Novak et al v. Levenfeld Pearlstein, LLC et al

Filing 187

ORDER signed by the Honorable Edmond E. Chang. For the reasons stated in the Order, Defendants' motion to dismiss T.N. [R. 126] is denied; Defendants' motion to dismiss the Board of Directors [R. 128] is granted, and the Board shall be te rminated as a named Defendant; and Plaintiffs' motion to lift the stay on discovery of the two discrete issues [R. 140] is denied without prejudice. If Plaintiffs still wish to ask for leave to amend the complaint to name individual Board member s, then Plaintiffs must file the motion for leave to do so by 03/16/2015. Defendants shall respond by 03/30/2015. Plaintiffs may reply by 04/08/2015. Only after the Court has decided that motion (if it is filed) may Defendants then file a motion to dismiss certain claims and parties as described in the Order. Emailed notice(slb, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MICHAEL NOVAK, CHRISTINA NOVAK,
and their daughter, T.N.,
Plaintiffs,
v.
STATE PARKWAYCONDOMINIUM ASS’N,
THE BOARD OF THE STATE PARKWAY
CONDOMINIUM ASS’N, DONNA WEBER, and
LIEBERMAN MANAGEMENT SERVS., INC.,
Defendants.

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No. 13 C 08861
Judge Edmond E. Chang

ORDER
This Order decides three motions in this contentious case brought under the
Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq.1 Pro se Plaintiffs Michael and
Christina Novak, who are hearing-impaired, and their minor daughter T.N. allege
that Defendants—the State Parkway Condominium Association, its Board of
Directors, the property management company, and the building manager—
discriminated and retaliated against Plaintiffs. R. 1, Compl. ¶ 1.2 Defendants move
to dismiss T.N. as a party, on the basis that she lacks standing to sue, R. 126, Mot.
Dismiss T.N., and to dismiss the condo board as improperly named, R. 128, Mot.
Dismiss Bd. The third pending motion was filed by Plaintiffs, who move to lift a
stay of discovery that is now in place on two discrete issues that have also been
raised in Illinois administrative proceedings. R. 140, Pls.’ Mot. Lift Stay. For the

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Subject matter jurisdiction is proper under 28 U.S.C. § 1331.
Citations to the docket are indicated as “R.” followed by the entry number.

reasons described below, the motion to dismiss T.N. is denied, the motion to dismiss
the Board of Directors is granted, and the motion to lift the stay is denied.
I. Background
The nature of the Novaks’ claims and the fractious history of the parties’
conflict—which has spanned years in a variety of federal and state fora—are
recounted in detail in the September 2014 order [R. 99] that granted in part and
denied in part Defendants’ prior motions to dismiss the complaint. Novak v.
Levenfeld Pearlstein, 2014 WL 4555581, at *1-3 (N.D. Ill. Sept. 15, 2014). The Court
dismissed all claims against the condo association’s attorneys, whom the Novaks
had alleged were equally liable for discriminatory acts, for failure to state a claim.
Id. at *6-7. The Novaks’ state-law emotional distress claims were similarly
dismissed, leaving only the federal Fair Housing claims alive in this action. Id. at
*8-10. By contrast, although Defendants asserted that claims against the Board of
Directors were also invalid because the Board is not a suable entity, the Court
declined to dismiss it as a party because Defendants did not develop the argument
and cited no authority in support of their contention. Id. at *1 n.2.
The Court also declined to dismiss the Novaks’ claims on the basis of
administrative proceedings that they had initiated with the Illinois Department of
Human Rights and the Illinois Human Rights Commission. Id. at *4-6. First, these
proceedings did not lead to issue preclusion of the Novaks’ present claims because,
even assuming that state administrative findings in FHA claims could preclude a
suit in federal court (a question as yet undecided by the Seventh Circuit), the

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Commission, which sustained the Department’s earlier dismissal of the Novaks’
administrative complaint by a voice vote in October 2013, had not yet issued a final
written order of dismissal (which may itself be subject to state court review) as of
the issuance of the September 2014 opinion—meaning that any preclusion
argument was premature.3 Id. at *4. Second, abstention by the Court from
exercising jurisdiction over the Novaks’ claims based on prudential concerns raised
by the Commission’s proceedings was not warranted because, contrary to
Defendants’ characterization, the precise claims raised with the Department and
the Commission were not in fact, for the most part, parallel with those pending in
this action. Id. at *5. The Court did, however, stay discovery as to two discrete
issues that did overlap with allegations made in the Novaks’ present complaint:
whether Defendants had refused (1) to provide the Novaks with Communication
Access Realtime Translation (CART) services to accommodate their hearing
impairment at a 2010 noise-violation hearing, and (2) to accommodate the Novaks’
service dog in retaliation for filing a 2007 discrimination complaint.4 Id. at *5-6.

