Shaikh v. City of Chicago

• Decision Date: 25 August 2003
• Docket Number: No. 02-2708.,02-2708.
• Citation: 341 F.3d 627
• Parties: Shahid SHAIKH, Plaintiff-Appellant, v. CITY OF CHICAGO, Julia Stasch, and David Saltzman, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

341 F.3d 627

Shahid SHAIKH, Plaintiff-Appellant, v. CITY OF CHICAGO, Julia Stasch, and David Saltzman, Defendants-Appellees.

No. 02-2708.

United States Court of Appeals, Seventh Circuit.

Argued April 18, 2003.

Decided August 25, 2003.

Steven Saltzman, Chicago, IL, Jon L. Schoenhorn (argued), Schoenhorn & Associates, Hartford, CT, for Plaintiff-Appellant.

Mara S. Georges, Meera Werth (argued), Office of the Corporation Counsel, Appeals Div., Chicago, IL, for Defendants-Appellees.

Before EASTERBROOK, KANNE, and DIANE P. WOOD, Circuit Judges.

KANNE, Circuit Judge.

Plaintiff Shahid Shaikh (an East-Asian Muslim, born in India, now a U.S. citizen and Connecticut resident) outbid his competitors at a public auction and entered into a purchase agreement with the U.S. Department of Housing and Urban Development to buy the Lowe Avenue Terrace Apartments—an apartment building located at 6531 South Lowe Avenue in Chicago, Illinois. HUD had acquired the building through foreclosure proceedings. Before the closing, the City of Chicago (acting through its then-Commissioner of the Department of Housing, Julia Stasch, and then-Deputy Commissioner of the Department of Housing, David Salzman) attempted repeatedly to persuade both HUD and Shaikh to cancel their purchase agreement. The City had sought to acquire the Lowe apartments for a possible expansion of the Kennedy-King City College campus, located a few blocks away at 6800 South Wentworth Avenue. To that end, the City had informed both HUD and Shaikh that it was considering condemning the property. HUD held to its agreement, but ultimately Shaikh withdrew after the City further offered him $20,000 to recoup his out-of-pocket expenses.

With Shaikh out of the picture, HUD offered the property to the second-highest bidders at the auction, John Schlick and David Horn (two Caucasian, non-Muslim residents of Washington, D.C.). The City once again tried to convince HUD and the potential buyers to withdraw, informing Schlick and Horn of its intention to take the property by eminent domain. This time though, HUD refused to allow Schlick and Horn to back out of their agreement.

After the sale had completed, the City never used its powers of eminent domain to acquire the property from Schlick and Horn nor did it proceed with the Kennedy-King campus relocation or expansion plans. It also reneged on its offer to pay Shaikh $20,000 for his expenses. Shaikh then brought this action against the City, Stasch, and Salzman, arguing that in causing him to withdraw from his purchase agreement with HUD, the defendants (hereinafter collectively referred to as the City) intentionally discriminated against him on account of his race and nationality in violation of 42 U.S.C. § 1981 (which prohibits discrimination in contractual relations) and 42 U.S.C. § 1982 (which prohibits discrimination in the sale of property) and violated 42 U.S.C. § 1983 by depriving him of equal protection under the law and by impeding his substantive-due-process rights and his right to travel.¹

The district court granted summary judgment to the City on Shaikh's §§ 1981 and 1982 claims and his equal protection, right-to-travel, and substantive-due-process claims under § 1983, finding that Shaikh could neither prove that the City treated similarly situated individuals outside his protected class (whether based on race, nationality, or citizenship) more favorably than he was treated nor that the City's stated reason for persuading Shaikh to cancel his contract (the Kennedy-King college expansion) was either illegitimate or pretextual. It also rejected Shaikh's "class of one" equal-protection argument because Shaikh failed to produce any evidence that tended to suggest that the City had a personal vendetta against him. Shaikh appeals.

Although in the final analysis we agree with the district court that the City behaved as inefficiently, irrationally, and for that matter impolitely, in trying to convince Shaikh not to proceed with the Lowe-apartments purchase as it did in trying to dissuade Schlick and Horn or any other potential purchaser without regard to preferences of race, nationality, citizenship, or personality, Shaikh's §§ 1981 and 1982 claims fail for a more fundamental reason: Because the City had no power directly to affect HUD's proposed sale of the property to Shaikh, it did not unlawfully or unconstitutionally impede upon Shaikh's ability to purchase the building. More fundamentally still, the possibility that the City would seek to take the Lowe apartments by eminent domain is a risk every private property owner bears, but it is a risk balanced by constitutional requirements to take the property only for the public use and then to compensate the owner for the property's fair market value. And Shaikh has not presented any theory that would allow him to recover under §§ 1981 or 1982 for the City providing him with advance notice of its intent to exercise that power within those constitutionally mandated limits.

