Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Ill.: Property owners’ real estate tax auction bid rigging suit against county official proceeds, (Feb 26, 2016)

By Linda O’Brien, J.D., LL.M.

An action by property owners against a county treasurer and several real estate tax purchasers for allegedly conspiring to illegally rig real estate tax auction sales was not barred by the statute of limitations, the federal district court in East St. Louis, Illinois, has decided. Thus, the defendant’s motion to dismiss was denied (Bloyer v. St. Clair County, Illinois, February 25, 2016, Vandle, S.).

John Bloyer, Adrianne Bloyer, Kevin Dvorak, and Kathleen Dvorak owned property that was sold at a St. Clair County real estate tax auction. In October 2014, the property owners filed suit against Charles Suarez, the Treasurer of St. Clair County who conducts the real estate tax auctions, and several investment companies that purchased properties at St. Clair County tax auctions, asserting claims for civil conspiracy, breach of fiduciary duty, and violations of Sections 1 and 2 of the Sherman Act and the Illinois Antitrust Act. Specifically, the property owners claimed that Suarez agreed with each investment company to change the bidding process to ensure that the auctioneer recognized the companies as winning bidders in return for political campaign contributions.

In January 2016, the defendants’ motion for sanctions was denied. Before the court was defendant John Vassen’s motion to dismiss the complaint as time-barred and motion to strike certain allegations as immaterial.

In denying the motion to dismiss, the court determined that the plaintiffs’ complaint set forth sufficient facts that, if proven, would raise a reasonable inference that the statute of limitations period was tolled until 2014 when the plaintiffs discovered their injury. The plaintiffs acknowledged the applicable statutes of limitations but argued that the discovery rule tolled the limitations period.

The plaintiffs alleged that Vassen and the tax purchaser investment companies directed political campaign contributions to a political party instead of Suarez, Suarez seated the tax purchaser defendants in the front of the auction room to facilitate the conspiracy, and other bids were allowed on less lucrative properties to cover up the conspiracy. The plaintiffs also alleged that the conspiracy was inherently self-concealing so they could not have discovered through reasonable diligence that they had been injured until 2014.

According to the court, the plaintiffs were not required to allege facts that would defeat affirmative defenses, such as a claim being time-barred. Here, the plaintiffs pleaded sufficient facts that allowed the court to draw a reasonable inference that the defendants were liable for the misconduct alleged.

Furthermore, the court declined to strike certain allegations that Vassen contended were “likely to rise to the level of scandalous as an attempt to confuse or improperly impugn the St. Clair County property tax sales.” The court found that the challenged allegations were not immaterial or scandalous, and would not significantly prejudice the defendant.

The case is No. 3:14-cv-01119-SMY-PMF.

Attorneys: Aaron G. Weishaar (Reinert Weishaar & Associates, PC) for John R. Bloyer, Jr. Garrett P. Hoerner (Becker, Hoerner, Thompson & Ysursa, PC) for St. Clair County, Illinois. Andrew R. Kasnetz (Sandberg Phoenix & Von Gontard P.C) for Sabre Group LLC and S.I. Securities, LLC.

Companies: Sabre Group LLC; S.I. Securities, LLC

Cases: Antitrust IllinoisNews