Case No. 20 CV 02341 Page 1 of 9 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

CARLOS ESCARZA, 

PLAINTIFF, 

v. 

THE BANK OF NEW YORK MELLON 

f/k/a The Bank of New York, as Trustee for 

CWHEQ Inc., Home Equity Loan Asset 

Backed Certificates, Series 2006-S10, 

SPECIALIZED LOAN SERVICING LLC 

and MCCALLA RAYMER LEIBERT 

PIERCE, LLC, 

DEFENDANTS.

Case No. 20 CV 02341 

Judge: Honorable Marvin E. Aspen 

Magistrate Judge: Honorable Sidney I. Schenkier 

MEMORANDUM OF LAW 

IN SUPPORT OF THE MOTION TO DISMISS PLAINTIFF’S COMPLAINT 

INTRODUCTION 

Plaintiffs filed a cause of action against McCalla Raymer Leibert Pierce, LLC (hereinafter 

“MRLP”), for alleged violations of the Fair Debt Collection Practices Act (“FDCPA”). 

Plaintiff claims MRLP is liable for damages under the FDCPA for attempting to collect 

upon a purported time-barred debt. See Complaint, filed separately as Document #1, but 

incorporated herein by reference. This cause must be dismissed pursuant to Fed. R. Civ. P. 

12(b)(6) for failure of Plaintiff to state a cause of action upon which relief can be granted because 

the debt is not time-barred. 

STATEMENT OF FACTS 

On November 30, 2006, Carlos Escarza, executed a demand promissory note in the amount 

of $77,033.00 and a mortgage secured by the real property located at 2454 West Foster Avenue, 

Unit 1W, Chicago, IL 60625. See, Complaint, Exhibits 1 and 2. No other individuals executed 
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the note or the mortgage. Carlos Escarza failed to make each of the payments when due on the 

loan and the loan is due for the November 1, 2009 payment. The note, which contains an optional 

acceleration clause, was not declared to be in default until April 16, 2019. On December 31, 2019, 

THE BANK OF NEW YORK MELLON f/k/a The Bank of New York, as Trustee for CWHEQ 

Inc., Home Equity Loan Asset Backed Certificates, Series 2006-S10 accelerated the loan when it 

filed its Complaint to Foreclose Mortgage, stylized as Cook County Case No. 2019 CH 15101.

ARGUMENT 

Rule 12(b)(6) allows for dismissal for failure of the pleader to state a claim upon which 

relief can be granted. Cannon v. Loyola University of Chicago, 787 F.2d 777, 780. To survive a 

motion to dismiss, the complaint “must contain sufficient factual matter, accepted as true, to state 

a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009) (quoting 

Bell. Atl. Corp. v. Twombly, 550 U.S. 544, 555, (2007)). 

When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts all wellpled factual allegations in the plaintiff's complaint as true and draws all reasonable inferences in 

the plaintiff's favor. Gustafson v. Adkins, 803 F.3d 883, 888 (7th Cir.2015). Although the court 

must accept as true all factual allegations in the complaint, it need not accept the pleader’s legal 

conclusions as true. Iqbal, 556 U.S. at 678. 

I. Statute of Limitations 

A. An action on a Demand Promissory Note must be filed within 10 years of the 

Demand for Payment; not 10 years of missed payment. 

Plaintiff correctly identifies that 735 ILCS 5/13-206 contains the applicable statute of 

limitations, however, the Plaintiff’s conclusion that the Foreclosure Plaintiff attempted to collect 

upon a time-barred debt is erroneous because Plaintiff does not account for the impact of the 1997 

amendment which added the second, third and fourth sentences to Section 5/13-206. In 1997 the 
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Illinois General Assembly passed amendments to both the Illinois Code of Civil Procedure and the 

Illinois Uniform Commercial Code (“IUCC”) that specifically transferred the relevant statute of 

limitations for causes of action on negotiable promissory notes from section 3-118 of the IUCC to 

section 13-206 of the Code. See, Fifth Third Bank v. Brazier, 2019 IL App (1st) 190078, ¶ 17, 

citing Sadler v. Service, 406 Ill. App. 3d 1063, 1066-68 (2011). Furthermore, when two statute of 

limitations arguably apply to the same cause of action, the limitations period “that more 

specifically relates to the action must be applied.” Id., quoting, Newell v. Newell, 406 Ill. App. 3d 

1046. 1049 (2011). 

