (6), filed by the

defendants, Steve Wenger, Christine Wenger, and ASAP Appraisal

Service, Inc., on January 5, 2016. (DE #22.) For the reasons set

forth below, the motion is GRANTED, and this case is DISMISSED

without prejudice1 for lack of subject-matter jurisdiction. 

BACKGROUND

Llano Financing Group (“Llano”), a Texas limited liability

company, filed its complaint against the defendants, Steve Wenger,

Christine Wenger, and ASAP Appraisal Service, Inc. (collectively,

“Defendants”), on August 17, 2015. (DE #1.) The complaint was

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 “A suit dismissed for lack of jurisdiction cannot also be dismissed

‘with prejudice’; that’s a disposition on the merits, which only a court with

jurisdiction may render.” Frederiksen v. City of Lockport, 384 F.3d 437, 438

(7th Cir. 2004).
amended on November 23, 2015. (DE #16.) Both Steve Wenger and

Christine Wenger are described as Certified Residential Real Estate

Examiners licensed by and living in Indiana who are “citizen[s] of

the United States.” (Id. at 2.) ASAP Appraisal Service, Inc. is

described as a “dissolved Indiana Corporation whose principal

office was located [in] . . . Indiana.” (Id.) Llano indicates

that it is: 

suing in its capacity as agent for Impac

Funding Corporation, (‘Impac’), the master

servicer for DEUTSCHE BANK NATIONAL TRUST

COMPANY, (‘Trust’) a national bank

association, which owns the loan that is the

subject of this suit. As master servicer,

Impac had the authority and right to assign

certain servicing functions and other duties

to Savant LG, LLC (hereinafter, ‘Savant’).

Specifically, Impac assigned any and all legal

rights that it possessed to assert damage and

negligence claims (hereinafter, ‘Tort Claims’)

against real estate appraisers and other

tortfeasors (real estate appraisers and other

tortfeasors collectively hereinafter

‘Tortfeasors’) relating to certain loans it

services, including this Loan, to Savant.

Savant, in turn, has the authority to pursue

such Tort Claims in its own name or assign

such Tort Claims to a claim servicing entity

(hereinafter ‘CSE’) to initiate litigation

against Tortfeasors. Consequently, Savant

delegated and assigned its duties, authority,

and legal rights to pursue the Tort Claims

against Defendants herein to Plaintiff as the

CSE. 

(Id. at 1-2) (capitalization in original; numerical paragraphs

deleted). Llano’s suit is premised upon diversity jurisdiction. 

(Id. at 3.)

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Llano alleges that, on or about October 26, 2006, Defendants

completed an appraisal of a residential property located at 3254

Kenwood Street in Hammond, Indiana (the “Property”), and determined

that the appraised value of the Property was $126,000. (Id.; see

also DE #16-1.) In reliance on that appraisal, Flick Mortgage

Investors, Inc. (the “Lender”), funded a loan in the amount of

$113,400 to Miguel A. Andrade (the “Borrower”), so that he could

purchase the Property. (Id. at 3, 5.) According to Llano, the

Borrower “subsequently defaulted and the Trust foreclosed on the

Property on February 3, 2012” which ultimately caused the Trust to

lose $134,495.29. (Id. at 6.) In May of 2015, Llano conducted a

review of the loan history and determined that the appraisal

conducted by Defendants and submitted to the Lender had been

“negligently prepared and contained material misrepresentations

regarding the Property and that the [l]oan was significantly

under-secured.” (Id.) Llano claims that the market value of the

Property was “far less than $126,000” and that, if the Lender had

known the “true market value of the Property it would not have

funded the [l]oan.” (Id.) Based on these allegations, Llano

brings state law claims of breach of contract, negligent

misrepresentation, and professional negligence. (Id. at 6-10.)

Defendants filed the instant motion to dismiss the amended

complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and

12(b)(6) on January 5, 2016. (DE #22.) Llano filed its response

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on January 19, 2016. (DE #23.) Defendants filed a reply on

January 26, 2016. (DE #24.) Thus, the motion is ripe for

adjudication. 

