Some Indiana plaintiffs in a lawsuit challenging a rent-to-buy housing business will get a second chance to argue their claims in federal court, but the judge has indicated there will be little patience for weak arguments or uncivil behavior.
The U.S. District Court for the Southern District of Indiana issued an order this month partially granting the plaintiffs’ motion for reconsideration of its earlier grant of summary judgment to the defendants in Fair Housing Center of Central Indiana, et al. v. Rainbow Realty Group, Inc., et al., 1:17-cv-01782. Plaintiffs will be able to restate a portion of their case at oral arguments set for Wednesday.
Previously, in an Aug. 12 order, the district court had denied the plaintiffs’ motion for summary judgment and granted the defendants’ cross-motion.
The plaintiffs then filed a motion to clarify the court’s summary judgment order and a motion for reconsideration of the court’s order on the parties’ cross-motions for summary judgment. Also, the plaintiffs requested an oral argument.
On Oct. 7, the court granted the request for an oral argument, but only regarding those individuals who entered into rent-to-buy agreements and made payments beyond the initial two years of the agreement but did not sign a conditional sales contract. Arguments will be limited to whether the Equal Credit Opportunity Act would apply to payments after the initial two years of the rent-to-buy agreements but not pursuant to a conditional sale contract.
The parties in the case were told to be prepared for the arguments to continue into the following two days.
Reconsideration was denied for the other two categories of plaintiffs: those who did not make payments past the first two years of the rent-to-buy agreements, and those who made payments past the first two years but signed a conditional sales contract.
The district court provided a detailed review of its August ruling, outlining the arguments of both sides and explaining its own conclusions. However, before undertaking the review, the court chastised the parties to be more “focused and efficient,” and to be respectful and civil.
Judge Jane Magnus-Stinson pointed out the Rainbow case presents many complicated legal issues, and the court relies on the parties to present their claims and arguments in a coherent and complete fashion. Parties who neglect to make arguments, write clear briefs or fail to press a point by citing pertinent authority should not expect the court to make allowances, she said.
The judge underscored the need for efficiency by noting the Indiana Southern District Court is one of the busiest in the 7th Circuit. Magnus-Stinson told the litigants her docket alone includes 401 civil cases and 68 criminal cases with 97 defendants.
In addition, Magnus-Stinson admonished the parties on their behavior toward the court. Specifically, she highlighted statements in the plaintiffs’ motion to reconsider asserting that the court’s conclusion was “clearly incorrect” and that the court’s dismissal of plaintiffs’ claims thwarted “valid attempts to hold (James Hotka) accountable for legal violations.”
“Counsel should keep in mind that the Court is rendering decisions to the best of its ability, based on the facts and law presented by the parties’ arguments,” Magnus-Stinson wrote. “If an argument — or the omission of an argument — compels the Court to reach a finding foreclosing liability, that finding is legally proper.”
Among the issues the plaintiffs asked to be reconsidered is the nature of the agreements the tenants had signed. Specifically, the plaintiffs argued the court did not address the Equal Credit Opportunity Act claims from the class members whose rent-to-buy agreements were not terminated within the first two years but either never signed a conditional sale contract with one of the individual land trusts, or entered into a conditional sales contract with one of the individual land trusts after two years had passed.
With the individuals who did not make payments past the first two years of the rent-to-buy agreements, the court had treated the rent-to-buy agreements as leases. On reconsideration, the court was not convinced to think otherwise.
The federal judge pointed to the ruling from the Indiana Supreme Court in Rainbow Realty Group, Inc. v. Carter, 131 N.E.3d 168 (Ind. 2019), which supported the conclusion “that the RTB Agreement is a lease at least for the first two years and … the conclusion that the RTB Agreements do not extend credit at least for the first two years.”
Consequently, the district court denied reconsideration and found it properly looked to state law in finding the rent-to-buy agreements are leases for the first two years.
Again, the court showed little tolerance for the way the arguments were presented.
Specifically, the plaintiffs used their motion to reconsider to expand their argument and assert that the rent-to-buy agreements were hybrid contracts with elements of a lease and a credit transaction. To support their contention, they cited to federal regulations and five previously unmentioned federal court decisions.
“Inexplicably, Plaintiffs did not cite to or otherwise discuss any of these provisions or cases in their original summary judgment briefs,” Magnus-Stinson wrote. “As it must, the Court relies upon the parties for the presentation of their case and must assume that if a party has not raised an argument, there is a reason why.
“It is not the Court’s responsibility to find legal authority for any party’s positions,” the judge continued. “Given that Plaintiffs did not point the court to these provisions, it is difficult for the court to see how it was a manifest error of law for the court not to have considered them.”