UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION

Scott Rydin Foster ) 

 ) 

 Plaintiff, ) Case No: 1:20-cv-4230 

 ) 

 v. ) Hon. Steven C. Seeger

 ) 

PHH Mortgage; et al. ) 

 ) 

 Defendants. ) 

 ) 

PLAINTIFF/RELATOR’S RESPONSE IN OPPOSITION TO DEFENDANTS’ JOINT 

MOTION TO DISMISS

Now comes Plaintiff-Relator, Scott Rydin Foster (Foster), by and through his attorney, 

Eryk Folmer, and in opposition to Defendants’1 Joint Motion to Dismiss (“JMTD”) states as 

follows: 

Introduction

At the outset, in moving for dismissal, the Defendants confuse the timeframe that Foster 

alleges that violations of the False Claim Act (“FCA”) occurred. Defendants do so by treating

the actions that led up to the alleged FCA claims with the actual claim for payment(s) made to 

the government, which is what gives rise to an actionable FCA claim. In other terms, the 

Defendants treat the “conspiracy” leading up to the act as the actual act itself. Foster does not 

dispute that his complaint is limited to individuals, like him, that were telephonically promised a 

forbearance by servicers during the six-month period prior to the passage of Dodd-Frank (the so1

 The moving Defendants are JPMorgan Chase Bank, N.A. (“JPMC”), PHH Mortgage Corporation 

(“PHH”), Bank of America Corporation (“BAC”), HSBC Finance Corporation (“HSBC”), Wells Fargo 

Bank, N.A. (“Wells Fargo”), and PNC Bank (“PNC”). Although not all the named Defendants, a ruling 

on most of the aspects of the moving Defendants’ motion would be dispositive to all defendants. 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 1 of 10 PageID #:2547
called “relevant time period” mentioned in the complaint) – when servicers were not excluded 

from mortgage originator agency liability. (See Generally Second Amended Complaint “SAC,”

Doc. # 34 at ¶17). However, that timeframe is given to identify the loans that Foster alleges 

would eventually qualify under the FCA, which is when these individual loans were 

judicially/short sold and the originating lender attempted to recoup losses (the difference 

between what was owed on the note/loan and what the property sold for) from the federal 

government through Fannie Mae and Freddie Mac. SAC at ¶ 40. Most of the arguments 

Defendants make for dismissal are based on this misreading.

One of Defendants’ key arguments is the lack of specificity or particularity in Foster’s 

SAC. In doing so, Defendants claim that Foster fails to reach the pleading standards required by 

Federal Rule of Civil Procedure 9(b). However, such arguments are defeated because Foster’s

inability to plead exactitudes regarding dates and other instrumentalities is and was due to the 

fact that those facts are in the exclusive control of the Defendants. Indeed, as more fully 

explained below, the Seventh Circuit has recognized a relaxed standard under Rule 9(b) for FCA 

claims. See e.g. U.S. ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 854 (7th Cir. 2009); See

also U.S. ex rel. Yannacopolous v. Gen. Dynamics, 315 F. Supp. 2d 939, 945 (N.D. Ill. 2004).

For instance, Foster’s judicial sale was approved on August 3, 20172

, but the false or fraudulent 

claim presented to the government would be sometime thereafter and only known to the 

Defendants. 

Another issue Defendants raise is that Foster’s claims are time-barred. Again, this 

misreads Foster’s complaint and improperly attempts to have Foster plead something of which

2 See generally PHH v. Foster, Cook County Circuit Court Case # 2010CH 48036; a copy of the Order 

Approving Sale is attached hereto as Exhibit A. As this is a public court record, this Court may take 

judicial notice of the same. Ennenga v. Starns, 677 F.3d 766, 774 (7th Cir. 2012)

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 2 of 10 PageID #:2548
he could not have any knowledge. Just to use Foster as an example, even if PHH (the 

lender/plaintiff in Foster’s foreclosure case) submitted its (false) claim for recoupment of loss on 

the date of judicial approval of sale, Foster would have had until August 3, 2020 to file an 

individual claim at a minimum. See 31 U.S.C. § 3731(b). Therefore, Defendants’ argument that 

the claims are time-barred is incorrect. Indeed, none of the FCA claims contemplated in the 

SAC could have occurred prior to the passage of Dodd Frank.

