Chicago Joe's Tea Room, LLC v. Village of Broadview
Opinion
For the last eleven years, the parties to this appeal have litigated a land contract that never closed and a strip club that never opened. Yet this appeal is still an interlocutory one. We conclude that the claim for injunctive relief that gives us appellate jurisdiction is actually moot, and we affirm its dismissal. Along the way to that conclusion, we address a tangled record of transactions that seem designed to conceal the real parties in interest and their substantive deals, and we decide issues of appellate jurisdiction, standing, and the law of the case.
I. Factual and Procedural Background
Plaintiff Chicago Joe's Tea Room, LLC, was formed to operate not a tea room but a strip club, in a small, near-west suburb of Chicago that does not want one. The paper trail of legal entities, abandoned transactions, and apparently illusory obligations in this case makes for a dense record. We sketch the essential facts at the outset and provide more detail in discussing specific issues.
The story begins in 2006 when plaintiff Pervis Conway contracted to sell land in the Village of Broadview to David Donahue. Donahue has never been a party to this lawsuit. Donahue assigned the land contract to Chicago Joe's Tea Room, LLC. Joseph Inovskis (who also has never been a party to this lawsuit) was Chicago Joe's sole manager. He applied for the special-use permit needed to operate a strip club on the property. Broadview denied the application in 2007. The land sale agreed to in the contract between Conway and Chicago Joe's Tea Room, LLC, has never closed, and the planned club, Chicago Joe's Tea Room, has never opened.
Chicago Joe's Tea Room, LLC and Conway (collectively, "Chicago Joe's") filed this suit in 2007 alleging that Broadview
*811
violated the First Amendment. Chicago Joe's sought: (1) a declaration that certain Broadview ordinances are unconstitutional, (2) "such further relief pursuant to
Under Broadview's zoning ordinance, Chicago Joe's needed to apply for and be granted a special-use permit to operate a strip club there. Broadview also categorized strip clubs as "adult businesses" and used a separate adult-use zoning ordinance to regulate their placement. Broadview amended its ordinances multiple times during the lawsuit, so the district court has faced a moving target. One of those amendments led the district judge presiding over the first round of summary judgment, Judge Gottschall, to conclude that Broadview's amendment to its adult-use setback ordinance was "aimed solely at Chicago Joe's."
Chicago Joe's Tea Room, LLC v. Village of Broadview
(
Chicago Joe's I
), No.
After the case was transferred from Judge Gottschall to Judge Lee in 2012, the parties litigated a third round of summary judgment motions. Broadview also moved for reconsideration of Judge Gottschall's ruling from the first round of summary judgment and incorporated by reference its arguments on that motion into its motion for summary judgment. Judge Lee granted the motion to reconsider and granted Broadview's motion for summary judgment on Chicago Joe's declaratory judgment and injunction claims, but denied Broadview's motion for summary judgment on the damages claim.
Chicago Joe's Tea Room, LLC v. Village of Broadview
(
Chicago Joe's II
), No. 07-cv-2680,
II. Analysis
This appeal presents a series of issues. We begin with appellate jurisdiction, which we have. We then move to the district court's subject-matter jurisdiction over the claims over which we have appellate jurisdiction, and we examine both standing and mootness. We conclude by considering the application of the law-of-the-case doctrine.
The decisive issue of mootness turns on the limits of the vested-rights doctrine of Illinois law and a recently amended state statute that prevents Chicago Joe's from operating a strip club anywhere in Broadview. The Illinois vested-rights doctrine can be used to recognize property rights to use property in established or planned ways even when state or local law changes to prohibit those uses. Under the doctrine, though, a property owner's claims must be based on a timely assertion of a right to use the property in a way that is actually allowed by law. See
City of Elgin v. All Nations Worship Ctr.
,
A. Appellate Jurisdiction
We have jurisdiction over this interlocutory appeal because the district
*812
court's order granted summary judgment for Broadview on all of Chicago Joe's equitable claims. With a few key exceptions, federal courts of appeal can review only final judgments, but
This appeal falls toward the reviewable end of that continuum, at least in this circuit. Even though the district court denied summary judgment on the damages count, it granted summary judgment for Broadview on the two counts requesting equitable relief.
Chicago Joe's II
,
Even with those limits, appeals like this one call for jurisdictional caution.
Holmes
held that irreparable harm is not required for appellate jurisdiction for an interlocutory appeal of an order denying an injunction. "Asking whether an order plainly denying an injunction
also
caused irreparable injury would add a gratuitously complicating factor to the simple statutory rule. We therefore ... hold that an order denying injunctive relief is immediately appealable even though a request for damages remains pending."
B. District Court's Jurisdiction Over Equitable Claims
We now turn to the district court's subject-matter jurisdiction over the claims properly before us, those seeking injunctive relief. (We see no basis to question the court's jurisdiction over the rest of the case.) The question of subject-matter jurisdiction here lies close to the sometimes blurry line between standing and mootness, which has sometimes been called "the doctrine of standing set in a time frame,"
*813
Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc.
