IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

JOSHUA POPPER,

Plaintiff, 

v. 

JAMES A KAECH, SR., 

Defendant. 

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Case No. 20-cv-4383 

Judge Robert M. Dow, Jr. 

MEMORANDUM OPINION AND ORDER 

Joshua Popper (“Plaintiff”) brought this lawsuit arising from his purchase of residential 

real estate from James A. Kaech, Sr. (“Defendant”) [17]. Defendant moved to dismiss [18]. For 

the reasons stated below, Defendant’s motion [18] is denied. Counsel are directed to file a joint 

status report no later than July 29, 2021 that includes (a) a proposed discovery plan and (b) a 

statement in regard to any settlement discussions and/or any mutual request for a referral to the 

assigned Magistrate Judge for a settlement conference. The Court will set further case 

management deadlines following review of the joint status report. 

I. Background 

 In November 2019, Plaintiff entered into a real estate contract to purchase Defendant’s 

former residence from Defendant for $150,000. [17, at ¶ 4]. Defendant executed a residential real 

property disclosure report (“property report”) pursuant to the Residential Real Property Disclosure 

Act, 765 Ill. Comp. Stat. 77. [Id., at ¶ 5]. Plaintiff relied on Defendant’s representations in the 

property report in negotiating the terms of the contract, entering into the contract, and eventually 

closing on the contract. [Id., at ¶ 8]. Plaintiff alleges that the property report made several false 

representations of fact related to (1) structural defects caused by termite defects, (2) material 

defects and cracks in the foundation and basement, (3) flooding and reoccurring leakage in the 
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basement, (4) the roof, and (5) the septic system (collectively, “material representations”). [Id., at 

¶ 7]. 

 First, Defendant represented on the property report that he was unaware of any material 

defects in the walls, windows, doors, or floors of the property and that he was unaware of any 

structural defects caused by previous infestations of termites. [Id., at ¶ 9]. However, in September 

2020, Plaintiff first discovered that there was previously a severe infestation of termites and that 

termites had completely destroyed a significant portion of the walls, including structural walls, 

joists, and beams of the property that are generally necessary structural supports. [Id., at ¶ 10]. To 

conceal the severe damage to the structure, Defendant erected new non-structural walls over the 

termite damage without replacing the wood for the structural walls, joists, and beams necessary to 

support the structure. [Id., at ¶ 11]. Because of the termite damage, the property is structurally 

unsafe and uninhabitable. [Id., at ¶ 12]. Replacement of the structural components of the property 

would cost at least as much as the property is worth. [Id., at ¶ 13]. 

 Next, Defendant represented on the property report that he was unaware of any material 

defects in the foundation or basement of the property. [Id., at ¶ 14]. Contrary to this 

representation, there are several significant cracks and other material defects in the foundation of 

the residence at the property. [Id., at ¶ 15]. To conceal these defects, the Defendant piled heavy 

construction materials in front of the cracks and defects to avoid detection by Plaintiff until after 

the closing of the transaction. [Id., at ¶ 16]. Due to these defects, water seeps and leaks through 

the foundation and into the basement of the residence. [Id., at ¶ 17]. The cracks and defects in the 

foundation render the property structurally unsafe and uninhabitable, and the cost to remediate 

them is $80,000. [Id., at ¶¶ 20–21]. 

 On the property report, Defendant also represented that he was aware of only “minor 
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seepage during heavy rains.” [Id., at ¶ 22]. However, the seepage in the residence is significant 

and occurs after even nominal amounts of rain. [Id., at ¶¶ 2324]. 

 Further, Defendant represented on the property report that he was unaware of any leaks or 

material defects in the roof, ceilings, or chimney of the property. [Id., at ¶ 25]. Contrary to this 

representation, the roof has a significant leak that has caused water to leak into the bathroom and 

bedroom of the property when it rains. [Id., at ¶ 26]. To conceal the roof leak, Defendant painted 

in the bathroom to cover up the water damage without also remediating the underlying source of 

the leak in the roof. [Id., at ¶ 27]. The cost to fix the leaking roof is $6,500. [Id., at ¶ 28]. 

 Finally, Defendant represented on the property report that he was unaware of any material 

defects in the septic system. [Id., at ¶ 29]. However, the septic system is functionally inoperable 

and was functionally inoperable at the time Defendant executed the property report. [Id., at ¶ 30]. 

