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

The Developer converted a vacant building into a residential condominium by gutting and refitting it. The Developer purchased Commercial Lines Policies covering bodily injury and property damage from Nautilus, covering periods from June 1998 through June 2000. The policies define occurrence as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” but do not define accident. The policies exclude damage to “that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations;” eliminate coverage for damage to “that particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it;” and contain an endorsement entitled “Exclusion—Products-Completed Operations Hazard.’ Construction was completed in 2000; the Developer transferred control to a board of owners. By May 2000, one homeowner was aware of water damage. In 2005, the Board hired a consulting firm, which found that the exterior brick walls were not fully waterproofed and concluded that the deterioration had likely developed over many years, even prior to the condominium conversion, but that the present water penetration was the result of inadequate restoration of the walls. The Board sued the Developer. Nautilus denied coverage and obtained a declaratory judgment. The Seventh Circuit affirmed, reviewing the policy and finding that the shoddy workmanship, of which the board complained, was not covered by the policies; that Nautilus did not unduly delay pursuing its declaratory suit; and that the alleged damage to residents’ personal property occurred after the portions of the building were excluded from coverage.View "Nautilus Ins. Co. v. Bd. of Dirs. of Regal Lofts Condo Ass'n" on Justia Law

When purchasing a house, the defendants submitted loan documents containing false incomes and bank statements, and failed to disclose that husband’s company was selling and his wife was buying. The company received $750,000 and rebated money paid above that amount to husband. The $1 million in loans they received resulted in $250,000 extra that was not disclosed as going to the couple. They were able to sell the house four months later for the same inflated amount, without raising any concerns. They failed to disclose on the HUD-1 forms in the second transaction that they would be giving the buyer kickbacks. The buyer received $1,090,573.06 in loans, but defaulted without making a payment. The lender eventually sold the house for $487,500. Defendants were convicted of three counts of wire fraud, 18 U.S.C. 1343 and aiding and abetting wire fraud, 18 U.S.C. 2. The Presentence Investigation Report determined that the lender’s loss was $603,073.06 and recommended a 14-point enhancement under USSG 2B1.1(b)(1)(H). The Seventh Circuit affirmed the convictions but remanded for explanation of why the loss was “reasonably foreseeable” and why the sentencing enhancement was proper. Involvement in a fraudulent scheme does not necessarily mean it was reasonably foreseeable that all the subsequent economic damages would occur; there was no evidence that defendants knew they were selling to what turned out to be a fictional buyer. View "United States v. Domnenko" on Justia Law

Thomas and Chapman were part of a scheme to fleece real estate lenders by concocting multiple false sales of the same homes and using the loan proceeds from the later transactions to pay off the earlier lenders. They were convicted of multiple counts of wire fraud. Thomas was also convicted of aggravated identity theft for using an investor’s identity without permission to craft a phony sale of a home that the victim never owned. The Seventh Circuit affirmed, rejecting: challenges to the sufficiency of the evidence; a claim by Thomas that there was no proof that he created or used the falsified documents at issue; Chapman’s claim that there was no evidence that he was the Lamar Chapman identified by the evidence, because no courtroom witness testified to that effect; Chapman’s claim that his due process rights were violated when the government dropped a co-defendant from the indictment; and a claim that the government failed to turn over unspecified exculpatory evidence. The court noted testimony from several victims, an FBI investigator, an auditor, and an indicted co-defendant who had already pleaded guilty. View "United States v. Chapman" on Justia Law

Spencer stopped paying her mortgage in 2008. In Wisconsin state court foreclosure proceedings, Spencer’s attorney, Nora, adopted an “object-to-everything litigation strategy and buried the state court in a blizzard of motions.” While a hearing on a summary judgment motion was pending in state court, Nora removed the case to federal court. Finding no objectively reasonable basis for removal, the district court remanded the case and awarded attorney’s fees and costs to the lender, 28 U.S.C. 1447(c). The Seventh Circuit dismissed Spencer’s appeal as frivolous; the district court did not order her to pay anything. The court affirmed the award as to Spencer “because she has not offered even a colorable argument that removal was reasonable” and ordered Nora to show cause why she should not be sanctioned for litigating a frivolous appeal. View "PNC Bank, N.A. v. Spencer" on Justia Law