Moreover, since Foster’s claim and the claims referenced in the complaint could only

occur after the passage of Dodd Frank, the complaint must be viewed under the lens of the 

current amendment to the FCA – and pertinent to Defendants’ JMTD, how the public disclosure 

bar is applied thereto. Although Foster readily admits that it is widely known that lenders were 

mishandling, mis-servicing, and otherwise handling loans fraudulently, he posits that the actual 

FCA claims herein are different than those previously disclosed or fall outside of the time-frames 

and subject matter contemplated by the consent judgments and settlements involving some of the

named Defendants. 

The SAC should not be dismissed.

Background/Procedural Information

Foster originally filed his complaint, pro se, on July 17, 2020. (Doc. #1). On October 8, 

2020, he later moved – again, pro se – to file an amended complaint. (Doc. # 6). This Court sua 

sponte dismissed this matter, without prejudice, on the basis that qui tam actions cannot be 

maintained by pro se litigants. (Doc. #7). Foster then engaged counsel to preserve his right(s) 

and access to Court. Foster thus moved to alter/amend/vacate the dismissal, pursuant to Fed. R. 

Civ. P 59(e). (Doc. #20). In a November 20, 2020 minute entry, this Court entered and 

continued Foster’s motion and stated that Foster’s pro se complaint was “anything but ‘short and 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 3 of 10 PageID #:2549
plain’ statement,” and that any filed amended complaint shall comply with pleading standards 

(Doc. # 21). 

Given the Court’s direction, Foster filed a shorter and plainer amended complaint. (Doc. 

# 27). This Court ordered Foster to file a second amended complaint that included the 

defendants in the case caption and body of the complaint. (See Doc. #33). Foster complied and 

filed the Second Amended complaint (Doc. #34) that the Defendants now seek to dismiss. 

Defendants seek dismissal pursuant to Federal Rules of Civil Procedure 9(b), and

12(b)(1) and (6). Defendants argue that Foster has not alleged facts with the requisite 

particularity required in making a FCA claim; that his claims are time barred; that his claims 

have already been publicly disclosed; and that his claims have been released as to certain 

defendants via previously entered consent judgments. For the reasons below, Defendant’s JMTD

should be denied.

I. The FCA and Fed. R. Civ. P 9(b).

Analyzing whether Foster satisfied the pleading requirements of Fed. R. Civ. P. 9(b) can 

expedite the overall analysis regarding dismissal, because a complaint that meets the pleading 

requirements and standards of Rule 9(b) will necessarily meet the pleading standard of Fed. R. 

Civ. P. 12(b)(6). See Camasta v. Jos. A. Bank Clothiers, Inc., 761 F. 3d 732, 736-37 (7th Cir. 

2014). Given the background in this matter and that Seventh Circuit has relaxed the heightened 

Rule 9(b) standard in FCA claims (See U.S. ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 

854 (7th Cir. 2009); United States, ex rel. Rose Presser v. Acacia Mental Health Clinic, LLC, 

836 F.3d 770, 778 (7th Cir. 2016)), Foster’s complaint is sufficiently pled. 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 4 of 10 PageID #:2550
A. The precise details of Defendants’ alleged fraudulent scheme would be in the 

exclusive control of the Defendants; Foster has otherwise sufficiently pled 

violations of the FCA

Although a plaintiff usually must describe the “who, what, when, where, and how” of an 

alleged fraud, “courts and litigants often erroneously take an overly rigid view of the 

formulation.” Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. V. Walgreen Co., 631 F.3d 

436, 442 (7th Cir. 2011). What is necessary to allege varies on a case-to-case basis. Id. 

Traditionally, Fed R. Civ P 9 holds a plaintiff to a heightened pleading standard because of the 

“stigmatic injury that potentially results from allegations of fraud.” United States ex re. Bogina 

v. Medline Indus., Inc., 809 F.3d 365, 370 (7th Cir. 2016). An accusation of “fraud can do great

damage to a [defendant] before the [defendant] is [potentially] exonerated in litigation ... United 

States ex rel. Grenadyor v. Ukrainian Vill. Pharmacy, Inc., 772 F.3d 1102, 1105 (7th Cir. 2014).

