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

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

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

World Outreach, a religious organization, purchased a YMCA building in a poor area of Chicago, planning to rent rooms to needy persons. The YMCA had a license for that use, even after the area was rezoned as a community shopping district. The city refused to grant World Outreach a license, ostensibly because it did not have a Special Use Permit (SUP). After the area was reclassified as a Limited Manufacturing/Business Park District, the city sued in state court, contending that the use was illegal. The city later abandoned the suit. World Outreach sued under the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42 U.S.C. 2000cc. The city relented and granted the licenses. According to World Outreach the city continued harassing it. On remand, the district court entered summary judgment in favor of the city on all but one claim. The Seventh Circuit affirmed partial summary judgment in favor of World Outreach, regarding the attorneys’ fees for having to defend itself against a frivolous suit, reversed partial summary judgment to the city, and remanded. The frivolous suit cannot be thought to have imposed a merely insubstantial burden on the organization, but the organization presented weak evidence concerning damages for the two years during which it was denied a license. View "World Outreach Conference Ctr. v. City of Chicago" on Justia Law

A large commercial development in Kansas City, Missouri was aborted in the middle of construction due to cost overruns. When the developer would not cover the shortfall, the construction lender stopped releasing committed loan funds, and contractors filed liens against the property for their unpaid work on the unfinished project. Bankruptcy followed, and the contractors’ liens were given priority over the lender’s security interest in the failed development, leaving little recovery for the lender. The lender looked to its title insurer for indemnification. The title policy generally covers lien defects, but it also contains a standard exclusion for liens “created, suffered, assumed or agreed to” by the insured lender. The Seventh Circuit affirmed judgment in favor of the title company. The exclusion applies to the liens at issue, which resulted from the lender’s cutoff of loan funds, so the title insurer owed no duty to indemnify. The liens arose from insufficient project funds, a risk of loss that the lender, not the title company, had authority and responsibility to discover, monitor, and prevent. View "BB Syndication Servs, Inc. v. First Am. Title Ins. Co" on Justia Law

Michael's brother, Kevin, purchased a lakefront lot. Michael was to cover expenses and ultimately purchase the lot. A dispute arose and Kevin put the lot up for sale. Kevin offered to reimburse Michael $54,049.10 and directed Michael to stop tampering with “For Sale” signs. Michael recorded a lien. Although Michael had about a 5% interest in the lot, the lien stated that Kevin “acquired title for convenience only.” Kevin sought a declaration of quiet title, and alleged slander of title, partition, and breach of contract. The jury was instructed, based on Wis. Stat. 706.13(1), which defines slander of title as submitting, entering, or recording, claim of lien, lis pendens, writ of attachment, financing statement or other instrument relating to a security interest in or the title to property, if the submitter “knows or should have known” that any part of the instrument was false, a sham, or frivolous. An interlocutory judgment of $281,000 was entered for Kevin. Michael filed a bankruptcy petition. Kevin asserted that their judgment was precluded from discharge under 11 U.S.C. 523(a)(6) as a “willful and malicious injury.” The bankruptcy court concluded that the issue was preclusively decided and entered judgment for Kevin. The district court affirmed. The Seventh Circuit reversed. The state court jury’s slander of title findings did not preclusively established that Michael acted “willfully.” The verdict could have been based on negligence. View "Gerard v. Gerard" on Justia Law

The owners of multifamily housing rental projects in Wisconsin that are assisted by the U.S. Department of Housing and Urban Development program under Section 8 of the Housing Act, 42 U.S.C. 1437f sued the Wisconsin Housing and Economic Development Authority (WHEDA), alleging WHEDA breached certain Housing Assistance Payments (HAP) contracts by failing to approve annual rent increases,as required by federal law, and by requiring the owners to submit rent comparability studies as a prerequisite to receiving rent increases. WHEDA filed a Third-Party Complaint against HUD, alleging that, if WHEDA is found to have breached the HAP contracts, then those breaches resulted from WHEDA following congressional and HUD directives. The district court dismissed for lack of subject-matter jurisdiction. The Seventh Circuit reversed, noting that the district court’s order was entered without the benefit of the parties’ full briefing on jurisdiction. While state law may create the breach-of-contract causes of action, the only disputed issues involve the proper interpretation of Section 8 and HUD’s implementing guidance. The issues are “capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” View "Wis. Hous. & Econ. Dev. Auth. v. Castro" on Justia Law

The Nelsons sued Chicago law firm Freeborn & Peters for malpractice, seeking $1.3 million in damages and were awarded more than $1 million. The malpractice claim arose from a transaction that the law firm handled involving acquisition of a shopping center under construction in Algonquin, Illinois. The law firm represented both the contract purchaser and the Nelsons, who invested in the venture, which suffered losses following the downturn of September 2008. The Seventh Circuit affirmed, finding that any error in the allocation of damages did not hurt the law firm or any creditors. View "Nelson Bros. Prof'l Real Estate, LLC v. Freeborn & Peters, LLP" on Justia Law

The Clean Air Act, 42 U.S.C. 7401, allows each state to craft a state implementation plan to control the levels of certain air pollutants. Most state plans include “Prevention of Significant Deterioration” (PSD) programs, to prevent backsliding in “attainment areas” that meet or exceed the Act’s air quality standards, while allowing some new sources of pollution. A PSD program prevents designated sources from propelling the region’s aggregate emissions over specified limits. The Act establishes these limits by setting a baseline and a cap on pollutants above that baseline. The Act grandfathers sources operational before 1975: the baseline incorporates their emissions, with post-1975 sources counting against the allowance. Title V of the Act requires each covered stationary source to have an operating permit. In 2002 Georgia-Pacific asked Wisconsin to renew the Title V permit for its pre-1975 paper mill. Meanwhile, Georgia-Pacific modified a paper machine at the plant. The application was unopposed and the modification permit issued in February 2004. In 2011 Wisconsin reissued the plant’s operating permit. Objectors claim that modifications to any part of a plant require all emissions from the plant, including pre-1975 emissions incorporated into the baseline, to count against the state’s allowance, so that the whole plant might need to close for lack of available allowance. The U.S. EPA declined to object, concluding that Wisconsin’s approach is consonant with its understanding of the statute. The Seventh Circuit denied a petition for review. EPA presented a reasonable interpretation of an ambiguous statutory provision.View "Clean Water Action Council of NE WI, Inc. v. Envtl. Prot. Agency" on Justia Law