At all relevant times, the sewer line from the property was not properly connected to the septic 

tank and the septic tank was pitched incorrectly. [Id., at ¶ 31]. Therefore, the sewer line does not 

properly drain to the septic tank, causing significant damage to the residence. [Id., at ¶ 32]. The 

cost to remediate the septic system issues is $25,000. [Id.]. Plaintiff alleges that Defendant had 

actual knowledge of the septic system issue, and all other issues discussed above, at the time he 

executed the property report. [Id., at ¶ 34]. 

 Plaintiff brought this diversity action, requesting recission of the contract and damages and 

alleging breach of contract, a violation of the Residential Real Property Disclosure Act, and fraud. 

[Id., at ¶¶ 35–61]. Defendant moved to dismiss the case under (1) Federal Rule of Civil Procedure 

12(b)(7), arguing that a nondiverse party is necessary and indispensable to the action; and 

(2) Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiff failed to state a claim. 
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II. Legal Standards 

 A. Rule 12(b)(7) Joinder of Indispensable Parties 

Rule 12(b)(7) permits dismissal for failure to join a party under Federal Rule of Civil 

Procedure 19. Rule 19 “permit[s] joinder of all materially interested parties to a single lawsuit so 

as to protect interested parties and avoid waste of judicial resources.” Moore v. Ashland Oil, Inc., 

901 F.2d 1445, 1447 (7th Cir.1990). Rule 19(a) establishes when a party is required to be joined. 

Specifically, a party “whose joinder will not deprive the court of subject-matter jurisdiction must 

be joined” if “in that person’s absence, the court cannot accord complete relief among existing 

parties.” Fed. R. Civ. P. 19(a)(1)(A). Such a party is also required to be joined if the party “claims 

an interest relating to the subject of the action and is so situated that disposing of the action in the 

person’s absence” would either (1) “as a practical matter impair or impede the person’s ability to 

protect the interest;” or (2) “leave an existing party subject to a substantial risk of incurring double, 

multiple, or otherwise inconsistent obligations because of the interest.” Fed R. Civ P. 19(a)(1)(B). 

If a party is necessary under Rule 19(a) but cannot be joined, courts turn to Rule 19(b) to 

“determine whether, in equity and good conscience, the action should proceed among the existing 

parties or should be dismissed.” “[F]ederal courts are reluctant to dismiss for failure to join where 

doing so deprives the plaintiff of his choice of federal forum.” Davis Cos. v. Emerald Casino, 

Inc., 268 F.3d 477, 481 (7th Cir. 2001). Further, “the party advocating for joinder generally has 

the initial burden to establish the absent person’s interest.” In re Veluchamy, 879 F.3d 808, 819 

n.4 (7th Cir. 2018). “In ruling on a dismissal for lack of joinder of an indispensable party, a court 

may go outside the pleadings and look to extrinsic evidence.” Davis Cos., 268 F.3d at 480 n.4. 

 
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B. Rule 12(b)(6) Failure to State a Claim 

To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief 

can be granted, the complaint typically must comply with Rule 8(a) by providing “a short and plain 

statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such 

that the defendant is given “fair notice of what the * * * claim is and the grounds upon which it 

rests.” Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (quoting Conley 

v. Gibson, 355 U.S. 41, 47 (1957)). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic 

recitation of the elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 

(2009) (quoting Twombly, 550 U.S at 555). Under Rule 9(b), “a party must state with particularity 

the circumstances constituting fraud or mistake,” though “[m]alice, intent, knowledge, and other 

conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). To plead fraud 

with particularity, the party must include “the who, what, when, where, and how” of the fraud. 

DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). In determining whether the complaint 

meets these standards, the Court accepts as true all of Plaintiff’s well-pleaded factual allegations 

and draws all reasonable inferences in Plaintiff’s favor. Killingsworth, 507 F.3d at 618. 

III. Analysis 

 A. Dismissal for Failure to Join a Necessary Party 

Defendant argues that Plaintiff’s mortgagee is a necessary party and that, because the 

mortgagee is a resident of Illinois, the Court should dismiss the case under Rule 12(b)(7).1

 

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 Defendant claims that the mortgagee is Guaranteed Rate, whose headquarters are in Illinois. [18, at 3–5]. 

