The United States District Court for the Northern District of Illinois recently granted a title insurance company’s motion to dismiss claims for breach of contract and consumer fraud, finding that the plaintiff failed to allege any loss and that his claim under the Illinois Consumer Fraud Act was barred by the statute of limitations. See Steward v. J.P. Morgan Chase Bank, N.A., et. al., 2021 WL 3142042 (N.D. Ill. July 26, 2021). In 2007, the plaintiff purchased a home using a mortgage obtained from Washington Mutual Bank (“Washington Mutual”) and obtained an owner’s title insurance policy. The plaintiff purchased the home from the guardian of the Estate of Eddie Griffin (“Griffin”). In 2019, however, the plaintiff learned that thirty-three years before he purchased the home, title to the property had been placed in an express trust by Griffin. That same day, a deed transferred title to the property from Griffin to Cosmopolitan National Bank of Chicago as Trustee under the provisions of a Trust Agreement dated June 20, 1974. Thus, when the plaintiff purchased the property, the transfer was defective. Accordingly, in 2019, the plaintiff filed a claim with the title company, who denied the claim. In the meantime, Washington Mutual sold the note securing the plaintiff’s mortgage to Freddie Mac. However, the plaintiff believed Chase owned the mortgage as receiver of Washington Mutual’s assets, and Chase refinanced his mortgage in 2011. The plaintiff brought a claim for breach of contract and fraud under the Illinois Consumer Fraud Act, alleging that the title company improperly denied his claim and failed to disclose that the mortgage was owned by Freddie Mac to coerce the plaintiff into purchasing title insurance he did not need.
The Court granted the title company’s motion to dismiss. First, the Court found that there was no breach of contract because the plaintiff failed to assert a loss. According to terms of the title insurance policy, the title company was not required to provide coverage unless the plaintiff suffered a loss. The Court noted that if Griffin’s trust or its beneficiaries demanded title to the home, the plaintiff would likely have a claim. However, no demand was made, and no demand could be made since it would be barred by the seven-year Illinois adverse possession statute. Next, the Court found that the plaintiff’s claim that the title company violated the Illinois Consumer Fraud Act claim because it knew or should have known that the 2011 refinance of his mortgage was a fraud was foreclosed by the statute of limitations. In so finding, the Court denied the plaintiff’s argument that his injury did not accrue until the title company denied his title claim. Assuming the title company was involved in the plaintiff’s 2011 refinance, the three-year statute of limitations ran in 2014. Accordingly, the Court granted the title company’s motion to dismiss.