Pittsfield Development LLC et al v. City Of Chicago
Filing
226
MEMORANDUM OPINION Signed by the Honorable Charles P. Kocoras on 2/13/2024. Mailed notice (ags, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PITTSFIELD DEVELOPMENT, LLC,
et al.,
Plaintiffs,
v.
CITY OF CHICAGO,
Defendant.
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17 C 1951
MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
Plaintiffs Pittsfield Development, LLC (“Development”), Pittsfield Residential
II, LLC (“Residential”), and Pittsfield Hotel Holdings, LLC (“Hotel”) (collectively,
“Pittsfield”) brought this case alleging unconstitutional takings of property interests and
substantive due process violations by Defendant City of Chicago (“City”). Before the
Court is Pittsfield’s motion for partial summary judgment and the City’s motion for
summary judgment. For the following reasons, Pittsfield’s motion is granted-in-part
and denied-in-part, and the City’s motion is granted-in-part and denied-in-part.
BACKGROUND
Pittsfield filed its complaint on March 13, 2017. Dkt. # 1. The Court issued an
order granting-in-part and denying-in-part the City’s motion to dismiss on November
28, 2017 (“November 2017 Order”). Dkt. # 20. Pittsfield filed a five-count amended
complaint on January 16, 2018, alleging regulatory taking claims under the Fifth
Amendment stemming from the City’s taking of Hotel’s property interest in floors 2–9
of the Pittsfield Building (“Hotel Property”) (Count I) and in the permit to build a hotel
thereon (“Permit”) (Count II). Dkt. # 29. Counts III–V allege substantive due process
violations pertaining to the effective revocation of the Permit, Development’s interest
in floors 23–40 (the “Tower”) and portions of floor 22 (together, “Development
Property”), and Residential’s interest in floor’s 10–12 (“Residential Property”),
respectively. Id. On March 12, 2019, the Court denied the City’s motion to dismiss the
amended complaint as well as its motion for partial reconsideration of the November
2017 Order (“March 2019 Order”). Dkt. # 54. On August 28, 2019, the Court also
denied the City’s motion for judgment on the pleadings seeking dismissal of the
amended complaint (“August 2019 Order”). Dkt. # 74.
Pittsfield filed its motion for partial summary judgment on June 15, 2022,
seeking judgment in its favor on Counts I and II, i.e., that there were uncompensated
takings of the Hotel Property and the Permit, respectively. Dkt. # 170. On July 1, 2022,
the City filed a motion to exclude the expert appraisal report and opinions of Pittsfield’s
expert, Stacy Nadolny, Dkt. # 174, and a motion seeking summary judgment on all five
counts of the amended complaint, Dkt. # 177. On September 29, 2023, we granted-inpart and denied-in-part the motion to exclude. Dkt. # 223. We now address both
Pittsfield’s and the City’s motions for summary judgment.
In resolving a motion for summary judgment, the Court views the evidence in
2
the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). The following facts are taken from the record and are
undisputed unless otherwise noted.1
The Pittsfield Building (the “Building”) is a historic building located at 55 East
Washington Street, Chicago, IL 60602 in downtown Chicago. In 2002, the Chicago
City Council enacted an ordinance designating the Building as a Chicago Landmark.
The landmark ordinance described the Building as one of Chicago’s most handsome
examples of a 1920s-era skyscraper, combining a distinctive, copper-clad, pyramidaltopped tower with decorate terra cotta cladding and bronze ornamentation that utilizes
both Gothic and Art Deco-style motifs.
The Building is 40 stories tall and was purchased as an investment by
Development on July 12, 2000, for $15,000,000. It has since been divided into four
separately deeded vertical subdivisions, three of which were owned by Pittsfield.
Pittsfield’s properties were identified under PIN 17-10-312-019.
Development is an Illinois LLC that owned and operated most of the ground
floor and all basement and sub-basement levels of the Building, along with the upper
portion of the Building, consisting of the Development Property. Development was
organized as an investment vehicle for its equity security holder to acquire, hold, and
earn a return on investment in the Building. Residential is an Illinois LLC that owned
1
Any asserted facts, or purported disputes of fact, that were immaterial or not supported by
admissible evidence have not been included.
3
the Residential Property. Hotel is an Illinois LLC that owned the Hotel Property. The
Development Property, Residential Property, and Hotel Property shall herein be
referred to as the “Pittsfield Properties.”
Development, Residential, and Hotel are related entities.
They have had
overlapping, but not identical, ownership, management, and control. Chicago Hotel
Partners (“CHP”), owned by Brian Scheinblum, was a member of Hotel but not of
Residential or Development. Scheinblum exercised management and control over
Hotel but not over Residential or Development. Development was initially owned by
a group of about ten investors and later owned by Robert Danial, Michael Sabet, and
three members of Sabet’s family, but these members were not the same for Hotel.
Beginning in 2004, the Building was zoned DX-16 Downtown Mixed Use
District (“DX-16”). At all times relevant herein, DX-16 zoning allowed for a mix of
uses, including retail, office, residential, and hotel, as a matter of right. DX-16 is the
highest designation (providing for a higher number of uses and greater residential
density than lower DX designations, such as DX-3) for a DX district which promotes
vertical mixed use projects that contain active ground floor uses, with no minimum
frontage requirements, no front set-backs, no side set-backs, an exemption from rear
set-back standards, and no building height limits.
On December 28, 2007, Development conveyed floors 13–21 of the Building to
55 East Washington Development, LLC, an unrelated third party. On October 27, 2009,
Development conveyed floors 9–12 of the Building to Residential.
4
The Building experienced a number of issues and received many building code
violations. Pittsfield’s architect, Dennis Kulak, appeared in court many times related
to the Building’s code violations. He testified that the Building had the most building
code violations that he had ever seen. There was often debris on the 6th floor of the
Building, which had a roof in a courtyard, that came from the middle floors of the
Building because people would throw things out the window, such as cans and
cigarettes. On July 20, 2017, a pedestrian was struck by a brick that fell from the
Building and the brick tore through her coat and wounded her back. Homeless people
entered through a broken back door and slept in the Building. Trespassers on the roof
of the Building were a constant problem, and there was an incident involving throwing
bottles. Trespassers would also spray graffiti in the Building’s interior, and break
windows and doors. Pittsfield’s property manager, Constance Rasmussen, stated the
building was a mess. Pittsfield had 24/7 security consisting of one security guard who
sat at the Washington Street entrance and did not move about the Building.
The Building suffered from plumbing issues, including leaks and flooding. Its
fire escapes were also in a state of disrepair and collapsed onto the sidewalk below.
After the Building was placed in receivership, CR Realty was appointed as the
first receiver in 2011, primarily to work on the Building’s elevators. CR Realty
expressed frustration with the progress of the receivership, noting that work was not
being completed and the Building’s management wanted to move at their own pace and
constantly failed to provide accurate information relating to work on the Building.
