Franklin et al v. Lakeview Loan Servicing, LLC

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
JAMES LEE FRANKLIN, JR.,
and ADDIE CHRISTINE FRANKLIN,
Plaintiffs,
v.
LAKEVIEW LOAN SERVICING, LLC,
Defendant.
Case No. 3:25-CV-361-NJR
MEMORANDUM AND ORDER
ROSENSTENGEL, District Judge:
Plaintiffs James Lee Franklin, Jr., and Addie Christine Franklin (“Plaintiffs”),
proceeding 	pro 	se, 	filed 	this 	civil 	action 	against 	Lakeview 	Loan 	Servicing, 	LLC
(“Lakeview”), on March 18, 2025. (Doc. 3). Plaintiffs allege that Lakeview, their mortgage
servicer, violated the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in
Lending Act (“TILA”). 1 (Id.). They also allege Illinois state law claims for fraudulent
representation and unjust enrichment. (Id.). Plaintiffs claim that Lakeview fraudulently
charged property taxes, mismanaged their escrow account, and wrongfully initiated
foreclosure proceedings despite their acquisition of a property tax exemption. (Id.).
Now before the Court is a Motion to Dismiss filed by Lakeview. (Doc. 17).
Plaintiffs filed a response in opposition (Docs. 21-23), and Lakeview filed a reply brief.
(Doc. 25). For the following reasons, Lakeview’s motion is granted.
1 Plaintiffs also mention the Fair Credit Reporting Act (“FCRA”), the Fair Debt Collection Practices Act
(“FDCPA”), and the Federal Trade Commission Act (“FTCA”) as federal statutes that are at issue in this
case, although they do not make any specific allegations supporting these claims.
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B ACKGROUND
On April 6, 2021, James Franklin obtained a loan for $659,835.00 from Fairway
Independent Mortgage Corporation to purchase a property located at 2331 Pebble Creek
Drive in Alton, Illinois (“the Property”). (Doc. 17-1). Addie Franklin was named as a co-
borrower. (Id.). Plaintiffs allege that Lakeview is a mortgage loan servicing company that
manages escrow accounts and tax payments for mortgaged properties across multiple
states, including Illinois. (Doc. 3 at ¶ 9). Lakeview is the master loan servicer of Plaintiffs’
mortgage, while M&T Bank is the sub-servicer of the loan. (See Doc. 5).
On July 12, 2021, Saints International Assemblies was added to a newly recorded
deed as a joint owner of the Property. (Doc. 5 at p. 6). As a result, the Illinois Department
of Revenue agreed the Property should be exempt from property tax beginning July 12,
2021. 	(Id.). 	Despite 	the 	Property’s 	tax-exempt 	status, 	Plaintiffs 	allege, 	Lakeview
improperly charged property taxes and added them to Plaintiffs’ escrow account. (Doc. 3
at ¶ 11). Although Plaintiffs repeatedly informed Lakeview of the tax-exempt status and
requested a correction, Lakeview failed to correct the error, continued to assess
fraudulent tax charges, and attempted to collect the invalid debts. (Id. at ¶¶ 12-13).
Lakeview 	also 	allegedly 	wrongfully 	initiated 	foreclosure 	proceedings, 	although
documentation attached to Plaintiffs’ Complaint shows that Plaintiffs stopped making
mortgage payments in October 2022. (Id. at p. 5; Doc. 5 at pp. 25-27, 31). Plaintiffs allege
that Lakeview’s actions have caused them financial harm, including inaccurate credit
reporting, additional financial burdens, and emotional distress. (Id. at ¶ 14).
Plaintiffs’ Complaint alleges claims under RESPA and TILA, as well as Illinois
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state law claims for fraudulent misrepresentation and unjust enrichment. As relief,
Plaintiffs seek $8,820,000 in compensatory damages for the financial and emotional harm
caused by the wrongful foreclosure, damage to their credit, and escrow mismanagement.
They also request punitive damages of $4,080,000 to deter Lakeview from continuing
fraudulent business practices and to punish it for willful misconduct. Plaintiffs further
claim they have lost an additional $4,080,000 in properties they were forced to sell or lost
due to Lakeview’s wrongful conduct. In total, Plaintiffs seek $17,700,000 in damages.
