North American Cold Storage v. County of Cook

• Decision Date: 19 January 1982
• Docket Number: No. 78 C 3533.,78 C 3533.
• Citation: 531 F. Supp. 1003
• Parties: NORTH AMERICAN COLD STORAGE COMPANY, et al., Plaintiffs, v. COUNTY OF COOK, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

531 F. Supp. 1003

NORTH AMERICAN COLD STORAGE COMPANY, et al., Plaintiffs, v. COUNTY OF COOK, et al., Defendants.

No. 78 C 3533.

United States District Court, N. D. Illinois, E. D.

January 19, 1982.

Abramson & Fox, James L. Fox, Chicago, Ill., for plaintiffs.

Richard M. Daley, State's Atty., Robert S. Vihon, Asst. State's Atty., Chicago, Ill., for Cook County defendants.

Herbert Lee Caplan, Asst. Atty. Gen., Chief of Litigation, Chicago, Ill., for state defendants.

MEMORANDUM OPINION

GRADY, District Judge.

This is an action by taxpayers seeking compensatory and punitive damages under 42 U.S.C. § 1983 for injuries allegedly caused by various county and state taxing officials and by the County of Cook in connection with the overassessment of plaintiffs' real property. Before the court is the motion of the County defendants to dismiss the amended complaint. The motion is denied. Also before the court is plaintiffs' motion to certify the action as a class action. That motion is denied with respect to Counts I through III and granted with respect to Count IV.

On September 1, 1978, plaintiffs filed a three-count complaint in this case. Defendants submitted a motion to dismiss all counts, and on April 10, 1979, that motion was denied.¹ On December 10, 1980, plaintiffs amended the complaint by adding a fourth count. The County defendants now challenge by way of a Fed.R.Civ.P.Rule 12(b) motion not only Count IV but also Counts I and II of the original complaint.

In their motion to dismiss, defendants argue that this court lacks subject matter jurisdiction, that the complaint must be dismissed pursuant to abstention principles recently announced by the Supreme Court in Fair Assessment in Real Estate Association, Inc. v. McNary, ___ U.S. ___, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981), that the causes of action in Counts I, II and IV are barred by collateral estoppel and that Count IV fails to state a claim.

At the outset, plaintiffs respond that the County defendants, having already filed one Rule 12(b) motion, may not attack Counts I and II through another such motion. Fed.R.Civ.P. 12(g) provides in relevant part that "If a party makes a motion under this rule but omits therefrom any defense or objection then available to him which this rule permits to be raised by motion, he shall not thereafter make a motion based on the defense or objection so omitted ...."

Plaintiffs' argument is without merit. Fed.R.Civ.P. 12(h)(3) permits a defendant to raise the issue that a court lacks subject matter jurisdiction at any time during the proceedings. City of Milwaukee v. Saxbe, 546 F.2d 693 (7th Cir. 1976). Thus, Rule 12(b) does not prevent consideration of this argument.

Second, the Fair Assessment case, supra, had not been decided at the time defendants made their first motion to dismiss. This basis for the motion to dismiss was therefore not "available" to defendants at that time.

Third, defendants argue that plaintiffs' claims are barred by collateral estoppel. This is an affirmative defense that is not waived if included in the answer. Fed.R.Civ.P. 12(b). Because defendants have pleaded an affirmative defense based on a former adjudication,² we will treat their motion on collateral estoppel grounds as one for summary judgment. Fed.R. Civ.P. 56(e). Rule 12(g) does not prohibit consideration of affirmative defenses by summary adjudication.

I. Subject Matter Jurisdiction

Defendants argue that this court lacks subject matter jurisdiction under 28 U.S.C. § 1343(3). We need not decide whether we have jurisdiction under § 1343 since, as plaintiffs point out, jurisdiction has been alleged under 28 U.S.C. § 1331. This statute confers jurisdiction upon the court in the instant case. See Maine v. Thiboutot, 448 U.S. 1, 8 n. 6, 100 S.Ct. 2502, 2506 n. 6, 65 L.Ed.2d 555 (1980)(§ 1983 claim which cannot be brought under § 1343(3) may be brought under § 1331 if that statute's $10,000.00 limit is satisfied). Since the $10,000.00 jurisdictional limit is no longer required under § 1331, plaintiff's claims may be heard under this statute.

II. Abstention

We now turn to defendants' contention that the Supreme Court's decision in Fair Assessment in Real Estate Associates, Inc. v. McNary, supra, requires this court to abstain from the case. In Fair Assessment, the Court held that

Taxpayers are barred by the principle of comity from asserting § 1983 actions against the validity of state tax systems in federal courts. Such taxpayers must seek protection of their federal rights by state remedies, provided of course that those remedies are plain, adequate, and complete ....

