Justia Real Estate & Property Law Opinion Summaries

Plaintiff owns properties in a mixed rural/suburban area in central Illinois and lives in a house on one parcel. The other parcels, about 190 acres and near the house, were zoned agricultural and very close to a hog farm. The owners of two other properties in proximity to the hog farm obtained rezoning to the “rural residential” classification, but the county declined plaintiff’s applications for rezoning. Plaintiff sued in state court; the court entered an “Agreed Order” that stated that the parcels should be rezoned, but did not order that they be rezoned. One year later, the zoning board held the required hearing and recommended approval. The County Board voted 11 to 10 in favor of the applications, less than a three-fourths majority, which functioned as a denial. In 2008, the Board granted the applications, but the real estate market had collapsed, and the parcels were no longer worth more zoned residential than they had been when zoned agricultural. Plaintiff sought damages under 42 U.S.C. 1983. The district court entered summary judgment for the defendants. The Seventh Circuit affirmed, noting that protection of agriculture was a rational, nonretaliatory motive for voting against the applications. View "Guth v. Tazewell County" on Justia Law

Robers pleaded guilty to conspiracy to commit wire fraud, 18 U.S.C. 371, based on his role in a mortgage fraud scheme; Robers signed mortgage documents seeking loans based on inflated income and assets and on his claim that he would reside in the houses and pay the mortgages. The loans went into default. The district court sentenced Robers to three years’ probation and ordered him to pay $218,952 in restitution to a lender and a mortgage insurance company. The Seventh Circuit affirmed the restitution order. The Mandatory Victims Restitution Act, 18 U.S.C. 3663A, requires restitution in the case of a crime resulting in damage to or loss or destruction of property. The court rejected Robers’s argument that the MVRA requires the court to determine the offset value based on the fair market value the collateral had on the date the lenders obtained title to the houses following foreclosure as the “date the property is returned.” Money was the property stolen and foreclosure is not a return of that property; only when the real estate is resold do the victims receive money. Victims are also entitled to expenses, other than attorney’s fees and unspecified fees, related to foreclosure and sale. View "United States v. Robers" on Justia Law

Home Federal agreed to lend up to $95.5 million to finance construction of a new ethanol production plant. When the developer of the plant ran into serious trouble finishing the project, the bank did not disburse the final $8 million. The developer defaulted on the debt and fired its general contractor, which then filed a mechanic’s lien on the property to recover $6 million allegedly owed it. When the bank sought to foreclose on its mortgage, the general contractor counterclaimed, asserting that its lien had priority over, or at least parity with, the bank’s mortgage. The bank tendered its defense to the title insurer under a policy that required the insurer to defend the bank against a “claim . . . alleging a defect, lien or encumbrance or other matter insured against by this policy.” The policy contained an exclusion from coverage for claims “created, suffered, assumed, or agreed to” by the insured. The district court ruled in favor of the title insurer. The Seventh Circuit reversed. The undisputed facts show that the title insurer breached its duty to defend the bank on the contractor’s claim that its mechanic’s lien had priority over or parity with the mortgage. View "Home Fed. Savings Bank v. Ticor Title Ins. Co." on Justia Law

Javell, the owner of a mortgage brokerage, and Arroyo, Javell’s employee and loan processor, were convicted of two counts of mortgage-based wire fraud (18 U.S.C. 1343) based on their actions in procuring a fraudulent mortgage during an FBI sting operation. Javell was sentenced to 12 months and one day in prison. The Seventh Circuit affirmed. Javell argued the district court violated Bruton, and Javell’s Sixth Amendment rights by admitting the post-arrest statements made by Arroyo and by failing to properly instruct the jury about the rules of non-imputation. According to Javell, Arroyo’s post-arrest statements directly implicated Javell and had the jury not heard those statements, Javell would not have been convicted. Noting a “plethora” of other evidence, including recordings, the court rejected the argument. View "United States v. Javell" on Justia Law

WR sought to develop a medical office building by executing a long-term ground lease to a developer, who would design, finance, construct, and own the facility, leasing space to WR. WR requested proposals, describing a 30-year ground lease for a 30,000 square foot medical facility. Citadel submitted a proposal. Negotiations followed. WR signed an “Authorization to Proceed” stating that WR “will only be responsible for architectural and engineering fees in the event [W R] does not execute its space leases and ground lease.” Citadel hired attorneys, architects, engineers; refined plans: conducted zoning review, and began securing financing. Negotiations failed. WR terminated the relationship, just as Citadel was preparing to commence construction. WR refused to pay expenses unless it received the plans; entered into contracts with Citadel’s architect and engineer; used their plans and built the facility. The district court rejected Citadel’s claims. The parties settled with respect to pre-construction costs and fees. The Seventh Circuit affirmed. Citadel failed to show that WR agreed to complete the arrangement. When the relationship ended, they had not agreed on essential lease terms. No language in the agreement required the parties to negotiate in good faith, nor did it establish a framework for the negotiation process. View "Citidal Grp. Ltd. v. Washington Reg'l Med. Ctr." on Justia Law

