Ravi Kadiyala v. Shellpoint Mortgage Servicing, Director’s Mortgage Group, and Popular Bank

Summary

The United States District Court for the Northern District of Illinois denied Ravi Kadiyala’s motion to remand and declined to abstain under the Colorado River doctrine. The court granted Shellpoint Mortgage Servicing’s Rule 12(b)(6) motion, dismissing claims seeking to invalidate a mortgage based on alleged licensing violations, quiet title, and a declaration that Shellpoint lacked standing to enforce the mortgage. The court allowed Kadiyala to file an amended complaint by February 27, 2026, warning that otherwise the dismissal would convert to one with prejudice.

Holdings

1. A plaintiff must raise nonjurisdictional defects in removal within 30 days after the notice of removal; failure to do so waives those defects. Kadiyala’s continuing-unanimity argument was waived because it was raised for the first time in reply and outside the 30-day period.
2. Abstention was unwarranted because the remaining state foreclosure action was not parallel to the federal action and, independently, the Colorado River factors did not establish exceptional circumstances justifying relinquishment of federal jurisdiction.
3. Under the amended Residential Mortgage License Act, a mortgage loan may not be held invalid solely because it was brokered, funded, originated, serviced, or purchased by a party that was not licensed under the Act. Count I therefore failed to state a claim based solely on alleged licensing violations.
4. A plaintiff may not amend the complaint by asserting new factual allegations or legal theories in a response to a motion to dismiss.
5. Under Illinois law, a mortgagor’s challenge to a plaintiff’s standing to enforce a mortgage is an affirmative defense in a foreclosure action, not an independent cause of action. Count IV therefore failed to state a claim.

Questions Presented

1. Whether the motion to remand was timely and whether any alleged defect in the removal procedure was waived.
2. Whether the federal court should abstain under the Colorado River doctrine because of a pending state foreclosure action.
3. Whether Illinois’s Residential Mortgage License Act permits a mortgage to be invalidated solely because the originating lender allegedly lacked the required license.
4. Whether the complaint stated a quiet-title claim based on alleged defects that were raised only in the plaintiff’s opposition brief.
5. Whether lack of standing to enforce a mortgage may be asserted by a mortgagor as an independent affirmative claim rather than as a defense in a foreclosure action.

Disposition

other