Villarreal v. Arnold

Filing 33

ORDER. Signed by the Honorable Manish S. Shah on 9/11/2017: Defendant's motion to dismiss, 26 , is granted. The first amended complaint is dismissed with prejudice. Enter judgment and terminate civil case. Notices mailed. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LETICIA VILLARREAL,
Plaintiff,

No. 17 CV 3141

v.

Judge Manish S. Shah

JONATHAN I. ARNOLD,
Defendant.
ORDER
Defendant’s motion to dismiss, [26], is granted. The first amended complaint
is dismissed with prejudice. Enter judgment and terminate civil case.
STATEMENT
In 2009, Jonathan Arnold filed a frivolous lawsuit against Leticia Villarreal.
See Arnold v. Villarreal, No. 09-cv-7399 (N.D. Ill.).1 Villarreal now brings this case
against Arnold for malicious prosecution. Arnold moves to dismiss this case on the
basis of res judicata and for failure to plead “special injury” as required by Illinois
law.
Before she filed this case, Villarreal filed an action against Arnold for abuse
of process, which I dismissed with prejudice. See Villarreal v. Arnold, No. 16-cv0603 (N.D. Ill.), Dkt. Entry 55. Villarreal’s claim for malicious prosecution had not
accrued at the time of that dismissal. That case was dismissed in February 2017,
and Villarreal prevailed in the appeal of Arnold’s suit against her in April 2017.
Villarreal could not have brought a malicious-prosecution case until she received a
favorable termination of Arnold’s suit. See Ferguson v. City of Chicago, 213 Ill.2d
94, 99 (2004); Cult Awareness Network v. Church of Scientology Int’l, 177 Ill.2d 267,
272 (1997). Res judicata acts as a barrier to claims that could have been brought as
Judge Grady granted Villarreal’s motion for summary judgment in that action. Arnold v.
Villarreal, No. 09-cv-7399, 2014 WL 2922810 (N.D. Ill. June 27, 2014). Arnold moved to
vacate or remand that judgment, but Judge St. Eve denied his motion. Arnold v. Villarreal,
No. 09-cv-7399, 2014 WL 4434580 (N.D. Ill. Sept. 9, 2014), aff’d, 853 F.3d 384 (7th Cir.
2017). Arnold appealed that decision, and the Seventh Circuit affirmed. Arnold v.
Villarreal, 853 F.3d 384 (7th Cir. 2017).
1

part of an earlier case. Rein v. David A. Noyes & Co., 172 Ill.2d 325, 339 (1996); see
Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001) (federal court
sitting in diversity applies claim-preclusion rules of the state in which it sits). This
malicious-prosecution claim is not such a claim, and so claim preclusion does not
bar this suit.
Malicious-prosecution actions are disfavored in Illinois. Thomas v. Hileman,
333 Ill.App.3d 132, 136 (2002). On one hand, there is a general principle that courts
should remain open for litigants to settle their rights without fearing that they will
be prosecuted for that choice. Indep. Plus, Inc. v. Walter, 367 Ill.Dec. 710, 716 (Ill.
App. 1st Dist., 2012). On the other hand, there is a societal interest in preventing
harassment through lawsuits. Id. In an effort to balance the general principle with
the societal interest, courts have decided that a malicious-prosecution claim
survives a motion to dismiss only when the plaintiff shows: (1) the defendant
brought the underlying suit maliciously; (2) the defendant did not have probable
cause to bring the underlying suit; (3) the underlying suit was terminated in the
plaintiff’s favor; and (4) the plaintiff suffered a “special injury.” Cult Awareness, 177
Ill.2d at 272. Villarreal’s complaint easily meets the first three elements. See [24]
¶¶ 14–16. The question is whether it satisfies the special injury requirement.
Special injury is defined as something greater than the injury that
necessarily results from any lawsuit, it is a “special damage beyond the usual
expense, time, or annoyance in defending a lawsuit.” Harmon v. Gordon, 712 F.3d
1044, 1056 (7th Cir. 2013) (quotation omitted). For example, damages in the form of
anxiety, lost time, or a damaged reputation do not qualify; those injuries are viewed
as “an unfortunate incident of many (if not most) lawsuits.” Doyle v. Shlensky, 120
Ill.App.3d 807, 817 (1983) (quoting Lyddon v. Shaw, 56 Ill.App.3d 815, 818 (1978)).
In practice, almost all cases where an Illinois court held that the plaintiff satisfied
the special injury element, the injury that the underlying action caused was
quantifiable. Thomas, 333 Ill.App.3d at 138; see also Bank of Lyons v. Schultz, 78
Ill.2d 235 (1980) (injunction restraining distribution of life insurance proceeds for
over nine years sufficiently interfered with property to constitute special injury).
Typically, damages in the form of an arrest, a seizure of property, a constructive
taking, or an interference with the person or property qualify as special injury.
Levin v. King, 271 Ill.App.3d 728, 730–31 (1995) (citing Schwartz v. Schwartz, 366
Ill. 247, 250–51 (1937)). Finally, the special injury must emanate directly from the
alleged malicious prosecution. Serfecz v. Jewel Food Stores, 67 F.3d 591, 603 (7th
Cir. 1995).
Villarreal says that Arnold knew that Villarreal’s financial circumstances
were “dire” and that the investment properties she owned in California were “a
significant financial asset and source of income.” [24] ¶¶ 25–26. Capitalizing on the
financial disparity between the two, Arnold filed the 2009 lawsuit in an attempt to
“paralyze Villarreal financially” so that she would be unable to defend her interests
2

