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Sequoia Financial Solutions, Inc. v. City of Chicago

United States District Court, N.D. Illinois, Eastern Division

December 9, 2014


For Sequoia Financial Solutions, Inc., Plaintiff: Paul G Wersant, LEAD ATTORNEY, Duluth, GA; David C. Thollander, The Thollander Law Firm, Ltd., Lombard, IL.

For The City of Chicago, Defendant: William Macy Aguiar, LEAD ATTORNEY, Ellen Wight Mclaughlin, City Of Chicago Department Of Law, Chicago, IL.


Gary Feinerman, United States District Judge.

After the City of Chicago sued Sequoia Financial Solutions, Inc. (" Sequoia"), in Illinois state court for violating the City's building code, Sequoia demolished the allegedly offending structure rather than continue to defend the suit, which the City then dismissed. Two months later, Sequoia brought the present case against the City and several City employees (collectively, " the City") for allegedly falsifying an inspection report and coercing Sequoia into tearing down the structure through its allegedly baseless state court suit. Doc. 1. The City moved to dismiss Sequoia's complaint under Federal Rule of Civil Procedure 12(b)(6). Doc. 9. Instead of opposing the motion, Sequoia sought and received leave to file an amended complaint. Docs. 16, 18. The City now moves to dismiss the amended complaint under Rule 12(b)(6). Doc. 26. The motion is granted, and the case is dismissed.


In considering the City's motion, the court assumes the truth of the amended complaint's factual allegations, though not its legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012). The court must also consider " documents attached to the [amended] complaint, documents that are critical to the [amended] complaint and referred to in it, and information that is subject to proper judicial notice, " along with additional facts set forth in Sequoia's brief opposing dismissal, so long as those additional facts " are consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). The following facts are stated as favorably to Sequoia as those materials allow. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir. 2012).

In June 2006, Miguel Murchison executed a promissory note secured by a mortgage on property located at 12448 South Lowe Avenue in Chicago. Doc. 18 at ¶ 12. Sequoia acquired the note and mortgage in September 2012. Id. at ¶ 15; Doc. 18-4. In October 2012, the Chicago Department of Buildings sent Sequoia (actually, a closely related entity sharing the same address) a notice stating that the structure on the property was hazardous and giving Sequoia fifteen days to restore or demolish it; the notice warned that if Sequoia did not take remedial action during this time, the City would seek a lien for the costs of demolishing the building or abating its hazards. Doc. 18 at ¶ 17; Doc. 18-5. In an email to a City employee, Sequoia offered to " register the property as vacant, board up the windows, and secure the doors, " while explaining that it was only " the lender" and thus had limited ability to abate the hazard, at least until it completed " the foreclosure process." Doc. 18-6; Doc. 18 at ¶ ¶ 20-21. The City did not respond to the email. Doc. 18 at ¶ 22.

In May 2013, the City filed suit against Murchison and Sequoia in City of Chicago v. Murchison, No. 13 M1 401374 (Cir. Ct. Cook Cnty., Ill.). Doc. 28-1 at 28-38; see Henson v. CSC Credit Servs., 29 F.3d 280, 284 (7th Cir. 1994) (holding that a federal court deciding a motion to dismiss may take judicial notice of publicly filed state court pleadings). The City's suit sought to abate the allegedly dangerous and unsafe conditions at the property and requested an order requiring Murchison and Sequoia to " repair, enclose, clean-up, or demolish the building" and to pay civil penalties, attorney fees, and costs. Doc. 18 at ¶ 23; Doc. 28-1 at 33. The suit initially named Sequoia Financial Solutions Holdings LLC as the defendant mortgagee; that technical glitch was repaired when the state court dismissed the LLC and an alias summons was issued to and served on the actual mortgagee, Sequoia Financial Solutions, Inc. Doc. 18 at ¶ 26; Doc. 28-1 at 40, 42-43.

In October and December 2013, the state court issued two orders requiring Murchison to board and secure certain of the structure's windows and to keep the premises vacant and secure. Doc. 28-1 at 40, 45. In February and March 2014, before the suit could be resolved--and without the court entering any order requiring demolition--Sequoia demolished the structure. Doc. 18 at ¶ ¶ 27-28. The City then voluntarily dismissed the suit with prejudice, with the court making a finding of " Substantial Compliance" and imposing no fines or costs. Id. at ¶ 29; Doc. 28-1 at 47.

Two months later, Sequoia filed this suit in federal court, alleging that the City falsified inspection reports and " forced" Sequoia, by threatening fines and bringing the state court suit, to demolish the building. The amended complaint has nine counts: claims under 42 U.S.C. § 1983 for the violation of Sequoia's federal constitutional rights (Count I); a Monell claim against the City (Count II); a state law tortious interference with a business expectancy claim (Count III); a state law fraud claim (Count IV); a takings claim under both the Illinois (Count V) and federal (Count VI) constitutions; a state law abuse of process claim (Count VII); a claim for conspiracy to violate § 1983 and state law (count VIII); and an indemnification claim against the City (Count IX). Doc. 18 at ¶ ¶ 43-112. Jurisdiction over the federal claims lies under 28 U.S.C. § 1331, while jurisdiction over the state law claims lies under 28 U.S.C. § 1332(a), as the parties are diverse and the amount in controversy exceeds $75, 000. Id. at ¶ ¶ 1-4, 11, 16.


I. Section 1983 Claims (Counts I, II, and VIII)

Count I alleges that the City deprived Sequoia of its federal rights " such as but not limited to its due process rights under the Fifth and Fourteenth Amendments and its access to courts under the First Amendment and right to a jury trial under the Seventh Amendment." Id. at ¶ 44. The First and Seventh Amendment claims are puzzling. The City did not deny Sequoia access to state court; it brought Sequoia there, in effect giving Sequoia more access than it wanted. Nor did the City deny Sequoia its Seventh Amendment right to a jury trial in civil cases. That right has not been incorporated via the Fourteenth Amendment against the States. See McDonald v. City of Chicago, 561 U.S. 742, 765 n.13, 130 S.Ct. 3020, 177 L.Ed.2d 894 (2010). In any event, by virtue of its destroying the building before the court could consider whether demolition was required, Sequoia itself is indisputably responsible for the state court suit's termination before trial.

Sequoia's due process alleges that the City " mischaracterized and falsified the alleged housing code violations" and " willfully intimidated, coerced or extorted Plaintiff into 'voluntarily' demolishing the Property." Doc. 18 at ¶ 45. Although Sequoia does not expressly say whether it means to pursue a substantive due process or a procedural due process claim, its argument and the case law it cites make clear that the claim sounds in substantive due process. As shown in Section III, ...

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