In 1952 an Illinois owner granted a pipeline operator an easement for two pipelines across the parcel. The first was built immediately; the second, if built, had to be within 10 feet of the first. The contract says that any pipeline must be “buried to such depth as will not interfere with such cultivation.” In 2012 the operator notified the owner that it planned to build a second pipeline. The owner filed a quiet-title suit, alleging that either the right to build a second line had expired or that another line would violate the farmability condition. The operator replied that 49 U.S.C. 60104(c), preempts enforcement of the farmability condition. The district court dismissed. A second pipeline has been built 50 feet from the first, using eminent domain to obtain the necessary rights, but the owner anticipates construction of a third pipeline. Vacating the judgment, the Seventh Circuit held that no construction is currently planned and the district court acted prematurely. Until details of a third pipeline’ are known, it is not possible to determine what effect it would have on agricultural use. Only if a third pipeline prevents using the land for agriculture would it be necessary (or prudent) to determine whether section 60104(c) establishes a federal right to destroy more of the land’s value than paid for in 1952. The court stated that it had no reason to think that Illinois would call the 1952 contract an option or apply the Rule Against Perpetuities. View "Knight v. Enbridge Pipelines, L.L.C." on Justia Law

The Gagnards built a house in Los Altos, California, then sold the home to Goldman in January, 2004. Since then, Goldman has sued the Gagnards and those involved with the construction and sale of the house in various tribunals. In 2011, Goldman registered a foreign arbitral award in Illinois. She then sought citations to discover and collect assets. The district court issued denied reconsideration motions and granted a turnover order. After filing an appeal, the Gagnards paid $1.3 million to Goldman in satisfaction of the judgment. Goldman accepted the payment, and refunded money she had collected in excess of the judgment balance. The district discharged all pending citations and allowed the Gagnards to file a counterclaim against Goldman, claiming unjust enrichment, but subsequently dismissed the counter-complaint. The Seventh Circuit affirmed, based on the failure, by the Gagnards to act in a timely manner. View "Goldman v. Gagnard" on Justia Law

Trump Tower Chicago is a 92-story building with 486 residential condominium units, 339 hotel condominium units, retail space, a health club, ballrooms, meeting rooms, restaurants, a hair salon, and other facilities. When the owner of a hotel condominium unit is not occupying the unit, building management can rent it to a visitor; rental income is divided with the owner’s share credited against his annual maintenance fee. Plaintiff, an 80-year-old CPA and financial planner, agreed to buy two hotel condominium units in 2006 for $2.2 million. She bought them as an investment and already owned other investment condominium units, including a residential unit in Trump Tower Chicago. The agreement gave TrumpOrg “the right, in its sole and absolute discretion, to modify the Condominium Documents.” Plaintiff asked TrumpOrg to give her the right to terminate the agreement and get her deposit back if she disapproved of any such changes. TrumpOrg refused. Plaintiff signed the agreement, even though TrumpOrg had already made three changes. The next year, TrumpOrg made changes that greatly curtailed owners’ rights in the hotel facilities. Plaintiff refused to close. TrumpOrg did not seek to compel her to close, but did not return her down payment, $516,000 and canceled the purchase agreement. Plaintiff sought damages under the common law of contracts, the Illinois Consumer Fraud and Deceptive Business Practices Act, the Condominium Property Act, and Illinois Securities Law. The district court ruled in favor of the defendants. The Seventh Circuit affirmed. View "Goldberg v. 401 N. Wabash Venture, L.L.C., " on Justia Law

