914 F.2d 107 (7th Cir. 1990), 89-1759, Becker v. Tenenbaum-Hill Associates, Inc.

Docket Nº:89-1759.
Citation:914 F.2d 107
Party Name:G. Raymond BECKER, John P. Dailey, Gordon E. Burns, Jr., and Bill A. Lanzotti, d/b/a Continental Development Company, an Illinois general partnership, Plaintiffs-Appellants, v. TENENBAUM-HILL ASSOCIATES, INCORPORATED, a corporation, Defendant-Appellee.
Case Date:September 20, 1990
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 107

914 F.2d 107 (7th Cir. 1990)

G. Raymond BECKER, John P. Dailey, Gordon E. Burns, Jr., and

Bill A. Lanzotti, d/b/a Continental Development

Company, an Illinois general

partnership, Plaintiffs-Appellants,

v.

TENENBAUM-HILL ASSOCIATES, INCORPORATED, a corporation,

Defendant-Appellee.

No. 89-1759.

United States Court of Appeals, Seventh Circuit

September 20, 1990

Argued April 5, 1990.

Page 108

John C. Parkhurst, Franklin L. Renner, Littler, Renner, Howard & Schroeder, Peoria, Ill., for plaintiffs-appellants.

Timothy L. Bertschy, Heyl, Royster, Voelker & Allen, Peoria, Ill., Cathy J. Dean, Kansas City, Mo., for defendant-appellee.

Before CUMMINGS, POSNER, and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

The plaintiffs-appellants initially filed this suit in state court in Illinois, seeking damages for alleged misrepresentations made by the defendant. The suit was removed to federal court based on diversity of citizenship. The defendant then moved for summary judgment. The district court granted the motion, and the plaintiffs filed a timely notice of appeal. For the following reasons, we affirm the judgment of the district court.

I BACKGROUND

A. Facts

The appellants are general partners in Continental Development Company, an Illinois general partnership that owns an interest in a Holiday Inn hotel located in Waterloo, Iowa. All of the partners are citizens of Illinois. The appellee, Tenenbaum-Hill Associates, Inc., is a Missouri corporation with its principal place of business in Kansas City, Missouri. Tenenbaum-Hill advises clients about real estate tax assessments and represents its clients in efforts to convince local authorities to reassess property owned by its clients.

On January 1, 1983, several months before the hotel opened for business, the Holiday Inn property was valued for tax purposes at $3,590,280. On January 1, 1984, the valuation was increased to $6,930,180. This valuation was retained for the 1985 and 1986 tax years. Continental Development believed that the valuation was too high. Therefore, the partnership entered into a contract with Tenenbaum-Hill, under which Tenenbaum-Hill would

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endeavor to convince the Blackhawk County Board of Review (which has authority to review assessments) to lower the appraised value of the property. Pursuant to the contract, Tenenbaum-Hill would receive a contingent fee from the plaintiffs based upon the savings for the first two tax years.

The property had been valued using the "cost method," which essentially calculates the amount needed to purchase the land and build any improvements on it. In 1985 Tenenbaum-Hill filed a protest with the Blackhawk County Board of Review, suggesting that the proper value of the property in 1985 was $4,042,300 (almost $3 million less than the assessed value). This amount resulted from application of the "income method," which bases an assessment on the income produced by the property. The Board of Review refused to lower the assessment. Tenenbaum-Hill did not seek to appeal this decision to state court, as would have been permitted by Iowa statute. However, Tenenbaum-Hill admits that one of its employees told a Continental Development partner, Bill Lanzotti, that the decision had been appealed.

In 1986 Tenenbaum-Hill petitioned once again to lower the assessment. A representative of Tenenbaum-Hill appeared at an oral hearing before the Blackhawk County Board of Review and argued for an assessment of $4,650,000 using the income method. The Board of Review did lower the assessment to $5,821,350, based on a general reduction of assessments on all commercial property in the city of Waterloo, but did not adopt Tenenbaum-Hill's lower assessment. Once again, Tenenbaum-Hill admits that one of its representatives told Continental Development that an appeal would be taken, although no appeal actually was filed. When Continental Development discovered that no appeals had been taken, it brought this suit in state court (subsequently removed by Tenenbaum-Hill to federal court pursuant to 28 U.S.C. Sec. 1441) to recover damages based on a claim of misrepresentation.

B. District Court Opinion

The district court granted Tenenbaum-Hill's motion for summary judgment. In support of its motion, Tenenbaum-Hill had submitted depositions indicating that the cost method was generally accepted in the assessment industry for valuing hotel property during the first three years of operation. The court noted that, in response to these depositions, the plaintiffs "submitted no affidavits contradicting"...

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