897 F.3d 797
7th Cir.2018Background
- In 2006 Meryl Squires‑Cannon and Richard Kirk Cannon purchased a 400‑acre estate through two LLCs, financed by a $14.5M one‑year note and mortgage from Amcore Bank.
- Amcore called the loan during the financial crisis; Amcore failed in 2009 and the FDIC became receiver; BMO Harris purchased Amcore’s loan assets and continued foreclosure proceedings.
- The Forest Preserve District of Cook County agreed to buy the note from BMO/FDIC, was assigned the note, obtained summary judgment in foreclosure, and made a $14.5M credit bid at the foreclosure sale; Illinois appellate rulings later disturbed aspects of the foreclosure proceedings and no final foreclosure judgment currently exists.
- The Cannons filed multiple suits (three state, three federal) challenging the Forest Preserve’s conduct; this appeal arises from dismissal under Rule 12(b)(6) of the Cannons’ federal suit alleging takings, fraud, conspiracy, and aiding/abetting.
- District court dismissed for failure to state a claim; on appeal the Seventh Circuit reviewed de novo and affirmed dismissal for the reasons summarized below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether enactment of an ordinance designating the land for future forest preserve was a regulatory taking | Ordinance made estate part of forest preserve and thus effected a taking | Ordinance was prospective authorization to acquire land, not an actual appropriation or regulation effecting a taking | No taking — mere authorization to condemn/acquire is not a regulatory taking |
| Whether purchase of the note, foreclosure, and credit bid constituted a Fifth Amendment taking | Forest Preserve used governmental power to acquire property via assignment and foreclosure, amounting to a taking | Forest Preserve acted in a proprietary/contractual creditor capacity exercising contractual remedies, not sovereign condemnation | No taking — proprietary/contractual foreclosure and credit bid are not a constitutional taking |
| Whether physical entry, patrols, or signage constituted a physical taking | Physical possession, patrols, and signs amounted to government appropriation of property | Any such acts were tied to creditor/mortgagee activity and, if improper, raise state‑law remedies rather than a constitutional taking | No constitutional violation shown; factual dispute may bear on state claims but not a federal taking |
| Whether misrepresentations and concealment by counsel/third parties support fraud and derivative conspiracy/aiding/abetting claims | Defendants misled Cannons about purchaser identity (Horizon/‘‘neighbors’’) to block Cannons’ ability to oppose purchase and negotiate, causing damages | Cannons suffered no plausible damages because their loss stemmed from default; defendants had no duty to disclose; fraud not pleaded with required particularity | Fraud and fraudulent concealment dismissed for failure to plead damages and duty; derivative claims fail without underlying tort |
Key Cases Cited
- Horne v. Department of Agriculture, 135 S. Ct. 2419 (2015) (standard for regulatory takings inquiry)
- Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978) (multi‑factor test for regulatory takings)
- Kirby Forest Indus., Inc. v. United States, 467 U.S. 1 (1984) (initiation of condemnation proceedings is not a taking)
- Danforth v. United States, 308 U.S. 271 (1939) (enactment authorizing condemnation does not itself constitute a taking)
- Warren v. Government Nat'l Mortg. Ass'n, 611 F.2d 1229 (8th Cir.) (governmental entity exercising contractual remedies acts in proprietary capacity)
- Connick v. Suzuki Motor Co., 675 N.E.2d 584 (Ill. 1996) (elements of common‑law fraud in Illinois)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (Rule 9(b) particularity applies to fraud and fraudulent concealment claims)