The Court added, however, “[t]he parties may revisit these [stayed] claims, and
their impact on the present litigation” once the state proceedings became final, thus
properly raising the issue preclusion question. Novak, 2014 WL 4555581, at *5.
4 The Court denied a motion by Defendants to expand the stay to include a host of
other claims raised in this action, rejecting the argument that they had been also been put
before the IHRC by the Novaks through subsequent submissions made after the IDHR’s
initial denial of their charge. R. 133, Order dated Nov. 28, 2014 at 2-3 (finding that record
did not show that IHRC considered these broader claims, which in any event were
presented, likely improperly, de novo to IHRC instead of on review after IDHR’s findings).
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II. Discussion
A. Defendants’ Motion to Dismiss T.N.
Defendants move to dismiss the Novaks’ daughter T.N. from the action,
asserting that she is not hearing-disabled and thus lacks standing to bring
discrimination claims under the FHA. Mot. Dismiss T.N. ¶ 4. Defendants point out
that T.N. does not require a service animal, CART services, or other reasonable
accommodations, which are the premise of the adult Novaks’ claims. Id. The Novaks
counter that the scope of actionable injury and proper plaintiffs under the FHA
must be understood in “the broadest possible terms,” and cover T.N.’s involvement
in the suit. R. 138, Pls.’ Resp. Mot. Dismiss T.N. ¶ 6. The Court concurs with the
Novaks that Defendants’ view of standing under the FHA is overly cramped.
Under the FHA, “[a]n aggrieved person may commence a civil action … to
obtain appropriate relief with respect to [a] discriminatory housing practice.” 42
U.S.C. § 3613(a)(1)(A). An aggrieved person includes any individual who “claims to
have been injured by a discriminatory housing practice.” 42 U.S.C. § 3602(i).
Consistent with this open-ended definition, the Supreme Court has repeatedly
counseled that “Congress intended standing under [the FHA] to extend to the full
limits of Art. III and that the courts accordingly lack the authority to create
prudential barriers to standing in suits brought under” the FHA. Havens Realty
Corp. v. Coleman, 455 U.S. 363, 372 (1982) (quoting Gladstone, Realtors v. Village of
Bellwood, 441 U.S. 91, 103 n.9, 109 (1979)) (internal quotation marks omitted). The
sole criterion for standing to sue under the FHA is, as laid out by Article III of the

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Constitution, the “minima of injury in fact: that the plaintiff allege that as a result
of the defendant’s actions he has suffered ‘a distinct and palpable injury[.]’” Id.
(quoting Warth v. Seldin, 422 U.S. 490, 501 (1975)). Thus, a FHA plaintiff need only
establish that: she suffered an “an invasion of a legally protected interest which is
(a) concrete and particularized … and (b) actual or imminent”; there is a “causal
connection between the injury and the conduct complained of,” and; it is likely that
“the injury will be redressed by a favorable decision.” MainStreet Org. of Realtors v.
Calumet City, Ill., 505 F.3d 742, 751 (7th Cir. 2007) (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61 (1992)). As a result, housing discrimination cases are
replete with examples of plaintiffs with proper standing to sue who, under an
ordinarily more restrictive view of injury, might have been shut out of federal court.
See Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 209-10 (1972)
(white tenant has standing alongside black tenant who was direct subject of
discrimination based on “loss of important benefits from interracial associations”
inflicted on all residents); Gladstone, 441 U.S. at 110-11, 115 (village government
was injured by loss of reduced property values caused by exclusion of blacks);
Havens, 455 U.S. at 369 (non-profit organization has standing to challenge realtor’s
discriminatory steering practices against prospective tenants because its resources
must be expended to combat those actions).
In any event, it is not necessary to rely on an attenuated view of injury in
order to be satisfied that T.N. meets the requirements of FHA standing. On the face
of the allegations, she has been subjected to direct harm. “In ruling on a motion to