,
1. Standing
The standing of Chicago Joe's Tea Room, LLC itself is at least doubtful, especially in view of the obscure trail of contracts, trusts, and illusory commitments, but we need not wrestle those issues to the ground. The other plaintiff-appellant, Conway, had standing, at least at earlier stages of the case. "As long as there is 'at least one individual plaintiff who has demonstrated standing to assert these rights as his own,' a court 'need not consider whether the other ... plaintiffs have standing to maintain the suit.' "
Bond v. Utreras
,
Standing requires three elements, and Conway satisfied all three. "The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."
Spokeo, Inc. v. Robins
, --- U.S. ----,
It is undisputed that Conway owned the property when Broadview denied the application for a special-use permit and that Conway still owns the property.
2
The original contract between Chicago Joe's and Conway was contingent not on
*814
Chicago Joe's actually obtaining zoning approval but on its being satisfied that it
could
obtain that approval. Broadview's denial killed the deal-at least as the parties originally envisioned it. The evidence of that result means that Conway has offered evidence of a concrete, actual injury traceable to Broadview's conduct and redressable by all three forms of relief sought in the complaint. See
Parvati Corp. v. City of Oak Forest
,
2. Mootness
Judge Lee correctly held that plaintiffs' injunction claims are moot. Because mootness is a jurisdictional issue, not a merits issue, Broadview should have raised its jurisdictional arguments as a motion under Rule 12(b)(1), not Rule 56. See
Winslow v. Walters
,
The boundary between mootness and the merits, as with the boundary between standing and the merits, can sometimes be difficult to discern, as it is in this case. As in Winslow , and because jurisdictional issues like standing and mootness are not *815 waivable, we overlook the misnomer and address the substance of the motion. Because the district court was correct that the injunction claims are moot, we affirm their dismissal on that ground.
"Whether a case has been rendered moot is a question of law that we review de novo."
Zessar v. Keith
,
a. Vested Rights
To explain the mootness problem the district court faced, we must detour briefly into the vested-rights doctrine under Illinois law. The general rule is that a property owner has no right to the continuation of an existing zoning classification. Under the vested-rights doctrine, however, a party may acquire a vested right to continue using its property in accord with existing law, particularly zoning classifications. See
1350 Lake Shore Associates v. Healey
,
The problem for Chicago Joe's here is that when it claims its rights vested, its proposal to use the property would have violated at least one Broadview ordinance. This is not a case where Chicago Joe's made substantial investments in good faith, filed a special-use permit application that complied with existing law, and the local government then responded by amending its ordinances to prohibit the planned use. The undisputed facts here show that Chicago Joe's original application proposed a use with sales of alcoholic beverages, which would have violated a presumptively valid ordinance that Chicago Joe's did not challenge before applying for the permit.
The Illinois courts have made clear that a property owner who claims a vested right must proceed according to the law as it existed at an earlier time, by "attempting to comply with an ordinance as written."
City of Elgin
,
Chicago Joe's vested-rights theory fails that requirement. Inovskis sought permission to do what Broadview's adult-use ordinance expressly forbade at the time. That is the opposite of what the vested-rights doctrine requires. When he applied for the special-use permit, it was "unlawful for any adult business to sell, distribute, or permit beer or alcoholic beverages on the premises." Inovskis was seeking permission to violate the adult-use ordinance:
I am seeking the following from the Village of Broadview:
Permission to operate an adult use facility in all adult use categories as defined in the Code of Ordinances of the Village of Broadview, permission to operate a restaurant with the ability to sell alcohol , permission to operate 24 hours per day-seven days per week, permission to operate a valet parking service for customers and employees in order not to disturb current traffic or parking patterns in the surrounding area, and permission to use an off site parking lot in addition to on site parking.
Complaint at 17 (emphasis added). That was the basis for Broadview's denial of the application. Because adult-use facilities could not serve alcohol, Chicago Joe's cannot make the required showing that it probably would have won approval under the law as it stood when it applied for a special-use permit.
On appeal, Chicago Joe's argues that it could still acquire a vested right because the application was for a special-use permit and not for serving alcohol, which would have required a separate liquor license. This argument is unpersuasive. In considering an application under the special-use ordinance, Broadview did not have to blind itself to proposed violations of other ordinances. In fact, the special-use ordinance required Broadview to consider the restrictions in the adult-use ordinance: "Special uses shall be authorized or denied by the village board of trustees in accordance with the statutes of the state applicable to amendments of this title, and the regulations and conditions set forth in this title for special uses." Because the vested-rights doctrine does not apply to Chicago Joe's planned operation of a strip club in Broadview, we need not explore a number of further issues that would arise otherwise. 5
b. The Illinois Statute
In the end, we agree with the district court that Chicago Joe's claims for injunctive relief are moot because an applicable Illinois statute now prohibits Chicago Joe's from opening anywhere in Broadview. Chicago Joe's has not challenged that statute, and it would effectively prohibit a court from granting effective relief to Chicago Joe's even if Chicago Joe's prevailed on its federal constitutional challenges to the Broadview ordinances. That is so whether Chicago Joe's had a vested *817 right or not, though it is certainly clearer in the absence of a vested right.