The amendment to 735 ILCS 5/13-206 changed the Statute of Limitations for Demand 

Promissory Notes as follows: 

Sec. 13-206. Ten year limitation. Except as provided in Section 2-725 of the "Uniform 

Commercial Code", actions on bonds, promissory notes, bills of exchange, written leases, 

written contracts, or other evidences of indebtedness in writing, shall be commenced within 

10 years next after the cause of action accrued; but if any payment or new promise to pay 

has been made, in writing, on any bond, note, bill, lease, contract, or other written evidence 

of indebtedness, within or after the period of 10 years, then an action may be commenced 

thereon at any time within 10 years after the time of such payment or promise to pay. [A>

FOR PURPOSES OF THIS SECTION, WITH REGARD TO PROMISSORY NOTES 

DATED ON OR AFTER THE EFFECTIVE DATE OF THIS AMENDATORY ACT OF 

1997, A CAUSE OF ACTION ON A PROMISSORY NOTE PAYABLE AT A DEFINITE 

DATE ACCRUES ON THE DUE DATE OR DATE STATED IN THE PROMISSORY 

NOTE OR THE DATE UPON WHICH THE PROMISSORY NOTE IS 

ACCELERATED. WITH RESPECT TO A DEMAND PROMISSORY NOTE DATED 

ON OR AFTER THE EFFECTIVE DATE OF THIS AMENDATORY ACT OF 1997, IF 

A DEMAND FOR PAYMENT IS MADE TO THE MAKER OF THE DEMAND 

PROMISSORY NOTE, AN ACTION TO ENFORCE THE OBLIGATION OF A PARTY 

TO PAY THE DEMAND PROMISSORY NOTE MUST BE COMMENCED WITHIN 10 

YEARS AFTER THE DEMAND. AN ACTION TO ENFORCE A DEMAND 

PROMISSORY NOTE IS BARRED IF NEITHER PRINCIPAL NOR INTEREST ON 

THE DEMAND PROMISSORY NOTE HAS BEEN PAID FOR A CONTINUOUS 

PERIOD OF 10 YEARS AND NO DEMAND FOR PAYMENT HAS BEEN MADE TO 

THE MAKER DURING THAT PERIOD. <A] (Source: P.A. 82-280.) 

P.A. 90-451, effective January 1, 1998. [Emphasis in original]. The amendment materially 

affected when a Plaintiff may file a cause of action as it states that a plaintiff may file suit within 
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10 years of the date of the demand for payment. There is no requirement in the Statute that 

mandates the Plaintiff file suit within 10 years of the first missed payment. 735 ILCS 5/13-206 as 

amended in 1997 provides that an action is not barred unless there was no payment for principal 

or interest made within the last 10 years and no demand for payment was made during that 10 year 

period. See, 735 ILCS 5/13-206. [Emphasis Added]. The amendment does not set a time 

limitation for when the holder of a demand promissory note must make a demand upon the unpaid 

obligation. See, 735 ILCS 5/13-206. The lone limitation in the statute with respect to a demand 

promissory notes is that the action upon a demand promissory note must be filed within 10 years 

of the date of the demand for payment. See, 735 ILCS 5/13-206. 

In Illinois, “[w]here the language of a statute is clear and unambiguous, a court must give 

it effect as written, without 'reading into it exceptions, limitations or conditions that the legislature 

did not express.’” Quadrangle House Condominium Ass'n v. United States Bank, N.A., 2018 IL 

App (1st) 171713, ¶ 15. The Illinois Supreme Court has repeatedly held, a reviewing court cannot, 

"’under the guise of statutory interpretation, ‘correct' an apparent legislative oversight by rewriting 

a statute in a manner inconsistent with its clear and unambiguous language.’" People v. McClure, 

218 Ill. 2d 375, 388, (2006), quoting, People v. Pullen, 192 Ill.2d 36 (2000). 

To determine whether the underlying Note is subject to the general 10 year statute of 

limitation period as suggested by the Plaintiff or the specific provision for demand promissory 

created in 1997, requires a review of the Note. The Note was executed on November 30, 2006, 

which was after the effective date of the Amendatory Act and thus this Note is subject to the Act 

as amended. 