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dismiss for lack of standing, the district court must accept as true all material
allegations of the complaint, drawing all reasonable inferences therefrom in the
plaintiff’s favor[.]” Reid L. v. Illinois State Bd. of Educ., 358 F.3d 511, 515 (7th Cir.
2004). Here, the complaint alleges that the Defendants have discriminated against
the Novaks by refusing to accommodate the couple’s disability with CART services,
attempting to force the sale of their home, levying unjustified fines and a lien on
their condo, and otherwise coercing and threatening them. See Compl. ¶¶ 13-61.
True, T.N. herself has no need of CART services at homeowners’ association
meetings, nor does she herself use her parents’ service animal. But T.N. would
suffer a concrete and actual injury—the loss of her home—as a direct result of a
discriminatory effort to force the Novaks to sell their condo and leave the building.
Although T.N. does not have an ownership interest in the home (at least not
according to the complaint), discriminatory and retaliatory fines and liens encumber
the entire property—again T.N.’s home as much as it is her parents—and inflict a
financial injury that can be fairly characterized as shared by T.N. Finally, although
T.N. herself may not need the use of the family’s guide dog, unlawful restrictions on
her parents’ ability to take the animal into common areas of the building (which
many apartment dwellers regard as a shared extension of their homes) are in effect
restrictions on her: there is distinct and palpable harm in the stigma suffered by a
minor who cannot walk through her own lobby with her parents and instead must
accompany them through a back door and up a service elevator. See generally,
Robert G. Schwemm, HOUSING DISCRIMINATION LAW

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AND

LITIGATION § 25:5 (2014)

(discussing nonmonetary injuries such as humiliation and embarrassment, long
accepted by courts under the FHA and outlined in statutory and regulatory text).
Contrary to Defendants’ assertions then, T.N.’s “equal opportunity to use and
enjoy the dwelling” is very much tied to the accommodations that have been
allegedly withheld, and success in this lawsuit would convey a direct benefit on her
as much as on her parents. R. 163, Defs.’ Reply Mot. Dismiss T.N. ¶¶ 5, 7. Indeed, it
is simply impossible to deny that children who live with parents who are the
subjects of housing discrimination are often (if not always) affected just as much by
discriminatory acts aimed at restricting and ending the use of enjoyment of a home.
See, e.g., The Fair Hous. Council of San Diego, Joann Reed v. Penasquitos
Casablanca Owner’s Ass’n, 381 F. App'x 674, 676 (9th Cir. 2010) (upholding
standing of children who “witnessed instances of sexual assault, suffered from
emotional disturbances, were generally confined to their home, and no longer used
the housing complex’s amenities as a result of the [defendants’] ongoing sexual
harassment”); United States v. Henry, 519 F. Supp. 2d 618, 622 n.7 (E.D. Va. 2007)
(minor children were “aggrieved persons” with standing to intervene in case brought
on behalf of their parents for alleged discriminatory practices, including imposition
of “quiet time” only on black residents). Cf. Hollis v. Chestnut Bend Homeowners
Ass’n, 760 F.3d 531, 544 (6th Cir. 2014) (affirming standing of parents to bring suit
in individual capacities for alleged housing discrimination suffered by their
children). Because T.N. would suffer direct injury by the alleged actions of

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Defendants, she has established her standing to remain a plaintiff in the action,
and Defendants’ motion to dismiss her as a party is denied.
B. Defendants’ Motion to Dismiss Board of Directors
1. Board of Directors is an Improper Party
Turning to Defendants’ motion to dismiss the Board of Directors, the Court
concludes that the Board must be dismissed as a non-suable entity. This time
around, Defendants offer authority in support of their position. Defs.’ Mot. Dismiss
Bd. of Dir. ¶ 2. “Under Illinois law, a corporation’s board of directors is not a legal
entity separate and distinct from the corporation itself, and thus is not amenable to
suit.” Edwards v. Lake Terrace Condo. Ass’n, 2011 WL 1548023, at *2 (N.D. Ill. Apr.
21, 2011) (citing Willmschen v. Trinity Lakes Improvement Ass’n, 840 N.E.2d 1275,
1280 (Ill. App. Ct. 2005)). Although individual board members of a non-profit
corporation, like a homeowners’ association, may be held liable for certain acts
involving willful or wanton conduct, a board may not be held liable as a collective
entity. Willmschen, 840 N.E.2d at 1280 (citing 805 ILCS 105/108.70).
The cases cited by Plaintiffs do not undermine this principle. Taghert v.
Wesley affirmed the ability of condo board members to be sued individually and in
their official capacity as board members under Illinois law, rather than target the
board itself as a collective party. 799 N.E.2d 377, 380 (Ill. App. Ct. 2003). And
although LaSalle Nat. Trust, N.A. v. Bd. of Directors of the 1100 Lake Shore Drive
Condo. ,speaks of “liability for the Board and its individual members,” it is in the
limited context of breaches of fiduciary duty related to the management of a

