Act (the “CFDBPA”) (Count IV), and the Real Estate Settlement
Procedures Act (Count V). The complaint also seeks a declaration
that Olympus is prohibited from charging post-acceleration late
charges (Count III).?

Defendants now move to dismiss Counts II, III, IV, and VI of
the second amended complaint. Plaintiff moves for reconsideration
of the dismissal of Counts V, VI, and VII of the original
complaint.

DISCUSSION

Plaintiff’s Motion to Reconsider Dismissal of Counts V-VII

In our memorandum opinion of October 8, 2002, we dismissed
Counts V-VIII of the original complaint. Counts V and VII alleged
that Olympus violated the FDCPA and the CFDBPA by “adding
attorney’s fees, legal fees, and related expenses to the borrower's
account” when those fees had not been awarded or approved by a
court. Count VI sought restitution for, or cancellation of, those
fees. Our reasoning for dismissing Counts V-VII was as follows:

The Note and Mortgage in this case clearly authorize

the assessment of reasonable attorney’s fees incurred in

relation to enforcing the Note and Mortgage. The Note

states, “If the Note Holder has required me to pay
immediately in full as described above, the Note Holder

will have the right to be paid back by me for all of its
costs and expenses in enforcing this Note to the extent

not prohibited by applicable law. Those expenses
include, for example, reasonable attorneys’ fees.”
(Complaint, Ex. A, Note, { 6(E).) The Mortgage provides

2%” On February 10, 2003, we granted plaintiff’s motion for class
certification, and on March 6, 2003, we entered a class certification order.



-9-

Plaintiff now has amended the complaint to allege that her
loan was reinstated “some time between August 15, 2001 and December
31, 2001.” (Second Amended Complaint, @ 17.) In a footnote to ¥
17, plaintiff adds that Olympus sent a letter to plaintiff stating
that her loan was reinstated on August 15, 2001, but implies that
this statement may be “false” because the foreclosure action
against plaintiff was not dismissed until December 31, 2001.
Olympus claims that plaintiff’s loan was in fact reinstated on
August 15, 2001.

The second amended complaint describes the timing of the
allegedly wrongful late charges as follows: “Olympus assessed at
least one and possibly additional late charges against plaintiff
with respect to periods after the loan was accelerated and before
it was reinstated, as shown by the printout supplied by Olympus.
For example, on August 15, 2001, Olympus charged late charges from
July 1, 2001 and August 1, 2001 to plaintiff’s account.” (Second
Amended Complaint, §@ 18 (citation omitted) .)

Olympus argues that these allegations do not state claims
based on the imposition of late charges because plaintiff still
does not sufficiently allege that Olympus assessed late charges
during the time the loan was accelerated. Olympus contends that it
is not wrongful, pursuant to the Note and Mortgage, to assess late
charges upon reinstatement (which, according to defendant, occurred

on August 15, 2001 and, according to plaintiff, may have occurred



-6-
opinion. According to plaintiff, Shula is inconsistent with our
ruling. We disagree.

In Shula, the plaintiff had received a letter from defendant,
a debt collector, demanding the payment of court costs related to
the collection of a debt for medical treatment. Plaintiff moved
for summary judgment on his claim that the letter violated the
FDCPA because the court costs were not expressly authorized by
agreement, nor were they permitted by law. Defendants admitted
that plaintiff had not entered into any agreement requiring him to
pay court costs and that no judgment existed against plaintiff
awarding court costs to defendant, but they argued that an Illinois
statute permitted the collection of court costs.

Magistrate Judge Keys noted that the Illinois statute provided
for the possibility of court costs by stating that they were
“recoverable,” but the statute did not make it automatic every time
the statutory requirements were met. The parties still had to
request a court order imposing such costs. Therefore, Magistrate
Judge Keys concluded that the court costs demanded by defendant
were not “permitted” by law under the FDCPA, and granted summary
judgment for plaintiff on that claim. Shula, 2002 WL 31870157, at
*10.

The instant case is easily distinguishable from Shula. There

was no “agreement creating [a] debt” at issue in Shula; rather, the

court was dealing with the “permitted by law” prong of § 1692f(1)



-5-

that in the event of a default by the Borrower, the
Lender may pay for whatever is necessary to protect the
value of the property, including appearing in court and
paying reasonable attorney’s fees, and that these
payments shall become additional debt of the Borrower.
(Complaint, Ex. B, Mortgage, { 7.) In the section titled
“Acceleration; Remedies,” the Mortgage also states:
“Lender shall be entitled to collect expenses incurred in
pursuing the remedies provided in this paragraph 21,
including, but not limited to, reasonable attorney’s fees
and cost of title evidence.” (Complaint, Ex. B,
Mortgage, 7 21.)

