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

Articles Posted in Real Estate & Property Law

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Landlords challenged a Hammond ordinance that they either obtain a city license or hire licensed contractors to perform repairs and renovations to their properties. Obtaining a license involves a test, payment of a fee, and a criminal background check. The ordinance does not apply to individual homeowners working on the properties in which they reside. On summary judgment, the district court rejected their argument that the ordinance impermissibly burdens owners who do not reside in Hammond. The Seventh Circuit affirmed. The ordinance does not discriminate against non-residents and is supported by a rational basis. The court noted the significant differences between resident owners and landlords and the city’s interests in safety and the habitability of dwellings. View "Regan v. City of Hammond" on Justia Law

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Ahmed co‐owned an LLC that owned a condominium building. Ahmed recruited individuals to pose as buyers for the building's units and to submit fraudulent loan applications to lenders, including Fifth Third. The participants split the loan proceeds; no payments were made on the loans. Kaufman was the seller's attorney for every closing. The closings were conducted by Traditional Title at Kaufman’s law office. Traditional received closing instructions from Fifth Third to notify it immediately of any misrepresentations and to suspend the transaction if “the closing agent has knowledge that the borrower does not intend to occupy the property.” Kaufman concealed the buyers’ misrepresentations and instructed closing agents to complete closings even when buyers were purchasing multiple properties. Ahmed and Kaufman extended the scheme to other buildings. Although Kaufman testified that he was not aware of the fraud, Ahmed testified that Kaufman knew the buyers were part of the scheme. Two closing agents testified that they informed Kaufman about misrepresentations in loan applications. The Seventh Circuit affirmed a fraud judgment for Fifth Third. Kaufman participated individually in each closing as counsel and personally directed Traditional’s employees to conceal the fraud from Fifth Third, for his personal gain. The judgment against Kaufman was not derived solely from Traditional’s liability, based on his membership in the LLC, so the Illinois LLC Act does not bar his liability. Kaufman is not shielded by being the attorney for the seller in the fraudulent transactions. View "Fifth Third Mortgage Company v. Kaufman" on Justia Law

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Valbruna purchased the steel mill at a 2004 bankruptcy auction and began cleanup efforts under the Resource Conservation and Recovery Act, 42 U.S.C. 6901. In 2000, Slater, the site’s then-owner, had unsuccessfully sued Joslyn, which had owned and operated the site from 1928-1981, in state court seeking indemnification under the parties’ contract and costs under Indiana’s Environmental Legal Actions (ELA) statute. In 2010, Valbruna sued Joslyn under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9613(b), and ELA. Joslyn’s fault is undisputed. Joslyn raised claim-preclusion, statute-of-limitations, and contribution defenses. The district court found that the CERCLA claim was not precluded, but the ELA claim was, and that the suit was timely. The court imposed equitable contribution on Valbruna, requiring it to pay for 25% of past and future cleanup costs. The Seventh Circuit affirmed, agreeing that the CERCLA claim was not precluded. If there is no state-court jurisdiction to hear an exclusively federal claim, there is no claim preclusion. The claim was not barred as being filed more than six years after the start of “remedial action.” Slater’s earlier cleanup was “removal.” While the 25% imposition on a no-fault owner "reached the limits" of the court's discretion, there was no abuse of that discretion. Valbruna understood the site’s pollution problems before purchasing it and apparently paid far less than the asking price; the court was rationally concerned about a windfall for Valbruna. View "Valbruna Slater Steel Corp. v. Joslyn Manufacturing Co." on Justia Law

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In the 1990s, Boucher cut down nine trees on his family farm in Indiana. The U.S. Department of Agriculture (USDA) claimed that the tree removal converted several acres of wetlands into croplands, rendering the Bouchers’ entire farm ineligible for USDA benefits that would otherwise be available under the “Swampbuster” provisions in the Food Security Act of 1985, 16 U.S.C. 3801, 3821–24. The Seventh Circuit reversed the district court. The USDA repeatedly failed to follow applicable law and agency standards. It disregarded compelling evidence showing that the acreage in question never qualified as wetlands that could have been converted illegally into croplands and has shifted its explanations for treating the acreage as converted wetlands, so its actions qualify as arbitrary, capricious, and an abuse of discretion. The agency experts did not attribute the alteration of hydrology to the removal of the nine trees; the agency presented no evidence that the tree removal altered the wetland hydrology. The USDA failed to engage meaningfully with this point, ignoring a crucial factor under the agency’s interpretation of its regulation. View "Boucher v. United States Department of Agriculture" on Justia Law

