Several defendants accused of participating in an alleged bid-rigging conspiracy with former Madison County Treasurer Fred Bathon seek summary judgment from the plaintiffs’ third amended complaint.
Plaintiff attorney Nelson Mitten of St. Louis filed the bid-rigging suit on behalf of a class of individuals who allege Bathon arranged for tax buyers to charge interest at the maximum legal limit of 18 percent at auctions of delinquent property taxes from 2005 to 2008.
The plaintiffs allege Bathon conspired with each tax purchaser defendant to establish a “no trailing bid” policy, meaning the process required one-time, simultaneous bidding. Rather than allowing a series of bids, all bidders had to bid at once, with the auctioneer accepting the lowest bid that was heard.
The defendants allegedly then made an agreement with Bathon to bid the maximum of 18 percent in the simultaneous bidding.
Bathon was charged in February 2013 for violating the Sherman Antitrust Act. He pleaded guilty the same day. Defendants Scott McLean, Barrett Rochman and Joe Vassen also entered guilty pleas to federal antitrust charges in October 2013.
Mitton filed the third amended complaint Sept. 25 after visiting Judge J. Marc Kelly of Fayette County granted their request to re-join Madison County and Madison County Board Chairman Kurt Prenzler as defendants.
They had been previously excused by the Fifth District Appellate Court on an appeal regarding class certification.
Defendants Vista Securities, Dennis Ballinger Jr. and Empire Tax Corporation filed separate answers to the third amended complaint on March 19 through attorneys Daniel Delaney of Drinker Biddle & Reath LLP in Chicago.
The defendants argue that the various purchases of the delinquent property taxes at or near the maximum interest rate was authorized under the Illinois Property Tax Code.
Citing the doctrine of waiver, the defendants argue that the plaintiffs “redeemed their delinquent properties by paying the 18% penalty rate, they voluntarily and intentionally relinquished their right to assert a claim based on the sale of their delinquent property taxes.”
They also allege the plaintiffs’ claims are barred by the voluntary payment doctrine and the doctrine of accord and satisfaction. They state that the delinquent property taxes were “tendered as full payments of all demands” and accepted by the defendants with an “understanding that such tender was full payment of all disputed amounts owed” to the defendants.
The defendants argue that the plaintiffs’ Illinois Antitrust Act claims fail because the Act excludes activities of a unit or agent of local government. Because the plaintiffs base their allegations on Bathon’s actions in his official capacity as treasurer, the alleged conspiracy is excluded from the Act, they claim.
They also argue that the plaintiffs’ civil conspiracy claim based upon a purported violation of the Illinois Antitrust Act is barred by the Act.
The defendants claim they were not members of the alleged conspiracy and are not liable to those who may have been part of the scheme.
They add that the plaintiffs have suffered no damages and that the plaintiffs’ alleged damages are improperly speculative.
Ballinger Jr., Empire Tax Corporation and Vista Securities also filed a motion for summary judgment.
Ballinger is an officer and owns a partial interest in Empire Tax Corporation and Vista Securities, “which are corporations with other shareholders, officers and employees, and engaged in the real estate investment business, including the purchase of delinquent taxes.”
The defendants argue that “Ballinger did not personally purchase any delinquent taxes at any of the Madison County auctions or anywhere else at any time. Ballinger did not even attend any of the Madison County auctions at issue and submitted no bids at those auctions for anyone.”
The defendants also argue that the plaintiffs failed to provide evidence that Empire Tax Corporation or Vista Securities purchased the delinquent taxes of the named plaintiffs.
Defendant James Foley filed a motion for summary judgment on March 15 through attorney Ann Barron of Heyl Royster Voelker & Allen in Edwardsville.
He argues that the Fifth District Appellate Court did not certify this matter as a class action for damages.
He also argues that the plaintiffs will have to prove that the defendants who had not previously pled guilty to conspiracy were involved.
“Plaintiffs have no evidence, let alone clear and convincing evidence, that Mr. Foley was a conspirator or participated in any conspiracy with respect to sales of delinquent property taxes in Madison County Illinois in the years 2005, 2006, 2007 or 2008,” the motion states.