Plaintiff does not dispute that the Note and
Mortgage authorize reasonable attorney’s fees, and does
not allege in the complaint that the amount of attorney’s
fees was unreasonable, but argues that the assessment of
attorney’s fees without court approval violates Illinois
law and therefore also violates the FDCPA.* Plaintiff,
however, cites no authority in support of this argument,
and our own research revealed none. The cases cited by
plaintiff merely stand for the principle that a party
seeking to recover attorney’s fees that are challenged as
unreasonable bears the burden of demonstrating
reasonableness. They do not stand for the proposition
that Illinois law prohibits the imposition of attorney’s
fees, pursuant to a contract, without a court order.
Accordingly, plaintiff's claims in Counts V-VII for
violation of the FDCPA, CFDBPA, and restitution must be
dismissed.

James v. Olympus Servicing, L.P., No. 02 C 2016, 2002 WL 31307540,

at *3-4 (N.D. Ill. Oct. 9, 2002).

Plaintiff contends that we should reconsider our ruling based
on Magistrate Judge Keys’s ruling and memorandum opinion in Shula
v. Lawent, No. 01 C 4883, 2002 WL 31870157 (N.D. Ill. Dec. 23

2002), which was issued over two months after our memorandum

¥ Section 1692£(1) of the FDCPA prohibits the collection of any amount
including any fees or charges incidental to the principal obligation “unless such
amount is expressly authorized by the agreement creating the debt or permitted
by law.”


-~g-
& Assocs., 122 F.3d 480, 483 (7th Cir. 1997). Dismissal is
appropriate only if “‘it is clear that no relief could be granted
under any set of facts that could be proved consistent with the

allegations.’” Ledford v. Sullivan, 105 F.3d 354, 356 (7th Cir.

1997) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984));

Jones _v. General Elec. Co., 87 F.3d 209, 211 (7th Cir.), cert.

denied, 519 U.S. 1008 (1996).

A. Late Charges (Counts II, III, IV

Counts II and IV of the complaint allege that Olympus violated
the FDCPA and the CFDBPA by assessing late charges for periods
after plaintiff’s loan was accelerated and before it was
reinstated. “For example, in Plaintiff’s case, on August 15, 2001,
Olympus assessed at least two post-acceleration/pre-reinstatement
late charges for the due dates of July 1, 2001 and August 1, 2001.”
(Second Amended Complaint, @ 41.) Count III seeks a declaration
that Olympus is not entitled to collect post-acceleration late
charges under the terms of the Note or Mortgage.

We dismissed Counts II-IV in our earlier memorandum opinion
because the complaint failed to specify when plaintiff’s loan was
reinstated and also failed to specify when the late charges were
assessed. We explained that whether plaintiff had stated viable
claims based on late charges depended upon exactly when those
charges were assessed in relation to the acceleration and

reinstatement of the loan.


Minute Order Foren (06/97)

United States District Court, Northern District of Illinois

;

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge John F. Grady than Assigned Judge
CASE NUMBER 02 C 2016 DATE April 30 2003
CASE Doris James v. Olympus Servicing LP et al
{ TITLE .
(In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) stare briefly the
MOTION: nature of the motion being presemted.]
DOCKET ENTRY:
(1) a) Filed motion of [ use listing in “Motion” box above.]
(2) Ga Brief in support of motion due
@) o Answer brief to motion due . Reply to answer brief due
(4) oO Ruling/Hearing on set for at
(5) a Status hearing{held/continued to] {set for/re-set for] on _ set for at
(6) QO Pretrial conference[held/continued to} {set for/re-set for) on set for at.
(7) i Trial[set for/re-set for] on at
(8) ea) [Bench/Jury trial] [Hearing] held/continued to at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) (General Rule21 O FRCP4i(a)(i) O FRCP41(a)(2).

ao) «oft {Other docket entry] Plaintiff's motion to reconsider dismissal of Counts V-VII of the original complaint

[ J is denied. Defendants’ motion to dismiss certain counts of the second amended complaint [ } is granted.

Counts II, IlI, IV, and VI of the second amended complaint are dismissed with prejudice.

The claims that remain are Counts I and V of the second amended complaint.

A status conference is set for May 21, 2003, at 10:30 a.m.
(11) (For further detail see order (on reverse side offattached to) the original minute order.]

