LaSalle Nat. Bank of Chicago v. County of DuPage, 92-2545
| Decision Date | 03 December 1993 |
| Docket Number | No. 92-2545,92-2545 |
| Parties | 1993-2 Trade Cases P 70,435, 27 Fed.R.Serv.3d 828 LaSALLE NATIONAL BANK OF CHICAGO, as Trustee under Trusts Numbered 40244, 53645, 100385 and 100386, Unity Ventures and William Alter, Plaintiffs-Appellees, v. COUNTY OF DuPAGE, a body politic, and Board of Commissioners of DuPage County, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
James P. Chapman (argued), Alan S. Mills, Chapman & Associates, Chicago, IL, for plaintiffs-appellees.
William G. Welnhofer, William C. Ives, Tracy E. Donner, Keck, Mahin & Cate, Chicago, IL, James E. Ryan, State Atty. (argued), George J. Sotos, Barbara A. Preiner, Office of the State's Attorney of DuPage County, Wheaton, IL, Paul G. Simon, Schwartz & Freeman, Chicago, IL, James H. Ryan, Horwood, Marcus & Braun, Chicago, IL, for defendants-appellants.
Before CUDAHY, RIPPLE, and ROVNER, Circuit Judges.
The County of DuPage and its Board of Commissioners ["the County"] appeal the district court's denial of its petition for sanctions under Federal Rule of Civil Procedure 11 and for attorneys' fees pursuant to 42 U.S.C. Sec. 1988. For the reasons discussed below, we affirm the judgment of the district court.
Because the factual background of this lawsuit has been chronicled thoroughly in two previous opinions of this court, 1 we present here only the brief overview necessary to place in perspective the County's petition for sanctions and attorneys' fees.
In 1969, plaintiff William Alter, with the commercial and financial backing of plaintiffs Once the state court appeal concluded in his favor, Mr. Alter sought a source of water and of sewage disposal for his development. In 1982, after encountering numerous difficulties with the defendants in obtaining access to these facilities, the plaintiffs filed this lawsuit in the district court. The complaint alleged that the County and two villages conspired, "through a series of illicit agreements," 3 for the purpose of controlling real estate development and unreasonably restraining competition. According to the allegations, these concerted actions, the wrongful refusal to rezone the plaintiffs' property and to provide water or sewage disposal service, damaged the plaintiffs in terms of delay and cost.
Unity Ventures and the LaSalle National Bank, purchased an unincorporated parcel of land to develop a luxury residential and commercial community. The land was in DuPage County, between the villages of Lisle and Woodridge. In dealing with these three governmental entities, the original defendants in this case, 2 Mr. Alter soon encountered difficulties in obtaining zoning, water, and sewage disposal access. In 1975, he sued the County in state court and obtained a declaration, which was affirmed on appeal, that the County's denial of his zoning application was arbitrary and capricious.
The district court denied the defendants' first motion to dismiss; however, on interlocutory appeal, we reversed and directed dismissal of the antitrust claims on state action immunity grounds. See LaSalle Nat'l Bank v. County of DuPage, 777 F.2d 377, 385 (7th Cir.1985), cert. denied, 476 U.S. 1170, 106 S.Ct. 2892, 90 L.Ed.2d 979 (1986). The plaintiffs then sought to amend their complaint. After the district court denied leave to amend, this court remanded with directions that the district court consider the plaintiffs' motion. R.102. The plaintiffs' amended complaint recharacterized the claims as Sec. 1983 due process and equal protection violations. The district court dismissed the amended complaint on res judicata grounds, but this court again reversed. See LaSalle Nat'l Bank v. County of DuPage, 856 F.2d 925 (7th Cir.1988), cert. denied, 489 U.S. 1081, 109 S.Ct. 1536, 103 L.Ed.2d 840 (1989).
On remand, the district court denied another motion to dismiss, but determined that an earlier state court ruling estopped the plaintiffs from claiming damages with respect to the sewer issue. At the end of discovery, the defendants sought summary judgment. The district court responded by dismissing the equal protection and due process claims for failure to state a claim under Rule 12(b)(6) and by dismissing the takings claim as not ripe for adjudication. LaSalle Nat'l Bank v. County of DuPage, No. 82 C 6517, 1991 WL 38686 (N.D.Ill. March 18, 1991). The plaintiffs initially appealed; however, after settling the litigation with the village defendants, they dismissed their appeal.
