Madison - St. Clair Record

Friday, August 23, 2019

Bank and appraisal company say property owners make insufficient conspiracy claims

By Heather Isringhausen Gvillo | Feb 22, 2016

A bank and appraisal firm argue that several St. Clair County residents made insufficient claims of conspiracy after their property values allegedly plummeted.

Benjamin R. Brown, Roberta L. Brown, Billy Joe Foutch, Madonna Foutchm and Mascoutah Land Trust #5 filed the lawsuit on Sept. 11 against Kenworth C. Johnston, Kenworth Johnston Appraisals and Commerce Bank.

According to the complaint, the plaintiffs claim they took out a loan and purchased a mortgage on a piece of land intending to redevelop the property as a senior living community for people 55 years old and older. The group claims they were later told the property value had fallen below what was owed on the note.

They claim they were forced to take on new partners, who in turn paid the note in full in exchange for a third share interest in their partnership.

They plaintiffs allege they would have never had less than a 50 percent share of the land per couple if not for the faulty conduct of the bank and appraisal firm, the suit states.

Commerce Bank filed a motion to dismiss the complaint on Oct. 21 through attorney Myron Hanna of Hanna & Volmert in Belleville. It argues that it entered into a Settlement and Release Agreement on Dec. 10, 2012, with the plaintiffs, which “released and forever discharged Commerce Bank and its agents from any and all claims and causes of action of any nature whatsoever for any act done or suffered to be done by Commerce Bank …”

It adds that any appraisal prepared by Johnston as an agent for Commerce Bank would have been prepared for the benefit of Commerce Bank and not for the benefit of the plaintiffs.

“To show that the defendant appraiser owed a duty to the Plaintiffs, the Plaintiffs would have to allege that the appraisal was intended to benefit or influence Plaintiffs,” the motion states.

The defendant also argues that no conspiracy can exist between a principal and an agent. It says the plaintiffs failed to allege how an injury was caused by Johnston’s action in providing his appraisal of the property where Commerce Bank was entitled to bring an action for foreclosure of its mortgage.

Further, the defendant argues that the Promissory Note secured by the mortgage on the property had already matured, and the plaintiffs “cannot assert reliance upon the allegedly ‘undervalued’ appraisal, nor can they assert that any deception was the proximate cause of any damage to them.”

Johnston also filed a motion to dismiss on Nov. 6 through attorney Edward Adelman of Goffstein, Raskas, Pomerantz, Kraus & Sherman of St. Louis. He argues that the plaintiffs failed to allege sufficient facts to state a cause of action.

“There were no allegations in the foreclosure action, contrary to the allegations made in plaintiffs’ complaint, that the foreclosure was filed as a result of the diminution of value in the property,” the motion states.

Circuit Judge Vincent Lopinot granted the defendants’ motions to dismiss on Jan. 19.

The plaintiffs filed a motion to amend their complaint that same day through attorney Eric Rhein of Belleville. They seek to attach a copy of the Kenworth Johnston land appraisal at issue and to correct alleged technical issues with the complaint.

Lopinot scheduled a status conference on March 14 at 9 a.m.

The plaintiffs seek damages in excess of $50,000 from each defendant, plus court costs and attorney’s fees.

St. Clair County Circuit Court case number 15-L-513

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