LEGAL STANDARD
When reviewing a motion to dismiss under Rule 12(b)(6), the Court must consider
whether the complaint states a claim for relief that is “plausible” on its face. Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Taha v. Int’l Bhd. of Teamsters, Loc. 781,
947 F.3d 464, 469 (7th Cir. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
A plaintiff need not plead detailed factual allegations, but must provide more than
“a formulaic recitation of the elements;” conclusory statements are not enough to support
causes of action on their own. Twombly, 550 U.S. at 570; see also Luna Vanegas v. Signet
Builders, Inc., 46 F.4th 636, 645 (7th Cir. 2022) (“all a complaint must do is state a plausible
narrative of a legal grievance that, if proved, would entitle the plaintiff to relief”).
In evaluating a complaint on a motion to dismiss, “district courts are free to
consider ‘any facts set forth in the complaint that undermine the plaintiff’s claim.’” Esco
v. City of Chicago, 107 F.4th 673, 678 (7th Cir. 2024) (quoting Bogie v. Rosenberg, 705 F.3d
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603, 609 (7th Cir. 2013)). “The court, therefore, may examine exhibits, including video
exhibits, attached to the complaint, or referenced in the pleading if they are central to the
claim.” Id.; see also Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002) (explaining that a court
may consider exhibits referred to in a complaint, even if not attached to it, as “plaintiff
could evade dismissal under Rule 12(b)(6) simply by failing to attach to his complaint a
document that proved that his claim had no merit”).
DISCUSSION
I. 	Real Estate Settlement Procedures Act (RESPA) (Count I)
In 	Count 	I, 	Plaintiffs 	allege 	Lakeview 	violated 	the 	Real 	Estate 	Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 2605, because Lakeview mismanaged their escrow
account and charged wrongful taxes.
Although Plaintiffs have not specified any section of RESPA that they believe
Lakeview violated, subsection (g) applies to escrow accounts and provides:
(g) Administration of escrow accounts
If the terms of any federally related mortgage loan require the borrower to
make payments to the servicer of the loan for deposit into an escrow
account for the purpose of assuring payment of taxes, insurance premiums,
and other charges with respect to the property, the servicer shall make
payments from the escrow account for such taxes, insurance premiums, and
other charges in a timely manner as such payments become due. Any
balance in any such account that is within the servicer’s control at the time
the loan is paid off shall be promptly returned to the borrower within 20
business days or credited to a similar account for a new mortgage loan to
the borrower with the same lender.
12 U.S.C. § 2605(g).
The statute defines “servicer” as “the person responsible for servicing of a loan
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(including the person who makes or holds a loan if such person also services the loan).”
§ 2605(i)(2). The term “servicing” is defined as “receiving any scheduled periodic
payments from a borrower pursuant to the terms of any loan, including amounts for
escrow accounts . . . , and making the payments of principal and interest and such other
payments with respect to the amounts received from the borrower as may be required
pursuant to the terms of the loan.” § 2605(i)(3).
Lakeview first argues that Count I must be dismissed because RESPA only applies
to the servicer of a mortgage loan, and Plaintiffs do not allege that Lakeview was the
servicer of the loan at issue in this case. Lakeview asserts that all correspondence attached
to Plaintiffs’ Complaint, including letters, mortgage statements, and payment histories,
is between Plaintiffs and M&T Bank. (Doc. 5 at 3, 7-8, 15-18, 30-33). Plaintiffs’ Complaint,
however, alleges that Lakeview “is a mortgage loan servicing company that manages
escrow accounts and tax payments for mortgaged properties across multiple states,
including Illinois.” (Doc. 3 at p. 10). Plaintiffs further allege that Lakeview “improperly
charged property taxes on this tax-exempt property and added them to Plaintiffs’ escrow
account.” (Id.). Lakeview, in its Statement of Facts, acknowledges that “Lakeview is the
master loan servicer while M&T Bank is the subservicer of the mortgage loan.” (Doc. 17
at p. 3). Thus, the Court finds that Plaintiffs have adequately alleged that Lakeview is the
loan servicer of the loan at issue.
Lakeview also argues that even it is the loan servicer, no RESPA violation
occurred. To state a RESPA claim, a plaintiff must allege that the loan servicer failed to
comply with one RESPA’s requirements and that the plaintiff suffered actual injury as a
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result. See Saccameno v. Ocwen Loan Servicing, LLC, 372 F. Supp. 3d 609, 637 (N.D. Ill. 2019)
(citing Baez v. Specialized Loan Servicing, LLC, 709 F. App’x 979, 982 (11th Cir. 2017) (“[T]o
prevail on a RESPA claim, a plaintiff must show (1) a failure to comply with a RESPA
obligation and (2) actual damages sustained as a result of the failure to comply.”).
