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Bloyer v. St. Clair County

United States District Court, S.D. Illinois

March 29, 2018

KEVIN DVORAK, et al., Plaintiffs,
v.
ST. CLAIR COUNTY, ILLINOIS, et al. Defendants.

          MEMORANDUM AND ORDER

          STACI M. YANDLE UNITED STATES DISTRICT JUDGE.

         Plaintiffs Kevin Dvorak and Kathleen Dvorak[1] are proceeding on an eight Count Complaint asserting an alleged conspiracy to fix St. Clair County, Illinois real estate tax sales so that property 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 associated business purchasers who are alleged to have participated in the conspiracy (collectively, “Purchaser Defendants”).

         Before the Court are Defendants' Motions for Summary Judgment (Docs. 265, 266, 267, 268, 269, 270 and 272). Plaintiffs have filed responses to most, though not all, of these motions (Docs. 278, 279, 280, 281, 282, 283).[2] For the following reasons, Defendants' motions (Docs. 265, 266, 267, 268, 269, 270 and 272) are GRANTED.

         BACKGROUND

         This case arises from certain St. Clair County real estate tax sales of properties for which the prior year's property taxes are delinquent. The general structure and requirements for the tax sales are set forth in Article 21 of the Illinois Property Tax Code (35 ILCS 200/21 et seq.). Under the statute, 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% interest. The winning bidder for a given property is the one who is willing to accept the lowest penalty rate if the owner exercises their right of redemption. Each successful bidder pays the County the amount of the delinquency. The maximum penalty percentage that may be bid is 18%. If no bids are received on a given property, it reverts to the County at the maximum penalty rate.

         For example, a property with a $2000 overall delinquency is offered at the tax sale. One bidder offers 18% - meaning that he will pay $2000 to the County and charge the property owner an additional 18%, if they want to redeem the property. Another bidder offers 13%. If this is the winning bid, the property owner would pay less to redeem the property. If no lower bids are received, the second bidder receives the Certificate of Purchase.

         If a 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.

         If the property is redeemed, the purchaser of the tax lien receives the certificate amount (what it paid 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% penalty on the subsequent taxes. An owner or other eligible party wishing to redeem the property pays the total amount owed to the County, which in turn sends that amount to the tax purchaser.

         Because 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. For that reason, 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 claim that the St. Clair County tax sale process was tainted in 2007 and 2008. Specifically, they allege that Defendant Suarez, in exchange for political contributions for himself and the St. Clair County Democrat Party, arranged for the auctioneer to recognize the Purchaser Defendants as winning bidders (presumably in cases of identical bids) and to distribute the winning bids between the Purchaser Defendants. (Doc. 2 at ¶¶74, 79). They also allege that Suarez arranged for representatives tied to Purchaser Defendants to have advantageous seating positions and caused the auctioneer to ignore subsequent (or “trailing”) lower bids, thereby artificially inflating the penalty rates. Finally, Plaintiff's allege that the Purchaser Defendants agreed amongst themselves to keep their bids at or near the 18% statutory maximum penalty rate. (Id. at ¶74).

         Plaintiffs 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 18% penalty rates and were subsequently redeemed on November 8, 2011 by mortgage holder First Federal Savings Bank (Docs. 268-4 and 268-5). 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. 268-4). Redemption of the Schuetz Property cost $2, 018.22 in penalty interest on a $1, 868.72 2007 tax bill. (Doc. 268-5). Both properties were sold at tax sales several years before and several years after the 2007 tax year sales at lower penalty rates. (Docs. 278-2 and 278-3).

         Plaintiffs assert eight causes of actions, including claims against all defendants for Civil Conspiracy (Count I), violations of the Sherman Anti-Trust Act, 15 U.S.C. §§ 1 and 2 (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).

