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United States v. Western Phase II

July 17, 2006


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge


The United States brought this action against Western Phase II, LLC and 2929 N. Western Avenue, LLC (collectively "Western") to reduce to judgment the civil penalties imposed against Western pursuant to a United States Department of Housing and Urban Development ("HUD") administrative proceeding. Plaintiff also seeks attorneys fees. Plaintiff has moved for summary judgment. For the reasons stated below, the Court grants the motion.


The facts in this case are undisputed. Defendants are Illinois limited liability companies with their principal place of business in Chicago. On April 29, 2005, HUD served an administrative complaint on Western for violations of the Interstate Land Sales Full Disclosure Act ("Act"), 15 U.S.C. §§ 1501 et seq. Western did not respond to the complaint.

On June 2, 2005, an Administrative Law Judge entered a default judgment in the amount of $230,400 against the defendants jointly and severally. HUD sent notice of the default judgment to Western. Western did not seek administrative or judicial review of the default order within the period allowed by statute. Western has not paid the civil penalty. On February 27, 2006, the United States filed this action to obtain a monetary judgment against Western.


Summary judgment will be granted only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The Court must construe all facts and any reasonable inferences in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Western does not dispute that it violated the Act sometime in 1998. The Act describes the procedure for imposing civil monetary penalties resulting from a violation. Specifically, if a person knowingly violates the Act, the Secretary of HUD may impose a civil penalty after the alleged violator has been given an opportunity for an administrative hearing. 15 U.S.C. §§ 1717a(a), 1717a(b)(1)(A). If the alleged violator does not request a hearing within 15 days of receipt of notice of the opportunity for a hearing, imposition of the penalty becomes final. Id. § 1717a(b)(2). A person upon whom a penalty has been imposed may seek judicial review after exhausting administrative remedies. Id. § 1717a(c)(1). If such a person fails to pay the penalty, the Attorney General may file suit in court seeking a monetary judgment once the time for administrative review has run. Id. § 1717a(d). The judgment may include attorney's fees and expenses. Id.

The undisputed facts show that HUD provided notice of a complaint seeking to impose civil penalties. Western did not respond within fifteen days. As a result, an ALJ entered a default order, concluding that by failing to respond, Western had admitted the facts alleged and had forfeited its right to a hearing. The ALJ imposed a civil penalty in the amount of $230,400. Western did not appeal either administratively or judicially within the time period required by law.

In this action, Western's sole defense is that the United States' claim expired by reason of the statute of limitations. It is unclear from Western's response to the government's motion whether it claims the statute of limitations bars the original administrative order or this action. For this reason, we will deal with both possibilities.

If Western is contending that the statute of limitations had run before the administrative proceedings were commenced, the argument is raised too late. The Supreme Court has clearly stated that issues not raised at an adversarial hearing before an administrative agency are forfeited on judicial review. United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952). The Seventh Circuit has applied this principle to the issue of timeliness. See Ester v. Principi, 250 F.3d 1068, 1071-72 (7th Cir. 2001); Barton Brands Ltd. v. NLRB, 529 F.2d 793, 801 (7th Cir. 1976).

If Western is contending that this action is barred by the statute of limitations, this argument is mistaken as well. Western bases its argument on 28 U.S.C. § 2462, which states:

Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued if, within the same period, the offender or the property is found within the United States in order that proper service may be made thereon.

28 U.S.C. ยง 2462. Because the United States filed this suit less than one year after the ALJ's default order, for Western to prevail on this argument, the statute of limitations must begin to ...

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