DISCUSSION

Pursuant to Federal Rule of Civil Procedure 12(b)(1), a

defendant may move to dismiss claims over which the federal court

lacks subject matter jurisdiction. Jurisdiction is the “power to

decide” and must be conferred upon a federal court. In re Chicago,

Rock Island & Pac. R.R. Co., 794 F.2d 1182, 1188 (7th Cir. 1986).

Federal courts are courts of limited jurisdiction. Hart v. FedEx

Ground Package System Inc., 457 F.3d 675, 679 (7th Cir. 2006). The

party asserting that jurisdiction exists has the burden of

establishing that the cause lies within the federal court’s limited

jurisdiction. Id. When the jurisdictional question involves

standing, the plaintiff must establish the required elements which

include an injury in fact, a causal connection, and redressability. 

See Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003). “If

standing is challenged as a factual matter, the plaintiff must come

forward with ‘competent proof’ – that is a showing by a

preponderance of the evidence – that standing exists.” Id. (citing

Retired Chicago Police Assoc. v. City of Chicago, 76 F.3d 856, 862

(7th Cir. 1996)). In reviewing such a Rule 12(b)(1) motion to

dismiss, the court may look beyond the complaint to review any

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extraneous evidence submitted by the parties to determine whether

subject matter jurisdiction exists. United Transp. Union v.

Gateway Western R.R. Co., 78 F.3d 1208, 1210 (7th Cir. 1996). 

Importantly, “[s]ubject-matter jurisdiction is the first question

in every case, and if the court concludes that it lacks

jurisdiction it must proceed no further.” State of Ill. v. City of

Chicago, 137 F.3d 474, 478 (7th Cir. 1998); see also Villareal v.

Snow, No. 95 C 2484, 1996 WL 28282, at *2 (N.D. Ill. Jan. 19, 1996)

(“When a motion to dismiss is brought both for lack of subject

matter jurisdiction under Rule 12(b)(1) and for failure to state an

actionable claim under Rule 12(b)(6), the Rule 12(b)(1) motion is

addressed first.”)

Lack of Subject-Matter Jurisdiction

Defendants argue that this case should be dismissed pursuant

to Federal Rule of Civil Procedure 12(b)(1) because Llano lacks

standing to sue. In essence, Defendants argue that Llano has not

established that it has suffered an injury because it has no

“‘personal stake’ in the redress of the alleged wrongs for which it

has sued Defendants.” Defendants accuse Llano of being in the

business of “lawsuit speculation” through champerty in that it

“seeks to reap a windfall for itself” when, in fact, it has

incurred no damages and suffered no actual injury as a result of

the foreclosure of the Property. Specifically, Defendants state

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that Llano has pled that it is not the “owner” of the loan but

rather solely an agent of Impac; as a result, it has affirmatively

identified two companies with Article III standing, neither of

which are Llano. Defendants assert that the amended complaint does

not show that Llano is entitled to the proceeds of this litigation

but instead only that others are entitled to those proceeds. In

response, Llano calls Defendants’ contention of champerty “close to

being libelous.” It argues that, as an agent of Impac, it has a

“direct and immediate interest in the right of action.” According

to Llano, “[i]t is well recognized that a mortgage loan servicer

has standing to sue for injuries suffered by the owner of the

mortgage loan.” 

As noted above, when a plaintiff’s standing is challenged as

a factual matter, conclusory assertions are not enough to overcome

such a challenge. See Llano Financing Group, LLC v. Bannec, No.