The City did not own the Lowe apartment building—HUD did—and so the City could not refuse to sell it to Shaikh. HUD had acquired the property by foreclosing on a Federal Housing Authority administered loan and, under the terms of the Multifamily Property Disposition Reform Act of 1994, it had informed the City of its acquisition. 12 U.S.C. § 1701z-11(c)(3)(A) (2003). At that time, the City took no action to acquire the property, even though the statute grants the City a right of first refusal. See id. at § 1701z-11(i). When the City later changed its mind and informed HUD of its interest in the property for the Kennedy-King expansion, it was too late: HUD had decided to proceed to auction. At this point, the City was powerless to stop the auction sale. The Act afforded them no further opportunity to lay claim to the property after they had passed on their right of first refusal. And under the Supremacy Clause, the City could not pursue condemnation proceedings against HUD to obtain the property in advance of, and for the purpose of cancelling, the auction. See Utah Power & Light Co. v. United States, 243 U.S. 389, 404-05, 37 S.Ct. 387, 61 L.Ed. 791 (1917) (holding that private rights in public lands of the United States within a state cannot be acquired under the state's power of eminent domain, unless Congress confers that right).

Unable to prevent HUD from proceeding to auction and eventual sale, the City redirected its persuasive efforts towards the successful bidder, Shaikh. After the auction, Shaikh and HUD entered into a purchase agreement for the property. For the same reasons discussed above, the City lacked leverage over HUD to get it to break its bargain with Shaikh (although that didn't stop it from urging HUD to adhere strictly to the purchase agreement and not to overlook any technical violations by Shaikh). Instead, it tried to convince Shaikh to back out of the deal, "threatening" him with condemnation proceedings. This, Shaikh suggests, was unconstitutional and unlawful conduct if motivated by discriminatory animus.

We disagree. To succeed on this theory under §§ 1981 and 1982, Shaikh must argue that advance notice of a local government's intent to use its eminent-domain power can constitute unlawful interference with his contractual rights and otherwise make unavailable or deny him the opportunity to purchase the target property. See Morris v. Office Max, Inc., 89 F.3d 411, 413 (7th Cir.1996) (holding that to succeed on a § 1981 or a § 1982 claim, a plaintiff must allege, inter alia, intentional discrimination concerning the making and enforcing of a contract or the sale or lease of real property). Shaikh is correct in noting that a third party's interference with an individual's equal opportunity to enter into contracts or purchase property can support civil-rights claims under §§ 1981 and 1982. See Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237, 90 S.Ct. 400, 24 L.Ed.2d 386 (1969) ("The right to `lease' is protected by § 1982 against the actions of third parties, as well as against the actions of the immediate lessor.... A narrow construction of the language of § 1982 would be quite inconsistent with the broad and sweeping nature of the protection meant to be afforded by [the Act]." (citations omitted)); Faraca v. Clements, 506 F.2d 956, 959 (5th Cir.1975) (extending Sullivan's rationale to § 1981 claims for interference with contractual relations). The problem for Shaikh, however, is that what he alleges the City did in this case— inform him that it was contemplating the use of its eminent-domain power—never interfered with his ability to purchase the building.

The Supreme Court in Sullivan did not discuss what type of action it anticipated would constitute third-party interference. But the concept of third-party interference with contractual or business relationships is not novel; it is a well-recognized common-law tort. And that tort is essentially what Shaikh complains about here—that the City, a competitor, interfered with his business opportunity to purchase and develop the Lowe avenue apartments by "threatening" to take the property from him by eminent domain. To succeed on a tortious-interference claim under Illinois law the plaintiff must show inter alia "an intentional interference by the defendant which prevents the [plaintiff's] expectancy from ripening into a valid business relationship." Heying v. Simonaitis, 126 Ill.App.3d 157, 81 Ill.Dec. 335, 466 N.E.2d 1137, 1140-41 (1984) (citation omitted).

Here, the City's actions never prevented Shaikh's legitimate interest in purchasing the property from ripening. HUD at all times remained a willing seller and Shaikh was free to proceed with the transaction. The City could not stop him. The gravamen of Shaikh's complaint is that he withdrew from the sale because he had envisioned the Lowe-apartment purchase as a long-term investment and no longer considered that prospect lucrative in light of the...