Evans v. City of Chicago
| Citation | 873 F.2d 1007 |
| Decision Date | 25 August 1989 |
| Docket Number | Nos. 87-3006,87-3085,s. 87-3006 |
| Parties | Sylvia EVANS, et al., Plaintiffs-Appellees, v. CITY OF CHICAGO, et al., Defendants-Appellants. Bertha BALARK, et al., Plaintiffs-Appellees, v. CITY OF CHICAGO, et al., Defendants-Appellants. Curtis COLLUM, et al., Plaintiffs-Appellees, Cross-Appellants, v. CITY OF CHICAGO, et al., Defendants-Appellants, Cross-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Dodge Wells, Asst. Corp. Counsel, Chicago, Ill., for defendants appellants.
John Bernard Cashion, Edward T. Stein, Singer & Stein, Chicago, Ill., for plaintiffs appellees.
Before BAUER, Chief Judge, and WOOD, Jr. and RIPPLE, Circuit Judges. *
This is a consolidated class action suit that has been in the courts for nearly a decade. The three plaintiff classes sued the City of Chicago under 42 U.S.C. Sec. 1983 claiming that the City's delay in paying tort judgment claimants violated their civil rights. This court originally dealt with this case over six years ago. Evans v. City of Chicago, 689 F.2d 1286 (7th Cir.1982) ("Evans I "). There we affirmed the district court's finding that Chicago's practice was unconstitutional. The case was remanded to the district court to sort out the question of damages due to the parties. In district court, plaintiffs advanced another equal protection claim in addition to the claim originally passed on by this court. The district court found for the plaintiffs on both equal protection allegations and awarded damages. The City has appealed, asking us not only to review the district court's findings but to also re-examine our own decision in Evans I.
Millions of dollars in court judgments are entered against the City of Chicago ("the City") each year. The City's practice of delaying payment of some judgments is under attack by three different plaintiff classes.
Plaintiff Sylvia Evans settled her lawsuit against the City for the wrongful death of Andrew Evans and a judgment of $67,000 was entered against the City on January 30, 1976. After entry of her judgment, Evans learned that the City had a policy of promptly paying (within thirty days) tort judgments under $1,000 while it delayed paying any tort judgments over $1,000 for a substantial time period. When Evans learned that the City would delay the payment of her judgment, she filed an action against the City under 42 U.S.C. Sec. 1983 claiming that her civil rights had been violated by the delay. The action was certified as a class action under Fed.R.Civ.P. 23(b)(3). The Evans class includes tort judgment creditors holding judgments larger than $1,000 against the City whose judgment payments are more than one year overdue. 1
Plaintiff Bertha Balark brought a civil rights action under 42 U.S.C. Sec. 1983 against six Chicago police officers in 1977. The case was settled by the parties and a judgment was entered by the United States District Court. The judgment was to be paid by the City. 2 Upon learning that the City would delay paying her judgment, Balark brought a separate class action under 42 U.S.C. Sec. 1983. The Balark class was certified and includes tort judgment creditors holding judgments larger than $1,000 against the City whose judgment payments are less than one year overdue. 3 The Evans and Balark actions were consolidated on January 28, 1981. 4
Plaintiff Curtis Collum entered into a settlement with the City and four police officers who allegedly beat him. Collum claims that at the time his judgment was entered, it was the practice and custom of the City to delay payment of judgments from two to four years. As a result of these delays, a market developed for the sale of judgments against the City. Unwilling to wait to collect his judgment from the City, Collum sold his judgment at a discount. Collum filed this class action suit in 1979 under 42 U.S.C. Sec. 1983 alleging that the delay violated equal protection and due process. While the Evans and Balark classes are made up of creditors who waited for the City to pay their judgments, the Collum class is made up of plaintiffs who assigned their judgments at a discount. The class was certified under Fed.R.Civ.P. 23(b)(3). The Collum class includes tort judgment creditors holding judgments larger than $1,000 against the City who assigned their judgments at a discount knowing the City would delay payment. 5 Plaintiffs in the Evans and Balark classes are original judgment holders while the Collum plaintiffs are assignors, since they assigned their judgments at a discount. Eighty percent of judgment holders with judgments over $1,000 sold their judgments. Purchasers bought judgments at a discount and the amount of the discount reflected a prediction of the delay in payment. All three classes were consolidated at trial and on appeal. 6