Plaintiff contends that his mortgagee is the Mortgage Electronic Registration System, Inc., a Delaware 

corporation headquartered in Michigan. [20, at 8]. Plaintiff also argues that even if his mortgagee is 

Guaranteed Rate, Defendant has not offered sufficient evidence to demonstrate that Guaranteed Rate is 

headquartered in Illinois. [Id.]. The Court need not resolve these disputes because, as explained below, 

Defendant has not met its burden of demonstrating that Plaintiff’s mortgagee—regardless of its identity—

is a necessary party. 
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Defendant argues that the mortgagee is a necessary for two reasons. First, because the complaint 

alleges that the property is uninhabitable and a total loss and that these “alleged conditions would 

place mortgagee’s security interest in jeopardy.” [18, at 3]. Second, because “any remedy sought 

by Plaintiff, including recission, would require joinder of” the mortgagee because the “Court does 

not have jurisdiction to make an order impacting the mortgagee, including replacing the current 

mortgagor with Defendant.” [Id., at 3; 21, at 2]. Defendant then cites to only the general 

proposition that a defendant “asserting any title or possessory interest” in property “is an

indispensable party to any relief which might be sought based upon or affecting title to the lands 

or any interest therein.” [Id., at 4 (quoting Stewart v. United States, 242 F.2d 49, 51 (5th Cir. 

1957)]. Defendant provides no further argument or authority. These arguments suggest that 

Defendant contends that the mortgagee must be joined because it has “an interest relating to the 

subject of the action and is so situated that disposing of the action in [its] absence” would “as a 

practical matter impair or impede [its] ability to protect the interest.” Fed. R. Civ. P. 19(a)(1)(B). 

However, Defendant has not met his “initial burden to establish the absent person’s 

interest.” In re Veluchamy, 879 F.3d at 819 n.4. On his first argument—that the alleged conditions 

would place the mortgagee’s security interest in jeopardy—Defendant does not explain how, even 

if the alleged conditions do impact the security interest, this lawsuit would impede the mortgagee’s 

ability to protect its interest. As best the Court can discern, Defendant suggests that the allegations 

about the property’s condition make the property less valuable and therefore a riskier security 

interest than it otherwise would be. However, it would not be the allegations of the conditions that 

impact the property’s suitability as a security interest. Rather, it would be the conditions of the 

property itself, which exist regardless of what Plaintiff alleges in a complaint. 

In regard to Defendant’s second argument, Plaintiff’s complaint states that the “court 
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should restore the parties to the status quo that existed prior to the parties entering into the contract” 

by “unwind[ing] the transaction and compel[ling] Defendant to repurchase the Property from 

Plaintiff for the amount of the Contract in exchange for Plaintiff deeding the Property back to 

Defendant.” [17, at ¶ 46]. As Plaintiff notes, he is “not attempting to rescind the mortgage or his 

obligations under the mortgage.” [20, at 8]. Defendant does not cite to any authority or otherwise 

explain how Defendant repurchasing the property from Plaintiff would “impair or impede” the 

mortgagee’s “ability to protect the interest.” Fed. R. Civ. P. 19(a)(1)(B); see also Williams v. 

Mackay, 54 V.I. 713, 724 (D.V.I. Jan. 6, 2011) (finding that mortgagee was not a necessary party 

in an action for partition of land because its “interest as mortgagee” was “that the mortgage debt 

be paid and that the property not be destroyed” and that “[t]hose interests are protected regardless 

of the outcome of the partition action”); Bosteve Ltd. v. Marauszwki, 110 F.R.D. 257, 260 

(E.D.N.Y. 1986) (finding that because the mortgagee’s “right to the balance of the loan” would 

“be unaffected by the outcome of” the litigation, the mortgagee was not a necessary party to a 

recission claim); Thompson v. Tualatin Hills Park & Recreation Dist., 496 F. Supp. 530, 538 (D. 

Or. 1980), aff’d, 701 F.2d 99 (9th Cir. 1983) (finding that mortgagees were not necessary parties 

to an inverse condemnation action because their interests were for repayments of specific amounts 

and would remain unaffected by any judgment in the case); cf. Huey v. Super Fresh/Sav-A-Ctr., 

Inc., 2009 WL 722738, at *2 n.15 (E.D. La. Mar. 17, 2009) (suggesting that mortgagee may be a 

necessary party because it had “an assignment of lease and rents that [became] absolute, entitling 

[it] to direct payment from” certain individuals, though declining to decide the issue because Rule 

19(b) factors weighed against joining mortgagee if it were a necessary party). 

