United States of America v. Cotton

Filing 17

OPINION AND ORDER granting 10 Motion for Judgment on the Pleadings. The Court finds the defendant to be in wrongful possession of the property. Signed by Judge Rudy Lozano on 1/3/2012. (kds)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
STEPHAN D. COTTON,
Defendant.

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No. 3:11-CV-161

OPINION AND ORDER
This matter is before the Court on the Motion for Judgment on
the Pleadings, filed by Plaintiff, the United States of America
(“United States”), acting on behalf of the United States Department
of Agriculture (“USDA”), which was filed on August 5, 2011 (DE
#10).

For the reasons set forth below, the motion is GRANTED. The

Court finds pro se Defendant, Stephan D. Cotton (“Cotton”), to be
in wrongful possession of the property located at 119 Sprunger
Drive, Wanatah, Indiana 46390 and hereby ORDERS him to vacate the
premises of said property.

BACKGROUND
Prior to December 29, 2008, Defendant, Cotton, owned the real
estate located at 119 Sprunger Drive, Wanatah, Indiana 46390
(“Property”) which was subject to a mortgage by 1st Source Bank and
a second mortgage by the USDA.

(Compl., ¶ 3.)

Cotton is an

African American male who also purports to be half Blackfeet

Indian.

(DE #13-1, p. 3.)

On December 29, 2008, 1st Source Bank

filed a complaint in LaPorte Circuit Court to foreclose on Cotton’s
mortgage for failure to make payments due on the mortgage. (Compl.
¶ 4.)
On June 22, 2009, the LaPorte Circuit Court entered a finding
that 1st Source Bank’s mortgage lien was superior to all other
liens

and

claims,

ordered

foreclosure

of

the

mortgage,

and

authorized the Sheriff of LaPorte County, Indiana, to sell the
Property at a foreclosure sale.
Judgment.)

(Compl., at ¶ 5, Ex. 1, Summary

On October 15, 2009, the Property was sold at a

foreclosure sale to Lake County Trust P-4274, Dunes Realty, LLC,
and

Grey

Dog

Purchasers”).

Investments,

LLC

(hereinafter

“Sheriff’s

Sale

(Compl., at ¶ 6, Ex. 2, Sheriff’s Deed and Sales

Disclosure Form.)
On October 6, 2010, the United States exercised its redemption
rights

under

federal

law

by

negotiating

and

agreeing

to

a

redemption of the Property with the Sheriff’s Sale Purchasers.
(Compl., at ¶ 7.)

Pursuant to the agreement, the Sheriff’s Sale

Purchasers signed a Quitclaim Deed transferring their interest in
the Property to the United States.

(Id., Ex. 3, Quitclaim Deed.)

In exchange for the Quitclaim Deed, the United States paid the
Sheriff’s Sale Purchasers an amount equal to what they had paid for
the Sheriff’s Deed at the foreclosure sale plus interest.

(Id.)

The United States subsequently recorded the Quitclaim Deed in the

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LaPorte County, Indiana Recorder’s Office.

(Id.)

On October 21, 2010, the USDA sent to Cotton, by Certified
United States mail, a notice to vacate the premises of the Property
within thirty days.

(Id., at ¶ 8, Ex. 4, Notice to Vacate.)

Cotton did not vacate the premises as instructed and continues to
occupy the Property to this day.

(Compl., at ¶ 9.)

On August 5, 2011, the United States properly notified Cotton
that it had filed a motion for judgment on the pleadings against
him and correctly advised him of his right to file a brief in
response to its motion.

(DE #12.)

Cotton timely filed his

response brief on August 17, 2011 (DE #13), after which the United
States timely filed its reply (DE #16).

Because the matter has

been fully briefed, the motion is ripe for adjudication.

DISCUSSION
A motion for judgment on the pleadings under Federal Rule of
Civil Procedure 12(c) “is reviewed under the same standard as a
motion to dismiss under 12(b) . . . .”

Flenner v. Sheahan, 107

F.3d 459, 461 (7th Cir. 1997); see also R.J. Corman Derailment
Servs., LLC v. Int’l Union of Operating Eng’rs, Local Union 150,
335 F.3d 643, 647 (7th Cir. 2003).

Where the plaintiff moves for

judgment on the pleadings, “the motion should not be granted unless
it appears beyond doubt that the non-moving party cannot prove
facts sufficient to support his position.”

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Housing Auth. Risk

Retention Group, Inc. v. Chicago Housing Auth., 378 F.3d 596, 600
(7th Cir. 2004) (quotation omitted).

In ruling on a motion for

judgment on the pleadings, the court must accept as true “all wellpleaded allegations” and view them in the light most favorable to
the nonmoving party, as well as accept as true all reasonable
inferences to be drawn from the allegations. R.J. Corman, 335 F.3d
at 647; see also Forseth v. Village of Sussex, 199 F.3d 363, 368
(7th Cir. 2000).

A court may rule on a judgment on the pleadings

under Rule 12(c) based upon a review of the pleadings alone, which
include the complaint, the answer, and any written instruments
attached as exhibits.

