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Edwards v. Holishor Association, Inc.

United States District Court, S.D. Illinois

May 15, 2018

BRUCE C. EDWARDS, ANGELA K. EDWARDS TIMOTHY COUCH and AMANDA COUCH, Plaintiffs,
v.
HOLISHOR ASSOCIATION, INC., ROBERT LOWRANCE, JEANNE MARTIN, STEVE YEATES, JR., SHAUN DILTZ, DAVE DECKER, MONTE THUS, MICHAEL HAWKS and MADISON COUNTY TITLE COMPANY, INC., Defendants.

          MEMORANDUM AND ORDER

          DAVID R. HERNDON, DISTRICT JUDGE

         Introduction and Background

         Now before the Court are two motions to dismiss for failure to state a claim (Docs. 32 & 40). Plaintiffs have responded to the motions (Docs. 39 & 42). Based on the record and the applicable law, the Court grants the motions to dismiss, dismisses with prejudice plaintiffs' Racketeer Influenced and Corrupt Organizations Act (“RICO”) claim (Count I) and declines to exercise supplemental jurisdiction over plaintiffs' state law claims (Counts II, III and IV).

         Originally, plaintiffs, Bruce C. Edwards, Angela K. Edwards, Timothy Couch and Amanda Couch filed suit against Holishor Association, Inc. (“Holishor”), Robert Lowrance, Jeanne Martin, Steve Yates, Jr., Shaun Diltz, Dave Decker, Monte Thus, Michael Hawks, and Midwest Title Insurance, Inc., (Doc. 1). Thereafter, plaintiffs filed their amended complaint on February 2, 2018, substituting defendant Midwest Title Insurance, Inc., for Madison County Title Company, Inc. (“Madison County Title”) (Doc. 7). The amended complaint contains four counts against defendants: Count I, RICO, 18 U.S.C. § 1962(a); Count II, Edwards' Quiet Title Action; Count III, Edwards' & Couches' Declaratory Action and Count IV, Edwards & Couches' Declaratory Action - Alternative Pleading under 735 ILCS 5/2-613 (Doc. 7). Plaintiffs seek money damages, punitive damages, quiet title, attorneys' fees, and costs of suit.

         Plaintiffs are husband and wife couples that each own property in the Holiday Shores Lake Subdivision (“Holiday Shores”) which is comprised of single family residential lots located in Fort Russell and Moro townships in Madison County, Illinois. Defendant Holishor, is an Illinois not-for-profit corporation and is the homeowners association for Holiday Shores. Defendants Robert Lowrance, Jeanne Martin, Steve Yates, Jr., Shaun Diltz, Dave Decker, Monte Thus, and Michael Hawks are members of the Board of Directors of Holishor. Defendant Madison County Title is a title corporation doing business in Madison County, Illinois.

         Plaintiffs allege that the covenants and restrictions referenced in the deeds for their respective property expired on January 1, 1975, long before they acquired their properties. Thus, plaintiffs allege that they do not owe the assessments, fees and monies due under the home owners association and that defendants' attempt to acquire such fees, monies and assessments amounts to RICO violations.

         In 2016, Holishor hired Madison County Title to develop a map of Holiday Shores by reviewing the original plats and deeds for the entirety of Holishor Association. Madison County Title performed the analysis and in its initial analysis determined preliminarily that plaintiffs' properties were subject to the covenants and restrictions of the Holishor Association. In 2017, the Holishor defendants specifically asked Madison County Title to determine if plaintiffs' properties were subject to Holishor Association's covenants and restrictions. After its review, Madison County Title determined that plaintiffs' properties were subject to the covenants and restrictions. These findings were sent to plaintiffs for review. In addition, Holishor defendants told plaintiffs that unless they provided information to prove otherwise, their unpaid dues and assessments were outstanding and needed to be paid. Plaintiffs did not provide information to the contrary and refuse to pay.

         Subsequently, on November 1, 2017, Holishor filed its claims for foreclosure of liens against the plaintiffs in separate suits in small claims court in the Madison County, Illinois Circuit Court. See Holishor Association, Inc. v. Bruce and Angela Edwards, 2017-SC-2965 and Holishor Association, Inc. v. Timothy and Amanda Couch, 2017-SC-2680.

         Analysis

         A. Federal Rule of Civil Procedure 12(b)(6)

         When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all allegations in the complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To avoid dismissal under Rule 12(b)(6) for failure to state a claim, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). This requirement is satisfied if the complaint: (1) describes the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds upon which it rests and (2) plausibly suggests that the plaintiff has a right to relief above a speculative level. Bell Atl., 550 U.S. at 555; see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl., 550 U.S. at 556). “Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.

         Allegations of fraud in a civil RICO complaint are subject to Rule 9(b)'s heightened pleading standard, which requires a plaintiff to plead all averments of fraud with particularity. Fed.R.Civ.P. 9(b); see Goren v. New Vision Intern, Inc., 156 F.3d 721, 726 (7th Cir. 1998). “While dismissal of a RICO claim is appropriate if the plaintiff fails to allege sufficient facts to state a claim that is plausible on its face, the adequate number of facts varies depending on the complexity of the case.” Kaye v. D'Amato, 357 Fed.Appx. 706, 710 (7th Cir. 2009). To plead with particularity means to allege “the who, what, when, where, and how” of the alleged fraud. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 569 (7th Cir. 2012) (quoting Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Financing Svc's, Inc., 536 F.3d 663, 668 (7th Cir. 2008)). With these principles in mind, the Court turns to address the merits of the motions.

         B. The Racketeer Influenced and Corrupt Organizations Act (Count I)

         The Racketeer Influenced and Corrupt Organizations Act allows for a civil cause of action by “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter ...” 18 U.S.C. § 1964(c). Under section 1962, it is unlawful to participate in the “conduct of [an] enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt” 18 U.S.C. § 1962(c). A violation requires proof of four elements: “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). The conspiracy provision-subsection (d)-further requires “that (1) the defendant[s] agreed to maintain an interest in or control of an enterprise or to participate in the affairs of an enterprise through a pattern of racketeering activity, and (2) the defendant[s] further agreed that someone would commit at least two predicate acts to accomplish these goals.” Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815, 823 (7th Cir. 2016) (internal citation omitted). In order to state a valid RICO claim, a plaintiff must plead that he suffered “an injury to [his] business or property [that] result[ed] from the underlying acts of ...


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