         LEGAL STANDARD

         Summary judgment is appropriate only if the moving party can demonstrate “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322(1986); see also Ruffin-Thompkins v. Experian Information Solutions, Inc., 422 F.3d 603, 607 (7th Cir. 2005). The moving party bears the initial burden of demonstrating the lack of any genuine issue of material fact. Celotex, 477 U.S. at 323. Once a properly supported motion for summary judgment is made, the adverse party “must set forth specific facts showing there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

         A genuine issue of material fact exists when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Estate of Simpson v. Gorbett, 863 F.3d 740, 745 (7th Cir. 2017) (quoting Anderson, 477 U.S. at 248). When deciding a summary judgment motion, the Court views the facts in the light most favorable to, and draws all reasonable inferences in favor of, the nonmoving party. Apex Digital, Inc. v. Sears, Roebuck & Co., 735 F.3d 962, 965 (7th Cir. 2013) (citation omitted).

         DISCUSSION

         Defendant Kenneth Rochman

         As an initial matter, Defendant Kenneth Rochman filed for summary judgment of the claim asserted against him individually. (Doc. 267). He maintains that he is entitled to judgment as a matter of law because there are no allegations or evidence connecting him to the alleged scheme.

         Plaintiffs did not respond to Rochman's motion. Under this Court's local rules, “[f]ailure to timely file a response to a motion may, in the Court's discretion, be considered an admission of the merits of the motion.” SDIL-LR 7.1(c). The Court finds it appropriate to invoke Rule 7.1(c) in this situation. Accordingly, Defendant Kenneth Rochman's Motion for Summary Judgment is granted.

         Statute of Limitations

         Defendants argue that the applicable statutes of limitations bar Plaintiffs' claims. (Doc. 271 at 12-16). The statutes of limitations for claims grounded in state law are governed by the law of that state. Indep. Tr. Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). Like the statute of limitations itself, state rules that are an “integral part of the statute of limitations” such as tolling and equitable estoppel, are also applied by federal courts to state law claims. Hollander v. Brown, 457 F.3d 688, 694 (7th Cir. 2006) (citing Walker v. Armco Steel Corp., 446 U.S. 740, 751-53 (1980)).

         Civil conspiracy (Count I) is not a separate and distinct tort in Illinois. See Weber v. Cueto, 624 N.E.2d 442, 449 (1993). Rather, “[a] cause of action for civil conspiracy exists only if one of the parties to the agreement commits some act in furtherance of the agreement, which is itself a tort.” Adcock v. Brakegate, Ltd., 645 N.E.2d 888, 894 (1994). See also Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 509 (7th Cir. 2007) (a claim for civil conspiracy requires “at least one tortious act by one of the co-conspirators in furtherance of the agreement.”). As a result, a civil conspiracy claim is subject to the same statute of limitations as the underlying tort on which the claim is based. Mauvais-Jarvis v. Wong, 987 N.E.2d 864, 894 (2013).

         Claims for money had and received (Count II) and breach of fiduciary duty (Count VIII) must be commenced within 5 years after the cause of action accrued. 735 ILCS 5/13-205.

         A 4 year statute of limitations applies to violations of the Sherman Act (as enforced by private parties under the Clayton Act) (Counts III and IV). 15 U.S.C. § 15b. Relatedly, a federal antitrust cause of action “accrues and the statute begins to run when a defendant commits an act that injures a plaintiff's business.” In re Copper Antitrust Litig., 436 F.3d 782, 789 (7th Cir. 2006) (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971) (Zenith II).

         A private action for violation of the Illinois Antitrust Act (Counts V-VII) must be commenced within 4 years after the cause of action accrued. 740 ILCS 10/7(2). In the context of an antitrust conspiracy, accrual is generally triggered by the last overt act in furtherance of the alleged conspiracy. People ex rel. Hartigan v. Moore, 493 N.E.2d 85, 86 (1986).

         Here, the tax sale in question took place on November 10, 2008. (Doc. 230-4 at 78). Plaintiffs have not alleged any overt acts in furtherance of the alleged conspiracy after the sale. Nor do Plaintiffs claim that their injury arose from any act committed after November 10, 2008. Plaintiffs filed this lawsuit on October 17, 2014 - five years and eleven months later. (Doc. 2). Facially, Plaintiffs' claims in Counts I and III-VIII appear to have been filed out of time. The only ...


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