United States District Court, S.D. Illinois
KEVIN DVORAK, et al., Individually and as the Representative of a Class of Similarly Situated Persons, Plaintiffs,
ST. CLAIR COUNTY, ILLINOIS, et al. Defendants.
MEMORANDUM AND ORDER
M. YANDLE, UNITED STATES DISTRICT JUDGE.
Kevin Dvorak and Kathleen Dvorak are proceeding on an eight
count class action Complaint (Doc. 2). The case involves an
alleged conspiracy to fix St. Clair County, Illinois real
estate tax sales so that owners were required to pay
artificially high interest penalties to redeem their
properties. The defendants include St. Clair County, St.
Clair County Treasurer Charles Suarez, and a number of
individual and business purchasers who are alleged to have
participated in the conspiracy (collectively,
“Purchaser Defendants”). Now pending before the
Court is Plaintiffs' Motion for Class Certification (Doc.
208). Defendants have all replied (Docs. 219, 221, 222, 224,
and 230). For the following reasons, Plaintiffs' Motion
for Class Certification is DENIED.
case revolves around St. Clair County, Illinois real estate
tax sales for properties for which the prior year's
property taxes are delinquent. The County Collector (an
ex officio role of the County Treasurer) conducts
the sales. Purchasers do not receive clear title to the
property at issue, but rather a Certificate of Purchase and
the right to collect the amount of unpaid taxes from the
owner plus a “penalty” ranging from 0 to 18
percent interest. Each successful bidder pays the county the
amount of the delinquency. The winning bidder for a given
parcel is the one who is willing to accept the lowest penalty
rate if the owner exercises his/her/its right of redemption.
The maximum penalty percentage that may be bid is 18 percent,
and if no bids are received on a given property, it reverts
to the County at the maximum penalty rate.
example, a property with a $2000 overall delinquency is
offered at the tax sale. One bidder offers 18 percent -
meaning that he will pay the $2000 to the county and charge
the property owner an additional 18 percent, if she wishes to
redeem the property. Another bidder offers 13 percent -
meaning that the property owner would pay less to redeem the
property. If no lower bids are received, the second bidder
receives the Certificate of Purchase.
property owner fails to redeem a property within the
statutory redemption period, the successful bidder may file a
Petition for a tax deed. Once a tax deed is issued, it
conveys merchantable title, free and clear from most previous
interests in the property.
property is redeemed, the purchaser of the tax lien receives
the certificate amount (what is owed to the county) plus the
penalty percentage. The penalty rate increases every six
months by the amount of the penalty rate that was originally
bid. Using the above example, the property owner would owe
the winning bidder $2, 260 if redeemed within six months, $2,
520 if redeemed between six months and a year, $2, 780 if
redeemed between a year and 18 months, etc. The holder of a
tax lien may also pay subsequent unpaid real estate taxes on
a property and claim an automatic 12 percent penalty on the
the cost of redemption is usually significantly less than the
market value of the property, there is a strong incentive for
anyone holding a sizeable ownership or security interest in
the property to redeem it following a tax sale. If a property
owner is unable to pay the cost of redemption, it is common
for a mortgage holder or other lienholder to redeem on behalf
of the property owner in order to preserve their interest.
The amount paid on the owner's behalf is then added to
the owner's outstanding obligation.
Plaintiffs maintain that something went very wrong with this
process at the St. Clair County tax sales conducted in 2007
and 2008. Specifically, they allege that Defendant Suarez-in
exchange for political contributions for himself and the
“Democrat Party of St. Clair County”- arranged
for the auctioneer to recognize the Purchaser Defendants as
winning bidders (presumably in cases of identical bids) and
to distribute the winning bids from the various auctions
between the Purchaser Defendants. (Doc. 2 at ¶¶74,
79). They also allege that Suarez arranged for the Purchaser
Defendants to have advantageous seating positions and caused
the auctioneer to ignore subsequent lower bids, thereby
artificially inflating the penalty rates. For their part, the
Purchaser Defendants are alleged to have agreed to keep their
bids at or near the 18 percent statutory maximum penalty
rate. (Id. at ¶74).