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homeowners’ association under the Illinois Condominium Property Act, 765 ILCS
605. 677 N.E.2d 1378, 1382 (Ill. App. Ct. 1997) (citation omitted); accord Carney v.
Donley, 633 N.E.2d 1015, 1022 (Ill. App. Ct. 1994). This provision does not appear to
undo the general common-law principle that a board of directors can neither sue in
its own name nor be sued. See Willmschen, 840 N.E.2d at 1280 (surveying authority
from other states).
Generally speaking, this rule is not prejudicial to a plaintiff as a practical
matter. As is the case here, for instance, the homeowners’ association, which is the
appropriate defendant in terms of corporate liability, can be named as a party. See
CHA v. Bd. of Directors of Enclave at Galewood, 2011 WL 1134249, at *3 (N.D. Ill.
Mar. 16, 2011) (“[W]here a board of a homeowners’ association has been subject to
suit, the appropriate defendant is the Master Association itself.”). What’s more, the
individual board members are not exempt from suit, so if the intent is to sue
particular members for their personal conduct, the inability to name them
collectively as the board of directors is of no real moment. For all these reasons, the
Board of Directors is dismissed as a party to this lawsuit.
2. A Proper Motion for Leave to Amend Is Required
Asserting in their response brief that they wanted to sue particular members
of the State Parkway Board of Directors all along, Plaintiffs belatedly request leave
to amend their complaint to do so. R. 139, Pls.’ Resp. Mot. Dismiss Bd. of Dir. ¶ 15.
Amendments at this stage may only be made with the consent of the opposing party
or with leave of the court under Federal Rule of Civil Procedure 15(a)(2), but a

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“special responsibility” is owed to pro se litigants, under which a district court must
“allow ample opportunity for amending the complaint when it appears that by so
doing the pro se litigant would be able to state a meritorious claim.” Donald v. Cook
Cnty. Sheriff’s Dep’t, 95 F.3d 548, 555 (7th Cir. 1996). Defendants oppose Plaintiffs’
request, arguing in their reply brief that at no point in the protracted course of the
present litigation and preceding administrative proceedings did Plaintiffs put any
such individuals on notice that they would be named. R. 162, Defs.’ Reply Mot.
Dismiss Bd. of Dir. ¶ 5. Defendants further argue that an amendment to insert
individual board members would be futile because the statute of limitations for
claims against them has long run. Id. Plaintiffs counter that their claims against
the board members were tolled by their administrative complaint filed in 2010. Pls.’
Resp. Mot. Dismiss Bd. of Dir. ¶ 15 n.2.
At first blush, the Court notes that the issue of futility on timeliness grounds
is not as straightforward as the parties represent. For instance, although the
statute of limitations under the FHA is two years, 42 U.S.C. § 3613(a)(1)(A), there
are the added variables of the tolling of claims during administrative proceedings,
42 U.S.C. § 3613(a)(1)(B), and the possible relation-back of amendments in the
event of joinder of new parties, Fed. R. Civ. P. 15(c)(1)(C), which complicate matters
for the various purported claims and proposed defendants at play here.
(Importantly, perhaps, the administrative complaint did not name the individual
board members.) In any event, the Court will reserve decision until Plaintiffs have
made a proper motion for leave to amend rather than act on a request imbedded in

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a response brief, so that the parties may properly brief the issues related to naming
individual board members at this stage, including its possible futility or the possible
undue delay in requesting leave.5 The briefing schedule for this motion is set at the
conclusion of this order.
C. Plaintiffs’ Motion to Lift Stay
The Novaks seek to lift the stay of discovery that the Court imposed on two
issues, specifically, the denial of CART services at a 2010 hearing and the refusal to
accommodate the Novaks’ service animal in alleged retaliation for a 2007 complaint.
Pls.’ Mot. Lift Stay ¶ 3. As explained here, the motion is unfounded at this time. In
September 2014, the Court determined that a stay was appropriate because the
Human Rights Commission was on the verge of deciding these two identical claims,
which represented the only overlap between the Novaks’ state administrative and
federal court actions. Novak, 2014 WL 4555581, at *5 (quoting Pfizer Inc. v. Apotex
Inc., 640 F. Supp. 2d 1006, 1007 (N.D. Ill. 2009)). The Novaks argue now, as they
did back in September, that the Court should exercise jurisdiction over these claims
regardless of the Commission’s decision, relying on case law that states that