However, in the realm of FCA claims, a plaintiff does not need to “present, or even 

include allegations about, a specific document or bill that the defendants submitted to the 

Government.” United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 

777 (7th Cir. 2016) (citing United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849 (7th 

Cir. 2009). As long as a complaint can lead one to reasonably understand that defendants had 

submitted false or fraudulent claims asking for payment, then it should survive a motion to 

dismiss. Lusby, 570 F.3d at 854. Here, Foster has sufficiently pled FCA violations. 

Initially, the potential for stigmatic injury to the defendants for this claim is nearly nonexistent. As Defendants have pointed out, instances of deception, fraud, unfair business 

practices, etc., by mortgage lenders during and after the Great Recession, is well-known.

Foster’s allegations that there was a separate subset of loans that were backed by Fannie Mae and 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 5 of 10 PageID #:2551
Freddie Mac, that were coerced into non-payment by servicers, and ultimately judicially 

sold/short sold for a loss to the government, are unsurprising. 

Secondly, Foster’s complaint sufficiently alleges that during six months prior to the 

passage of Dodd Frank, mortgage servicers told borrowers to “get behind” in payments so that 

they could be put into forbearance. See SCA at ¶ 14, 34. The lender/servicer later reneged and 

foreclosed upon the loans. See Id. at ¶ 34, 42. This led to judicial or short sales where the 

property was sold for an amount lower than what was owed on the loan. See Id. at ¶ 19, 23, 40. 

This shortfall would be made up by the government in paying out loans backed by Fannie Mae 

and Freddie Mac. See Id. at ¶ 23, 39-40, 42. Again, the exact date of claim and the exact 

amount of claim is in the sole control of the Defendants. Nonetheless, the loss that was paid out 

to the lenders by government backed securities was borne either fully or partially by the 

government. The who, what, where, when, and how can be reasonably discerned from the SAC. 

Defendants attempt to make the distinction that Foster only alleges that false statements 

were made to borrowers and not the GSE’s (Fannie and Freddie) themselves. Again, this 

misconstrues the complaint and the FCA itself. The FCA does not require “false” statements, 

per se. It requires false – or fraudulent claims for payment. (31 U.S.C. § 3729(a)(1)(B)). Foster 

alleges that borrowers were basically lied to, or at the very least fraudulently misled, by 

lenders/servicers, which began the process that ultimately led to judicial/short sales of their 

home. Once that sale occurred, at a price lower than the amount owed, the lenders would recoup 

the shortfall from the GSEs – which were backed by government funds. The Defendants admit 

that lenders and servicers were committing fraud – they even point to several exhibits that 

explicitly say that fraud was occurring. The poisonous tree of this fraud extended to the very 

end, when the GSEs paid out these claims. Only the defendants would know which of these 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 6 of 10 PageID #:2552
funds were from the GSEs “private funds” or from funds received from the government. It 

would be an impossibility for Foster to plead differently. 

II. The SAC meets the pleading standards of Fed R. Civ. P. 12(b).

a. 12(b)(1) is inapplicable to these claims.

Defendants correctly state that prior to March 23, 2010, the FCA defined the public 

disclosure bar as a jurisdictional bar, where Fed R. Civ. P. 12(b)(1) would apply. However, as

stated above, the actual actionable FCA claims in this case could have only occurred after the 

passage of Dodd Frank, July 21, 2010. Therefore, 12(b)(1) is inapplicable here.

b. Foster has properly stated a claim; 12(b)(6) does not apply.

Again, since Foster can overcome a Rule 9(b) motion to dismiss, he necessarily meets the 

pleading standard of Fed. R. Civ. P. 12(b)(6). See Camasta v. Jos. A. Bank Clothiers, Inc., 761 

F. 3d 732, 736-37 (7th Cir. 2014). Under a Rule 12(b)(6) motion to dismiss, the Court tests the 

sufficiency of a complaint, not its merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th 

Cir.1990). When considering the motion, the court accepts as true all well-pleaded allegations, 

and draws all reasonable inferences in the Plaintiff’s favor. Tamayo v. Blagojevich, 526 F.3d 

1074, 1081 (7th Cir. 2008). A claim is facially plausible when the factual allegations allow the 

court to draw reasonable inferences that a defendant is liable for the misconduct alleged. 

Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009).

