United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
PHIL GILBERT DISTRICT JUDGE.
matter comes before the Court on plaintiff Alfred Cross's
response (Doc. 7) to the Court's January 18, 2017, order
to show cause (Doc. 5) why the Court should not deny his
motion for leave to proceed in forma pauperis (Doc.
3) and dismiss his case for lack of jurisdiction because his
complaint fails to state of cause of action over which this
Court has subject matter jurisdiction. The Court directed
Cross to specify in his response which provisions of the Real
Estate Settlement Procedures Act (“RESPA”), 12
U.S.C. § 2601 et seq., he asserts any defendant
has violated and to briefly summarize the acts alleged to
constitute that violation. The Court further directed him to
specify any other federal law for which there is a civil
remedy that he asserts any defendant has violated. The Court
warned Cross that if he failed to respond to this order to
show cause by identifying a non-frivolous federal claim
conferring federal question jurisdiction on this Court, the
Court could deny Cross's motion for leave to proceed
in forma pauperis and could dismiss this case
without prejudice for lack of jurisdiction.
alleges, among other things, that defendants Randall Nile
Irwin and/or NVK Properties LLC (“NVK”) agreed to
pay him a $210, 000 commission for acting as Irwin's
agent in negotiating the purchase of a hotel in Mt. Vernon,
Illinois, and for upgrading and operating that hotel. Cross
alleges he reasonably relied on the promise of a commission
to repair, upgrade, operate and manage the Mt. Vernon hotel.
Cross claims that the settlement sheet prepared for the
January 16, 2015, closing - the Form HUD-1 - anticipated
payment of his commission. In a separate agreement with
Irwin, Cross agreed that Irwin could have up to May 1, 2015,
to pay the commission. Cross signed the sales contract and
the original settlement sheet as the agent of NVK.
months later, Cross obtained a copy of the settlement sheet
from defendant Jefferson County Title Company. He noticed
that the first page had been altered from the original
settlement sheet to reallocate the amount originally listed
as “Permanent working capital” due from the buyer
($200, 000) to be included in the “Buyer's
Expenses” line. The change did not affect the gross
amount due from the buyer or the total settlement charges.
The second page of the altered settlement sheet was identical
to the second page of the original settlement sheet,
including Cross's signature. Cross believes defendants
Peoples National Bank and Jefferson County Title Company were
complicit in changing the settlement sheet to enable Irwin to
use the reallocated $200, 000 for things other than working
capital. Notably, neither settlement sheet indicates on Line
703 an amount to be paid by the buyer or seller at settlement
as a commission.
meantime, in anticipation of payment of the commission by May
1, 2015, Cross took out a loan with a repayment date of June
was never paid his commission; he alleges that instead of
paying the commission, Irwin took the money to invest in real
estate in Salem, Illinois, owned by Irwin. There is no longer
enough money in Irwin's bank account to pay Cross his
commission. Cross asserts the alteration of the settlement
sheet and the failure to pay his commission at the closing
from the amounts in escrow violated RESPA.
response, Cross admits that RESPA does not apply to loans
primarily for business or commercial purposes. Regulations
promulgated under RESPA provide:
(a) Applicability. RESPA and this part apply to federally
related mortgage loans, except as provided in paragraphs (b)
and (d) of this section.
* * *
(2) Business purpose loans. An extension of credit primarily
for a business, commercial, or agricultural purpose, as
defined by 12 CFR 1026.3(a)(1) of Regulation Z. Persons may
rely on Regulation Z in determining whether the exemption
12 C.F.R. § 1024.5. Regulation Z, in turn, provides, in
The following transactions are not subject to this part or,
if the exemption is limited to specified provisions of this
part, are ...