5
Pittsfield’s witnesses believed that development of a hotel within the Hotel
Property was an attractive option from a financial perspective because it provided
significantly enhanced value over other uses. Development arranged for Kulak to pay
the $150 application fee and write a letter to the Zoning Administrator for the City’s
Department of Housing and Economic Development (“DHED”). The letter, dated April
2, 2014, requested an advisory opinion that a 210-room hotel in the Hotel Property
would be an allowable use under the zoning then in place. On May 1, 2014, the DHED’s
Assistant Zoning Administrator wrote back to Kulak, advising that “a 210-room hotel
with associated hotel operations . . . is a permitted use in the DX-16 district and
therefore would be allowed to establish by-right at the subject site” pursuant to section
17-04-0207-II of the City’s Zoning Ordinance (“May 2014 Letter”). After receiving
the May 2014 Letter, Development organized Hotel on May 12, 2014, as an investment
vehicle to take title to the Hotel Property and develop and operate a hotel on the Hotel
Property. CHP, which was never a member of Development, also organized Hotel.
In reliance on the existing DX-16 zoning and the May 2014 Letter, Development
moved forward with arranging for the development of a hotel on the Hotel Property
(“Hotel Development Project”). This included expending hundreds of thousands of
dollars on hiring professionals such as engineers, architects, and consultants. The City
disputes that Development expended hundreds of thousands of dollars, pointing to
testimony from Kulak, as well as Pittsfield’s general contractor, George Karambinis of
Spartan Contractors, Inc. (“Spartan”), that they were regularly not paid for their work
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or were paid egregiously late.2
Within the Hotel Property, Development stopped marketing space for lease,
stopped renewing existing leases, and negotiated the relocation of rent-paying tenants
out of the Building. This created a significant drop off in revenue from the Pittsfield
Properties. By removing rent-paying tenants from the Hotel Property (and elsewhere
in the Pittsfield Properties), Development and Hotel denied themselves income from
ongoing Building operations, resulting in increasing losses in 2014–2017.3
On May 5, 2015, Hotel filed an application with the City’s Department of
Buildings to develop a 191-room hotel on the Hotel Property (“Application”). All
reviews associated with the Application, i.e., fire prevention, zoning, landmark,
plumbing, environmental, etc., were approved. The Application represented that the
cost of construction was $7.68 million. The budget, put together by Spartan, reflected
a project cost of $23.6 million.
Spartan was the sole general contractor listed on the Application. Spartan held
a Class B General Contractor License.
In relation to the Building demolition,
Rasmussen observed Karambinis directing children to remove debris from the Building.
On June 4, 2015, moving forward with plans for the Hotel Development Project,
2
The City also claims the allegedly paid invoices constitute inadmissible hearsay because Pittsfield
“identified no witnesses in their Rule 26(a) disclosures who could authenticate and render the
records admissible as business records.” Dkt. # 191, at 9. The parties did not provide the Court
with enough information to make that determination and we thus disregard the hearsay objection.
3
City disputes this fact, asserting that Hotel did not own the Hotel Property until June 4, 2015, and
that the rent was paid to Development, not Hotel.
7
Development conveyed floors 2–8 of the Building to Hotel and Residential conveyed
floor 9 to Hotel.
Throughout 2015, Pittsfield failed to pay taxes and received a Delinquent Tax
Notice from Cook County on August 6, 2015. It stated that the collective Pittsfield
Properties were sold for delinquent taxes. Pittsfield then owed $3,278,887 in unpaid
real estate taxes.
On December 10, 2015, the Department of Buildings issued the Permit, building
permit no. 100627025, to Hotel to convert the Hotel Property to a hotel with 191 rooms.
Hotel then started demolition on floors 7 and 8 of the Hotel Property.
Adam David Lynd was a prospective purchaser of the Building who expressed
an interest in converting the Building to residential use. On August 3, 2015, Pittsfield
entered into a contract (“Purchase Contract”) with Adam David Partners I, LLC
(“Prospective Buyer”), an entity created by Lynd, to sell all of the Pittsfield Properties
(except floors 13–21 that were previously conveyed to 55 East Washington
Development, LLC, an unrelated third party) to the Prospective Buyer for $36 million.
Prospective Buyer still wanted to purchase the Building even after learning about the
Ordinance because it wanted to build residential units, including luxury residential
units, which Lynd viewed as an economically viable use for the property. According
to Lynd, the Ordinance had nothing to do with the sale falling through—rather, it fell
through because of the personalities involved.
On September 15, 2015, representatives of the Prospective Buyer met with
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Alderman Reilly (the Alderman for the 42nd Ward, where the Building is located) and
his staff and discussed Hotel’s plans to convert the Hotel Property into a hotel. On
November 10, 2015, i.e., one month before the Permit issued, the Prospective Buyer
defaulted on the Purchase Contract and forfeited its $500,000 deposit to Pittsfield.
On December 22, 2015, the Lynd Company made a $1,500 campaign donation
to Citizens for Alderman Reilly.4
Lynd remained interested in purchasing the Building at the same price, even after
learning of Alderman Reilly’s opposition to the Hotel Development Project. On
February 9, 2016, Prospective Buyer sent a letter of intent offering to buy the Building
for $87 million, with $35.5 million allocated to Pittsfield’s portion of the Building.
On February 10, 2016, Alderman Reilly introduced Ordinance No. O2016-811
(“Ordinance”) to the City Council, which proposed to change the zoning of the Building
from DX-16 (Downtown Mixed Use District) to DR-10 (Residential Use Downtown
District). DR-10 zoning does not permit use as a hotel or office, thereby preventing
Hotel from proceeding with the Hotel Development Project or re-letting office space in
the Hotel Property that was previously vacated in preparation for the Hotel
Development Project.
In a letter dated March 9, 2016, to Daniel Solis, Chairman of the Committee on
Zoning, Landmarks, and Building Standards (“Zoning Committee”), Alderman Reilly
4
City contends this document is “inadmissible hearsay” but does not explain why.
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stated that the Ordinance was introduced to, inter alia: (1) “halt” a building program
(i.e., the Hotel Development Project); (2) “downzone and throw [the Building] into nonconformance”; (3) “assist new ownership”, i.e., the Prospective Buyer who already
defaulted on the Purchase Contract; and (4) “hit the pause button” on the Hotel
Development Project. At a Zoning Committee meeting on March 14, 2016, it was
recommended that the Ordinance be passed.
The Chicago City Council passed the Ordinance during a meeting held on March
16, 2016. The Ordinance contains no language indicating it was a temporary measure.
Prior to the Ordinance, Pittsfield was working with a real estate agency called
CBRE to market their interests in the Building.
CBRE procured 83 separate
confidentiality agreements from potential buyers. For example, DeBartolo Properties,
LLC offered to purchase the Building for $79 million, Pramana Global, LLC offered to
purchase the Building for $83 million, Brijus Capital, LLC offered to purchase the
Building for $72.3 million, and Akara Partners, LLC offered to purchase the Building
for $83.5 million.5 None of these offers progressed to a contract to purchase.
