Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Bell alleged that her former employer, PNC Bank, failed to pay her overtime wages in violation of the Fair Labor Standards Act, 29 U.S.C. 201, and the Illinois Minimum Wage and Wage Payment and Collection Acts, and that the failure was not an isolated incident, but rather part of a PNC policy or practice that affected other employees. Bell claimed that she was evaluated, in part, based on how many new accounts she brought into the bank, and in order to generate new accounts she needed to spend “significant” time outside of her regular work hours visiting prospective clients. Some of the assignments to visit prospective clients came from a PNC vice president who did not work at the Bell’ branch. According to Bell, when she submitted time cards reflecting overtime work, her branch manager and a PNC regional manager told her that “PNC would not permit... overtime for the branch,” and “PNC expected its employees to handle their outside-the-branch work on their own time, without reporting any extra hours that they worked.” The Seventh Circuit affirmed certification of a class of plaintiffs. Many issues remain unanswered and the district court was correct to conclude that a class action would be an appropriate and efficient pathway to resolution. View "Bell v. PNC Bank" on Justia Law

In 2005, Mutual Bank of Harvey, Illinois, made loans to the defendants, evidenced by promissory notes. As security the defendants executed mortgages. Mortgage I applies to four properties in Appleton, Menasha, and Milwaukee, Wisconsin. Mortgage II applies to a property in Grand Chute. Mortgage III applies to seven Milwaukee properties. The notes went into default in 2008. In 2009, regulators closed Mutual Bank. The Federal Insurance Deposit Corporation (FDIC) was appointed receiver. Ultimately UCB became the owner and holder of the notes and mortgages on the Wisconsin properties. In 2011, UCB commenced mortgage foreclosure. Defendants argued that under the Illinois “single refiling” rule, 735 ILCS 5/13-217, UCB was barred from enforcing the promissory notes underlying the mortgages since UCB had twice formerly filed an action against the defendants to recover on the notes and voluntarily dismissed each of these prior actions. The Seventh Circuit affirmed that Mortgage I, was governed by Illinois law and that UCB was precluded from foreclosing on Mortgage I. The defendants did not appeal a holding that Wisconsin law applied to Mortgages II and III and that Wisconsin law permitted UCB to foreclose. View "United Central Bank v. KMWC 845, LLC" on Justia Law

The Cocrofts acquired a home in Country Club Hills, Illinois. In 2007, they refinanced their mortgage. As part of the transaction, the Cocrofts’ mortgage and loan were pooled into a mortgage loan trust. A year later, the Cocrofts ceased making payments. The lender became aware that the property was vacant and was “a mess” and entered to winterize. The Cocrofts claimed to have the right to rescission because the lender committed various unspecified disclosure violations in contravention of several federal statutes. The trustee initiated a foreclosure action. The Cocrofts filed suit, raising claims against Mortgage Electronic Registration Systems (MERS), Bank of America, BAC Home Loans Servicing, and HSBC Bank. The Seventh Circuit affirmed summary judgment for defendants on all claims. An alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act was based HSBC Bank’s letter, in which it indicated that it was unable to locate an account for the Cocrofts; the Cocrofts offered no evidence that this was deceptive. The court rejected a wrongful possession claim; the lender was entitled to enter the property to winterize. The Colcrofts lacked standing to challenge the transfer of the property into the trust. View "Cocroft v. HSBC Bank USA, N.A." on Justia Law

The Cocrofts acquired a home in Country Club Hills, Illinois. In 2007, they refinanced their mortgage. As part of the transaction, the Cocrofts’ mortgage and loan were pooled into a mortgage loan trust. A year later, the Cocrofts ceased making payments. The lender became aware that the property was vacant and was “a mess” and entered to winterize. The Cocrofts claimed to have the right to rescission because the lender committed various unspecified disclosure violations in contravention of several federal statutes. The trustee initiated a foreclosure action. The Cocrofts filed suit, raising claims against Mortgage Electronic Registration Systems (MERS), Bank of America, BAC Home Loans Servicing, and HSBC Bank. The Seventh Circuit affirmed summary judgment for defendants on all claims. An alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act was based HSBC Bank’s letter, in which it indicated that it was unable to locate an account for the Cocrofts; the Cocrofts offered no evidence that this was deceptive. The court rejected a wrongful possession claim; the lender was entitled to enter the property to winterize. The Colcrofts lacked standing to challenge the transfer of the property into the trust. View "Cocroft v. HSBC Bank USA, N.A." on Justia Law

