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Minter v. Diamond

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

May 9, 2017



          MATTHEW F KENNELLY United States District Judge

         Louise Minter filed suit against five defendants, alleging that they engaged in a fraudulent home equity-stripping scheme in which they unfairly and misleadingly induced her to obtain a reverse mortgage on her home and then deprived her of the proceeds. Minter claims the defendants violated the Civil Rights Act, 42 U.S.C. § 1981; the Fair Housing Act, 42 U.S.C. § 3605; and the Illinois Consumer Fraud Act (ICFA), 815 ILCS 505. She also asserts state-law claims for conversion, civil conspiracy, and breach of fiduciary duty. One of the defendants, Dennis Both, has moved for summary judgment on all of the claims asserted against him. For the reasons stated below, the Court denies Both's motion.


          The Court takes the facts in the light most favorable to Minter, the non-moving party. Minter is an elderly African-American woman who owns a home on the west side of Chicago. She lives there with her granddaughter, LaShon Minter Williams, and her granddaughter's husband, Arik Williams. Minter acquired title to the home in 1992 and included LaShon Williams's name on the deed, because Minter wants her to own the home when she passes away. (The Court will refer to LaShon Minter Williams as "Williams" for the remainder of this opinion.) In January 2011, Minter allowed Williams and Arik to take out a mortgage on the home in order to make improvements to the property.

         In March 2013, Mark Diamond came to Minter's door and offered his remodeling services. He explained to her that there was a free government program for senior citizens that would allow her to remodel her home. He described possible improvements to her property, including removing her bathtub and adding a shower with a sliding door, building a new porch, and upgrading the kitchen and bedroom. He told her that she could apply for the program and that these improvements would not cost her any money.

         Sometime after this initial conversation, Diamond contacted Williams to discuss the fact that her name was on the title to the house. He told her that she would need to sign her interest over to Minter in order for Minter to be eligible for the free home repairs. Diamond told Williams that he would restore her name to the title after Minter had been approved. An employee at Primary Title Services, LLC prepared a quitclaim deed. Minter was unaware of this conversation

         Soon after the initial conversation in March 2013, Diamond returned to Minter's home with Gary Bohn, an employee of American Fidelity Financial Mortgage Services, Inc., and Jaclyn Unger, an insurance agent with AXA Advisors. Diamond told Minter to sign several documents so that he could begin the home improvements. She believed that these documents were an application for the free program that Diamond had told her about. In fact, the documents were a loan application for a reverse mortgage that Bohn later submitted in Minter's name. Minter was unaware that the defendants were applying for a reverse mortgage on her behalf. Unger also submitted an application for life insurance in Minter's name.

         Federal regulations require an applicant for a reverse mortgage to receive counseling to ensure that she understands the nature and consequences of the loan. A borrower who completes the counseling receives a certificate of home equity conversion mortgage (HECM) counseling during the loan application process. Minter does not recall ever receiving any type of counseling regarding a reverse mortgage. But in March 2013, someone from Diamond's office faxed to the reverse mortgage lender a certificate of HECM counseling bearing Minter's name.

         Around April 2013, both Williams and Arik signed the quitclaim deed, though not at the same time. The deed was later notarized by Dennis Both, a notary and licensed attorney. Mr. Both [1] notarized the deed, although Minter alleges that he was not present when either Williams or Arik signed the document.

         In May 2013, Diamond again called Both to request his notary services. He and Diamond returned to Minter's home, where Diamond asked her to sign more documents. Mr. Both told Minter and Williams that he was there so that Minter "could sign the documents for Mark to start the repairs on the house." See Def.'s Statement of Uncontested Facts Submitted in Supp. of Summ. J. (SUCF), Ex. Q (LaShon Williams Dep.) at 244:21-245:4. Unbeknownst to Minter, she had been approved for a reverse mortgage and was signing documents to finalize the loan. She did not know that she was borrowing money. Mr. Both notarized the mortgage agreement, which was later recorded in June 2013. Neither Both nor Diamond informed Minter that she had three days in which she could change her mind and reverse the transaction. Further, neither told Minter that she would receive a payout of the loan proceeds, nor did they discuss with her whether she would like to have those funds deposited electronically instead of distributed via check. Mr. Both did tell Minter and Williams that they were not obligated to make any payments under this agreement. Diamond paid Both $250 for notarizing the documents.

         At this same time, Diamond also had Minter sign a construction contract for home improvements with a total estimated cost of $46, 500. The contract listed a number of repairs, including modifications to the bathroom and rebuilding the front and rear porches.