After the Ordinance went into effect, interest in purchasing the Building ceased,
or at the least, decreased. The City disputes this fact, pointing to testimony that the
Ordinance in some cases had no effect on the purchase offers and that one of the
potential buyers actually increased their offer after the zoning change was proposed, the
5
City objects to these letters of intent as hearsay but does not explain why John Jaeger of CBRE,
who was asked about these documents at his deposition, could not offer his personal knowledge
of the offers, or why the letters would not meet the business record exception as records of CBRE.
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fact that Pittsfield eventually sold their collective interests in the Building for $20.8
million, and the fact that Pittsfield chose to stop marketing their properties following
the Ordinance’s enactment.
Even after the Building was downzoned from DX-16 to DR-10, Pittsfield tried
to move forward with the Hotel Development Project. Scheinblum continued to
communicate with the City about the Hotel Development Project, including via an email
sent on June 2, 2016, to a supervisor in the Department of Buildings stating that
Pittsfield had only completed demolition of floor 8 but that the project was still active.
Karambinis went to City Hall to ask if the Permit was still valid and was told that it
was. Hotel continued working under the Permit after the Ordinance’s enactment.
On March 29, 2016, Scheinblum met with Alderman Reilly and his staff who
told him that even if a hotel was built, Hotel would not get a license to operate it.
To move forward with the Hotel Development Project, it was necessary to
procure financing or investment capital. The City disputes this fact, pointing to the
testimony of Brian Scheinblum (a representative of Hotel) that Pittsfield could have
funded the hotel themselves, and obtaining financing was not necessary.
Pittsfield attempted to make a deal with a potential purchaser/investor, Trevian
Capital, to either purchase Pittsfield’s interest in the Building or to fund construction of
a hotel but the deal was never made.
On behalf of Hotel, Scheinblum sought to secure a lease agreement with Hotusa
Group (“Hotusa”) for a hotel on the Hotel Property. This resulted in a letter of intent
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from Hotusa, dated September 28, 2015, whereby Hotusa would retain a purchase
option to acquire the hotel for $350,000 per key.6 At 191 rooms, this would be a
purchase option of $66,850,00. A lease was never entered into.
Prior to the Ordinance, Hotel was in talks with potential financiers. Hotel had a
signed term sheet, dated May 28, 2015, from a lender called TPG for $18 million. The
proposed project was converting the Hotel Property to a “196-key Crowne Plaza Hotel.”
Dkt. # 172-9.7 The “Franchise Agreement” section of the term sheet stated:
Prior to closing, Borrower shall be required to deliver a satisfactory
executed Franchise Agreement with InterContinental Hotels Group (IHG)
or equivalent hotel operator, for the establishment of a Crowne Plaza
Hotel, or equivalent flag, at the Property, with satisfactory documentation
under which IHG (or its equivalent) will attorn to Lender in the event of
the initiation or completion foreclosure.
Id. The City disputes this fact, pointing to Scheinblum’s testimony that signing a
franchise agreement with Crowne Plaza was not a prerequisite of obtaining financing
from TPG and that the TPG loan did not go forward because TPG “got out of the
business” and “were no longer doing those types of loans.” Dkt. # 191, at 28.
Hotel entered into a term sheet with IHG, which had Crowne Plaza and Kimpton
under its umbrella. Hotel never signed a franchise agreement with Crowne Plaza, nor
entered into an agreement with Kimpton to put a hotel in the Building. Scheinblum
believes that if the Building was not downzoned, Hotel would have been able to enter
6
City objects to the letter of intent as hearsay but does not explain why it would not meet the
business record exception as a record of Hotel.
7
The Court overrules City’s hearsay objection to the term sheet. See supra note 6.
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agreements with IHG, Crowne Plaza, Kimpton, or another comparable hotelier. He also
believes that Hotel could not have obtained a lease without getting the zoning changed
back, and that the downzoning was the reason Hotel was unable to procure a lease or
franchise agreement for the Hotel Development Project. According to Scheinblum, the
Hotel Development Project “was stopped cold in its tracks.” Dkt. # 172-5.
Robert Danial, Pittsfield’s manager, also believes that the Ordinance “put a halt
to our plans to develop a hotel on the Hotel Property”, “rendered the Hotel Property to
be useless”, and prevented and/or restricted Pittsfield’s ability to lease space in the
Building, thus rendering the Hotel Property “useless and burdensome liabilities as
[Pittsfield] could no longer generate sufficient income to sustain their operations.”
Dkt. # 172-4, ¶¶ 34–35. According to Danial, after the Ordinance, the only Pittsfield
Property that was “generating any meaningful income and operating at a profit was the
Residential Property.” Id., ¶ 40. The City disputes this fact, noting that Residential
declared bankruptcy in 2011, i.e., years before the 2016 Ordinance.
Alderman Reilly was “probably” aware at the time he sponsored the Ordinance
that, if approved, it could affect the Hotel Development Project’s financing.
Pittsfield engaged an auctioneer and held auctions for the Pittsfield Properties on
February 28, 2017, and March 1, 2017, but did not procure a buyer at that time.
The City never offered Pittsfield any compensation for their losses incurred as a
result of the Ordinance.
On March 26, 2017, Development filed a voluntary Chapter 11 bankruptcy
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petition with the United States Bankruptcy Court for the Northern District of Illinois
(“Bankruptcy Court”) in case number 17-09513. On May 31, 2017, the Bankruptcy
Court ordered the sale of the Pittsfield Properties. On June 27, 2017, an auction was
held where the Pittsfield Properties were sold for a total sales price of $20.8 million,
which closed on August 26, 2017. The proceeds of the sale were allocated as follows:
31% ($6.45 million) to Development; 38% ($7.9 million) to Residential; and 31%
($6.45 million) to Hotel for floors 2–9, of which $2.16 million was disbursed to CHP
(exactly matching the amount CHP paid for its interest in Hotel).
LEGAL STANDARD
Summary judgment is proper “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)
(citation omitted). “A genuine dispute as to any material fact exists if the evidence is
such that a reasonable jury could return a verdict for the nonmoving party.” Kvapil v.
Chippewa Cnty., 752 F.3d 708, 712 (7th Cir. 2014) (cleaned up).
In deciding whether a dispute exists, the Court must “construe all facts and
reasonable inferences in the light most favorable to the non-moving party.” Citizens
for Appropriate Rural Roads v. Foxx, 815 F.3d 1068, 1074 (7th Cir. 2016). The
nonmovant “must go beyond the pleadings” to demonstrate that there is evidence “upon
which a jury could properly proceed to find a verdict in [their] favor.” Modrowski v.