Given the absence of argument and authority supporting Defendant’s position, and the 

contrary authority cited above, the Court concludes that Defendant has not met its burden of 
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showing that the mortgagee must be joined. See In re Veluchamy, 879 F.3d at 819 n.4; Wade v. 

Hopper, 993 F.2d 1246, 1249 (7th Cir. 1993) (declining to join party where the plaintiff failed to 

explain how it was a necessary party); Chi. Tchrs. Union v. DeVos, 468 F. Supp. 3d 974, 989 (N.D. 

Ill. 2020). Accordingly, the Court declines to dismiss this case under Rule 12(b)(7). 

B. Dismissal for Failure to State a Claim 

Defendant next argues that Plaintiff’s complaint should be dismissed for failure to state a 

claim. [18, at 5–8]. Defendant first asserts that Plaintiff failed to adequately allege damages 

because the statement that Plaintiff “suffered ‘great damage’ is vague and improper.” [18, at 5 

(quoting 17, at ¶¶ 1, 40)]. However, the damages allegations in this case need only meet Rule 8’s 

notice pleading standard. See Smolinski v. Oppenheimer, 2012 WL 2885175, at *3 (N.D. Ill. July 

11, 2012) (explaining that general damages “need not be pled with specificity to make out a 

plausible case that” the plaintiff “is entitled to relief”). Moreover, Defendant’s argument ignores 

the paragraphs in Plaintiff’s complaint specifying his damages to the dollar amount. [See, e.g., 17, 

at ¶¶ 13, 18, 21, 28]. 

Defendant argues that the recission claim fails because “Plaintiff’s allegations that 

Defendant made material misrepresentations lacks factual support given that [the] said conditions 

were disclosed in a Professional Home Inspection, a Termite Inspection, and [a] Well and Septic 

Inspection prior to closing.” [18, at 5–6]. Thus, Defendant continues, because Plaintiff’s recission 

claim stems from these inaccurately alleged misrepresentations, it must be dismissed. Defendant 

attached a copy of these three inspections to his motion to dismiss. [See 18, at 55–96]. Defendant 

acknowledges that a court can only consider documents attached to a motion to dismiss without 

converting it to a motion for summary judgment if those documents are referred to in the complaint 

and central to the claim. [18, at 6 n.1 (citing Brownmark Films, LLC v. Comedy Partners, 682 
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F.3d 687, 690 (7th Cir. 2012))]. However, Defendant argues that the Court can refer to these 

documents because “Plaintiff’s references to the defects in his [complaint] necessarily implicate 

the inspection report.” [Id.]. Elsewhere, Defendant states that the inspection reports are “alluded 

to” in the complaint. [21, at 4]. Defendant does not cite to any specific paragraph in the complaint 

when making these claims. Moreover, implicating or alluding to a document is not the same as 

referring to it. Because the complaint does not refer to these three inspection reports, the Court 

declines to consider them. As such, any argument Defendant has made based on these documents 

fails. 

Next, Defendant contends that Plaintiff failed to adequately plead a violation of the Illinois 

Residential Real Property Disclosure Act. This Act requires a seller to “disclose material defects 

of which the seller has actual knowledge.” 765 Ill. Comp. Stat. 77/25(b). In arguing that Plaintiff 

has not stated a claim, Defendant notes that the Act provides that “[t]he seller is not liable for any 

error, inaccuracy, or omission of any information delivered pursuant to this Act if * * * the error, 

inaccuracy, or omission was based on information provided by a public agency or by a licensed 

engineer, land surveyor, structural pest control operator, or by a contractor about matters within 

the scope of the contractor’s occupation and the seller had no knowledge of the error, inaccuracy, 

or omission.” [18, at 7 (quoting 765 Ill. Comp. Stat. 77/25(b) (alterations in original))]. Defendant 

then states that “the professional property inspection report, professional pest/termite inspection 

and the well and septic inspection disclose conditions that Plaintiff alleges were material 

misrepresentations amounting to fraud.” [Id.]. From this citation and argument, it is difficult to 

discern whether Defendant argues that (1) the inspection reports were inaccurate and he is not 

liable for any material misrepresentation because any error, inaccuracy, or omission was based on 

information provided by the inspection reports or (2) the inspection reports were accurate and he 
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is not liable because Plaintiff had full knowledge of the property’s conditions. Regardless, either 

argument depends on the three inspection reports attached to Defendant’s motion to dismiss, which 

the Court will not consider in deciding this motion. 

