Legal Case Studies: May 2021

Legal Case Studies: May 2021


Legal case studies in this issue:

Lisa Harms HartzlerResearch and analysis by Lisa Harms Hartzler,
Sorling Northrup Attorneys

Plaintiff with a license, not a lease, could not claim eviction was an unconstitutional seizure

In Dix v. Edelman Financial Services, LLC, 978 F.3d 507 (7th Cir. 2020), the plaintiff claiming he was wrongfully evicted from a house sued not only the owner who also resided there and several police officers present at the eviction, but also a number of completely irrelevant parties, including the owner’s real estate broker and her financial advisor, two municipalities, and a local car-towing company for violating his Fourth Amendment right to be free from unreasonable seizures.

The plaintiff initially had a romantic relationship with the owner of the house. They lived together for some time but, according to the plaintiff, the relationship had evolved into one of landlord-tenant only. However, he also complained the owner used his credit card, demanded he do repairs, and made  him serve her meals in bed—very “unlandlady-like” conduct, according to the court. When the owner decided to sell the house, she told the plaintiff to vacate the premises. He refused and she called the police, who allowed the owner to remove the plaintiff’s belongings from her house.

The Fourth Amendment states, in part, that “the right of the people to be secure in their person, houses, papers, and effects, against unreasonable searches or seizures, shall not be violated.”  A seizure of property occurs when there is a meaningful interference with an individual’s possessory interest in that property. An eviction by the police can constitute a seizure when the plaintiff has a legal interest and a right to possession in the property.

Under Illinois law, a lease is a legal interest carrying the right to possession. The essential elements of a lease include (1) the extent and bounds of the property; (2) the length of the term; (3) the amount of rent; and (4) the time and manner of payment. “The ultimate hallmark of a lease is the tenant’s ‘exclusive possession of the premises against all the world, including the owner.’”

On the other hand, a license “merely confers a privilege to occupy the premises under the owner and is ordinarily revocable at the will of the grantor.”  It is not an interest in land. A house guest, for example, is a licensee. When a license is revoked the licensee becomes a trespasser and has no possessory property interest that can support a Fourth Amendment challenge to a seizure.

The court in this case found none of the characteristics of a lease:  (1) the plaintiff had no defined area of the house; (2) he was staying indefinitely with no specific term; and (3) he paid no rent. He lacked exclusive control over any specific part of the house and, in fact, could not prevent the owner from going through his things, opening his mail, and mingling her property with his. He had resorted to locking his possessions in his truck.

The court concluded that the plaintiff had only a verbal license to stay at the house that was clearly revoked. Consequently, he had no possessory interest on which to base a Fourth Amendment challenge to his eviction as an unreasonable seizure. The district court’s dismissal for failure to state a claim was affirmed.

Evidence was insufficient to hold real estate agent liable for fraudulent misrepresentation

In Jewell v. Maryland Real Estate Commission, Case No. 46577IV (MD Ct. Special Appeals, April 2, 2021), unhappy home buyers sought recovery from the Maryland Real Estate Commission for the expense of a new roof and other repairs. The Commission maintained a guaranty fund to protect persons who suffer financial loss due to the misconduct of a real estate broker or salesperson. A claim must be based on an act or omission that constitutes fraud or misrepresentation. The guaranty fund pays successful claimants and requires the real estate licensee reimburse the fund plus interest working under a license until the repayment is made.

In this case, Jewell was an 80-year-old licensed real estate agent who listed a residential property as “newly renovated” in a Maryland neighborhood. He also owned a minority interest in the owner of the property, an LLC that renovated and flipped properties for resale. Jewell showed the property to the buyers, who were represented by another real estate agent. They made an offer on the property, obtained an FHA mortgage, which included an appraisal, and also obtained an independent inspection. The inspection revealed the need for 36 repairs, many of them major.

The buyers claimed they sent the list of repairs to Jewell, who orally promised to finish them before closing. At the walk-through prior to closing, Jewell did not disclose that many repairs undiscoverable by a superficial inspection remained unfinished. The buyers discovered the problems after closing and filed a claim with the Commission. An administrative law judge found that Jewell had misrepresented that certain repairs had been completed before closing and recommended the buyers receive $50,000 for a new roof and other repairs. The Commission adopted this recommendation. A circuit court affirmed the Commission’s award. Jewell then appealed.

To prove fraudulent misrepresentation, a plaintiff must show the (1) the defendant made a false representation; (2) the falsity of the representation was either known to the defendant or it was made with reckless indifference to its truth; (3) the misrepresentation was made for the purpose of defrauding the plaintiff; (4) the plaintiff relied on the misrepresentation and had the right to rely on it; and (5) the plaintiff suffered compensable injury as a result.

Although the court found sufficient evidence to conclude that Jewell orally agreed to finish repairs prior to closing, it held that misrepresentation cannot be based on statements that are promissory in nature. Actions for deceit cannot be brought “for the unfulfillment of promises or the failure of future events to materialize as predicted.”  The only exception is when the defendant intended to deceive or fail to perform at the time the promise was made. In this case, there was no evidence presented that Jewell did not intend to make the repairs when he agreed to them. Consequently, the buyers could not succeed on a claim for misrepresentation at the time Jewell agreed to make repairs.

The buyers might have had a claim for fraudulent concealment if Jewell had a duty to disclose the lack of repairs and failed to do so at the walk-through before closing. He was, in fact, silent as to the status of any repairs at that time. Unfortunately for the buyers, the Commission’s decision was not based on that argument, nor was it raised before the appellate court.

The Commission’s decision awarding the buyers damages was based only on fraudulent misrepresentation at the walk-through. However, there was no evidence that Jewell affirmatively misrepresented to the buyers at the walk-through that the repairs were finished. The appellate court had to reverse the Commission’s award to the buyers.

