People Ex Rel. Fahner v. Colorado City Lot Owners & Taxpayers Ass'n

438 N.E.2d 1273, 108 Ill. App. 3d 266, 63 Ill. Dec. 910, 1982 Ill. App. LEXIS 2144
CourtAppellate Court of Illinois
DecidedJuly 22, 1982
Docket81-1218
StatusPublished
Cited by19 cases

This text of 438 N.E.2d 1273 (People Ex Rel. Fahner v. Colorado City Lot Owners & Taxpayers Ass'n) 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
People Ex Rel. Fahner v. Colorado City Lot Owners & Taxpayers Ass'n, 438 N.E.2d 1273, 108 Ill. App. 3d 266, 63 Ill. Dec. 910, 1982 Ill. App. LEXIS 2144 (Ill. Ct. App. 1982).

Opinion

PRESIDING JUSTICE JOHNSON

delivered the opinion of the court:

Defendant, Mark P. Einstein, appeals the decision of the trial court holding him in contempt of court for violation of a consent decree and fining him $4,500. He raises the following issues for review: (1) whether his activities constituted contempt; (2) whether the trial court erred in finding that he could not purge himself of contempt; (3) whether plaintiff’s conduct constituted estoppel or waiver of its rights under the consent decree; and (4) whether plaintiff’s conduct constituted bad faith, thus, precluding a finding of contempt.

We affirm and modify.

On December 20, 1978, the Illinois Attorney General filed a complaint for injunctive and other relief against the Colorado City Lot Owners and Taxpayers Association (Colorado City Lot Owners), Myron R. Luehshyn and Mark P. Einstein under the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1977, ch. 121V2, par. 261 et seq.). On February 2, 1979, a consent decree was entered between the Attorney General and Einstein. Findings in the decree were as follows:

(1) Einstein advertised, solicited and enrolled property owners of land located in Colorado City, Colorado, residing in the Chicago area, for the purpose of conducting litigation against Great Western Cities, the owner and developer of Colorado City;
(2) On November 22, 1978, Einstein mailed a “Notice of Urgent Meeting” to about 3,000 Chicago area lot owners;
(3) At a November 30, 1978, meeting, Einstein represented to lot owners that he had won large sums of money from land developers in similar circumstances when in fact those cases were still pending;
(4) Einstein represented himself to be a land sales and land fraud expert when in fact he specialized in organizing lawsuits against land developers; in 1971 he had been fined $1,000 for violating Federal securities laws;
(5) Einstein represented that large sums of money were necessary for research and legal fees, and that he received only a consultation fee when in fact he had been accused in Indiana of misappropriating most of the funds collected and not paying the attorneys retained by the lot owners’ association;
(6) Einstein represented to lot owners that he performed valuable research into alleged land sale frauds of Great Western Cities, but it has not been proved whether his research has value in proving such frauds;
(7) Einstein claimed that he had negotiated with the Chicago Bar Association and various law firms to represent the lot owners, but in fact no representation agreements had been completed and no local attorneys retained;
(8) Einstein represented that past actions have been very successful when in fact no actions have been concluded and no money has been refunded to lot owners;
(9) Einstein represented that no other avenue of recovery was open to lot owners except to join the association organized by Einstein;
(10) Einstein failed to disclose that in June 1978 he executed a stipulation amounting to an assurance of voluntary compliance preventing him from soliciting funds in Wisconsin as agent for lot owners;
(11) Einstein imparts a sense of urgency when none may be necessary since most owners purchased their lots around 1970.

The decree provided the following:

(1) Einstein was permanently injoined from controlling the management, affairs and conduct of Colorado City Lot Owners;
(2) Einstein was permanently enjoined from organizing any business entity for the purpose of soliciting litigants for a lawsuit against Great Western Cities or any other business entity without entering into an assurance of voluntary compliance with the Attorney General;
(3) Einstein was permanently enjoined from any organizational role in a lot owners’ association “where he might solicit, collect, negotiate, disburse, or deposit funds,” on behalf of a lot owners’ association “as opposed to his acting as an agent or employee of that entity”;
(4) Einstein was enjoined from taking any action of any nature whatsoever relating to any Colorado City Lot Owners’ funds.

On January 30, 1981, the Attorney General filed a petition for a rule to show cause why Einstein should not be held in contempt of court and a petition for emergency supplemental relief. The first petition alleged that Einstein violated the terms of the February 2, 1979, consent decree by the following acts:

(1) The Rotonda Lot Purchasers Association mailed a letter to Illinois residents who owned lots in Rotonda subdivisions in Florida. According to the letter:
(a) Lot owners were urged to attend a meeting on January 24, 1981;
(b) Lot owners were victims of a massive land fraud scheme perpetrated by the Rotonda developer, Cavanagh Communities;
(c) The Rotonda association was formed to start litigation based on exhaustive research by a research service;
(d) The association had retained the investigator responsible for research in other successful lawsuits against fraudulent land developers.
(2) The lawsuits described in the letter involved Colorado City and Cochiti Lake developments, and the investigator was defendant Einstein.
(3) On January 24, 1981, Einstein represented the Rotonda association at the meeting and solicited funds to start litigation. Lot owners were given a document called “Cavanagh Communities and Its Rotonda Subdivisions - A Report Prepared by Mark P. Einstein ‘Interstate Land Sales Research.’ ”
(4) Lot owners also received a “Recovery Action” which informed them that Einstein had been retained to conduct research and investigation and participate in legal proceedings as directed by the association and its law firms and which also solicited funds.
(5) Einstein did not enter into an assurance of voluntary compliance with the Attorney General before engaging in the conduct described above.

The Attorney General prayed that Einstein be held in contempt and restrained from attending meetings, soliciting and collecting funds, and from further dealings with the Rotonda association.

At a hearing on January 30, 1981, the court stated:

“THE COURT: The State of Illinois cannot take the position that they will not negotiate with Mr. Einstein to secure an assurance of voluntary compliance. And on the other hand, Mr.

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Bluebook (online)
438 N.E.2d 1273, 108 Ill. App. 3d 266, 63 Ill. Dec. 910, 1982 Ill. App. LEXIS 2144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-ex-rel-fahner-v-colorado-city-lot-owners-taxpayers-assn-illappct-1982.