Johnson v. American Advisors Group

2023 IL App (1st) 221398-U
CourtAppellate Court of Illinois
DecidedSeptember 13, 2023
Docket1-22-1398
StatusUnpublished

This text of 2023 IL App (1st) 221398-U (Johnson v. American Advisors Group) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. American Advisors Group, 2023 IL App (1st) 221398-U (Ill. Ct. App. 2023).

Opinion

2023 IL App (1st) 221398-U No. 1-22-1398 Order filed September 13, 2023 Third Division

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT _____________________________________________________________________________

LEVADA JOHNSON, MARY JOHNSON, and ) Appeal from the DOROTHY YATES, ) Circuit Court of ) Cook County Plaintiffs-Appellants, ) ) No. 20 CH 7462 v. ) ) Honorable AMERICAN ADVISORS GROUP, ) Caroline K. Moreland, Defendant-Appellee. ) Judge, Presiding.

JUSTICE R. VAN TINE delivered the judgment of the court. Presiding Justice Reyes and Justice Lampkin concurred in the judgment.

ORDER

¶1 Held: We affirm the circuit court’s dismissal of plaintiffs’ amended complaint because their claims are barred by the statute of limitations.

¶2 Plaintiffs Levada Johnson, Dorothy Yates, and Mary Johnson appeal from the dismissal of

their amended complaint pursuant to section 2-619(a)(5) of the Code of Civil Procedure (735 ILCS No. 1-22-1398

5/2-619(a)(5) (West 2020)). 1 The circuit court dismissed plaintiffs’ claims for declaratory

judgment as barred by the general civil five-year statute of limitations pursuant to section 13-205

of the Code. Id. § 13-205. On appeal, plaintiffs argue that the circuit court erred because the statute

of limitations does not apply to their declaratory judgment claims. They also argue that even if the

statute of limitations applies, the discovery rule and continuing violation rule tolled the statute of

limitations. For the following reasons, we affirm.

¶3 I. BACKGROUND

¶4 Plaintiffs allege defendant American Advisors Group (AAG), among others, and one of its

agents, Mark Diamond, engaged in a fraudulent reverse mortgage scheme to take plaintiffs’

homes. 2 Diamond is a formerly licensed mortgage broker and home improvement contractor; AAG

is a provider of reverse mortgages. A reverse mortgage is a loan secured by a homeowner's equity

in their real property. 765 ILCS 945/5 (West 2020). The homeowner is not required to pay the loan

back until the entire loan has been disbursed. Id. If the homeowner is unable to pay the loan back

at the time the loan becomes due, the lender may seek foreclosure and take possession of the home.

Id.

¶5 Plaintiffs filed their initial complaint on December 23, 2020, and filed an amended

complaint on July 16, 2021. Essentially, plaintiffs sought declaratory judgment that their reverse

mortgages were void because they were fraudulently procured. They also requested an order

directing defendants to return the titles to plaintiffs’ homes.

1 Because Levada Johnson and Mary Johnson share the same last name, we refer to plaintiffs by their first names. 2 Diamond is not party to this appeal and his agency status is not at issue here.

-2- No. 1-22-1398

¶6 Levada alleged that, in the spring of 2013, Diamond offered to renovate her home at no

cost, purportedly pursuant to a federal program that would pay for the renovations. In the summer

of 2013, she signed documents that Diamond claimed were necessary to participate in the program.

One of these documents was a reverse mortgage with AAG that Levada signed on July 11, 2013.

According to Levada, when AAG issued a reverse mortgage payment check to her, Diamond

demanded that she sign it over to him. Levada signed the check over to Diamond because Diamond

claimed Levada would have to pay for the home renovations herself if she refused. Levada alleged

Diamond did not complete renovations to her home and later learned that the home renovation

reimbursement program that Diamond described did not exist.

¶7 Dorothy alleged that Diamond proposed she finance the renovation of her closets and

kitchen floor with a reverse mortgage. Dorothy signed a reverse mortgage during a meeting with

Diamond on August 12, 2015. According to Dorothy, Diamond did not explain the details of what

she was signing, nor did he fully explain the reverse mortgage process. Diamond only told Dorothy

that she would receive money every year from the reverse mortgage. When Dorothy asked

Diamond why she was not receiving reverse mortgage payments, Diamond claimed the money

was funding renovations to her home. Dorothy alleged that Diamond renovated her closet and

kitchen floor, but did so with poor workmanship.

¶8 Mary alleged that, in 2014, Diamond offered to provide free home renovations if she signed

certain paperwork. On October 8, 2014, Mary signed a reverse mortgage with a mortgage lender

called Top Flite, which was later transferred to AAG. Mary also alleged that Diamond “filed a

construction contract” against her house before the reverse mortgage closing. On October 15,

2014, Mary signed a document that assigned $30,900 of her reverse mortgage payments to Peszko

-3- No. 1-22-1398

Construction, a company that Diamond owned. Mary alleged that Diamond performed incomplete

and low-quality work on her home.

¶9 AAG moved to dismiss plaintiffs’ claims pursuant to section 2-619.1 of the Code of Civil

Procedure. 3 735 ILCS 5/2-619.1 (West 2020). Relevant here, AAG argued the circuit court should

dismiss plaintiffs’ claims pursuant to section 2-619(a)(5) (735 ILCS 5/2-619(a)(5) (West 2020))

because the five-year statute of limitations for fraud claims applied to plaintiffs’ declaratory

judgment claims premised on allegations of fraud. Specifically, AAG argued that the statute of

limitations on Levada’s claims began to run no later than July 2013, when she signed her reverse

mortgage check over to Diamond, and expired in July 2018. AAG contended that the statute of

limitations on Dorothy’s claims began to run no later than August 2015, when she asked Diamond

why she was not receiving reverse mortgage payments, and expired in August 2020. AAG asserted

that the statute of limitations on Mary’s claims began to run when she signed her reverse mortgage

on October 8, 2014, and failed to investigate further after Diamond did not make any repairs in

2015. According to AAG, the statute of limitations on Mary’s claims expired in 2020 at the latest.

¶ 10 Levada and Dorothy argued that the statute of limitations did not apply to their declaratory

judgment claims because those claims were preemptive affirmative defenses to foreclosure actions

they anticipated AAG would file against them. They further argued that, even if the statute of

limitations did apply, they timely filed their complaint because they did not discover that

defendants had defrauded them until July 2016, when a court ordered Diamond to pay restitution

to other victims. Pursuant to the discovery rule, Levada and Dorothy assert that the five-year statute

3 Only AAG moved to dismiss the claims now on appeal. Diamond did not take part in AAG’s motion.

-4- No. 1-22-1398

of limitations on their claims did not expire until July 2021. Levada and Dorothy also argued that

the continuing violation rule tolled the statute of limitations because their reverse mortgages were

still in effect. Mary contended that the discovery rule tolled the statute of limitations on her claims

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2023 IL App (1st) 221398-U, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-american-advisors-group-illappct-2023.