Townsend signed a note and a mortgage to purchase a condominium. After Townsend defaulted, HSBC sought foreclosure under Illinois law. Representing himself, Townsend answered the complaint. HSBC moved for summary judgment, submitting evidence of default; that Townsend owed $141,425.65; and that HSBC owned the note and mortgage. Townsend failed to respond. The court entered a judgment of foreclosure, an order finding that Townsend owed $143,569.65, and an order providing for judicial sale if Townsend did not pay before the redemption period expired. The court wrote that the judgment was “a final and appealable order” that was “fully dispositive” under Federal Rule of Civil Procedure 54(b), but retained jurisdiction to enforce or vacate (in the event of reinstatement) the judgment. The court acknowledged that it might have to hold a hearing to confirm the judicial sale under Illinois law and could decide not to confirm, if appropriate parties did not receive proper notice, if sale terms were unconscionable, if the sale was conducted fraudulently, “or … justice was otherwise not done.” The Seventh Circuit dismissed an appeal for lack of jurisdiction. The judgment of foreclosure and judicial sale posed no imminent threat of irreparable harm to Townsend. His interests are protected under Illinois law. Because entry of the Rule 54(b) judgment compelled Townsend to appeal when he did, the court ordered that costs on appeal be assessed against HSBC. View "HSBC Bank USA, N.A. v. Townsend" on Justia Law

Over four years, Dade, a former licensed real estate agent, with co-defendants, facilitated loans to purchase residential real estate by knowingly providing lenders with false statements and documents. Dade referred potential buyers to loan officers and provided false payroll stubs and W-2 forms from fake companies. Dade (with help) refinanced a mortgage on his own Chicago property, stating that he was paying monthly rent of $1,450 (he did not live in the house), and provided a rental verification from “Jireh,” which did not exist. Dade received a $156,000 loan. He was charged with bank fraud, 18 U.S.C. 1344, wire fraud, section 1343, and mail fraud, section 1341. He pleaded guilty to bank fraud, based on the fraudulent refinancing; the remaining charges were dismissed. The government sought a 2-level upward adjustment for his role as an organizer, leader, manager, or supervisor in the offense, U.S.S.G. 3B1.1(c). When preparing the presentence report, however, the probation officer concluded that a 4-level upward adjustment would be appropriate, stating that the scheme had involved five or more participants and Dade had organized the scheme. The government adopted that position, recounting the facts underlying the charges dismissed as part of Dade’s plea agreement. The Seventh Circuit affirmed his 20-month sentence, upholding the upward adjustment. View "United States v. Dade" on Justia Law

Brown defrauded Chicago-area mortgage lenders in 2004-2008, arranging with home builders and other sellers of new houses to receive fees for locating buyers to purchase their properties at inflated prices. Using his businesses, including Chicago Global, Brown located nominee buyers. To obtain financing, the nominees were referred to loan officers, including Spencer, who fraudulently qualified them for loans through false statements and documentation. Once a purchase was finalized, Brown and his coconspirators kept the surplus amount above what the seller was seeking. As co-owner of Chicago Global, Jackson recruited nominee buyers and provided, or caused to be provided, funds for the purchases and falsely represented the nominees as the source of those funds. Jackson’s participation in the scheme resulted in $8,515,570 losses to lenders. Spencer’s participation as a loan officer, assisting nominee buyers in 12 different fraudulent real estate transactions, resulted in $3,091,050 losses to lenders. Jackson was charged with wire fraud, 18 U.S.C. 1343, and mail fraud, 18 U.S.C. 1341. The Seventh Circuit affirmed Spencer’s conviction for bank fraud, 18 U.S.C. 1344, and mail fraud and her 36-month sentence and affirmed Jackson’s conviction, but vacated her 112-month sentence, finding that an obstruction of justice enhancement was improperly applied. View "United States v. Spencer" on Justia Law