The next question to be resolved is whether the Note is a Demand Promissory Note. This 

question is resolved in the affirmative by the IUCC. The pertinent provision of the IUCC provides 
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that: “If an instrument, payable at a fixed date, is also payable upon demand made before the fixed 

date, the instrument is payable on demand until the fixed date and, if demand for payment is not 

made before that date, becomes payable at a definite time on the fixed date.” 810 ILCS 5/3-108(c). 

The Note at issue is a Demand Promissory Note under as defined by 810 ILCS 5/3-108(c) because 

the demand was made upon the note prior to maturity date or the fixed payment date of December 

1, 2031. 

Moreover, the Note has a specific type of demand feature; it has an optional acceleration 

clause, which does not automatically accelerate the loan in the event a monthly payment is not 

remitted timely. “Under Illinois law, courts interpret the word "'may" as permissive and "shall" as 

mandatory.” Bem I, L.L.C. v. Anthropologie, Inc., 2000 U.S. Dist. LEXIS 8966, 2000 WL 816789 

at *8 (N.D. Ill. Jun 22, 2000) aff'd by 301 F.3d 548 (7th Cir. 2002). See also, Assocs. Asset Mgmt., 

LLC v. Cruz, 2019 IL App (1st) 182678, ¶25. 

The First District analyzed the optional acceleration clause and determined that the clause 

provides the noteholder with the discretion as to when it sends the notice of default. Cruz, 2019 

IL App (1st) 182678, ¶25. Specifically, the court held that: 

[t]he note holder is not required to send a section 4(B) notice; 

concomitantly, the note holder is not required to try and collect any 

outstanding debt. The note holder may forbear pursuing its rights in case of 

nonpayment. But considering the note as a whole, as we must (Salce, 409 

Ill. App. 3d at 981), it is apparent that if the note holder wishes to declare 

default [] the only contractual mechanism for doing so is by following the 

procedure set forth in sections 4(B) and (C). 

Assocs. Asset Mgmt., LLC v. Cruz, 2019 IL App (1st) 182678, ¶25. The court stated the borrower 

is not in default upon the note until the note holder sends the notice and the borrower fails to pay 

the amount due within the allotted time. Id. at 24. It further held there is no alternative procedure 

to declare a default in the note. Id. 
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The Note at issue herein states in pertinent part that: “If [ ] [the borrower] do[es] not pay 

the full amount of each monthly payment on time, the Note Holder may send [the borrower] a 

written notice telling [the borrower] that if [the borrower] do[es] not pay the overdue amount by a 

date certain [the borrower] will be in default,” and :” If [ ] [the borrower] do[es] not pay the overdue 

amount by the date stated in the notice describe in (B) above, [] [then the borrower] will be in 

default.” See, Note, ¶ 4(B) and (C) [Emphasis added]. Therefore, the use of the word “may” in 

the acceleration clause vests the Noteholder with the discretion to determine when to accelerate 

the loan and provides that the borrower is not in default until after the lender sends notice. 

Optional acceleration clauses are designed for the benefit of the creditor because the 

optional acceleration clause does not self-execute. This is to the creditor’s benefit with respect to 

a statute of limitations because until the loan is accelerated, each subsequent missed payment will 

have its own limitations period. Thread & Gage Co. v. Kucinski, 116 Ill. App. 3d 178, 184 (1st 

Dist. 1983). 

Where the creditor has the option of declaring all installments payable in 

the event of default on a single payment, and the creditor fails to exercise 

the option when the debtor defaults, the rule that each installment carries its 

own limitation still applies. It is only where the acceleration provision of 

the contract provides that payment of the entire debt upon default is 

automatic, or where the acceleration provision is optional and the creditor 

unequivocally exercises the option, that a different rule might apply. 

Thread & Gage Co. v. Kucinski, 116 Ill. App. 3d 178, 184 (1st Dist. 1983). 

More recently, the Sigler Court explained that: 

However, there is a "different rule" in situations "where the acceleration 

provision of the contract provides that payment of the entire debt upon 

default is automatic, or where the acceleration provision is optional and the 

creditor unequivocally exercises the option; it is sometimes held in those 

instances that the statute of limitations begins to run immediately upon 

default." Kucinski, 116 Ill. App. 3d at 184-85 (citing 18 Samuel Williston, 

A Treatise on the Law of Contracts § 2027 (3d ed. 1978), and 4 Corbin on 

Contracts § 951 (1951)); see 735 ILCS 5/13-206 (West 2008) ("[A] cause 
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of action on a promissory note payable at a definite date accrues on the due 

date or date stated in the promissory note or the date upon which the 

promissory note is accelerated ***."). 