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Pigatto, 712 F.3d 1166, 1168–69 (7th Cir. 2013). “The existence of a mere scintilla of
evidence, however, is insufficient to fulfill this requirement.” Wheeler v. Lawson, 539
F.3d 629, 634 (7th Cir. 2008). And “[c]onclusory statements, not grounded in specific
facts” cannot defeat a motion for summary judgment. Bordelon v. Bd. of Educ., 811
F.3d 984, 989 (7th Cir. 2016) (cleaned up).
Not all factual disputes will preclude the entry of summary judgment, only those
that “could affect the outcome of the suit under governing law.” Outlaw v. Newkirk,
259 F.3d 833, 837 (7th Cir. 2001) (citation omitted). In deciding a motion for summary
judgment, the Court’s sole function is “to determine whether there is a genuine issue
for trial.” Tolan v. Cotton, 572 U.S. 650, 657 (2014). The Court cannot weigh
conflicting evidence, assess the credibility of witnesses, or determine the ultimate truth
of the matter, as these are functions of the jury. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986); Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704–
05 (7th Cir. 2011).
Local Rule 56.1 requires a party moving for summary judgment to submit a
statement of material facts as to which the movant contends there is no genuine issue
and entitles the movant to judgment as a matter of law. The party opposing the motion
for summary judgment is then required to file “any opposing affidavits and other
materials referred to in [Federal Rule of Civil Procedure 56(e)]” and a “concise
response” to the movant’s statement of facts containing “any disagreement, specific
references to the affidavits, parts of the record, and other supporting materials.” L.R.
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56.1(b)(1), (3).
“A general denial is insufficient to rebut a movant’s factual allegations; the
nonmovant must cite specific evidentiary materials justifying the denial.” Malec v.
Sanford, 191 F.R.D. 581, 584 (N.D. Ill. 2000). Local Rule 56.1(b)(3)(C) is not satisfied
by “purely argumentative denials,” id., or “evasive denials that do not fairly meet the
substance of the material facts asserted,” Bordelon v. Chi. Sch. Reform Bd. of Trs., 233
F.3d 524, 528 (7th Cir. 2000). If a response to a statement of material fact provides
only extraneous or argumentative information, this response will not constitute a proper
denial of the fact, and the fact is admitted. See Graziano v. Vill. of Oak Park, 401 F.
Supp. 2d 918, 936 (N.D. Ill. 2005). Similarly, if a statement of fact contains a legal
conclusion or otherwise unsupported statement, including a fact that relies upon
inadmissible hearsay, such a fact is disregarded. Eisenstadt v. Centel Corp., 113 F.3d
738, 742 (7th Cir. 1997). “The purpose of the 56.1 statement is to identify for the Court
the evidence supporting a party’s factual assertions in an organized manner[;] it is not
intended as a forum for factual or legal argument.” Malec, 191 F.R.D. at 585.
DISCUSSION
I.
Pittsfield’s Motion for Partial Summary Judgment
Pittsfield’s motion for partial summary judgment argues they are entitled to
judgment in their favor on Count I, Count II, and the City’s affirmative defenses for
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ripeness and mitigation of damages.8 For the following reasons, Pittsfield’s motion is
granted-in-part and denied-in-part.
a. Count II: Taking of Hotel’s Permit9
The Takings Clause provides: “[N]or shall private property be taken for public
use, without just compensation.” U.S. Const., Amdt. 5. The Takings Clause is intended
to compensate with money an individual whose property rights are impacted by
government action. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg’l Planning
Agency, 535 U.S. 302, 322 (2002). A Fifth Amendment takings claim requires the
Court to engage in a two-part analysis: (1) whether there was a protected property right,
and (2) whether the property was taken. See Pittsfield Dev., LLC v. City of Chi., 2017
WL 5891223, at *4 (N.D. Ill. 2017) (Kocoras. J.).
Pittsfield first argues that the Court already determined at the motion to dismiss
stage that Hotel held a protected property right in the Permit. The Court addressed this
issue in three separate orders, including in-depth legal analysis, at the pleadings stage
of this case. Dkt. # 20; Dkt. # 54; Dkt. # 74. In particular, the March 2019 Order stated
that, according to the allegations of the complaint, the Permit “fits squarely within the
Illinois’ vested rights doctrine” and that:
Pittsfield sufficiently pled facts affording property right interests to the
Permit. Pittsfield has alleged that it was issued a valid permit. As
Pittsfield moved for summary judgment as to all eight of the City’s affirmative defenses, but the
City chose to defend only two of them.
8
Because Pittsfield’s briefing begins with Count II then proceeds to Count I, we do the same here
for ease of reference.
9
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discussed at great lengths in the November Order, the Court need not
question whether Pittsfield’s demolition of three whole floors anticipated
some presupposed permit, because an actual permit, the Permit, was
issued after both extensive demolition and the spending of hundreds of
thousands of dollars on the Permit application.
Dkt. # 54, at 11, 13 (emphasis in original). We also concluded at that stage that
Pittsfield’s “vested right” in the Permit gave rise to a property interest compensable as
a taking because the right was “so complete and unconditional that it may be equated
with a property interest.” Id. at 15; see Bell v. City of Country Club Hills, 841 F.3d 713
(7th Cir. 2016). The Court’s view of the allegations was as follows:
“Whether acting through its judiciary or through its Legislature, a state
may not deprive a person of all existing remedies for the enforcement of
a right, which the state has no power to destroy, unless there is, or was,
afforded to him some real opportunity to protect it.” We agree with
Pittsfield that it had no real opportunity to protect its rights because
applying for a writ of mandamus was not a viable option after the []
Ordinance. Pittsfield has plausibly alleged that reputable hotel brands and
operators could not be reasonably expected to proceed with such a
development given the hostile political environment. The [] Ordinance
and lack of subsequent funding for Hotel’s development ultimate[ly]
forced the bankruptcy of the Pittsfield building and disposition of the
Properties at a liquidation sale. Pittsfield’s assertions are especially
plausible because the [] Ordinance was not enacted until after Alderman
Reilly publicly voiced his opposition to the operation of a hotel in the
Building, which curiously happened two months after the issuance of the
Permit.
Dkt. # 54 at 16 (citation omitted).
As we have stated, in the case of “vested property” rights in Illinois, “a ‘writ of
mandamus’ [is] the proper form of equitable relief”, Dkt. # 74 (citing Pioneer Tr. &
Sav. Bank v. Cook Cnty., 377 N.E.2d 21, 22 (Ill. 1978)). We previously found that
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Pittsfield sufficiently alleged a vested property right in the Permit because it “plausibly
alleged that reputable hotel brands and operators could not be reasonably expected to
proceed with such a development given the hostile political environment” and therefore
Pittsfield “had no real opportunity to protect its rights because applying for a writ of
mandamus was not a viable option after the [] Ordinance.” Id.
