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

In order to receive federal housing funds (42 U.S.C. 2000d; the Fair Housing Act, 42 U.S.C. 3601; and “42 U.S.C. 608(e)(5), 5304(b)(2), and 12705(b)(15)), the City of Chicago must certify that it is in compliance with federal requirements related to reducing the city’s admitted racial segregation. Hanna filed a qui tam suit, alleging that the city violated the False Claims Act because its policies, particularly “aldermanic privilege” and strategic zoning of relatively wealthy neighborhoods, have actually increased segregation, making its certifications false. Under “aldermanic privilege,” the City grants each alderman the “full authority to determine whether and where affordable, multifamily rental housing will be built and renovated in the ward.” The Seventh Circuit affirmed the dismissal of the complaint. Hanna did not allege the circumstances of the purported fraud with sufficient particularity to satisfy Federal Rule of Procedure 9(b). Hanna apparently had no insider information. He did not allege the “time, place, … and the method by which the misrepresentation was communicated” to him. Hanna’s complaint gave no information about which regulatory provisions Hanna thinks the city violated; it does not draw a link between the statutes Hanna cited and any particular alleged false certification. View "Hanna v. City of Chicago" on Justia Law

In 2006, the Zoretics rented a Castilian Court condominium. Their landlord stopped paying condominium assessments and lost possession to Castilian in 2008. Castilian obtained an eviction order. The Cook County Sheriff evicted the family in January 2009. Later that day, Castilian’s agent allowed them to reenter the unit, agreeing they would sign a new lease. Zoretic never signed the lease or paid rent. After receiving no response to two letters, Castilian’s lawyers obtained a new date stamp (April 2009) from the Clerk on the September 2008 order and placed the order with the Sheriff. On June 5, deputies knocked, announced their presence, got no answer, opened the door, and entered the unit with guns drawn. They found Zoretic, put down their weapons, conducted a protective sweep, and escorted Zoretic out of the unit. Days later, Zoretic sued and was awarded possession until Castilian obtained a lawful eviction order. The family returned, continued not paying rent, and were evicted in March 2012. Zoretic sued under 42 U.S.C. 1983. The court granted the defendants summary judgment. The Seventh Circuit reversed as to Fourth Amendment claims against the deputies, but affirmed as to claims of intentional infliction of emotional distress against the owners. Zoretic failed to create a material factual dispute about whether the owners were extreme and outrageous in pursuing eviction. View "Zoretic v. Darge" on Justia Law

Pike County's Sny Island Levee Drainage District was organized in 1880 to protect from Mississippi River flooding and runoff. The Kansas City Southern and the Norfolk Southern operate main line railways over the District's flood plain. Illinois law permits the District to assess properties within its territory in order to maintain the levees. A new method, ​adopted in 2009, purported to calculate assessments based on the benefits the District conferred on each property, rather than based on acreage. After the Seventh Circuit enjoined use of the methodology, the District discontinued collecting annual assessments and implemented a one-time additional assessment, 70 ILCS 605/5. The District filed an assessment roll based on new benefit calculations, identifying the tax on KC as $91,084.59 and on Norfolk as $102,976.18, if paid in one installment..The Railroads again filed suit, alleging that the District used a formula that discriminated against them in violation of the Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. 11501. The Seventh Circuit affirmed judgment in favor of the District. The court rejected an argument that the comparison class against which their assessment should be measured is all other District properties, instead of the narrower class of commercial and industrial properties used by the district court. There was no clear error in the court’s assessment of a “battle of the experts.” View "Kansas City S. Ry. v. Sny Island Levee Drainage Dist" on Justia Law

