7th Circuit upholds judgment for bank in insurance funds dispute

The 7^th Circuit Court of Appeals has upheld judgment in favor of U.S. Bank in a complaint under the Real Estate Settlement Procedures Act after finding the plaintiff failed to show how the bank’s allegedly inadequate response to a letter inquiring about insurance funds contributed to her legal injuries.

In June 2013, Kelly Jean Linderman’s mother asked her to move out of the home Linderman’s family shared with her parents to reduce intra-family conflicts. Linderman left but stopped making mortgage payments on the family house.

The home then became completely vacant in May 2014, prompting vandalism on the structure. Meanwhile, U.S. Bank began foreclosure proceedings, but the status of that case was unknown at the time of the 7^th Circuit Court of Appeals’ Tuesday opinion.

The vandalism yielded insurance money that was sent to the bank, which disbursed $10,000 toward the cost of repairs. However, when the contractor Linderman hired abandoned the job due to a predicted lack of payment, the home was vandalized twice more and was damaged in a storm in 2015.

Though Linderman has yet to hire a replacement contractor or ask the bank to disburse additional insurance funds for more repairs, she sent a letter on Sept. 5, 2015 inquiring how the funds were being handled. She then filed the instant case of Kelly Jean Linderman v. U.S. Bank National Association, 17-1770, after she allegedly failed to receive the bank’s Sept. 25, 2015 response.

The U.S. District Court for the Southern District of Indiana ruled against Linderman on her claim under the Real Estate Settlement Procedures Act, finding her nonreceipt of the bank’s response did not cause or aggravate any of her injuries. Among those alleged injuries were a property-preservation company’s removal of items from the house, letters from the City of Indianapolis informing her that the house was a nuisance and her treatment for depression and anxiety — all of which occurred before her September 2015 correspondence with the bank.

Despite the time discrepancy, Linderman maintained the home’s deterioration increased her depression and anxiety. But the 7^th Circuit Court of Appeals noted Tuesday that Linderman failed to explain how receiving an earlier response from the bank would have improved her mental state.

“Nor do we see how lack of an adequate response, as opposed to the ongoing foreclosure and need of money for repairs, could have contributed to her mental issues,” Judge Frank Easterbrook wrote. “And some of her asserted injuries, such as the breakdown of her marriage, are outside the scope of the Act.”

“The contract between Linderman and the Bank, not federal law, determines how insurance proceeds must be handled and when the Bank must disburse money from the escrow to make repairs,” Easterbrook continued. “The Act does not require servicers to explain the details of contracts (or contract law) to customers or their lawyers.”