United States District Court, N.D. Illinois, Eastern Division
For General Star National Insurance Company, Plaintiff: Gustavo Adolfo Otalvora, Sarah Hope Dearing, Hinkhouse Williams Walsh LLP, Chicago, IL.
For Adams Valuation Corporation, Douglas Adams, Defendants: Craig Michael Capilla, LEAD ATTORNEY, Justin Nathan Fielkow, Franklin Law Group, Northfield, IL.
For Diane Goldring Nesbitt, Defendant: Stuart Jay Chanen, LEAD ATTORNEY, Valorem Law Group LLC, Chicago, IL; Margot Klein, Valorem Law Group, Chicago, IL.
Memorandum Opinion And Order
Gary Feinerman, United States District Judge.
In late 2013, Diane Goldring Nesbitt sued Adams Valuation Corporation and Douglas Adams (together, " Adams" ), along with several other individuals and a law partnership, in Nesbitt v. Regas, 13 C 8245 (N.D. Ill.) (Tharp, J.). General Star National Insurance Company, which had issued an insurance policy to Adams, then filed this suit against Adams and Nesbitt, seeking a declaration under 28 U.S.C. § 2201 that it has no duty to defend Adams in the Nesbitt case. Doc. 1. Subject matter jurisdiction lies under 28 U.S.C. § 1332 because the parties are completely diverse and the amount in controversy exceeds $75,000. General Star has moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). Doc. 21. Adams opposes the motion, while Nesbitt has remained silent. The motion is granted.
A. The Nesbitt Suit
The Nesbitt suit alleges that two of Adams's co-defendants, James Regas and Christian Nesbitt, " engaged in a massive scheme to defraud two banks out of millions of dollars through the making of unsupportable and improper insider loans" and that Adams " actively participated with [them] to effectuate the Scheme," which " involved countless lies, conflicts of interest, material omissions, and criminal acts." Doc. 1-2 at ¶ ¶ 1, 10. According to the Nesbitt complaint, " [a] central part of the Scheme was to cause appraisals of property values to be wildly inflated and then to skim proceeds from the loans that were issued in reliance on the inflated appraisals." Id. at ¶ 36. The Nesbitt suit alleges that Regas and Christian Nesbitt " used false appraisals prepared by Adams," id. at ¶ 30, that Regas " arranged for Adams ... to be retained on approximately 50% of the appraisals ... during the Scheme," and that Adams and Regas " agreed to overvalue by as much as 30-80% the property appraisals that Adams ... performed ..., and sometimes more," id. at ¶ 36. The Nesbitt complaint lists several of those appraisals, id. at ¶ 40, and alleges that Regas and Christian Nesbitt " were fully aware of the inflated appraisals that were being prepared by Adams," id. at ¶ 41.
Adams is named as a defendant in four counts of the Nesbitt complaint. Count I alleges violations of the Racketeer Influenced Corrupt Organizations Act (" RICO" ), 18 U.S.C. § 1962(c). Doc. 1-2 at ¶ ¶ 62-69. That count alleges: " Defendants conducted and participated in, both directly and indirectly, an enterprise. The enterprise was comprised of a group of individuals [including Douglas Adams], one partnership, and one company [Adams Valuation Company], who were associated in fact." Id. at ¶ 64. Count I further alleges that " [t]he primary objective of the Racketeering Enterprise was to illegally steal funds belonging to the Banks and to make other unwitting third parties -- and not themselves -- legally responsible in the event that any of the fraudulent loans, which the Racketeering Enterprise cause the Banks to issue, were not repaid," and that " [t]he RICO Defendants conducted the affairs on the Enterprise through a pattern of racketeering activity, most specifically a series of violations of the United States mail fraud statute, 18 U.S.C. § 1341 ... and the United States obstruction of justice statute, 18 U.S.C. § 1512(c)(1) ('destroying ... or concealing a document with the intent to obstruct justice')." Id. at ¶ ¶ 64-65. Count II alleges a RICO conspiracy under 18 U.S.C. § 1962(d) and
incorporates Count I by reference. Id. at ¶ ¶ 70-73. Count V, which asserts a claim for common law fraud, alleges that " [e]ach of the makers of these misrepresentations and/or material omissions knew the statements to be false at the time they were made." Id. at ¶ 90. And Count VI alleges that Adams aided and abetted the fraud ...