Pittsfield now presents evidence of the “hostile political environment,” such as
Alderman Reilly’s introduction of the Ordinance two months after the Permit issued,
his letter to Solis stating the Ordinance was intended to “halt” the Hotel Development
Project and throw the Building into non-conformance, and that none of the potential
purchases or lease agreements for the Pittsfield Building came to fruition after the
Ordinance was enacted. Although the City has shown that at least one potential buyer
(Lynd) was willing to go through with purchasing the Building even after learning of
the Ordinance because his company wanted to build luxury residential units in the
building, that says nothing about Hotel’s ability to proceed with developing a hotel
based on the Permit.
The City has not raised sufficient facts to defeat summary judgment on this basis
and we maintain our view that Pittsfield has demonstrated a property interest in the
Permit and that pursing a writ of mandamus was not viable.
i. Total Regulatory Taking of the Permit Under Lucas
We find that Pittsfield cannot show that a total regulatory taking of the Permit
under Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) occurred. Pittsfield
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contends the Ordinance “confiscated” the Permit, and offers a conclusory argument that
the Permit was “rendered worthless” by the Ordinance and therefore they were
“deprived of all economically beneficial uses” of the Permit under Lucas.
In response, the City argues that Lucas only applies to real property (i.e., land),
and cannot apply to personal property like a permit. We agree.10 See Horne v. Dep’t
of Agric., 576 U.S. 351, 360–61 (2015) (noting that with respect to regulatory takings,
“Lucas recognized that while an owner of personal property ‘ought to be aware of the
possibility that new regulation might even render his property economically worthless,’
such an ‘implied limitation’ was not reasonable in the case of land.”); Lucas, 505 U.S.
at 1027 (“And in the case of personal property, by reason of the State’s traditionally
high degree of control over commercial dealings, [the owner] ought to be aware of the
possibility that new regulation might even render his property economically worthless
. . . .”).
Pittsfield makes no meaningful response to this argument, stating only that it
“does not matter whether the analysis is under Lucas or Penn Central” and referencing
its response to the City’s summary judgment motion. Dkt. # 195, at 6. But that
response does not cite any cases in which a court applied Lucas to personal property.
See Dkt. # 189, at 21–22. Thus, Pittsfield’s response is waived. See Crespo v. Calvin,
824 F.3d 667, 674 (7th Cir. 2016) (“Arguments that are unsupported by pertinent
10
Although the Court held at the motion to dismiss stage that Pittsfield had sufficiently alleged a
Lucas taking, the City’s real property argument was not presented to the Court at that time.
20
authority[] are waived . . . . ”); Urban 8 Fox Lake Corp. v. Nationwide Affordable Hous.
Fund 4, LLC, 2019 WL 5963644, at *2 (N.D. Ill. 2019) (“Arguments unsupported by
applicable case law are deemed waived.”).
ii. Partial Regulatory Taking of the Permit Under Penn Central
Pittsfield also cannot show a partial taking of the Permit. When a regulation
impedes the use of property without depriving the owner of all economically beneficial
use, a partial regulatory taking under Penn Central Transp. Co. v. New York City, 438
U.S. 104 (1978), may be found on a “complex of factors”: (1) the economic impact of
the regulation on the claimant; (2) the extent to which the regulation has interfered with
distinct investment-backed expectations; and (3) the character of the government
action. Murr v. Wisconsin, 582 U.S. 383, 387 (2017).
Regarding the investment-backed expectations factor, Pittsfield contends they
had an expectation of building a hotel on the Hotel Property in light of the City’s May
2014 Letter, as well as the issuance of the Permit. Furthermore, Hotel was organized
as an investment vehicle to take title to, develop, and operate a hotel on the Hotel
Property, and Hotel laid out capital and sustained revenue losses in anticipation of
developing a hotel. The City counters that Development (not Hotel, who brings this
claim) is the entity that actually made expenditures and sustained monetary losses, and
cites evidence that Pittsfield failed to pay invoices from its general contractor.11
As to the “character of the government action” factor, Pittsfield initially argued
11
The City makes other arguments as well but does not support them with citations to the record.
21
only that the Ordinance was “draconian.” The City responded that Pittsfield’s argument
missed the mark because the factor “turns on whether the government action is akin to
a physical invasion by the government or more fairly characterized as some public
program adjusting the benefits and burdens of economic life to promote the common
good.” Dkt. # 192, at 11 (quoting Home Builders Ass’n of Greater Chi. v. City of Chi.,
213 F. Supp. 3d 1019, 1029 (N.D. Ill. 2016)). Pittsfield replied that the Ordinance
effectively “confiscated” the Permit, which is tantamount to a physical taking.
Dkt. # 195, at 9 (citing Wheeler v. City of Pleasant Grove, 664 F.2d 99, 100 (5th Cir.
1981), and G.T. Scott v. Greenville Cnty., 716 F.2d 1409, 1421 (4th Cir. 1983)).
As to economic impact, Pittsfield argues (among other things) that the Permit
was “rendered worthless” by the Ordinance. The Permit was granted to build a hotel
on the Hotel Property, but the Ordinance downzoned the Building from DX-16 to DR10 and DR-10 does not allow for hotel use.
The City responds that Pittsfield offers no evidence regarding the Permit’s value
at any time—their expert did not value the Permit—and the economic impact analysis
“primarily turns on consideration of the fair market value of the allegedly taken property
before and after the challenged regulation.” Dkt. # 192, at 8–9. We agree with the
City—Pittsfield has come forth with no evidence specific to the Permit to establish its
value before and after the Ordinance. The only evidence regarding value is with respect
to the Hotel Property, not the Permit specifically. We found in our order on the motion
to exclude that Pittsfield’s expert did not opine on the value of the Permit. Dkt. # 223,
22
at 8–9. And Pittsfield’s argument that the Ordinance rendered the Permit “worthless”
is conclusory. Pittsfield has therefore failed to provide any evidence of the Ordinance’s
economic impact on the Permit.
Even if the Ordinance did effectively confiscate the Permit, whatever value the
Permit held was in the fact that it gave Hotel the ability to move forward with the Hotel
Development Project. There is no evidence from which to conclude that the Permit
held its own monetary value separate from the Hotel Property or what impact there may
have been on that value. To the extent the Permit held value, it was subsumed into the
value of the Hotel Property. Summary judgment in Pittsfield’s favor on Count II is
therefore denied.
b. Count I: Taking of the Hotel Property
Next, we address Hotel’s claim that the Ordinance constituted a taking of the
Hotel Property. The City includes one cursory paragraph stating that Hotel lacked a
property interest in the Hotel Property, which merely cites the City’s own summary
judgment motion and does not include any additional law or factual support. See Dkt.
# 192, at 7. We therefore proceed to analyzing the takings claim under the relevant
frameworks, and find that Pittsfield has shown there was an unconstitutional taking
under Lucas. Summary judgment on Count I is granted in Pittsfield’s favor.
