Hagee v. City of Evanston, No. 83-1712

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before BAUER and FLAUM, Circuit Judges, and EVANS; FLAUM
• Citation: 729 F.2d 510
• Parties: Joseph HAGEE, Reed Mitchell Hagee and Raymond Jump, Plaintiffs-Appellants, v. CITY OF EVANSTON, a Municipal Corporation, Defendant-Appellee.
• Docket Number: No. 83-1712
• Decision Date: 09 March 1984

Page 510

729 F.2d 510 Joseph HAGEE, Reed Mitchell Hagee and Raymond Jump,
Plaintiffs-Appellants,
v.
CITY OF EVANSTON, a Municipal Corporation, Defendant-Appellee. No. 83-1712. United States Court of Appeals,
Seventh Circuit. Argued Dec. 5, 1983.
Decided March 9, 1984.

Page 511

John Bernard Cashion, Chicago, Ill., for plaintiffs-appellants.

Jack M. Siegel, Chicago, Ill., for defendant-appellee.

Before BAUER and FLAUM, Circuit Judges, and EVANS, District Judge. ^*

FLAUM, Circuit Judge.

The appellants brought this action in the district court seeking damages under 42 U.S.C. Sec. 1983 (Supp. IV 1980) for an alleged violation of their civil rights. The district court dismissed their suit on the basis of res judicata, finding that the appellants' earlier state court suit, which stemmed from the same set of facts and in which they sought and won injunctive relief, barred them from later bringing this suit in federal court. On the appeal from that dismissal, we affirm the decision of the district court. ¹

In September of 1978, the appellants obtained a building permit from the appellee, the city of Evanston, Illinois, to build a residential development on a parcel of land in Evanston. Some time later, after a substantial amount of construction had been done, Evanston officials determined that the building permit had been issued erroneously, and that the appellants' development would violate applicable zoning requirements. Subsequently, Evanston's Zoning Board of Appeals voted to revoke the building permit, and the city halted construction. The appellants then filed suit in the Chancery Division of the Circuit Court of Cook County, claiming that Evanston was estopped to revoke the building permit, and seeking to enjoin Evanston from interfering with the completion of their project. The circuit court granted the appellants injunctive relief, noting that they had incurred nearly a million dollars in expenses in reliance on the permit. However, the court conditioned its injunction upon the performance of certain actions by the appellants.

The circuit court's order was not stayed pending appeal, and the appellants resumed construction of their development. A dispute arose concerning some aspects of the appellants' compliance with the conditions of the circuit court's order, and Evanston again halted work at the construction site. The appellants then went back to the state circuit court to petition for a rule to show cause. After a hearing, the state court denied the appellants' petition.

On December 8, 1980, the Illinois Appellate Court affirmed the circuit court's order granting the appellants injunctive relief. Hagee v. City of Evanston, 91 Ill.App.3d 729, 47 Ill.Dec. 68, 414 N.E.2d 1184 (1980). More than a year and a half later, in July 1981, the appellants, having completed their construction project, brought this action in federal court. The appellants essentially alleged that by revoking their building permit and twice stopping construction on their development, Evanston arbitrarily deprived them of their property without due process of law. They also complained that Evanston violated their rights under the fifth amendment's "takings" clause and the fourteenth amendment's equal protection clause. The appellants sought damages under section 1983 in the amount of $515,000, allegedly incurred in the form of attorneys' fees, increased financing expenses, forced renegotiation of subcontracts, preservation expenses during shutdown, and increases in the cost of materials. They also sought attorneys' fees expended

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in their federal suit, pursuant to 42 U.S.C. Sec. 1988 (Supp. IV 1980).

The district court first dismissed the appellants' complaint for failure to state a cause of action for relief under section 1983. Hagee v. City of Evanston, 530 F.Supp. 585 (N.D.Ill.1982). It then permitted the appellants to amend their complaint, Hagee v. City of Evanston, 95 F.R.D. 344 (N.D.Ill.1982), and the appellants did so. Subsequently, in a memorandum opinion and order dated March 21, 1983, the district court dismissed the appellants' amended complaint, finding the appellants' suit barred by their earlier state court action under the principles of res judicata. This appeal followed.

The district court found that the appellants' present suit was barred by res judicata because the appellants could have raised their current claims in their earlier state court suit but failed to do so. It is a well-established rule that res judicata bars parties or their privies from litigating not only matters that in fact were raised and decided in an earlier suit involving the same cause of action and the same parties, but also all other matters that could have been raised in the earlier suit. Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir.1982); Spiller v. Continental Tube Co., 95 Ill.2d 423, 432, 69 Ill.Dec. 399, 436, 447 N.E.2d 834, 838 (1983). ² The appellants seek to avoid the application of this rule to their case primarily by arguing that under the Illinois law of res judicata, their state and federal suits involve different causes of action. However, because we find that under Illinois law the appellants' present suit would be barred by res judicata, we affirm the decision of the district court.

The appellants correctly point out that under 28 U.S.C. Sec. 1738 (1976), ³ this court must apply the res judicata law of Illinois in determining the preclusive effect of a judgment rendered by an Illinois court. In Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980), the Supreme Court stated, "Congress has specifically required all federal courts to give preclusive effect to state-court judgments whenever the courts of the State from which the judgments emerged would do so." Id. at 96, 101 S.Ct. at 415. See also Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). Although some courts and commentators have suggested that a federal court sometimes may apply a federal rule of res judicata and give a greater preclusive effect to a state court judgment than would be accorded by that state's law, see generally FDIC v. Eckhardt, 691 F.2d 245 (6th Cir.1982) and authority cited therein, the Supreme Court recently laid this proposition to rest in the case of Migra v. Warren City School District Board of Education, --- U.S. ----, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984). Thus, it is clear that we must give the decision in the appellants' state court suit the same preclusive effect--no more, no less--as would the courts of Illinois. Accordingly, we will examine the Illinois law of res judicata.

As we have indicated, the appellants frame the main question on this appeal as whether their earlier state court suit and their present suit involve the same cause of action under Illinois law, for purposes of applying the doctrine of res judicata. The Illinois intermediate appellate courts have produced a wealth of cases on the question of what constitutes a cause of action, but they have not spoken with one voice. Our review of Illinois case law reveals many different formulations of the test to determine whether two suits involve the same

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cause of action, with no clear trend in any direction. However, despite differences in language, virtually all of these cases can be placed in one of two basic groups.

In the first group of cases, the courts have approached the task of deciding whether two suits...