2:15-CV-297, 2016 WL 739278, at *5 (N.D. Ind. Feb. 25, 2016)

(citing Shales v. Schroeder Asphalt Servs., Inc., No. 12 C 6987,

2013 WL 2242303, at *7 (N.D. Ill. May 21, 2013)). The Seventh

Circuit has recognized that there is a “critical difference”

between facial and factual jurisdictional challenges. Apex

Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443-44 (7th

Cir. 2009). Importantly, during a factual attack, the court “is

free to weigh the evidence and satisfy itself as to the existence

of its power to hear the case. In short, no presumptive

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truthfulness attaches to plaintiff’s allegations, and the existence

of disputed material facts will not preclude the trial court from

evaluating for itself the merits of jurisdictional.” Apex Digital,

572 F.3d at 444 (quoting Mortensen v. First Fed. Sav. & Loan Ass’n,

549 F.2d 884, 891 (3d Cir. 1977)). Because the court is of limited

jurisdiction, “‘if the facts place the district court on notice

that the jurisdictional allegation probably is false, the court is

duty-bound to demand proof of its truth.’” Id. (quoting

Kanzelberger v. Kanzelberger, 782 F.2d 774, 777 (7th Cir. 1986)).

Here, even though Llano was presented with a factual challenge

regarding its standing, it responded by simply pointing to the

allegations outlined in the complaint and stating that, “[Llano] is

an agent of Impac who is the master loan servicer for the mortgage

holder. [Llano] is a sub-servicer of the master servicer and also

has a direct and immediate interest in the right of action.” But,

as noted by the Honorable William C. Lee in a recent case almost

identical to this one,2 “Llano’s conclusory allegations, despite

its insistence otherwise, do not establish how Llano acquired the

standing it claims to have or how it suffered any damages when the

underlying loan, held by a mortgage trust, went into default.” 

Llano Financing Group, LLC v. Bannec, No. 2:15-CV-297, 2016 WL

739278, at *4 (N.D. Ind. Feb. 25, 2016) (distinguishing cases cited

2

 In fact, even Llano’s response brief itself is identical in both

cases save for a few words. 

7
by the plaintiff as both factually and legally distinct from the

case at bar). The Court agrees with Defendants that Llano has not

shown that it has a personal stake in this litigation or that it

has suffered an injury in fact. Focusing on Llano’s failure to

recognize the distinction between facial and factual challenges to

jurisdiction and its reliance on general legal propositions rather

than specific evidence, Judge Lee aptly stated: 

What makes [Llano’s] argument smell so bad is

that it is nothing more than a generic

statement of contract and agency law without

any explanation, let alone evidence, that it

applies in this case. Put another way, Llano

fails to adduce any evidence whatsoever that

establishes its standing to bring this

lawsuit, instead resting on the assertions in

its Complaint to do so. . . . Llano’s argument

that it has standing is based solely on its

self-serving conclusory assertion that it

acquired that standing by virtue of being a

sub-servicer to Impac Lending, who, in turn,

was the master servicer for the mortgage

Trust. But . . . such conclusory assertions

are insufficient to overcome a factual

challenge to a plaintiff’s standing . . . .

Applying the proper standard for analyzing a

factual challenge to jurisdiction, it is clear

that Llano has failed to establish standing to

bring this lawsuit. Llano’s vague,

unsupported, and conclusory assertion that it

has standing in this case does not make it so.

[The defendant] raised a factual challenge to

Llano’s standing and Llano presented nothing

to quash that challenge. Once such evidence is

proffered, the presumption of correctness that

we accord to a complaint’s allegations falls

away, . . . and the plaintiff bears the burden

of coming forward with competent proof that

standing exists. Llano has failed to meet its

burden and this case must be dismissed in its

entirety. 

8
Id. at *5-6 (internal quotations marks, brackets, and citations

omitted). The same sound reasoning applies in this case, and Llano

has not raised any arguments or provided any evidence that would

change that result. Thus, because Llano has failed to establish

that it has standing to bring this suit, this case must be

dismissed. 

CONCLUSION

For the reasons set forth above, the motion is GRANTED, and

this case is DISMISSED without prejudice for lack of subject-matter

jurisdiction. 

ENTERED: August 19, 2016 /s/Rudy Lozano

Judge, United States District Court

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