Hotel argues that it was “denied all beneficial economic use of the Hotel
Property” after the Ordinance was enacted, and thus they are entitled to summary
judgment in their favor on whether there was a Lucas taking. Dkt. # 170, at 11. It cites
23
the multiple letters of intent to purchase its interests in the Building, and the fact that
after the Ordinance, none of those transactions closed. Pittsfield’s manager testified
that he believed the Ordinance “rendered the Hotel Property to be useless” and
prevented and/or restricted Pittsfield’s ability to lease space in the Building thus
rendering the Hotel Property “useless and burdensome liabilities as [Pittsfield] could
no longer generate sufficient income to sustain their operations.” Dkt. # 172-4, ¶¶ 34–
35. Furthermore, within the Hotel Property, Development also stopped marketing space
for lease, stopped renewing existing leases, and negotiated the relocation of rent-paying
tenants out of the Building. This created a significant drop in revenue from the Pittsfield
Properties. By removing rent-paying tenants from the Hotel Property (and elsewhere
in the Pittsfield Properties), Development and Hotel denied themselves income for
ongoing Building operations, resulting in increasing losses in 2014–2017. Hotel also
demolished floors 7 and 8 of the Hotel Property after the Permit issued.
The City argues that Lucas cannot apply to Hotel’s interests in the Hotel Property
because “the Ordinance allows those floors to be developed under the full range of
economically viable uses permitted under DR-10 zoning.” Dkt. # 192, at 8. This onesentence, bare bones argument, with no citation to any record evidence, is insufficient
to defeat summary judgment. See Grant v. Trs. of Ind. Univ., 870 F.3d 562, 568 (7th
Cir. 2017) (“As the ‘put up or shut up’ moment in a lawsuit, summary judgment requires
a non-moving party to respond to the moving party’s properly-supported motion by
identifying specific, admissible evidence showing that there is a genuine dispute of
24
material fact for trial.” (cleaned up)); Singer v. Raemisch, 593 F.3d 529, 533 (7th Cir.
2010) (nonmovant “must do more than raise some metaphysical doubt as to the material
facts; he must come forward with specific facts showing that there is a genuine issue
for trial.” (cleaned up)).
The Court agrees with Pittsfield that the Ordinance “denie[d] all economically
beneficial or productive use” of the Hotel Property. See Lucas, 505 U.S. at 1019. The
facts are quite straightforward here—Pittsfield obtained the City’s blessing to move
forward with the Hotel Development Project. It then removed tenants, expended
money, and demolished several floors of the Hotel Property in reliance on that blessing.
The City then changed its mind and expressed its reversal in multiple ways, i.e., Reilly
introducing the Ordinance, Reilly’s letter to Solis stating the Ordinance was intended
to stop the Hotel Development Project and throw the Building into non-conformance,
and the City enacting the Ordinance.
Unable to move forward with the Hotel
Development Project, the purpose for which Hotel made its financial decisions
regarding the Hotel Property, the Hotel Property lost its economic value to Hotel. See
Lingle v. Chevron, 544 U.S. 528, 539–40 (2005) (“In the Lucas context, [] the complete
elimination of a property’s value is the determinative factor.”); Lucas, 505 U.S. at 1017
(“total deprivation of beneficial use is, from the landowner’s point of view, the
equivalent of a physical appropriation.”).
We therefore grant summary judgment in Pittsfield’s favor on Count I under the
Lucas framework, and do not proceed to the Penn Central analysis.
25
c. The City’s Affirmative Defenses
Finally, Pittsfield moves for summary judgment on the City’s eight affirmative
defenses: (1) no damages; (2) laches; (3) reservation of rights to add affirmative
defenses; (4) ripeness; (5) waiver; (6) failure to mitigate damages; (7) mootness; and
(8) estoppel. In response, the City chose to defend only its fourth (ripeness) and sixth
(mitigation of damages) affirmative defenses, and thus summary judgment is granted
in Pittsfield’s favor on the City’s first, second, third, fifth, seventh, and eighth
affirmative defenses.
The City’s fourth affirmative defense is a ripeness defense, stating that
Pittsfield’s “claims are not ripe for review in this Court because Plaintiffs have not
pursued compensation through state procedures and have not received a final decision
regarding the application of the regulations to the property at issue.” Dkt. # 59, at 39.
Pittsfield argues that the defense relies on the Supreme Court’s holding in Williamson
Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 105 S. Ct. 3108
(1985), which was abrogated by Knick v. Twp. of Scott, Pennsylvania, 139 S. Ct. 2162
(2019). The City responds:
This is a misstatement of the law. Knick overruled only one prong of the
Williamson County ripeness test, such that litigants no longer need[] to
seek just compensation in state court before seeking just compensation in
federal court. But the requirement that a litigant must seek a final decision
from the government regarding how the challenged land use regulation
applies to the property at issue remains good law. See Pakdel v. City and
Cnty. of San Francisco, CA, 141 S. Ct. 2226, 2228 (2021) (“When a
plaintiff alleges a regulatory taking in violation of the Fifth Amendment,
a federal court should not consider the claim before the government has
26
reached a ‘final’ decision.”).
Dkt. # 192, at 12.
On reply, Pittsfield cites the Court’s March 2019 Order finding that “Pittsfield
has plausibly alleged that reputable hotel brands and operators could not be reasonably
expected to proceed with such a development given the hostile political environment.”
Dkt. # 195, at 12 (citing Dkt. # 54, at 7). Because we find that Pittsfield has presented
evidence to support that ruling, i.e., that pursuing a writ of mandamus was not a viable
option because of the hostile political environment, see supra, we also find it
appropriate to grant summary judgment in Pittsfield’s favor on the City’s ripeness
defense.
The City’s sixth affirmative defense claims that Pittsfield “did not take
reasonable steps to mitigate their alleged damages” and so their claims are limited or
barred entirely. Pittsfield argues that they did attempt to mitigate their damages by
“unsuccessfully [trying] to see the Hotel Development Project through, even after the
[] Ordinance was enacted” and “unsuccessfully [trying] to auction their Properties.”
Dkt. # 170, at 14. But the City raises genuine factual disputes, arguing that Lynd was
still willing to purchase the Pittsfield Building (for more than they ultimately got for it
at the bankruptcy auction), but Pittsfield declined that offer.12
Therefore, “the jury
must determine whether [Pittsfield’s] . . . efforts constituted reasonable diligence to
12
The City also argues that Pittsfield failed to pursue a writ of mandamus, but we already rejected
that argument. See supra.
27
mitigate [their] damages.” Jankowski v. Dean Foods Co., 378 F. Supp. 3d 697, 713
(N.D. Ill. 2019) (citing Kasper v. Saint Mary of Nazareth Hosp., 135 F.3d 1170, 1176
(7th Cir. 1998)).
Summary judgment is granted as to the City’s fourth affirmative defense and
denied as to the City’s sixth affirmative defense.
II.
