ABN AMRO’s civil complaint against Promised Land Mortgage LLC, et al survived motions to dismiss under Federal Rule of Civil Procedure 12(b)6 (click here to view original post on the filing of the complaint which contains a complete list of defendants along with a copy of the complaint.)

On March 28, 2005, the United States District Court for the Southern District of Indiana, Indianapolis Division, issued an order denying motions to dismiss brought by three defendants, Guaranteed Land Title LLC, Title One and Real Estate Exchange Services Company and First American Title Insurance Company and requiring that Plaintiff file supplemental documentation establishing the dates the loans closed.

As to the non-fraud claims (negligence, negligent misrepresentation, breach of fiduciary duty, breach of contract), the defendants claimed that the Closing Title Agencies owed no duty to ABN AMRO. Although the Court noted that duty is a question of law in Indiana, the parties disagreed as to the factual basis of any alleged relationship between them that would give rise to a duty. ABN AMRO alleged that the Closing Title Agencies served as closing agents acting on behalf of ABN AMRO and that the relationship created duties to ABN AMRO. The defendants refused to clarify their relationship with ABN AMRO and denied that any relationship existed. The Court thus, treating ABN AMRO's factual allegations as true, found that the allegations were sufficient to survive motion to dismiss.

As to the fraud claims, ABN AMRO is held to a heightened pleading standard and must plead with particularity (“the who, what, when, where, and how: the first paragraph of any newspaper story." [DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990)].

In reviewing the defendants’ arguments, the Court stated:

“. . . Defendants are essentially asking the Court to invert the standard of review by drawing all possible inferences in their favor. In particular, Moving Defendants request that we find that: (1) despite acting as closing agents, the Closing Title Agencies owed no duties to the principal on whose behalf they were working; (2) the Closing Title Agencies prepared official documents in relation to a real estate transaction which did not need to be completed in an honest or accurate fashion because their principal would not read the documents, let alone rely on them; and (3) the Closing Title Agencies, which were given large sums of money by their principal, could dispense those funds in their discretion without other obligations or restrictions. These contentions by Moving Defendants display an obvious misunderstanding of the purpose of a motion to dismiss.”

ABN AMRO alleged that its pre-filing investigation identified 109 loans in which fraud allegedly occurred and, for each of the fraudulent transactions, ABN AMRO provided the last name of the borrower, the address of the property involved and identified which closing agent performed the closing tasks. ABN AMRO’s complaint also specified the actions it alleged constituted fraud by the Closing Title Agencies. The Court found that the Complaint needed to and did not contain the specific dates on which each of the loan closings occurred. As this information could be easily corrected, the Court directed ABN AMRO to file an amended complaint containing the information (or an explanation as to why the information could not be provided) at which time the motions would be denied in their entirety.