With respect to the breach of contract claim, Defendant argues that Plaintiff failed to state 

a claim because Plaintiff did not specify which portion of the contract Defendant allegedly 

breached. [18, at 6]. In response, Plaintiff notes that the Residential Real Property Disclosure Act 

is incorporated into residential real estate contracts in Illinois, and that he specifically alleged that 

Defendant breached the contract by making material misrepresentations in violation of the Act. 

[20, at 13 (citing Fox v. Heimann, 872 N.E.2d 126, 136 (Ill. App. 2007) (presuming “the provisions 

of the Disclosure Act are deemed to be part of the contract, as though expressly referred to or 

incorporated therein”))]. Defendant replies that Plaintiff did not allege sufficiently specific 

misrepresentations and that, regardless, the breach of contract claim is duplicative to Plaintiff’s 

claim under the Residential Real Property Disclosure Act. [21, at 5]. As to Defendant’s first 

argument, Plaintiff alleged specific material misrepresentations, as described in the background 

section above. As to the second, “district courts are accorded ‘a great deal of latitude and 

discretion’ to dismiss duplicative claims.” Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893, 919 

(N.D. Ill. 2013) (quoting Serlin v. Arthur Andersen & Co., 3 F.3d 221 (7th Cir.1993)). Given that 

this case is in its early stages and that the elements of a breach of contract claim and claim under 

the Act do not wholly overlap, the Court declines to dismiss either claim as duplicative of the 

other. See Willborn v. Sabbia, 2011 WL 1900455, at *6 (N.D. Ill. May 19, 2011) (declining to 

dismiss potentially duplicative claim at the pleading stage). If further factual development of the 

case indicates that dismissal of one of these overlapping claims is appropriate, Defendant can seek 

such relief either in a motion for reconsideration or a motion for summary judgment. 
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Finally, Defendant argues that Plaintiff’s fraud claim does not meet the heightened 

pleading requirements under Rule 9(b). Defendant first argues that Plaintiff failed to “plead 

specific allegations to support his claim that the Defendant had knowledge that the alleged 

misrepresentations regarding the defects were false and that the Defendant intended to induce the 

Plaintiff to enter into the real estate contract.” [18, at ¶ 8]. However, Rule 9(b) provides that 

“intent, knowledge, and other conditions of a person’s mind may be alleged generally.” See also 

Hefferman v. Bass, 467 F.3d 596, 602 (7th Cir. 2006) (finding that the plaintiff adequately alleged 

intent and knowledge by stating that the “fraud and breach of fiduciary duty was knowing and 

intentional”). Here, Plaintiff alleged that Defendant had actual knowledge of the the material 

misrepresentations and intended for Plaintiff to rely on them when purchasing the property. [17, 

at ¶ 34]. Moreover, contrary to Defendant’s characterization of the complaint, Plaintiff does make 

specific factual allegations supporting his claim that Defendant acted with knowledge and intent. 

For example, Plaintiff alleges that Defendant actively concealed the termite damage by erecting 

new non-structural walls over the damage without replacing the wood for the structural walls, 

joists, and beams necessary to support the structure. [Id., at ¶ 11]. He also alleges that Defendant 

concealed the damage to the foundation by piling heavy construction materials in front of the 

cracks and defects to avoid detection by Plaintiff until after the closing of the transaction. [Id., at 

¶ 16]. Defendant additionally argues that Plaintiff failed to allege “how the Defendant 

misrepresented the condition of the property.” [21, at 6]. However, Plaintiff alleges that 

Defendant misrepresented the condition of the property by including inaccurate information on the 

property report. 

IV. Conclusion 

For the reasons stated above, Defendant’s motion [18] is denied. Counsel are directed to 
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file a joint status report no later than July 29, 2021 that includes (a) a proposed discovery plan and 

(b) a statement in regard to any settlement discussions and/or any mutual request for a referral to 

the assigned Magistrate Judge for a settlement conference. The Court will set further case 

management deadlines following review of the joint status report. 

Dated: July 15, 2021 __________________________

 Robert M. Dow, Jr. 

 United States District Judge