At that point, DuPage County sought sanctions and fees. The district court denied its petition. LaSalle Nat'l Bank v. County of DuPage, No. 82 C 6517, 1992 WL 131548 (N.D.Ill. June 3, 1992). Noting that a zoning variance, sewer service, and water service indisputably were denied to the plaintiffs, it determined that the conspiracy claims underlying both the antitrust and the Sec. 1983 claims were supported by sufficient factual inquiry. The court further commented on the complexity and developing nature of the legal issues involved, and consequently the unsuitability of this type of case to Rule 11 sanctions. Accordingly, it denied the defendants' petition for sanctions and fees.
In reaching this conclusion, the district court held that the plaintiffs had conducted a "reasonable inquiry" into the facts concerning The district court also examined the plaintiffs' legal claims to determine whether the suit had been without legal foundation. It focused on its prior decision dismissing the plaintiffs' claims for failure to state a claim and for lack of ripeness. 5 The court first stated that it could not determine that the conspiracy central to the amended complaint did not exist, and declined to fault the plaintiffs' prefiling legal research. The court then reviewed each of the plaintiffs' legal arguments that it later dismissed in its summary judgment determination. It opined that, although the takings claim was not ripe, "[p]laintiffs made a reasonable argument that, on these particular facts, the state court litigation supplied them with a ripe issue." R. 307 at 8-9. Turning to the due process issues, the district court pointed out that this court had recognized the unsettled state of the law concerning substantive due process with respect to property interests in New Burnham Prairie Homes v. Village of Burnham, 910 F.2d 1474, 1480 n. 5 (7th Cir.1990). The court also noted that "reasonable minds might have differed about the notice question" underlying the plaintiffs' procedural due process claim. R. 307 at 9. Finally, it acknowledged that the plaintiffs' failure to allege membership in a class is a pleading discrepancy frequently overlooked and, in fact, one the district court itself overlooked at an earlier stage in the proceeding. The district court determined that this lapse was a minimal error "in the larger landscape of the case." R. 304 at 10. It concluded that, in this case, Rule 11 sanctions were particularly inappropriate: "The factual context of the case is certainly complex, and the law has been developing apace on a number of fronts." R. 304 at 11. For these reasons, it denied the defendants' petition for sanctions and fees.
the defendants' allegedly conspiratorial acts before filing their complaint. R. 304 at 6-7. It pointed out that such factual inquiry, necessarily made in the course of preparing for two state court cases, included minutes from village board meetings and the depositions of many key officials. 4 Acknowledging the difficulty of discovering conspiracies, the court concluded that "the factual inquiries were sufficient to withstand Defendants' challenge to Plaintiffs' investigation." R. 304 at 7
The County submits that the district court erred by failing to discover that the plaintiffs' conclusory conspiracy allegations had no basis in fact. In its view, the zoning, water, and sewer rulings were simply three separate sets of joint municipal decisions made by separate groups of public officials as part of their normal, lawful governmental and intergovernmental activities. The County also asserts that the trial court erred in holding that, because the plaintiffs' Sec. 1983 claims
presented "tricky areas of law," sanctions were not required. It insists that there was no "new law" between 1986, the date of the amended complaint, and 1991, the district court's decision granting summary judgment to the defendants. According to the County, the plaintiffs should have known when they filed their amended complaint that they had no Sec. 1983 claim against the County. Following the district court's conclusions in its summary judgment ruling, the County argues that the plaintiffs' claims were "dead on arrival" in 1986.
The County first asks this court to "eschew the customary, deferential standard of review" and employ instead a de novo standard. Without case authority to bolster its position, the County reasons that, because the "substance of the alleged sanctionable violation [i.e., the conspiracy allegations] has gone intentionally unexamined by the District Court, no such deference should be extended by this Court." In the alternative, it urges us to determine that the district court's decision was an egregious abuse of discretion or a failure to use discretion.
The Supreme Court has directed that we apply an "abuse-of-discretion standard in reviewing all aspects of a district court's Rule 11 determination." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2461, 110 L.Ed.2d 359 (1990). Cooter requires appellate courts to apply, under the same deferential scope of review, a unitary standard that encompasses factual questions, legal issues, and the tailoring of an appropriate sanction. The Supreme Court grounded its preference for this unitary approach in...
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