In 2008, the Marchettis purchased real estate for $180,000, with a loan for that amount, plus $155,000, for planned improvements. Jonathon Marchetti acted as buyer, real-estate broker, mortgage broker, and general contractor. Three months earlier, Jonathon had been indicted for mortgage and wire fraud regarding other real-estate transactions. He ultimately pleaded guilty. The parcel, which the Marchettis nominally acquired from Seville, actually was owned by Lekich. A series of sham transactions orchestrated by Hodgman made it look as if Seville held title. In 2010 Lekich sought to quiet title. The Lender had the property appraised at $110,000, agreed to accept $110,000 from a Chicago Title Insurance policy as full satisfaction, and released the Marchettis from liability. Lekich’s suit settled. Chicago Title became subrogated to the Marchettis’ claims against their predecessors in title. Hodgman was indicted. Chicago Title obtained $37,500 in restitution. The Marchettis sued, claiming that Chicago Title owed them $37,500 from Hodgman, plus the $88,000 difference between the maximum value of the policy and the amount paid the Lender. The Marchettis had the property appraised for $202,000, and claimed that the insurer had to disburse the policy’s $198,000 maximum value. The Seventh Circuit affirmed summary judgment in favor of Chicago Title. Market value matters only as one determinant of how much loss the owner suffers. The Marchettis suffered no loss; they had no equity interest in the property. View "Marchetti v. Chicago Title Ins. Co." on Justia Law

The bank filed a residential mortgage foreclosure suit in Wisconsin state court. The owners, citizens of Minnesota, removed the case to federal court based on diversity of citizenship. The district court entered a judgment of foreclosure, ordered the property sold at a sheriff’s auction after the time for redemption expired, and held that the bank would not be entitled to obtain a deficiency judgment. The owners appealed. In the meantime, the Seventh Circuit held (Townsend decision) that a judgment of foreclosure applying Illinois law was not a final, appealable judgment under 28 U.S.C. 1291, then dismissed the Wisconsin foreclosure appeal. The court noted that both judgments: determined the amount owed as of the judgment date; allowed the bank to seek additional costs before the sale; ordered a sale, but only after passage of the redemption period under state law; ordered the sheriff to report the sale for court confirmation; and ordered that, upon confirmation, the auction purchaser would be entitled to possession of the property. Unlike in Townsend, the Wisconsin judgment precludes any deficiency judgment, so that the bank’s recovery is limited to the sale proceeds. Given a post‐judgment state law right of redemption and a sale that requires further court approval before taking effect, the fact that Wisconsin courts treat a foreclosure judgment ordering a sale as final and appealable does not override the federal standard of finality. View "Bank of America, N.A. v. Martinson" on Justia Law

In 2005 the City of Joliet filed a condemnation action concerning the Evergreen Housing Complex. The complex’s owner filed suit under the Fair Housing Act and other federal statutes. After a remand by the Seventh Circuit, the condemnation suit went to trial, spread over more than 18 months of calendar time. In 2014, the district court held that Joliet is entitled to possess (and demolish) Evergreen Terrace, but did not decide the amount of compensation. Pursuant to 735 ILCS 30/10-5-5(a), a jury concluded that $15,077,406 was just compensation. The owner appealed, arguing that Evergreen Terrace is not dilapidated and that razing the buildings would have a disparate impact on its predominantly black tenants, in violation of the Fair Housing Act, 42 U.S.C. 3604. The Seventh Circuit affirmed the district judge’s rejection of those arguments. There was substantial evidence to support a finding of no discriminatory intent or disparate impact. The complex is dilapidated and crime-ridden and the city plans to use the land to extend the existing Riverwalk park. View "City of Joliet v. New West, L.P." on Justia Law