The City’s Motion for Summary Judgment
Next, we turn to the City’s motion for summary judgment, seeking judgment in
its favor on all five of Pittsfield’s claims. Because we granted Pittsfield’s summary
judgment motion as to a taking of the Hotel Property (Count I), we address only those
aspects of the City’s motion pertaining to the Permit (Count II) and the substantive due
process claims (Counts III–V). The City makes several arguments in support of its
motion: (i) Pittsfield did not have constitutionally protected property interests; (ii) the
Ordinance was not the actual and proximate cause of Hotel’s alleged injuries; (iii) the
Ordinance did not effectuate a partial regulatory taking; (iv) Hotel cannot establish a
complete taking of the Permit; and (v) Pittsfield’s substantive due process claims are
not viable. We do not address arguments (i) and (ii) because we find summary judgment
in the City’s favor is warranted on the merits of Counts II–V. For the following reasons,
the City’s motion is granted-in-part and denied-in-part.
a. Partial Regulatory Taking of the Permit Under Penn Central
The City argues that the Ordinance did not effectuate a partial regulatory taking
of the Permit under the Penn Central analysis. As stated above, when a regulation
28
impedes the use of property without depriving the owner of all economically beneficial
use, a partial regulatory taking under Penn Central may be found on a “complex of
factors”: (1) the economic impact of the regulation on the claimant; (2) the extent to
which the regulation has interfered with distinct investment-backed expectations; and
(3) the character of the government action. Murr, 582 U.S. at 387. We find that
summary judgment in the City’s favor is warranted as to the Permit under the Penn
Central test. Hotel has come forward with no evidence regarding the economic impact
of the Ordinance on the Permit and thus, even if the other two factors are closer calls,
no reasonable jury could find in Hotel’s favor.
As to the reasonable investment-backed expectations factor, the City argues that
a reasonable investor would not have expended the substantial amounts of money on
the Hotel Development Project that Hotel did because it “did not even own the subject
property due to an enormous tax delinquency” and would not have removed the few
rent-paying tenants it had “in anticipation of building out a pipe dream hotel.” Dkt.
# 179, at 20–21. Furthermore, it was “unreasonable to assume that [Hotel] would be
able to get all required licenses and permits to operate a speculative hotel after making
no efforts to obtain those authorizations,” and “Hotel’s expectations were all the less
reasonable given then egregious mismanagement of the building.” Id. at 21. Pittsfield
counters that it was reasonable to expect to develop a hotel on the Hotel Property when
the City issued the Permit to do so, and it was not reasonably expected that the City
would downzone the Hotel Property shortly thereafter. There is a question of fact
29
regarding whether Pittsfield’s investment-backed expectations were “reasonable.”
As to character of the government action, the City argues that it “acted in a
manner that balanced burdens and benefits of economic life for the common good” and
“regulated a building that had become a menace to the community while still permitting
the owners of the building to engage in a wide array of profitable and economically
viable property uses.” Dkt. # 179, at 22. In response, Pittsfield cites case law finding
takings occurred where property was effectively “confiscated” as well as evidence that
the purpose of enacting the Ordinance was to “halt” the Hotel Development Project and
“throw [the Building] into non-conformance.” Dkt. # 189, at 20–21. This is enough to
raise a dispute of material fact as to whether the Ordinance was akin to a “physical
invasion by the government” as opposed to an interference meant to “promote the
common good.” See Penn Central, 438 U.S. at 124.
The parties’ arguments as to the economic impact13 on the Permit are essentially
the same arguments discussed above in conjunction with Pittsfield’s motion for
summary judgment. See supra. As before, the City argues that the “economic impact
factor primarily turns on consideration of the fair market value of the allegedly taken
property before and after the challenged regulation,” Dkt. # 208, at 15, that Pittsfield
As to the first Penn Central factor, the City argues that the proper “denominator” for evaluating
economic impact is Pittsfield’s collective interests in the Building plus the Permit, rather than the
Permit on its own, and that the economic impact on these interests was too small to support finding
that a taking occurred. And even if the Permit is assessed separately, the City argues, this factor
still does not weigh in favor of establishing a taking. Because we find that, even assessing the
Permit alone, Pittsfield cannot make out a claim for the Permit under Penn Central, we do not
analyze this argument.
13
30
has “adduced no evidence regarding the Ordinance’s economic impact on the [Permit]”,
Dkt. # 179, at 16, and that the Permit is nontransferable, id. The City cites Seiber v.
U.S., 364 F.3d 1356, 1371 (Fed. Cir. 2004) for the proposition that “the failure to
provide evidence to support the existence of economic injury is fatal to a takings claim.”
Id. at 17. In response, Pittsfield cites only evidence regarding the value of the Hotel
Property, not the Permit. See Dkt. # 189, at 17. Pittsfield has come forward with no
evidence of economic impact on the Permit. As discussed supra, whatever value the
Permit may have had was subsumed into the value of the Hotel Property. So, to the
extent Pittsfield argues that the Permit was “confiscated” and therefore the taking was
“total,” it is not enough to defeat summary judgment. Even if the other two factors are
closer calls, the lack of evidence supporting economic impact means Pittsfield cannot
make out a claim under Penn Central.
b. Total Regulatory Takings under Lucas
Under Lucas, a regulatory taking occurs when a “regulation denies all
economically beneficial or productive use of land.” 505 U.S. at 1019. This requires a
“complete elimination of value” or a “total loss.” Tahoe-Sierra, 535 U.S. at 330.
Because Pittsfield has raised no genuine disputes of material fact, we grant summary
judgment in the City’s favor as to the Permit under Lucas.
As it did with respect to Pittsfield’s motion for summary judgment, the City
argues that Hotel cannot establish a total regulatory taking of the Permit under Lucas
because that analysis applies only to land or real property, as opposed to personal
31
property. Dkt. # 179, at 22–23 (citing Tahoe-Sierra, 535 U.S. at 330; Lucas, 505 U.S.
at 1015–19; Hawkeye Commodity Promotions, Inc., 486 F.3d 430, 441 (8th Cir. 2007);
Philip Morris, Inc. v. Reilly, 312 F.3d 24, 35 (1st Cir. 2002); Unity Real Estate Co. v.
Hudson, 178 F.3d 649, 675 (3d Cir. 1999); Parkridge Inv’rs, Ltd. P’ship v. Farmers
Home Admin., 13 F.3d 1192, 1199 (8th Cir. 1994)).
And as before, Pittsfield argues that “it does not matter whether or not Lucas
applies as Penn Central does in fact apply to [the] matter at bar.” Dkt. # 189, at 22. It
cites no cases in which a court applied Lucas to personal property. Id. at 21–22. Thus,
this argument is waived. See Crespo, 824 F.3d at 674; Urban 8 Fox Lake, 2019 WL
5963644, at *2.
The Lucas analysis is inapplicable to the Permit. See Horne, 576 U.S. at 360–61
(noting that with respect to regulatory takings, “Lucas recognized that while an owner
of personal property ‘ought to be aware of the possibility that new regulation might
even render his property economically worthless,’ such an ‘implied limitation’ was not
reasonable in the case of land.”); Lucas, 505 U.S. at 1027 (“And in the case of personal
property, by reason of the State’s traditionally high degree of control over commercial
dealings, [the owner] ought to be aware of the possibility that new regulation might
even render his property economically worthless . . . .”). Because we also found that
Pittsfield failed to raise a dispute of material fact regarding the Permit under the Penn
Central analysis, summary judgment is granted in the City’s favor on Count II.