No notices required, advised in open court
No notices required.

Notices MAILED by judge’s staff,

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form.

Copy to
courtroom
KAM deputy’s
initials

tang

MAY 052

Document
Number.

number of natices

re do;

locket initials

dace aiited notice

KAM

Date/time received in.
central Clerk’s Office

railing deputy iniiats

(Reserved for use by the Court)



-1l-
Olympus claims to have reinstated the loan.” (Second Amended
Complaint, 9 78 (citations omitted) .)

Olympus asserts that the Mortgage authorizes (indeed, compels)
the sending of such a notice when the borrower is in default, and
plaintiff fails to state an FDCPA claim because she does not allege
that she was not in default. Olympus explains that plaintiff’s
loan was reinstated on August 15, 2001 based on her partial payment
of the full amount due, and that payments for July and August were
still due. Accordingly, plaintiff was still in default on the
loan, and the notice of default required by the Mortgage was sent
to plaintiff.

Plaintiff argues that it was “unfair” and “deceptive” for
Olympus to have sent the August Notice, but the facts alleged fail
to state a claim. The documents attached to the second amended
complaint show that, on August 15, 2001, plaintiff made partial
payment of the entire amount that was past due on her loan. Even
though plaintiff's loan was reinstated based on these partial
payments, she was still in default at the time Olympus is alleged
to have sent the Notice, and plaintiff does not claim otherwise.
The default was due to the fact that plaintiff had not yet made her
payments for July and August. The Mortgage expressly required
Olympus to send a notice of default prior to acceleration
following plaintiff’s breach of any agreement in the Mortgage (one

of which was an agreement to make timely monthly payments on the



- 10 -
on that date) “with respect to periods” when the loan was
accelerated.

We agree with Olympus that plaintiff fails to state FDCPA or
CFDBPA claims based on late charges. Plaintiff alleges that, when
Olympus reinstated her loan, she was assessed late charges with
respect to months during which her loan had been accelerated.
These allegations do not state an FDCPA or CFDBPA violation because
plaintiff’s Mortgage expressly conditions reinstatement on the
Borrower’s payment of “all sums which then would be due under this

Security Instrument and the Note as if no acceleration had

occurred” and the Borrower’s curing of “any default of any other
covenants or agreements.” (Second Amended Complaint, Ex. B,
Mortgage, at 5 (emphasis added).) Because the assessment of late
charges upon reinstatement for months during which plaintiff’s loan
was accelerated is expressly authorized by the Mortgage, plaintiff
fails to state an FDCPA or CFDBPA claim, and Counts II, III, and IV
must be dismissed.

B. Notice of intent to Foreclose (Count VI)

Count VI is a claim that Olympus violated several provisions
of the FDCPA by sending plaintiff a notice of intent to foreclose.
The second amended complaint states: “If, as Olympus claims, it
reinstated plaintiff’s loan on August 15, 2001, then Olympus
violated the FDCPA by sending the letter dated August 22, 2001

which contained a threat to foreclose once again, immediately after



-7-
Here, we have the Note and Mortgage. The only question, then, is
whether the Note and Mortgage “expressly authorize” reasonable
attorney’s fees. They do; therefore, plaintiff cannot assert an
FDCPA or CFDBPA claim for attorneys’ fees, or seek restitution.

In her reply brief, plaintiff asserts that the Seventh
Circuit’s ruling in Veach v. Sheeks, 316 F.3d 690 (7th Cir. 2003),
controls this case. Plaintiff also relies on Bernstein v. Howe, IP
02-192-C-K/H, 2003 WL 1702254 (S.D. Ind. Mar. 31, 2003). Both
cases are distinguishable because they do not address whether
Illinois law or the FDCPA prohibits the assessment, without a court
order, of attorney’s fees that have actually been incurred, when
they are expressly authorized by contract.

None of the cases relied upon by plaintiff bears upon the
issue in this case. Accordingly, plaintiff’s motion for
reconsideration is without merit.