Section 2605(g) requires a loan servicer to make payments from an escrow account
for taxes, insurance premiums, and other charges in a timely manner. It further requires
the servicer to promptly return, within 20 days, any balance in the escrow account that is
within the servicer’s control at the time the loan is paid off. Plaintiffs have not alleged
that Lakeview failed to make tax or insurance payments in a timely manner, nor have
they alleged that the loan was paid off and Lakeview failed to promptly return any
escrow balance. Accordingly, Plaintiffs have failed to state a claim under RESPA and
Count I will be dismissed.
II. 	Truth in Lending Act (TILA) (Count II)
In Count II, Plaintiffs assert Lakeview violated the Truth in Lending Act (“TILA”),
15 U.S.C. 1601, et seq., when it failed to provide clear, accurate, and timely disclosures
about the status of Plaintiffs’ escrow payments and tax obligations. By falsely claiming
that property taxes were due despite the property’s tax-exempt status, Plaintiffs allege,
Lakeview engaged in misleading and deceptive loan servicing practices in violation of
TILA’s disclosure requirements.
“TILA was intended to ensure that consumers are given ‘meaningful disclosure of
credit terms’ and to protect consumers from unfair credit practices.” Marr v. Bank of Am.,
N.A., 662 F.3d 963, 966 (7th Cir. 2011) (quoting 15 U.S.C. § 1601(a)). With certain
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exceptions, “any action under TILA must be brought within one year from the date of the
occurrence of the violation.” 15 U.S.C. 1640(e).
Lakeview first argues Plaintiffs are time-barred from alleging a TILA violation
because they filed the Complaint more than one year after Lakeview allegedly failed to
provide clear, accurate, and timely disclosures about the status of Plaintiffs’ escrow
payments and tax obligations. True, § 1640(e) of TILA provides that any action for
damages must be brought within one year from the date of the occurrence of the
violation. But, it then states: “Any action under this section with respect to any violation
of section 1639, 1639b, or 1639c of this title may be brought . . . before the end of the 3-
year period beginning on the date of the occurrence of the violation.” § 1640(e). Sections
1639, 1639b, and 1639c apply to residential mortgage loans. Without further argument on
which TILA provisions were allegedly violated and whether §§ 1639, 1639b, or 1639c
apply in this case, the Court cannot say that Plaintiffs’ claim is barred by the statute of
limitations.
Lakeview also argues that Plaintiff’s claim fails because TILA does not create a
private right of action against mortgage servicers or their employees. With this, the Court
agrees. Courts examining § 1640, which imposes civil liability for a violation of TILA,
have noted that it only applies to creditors—not loan servicers like Lakeview. Iroanyah v.
Bank of Am., 753 F.3d 686, 688 n.2 (7th Cir. 2014) (loan servicers cannot be liable for
damages under TILA); Dawoudi on behalf of Plaintiff v. Nationstar Mortg. LLC, 448 F. Supp.
3d 918, 928 (N.D. Ill. 2020) (“it remains well settled that TILA liability does not extend to
loan servicers”). Because there is no dispute that Lakeview is a loan servicer—not a
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creditor—Plaintiffs’ claim for damages under TILA fails and Count II will be dismissed.
III. 	Fraudulent Misrepresentation (Count III)
In Count III, Plaintiffs assert that Lakeview fraudulently misrepresented the
Property’s tax obligations to induce Plaintiffs to pay money not legally owed, in violation
of Illinois law.
A plaintiff can sustain a cause of action for fraudulent misrepresentation in Illinois
by alleging “(1) [a] false statement of material fact (2) known or believed to be false by
the party making it; (3) intent to induce the other party to act; (4) action by the other party
in reliance on the truth of the statement; and (5) damage to the other party resulting from
that reliance.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 569 (7th Cir. 2012) (citing
Dloogatch v. Brincat, 920 N.E.2d 1161, 1166 (Ill. App. Ct. 2009)). “Under the heightened
federal pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure, a plaintiff
“alleging fraud . . . must state with particularity the circumstances constituting fraud.”
Id. (quoting Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007) (“This
heightened pleading requirement is a response to the great harm to the reputation of a
business firm or other enterprise a fraud claim can do.”)).
