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

In 1920 Peoples Gas and Beazer’s predecessor entered into a contract, Beazer agreed to to operate a plant for coke by-products and carbureted water gas (Chicago Coke), at Crawford Station, Chicago, using its patented coke-oven technology. Peoples agreed to purchase all of the gas and coke manufactured at the plant for distribution to consumers. Chicago Coke opened in 1921. Seven years later, Peoples acquired its assets. Later, Peoples purchased Coke’s stock and took over operations until 1956. Some of the land is still owned by Peoples. Peoples worked with the U.S. EPA and the Illinois EPA to investigate environmental contamination at the Crawford site and entered into agreements with the EPA. For investigation and removal at Crawford, Peoples incurred over $70,000,000 in costs. Peoples sued Beazer to recover costs under CERCLA, 42 U.S.C. 9607(a) and 42 U.S.C. 9613(f)(3)(B). The district court dismissed in part, finding that Peoples had resolved its liability to the government via administrative settlement and, therefore, only had a claim for contribution; that each consent order was subject to the three-year limitations period under 42 U.S.C. 9613(g)(3)(B); and that a contribution claim under the 2011 consent order was barred by Beazer’s operator liability. The court denied Beazer’s motion as to claim ownership liability. The Seventh Circuit affirmed: the 1920 agreement bars Peoples’ contribution claims against Beazer. View "Peoples Gas Light & Coke Co, v. Beazer East Inc." on Justia Law

Avila bought his Chicago home with a $100,500 CitiMortgage loan. Five years later, a fire made the house uninhabitable. Avila’s insurance carrier paid out $150,000. CitiMortgage took control of the proceeds and paid $50,000 to get the restoration underway. CitiMortgage later inspected the work and found that it needed to be redone. By then Avila had missed several mortgage payments. CitiMortgage applied the remaining $100,000 toward Avila’s outstanding mortgage loan. Avila’s home was not repaired. CitiMortgage never claimed that restoration was economically infeasible or would reduce its security interest. Nor had any of three special conditions described in the mortgage occurred. Avila sued, alleging breach of fiduciary duty and the mortgage contract, seeking to represent a class of defaulting CitiMortgage borrowers whose insurance proceeds had been applied to their mortgage loans rather than repairs. The district court dismissed, reasoning that the allegations did not support a fiduciary duty on CitiMortgage’s part and Avila was barred from pursuing his contract claim because he had materially defaulted on his own obligations. The Seventh Circuit agreed that allegations of a fiduciary relationship were inadequate as a matter of law, but held that a claim that the mortgage agreement remained enforceable after his missed payments was plausible in light of the agreement’s structure and the remedies it prescribes in the event of default. View "Avila v. CitiMortgage, Inc." 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 IRS assessed deficiencies against Williams in connection with his income tax for 1996-2005, totaling, with interest and penalties, about $1.3 million. He did not pay. The IRS filed tax liens in Clark County, Indiana, where Williams and his wife Leslie jointly own land. The state and county also filed liens. The district court entered an order that specifies how much Williams owes to each of the three taxing bodies, orders the property to be sold and the net receipts applied to these debts, and details how the money will be divided among the United States, the state, the county, and Leslie. The order states that it is the court’s final decision; the Williamses appealed. The mortgage lender argued that foreclosure governed by Illinois law is not final, and not appealable, because the amount of a deficiency judgment depends on the reasonableness of the sale price, and the validity of the sale itself is contestable to determine whether the outcome is equitable. Illinois provides debtors with multiple opportunities to redeem before a transfer takes effect. The Seventh Circuit affirmed. The foreclosure sale is governed by 26 U.S.C. 7403(c), which does not provide for deficiency judgments and does not give the taxpayer a right of redemption. View "United States v. Williams" 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

Stars is a nude dancing establishment in Neenah, Wisconsin. When Stars opened in 2006, the County had a zoning ordinance governing Adult Entertainment Overlay Districts. Stars’s application was stalled because, all parties agree, the 2006 ordinance violated the First Amendment. Its owner sued in federal court, arguing that anything is legal that is not forbidden, and Staars was banned only by an unconstitutional ordinance: therefore, Stars was permitted in 2006 and is now a legal nonconforming use that cannot be barred by a later ordinance. The court granted summary judgment to Winnebago County, reasoning that it was possible to use the law’s severance clause to strike its unconstitutional provisions. The Seventh Circuit reversed in part, agreeing that the permissive use scheme laid out in the ordinance was unconstitutional, but reasoning that, after the constitutional problems are dealt with, the remaining questions concern state law. Their resolution depends on facts that were not developed, and on the possible existence of a power not only to sever problematic language but to revise it—a power federal courts do not have. The district court should have declined to exercise supplemental jurisdiction over the state-law claims and should have dismissed them without prejudice so that the parties may pursue them in state court. View "Green Valley Inv., LLC v. Winnebago Cnty." on Justia Law

Monsanto operated chemical plants and disposed of waste, including PCBs, at sites within Sauget Area 1. In 1999, the government filed suit under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), to recover EPA costs in removing hazardous substances from Area 1, which follows Dead Creek through Sauget and Cahokia, Illinois. Monsanto (later Pharmacia) and Solutia, original defendants, filed a third-party complaint adding Rogers, which formerly operated trucking depots near Area 1, alleging that Rogers washed trucks after hauling hazardous substances, releasing substances into drainage systems that emptied into Dead Creek. The government added Rogers as a defendant, and other defendants brought cross-claims. In 2003, the court dismissed other claims against Rogers because it had been found not liable on the government’s claim under 42 U.S.C. 9607. In 2007, the Supreme Court decided “Atlantic Research,” establishing that potentially responsible parties that incur voluntary CERCLA cleanup costs may seek contribution from other potentially responsible parties. Four defendants filed an amended cross-claim; Rogers filed counterclaims, alleging that Monsanto had arranged for transport and disposal of hazardous substances without informing Rogers of the nature of the substances involved. The four settled, with Rogers paying $50,000 if it cooperated in efforts to recover the difference from its insurer. The settlement released all claims “brought or alleged, or which could have been brought or alleged” in the EPA action. The agreement contemplated that cleanup of Rogers’s depot would be paid for out of settlement proceeds. Rogers leased that land from ConocoPhillips, which filed a separate action against Rogers, seeking contribution for its voluntary cleanup costs. Rogers filed a third-party complaint against Pharmacia and Solutia. The Seventh Circuit affirmed the subsequent dismissal, finding the claim barred, by the settlement, and sanctions against Rogers. View "Rogers Cartage Co. v. Monsanto Co." on Justia Law

Carter lost his home in Crete, Illinois, after its mortgage foreclosed. He sued the financial institutions involved in making, servicing, or foreclosing his mortgage, alleging constitutional claims based on the fact that the “foreclosing entity” (not identified) did not hold the note or mortgage at the time of the foreclosure. The district court dismissed the suit as frivolous. The Seventh Circuit agreed that the suit and a similar pending suit are “indeed frivolous” and affirmed dismissal. In neither case did the complaint allege anything that might support an inference that the defendants were state actors under 42 U.S.C. 1983. A claim must be dismissed “if it is clear beyond any reasonable doubt that a case doesn’t belong in federal court, the parties cannot by agreeing to litigate it there authorize the federal courts to decide it.” View "Carter v. Homeward Residential, Inc." 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