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A 2014 hail and wind storm damaged Windridge buildings that were insured by Philadelphia Indemnity. The storm physically damaged the aluminum siding on the buildings’ south and west sides. Philadelphia argued that it is required to replace the siding only on those sides. Windridge argued that replacement siding that matches the undamaged north and east elevations is no longer available, so Philadelphia must replace the siding on all four sides so that all of the siding matches. The Seventh Circuit affirmed summary judgment in favor of Windridge. Each building suffered a direct physical loss, which was caused by or resulted from the storm, so Philadelphia must pay to return the buildings to their pre‐storm status—i.e., with matching siding on all sides. Having mismatched siding on its buildings would not be the same position. The district court’s conclusion that the buildings as a whole were damaged—and that all of the siding must be replaced to ensure matching—is a sensible construction of the policy language as applied to these facts. View "Windridge of Naperville Condominium Association v. Philadelphia Indemnity Insurance Co." on Justia Law

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In 1998, Williams hired Jaffe as her attorney. The statute of limitations expired before Jaffe filed a complaint. Williams sued for legal malpractice, obtained a default judgment, and recorded that judgment on property owned by Jaffe and his wife as tenants by the entirety. Jaffe filed a chapter 7 bankruptcy petition in 2015, which identified that debt, indicating it was secured by a judgment lien on his residence. On the petition date, Jaffe and his wife owned the property as tenants by the entirety. Before bankruptcy proceedings were complete Jaffe’s wife died. When she died the tenancy by the entirety terminated; Jaffe held the property individually in fee simple. In Illinois, a creditor cannot force the sale of the tenancy by the entirety property to collect a debt against only one of the tenants but not all interests held by tenants by the entirety are immune from process. Jaffe argued that his contingent future interest in the property was exempt under 11 U.S.C. 522(b)(3)(B), which refers to “any interest in property which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law. UnThe Seventh Circuit reasoned that the statute exempts any interest held by an individual as a tenant by the entirety to the extent that state law exempts that particular interest so that the property cannot be excluded from the bankruptcy estate. View "Williams v. Jaffe" on Justia Law

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Narkiewicz‐Laine, an artist, rented space from the defendants in 2004. About six years later, the defendants cleared the rental space and discarded most of his property, including his only records of the stored property. Narkiewicz‐Laine filed suit, citing the Visual Artists Rights Act, 17 U.S.C. 106A. For certain visual art, the Act confers upon artists rights to attribution and integrity, including the right to prevent the work’s destruction. Narkiewicz‐Laine added claims for trespass, conversion, and negligence under Illinois law. He sought $11 million for his losses. The defendants presented evidence that Narkiewicz‐Laine had missed multiple rent payments and stopped paying for the property's utilities, and testified that, before emptying the space, they saw nothing resembling art or valuable personal property. The defendants introduced Narkiewicz‐Laine's prior conviction for lying to an FBI agent. The jury awarded $120,000 in damages under the Act plus $300,000 on the state law claims, reflecting the loss of all the belongings stored at the unit. The court reduced the total award to $300,000 to avoid an improper double recovery, reasoning that Narkiewicz‐Laine’s common law claims necessarily included the loss of his artwork. The court concluded did not award Narkiewicz‐Laine attorneys’ fees under the Copyright Act. The Seventh Circuit affirmed, first upholding the decision to allow Narkiewicz‐Laine’s 2003 conviction into evidence. Narkiewicz‐Laine is not entitled to recover twice for the same property, so the actual damages attributed to specific art must be subtracted from the jury’s award of actual damages for all destroyed property. View "Narkiewicz-Laine v. Doyle" on Justia Law