Defendants’ Motion to Dismiss Counts II, IIT, IV & VI

The purpose of a 12(b)(6) motion to dismiss is to test the
sufficiency of the complaint, not to resolve the case on the
merits. SA Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1356, at 294 (2d ed. 1990). When
evaluating such a motion, the court must accept as true all factual
allegations in the complaint and draw all reasonable inferences in

the plaintiff’s favor. Hentosh v. Herman M. Finch Univ. of Health

Sciences, 167 F.3d 1170, 1173 (7th Cir. 1999); Jang v. A.M. Miller


~3-
a “notice of intent to foreclose” on August 22, 2001 (the “August
Notice”). Olympus also began sending plaintiff notices asserting
that she was not maintaining hazard insurance on the property. The
second amended complaint states that, on information and belief,
based on statements made to plaintiff by a representative of
Olympus on February 28, 2002, Olympus took plaintiff’s monthly
payments and applied them to charges for unnecessary force-placed
hazard insurance instead of principal and interest on the mortgage
loan. Plaintiff had her own insurance and attempted to inform
Olympus. In order to determine the allocation of her payments, on
February 9, 2002, plaintiff requested an account history and
documentation of all charges other than principal, interest, and
late charges. Olympus failed to acknowledge or respond to this
request within 20 business days.

Plaintiff filed this action on March 19, 2002. In a
memorandum opinion dated October 8, 2002, we granted defendants
motion to dismiss Counts II, III, IV, vV, VI, and VII of the
original complaint, and denied the motion as to Count I. We also
dismissed Count VIII. We gave plaintiff leave to amend Counts II,
III, IV, and VIII.

On November 13, 2002, plaintiff filed a second amended
complaint. The second amended complaint alleges violations of the
Fair Debt Collection Practices Act (the “FDCPA”) (Counts I, II, and

VI), the Illinois Consumer Fraud and Deceptive Business Practices


-2-
The second amended complaint alleges the following facts. In

May 2000, plaintiff obtained a mortgage loan to refinance various

personal debts. In October 2000, servicing of the loan was
transferred to Litton Loan Servicing L.P. (“Litton”). on February
2, 2001, Litton sent plaintiff a notice of default. Between

February 2, 2001 and April 16, 2001, Litton transferred servicing
of the loan to Olympus Servicing. The loan was in default at the
time.

“Olympus accelerated plaintiff’s note and mortgage and refused
to accept further payments on or before June 21, 2001.” (Second
Amended Complaint, 9 15.) Then, on August 7, 2001, Olympus caused
a foreclosure proceeding to be filed against plaintiff. Some time
between August 15, 2001 and December 31, 2001, plaintiff’s loan was
reinstated. (In a letter to plaintiff and in its briefs, Olympus
claims that the loan was reinstated on August 15.) The mortgage
foreclosure action was dismissed on December 31, 2001.

“Olympus assessed at least one and possibly additional late

charges against plaintiff with respect to periods after the loan

was accelerated and before it was reinstated.” (Second Amended
Complaint, 4 18.) Olympus continued sending monthly loan
statements to plaintiff. Following reinstatement of the loan

(assuming it occurred on August 15, 2001), Olympus sent plaintiff

¥ The wording of this sentence is confusing, but we interpret it to mean
that, some time on or before June 21, 2001, Olympus accelerated plaintiff's loan.


02-2016.031-JCD April 30, 2003

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

DORIS JAMES,
Plaintiff,
Vv.

No. 02 C 2016

OLYMPUS SERVICING, L.P. and
OLYMPUS GP LLC,

DOCKETED

MAY - 5 2003

Defendants.

MEMORANDUM OPINION

Before the court are two motions: (1) plaintiff’s motion to
reconsider our dismissal of Counts V-VII of the original complaint;
and (2) defendants’ motion to dismiss Counts II, III, IV, and VI of
plaintiff’s second amended complaint. For the reasons explained
below, plaintiff’s motion is denied, and defendants’ motion is
granted.

BACKGROUND

The facts of this case were described in our earlier opinion,
and are as follows. Plaintiff, Doris James, brings this action
against defendants Olympus Servicing, L.P. and Olympus GP LLC
(collectively, “Olympus”), alleging that Olympus engaged in
unlawful debt collection and fraudulent mortgage servicing
practices and failed to provide plaintiff with her account history

when requested.


-12-
loan). Accordingly, plaintiff fails to state an FDCPA claim based
on the August Notice.’
CONCLUSION

For the foregoing reasons, plaintiff’s motion to reconsider
dismissal of Counts V-VII of the original complaint is denied.

Defendants’ motion to dismiss certain counts of the second
amended complaint is granted. Counts II, III, IV, and VI of the
second amended complaint are dismissed with prejudice.

The claims that remain are Counts I and V of the second
amended complaint.

A status conference is set for May 21, 2003, at 10:30 a.m.

DATE: April 30, 2003

ENTER: An

John /F. Grady, United States District Jud

“ Because plaintiff fails to state a claim based on the August Notice,
we need not address Olympus’s argument that the claim is barred by the statute
of limitations.