32
c. Counts III–V: Substantive Due Process Claims
Finally, the City seeks summary judgment on Pittsfield’s substantive due process
claims in which Pittsfield argues that the Ordinance was not rationally related to any
legitimate interests of the City. Count III is brought by Hotel regarding its interests in
the Permit and Hotel Property, Count IV is brought by Development regarding its
interests in the Tower, and Count V is brought by Residential regarding its interests in
floors 10–12 of the Building. The City argues that summary judgment in its favor is
warranted as to all three claims for two reasons: (1) the Ordinance had rational bases;
and (2) Pittsfield had adequate state law remedies and there is no independent
constitutional violation. Summary judgment is warranted in the City’s favor on Counts
III, IV, and V because there were conceivable rational bases for the Ordinance.
Where a zoning ordinance interferes with an entity’s property interest,
“substantive due process requires only that the practice be rationally related to a
legitimate government interest, or alternatively phrased, that the practice be neither
arbitrary nor irrational.” Lee v. City of Chi., 330 F.3d 456, 467 (7th Cir. 2003). “A
zoning decision denies substantive due process only if it is invidious or irrational.”
Harding v. Cnty. of Door, 870 F.2d 430, 431 (7th Cir. 1989). “[F]ederal courts . . . are
not zoning boards of appeal. State and local land-use decisions are entitled to great
deference when constitutional claims are raised in federal court.” CEnergy-Glenmore
Wind Farm #1, LLC v. Town of Glenmore, 769 F.3d 485, 487 (7th Cir. 2014) (cleaned
up).
33
Here, the City puts forth four potential rational bases for the Ordinance. First, it
notes that the Building is a Chicago landmark that the City has a unique interest in
preserving and protecting. The City argues that the Ordinance was conceivably rational
because DR-10 allows for slightly fewer dwelling units than DX-16 and people were
prone to causing extensive property damage, throwing unlawful parties, trespassing on
the building’s roof, lobbing bottles, pieces of masonry, and debris from the Building
onto neighboring streets, and spraying graffiti in the building’s interior. According to
the City, “DR-10 zoning reduces the maximum permitted number of building occupants
and thus might conceivably address or mitigate these problems.” Dkt. # 179, at 24.
Second, the City asserts that “DR zoning generally permits more uniform, manageable
property uses than DX zoning” and “[e]nsuring that the property would be used in such
ways, and would not include a chaotic hodgepodge of uses permitted under DX zoning,
could conceivably aid building security and property managers in overseeing the
building, which Pittsfield’s own property manager acknowledge was a ‘mess.’” Id.
Third, the City argues that to the extent the Ordinance prevented hotel use, doing so
was conceivably rational given the myriad problems associated with the Building,
which would have posed dangers and other problems to hotel patrons and hotel
management companies and tarnished the reputation of the hotel industry within
Chicago. Fourth, the City argues that Pittsfield was repeatedly unresponsive to the
34
City’s efforts to restore the Building during a receivership proceeding 14, and therefore
it was conceivably rational for the City to employ alternative strategies to safeguard the
landmark building.
In its response, Pittsfield does not engage with any of the City’s asserted rational
bases. Instead, it incorrectly states that the City “fail[ed] to discuss a preliminary
inquiry—whether the government action was arbitrary and capricious[,]” before
arguing that there were conceivable rational bases for the Ordinance. But Pittsfield
cites no authority for this rigid, step-by-step test. The relevant case law, rather than
suggesting that a court must determine whether a regulation was “arbitrary and
capricious” before reaching the question of whether there was a rational basis for it,
instead asks those questions in tandem. See, e.g., Lee, 330 F.3d at 467; CEnergyGlenmore Wind Farm, 769 F.3d at 488 (to constitute a due process violation, “the action
must have been ‘arbitrary and capricious’ or ‘random and irrational.’”) (cleaned up).
Although Pittsfield makes arguments regarding why the Ordinance may have
been “enacted arbitrarily as a result of political animus,” Dkt. # 189, at 23, its failure to
respond to any of the City’s proposed rational bases constitutes waiver. See U.S. v.
Holm, 326 F.3d 872 (7th Cir. 2003) (“It is not the obligation of this court to research
and construct the legal arguments open to parties,” and “perfunctory and undeveloped
arguments” are waived.); Rose v. United States, 929 F. Supp. 305, 309 (N.D. Ill. 1996)
14
Illinois circuit judges placed the Building into receivership in 2011 and 2017. See City of Chi.
v. Pittsfield Building, No. 11-M1-401448; City of Chi. v. Jewelry Tower, LLC et al., 17-M1401501.
35
(“the paucity of argument on this issue in her response brief essentially waives the
claim”) (citing Bakalis v. Golembeski, 35 F.3d 318, 326 n. 8 (7th Cir. 1994)).
Furthermore, animus is not enough. “[A] given action can have a rational basis
and be a perfectly logical action for a government entity to take even if there are facts
casting it as one taken out of animosity.” Miller v. City of Monona, 784 F.3d 1113,
1121 (7th Cir. 2015). “If we can come up with a rational basis for the challenged action,
that will be the end of the matter—animus or no.” Fares Pawn, LLC v. Ind. Dep’t of
Fin. Insts., 755 F.3d 839, 845 (7th Cir. 2014); Flying J, Inc. v. City of New Haven, 549
F.3d 538, 548 (7th Cir. 2008) (“It is only when courts can hypothesize no rational basis
for the action that allegations of animus come into play.”). Even if Alderman Reilly
exhibited animus towards Pittsfield, that is insufficient since the Ordinance was passed
by the City Council as a whole, and not Alderman Reilly alone. See Strauss v. City of
Chi., 346 F. Supp. 3d 1193, 1206–07 (N.D. Ill. 2018); see also Flying J, 549 F.3d at
548 (government action receives “presumption of rationality”).
The City has suggested several bases that we find conceivably rational, and
summary judgment is therefore granted as to Pittsfield’s substantive due process claims.
CONCLUSION
Pittsfield’s motion for summary judgment [170] is granted-in-part and deniedin-part, and the City’s motion for summary judgment [177] is granted-in-part and
denied-in-part. Pittsfield’s motion is granted as to as to Count I and the City’s first,
second, third, fourth, fifth, seventh, and eighth affirmative defenses but denied as to
36
Count II and the City’s sixth affirmative defense. The City’s motion is denied as to
Count I and granted as to Counts II, III, IV, and V. Status hearing set for March 14,
2024 at 10:10 a.m. to discuss how the parties wish to proceed with the damages portion
of this case and whether resolution is possible. It is so ordered.
______________________________
Charles P. Kocoras
United States District Judge
Date: February 13, 2024
37
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