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Tuesday, September 17, 2019

St. Clair County residents file motion to reconsider dismissal of conspiracy suit involving plummeting property values

By Heather Isringhausen Gvillo | Apr 12, 2016


Several St. Clair County residents are asking St. Clair County Circuit Judge Vincent Lopinot to reconsider his order granting dismissal of a suit alleging conspiracy after their property values 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.

The 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.

Lopinot granted dismissal for both defendants on Jan. 19, noting that Johnston was an agent of the bank and was covered by the release.

On Feb. 18, the plaintiffs filed a motion to reconsider Lopinot’s Jan. 19 order granting dismissal. They ask the court to reconsider its finding that Johnston was Commerce Bank’s agent.

They argue that the issue of Johnston’s legal capacity when he appraised the Mascoutah mobile home park is a question of fact and should not be resolved at the pleading stage of litigation.

Further, they argue that Johnston’s name was never mentioned on the Settlement Agreement and Release and that he referred to Commerce Bank as his “client.”

They also filed a motion to amend their complaint on Jan. 19 to attach a copy of the land appraisal at issue to “correct alleged technical deficiencies in the original complaint.”

Johnston responded to the plaintiffs’ motion to reconsider on March 14 through attorney Edward Adelman of Goffstein Raskas Pomerantz Kraus & Sherman in St. Louis, arguing that the motion is without merit.

“The court entered an order dismissing the plaintiffs’ action after finding that the Settlement and Release Agreement entered into between the plaintiffs and Commerce Bank barred the plaintiffs’ action against this defendant. Nothing new is presented by the plaintiffs’ motion to reconsider,” the response states.

“If the plaintiffs’ admission in their pleading that this defendant was an agent of Commerce Bank is insufficient to sustain the court’s holding, then its limitation placed upon this defendant’s appraisal to that of an appraisal of a vacant lot, and not as an operating mobile home part, is sufficient to show that Commerce Bank exercised control over this defendant so that he was its agent,” it continued.

Johnston also argues that documents show that Commerce Bank deducted the appraisal fee from the plaintiffs’ bank account despite the plaintiffs’ allegation that they paid the appraisal fee.

Further, Johnston argues that the plaintiffs were aware of a potential claim when they signed the release in November 2012.

Lopinot scheduled a motion hearing for April 27 at 9 a.m.

The plaintiffs are represented by Eric Rhein of Belleville.

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

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