Here, Plaintiffs allege simply that Lakeview “knowingly misrepresented the
property’s tax obligations, despite Plaintiffs’ documented proof of tax exemption,” that
Lakeview’s “false statements and wrongful charges were intended to induce Plaintiffs to
pay money not legally owed,” and that “Plaintiffs relied on these misrepresentations and
suffered financial harm as a result.” (Doc. 3 at p. 11). Plaintiffs allegations fall short of the
heightened pleading requirements for allegations of fraud. They have not identified any
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false statements made by Lakeview, when those statements were made, or how Lakeview
induced Plaintiffs to do so. In other words, Plaintiffs have not explained the ”who, what,
when, where, and how” of the fraud. Wigod, 673 F.3d at 569. Furthermore, although
Plaintiffs have attached numerous documents to their Complaint, none of them even
mention Lakeview. All correspondence appears to be between Plaintiffs and M&T Bank.
(See Doc. 5). Thus, Plaintiffs’ fraudulent misrepresentation claim in Count III shall be
dismissed.
IV. 	Unjust Enrichment
In Count IV, Plaintiffs claim Lakeview was unjustly enriched in violation of Illinois
law when it collected and retained the fraudulent tax payments. Plaintiffs allege that
Lakeview “wrongfully profited by collecting fraudulent tax payments and misallocating
escrow funds,” and that “retention of these unlawfully collected funds constitutes unjust
enrichment, requiring restitution.” (Doc. 3 at ¶¶ 24-25).
“Unjust enrichment is not a separate cause of action under Illinois law.” Horist v.
Sudler, 941 F.3d 274, 281 (7th Cir. 2019). “Unjust enrichment is a common-law theory of
recovery or restitution that arises when the defendant is retaining a benefit to the
plaintiff’s detriment, and this retention is unjust.” Cleary v. Philip Morris, Inc., 665 F.3d
511, 517 (7th Cir. 2011). “[I]f an unjust enrichment claim rests on the same improper
conduct alleged in another claim, then the unjust enrichment claim will be tied to this
related claim—and, of course, unjust enrichment will stand or fall with the related claim.”
Plaintiffs allege that they were injured by Lakeview’s collection of fraudulent tax
payments and misallocation of escrow funds. Because their unjust enrichment claim rests
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on the same conduct alleged in Counts I, II, and III, which have been dismissed, Plaintiffs
unjust enrichment claim also fails. See Alliance Acceptance Co. v. Yale Ins. Agency,
648 N.E.2d 971, 977 (Ill. App. Ct. 1995) (“The term ‘unjust enrichment’ is not descriptive
of conduct that, standing alone, will justify an action for recovery”) (quoting Charles
Hester Enterpr., Inc. v. Ill. Founders Ins. Co., 484 N.E.2d 349, 354 (Ill. App. Ct. 1985)).
Accordingly, Count IV shall also be dismissed.
V. 	Other Federal Statutory Claims
In addition to the above-mentioned claims, Plaintiffs reference the following
federal statutes as bases for federal question jurisdiction: the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq., the Fair Credit Reporting Act (“FCRA”),
15 U.S.C. § 1681, et seq., and the Federal Trade Commission Act (“FTCA”), 15 U.S.C.
§ 745(a). (Doc. 3 at p. 4). Defendant argues that Plaintiffs have failed to articulate which
sections provide a right of action and have not alleged any facts supporting claims under
these statutes. (Doc. 17 at 12-15). Plaintiffs do not provide any legal precedent or analysis
to counter these assertions.
Despite making bare references to the FDCPA, FCRA, and FTCA in their
Complaint, Plaintiffs failed to allege any facts that would support a claim under these
statutes. Thus, to the extent Plaintiffs intended to bring causes of action under these laws,
the claims are dismissed.
CONCLUSION
For these reasons, Defendant Lakeview Loan Servicing, LLC’s Motion to Dismiss
(Doc. 17) is GRANTED. The Complaint filed by Plaintiffs James Lee Franklin, Jr., and
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Addie Christine Franklin is DISMISSED without prejudice.
Plaintiffs are GRANTED leave to file an amended complaint on or before
February 6, 2026. Failure to do so will result in the dismissal of this action with prejudice.
IT IS SO ORDERED.
DATED: 	January 7, 2026
____________________________
NANCY J. ROSENSTENGEL
United States District Judge
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