Lake Street was obligated under a $1.5 million loan made by American Chartered Bank, secured by a mortgage. Unable to repay, Lake Street negotiated several forbearance-to-foreclose agreements. One required Lake Street to give the deed to the mortgaged property (its only significant asset) to an escrow agent who, in the event of default, would give the deed to Scherston, the bank’s affiliate. The bank’s charter forbids it to own real estate. Lake Street defaulted, Scherston recorded the deed. Lake Street, a debtor in possession in a Chapter 11 bankruptcy, brought an adversary proceeding against the bank and Scherston. The district court granted the bank summary judgment. The Seventh Circuit affirmed, noting that Lake Street focused on the deed rather than on the mortgage, claiming that the deeded property is worth more than the mortgage. It was Lake Street’s decision to give the deed to the bank; it did so to induce the bank’s forbearance, by giving additional security. There is no contention that the bank employed unlawful or unethical practices to the transfer, or that any unsecured creditors were harmed by the transaction—there is only one unsecured creditor and his claim is worth less than a thousand dollars. View "1756 W. Lake St. LLC v. Am. Chartered Bank" on Justia Law

In 2001, representatives from the Moody Bible Institute of Chicago and Sysix Financial signed a master agreement, laying the groundwork for future leases of equipment from Sysix to Moody. In 2008, two lease schedules for computer items were executed; they appeared to have been signed by Moody’s vice president and Sysix’s president. Sysix assigned its interest in both leases to Rockwell, which acquired loans from PNB to finance the leases. PNB procured indemnification coverage for those loans from RLI in the form of a financial institution bond. Sysix’s president had forged the signature of Moody’s vice president on both lease schedules. Moody never agreed to either schedule nor did it ever receive any of the promised equipment. PNB notified RLI of its potential loss, but PNB itself soon went under. As receiver for PNB, the FDIC sued RLI. The district court granted summary judgment in FDIC’s favor. The Seventh Circuit affirmed, finding that the plain language of the bond covered FDIC’s losses The Financial Institutions Reform Recovery and Enforcement Act limitations period applies,12 U.S.C. 1821(d)(14), so the suit was timely. View "Fed. Deposit Ins. Corp. v. RLI Ins. Co." on Justia Law

In 2007, Suarez, a 75-year-old widower from Mexico, opened a checking account at an Illinois Chase Bank. DeMarco, the branch manager, assisted him. The two became friends. Suarez was trying to sell his three acre property, listed for $1.8 million. DeMarco convinced Suarez to break his listing contract, indicating that he had a buyer. DeMarco told Suarez that he needed a home equity line of credit (HELOC) to complete the sale. DeMarco obtained a $250,000 HELOC, under Suarez’s name, secured by Suarez’s property. DeMarco caused the lender to transfer the proceeds into a joint checking account, which he opened in his and Suarez’s name. After the transfer, DeMarco withdrew $245,000 and deposited the funds into his personal account. After Chase terminated his employment, DeMarco transferred the funds into new accounts and spent most of the proceeds to pay off his credit card debt, improve his home and on cars and vacations. He used a small fraction of the money to pay off Suarez’s debts. Suarez later noted irregularities in his bank statement and contacted the FBI. DeMarco was convicted of wire fraud, 18 U.S.C. 1343 and sentenced to 48 months in prison. The Seventh Circuit affirmed, rejecting challenges to evidentiary rulings and to the sentence, claiming that the court erred by applying a two-level increase to his base offense level for abuse of a position of trust, U.S.S.G. 3B1.3, and the use of sophisticated means, U.S.S.G. 2B1.1(b)(1). View "United States v. DeMarco" on Justia Law