See Northern Indiana Gun & Outdoor Shows,

Inc. v. City of South Bend, 163 F.3d 449, 452-53 (7th Cir. 1998);
see also Fed. R. Civ. P. 10(c) (providing that written instruments
attached as exhibits to a pleading are a part of the pleading for
all purposes).
Pursuant to 28 U.S.C. § 2410(c), ”[w]here a sale of real
estate is made to satisfy a lien prior to that of the United
States, the United States shall have one year from the date of sale
within which to redeem [the real estate] . . . .” Additionally, as
a general rule, the determination of property rights is governed by
state law. Butner v. United States, 440 U.S. 48, 54 (1979); In re
Jafari, 569 F.3d 644, 648 (7th Cir. 2009). Indiana recognizes that
“[o]ne of the time-honored principles of property law is the
absolute and unconditional right of private property owners to

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exclude from their domain those entering without permission.”
Donovan v. Grand Victoria Casino & Resort, L.P., 934 N.E.2d 1111,
1113 (Ind. 2010) (citing Bailey v. Washington Theatre Co., 34
N.E.2d 17, 19 (Ind. 1941)).
Therefore, to prevail on its motion, the United States must
prove the following beyond a doubt: that First Source Bank’s lien
on the Property stood in first priority, ahead of the USDA’s; that
it timely exercised its redemption right in the Property; and that
it followed the proper procedures under Indiana law to perfect
legal title in the Property. The evidence conclusively establishes
that the United States has met its burden.
The priority of First Source Bank’s mortgage lien on the
Property over that of the USDA’s was determined by the LaPorte
Circuit Court in the foreclosure proceedings initiated by First
Source Bank.

The United States’ right to redeem the Property

vested upon its sale to the Sheriff’s Sale Purchasers on October
15, 2009.

The United States subsequently exercised its right to

redeem the Property within one year by purchasing it via quitclaim
deed from the Sheriff’s Sale Purchasers on October 6, 2010.

The

United States then promptly recorded the quitclaim deed that very
same day with the LaPorte County, Indiana Recorder’s Office which
served to perfect its legal title in the Property.

Therefore, as

the owner of an undivided fee simple interest in the Property, the
United States is entitled to permit, or exclude, whomever it

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desires from the property; including Cotton.
Rather than contest the United States’ compliance with the
legal formalities in acquiring the Property, Cotton grounds his
attack in notions of equity, asserting that the United States does
not have “clean hands.”

Specifically, Cotton contends that the

USDA had an obligation to intervene on his behalf and to provide
him with legal representation and advice in the state court
mortgage

foreclosure

proceedings

with

First

Source

Bank.

Additionally, Cotton asserts that because the USDA previously
defended against allegations of race discrimination in a class
action lawsuit, this alleged misconduct should either be imputed or
presumed into the context of the instant case.
The equitable doctrine of “unclean hands” is recognized in
Indiana property law as “demand[ing] that one who seeks relief in
a court of equity must be free of wrongdoing in the matter before
the court.”

Hardy v. Hardy, 910 N.E.2d 851, 856 (Ind. Ct. App.

2009) (citing Galloway v. Hadley, 881 N.E.2d 667, 678 (Ind. Ct.
App. 2008)).

This means that “[t]he alleged wrongdoing must have

an immediate and necessary relation to the matter being litigated”
and it must be intentional.

(Id. at 856-57.)

It is important to

note that, “[t]he doctrine [of unclean hands] is not favored by the
courts and is applied with reluctance and scrutiny.” (Id. at 857.)
In the instant case, neither the actions of the United States nor
those of the USDA make it inequitable for the Court to order the

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relief requested by the United States.
As an initial matter, while the USDA may have an obligation
under federal law to assist minority and impoverished individuals
in their efforts to obtain affordable housing, it does not follow
that this obligation extends so far as to require providing free
legal services to those persons.

This is especially true when the

legal services are for a mortgage that is being serviced by a
private lender and not the USDA.
In support of the contention that this Court should impute or
presume race discrimination by the USDA, Cotton relies on Pigford
v. Glickman and its progeny (“Pigford Cases”) for the proposition
that past discrimination by the USDA against certain African
Americans suggests that the same has been done to him.

See Pigford

v. Glickman, 185 F.R.D. 82 (D.D.C. 1999), enforcement denied by
Pigford v. Schafer, 536 F. Supp. 2d 1 (D.C.C. 2008); see also In re
Black Farmers Discrimination Litigation, Misc. No. 08-0511, 2011 WL
5117058 (D.D.C. Oct. 27, 2011 amended Nov. 10, 2011).

Cotton’s

reliance on the Pigford Cases is misplaced, and his argument
fundamentally flawed.
Aside from not being controlling authority on this Court, the
Pigford Cases were not decided on the merits. Instead, these cases
represent the discussion and subsequent decision to approve a
proposed settlement agreement for a class action lawsuit which
listed various criteria each plaintiff would have to prove before

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being entitled to relief.

Moreover, the plaintiffs in the Pigford

Cases had alleged racial discrimination in applying for mortgage
loans.

By contrast, Cotton applied for, and received a mortgage

from the USDA without complications.
Even assuming discrimination by the USDA in the Pigford Cases,
the argument that Cotton derives from his reliance on those cases
is fundamentally flawed in that it asks this Court to indulge in
the logical fallacy of post hoc ergo propter hoc (translated,
“after this, therefore because of this”).

Simply put, Cotton

invites this Court to entertain a presumption that because the USDA
discriminated against similarly situated persons in the past, it
necessarily follows that he too was a victim of discrimination.
Because the evidence in the pleadings does not substantiate this
allegation, the Court is not inclined to leap to such a conclusion.

CONCLUSION
For the reasons set forth above, Plaintiff’s Motion for
Judgment on the Pleadings is GRANTED. The Court hereby finds the
Defendant, Stephan D. Cotton, to be in wrongful possession of the
property located at 119 Sprunger Drive, Wanatah, Indiana 46390 and
ORDERS him to vacate the premises of said property.

DATED: January 3, 2012

/s/ RUDY LOZANO, Judge
United States District Court

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