Foley also argues that summary judgment is proper because an employee of a unit of local government and an “indirect purchaser” cannot be held liable for a violation of the Illinois Antitrust Act.
Defendants Barrett Rochman, SI Securities and Sabre Group answered the complaint on March 15 and filed a motion for summary judgment through attorney Natalie Kussart of Sandberg Phoenix & von Gontard in Edwardsville.
They argue that the plaintiffs’ claims are barred by the statute of limitations.
“Plaintiffs and the proposed Class Members in this action either knew, or could have discovered through reasonable diligence, the facts forming the basis of the alleged conspiracy as early as 2010 and, as a result, there has been no tolling of the statute of limitations on Plaintiffs’ claims as they allege,” the motion states.
They also allege that class representative Virgil Straeter has been a professional auctioneer since 1996 and researched the tax buying business in the 1970s in anticipation of becoming a tax buyer.
“He has been familiar with the tax sale process since the 1980s,” the motion states. “He has challenged the tax assessments on his properties.”
They add that Straeter knew he had a claim for a lawsuit as early as 2010 when he was contacted by the Belleville New Democrat and was quoted in a September 2010 article saying, “Something was rotten in Denmark” in regards to the tax sales.
He allegedly contacted an attorney about a potential lawsuit in 2010 or 2011.
The defendants argue that class representative Richeson Real Estate knew about the alleged issues with the tax sale auctions and unpaid taxes prior to its meeting in the fall of 2012 about the tax sale auctions.
The defendants argue that “none of the Plaintiffs have testified that they actually learned they may have a claim by the publicly revealed Federal Indictment of Defendant Bathon as alleged in the Third Amended Complaint. Instead, all of the named Plaintiffs, except Virgil Straeter, have testified that they learned of the existence of their potential claim through the attorneys who brought this suit.”
The motion states that there were “dozens of newspaper articles in the Belleville News Democrat over the years that contain all of the basic underlying facts that form the basis of Plaintiffs’ claims.”
They further argue that class representative Scott Bueker has not personally redeemed the delinquent taxes for his property because they were added to the end of his mortgage through Carrington Mortgage.
“At best, Bueker might one day be an ‘indirect purchaser’ of the delinquent taxes sold at the Madison County tax auction – assuming that he pays the final balance on his mortgage one day – but he is not a direct purchaser here,” the motion states.
Indirect purchasers cannot pursue claims under the federal antitrust laws.
Defendant CDBR LLC answered the complaint and filed a motion for summary judgment on March 15 through attorney Natalie Kussart of Sandberg Phoenix & von Gontard in St. Louis.
It argues that it did not attend the delinquent tax sales and did not bid on or purchase any tax sale certificates.
“Simply put, CDBR was not a Madison County tax buyer and should not be a defendant,” the motion states.
Defendant Kenneth Rochman also answered the complaint and filed a motion for summary judgment through Kussart.
He argues that the plaintiffs do not specifically allege nor provide any evidence that Rochman conspired with any of the tax buyers or purchased tax certificates at the tax sales in question.
“In fact, Plaintiffs have not provided any evidence linking Kenneth Rochman to the tax sales in question,” the motion states.
Defendant Blue Sky Vineyards LLC also answered the complaint and filed a motion for summary judgment through Kussart, arguing that it did not attend the delinquent tax sale and did not bid on or purchase any tax sale certificates.
It also argues that the plaintiffs did not specifically allege and failed to provide evidence that it conspired with any of the tax buyers.
Defendants John Vassen, Joseph Vassen, and V.I. Inc. answered the complaint on March 9 and filed a motion for partial summary judgment on March 13 through attorney Paul Slocomb of Hoffman Slocomb LLC in St. Louis.
They argue that the plaintiffs’ claims are barred by the statute of limitations.
Defendant Joseph Vassen also filed a separate motion for summary judgment.
He argues that he did not participate in any of the tax sales in question, did not enter into any explicit or implicit agreements with anyone regarding the tax sales, did not make any political campaign contributions to Bathon, and received no money from the plaintiffs or class members.
Madison County Circuit Court case number 13-L-276