The Blanchards agreed to sell Marathon County property to the Hoffmans, who paid $30,000 up front. The land contract balance was due in 2015, with an option to close early by paying off the Blanchards’ new $142,000 mortgage, obtained as part of the agreement. The parties signed a separate “rental agreement,” under which the Hoffmans paid $500 per month. The land contract was not recorded. The lender obtained an Assignment of Leases and Rents as collateral, but did not obtain an Assignment of Land Contract. The bank recorded its mortgage and the Assignment. In 2014, the Blanchards filed a bankruptcy petition. The trustee filed an adversary proceeding against the lender under 11 U.S.C. 544(a)(3), which grants him the position of a bona fide purchaser of property as of the date of the bankruptcy, to step ahead of the mortgage and use the Blanchards’ interest in the land contract for the benefit of unsecured creditors. The trustee argued that a mortgage can attach a lien only to real property and that the Blanchards' interest under the land contract was personal property. The district court affirmed summary judgment in favor of the bank. The Seventh Circuit affirmed. A mortgage can attach a lien to a vendor’s interest in a land contract under Wisconsin law; this lender perfected its lien by recording in county land records rather than under UCC Article 9. View "Liebzeit v. Intercity State Bank, FSB" on Justia Law

Jepson executed a note and mortgage on Illinois property, listing America’s Wholesale Lender as the lender and Mortgage Electronics Registration Systems (MERS) as its nominee. Jepson’s note was endorsed in blank by Countrywide, “doing business as America’s Wholesale Lender” and transferred to CWABS, a residential mortgage trust that pools loans and sells certificates backed by the mortgages to investors. CWABS was formed and governed by a Pooling and Service Agreement (PSA). BNYM, trustee for CWABS, now possesses Jepson’s note. MERS assigned Jepson’s mortgage to BNYM. Jepson defaulted. BNYM filed a foreclosure complaint. Jepson filed a Chapter 7 bankruptcy petition. BNYM sought to lift the automatic stay. Jepson filed an adversary complaint, seeking a declaration that BNYM had no interest in her mortgage because the note did not include a complete chain of intervening endorsements and was endorsed after the closing date in the PSA and that America’s is a fictitious entity, so that the note was void and not negotiable under Illinois law. The bankruptcy court held that, under governing New York law, Jepson lacked standing to challenge alleged violations of the PSA, dismissed the adversary complaint, and modified the automatic stay to allow BNYM to proceed with its Illinois foreclosure action. The district court affirmed. The Seventh Circuit agreed that Jepson lacks standing to raise challenges based on the PSA, but remanded for consideration of her other claims. View "Jepson v. Bank of NY Mellon" on Justia Law

In 2004, the Simstads, developers, began the process of seeking approval from the Lake County Plan Commission for a proposed subdivision, “Deer Ridge South.” In late 2006, the Commission approved the plans. The Simstads believed that approval was delayed, at great cost to them, because of their support in 1996 for commission member Scheub’s opponent in the County Commissioner primary race. They sued Commission members and Lake County, alleging violations of the First and Fourteenth Amendments, the Racketeer Influenced and Corrupt Organizations Act (RICO), and various Indiana laws. A jury ruled in favor of the defendants. The Seventh Circuit affirmed, first noting that a defense of claim preclusion, based on earlier state proceedings, had been waived. The district court did not abuse its discretion in allowing a belated answer to the amended complaint or in allowing the defendants to withdraw their deemed admissions. Rejecting an argument that approval was a ministerial act, the court stated that determination of whether a project meets the ordinances, with or without waivers, involves some degree of discretion. The court noted the absence of evidence of animus. View "Simstad v. Scheub" on Justia Law

Since 2001 Hoyt has owned a 40-acre lot (with a cabin) in a heavily forested region in southwestern Indiana. His lot is surrounded by lots owned by others, including a lot owned by the U.S. Forest Service. None will allow him to use their land to enable vehicular access to his property. No public roads touch his land. The owner of the lot directly to his north allows him to walk through that lot to access his lot. Wanting access to West Burma Road, which runs close to the southeastern corner of Hoyt’s lot, he sued under Indiana law and the Quiet Title Act, 28 U.S.C. 2409a. The access he sought would cross three lots. The district judge rejected his claims. The Seventh Circuit affirmed, calling the duration of the litigation “inexplicable and inexcusable.” The court rejected claims of prescriptive easement over the Forest Service land and of an easement of necessity over the southwestern lot. View "Hoyt v. Benham" on Justia Law