Greco v. Guss

• Decision Date: 01 October 1985
• Docket Number: No. 84-2811,84-2811
• Citation: 775 F.2d 161
• Parties: Anthony P. GRECO and Buffet Internationale, Inc., an Illinois corporation, d/b/a Greco's Restaurant, Plaintiffs-Appellants, v. Robert GUSS, individually and as President of the Village of Palatine, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 161

775 F.2d 161

Anthony P. GRECO and Buffet Internationale, Inc., an Illinois corporation, d/b/a Greco's Restaurant Plaintiffs-Appellants, v. Robert GUSS, individually and as President of the Village of Palatine, et al., Defendants-Appellees.

No. 84-2811.

United States Court of Appeals Seventh Circuit.

Argued April 25, 1985.

Decided Oct. 1, 1985.

Katrina Weing, Chicago, Ill., for plaintiffs-appellants.

John B. Murphy, Ancel, Glink, Diamond, Murphy & Cope, P.C., Chicago, Ill., George E. Downs, Palatine, Ill., Fred Weiszmann, Northbrook, Ill., William Frazier, Lord, Bissell & Brook, Chicago, Ill., for defendants-appellees.

Before BAUER and WOOD, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.

HARLINGTON WOOD, Jr., Circuit Judge.

Plaintiffs Anthony Greco and Buffet Internationale brought this action under 42 U.S.C. Sec. 1983 (1982) alleging two unconstitutional takings. Their second amended complaint contained six counts. Count I alleged that the Village of Palatine and the Village Trustees transferred or revoked Buffet's liquor license without due process of law, in violation of 42 U.S.C. Sec. 1983 and the fourteenth amendment of the United States Constitution. Count II alleged that Robert Galloy conspired with the Village Trustees to deprive Buffet of its liquor license and to obtain Buffet's license for Galloy's use in his own restaurant. Count III alleged that Galloy, Fred Weiszmann, Cambridge Court Ventures, and a Cook County deputy sheriff acted jointly under color of and pursuant to the Illinois Distress for Rent Act, Ill.Rev.Stat. ch. 110, Sec. 9-301 et seq., to serve a distress warrant on Buffet, and to seize and hold for sale assets and property of Buffet and Greco. Plaintiffs alleged that this seizure deprived Buffet and Greco of their property without due process of law, in violation of 42 U.S.C. Sec. 1983 and the fourteenth amendment of the United States Constitution. Count III further alleged that the Distress for Rent Act violated the fourteenth amendment of the United States Constitution. Finally, Count III alleged that Galloy, Weiszmann and Cambridge deprived Buffet and Greco of their property without due process of law by entering an unauthorized appearance on Buffet's behalf in the state court distress for rent action. Count IV alleged the same facts as Count III but also alleged that the deprivation resulted from a conspiracy between Galloy, Weiszmann, Cambridge, and the deputy sheriff. Counts V and VI, pendent state tort claims, alleged that Galloy, Weiszmann and Cambridge, by the seizure and sale of Buffet and Greco's property, converted the plaintiffs' personal and corporate property and assets. The district court dismissed the claims against the Village Trustees, granted summary judgment on the other section 1983 claims, and dismissed without prejudice the pendent state law claims. We affirm. ¹

I.

Plaintiff Anthony Greco and defendant Robert Galloy each own fifty percent of Buffet Internationale, Inc., an Illinois corporation that did business as Greco's Restaurant. From December 1, 1975 to June 13, 1980 Buffet operated the restaurant and lounge on premises leased from defendant Cambridge Court Ventures. Buffet served liquor at that location under a license from the Village of Palatine. In June, 1980, Buffet owed the Bank & Trust Company of Arlington Heights more than $100,000, a debt which was secured by a lien on the restaurant's equipment and fixtures and a deed of trust on Galloy's home. None of Greco's personal assets secured Buffet's indebtedness. Viewed in the light most favorable to the plaintiffs, the rest of the facts are as follows.

Buffet fell in arrears in its rent payments to Cambridge in early 1980 and defendant Weiszmann, a partner and attorney for Cambridge, contacted Greco several times about the overdue rent. On June 13, 1980, Weiszmann entered the lounge with a Cook County deputy sheriff and a Palatine police officer. The deputy sheriff approached Greco, identified himself, and served a distress warrant on Greco. The deputy sheriff also asked Greco for the keys and told Greco to get his personal belongings and leave. That evening Galloy and his wife helped Weiszmann inventory all personal property on the premises.