After being rejected for a mortgage because Hall had a bankruptcy and their joint income was too low, Phillips and Hall applied with Bowling, a mortgage broker, under the “stated income loan program.” Bowling prepared an application that omitted Hall’s name, attributed their combined income to Phillips, doubled that income, and falsely claimed that Phillips was a manager. Phillips signed the application and employment verification form. Fremont extended credit. They could not make the payments; the lender foreclosed. Bowling repeated this process often. He pleaded guilty to bank fraud and, to lower his sentence, assisted in prosecution of his clients. Phillips and Hall were convicted under 18 U.S.C. 1014. The district court prohibited them from eliciting testimony that Bowling assured them that the loan program was lawful and from arguing mistake of fact when in signing the application and employment verification. They argued that they were hindered in showing the lack of intent for a specific-intent crime. The district judge concluded that they sought to argue mistake of law. Jury instructions required acquittal absent a finding, beyond a reasonable doubt, that defendants knew that the statements were false; genuine mistake of fact would have led to acquittal.. The Seventh Circuit affirmed.View "United States v. Phillips" on Justia Law

In 2005, Banks, a construction worker, wanted to flip houses, but did not have capital. John, a mortgage broker, suggested that they purchase homes from distressed owners at inflated prices, with the sellers promising to return money above what they owed their own lenders. Owners cooperated rather than face foreclosure. Banks renovated the houses using funds received from sellers and resold them. Johns collected a broker’s fee. When they purchased a house from owners in bankruptcy, they wanted a mortgage to secure payment from the sellers and informed the trustee of the bankruptcy estate. Despite protestations by the trustee, the sale went through, and Banks used the rinsed equity to pay off sellers’ creditors through the trustee. The sellers’ lawyer discovered the scheme, which led to indictments. Johns was convicted of making false representations to the trustee regarding the second mortgage and for receiving property from a debtor with intent to defeat provisions of the Bankruptcy Code. With enhancements for financial loss and for targeting vulnerable victims, Johns was sentenced to 30 months. The Seventh Circuit affirmed the conviction, rejecting challenges to sufficiency of the evidence and jury instructions, but remanded for clarification of sentencing enhancements. View "United States v. Johns" on Justia Law

Safeco issued plaintiffs a homeowner’s policy that went into effect when they closed on the property and covered all accidental direct physical loss to property, unless limited or excluded, “occurring during the policy period.” Before receiving the policy and first seeing its terms, but after beginning renovations, plaintiffs discovered severe inner wall water leaks and significant water infiltration on three exterior walls. A mold specialist found that the home had numerous construction deficiencies that existed long before they purchased the home, resulting in chronic water intrusion that damaged interior finished walls, insulation, external plywood sheathing, and other aspects of the structure. Safeco denied coverage, stating that the prepurchase inspection confirmed multiple areas of water damage that were in need of attention and that the loss qualified as a preexisting condition that occurred outside of the policy period. The district court held that Safeco was precluded from raising the exclusions because it did not notify plaintiffs the exclusions until after they discovered the damage, awarded $485,100.64, and held that Safeco lacked a reasonable basis for denial and demonstrated reckless disregard, entitling plaintiffs to damages resulting from bad faith. The Seventh Circuit affirmed.

Investors joined together to buy property. To finance the purchase, they formed a distinct limited liability company, IPA, to negotiate and execute a loan on their behalf with Morgan Stanley. Okun was manager of IPA, which was not allowed to hold an ownership interest in any of the investors. Morgan Stanley sold the loan to an Okun-controlled entity, Lender, LLC, and agreed to offset the purchase price by the amount of funds available in escrow, reserve, and impound accounts, in which it held a security interest and which were, under the terms of the loan, required to reimburse investors for maintenance, taxes, and other property-related expenses. Lender LLC never reestablished the accounts, depriving the Investors of $1,361,184.63. Abandoning their suit against Lender, LLC, the investors claimed that Morgan Stanley breached their loan agreement and committed conversion. The district court granted summary judgment for Morgan Stanley. The Seventh Circuit affirmed. Morgan Stanley was not barred by the Note, the Mortgage, or the RSA from assigning its interest in the escrow accounts to Okun or structuring a sale of the loan as it wished; it committed neither breach of contract nor conversion.

While vacationing in Arizona, plaintiffs contracted to purchase a condominium in a planned development in Mexico. The project was managed by defendant, an Arizona resident. After making the first of three installment payments, plaintiffs became concerned and sought reassurance. Defendant sent several communications to plaintiffs (in Wisconsin) assuring them the project was properly financed and would be completed on time. They made additional payments. The unit was not completed on time and investigation revealed that the project did not have financing; advance sales were funding the development. Plaintiffs sued in Wisconsin state court, alleging intentional misrepresentation and seeking rescission and damages. Following removal to federal district court, the case was dismissed for lack of personal jurisdiction. The Seventh Circuit reversed. The complaint alleges that repeated communications to plaintiffs’ Wisconsin home were part of a deliberate attempt to create a false sense of security and to induce plaintiffs to make payments. The communications are critical to the claim of intentional misrepresentation. Defendant was aware that the harm would be felt in Wisconsin. The allegations are sufficient to establish minimum contacts necessary to satisfy due-process requirements for jurisdiction in Wisconsin. The communications satisfy the “local act or omission” provision of the Wisconsin long-arm statute.