Illinois statutes preempt conflicting ordinances by non-home-rule municipalities.
Village of DePue v. Exxon Mobil Corp.
,
In August 2007, a few months after Broadview had denied Chicago Joe's permit application in March 2007, the Illinois legislature amended its "Adult entertainment facility" statute to prohibit "locat[ing], construct[ing], or operat[ing] a new adult entertainment facility
within one mile
of the property boundaries of any school, day care center, cemetery, public park, forest preserve, public housing, or place of religious worship located in that area of Cook County outside of the City of Chicago." 65 Ill. Comp. Stat. Ann. 5/11-5-1.5 (emphasis added). The prior version was less restrictive, with only a 1,000-foot setback. Plaintiff Conway's property is within one mile of a cemetery, two schools, three parks, and a church. By its terms, the state statute forecloses any attempt to operate a strip club on Conway's property, and apparently anywhere else in Broadview.
Chicago Joe's II
,
3. Law of the Case
Finally, Chicago Joe's has also suggested that under the law-of-the-case doctrine, the district court erred by even entertaining any arguments about mootness and vested rights. Judge Gottschall's first summary judgment ruling in 2008 held that Chicago Joe's had a "vested right" in the setback subsection of Broadview's adult-use ordinance, but only in that subsection.
Chicago Joe's I
,
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In any event, Judge Lee did not abuse his discretion by taking a fresh look at the issue of vested rights. The law of the case is a discretionary doctrine, not an inflexible dictate. E.g.,
Pepper v. United States
,
In this case, several factors made it reasonable for Judge Lee to revisit the issue of vested rights. The issue affects subject-matter jurisdiction; the two judges actually decided different questions, particularly since Judge Gottschall limited her decision to only the setback subsection of the local ordinance rather than the planned use of the property; and Judge Lee had a more detailed and complete record, after discovery had been completed. Judge Lee did not err by reconsidering Judge Gottschall's order; Chicago Joe's claims for an injunction are moot.
The district court's dismissal of Chicago Joe's claims for injunctive relief is
AFFIRMED.
Our approach has been criticized and, in a proper case, may need a fresh look. See 16 Wright & Miller, Federal Practice and Procedure § 3924.1 (3d ed.) (comparing different circuits' approaches and concluding that "these considerations suggest that ordinarily § 1292(a)(1) appeals should be limited to orders refusing express requests for preliminary injunctions. Routine appeal from interlocutory orders that narrow or deny permanent relief is unwarranted.").
On August 9, 2007, Conway and the State Bank of Countryside as Trustee under Trust No. 072982 executed "Articles of Agreement for Deed." In that contract, Conway agreed to deed the property to the trust following receipt of all payments from the trust. The agreement provided for a quitclaim deed and a warranty deed to be tendered at the initial closing and held in escrow until the trust performed all of its obligations under the agreement. In the district court, Broadview did not dispute that Conway owned 2850 Indian Joe Drive "at all times relevant herein." But Broadview also attempted to designate the Articles of Agreement for Deed as evidence that Conway sold the property, which Chicago Joe's disputed. Broadview did not designate any evidence to show that the deeds referenced in the Articles of Agreement for Deed ever changed hands or that the sale ever closed. Without that evidence, the record contradicts Broadview's assertions in its appellate brief, at oral argument, and again in its post-argument submission that the property was sold and that Conway has no ownership interest in the property. In its post-argument submission, Chicago Joe's told this court that the sale "has not yet closed." As far as we can tell, the record supports that claim.
All three forms of relief would redress the injury the ordinances allegedly impose on Conway. A declaration that the ordinances violated the First Amendment would remove an impediment to a sale for a buyer like Chicago Joe's who intended a use prohibited by the ordinances. Enjoining Broadview from enforcing its ordinances would have a similar effect. Damages based on the abandoned sale could also redress Conway's injury.
Although the complaint seems to frame the damages request primarily from Chicago Joe's perspective, the complaint states that both plaintiffs seek $10 million in damages. The complaint does not explain the nature of Conway's damages. Its references to a singular plaintiff imply that the damages for Conway would be different than the damages for Chicago Joe's. The complaint alleges that the permit denial "deprived Plaintiff of its investment in [the] property, and has also deprived it of the profits it would have earned had Plaintiff been able to use its property for the purposes it desires."
As Judge Gottschall noted in her order on Broadview's second summary judgment motion, Broadview made this same error in that earlier motion. See
Chicago Joe's Tea Room, LLC v. Village of Broadview
,
The district court assumed that the vested-rights doctrine "applies to federal claims such as those at issue here."
Chicago Joe's II
,
In the last summary judgment order, the district court noted that Chicago Joe's briefing "suggest[ed] that Broadview's local analog to the [statute] is unconstitutional," but that this is "quite different from challenging the validity of the statute itself."
Chicago Joe's II
,
Reference
- Full Case Name
- CHICAGO JOE'S TEA ROOM, LLC and Pervis Conway, Plaintiffs-Appellants, v. VILLAGE OF BROADVIEW, Et Al., Defendants-Appellees.
- Cited By
- 59 cases
- Status
- Published