Deutsche Bank Trust Co. Americas v. Sigler, 2020 IL App (1st) 191006, ¶ 42. 

The court explained that a loan is not deemed accelerated until the lender invokes the 

acceleration clause by both sending a demand for payment and by filing of the complaint. See, 

Id. at 43. The court concluded that the monthly obligation to pay each installment due under the 

note does not merge into a single obligation until after the acceleration clause was invoked and

the foreclosure action was filed. Id. at 53. 

As established above, the Note at issue is a Demand Promissory Note per 810 ILCS 5/3-

108(c) because it contained a demand feature that was exercised prior to the Note’s maturity date. 

Furthermore, because the demand clause in the Note was optional, acceleration of the loan was not 

automatic. The lender exercised its discretion to delay the declaration of default until April 16, 

2019 and affirmatively accelerated the loan less than one year after sending notice of the default. 

Thus the foreclosure action is a timely filed “action to enforce the obligation of a party to pay the 

demand promissory note must be commenced within 10 years after the demand.” 735 ILCS 5/13-

206. See further, Assocs. Asset Mgmt., LLC, 2019 IL App (1st) 182678. 

The Noteholder was within its contractual right to not declare the entire balance due while 

the borrower continued to miss payments each month. Here, the right of action did not accrue 

until the Noteholder exercised its option to declare the loan in default by issuing a demand for 

payment on April 16, 2019. Once the Noteholder issued its demand for payment, it had 10 years 

to file suit to enforce its rights and the limitations period does not expire until April 16, 2029. As 

the Foreclosure Action was filed in 2019, it is timely filed. Therefore, because Plaintiff’s cause of 

action is entirely predicted upon the erroneous conclusion that the debt is time-barred, which this 
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court need not and cannot accept as true, Plaintiff’s complaint fails to state a plausible cause of 

action and must be dismissed. 

B. Action on a Foreclosure must be filed within 10 years of the date of accrual. 

The Illinois Code of Civil Procedure provides that a foreclosure action must be filed with 

10 years after the right of action accrues. 735 ILCS 5/13-115. The Illinois Supreme Court stated 

that an action to foreclosure upon “a mortgage will not be barred until the debt is barred.” 

Livingston v. Meyers, 6 Ill. 2d 325, 331 (1955). 

Although the Plaintiff made no mention of the statute of limitations for a mortgage 

foreclosure, the underlying foreclosure action was timely filed under the Illinois Code of Civil 

Procedure because the right of action to file its foreclosure did not accrue until the Noteholder 

made a demand for payment. In addition the Illinois Supreme Court held that an action to foreclose 

upon a mortgage is not barred until a claim for the underlying debt is barred. See, Meyers, 6 Ill. 

2d at 331. Thus, because an action on the promissory note is not barred, for the reasons stated 

above, it follows that an action on the mortgage is not barred. 

CONCLUSION 

The Note at issue is subject to the 1997 amendments to the Illinois Code of Civil Procedure 

and Uniform Commercial Code; is a Demand Promissory Note as defined by 810 ILCS 5/3-108(c); 

and has an optional acceleration clause which allowed the Noteholder to delay making a demand 

for payment of the indebtedness. The Noteholder made its Demand for Payment on April 16, 

2019, and that is the date which triggered the limitations period, which will not expire for another 

9 years. Therefore, because the right to bring an action or actions upon the Note and accompanying 

Mortgage have not elapsed, Plaintiff’s cause of action is predicated upon a false premise. Without 

its ability to rely upon the false premise that the debt is time-barred, the entire cause of action 
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against MRLP fails to state a cause of action and must be dismissed. 

For the reasons stated above, Plaintiffs’ claims against Pierce must be dismissed because 

Plaintiffs have not alleged facts to sustain a plausible cause of action. 

WHEREFORE, Defendant, McCalla Raymer Leibert Pierce, LLC, respectfully requests 

that the Court dismiss Plaintiffs’ Complaint against Pierce, with prejudice. 

By: /s/Brian R. Merfeld 

Brian R. Merfeld 

Attorney for Defendant 

Brian R. Merfeld (brian.merfeld@mccalla.com) 

ARDC No. 6280615 

McCalla Raymer Leibert Pierce, LLC 

1 N. Dearborn, Suite 1200 

Chicago, IL 60602 

312-346-9088