Articles Posted in U.S. 6th Circuit Court of Appeals

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The Hollis family, with five children, lived in a house in Franklin, Tennessee. The two youngest children have Down Syndrome and developmental disabilities. The parents wanted to attach a sunroom to their house to permit the children to enjoy the therapeutic benefits of sunlight, as recommended by a pediatric cardiologist who treated the children. The house is in a residential subdivision, which is subject to restrictive covenants. The homeowners association rejected several applications for approval to build the addition. The Hollises sued under the Fair Housing Act, 42 U.S.C. 3604, individually and as “next friends” of the children. The district court dismissed their personal-capacity claims for want of standing and then, applying the McDonnell Douglas burden-shifting test to the claim under the reasonable-modification provision of the Act, awarded summary judgment to the association on the “next friend” claim. The Sixth Circuit vacated and remanded. Intent is irrelevant in reasonable modification claims: a reasonable modification plaintiff must prove the reasonableness and necessity of the requested modification; that she suffers from a disability; that she requested an accommodation or modification; that the defendant refused to make the accommodation or to permit the modification; and that the defendant knew or should have known of the disability at the time. View "Hollis v. Chestnut Bend Homeowners Ass'n" on Justia Law

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Circuit affirmed. When real estate taxes are not paid, a tax lien attaches to the property, annually, including interest, penalties, and fees accrued until paid, O.R.C. 323.11. Summit and other Ohio counties sell tax lien certificates that entitle the certificate holder to the first lien on the property. Property owners may redeem and remove the lien by paying the holder the purchase price plus interest, penalties, and costs, O.R.C. 5721.32. The certificate holder may initiate foreclosure proceedings after one year. Plymouth Park purchased Certificate 1, showing a purchase price of $4,083.73 with a negotiated interest rate of 0.25%, and Certificate 2, showing a purchase price of $2,045.44 with a negotiated interest rate of 18.00%. Summit County filed a foreclosure complaint following a request by Plymouth Park. The complaint stated that “as provided by Section 5721.38(b) of the Ohio Revised Code” the “redemption price” calculated was $10,585.82. A month later, the Debtors filed their Chapter 13 plan and petition; they did not file any notice to “redeem” their property during the bankruptcy action. The Chapter 13 payment plan (11 U.S.C. 1321) proposed to pay the interest rates listed on the certificates. , Plymouth Park filed a proof of claim based on both certificates for $10,521.46, including $2,120.00 in fees and the principal balance of $7,781.19 plus 18% interest. The Bankruptcy Court agreed that Plymouth Park’s claim was a tax claim under 11 U.S.C. 511 and that state law governed the interest rate, but rejected a claim that the 18% statutory rate, rather than the negotiated rate, should apply. The Bankruptcy Appellate Panel and Sixth View "Plymouth Park Tax Servs, LLC v. Bowers" on Justia Law

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Two Ohio counties brought a class action on behalf of a class of all Ohio counties against the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Housing Finance Agency, as bankruptcy conservator for both Fannie Mae and Freddie Mac. The counties sought unpaid real property transfer taxes under Ohio law. The agencies responded that they are exempt, under their federal charters, from such state taxes. The district court dismissed. The Sixth Circuit affirmed, holding that the real property transfer taxes at issue are encompassed in the statutory exemptions from all taxation. Real property transfer taxes are excise taxes rather than taxes on real property which are an exception to those tax exemptions. Congress had the power to enact the exemptions under the Commerce Clause, and the enactment does not violate any constitutional provision. View "Bd. of Comm'rs of Montgomery Cnty. v. Fed Hous. Fin. Agency" on Justia Law