Weiszmann subsequently filed a copy of the distress warrant and the inventory with the Clerk of the Circuit Court of Cook County, who then issued a summons for Buffet and set a hearing for June 30, 1980. Greco was never served with the summons.

Between June 13 and June 23, Galloy took steps to salvage his investment in Buffet. By June 20, Galloy had arranged loans totalling $16,000. He also agreed with Weiszmann to assume Buffet's lease, with Weiszmann agreeing to loan Galloy $6,000 of the proceeds of the sheriff's sale in the distress for rent action. On June 23, 1980, Galloy filed a liquor license application with the Village of Palatine. That evening George Downs, an attorney representing Galloy, told the Village Trustees that Buffet was in fact bankrupt and that Greco was filing for personal bankruptcy. The Village Attorney then stated that Buffet had not filed an application to renew its liquor license, which expired June 30. Both of these statements were false, but, based on this information, the Village Trustees approved Galloy's liquor license request subject to Galloy obtaining a sales tax number and a license for food service. Greco learned of this action by June 27, 1980.

Galloy, his attorney, Weiszmann, and an officer of the bank appeared at the June 30th hearing on the distress for rent action. Neither Greco nor his attorney was present. The state court, finding that the appearance by Galloy, the vice-president of Buffet, gave the court jurisdiction over Buffet, ordered the distrained property sold subject to the lien of the bank. On July 27, 1980, the sheriff's sale was held, with Greco and his attorney, Galloy and his attorney, Weiszmann, and a bank representative in attendance. Galloy bid successfully on the property.

II.

Section 1983 provides as follows:

Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof 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, suit in equity, or other proper proceeding for redress.

42 U.S.C. Sec. 1983 (1982). To prevail on a section 1983 claim, a plaintiff must show (1) that the conduct complained of was committed by a person acting under color of state law, and (2) that this conduct deprived the plaintiff of rights, privileges, or immunities secured by the Constitution or laws of the United States. See Parratt v. Taylor, 451 U.S. 527, 535, 101 S.Ct. 1908, 1912-13, 68 L.Ed.2d 420 (1981). Here the plaintiffs claim that the seizure of their property without prior notice and a hearing violated due process. The defendants assert that service of the distress warrant did not constitute action under color of state law and that the distress for rent statute is constitutional.

The Illinois Distress for Rent Act ("the Act") requires no state involvement prior to distraining the property. The Act permits a landlord, his agent, or his attorney to seize for rent any of the tenant's personal property found in the county where the tenant resides. Ill.Rev.Stat. ch. 110, Sec. 9-301 (1983). The landlord files nothing in court prior to distraining the property; he simply fills out a distress warrant stating that rent is overdue, serves the warrant on the tenant, and seizes the tenant's property. "Immediately" after the seizure, the landlord must file a copy of the distress warrant and an inventory of property seized with the court clerk. Ill.Rev.Stat. ch. 110, Sec. 9-302 (1983); see also Schoenfeld v. Kulwinsky, 197 Ill.App. 472, 474 (1916) ("immediately" means promptly). The court clerk then issues a summons against the tenant and the action proceeds like an action for attachment. See Ill.Rev.Stat. ch. 110, Secs. 9-303, 9-305 (1983).

Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982) provides the framework for analyzing plaintiffs' claims. In Lugar, the defendant had attached property of the plaintiff under Virginia's prejudgment attachment statute. That statute permitted a creditor to file an ex parte petition for a writ of attachment, which was then issued by a state court clerk and executed by a county sheriff. Id. at 924-25, 102 S.Ct. at 2746-47. In holding that the attachment constituted state action, the Supreme Court outlined a two-part approach:

First, the deprivation must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible. In Sniadach [v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) ], Fuentes [v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) ], [Mitchell v.] W.T. Grant [416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974) ], and North Georgia [Finishing v. Di-Chem, 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975) ], for example, a state statute provided the right to garnish or to obtain prejudgment attachment, as well as the procedure by which the rights could be exercised. Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor. This may be because he is a state official, because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the State. Without a limit such as this, private parties could face constitutional litigation whenever they seek to rely on some state rule governing their interactions with the community surrounding them.

Id. at 937, 102 S.Ct.at 2753-54. The Court concluded that the...