___ U.S. at ___, 102 S.Ct. at 186.

We hold, however, that since interest and attorney's fees are not recoverable in a state court refund procedure, Clarendon Associates v. Korzen, 56 Ill.2d 101, 306 N.E.2d 299 (1973), that remedy is neither "adequate" nor "complete." LaSalle National Bank v. Rosewell, 604 F.2d 530, 532-537 (7th Cir. 1979), rev'd on other grounds, 450 U.S. 503, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981).³

While the Court of Appeals' decision in Rosewell sufficiently explains why the absence of a provision for interest renders the state court remedy inadequate, we add one observation. "A federal district court is under an equitable duty to refrain from interfering with a state's collection of its revenue except in cases where an asserted federal right might otherwise be lost." Tully v. Griffin, 429 U.S. 68, 73, 97 S.Ct. 219, 222, 50 L.Ed.2d 227 (1976); Fair Assessment, supra, ___ U.S. at ___, at n. 8, 102 S.Ct. at 186 n. 8. Plaintiffs in the instant case assert a federal right to be fully compensated for injuries arising from a constitutional violation, i.e., a discriminatory assessment. In Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978), the Supreme Court held that when a cause of action under § 1983 has been proved, there is a federal right to be fully compensated for the injury.

Our legal system's concept of damages reflects this view of legal rights. "The cardinal principle of damages in Anglo-American law is that of compensation for the injury caused to plaintiff by defendant's breach of duty." 2 F.Harper & F.James, Law of Torts § 25.1, p. 1299 (1956) (emphasis in original). The Court implicitly has recognized the applicability of this principle to actions under § 1983 by stating that damages are available under that section for actions "found ... to have been violative of ... constitutional rights and to have caused compensable injury ...." Wood v. Strickland, 420 U.S. 308 at 319 95 S.Ct. 992 at 999, 43 L.Ed.2d 214 (emphasis supplied).

435 U.S. at 254-255, 98 S.Ct. at 1047-1048.

The common law recognizes that "an injured party suffers an economic injury from the fact that he did not receive the monies to which he was entitled immediately after the injury which created the entitlement" and that he deserves to be compensated accordingly. Southern Pacific Transportation Co. v. U. S., 471 F.Supp. 1186, 1193 (E.D.Cal.1979); Socony Mobile Oil Co. v. Texas Coastal & International, Inc., 559 F.2d 1008, 1009 (5th Cir. 1977) ("Prejudgment interest is not awarded as a penalty, but is in the nature of compensation for the use of the funds."); Rosa v. Insurance Company of Pennsylvania, 421 F.2d 390 (9th Cir. 1970); Glens Falls Insurance Co. v. Danville Motors, Inc., 333 F.2d 187 (6th Cir. 1964); Chesapeake & Ohio Ry. Co. v. Elk Refining Co., 186 F.2d 30 (4th Cir. 1950).⁴ Thus, inasmuch as plaintiffs would be compensated for pre-judgment interest at common law, they have a federal right to pre-judgment interest as compensation for suffering a violation of § 1983. Confining plaintiffs to state law refund remedies would, of course, deprive them of this federal right.

III. Preclusive Effect of State Court Suits

Next we consider defendants' argument that plaintiffs' claims are precluded by judgments plaintiffs obtained in state court refund actions. In arguing for preclusion, defendants inaccurately rely on the doctrine of collateral estoppel. Collateral estoppel is inapplicable, since it precludes only those issues which were fully and fairly litigated in the first action. Allen v. McMurry, 449 U.S. 90, 95, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1981). Since plaintiffs did not litigate the constitutionality of the overcharges in state court, collateral estoppel will not preclude litigation of that issue here.

The doctrine of res judicata, however, may preclude plaintiffs from splitting their cause of action between state and federal courts. Id. at 95, 101 S.Ct. at 415. Simply stated, res judicata means that

A judgment on the merits, rendered in a former suit between the same parties or their privies, on the same cause of action, by a court of competent jurisdiction, operates as a bar not only as to every matter which was offered and received to sustain or defeat the claim, but as to every other matter which might with propriety have been litigated and determined in that action. In other words, he must present his whole case, extending his claim so as to embrace everything which properly constitutes a part of his cause of action or defense, and cannot bring a new suit to recover something more on the same cause of action.

Liddel v. Smith, 345 F.2d 491, 493 (7th Cir. 1965).

Plaintiffs first argue that they have not improperly split their cause of action since in a refund proceeding under Ill.Rev.Stats. ch. 120, § 716, the state court is not empowered to grant any remedy other than a tax refund and that, consequently, a cause of action designed to secure additional relief is a different cause of action. We recognize that refund cases are heard pursuant to special statutory jurisdiction under the Revenue Act, Stein v. Olsen, 26 Ill.App.3d 858, 326 N.E.2d 176 (1975); LaSalle National Bank v. Hoffman, 1 Ill.App.3d 470, 274 N.E.2d 640 (1971), and that in proceedings under that Act, the court may only grant a remedy as provided therein....