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Hescott, a U.S. Army pilot, has been routinely deployed to the Middle East. He and his son own a rental property in Saginaw, Michigan. When the property became vacant and they were unable to sell it in 2008, they planned to remodel it. In 2009 Hescott found that the basement wall had given way. He hired contractors to repair the foundation and returned to his post. Before the contractors could begin work, a police officer noticed children playing at the house and contacted the Dangerous Buildings Inspector. The Inspector and the Fire Marshal, determined that the house should be demolished immediately due to the threat to public safety. The city did not notify Hescott before or after the demolition. The house was demolished and all fixtures and materials were taken to a landfill. The city did not take an inventory or consider whether any salvageable items remained. When Hescott returned to assist his contractors with purchasing supplies, he realized his house was gone. The Hescotts sued under 42 U.S.C. 1983. Partial summary judgment left a viable claim under the Fourth Amendment for unlawful seizure of aluminum siding following demolition. Before trial, the Hescotts rejected an FRCP rule 68 offer of judgment of $15,000. The jury rejected inverse-condemnation and punitive damages claims, based on exigent circumstances, but awarded $5,000 for the aluminum. The court awarded costs to the Hescotts as “prevailing parties” on their Fourth Amendment claim, but denied attorney fees based on “the degree of success obtained,” and denied the city sanctions under Rule 68. The Sixth circuit reversed in part, holding that no special circumstances warranted denial of the Hescotts’ attorneys’ fees, but that attorneys’ fees are not awardable to a losing party, even one otherwise entitled to post-settlement-offer costs under Rule 68. View "Hescott v. City of Saginaw" on Justia Law

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ABC makes and distributes soft drinks and other non-alcoholic beverages for Dr Pepper Snapple Group and leased a Hazelwood, Missouri facility. After concluding that its rent was too high, it exercised an option to buy the property. Appraisals valued the property without the lease at $2.75 million, and ABC determined that the fair market value with the lease would be at least $9 million. ABC bought the property for more than $9 million. On its tax return, ABC reported $2.75 million as its cost of acquiring the property and deducted $6.25 million as a business expense for terminating the lease. The IRS disallowed the deduction and assessed a tax deficiency; ABC paid the deficiency and sued for a refund. On summary judgment, the district court ruled in favor of ABC. The Sixth Circuit affirmed. Because the lease terminated when ABC acquired the property, the property was not acquired subject to a lease, and I.R.C. section 167(c)(2) does not apply to bar ABC’s deduction. The government conceded that ABC could deduct a lease termination payment if it first paid to terminate the lease and then purchased the property. The court declined “to elevate this transaction’s form over its substance.” View "ABC Beverage Corp. v. United States" on Justia Law

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Patriot was authorized to issue title policies underwritten by First American in Michigan. In 2007, Patriot closed a transaction and provided title insurance and a closing protection letter (CPL) when which WaMu loaned $4,543,593.07 to Truong for the purchase of property in Grosse Ile. In the CPL, First American agreed to indemnify WaMu for actual losses arising from Patriot’s fraud or dishonesty in connection with the closing. In 2008, First American discovered that the Truong transaction was a sham, orchestrated by Patriot’s owner, and obtained title to the property. During negotiations concerning sale of the property, federal regulators closed WaMu. The FDIC became its receiver and sold most of WaMu’s assets to Chase, including the title insurance commitment issued in connection with the Truong transaction. Attempting to resolve the claim, First American tendered a quitclaim deed. Chase refused to accept that deed. First American sought a declaration that First American had fulfilled its obligations under the commitment by tendering a deed to the property. Chase sought a declaration that the deed was void and requested money damages. The FDIC intervened, alleging breach of contract against First American based on the CPL. After the property was sold, First American and Chase stipulated to dismissal of Chase’s claims against First American and First American’s claims against Chase. Chase and the FDIC entered into a stipulation that Chase did not acquire the CPL claim that the FDIC was pursuing. A jury awarded the FDIC $2,263,510.78. The Sixth Circuit affirmed. View "JP Morgan Chase Bank NA v. First Am. Title Ins. Corp." on Justia Law

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The Miks sued the Federal Home Loan Mortgage Corporation (Freddie Mac), claiming that they were unlawfully evicted from their rental home after their landlord defaulted on her mortgage and the property was sold at a foreclosure sale. The district court dismissed, under the Protecting Tenants at Foreclosure Act of 2009 (12 U.S.C. 5220), which imposes certain requirements on successors in interest to foreclosed properties in order to protect tenants, but which does not provide a private right of action. The Sixth Circuit affirmed in part, agreeing that the PTFA does not provide a private right of action. The PTFA does, however, preempt less protective state laws, and requires that successors in interest to foreclosed properties provide bona fide tenants with 90 days’ notice to vacate and to allow them to occupy the premises until the end of their lease term unless certain conditions are met. While tenants may not bring a federal cause of action for violations of the PTFA, they may use such violations to establish the elements of a state law cause of action. Under state law, the Miks stated a claim for wrongful eviction but did not state claims for denial of due process and outrageous infliction of emotional distress. View "Mik v. Fed. Home Loan Mortg. Corp" on Justia Law