Kevin and Kathleen Dvorak owned two properties that were sold
at the 2007 St. Clair County real estate tax sale conducted
in November 2008. (Id. at ¶¶6-11). The
first property is located at 518 E. Washington St.,
O'Fallon, Illinois (“Washington Property”);
the second property is located at 619 W. Schuetz St.,
Lebanon, Illinois (“Schuetz Property”). Both
properties were purchased by Defendant White Oak Securities
at a penalty rate of 18 percent and redeemed on November 8,
2011 by mortgage holder, First Federal Savings Bank (Docs.
208-4 at 2; 208-5 at 3). Because the redemption took place
nearly three years after the sale, $1, 725.03 in penalty
interest was assessed on a $1, 597.25 tax bill for the
Washington Property. (Doc. 208-5 at 3). Redemption of the
Schuetz Property cost $2, 018.22 in penalty interest on a $1,
868.72 2007 tax bill, which was paid by the same mortgage
holder. (Doc. 208-4 at 2). Both properties were sold at tax
sales before and after the 2006 and 2007 tax year sales at
penalty rates ranging from one to three percent. (Docs. 278-2
assert eight causes of actions, including claims against all
defendants for Civil Conspiracy (Count I), violations of the
Sherman Anti-Trust Act (Counts III and IV) and violations of
the Illinois Antitrust Act, 740 ILCS 10/1, et seq.
(Counts V-VII). They also assert claims for Money Had and
Received against all defendants except Suarez (Count II) and
breach of fiduciary duty against Suarez alone (Count VIII).
In each Count, Plaintiffs allege damages “based on the
difference [between] the amount redeemed and the amount that
would have been needed to redeem the property at a reasonable
and appropriate penalty rate[, ]” plus attorneys'
fees, expenses and trebling of damages where allowed by
statute. (Doc. 2)
move for class certification under Rules 23(a) and 23(b)(3)
of the Federal Rules of Civil Procedure, seeking to certify a
plaintiff class consisting of:
all owners of real estate parcels that were sold at a St.
Clair County Tax sale auction for unpaid real estate taxes
for the 2006 and 2007 tax years with respect to which a
Certificate of Purchase was obtained at such auction in
response to a penalty rate bid in excess of 0 percent,
excluding the owners of parcels for which there were no bids
and therefore were “sold” to St. Clair County at
penalty rate of 18% by operation of statute.
(Doc. 208 at ¶ 3).
certifiable, a class must be definable and must meet the
requirements of numerosity, commonality, typicality and
adequacy of representation. See Fed. R. Civ. P.
23(a); Alliance to End Repression v. Rochford, 565
F.2d 975, 977 (7th Cir. 1977). The case must also fall within
one of the three enumerated Rule 23(b) categories. Spano
v. The Boeing Co., 633 F.3d 574, 583 (7th Cir.
2011) (“(1) a mandatory class action (2) an action
seeking final injunctive or declaratory relief, or (3) a case
in which the common questions predominate and class treatment
may be certified only if a district court is
“satisfied, after a rigorous analysis, ” that
compliance with Rule 23 has been shown, even if the analysis
entails some overlap with the merits. Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 351 (2011). Although a
plaintiff bears the burden of showing that the proposed class
satisfies the Rule 23 requirements, he “need not make
that showing to a degree of absolute certainty.”
Messner v. Northshore Univ. HealthSystem, 669 F.3d
802, 811 (7th Cir. 2012) (internal citation omitted).
initial matter, Defendants Dennis Ballinger Sr., Dennis
Ballinger Jr., Empire Tax Corp. and Vista Securities, Inc.
(collectively “Ballinger Defendants”) challenge
the proposed class definition as “fatally
overbroad.” (Doc. 230 at 23). They object to the
inclusion of every owner whose property was purchased or a
penalty rate above 0% in the 2006 and 2007 tax sales, arguing
that definition may encompass a significant number of
property owners (1) whose penalty rate was at or below what
it would have been in a “normal” year, (2) whose