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Yandle denies tax buyer’s motion to dismiss bid-rigging class action

By Heather Isringhausen Gvillo | Dec 14, 2016

District Judge Staci Yandle denied a St. Clair County tax buyer’s motion to dismiss a class action alleging St. Clair County Treasurer Charles Suarez and several tax buyers participated in a bid rigging conspiracy.

Yandle filed her order denying dismissal for defendant Barrett Rochman on Nov. 17.

Rochman filed a combined motion to dismiss through attorneys Andrew Kasnetz, Timothy Sansone and Natalie Kussart of Sandberg Phoenix & von Gontard in St. Louis.

Defendants Kenneth Rochman, Sabre Group LLC and SI Securities LLC joined in the motion.

The defendants argued that the complaint is time-barred under the statute of limitations.

In her order, Yandle held that the complaint raises a reasonable inference that the limitations period was tolled until 2014 when the plaintiffs discovered the injury.

The defendants also argued that count I for “civil conspiracy” should be dismissed because antitrust claims cannot be asserted as civil conspiracy claims under Illinois law.

Yandle noted that while the plaintiffs cannot recover under both the Illinois Antitrust Act and common law theories, they may allege both theories and choose which theories of recovery to pursue at trial.

The defendants further argue that count II for “money had and received” should be dismissed because the complaint fails to state a claim. They specifically claim that the Illinois Property Tax Code permits an 18 percent penalty rate, and no more than an 18 percent penalty was charged.

Yandle held that the plaintiff’s allegation that the illegally rigged tax sales unfairly ensuring the highest penalties would be charged is sufficient to state a claim for money had and received.

The defendants also argued that counts III and IV failed to state a claim under the Sherman Act. They claim the plaintiffs make “fundamentally deficient allegations.”

However, Yandle wrote that “proof of an explicit agreement is not required to plead a Sherman Act antitrust conspiracy claim.”

“Here, Plaintiffs pled sufficient facts to survive a motion to dismiss. The factual allegations include specific details about the agreement and how sales were structured to eliminate competition,” the order states.

The plaintiffs also provided allegations that sufficiently identify a relevant market, she held.

“Competition is clearly envisioned by the Property Tax Code,” Yandle wrote. “Further, Plaintiffs’ allegations reasonably set forth tax lien certificates as products that fall within the definition of commodity.”

Yandle further held that the plaintiffs sufficiently pled exclusionary conduct and monopoly power to survive a motion to dismiss.

“The alleged conduct is exclusionary in that it ‘had the effect of preventing other competitors from receiving the winning bid at the tax sale auctions’ by ‘fixing, controlling, maintaining, limiting, and/or discontinuing the bidding of lower rates during the auction process,’” the order states.

“The alleged arrangement between Defendant Suarez and tax-purchaser defendants prevented competitive bids except on less lucrative properties, which were allowed in order to conceal the conspiracy,” it continued.

As an alternative to dismissal, the defendants moved for a more definite statement or to strike the allegations regarding fraudulent concealment, which was denied.

Calling motions to strike “time wasters,” Yandle held that “the challenged paragraphs and exhibits are neither immaterial nor scandalous and that Defendants will not be significantly prejudiced by them.”

Two couples sued Suarez and tax buyers in the U.S. District Court for the Southern District of Illinois on Oct. 17, 2014, alleging a conspiracy similar to one that sent former Madison County treasurer Fred Bathon to prison.

John Bloyer Jr., Adrianne Bloyer, Kevin Dvorak and Kathleen Dvorak, all of O’Fallon, claim the alleged conspirators artificially inflated interest rates at tax sales in 2007 and 2008. They claim Suarez illegally rigged bids at sales of delinquent taxes to enrich Democratic campaign contributors.

The plaintiffs sought access to the defendants’ sealed criminal sentencing documents in their discovery requests. The defendants objected.

Rochman also answered the plaintiff’s class action complaint on Nov. 17, asserting 14 affirmative defenses.

Rochman argued that he was not a conspirator in this action. He says that if a conspiracy is proven, that third parties or co-defendants who participated in the alleged conspiracy are liable for all damages.

The defendant alleged that the voluntary payment doctrine bars recovery because someone on the plaintiffs’ behalf voluntarily paid the defendant an 18 percent penalty rate to redeem their properties.

Rochman also argued that the claims are barred by the doctrine of accord and satisfaction, “because the payments of the disputed amounts to redeem the Plaintiffs’ delinquent property taxes sold at the Madison County real estate tax sale auctions conducted in 2005 through 2008, were tendered as full payments of all demands, accepted by the Defendants with an understanding that such tender was full payment of all disputed amounts owed to the Defendants.”

Similar to the defendant’s motion to dismiss, Rochman also argued that the complaint is barred by the statute of limitations and the complaint fails to state a claim.

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St Clair County U.S. District Court for the Southern District of Illinois

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