For the same reasons he has met the pleading standard of Rule 9(b) above, Foster 

similarly contends that he has met the pleading standards of 12(b)(6). Nonetheless, Defendants 

argue that Foster cannot state a “claim” because GSEs such as Fannie Mae and Freddie Mac are 

private corporations and not the government – only chartered by the government. Again, this 

would cause an impossible burden on Foster to show that particular funds for the payment of a 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 7 of 10 PageID #:2553
particular loss were sourced from the government rather than funds that Fannie Mae or Freddie 

Mac may have gathered from private sources. 

c. The claims are not time-barred.

In Cochise Consultancy, Inc. v. U.S. ex rel. Hunt, the Supreme Court stated that FCA 

claims maintained by qui tam relators must be brought within either six years of the FCA 

violation, under 31 U.S.C. § 3731(b)(1), or "three years after the date when facts material to the 

right of action are known or reasonably should have been known by the official of the United 

States charged with responsibility to act in the circumstances," but never "more than 10 years 

after" the violation, under § 3731(b)(2). Cochise Consultancy, Inc. v. United States ex rel. Hunt, 

139 S. Ct. 1507 (2019). As mentioned before, the exact date of Foster and all of the other claims 

contemplated are unknown because only the Defendants would know when it submitted 

fraudulent claims for loss recoupment. Nonetheless, the claims complained of in the SAC could

not have been made until after passage of Dodd Frank – satisfying the ten-year statute of repose. 

The FCA violation tied to Foster’s individual claim could not have been made earlier than 

August 3, 2017 (which would still today be within the statute of limitations. Therefore, the 

claims are not time-barred.

d. The allegations made in Foster’s complaint do not fall victim to the Public Disclosure 

Bar

Again, Foster cannot argue that it is common knowledge that lenders and servicers

entered into consent judgments, settlement agreements over their mishandling of mortgage loans 

during the mortgage loan crisis. However, Foster’s specific allegations have not been publicly 

disclosed.

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 8 of 10 PageID #:2554
Defendants first point to “Mortgage Fraud Complaints” that they attach as their Exhibits

1 and 2, and later the consent judgments (Exhibits 3-6) stemming from those mortgage fraud 

complaints as its initial evidence that Foster’s claims have been publicly disclosed. However, 

the Mortgage Fraud Complaint attached as Exhibit 1 only dealt with FHA loans. The Mortgage 

Fraud Complaint attached as Exhibit 2, dealt with FHA RHS, and VA loans, and loans that were 

subject to the US Trustee Program via bankruptcy filings. None of these complaints dealt with 

Fannie Mae or Freddie Mac loans. The OCC consent orders attached as Exhibits 7-11 were 

entered into between 2011 to 2013.3 Foster’s claim could not happen until 2017 (i.e. the FCA 

fraudulent claim occurred after the entry of the order). Many, if not all, of Foster’s short sale 

clients went to sale after 2013. The settlement agreements attached as Exhibits 12 and 13 do 

discuss servicing issues, false and/or fraudulent affidavits, and other servicing atrocities. 

However, they do not discuss the gaps of value sought to be recovered when these mis-serviced 

loans were brought to judicial/short sale and the lender sought recoupment of loss of value that it 

had intrinsically caused.

Foster’s claims underscore the giant issue here that despite all the servicing issues these 

Defendants knew about – and even after they entered into consent judgments and settlements 

regarding the same – they still judicially/short sold properties whose loans payoffs where inflated 

due to their own wrongdoing. The Defendants then still collected its “losses” from funds that 

came from the government of the United States of America.

The SAC should not be dismissed.

3 Defendants point out that some of the consent orders included GSEs, which would seem to 

contradict their argument that GSEs like Fannie Mae and Freddie Mac cannot be liable under the 

FCA

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 9 of 10 PageID #:2555
CONCLUSION

For the reasons stated above, Foster respectfully requests that this Court enter and 

order:

1. Denying Defendants’ Joint Motion to Dismiss.

2. Granting any other relief the Court deems necessary and just; 

Alternatively, if the Court finds that Defendants have properly moved to dismiss, Foster 

respectfully requests an opportunity to amend his complaint.

Respectfully submitted,

____________________________________ 

Eryk Folmer 

Eryk Folmer 

119 S. Emerson St., #241 

Mt. Prospect, IL 60056 

Telephone: (312) 854-7030 

eryk@folmerlaw.com 

ARDC No. 6299786 

Case: 1:20-cv-04230 Document #: 84 Filed: 04/08/22 Page 10 of 10 PageID #:2556