September 28, 2017
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 14-CV-5611 - Sara
L. Ellis, Judge.
Bauer, Manion, and Hamilton, Circuit Judges
HAMILTON, CIRCUIT JUDGE
Forest Preserve District of Cook County, Illinois, has been
trying to acquire a 400-acre estate in Barrington after the
owners defaulted on a mortgage and note held by the Forest
Preserve. The Forest Preserve foreclosed and then bought the
property at the foreclosure auction. The original owners have
expressed their opposition by filing five lawsuits of their
own, in addition to raising affirmative defenses and
counterclaims in the still-pending foreclosure action. This
appeal arises in the owners' third federal lawsuit, in
which they have alleged unconstitutional takings, fraud, and
derivative claims for conspiracy and aiding and abeting. The
district court dismissed the suit for failure to state a
claim. We affirm.
Factual and Procedural Background
2006, plaintiffs Meryl Squires-Cannon and Richard Kirk Cannon
purchased a 400-acre estate and horse farm in Barrington. The
Cannons bought the property through two wholly-owned limited
liability companies, Royalty Properties, LLC and Cannon
Squires Properties, LLC, which are also plaintiffs in this
lawsuit. The LLCs executed a one-year, $14.5 million note and
mortgage loan agreement with Amcore Bank, N.A. The Cannons
allege that Amcore commited to modify the loan to a longer
term before the end of the initial one-year term. But the
financial crisis intervened, and Amcore reneged. Under
financial distress itself, Amcore called the loan and when,
we assume, the Cannons were unable to refinance in the
financial environment of the time, Amcore filed for
foreclosure in an Illinois state court. Amcore then failed in
2009, and the FDIC became its receiver. BMO Harris Bank, N.A.
bought Amcore's loan assets at a discount from the FDIC,
became the owner of the Cannons' note, and took over as
the plaintiff in the foreclosure action.
the value of the estate fell in the midst of the financial
crisis, BMO faced a risk that the note was worth more than
the property securing it. And the FDIC had agreed to pay BMO
80% of any Amcore loan that BMO could not recover directly
from the borrowers. To cut their losses on the Cannons'
loan, the FDIC and BMO had incentives to find a buyer for the
note. Enter the Forest Preserve. The Cannons allege that the
FDIC, BMO, Bayview Loan Servicing, LLC, and Does 1-15
secretly agreed to assign the note to the Forest Preserve for
$14 million. After the Forest Preserve's board approved
the purchase, BMO assigned the note to the Forest Preserve,
which became the plaintiff in the foreclosure action.
2013, the foreclosure court granted summary judgment for the
Forest Preserve. The Forest Preserve then obtained board
approval to offer a credit bid for the estate at the
foreclosure sale. The Forest Preserve made the (winning)
credit bid of about $14.5 million at the foreclosure sale.
The foreclosure court also entered a deficiency judgment
against the Cannons for over $6 million. See BMO Harris
Bank, N.A. v. Royalty Properties, LLC, No. 1-15-1338,
2016 WL 6269967, at *3 ( Ill. App. May 17, 2016). The
Illinois Appellate Court later reversed the foreclosure
judgments. Id. at *14. On remand, the foreclosure
court reinstated its order making the Forest Preserve a
mortgagee in possession, but the Illinois Appellate Court
also vacated that order in an interlocutory appeal.
Forest Preserve District of Cook County v. Royalty
Properties, LLC, No. 1-17-1564, 2017 WL 3758758 ( Ill.
App. Aug. 29, 2017). As far as we know, there is at this time
no judgment in the foreclosure action. The Cannons told us at
oral argument that the foreclosure action is "starting
have now been six separate lawsuits relating to the
Cannons' default on the note-three state and three
federal. The three state lawsuits are:
(1) the foreclosure action, which is still pending;
(2) the Cannons' lawsuit against the Forest Preserve and
BMO (the "taxpayer action"), which was dismissed,
Baker v. Forest Preserve District, 33 N.E.3d 745 (
Ill. App. 2015) (affirming dismissal of all claims and
rejecting theory that Forest Preserve's purchase of note
and participation in foreclosure auction violated Cook County
Forest Preserve District Act), and;
(3) a lawsuit by one of the Cannon entities against the
Forest Preserve for breach of a purported lease after the
foreclosure sale, which is stayed, Royalty Farms, LLC v.
Forest Preserve District of Cook County, 92 N.E.3d 943 (
Ill. App. 2017) (reversing order awarding possession of
property to Forest Preserve and remanding ...