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Carroll and Lizzie Raines purchased their Mundelein home in 1975 as joint tenants. When Raines’ wife died, he became the sole owner until his 2009 death. Raines died intestate with six heirs. In 2007, Raines had filed federal income taxes for tax years 2000, 2001, 2003, and 2004. The IRS assessed taxes, penalties, and interest that remained unpaid. In 2010, the government recorded a notice of a $115,022.42 federal tax lien with the Lake County Recorder of Deeds. The Notice incorrectly identified “Carrol V. Raines” as the debtor, omitting the second “l” from his first name, and failed to include a legal description or permanent index number, but did correctly identify the property address. Raines’ heirs conveyed their interest in the property to Chicago Title Land Trust, which made improvements and capital investments in the property. In 2017, the government instituted proceedings to foreclose the tax lien, naming Chicago Title, other financial institutions, and municipal entities. The district court found that the defendants had adequate notice of the lien, which conformed to 26 U.S.C. 6323, so the government could enforce the lien. The Seventh Circuit affirmed, upholding a determination that the Affidavit of Bond, a title insurance executive who has conducted thousands of title searches and prepared thousands of title reports, commitments, and insurance policies, was inadmissible because it consisted of undeclared expert testimony and improper legal conclusions. The errors did not make the Lien undiscoverable. View "United States v. Z Investment Properties, LLC" on Justia Law

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In 2005, Joliet proposed to condemn and raze New West's apartments as a public nuisance. By 2017 the district court held that Joliet is entitled to condemn the buildings, set just compensation at $15 million, and held that New West cannot obtain relief against the city under federal housing discrimination statutes. The Seventh Circuit affirmed. The parties then disputed the status of a reserve fund, about $2.8 million, that the Department of Housing and Urban Development (HUD) held for the federally-subsidized apartment complex. New West argued that the money came from rents to which it was entitled by contract with HUD and that, once it no longer had responsibility for the buildings, HUD must write it a check. The district court recognized that the fund was not part of the condemnation or housing-discrimination suits, but nonetheless rejected New West’s claim and concluded that the fund should accompany the buildings. The Seventh Circuit vacated. HUD controls the reserve fund and is the only entity that can use or disburse it; HUD was dismissed as a party in 2013. The court lacked authority to order HUD to do anything. New West needs to file a new action, seeking an order that the federal government pay it a sum of money, in the Court of Federal Claims, under the Tucker Act or in the district court. “In either forum, the judge should start from scratch, disregarding the missteps in the condemnation suit.” View "Joliet v. New West, L.P." on Justia Law

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Surviving Mustang fighter planes are collectors’ items. In 1965 Vartanian bought a Mustang, serial number 44-74543 and kept it in a Fulton County New York hangar. In 1985 Vartanian's representative could not find it. Vartanian suspected Martin, who had promised to restore the plane. Vartanian’s lawyer unsuccessfully demanded that Martin return the plane. Vartanian complained to the FAA, the FBI, and local police. Martin denied taking Vartanian’s plane. Martin later registered with the FAA a Mustang, serial number 44-63655. Martin asserts that it was cobbled together using parts from a plane that crashed in Nicaragua plus components acquired from several sources. In 1998 Martin sold 44-63655 to Greenhill. Vartanian learned about this transaction in 2002 or 2003 by reading a magazine article that incorrectly identified it as 44-74543. Vartanian hired another lawyer, who died before filing suit. Vartanian did not follow up until after learning in 2013 that there were irregularities in the serial numbers of several of Martin’s planes. Vartanian demanded that Greenhill return the plane. Greenhill sought a declaratory judgment of ownership. Vartanian filed counterclaims. The Seventh Circuit affirmed that the counterclaims were untimely and that the aircraft is free of Vartanian's claim. Although federal law provides the registration system, state law supplies the rules for determining ownership, 49 U.S.C. 44108(c)(1). For conversion claims, Illinois law establishes a five-year limitations period that starts when the injured party “knows or reasonably should know” of the injury and its cause. Vartanian knew in 1985 that his Mustang had vanished; he suspected Martin immediately and knew long ago what serial number Martin was using. Even if Illinois would not apply a statute of limitations, the doctrine of laches would remain. View "Greenhill v. Vartanian" on Justia Law