In 2006 Iroanyah obtained first and second mortgage loans of $192,000 and $36,000. The Disclosure Statement for each displayed the repayment schedule, including the number of payments, the amount due for each, and the due dates for the first and last payments. Neither disclosure included the dates on which each payment was due, nor did they include the frequency with which payment should be made. The Iroanyahs admitted that they understood that payments were to be made monthly. They stopped making payments in 2008. In response to foreclosure proceedings in state court, the Iroanyahs sent a rescission notice for the first loan, citing deficient disclosure statements in violation of the Truth in Lending Act. The lender denied violation, but agreed to rescind the loan upon payment of $169,015.30. The Iroanyahs sent rescission notices for the second loan, to which there was no response They filed suit. The court agreed that the disclosures violated TILA, which extended the right of rescission to three years; statutory damages were denied under a one year limitation period. The court held that failure to respond to the rescission notices violated TILA, triggering an award of statutory damages for failure to respond and actual damages for attorneys’ fees. The Iroanyahs sought awards of $38,812 and $33,849. The district court awarded fees and costs in the amount of $16,433 against one lender and $13,433 against the other. The Seventh Circuit affirmed. View "Iroanyah v. Bank of America, N.A." on Justia Law

In 2008 the Kathreins challenged Evanston’s Affordable Housing Demolition Tax under the Fifth and Fourteenth Amendments. The Tax required a property owner seeking to demolish any residential building to pay the greater of $10,000 per building, or $3,000 per unit. The measure is to “provide a source of funding for the creation, maintenance, and improvement of safe and decent affordable housing; proceeds go to the city’s Affordable Housing Fund. The Kathreins alleged that a developer, learning of the Tax, lowered his bid on their property. The sale fell through. The Kathreins also alleged the unconstitutionality of the Tax Injunction Act (TIA), 28 U.S.C. 1341, which forbids federal courts to enjoin assessment or collection “of any tax under State law,” so long as there is a remedy in state court. The district court dismissed. A Seventh Circuit panel reversed in part, holding that the Demolition Tax was a regulatory device, not a tax under the TIA, because it provided a deterrent against demolition of residential buildings and raised little revenue. Before the district court could resolve remaining claims on remand, the Seventh Circuit, en banc, rejected the approach to identifying a tax taken in the Kathrein case, holding that an “exaction[] designed to generate revenue” was a tax, contrasted to fines “designed … to punish,” and fees that “compensate for a service,” but did not directly overrule the Kathrein decision. The district court applied the new holding and again dismissed. The Seventh Circuit affirmed, stating that the decision of the en banc court did effect an intervening change in the law. View "Kathrein v. City of Evanston, IL" on Justia Law

Until the early 1970s, CBS (formerly Westinghouse) manufactured electrical capacitors at a Bloomington plant, using insulating fluid containing PCBs, which are carcinogens to humans and wildlife. CBS deposited defective capacitors at landfills where PCBs escaped and entered the environment and discharged PCB-laden water to a local sewage treatment plant. After PCB contamination was discovered and traced to six sites, federal, state, and municipal governments filed a Comprehensive Environmental Response Compensation and Liability Act (CERCLA), 42 U.S.C. 9600, enforcement action, which resulted in a 1985 consent decree requiring CBS to dig up all PCB-contaminated materials at the sites and destroy them in a high-temperature incinerator. The Indiana legislature blocked the plan. The parties agreed on modified remedies for three sites but were unable to agree on remedies for the Lemon and Neal Landfills and Bennett’s Dump, all on CERCLA’s National Priorities List. The parties negotiated in stages to allow clean up to begin before resolution of all issues and established three phases. Stage 1 required CBS to remove sediment from the landfill contamination hot spots, to clean sediment at Bennett’s Dump to “industrial standards,” and to install caps at all three sites. After CBS completed Stage 1 in 2000, tests showed that PCBs had migrated into the bedrock and were still being released from into water and sediment. Stages 2 and 3 address current and future contamination of groundwater and sediment. In 2009 the district court approved a consent amendment in the ongoing CERCLA action and rejected citizens’ claims with respect to phases two and three. The Seventh Circuit affirmed. Section 113(h)(4) prevents the courts from reviewing claims about stages in progress, but does not bar judicial review of claims about the first remedial stage that are not affected by continuing clean-up efforts.View "Frey v. Envtl. Prot. Agency" on Justia Law