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In 2006, Plaintiffs entered into a five-year oil and gas lease covering 47 acres in Ross Township, Ohio, and granting Chesapeake exclusive rights to “all oil and gas and their constituents” for $5.00 per mineral acre per year and a royalty on production. The lease provides for extension, if “Operations” are being “conducted on the Leasehold, or on lands pooled, unitized or combined with all or a portion of the Leasehold.” In 2011, Chesapeake submitted drilling-permit applications for property that did not include Plaintiffs’ property. Later, Chesapeake filed a “Declaration and Notice of Pooled Unit,” consisting of 21 properties, including Plaintiffs’ property, and declared that “operations and/or production … anywhere within the Unit shall be deemed to be operations and/or production on each separate tract sufficient to extend and maintain each included lease in the Unit.” It specified that production from the unit would be allocated among all leases in the unit proportional to the surface area of each lease. Plaintiffs sought a declaration that the lease expired; Chesapeake filed a counterclaim. The district court ruled in favor of Plaintiffs, concluding that Chesapeake’s actions did not extend the lease because the lease required that a permit application pertaining to the leased property or a property already unitized with the leased property, be filed before the expiration of the lease. The Sixth Circuit reversed and remanded. View "Henry v. Chesapeake Appalachia, LLC" on Justia Law

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The Fillers planned to demolish an unused Chattanooga factory. They knew the site contained asbestos, a hazardous pollutant under the Clean Air Act. Environmental Protection Agency regulations require removal of all asbestos before any demolition. Asbestos materials must be wetted, lowered to the ground, not dropped, labeled, and disposed of at an authorized site. Fillers hired AA, a certified asbestos surveying company, which estimated that it would cost $214,650 to remove the material safely. Fillers hired Mathis to demolish the factory in exchange for salvageable materials. Mathis was required to use a certified asbestos contractor. Mathis applied for an EPA demolition permit, showing an estimated amount of asbestos far less than in the AA survey. The agency’s asbestos coordinator contacted Fillers to verify the amount of asbestos. Fillers did not send the survey, but provided a revised estimate, far less than the survey’s estimate. After the permit issued, the asbestos contractor removed “[m]aybe, like, 1/100th” of the asbestos listed in the AA survey. Temporary laborers were hired, not equipped with protective gear or trained to remove asbestos. Fillers supervised. The work dispersed dust throughout the neighborhood. An employee of a daycare facility testified that the children were unable to play outside. Eventually, the EPA sent out an emergency response coordinator and declared the site an imminent threat. Mathis and Fillers were convicted of conspiracy, 18 U.S.C. 371, and violations of the Clean Air Act, 42 U.S.C. 7413(c). Fillers was also convicted of making a false statement, 18 U.S.C. 1001(a)(2), and obstruction of justice, 18 U.S.C.1519. The district court sentenced Mathis to 18 months’ imprisonment and Fillers to 44 months. The Seventh Circuit affirmed. View "United States v. Mathis" on Justia Law

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A title services company may not pay a real estate agent a fee in exchange for a referral, Real Estate Settlement Procedures Act, 12 U.S.C. 2607(a), with an exemption for “affiliated business arrangements.” The defendants are related title and real estate agency companies and met three prerequisites for the exemption. Home buyers claimed that the defendants fell outside the safe harbor’s coverage because they failed to satisfy a fourth condition announced in a Department of Housing and Urban Development policy statement. The district court held that the policy statement is not binding on the Department, is not otherwise entitled to deference, and does not supplement the Act’s existing safe-harbor conditions. The Sixth Circuit affirmed, holding that the defendants qualify under the exemption for affiliated businesses. View "Carter v. Welles-Bowen Realty, Inc." on Justia Law