Supreme Court limits definition of “robo-calling”

In Facebook, Inc. v. Duguid, –S.Ct.–, No. 19511 (April 1, 2021), the U.S. Supreme Court analyzed the definition of an “automatic telephone dialing system” contained in the Telephone Consumer Protection Act of 1991 (TCPA). Duguid was an individual who received a text message from Facebook notifying him of an attempt to access his account from an unknown device or browser. Facebook allows its users to opt to receive these notifications as a security protection.

Duguid, however, never had a Facebook account and never gave Facebook his phone number for any purpose. Facebook suspected that Duguid had been assigned a recycled cell phone number that previously belonged to a Facebook user who had opted to receive login notifications.

Duguid found the unwanted texts annoying and filed a class action suit alleging Facebook violated the TCPA by maintaining a database that stored phone numbers and programming its equipment to send automated text messages to those numbers each time the associated account was accessed by an unrecognized device or web browser.

The TCPA proscribes abusive telemarketing practices by, among other things, imposing restrictions on making calls with an “automatic telephone dialing system.”  An autodialer is defined as “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”  According to the Court, the question in the case was whether this definition encompasses equipment that can “store” and dial telephone numbers, even if the device does not use a random or sequential number generator. If answered in the affirmative, cell phones capable of storing phone numbers and automatically dialing a number by the selection of a name or contact would come within the definition.

The Court held that to qualify as an “automatic telephone dialing system” restricted by the TCPA, a device must have the capacity either to store a telephone number using a random or sequential generation or to produce a telephone number using a random or sequential number generator. Facebook’s login notification system stored phone numbers for automatic notifications, but it did not use a random or sequential number generator and, therefore, was not covered by the TCPA.

Federal appeals court decides grocery store’s website was not a place of public accommodation for purposes of ADA compliance

In Gil v. Winn-Dixie, –F.3d.–, No. 1:16cv23020-RNS (11th Cir., April 7, 2021), the issue before the federal Eleventh Circuit Court of Appeals was whether Winn-Dixie’s website violated the Americans with Disabilities Act (ADA) because it was not compatible with a computer screen reader used by the plaintiff, who is blind.

The court acknowledged a split in decisions among the federal courts on the issue. Some courts have found that a website incapable of being used by a screen reader placed an intangible barrier to a blind person’s ability to fully and equally enjoy goods, services, privileges and advantages of places of public accommodation associated with the website. The plaintiff argued in this case that his inability to access Winn-Dixie’s website to request pharmacy refills and redeem coupons was such an intangible barrier that violated the ADA.

This court determined, however, that the ADA was clearly limited only to physical places like the grocery store. Looking to the plain meaning of the statute and various regulations issued under it, the court found persuasive that, of the numerous examples listed as to what is covered by the ADA, all are physical places, without a single mention of websites.

The court also explicitly declined to adopt the “nexus” test other courts have used to find a sufficient connection between a physical store and its website to require ADA compliance. The court further distinguished other cases, like the Domino’s Pizza case from the Ninth Circuit (a case this column reported in 2019), in noting that Winn-Dixie’s website could not be used as a “point of sale” location. Unlike the Domino’s Pizza website, where customers could order, pay for, and request pizza delivery, every Winn-Dixie customer had to physically go to the grocery store to pick up prescriptions and purchase goods for which coupons were applicable.

The court reversed the district court’s decision in favor of the plaintiff. With increasingly contradictory decisions around the country, the U.S. Supreme Court might eventually weigh in on the controversy.

Suburban resident used Municipal Code to obtain injunction against neighboring nuisance

In Frederick v. Gaca, 2020 IL App (3d) 20054, the plaintiff lived near a neighbor who was renting a single-family home to six individuals and charging fees to allow as many as 26 cars and trucks to park for extended periods on the property. The City of Naperville zoning ordinances applicable to the residential property prohibited using it as a boarding house and operating a vehicle parking and storage facility. The plaintiff sued the defendant on multiple theories, including violating the local zoning ordinance, and requested a permanent injunction against those illegal uses.

Under the Illinois Municipal Code, an owner or tenant of real property located within 1200 feet of a structure or building in violation of local zoning ordinance may file an action to correct the violation when the plaintiff’s “property or person will be substantially affected by the alleged violation.”  Relief will be afforded when “municipal officials are slow or reluctant to act, or where their actions do not protect the landowners’ interests.”

The city’s zoning ordinance defined a boarding house as a building in which individuals live in separate spaces under individual rental agreements with varying lease terms. In this case, the plaintiff presented overwhelming evidence, including admissions by the defendant and affidavits from tenants, that the house was being used in violation of the ordinance. Similarly, adequate evidence that between 15 and 26 cars and trucks were parked on the property for months was supported by testimony and photographs from an online car dealer and several truck owners who rented space from the defendant.

The court explained that the plaintiff would be entitled to a permanent injunction if (1) he had a clear and ascertainable right in need of protection; (2) he would suffer irreparable harm if the injunction did not issue; and (3) no adequate remedy at law existed. In this case, the court held that the plaintiff had a statutory right under the Municipal Code to bring the action to protect his property. Second, the defendant effectively admitted that he would continue to use the property in violation of the zoning ordinance if he was not enjoined from doing so. Finally, the Municipal Code allowed only injunctive relief. It did not provide for any monetary relief.

The appellate court affirmed the lower court’s grant of a permanent injunction against the defendant. It would have been interesting if the court had discussed whether or how the city engaged in “slow action” or reluctance to prosecute the zoning code violations. Unfortunately the court did not mention it.

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