Under the budgetary scheme adopted by the City, judgments levied against the City are paid out of different city funds depending on the origin of the claim. At trial, the City maintained that all tort and nontort judgments arising from certain special enterprise activities ("enterprise judgments") are paid from revenues generated by the enterprises themselves. Such enterprises include the Water Fund, the Sewer Fund, O'Hare Airport, Midway Airport, and the Chicago Skyway. These enterprises are meant to be self-sustaining with user fees generating revenue and are separated for accounting purposes from the City's general revenue funds. Judgments arising from relationships undertaken by the City ("contract judgments") are paid from departmental funds. When a city department enters a contract, the department's budget is encumbered for the maximum amount that could be due under the contract. If a judgment is levied against the City for breach of that contract, the judgment is paid out of the encumbrance already on the books. The departmental appropriations that pay such contract judgments are financed by general municipal taxes appropriated to the City's general corporate fund. Judgments arising out of employment-related litigation are usually payable from the personnel budgets of the affected departments.
All remaining judgments against the City ("tort judgments") are paid from the City's Tort Judgment Fund, also known as the "395 Fund." Revenue for the 395 Fund is raised through a separate property tax levy. This fund is not part of the City's general corporate fund.
Between 1972 and 1983, the period we are most concerned with, the City normally paid enterprise judgments and contract judgments within thirty to one hundred-fifty days of presentment. However, this was not the case for judgments paid out of the 395 Fund. The 395 Fund was annually underfunded, resulting in the City's inability to pay off all tort judgments in a timely fashion. Tort judgments of $1,000 or less were given priority and paid off within approximately thirty days of presentment. Judgments over $1,000 were paid off in the order they were entered, but at a much delayed rate. The average delay in payment of tort judgments over $1,000 ranged from fifteen months to four years after the entry of final judgment. Payment of some judgments apparently was delayed as long as nine years. The City pays interest at the statutory 6% rate at the time it pays the judgment. Ill.Rev.Stat. ch. 110, p 2-1303. 7 The delay in paying tort judgments stemmed from the City's practice of levying a special property tax each year to pay judgments at an amount that was far less than needed to pay the annual tally of judgments. The City refused to apply any other revenue to the payment of tort judgments.
Plaintiffs individually and collectively launched a number of attacks on the City's system of paying tort judgments. In the first trial, the City's distinction between judgment creditors above or below $1,000 was alleged to be a violation of the equal protection clause of the fourteenth amendment. Plaintiffs also alleged that the practice of delaying payment of judgments for up to four years deprived them of due process. 8
The district court, having certified the plaintiff classes, consolidated the Evans and Balark cases. On plaintiff's motion for partial summary judgment and immediate payment, the district court ordered the City to pay immediately all judgments held by Evans class members plus costs and interest, enjoined the City's practice of paying judgments of $1,000 or less before earlier-entered, larger judgments, and declared the practice unconstitutional. The court also declared that Ill.Rev.Stat. ch. 24, p 8-1-16 was unconstitutional, to the extent that it authorized the practice. 9 The district court found that the City's policy violated equal protection and deprived the plaintiffs of property without due process. 10
On appeal, this court affirmed the district court's finding that the City's practice of paying judgments out of order was unconstitutional. The court in Evans I, applying the rational basis test articulated in San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973), found that the practice was a violation of equal protection. 11 The holding in Evans I applied only to the issue of paying tort judgments assessed to the 395 Fund out of order. The district court's decision was affirmed 12 and the case was sent back to iron out the question of damages and other issues.
After this case was remanded to the district court, the City negotiated a consent decree with the Evans and Balark plaintiffs. The consent decree, entered on May 31, 1984, governs the payment of tort judgments that remained unpaid as of December 31, 1983 and the payment of future judgments beginning in 1984. The decree was designed to bring payment of judgments up to a current...
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