         On May 23, 2013, the lender for the reverse mortgage wired the loan proceeds in the amount of $45, 292.07 to Primary Title, which deposited them in an escrow account. Primary Title then issued a check payable to Minter for this amount. Primary Title gave the check to Bohn, who gave it to Diamond. Diamond again visited Minter at her home and told her she needed to sign another document in order for Diamond to start the work. In fact, Diamond had Minter endorse the check without knowing what she was doing. Diamond deposited the check into his business account.

         According to Minter, the home repairs did not begin immediately after this transaction. Although one of Diamond's subcontractors eventually came to perform some work in the bathroom, it was shoddy and incomplete. Minter and Williams repeatedly called Diamond to ask when his men would be returning to complete the work. Diamond promised that work would resume, but it did not for many weeks. Around July 2013, Diamond's subcontractors began work on the kitchen by removing all of the appliances and cabinets but then failed to return for over a month. In September 2013, Diamond claimed the work had been completed, but Minter found numerous issues with the construction and places where the house remained unfinished. Minter and Williams tried to get Diamond to come back to finish the job and fix the house, but he would not. Eventually, Minter had to hire another contractor to complete the repairs.

         In December 2013, Diamond came to Minter's house and asked her to sign a completion certificate stating that she was completely satisfied with the work he performed. Minter refused.

         Throughout these events, Minter and Williams contend they were unaware that Minter had taken out a reverse mortgage or of the effect this loan would have. The defendants did not tell Minter and Williams that, by taking out a reverse mortgage, they paid off the mortgage they took out in 2011. The defendants did not tell them that when the borrower of a reverse mortgage dies or moves out, the entire loan must be repaid in order to keep the lender from taking possession. Although Minter was aware of the life insurance policy, the defendants did not tell her that they took out the life insurance policy so that, in the event of her death, Williams would receive a payout that she could use to pay off the reverse mortgage. For this reason, Williams and Minter were unaware that they needed to keep up with payments on the life insurance policy in order to keep the house.

         As a result of these events, Minter lost the equity in her house. The house is now encumbered by a lien of over $116, 300 that accrues interest and charges each month. And Williams no longer has any ownership interest in the property.

         Minter and Williams later learned that defendants had engaged in similar behavior in the past. Between 2000 and 2013, Diamond was sued by twelve homeowners who made similar allegations of fraud based on mortgage and home repair transactions. Diamond was sued in 2003 by the Federal Trade Commission and the Illinois Attorney General. In 2009, the Illinois Attorney General again sued him on behalf of homeowners. In many of these proceedings, Both represented Diamond as his attorney. As of May 2013, eighty-four individuals had filed complaints with the Illinois Attorney General about Diamond's practices. In over half of these cases, Both had provided the notarization services for the mortgage transactions. In 2016, a circuit court in Cook County entered a permanent injunction against Diamond and his companies and ordered him to pay restitution of over $2 million.

         Minter filed this suit in May 2015, bringing claims against Diamond, United Residential Services and Real Estate, Inc. (Diamond's company), Both, Bohn, and Primary Title. In count 1, Minter alleges that Diamond, United, and Bohn violated the Civil Rights Act by intentionally targeting individuals on the basis of race for their fraudulent scheme. Minter alleges in count 2 that Diamond and Bohn violated the Fair Housing Act by intentionally discriminating against Minter on the basis of her race during a real estate transaction. In count 3, Minter alleges that Diamond and Bohn violated the Fair Housing Act because their loan scheme had a disparate impact on African Americans. Minter alleges in count 4 that Diamond, United, and Bohn are liable for conversion for taking possession of Minter's loan disbursement. In count 5, Minter alleges that Diamond, United, Both, and Bohn engaged in deceptive conduct in violation of the ICFA. Minter alleges in count 6 that Diamond, United, Both, and Bohn engaged in unfair conduct in violation of the ICFA. In count 7, Minter alleges that Diamond, United, Both, and Bohn engaged in a civil conspiracy to unlawfully deprive Minter of the equity in her home. Minter alleges in count 8 that Primary Title breached its fiduciary duty as the closing agent for the lender.

         In April 2016, Minter stipulated to a dismissal of all her claims against Bohn. In November 2016, Minter voluntarily dismissed count 8 with prejudice pursuant to a settlement with Primary Title.

         In this order, the Court considers Both's motion for summary judgment. The Court therefore addresses only counts ...

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