Defendants state that they will shortly move to dismiss Lieberman Management
Services, Inc. and Donna Weber, the property management company and building manager.
Defs.’ Reply Mot. Dismiss Bd. of Dir. ¶ 5 n.2. In the interest of streamlining this litigation,
which has already seen a stream of piecemeal motions, the Court will entertain that motion
only after it has resolved Plaintiffs’ forthcoming motion for leave to amend their complaint
to add potential new defendants. That way, as it is possible that Defendants may move to
dismiss the claims against newly named individual board members (should leave to amend
be granted), multiple motions will be avoided. This combined motion to dismiss certain
parties should also be brought in conjunction with Defendants’ potential motion to dismiss
the two stayed issues on preclusion grounds, as described in the following section. This plan
of attack represents the most efficient manner of streamlining the claims and teeing up the
remainder of this litigation.
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whatever the Commission decides should have no bearing on the adjudication of
their action in federal court. See Morales v. Goodwill Indus. of Se. Wis., Inc., 2014
WL 4914255, at *5 (N.D. Ill. Sept. 30, 2014) (“[U]nreviewed decisions by state
agencies are not entitled to preclusive effect as to [Americans with Disabilities Act]
claims brought in federal court[.]”); see also Mitchell v. Cellone, 389 F.3d 86, 91-92
(3d Cir. 2004) (holding tenants could bring FHA suit in federal court, despite
previously filed administrative complaint that led to state court action).
But as the Court has already noted, in spite of the district court’s opinion in
Morales and the Third Circuit’s opinion in Mitchell, neither of which is binding
precedent, the preclusive effect of unreviewed agency decisions (on determinations
of both law and fact) remains an open question in this Circuit. Novak, 2014 WL
4555581, at *4 (citing Sokoya v. 4343 Clarendon Condo Ass’n, 1996 WL 699634, at
*3-5 (N.D. Ill. Nov. 27, 1996) (common-law administrative preclusion applies to
IHRC and FHA)); see also Allahar v. Zahora, 59 F.3d 693, 696 (7th Cir. 1995)
(“Agency decisions may have a preclusive effect, but only in the limited area of
factfinding.”) (emphasis added). In any event, because the Commission’s decision
was not yet final, the Court could not resolve that question and purposefully stayed
discovery on the two issues on prudential grounds until the Commission issued its
written order of dismissal. Novak, 2014 WL 4555581, at *5. Now that it has been
finally issued, R. 167-1, IRHC Order dated Feb. 9, 2015, the question is closer to
being ripe for presentation to the Court.

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Closer, but not quite there: the Commission’s final order of dismissal is
reviewable by the Illinois state courts, 775 ILCS 5/8-111(B)(1), and whether the
Novaks exercise their prerogative to take such an appeal will determine our next
steps. If the Novaks do take an appeal, then the appropriate Illinois courts will
adjudicate the two claims, which will almost certainly have preclusive effect in this
federal action. See Haber v. Biomet, Inc., 578 F.3d 553, 556 (7th Cir. 2009) (“State
court judgments are entitled to recognition by federal courts and are entitled to
preclusive effect.”) (citing 28 U.S.C. § 1738). If the Novaks do not appeal to the state
courts, then the Commission’s findings will be the final word as far as the state
proceedings are concerned, and the Court anticipates that either Defendants will
renew their motion to dismiss these two claims on preclusion grounds or Plaintiffs
will renew their motion to lift the stay on the grounds that preclusion should not
apply. Only then will the Court be in a position to resolve the question of issue
preclusion and unreviewed state agency decisions.
Either way, the appropriate course is to maintain the stay until we know
which of these two scenarios plays out. As the deadline by which the Novaks must
appeal the Commission’s order, if they wish to do so, is 35 days from the date that a
copy of the decision was served, and the Novaks state that they received a copy on
February 14, 2015, R. 168, Pls.’ Reply Mot. Lift Stay ¶ 1, we will have clarity in
short order. Accordingly, the Novaks’ motion to lift the stay of discovery on the two
discrete issues that overlap with the IHRC proceedings is denied without prejudice.

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III. Conclusion
For the reasons given above, Defendants’ motion to dismiss T.N. [R. 126] is
denied, Defendants’ motion to dismiss the Board of Directors [R. 128] is granted,
and Plaintiffs’ motion to lift the stay on discovery of the two discrete issues [R. 140]
is denied without prejudice.
If Plaintiffs still wish to ask for leave to amend the complaint to name
individual Board members, then Plaintiffs must file the motion for leave to do so by
March 16, 2015. Defendants shall file a response by March 30, 2015 and Plaintiffs
may reply by April 8, 2015. Only after the Court has decided this motion may
Defendants then file a motion to dismiss certain claims and parties as described
above.

ENTERED:
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: March 6, 2015

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