Bell v. City of Country Club Hills, Nos. 16-1245

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Bauer, Circuit Judge.
• Citation: 841 F.3d 713
• Parties: Leora H. Bell, individually and on behalf of all others similarly situated, Plaintiff–Appellant, v. City of Country Club Hills, Defendant–Appellee.
• Docket Number: 16-1448,Nos. 16-1245
• Decision Date: 08 November 2016

841 F.3d 713

Leora H. Bell, individually and on behalf of all others similarly situated, Plaintiff–Appellant,
v.
City of Country Club Hills, Defendant–Appellee.

Nos. 16-1245
16-1448

United States Court of Appeals, Seventh Circuit.

Argued September 13, 2016
Decided November 8, 2016

Thomas A. Zimmerman, Jr., Matthew Charles DeRe, Attorneys, Zimmerman Law Offices, P.C., Chicago, IL, for Plaintiff–Appellant.

Michael R. Radak, Thomas Weiler, Attorneys, Langhenry, Gillen, Lundquist & Johnson, LLC, Chicago, IL, for Defendant–Appellee.

Before Bauer, Kanne, and Hamilton, Circuit Judges.

Bauer, Circuit Judge.

Plaintiff-appellant, Leora H. Bell, filed suit against Defendant-appellee, City of Country Club Hills, claiming a deprivation of her constitutional rights in violation of 42 U.S.C. § 1983. Bell's claims arise from the City's decision to repeal an ordinance that provided a twenty-five percent tax rebate to qualifying homeowners. The district court granted the City's motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), holding that the tax rebate did not confer a vested property right upon Bell. Bell appeals, arguing that she maintains a vested property right in the rebate program, and that the City unlawfully repealed the ordinance. For the reasons stated below, we affirm.

I. BACKGROUND

On April 23, 2012, the City of Country Club Hills City Council adopted Ordinance No. O–02–12, which provided to homeowners a twenty-five percent rebate of 2010 city property taxes paid in 2011, subject to the completion of an application by the homeowner and approval by the City Clerk. According to the application, this was the City's twelfth consecutive year of offering a rebate program. The application stated that the “FILING OF THIS APPLICATION DOES NOT GUARANTEE APPROVAL BY THE

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CITY OF COUNTRY CLUB HILLS.” The city prepared the rebate checks but never distributed them to homeowners. In 2012, the Cook County treasurer overpaid the City by more than $6 million, and the County brought suit against the City in Cook County Circuit Court to collect the overpayment in July 2012.¹ Judgment was entered against the City a year later for nearly $6.6 million.

Bell filed the instant action on May 15, 2015, on behalf of herself and others similarly situated. She asserted a claim under § 1983, arguing that the City's refusal to issue the rebates constituted a taking in violation of the Fifth and Fourteenth Amendments to the United States Constitution, as well as Article I, § 15 of the Illinois Constitution. Bell also asserted state law claims for conversion and unjust enrichment. On August 24, 2015, the City Council passed Ordinance O–11–15, which repealed the April 2012 Ordinance. On September 1, 2015, the City filed a motion to dismiss under Rule 12(b)(6), contending that Bell had no constitutionally protected property interest in the expectation of a rebate, and that she had adequate state court remedies for her claims under state law. The district court agreed with the City, and granted its motion on January 6, 2016.²

Bell filed a motion for relief from a final judgment under Federal Rule of Civil Procedure 60(b) on February 4, 2016, arguing that the City's August 2015 repeal of the April 2012 Ordinance was invalid because it violated the Illinois Open Meetings Act, 5 Ill. Comp. Stat. 120/2(e). The district court denied Bell's motion. On March 28, 2016, the City Council responded to concerns over the validity of its August 2015 repeal by again repealing the April 2012 Ordinance. This appeal followed.

II. DISCUSSION

We review the district court's granting of a motion to dismiss under Rule 12(b)(6)de novo , accepting all well-pleaded facts as true and drawing all reasonable inferences in favor of the non-moving party. Golden v. State Farm Mut. Auto. Ins. Co ., 745 F.3d 252, 255 (7th Cir. 2014). A Rule 12(b)(6) motion challenges the sufficiency of the complaint itself. Gibson v. City of Chicago , 910 F.2d 1510, 1520 (7th Cir. 1990) (citation omitted). To state a claim, a complaint must first provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The statement of the claim must sufficiently give to the defendants “fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). Additionally, the complaint's factual allegations must raise the claim above a mere “speculative level.” Id . “While a complaint attacked by

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a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id . (citations and internal alterations omitted).

Bell asserts her constitutional claims against the City under § 1983, which provides that “[e]very person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ... subjects, or causes to be subjected, any citizen of the United States ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law....” In order to state a claim under this provision, the following conditions must be met: “(1) the offending conduct [must be] committed by someone who acted under the color of state law; (2) the actions deprive the plaintiff of a constitutionally protected property interest; and (3) the alleged deprivation occurred without due process of law.” Germano v. Winnebago Cnty ., 403 F.3d 926, 927 (7th Cir. 2005). The parties do not appear to dispute that the City acted under color of law.

Bell contends that the City's failure to issue the rebate constitutes a taking of a government benefit without due process of law in violation of the United States and Illinois Constitutions. The Takings Clause of the Fifth Amendment, made applicable to the states through the Fourteenth Amendment, provides: “[N]or shall private property be taken for public use, without just compensation.” Sorrentino v. Godinez , 777 F.3d 410, 413 (7th Cir. 2015) (quoting U.S. Const. amend. V ). The Due Process Clause of the Fourteenth Amendment provides: “[N]or shall any State deprive any person of life, liberty, or property, without due process of law.” U.S. Const. amend. XIV, § 1. “[I]n any due process case where the deprivation of property is alleged, the threshold question is whether a protected property interest actually exists.” Cole v. Milwaukee Area Tech. Coll. Dist ., 634 F.3d 901, 904 (7th Cir. 2011).

“To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.” Bd. of Regents of State Colls. v. Roth , 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). “Property interests are not created by the Constitution but rather ‘they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.’ ” Cole , 634 F.3d at 904 (quoting Roth , 408 U.S. at 577, 92 S.Ct. 2701 ).

“Accordingly, federal property interests under the 14th Amendment usually arise from rights created by state statutes, state or municipal regulations or ordinances, and contracts with public entities.” O'Gorman v. City of Chi. , 777 F.3d 885, 890 (7th Cir. 2015) (citation omitted). “Although we look to state law for the source of the plaintiff's alleged property interest, whether a particular state-created interest rises to the level of a ‘legitimate claim of entitlement’ is a question of federal law.” Dibble v. Quinn , 793 F.3d 803, 808 (7th Cir. 2015) (quoting Memphis Light, Gas & Water Div. v. Craft , 436 U.S. 1, 9, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978) ).

Bell's principal contention is that her property interest in the rebate is derived from the April 2012 Ordinance. She argues further that the rebate is a “vested right” under Illinois law, and thus the City is precluded from using subsequent legislation to deny homeowners their rebates.

841 F.3d 718

Under Illinois law, vested rights are “interests that are protected from legislative interference by [the...