in separate child custody proceedings occurring before a California court.2 Id. ¶¶ 20,
24. To that end, in the 2009 action, Arnold moved the court to freeze Villarreal’s
assets, including one of her investment properties. Id. ¶ 28; see also Villarreal v.
Arnold, No. 09-cv-7399 (N.D. Ill.), Dkt. Entry 9. As a result of Arnold’s actions,
Villarreal says she lost her source of income through the foreclosures of her
investment properties; her relationship with her daughter was damaged; and she
suffered severe emotional distress, mental anguish, and loss of enjoyment of life. Id.
¶ 30.
The allegation that Arnold filed the underlying action with the intention of
bankrupting Villarreal, without more, does not state a claim for malicious
prosecution. See Bank of Lyons, 78 Ill.2d at 240 (“While the institution of an
ordinary civil action [. . .], no matter how unfounded, vexatious, or malicious it may
be, does not give rise to an action for malicious prosecution,” unless, “there has been
some interference with the person or property of the defendant in connection with
the bringing [. . .] of the civil action.”) (citation omitted). Perhaps if Arnold had
succeeded in persuading the court in the underlying action to freeze her assets, the
result would be different because Villarreal’s right to freely use her property would
have been suspended during the pendency of the litigation. See Equity Assocs., Inc.
v. Vill. of Northbrook, 171 Ill.App.3d 115, 119–20 (1988). But, the loss of Villarreal’s
investment properties to foreclosure equates to the loss of income, and such
financial consequences of defending litigation are not special injuries. See Harmon,
712 F.3d at 1057.
Interference with child custody or the child-parent relationship does not have
the quantifiable characteristic that Illinois courts look for in special injuries.
Villarreal does not cite any authority to the contrary. Moreover, the complaint
appears to allege that these unquantifiable injuries directly emanate from the
custody dispute itself, and not from the underlying litigation here. There is no
support for the inference that the nature of the 2009 lawsuit visited the injury onto
Villarreal. Id. at 1056.
Villarreal’s argument that her complaint satisfies the special injury element
under the successive harassing suits theory is unsuccessful. See [31] at 8 (citing
Shedd v. Patterson, 302 Ill. 355, 360–62 (1922)). Although several federal judges
criticized Arnold’s pursuit of the underlying action and appeal, ultimately, he only
filed one action, which makes this case distinguishable from the types of cases in
which Illinois courts have found that the onslaught of litigation constituted a
special injury. See Cult Awareness, 177 Ill.2d 267 (large organization induced
members to engage in national campaign of litigation, comprising twenty-one
The complaint states that in addition to pursuing litigation and a custody battle, Arnold
was simultaneously withholding adequate financial support for their child, who lives with
Villarreal. [24] ¶¶ 20–21.
2

3

actions) Shedd, 302 Ill. at 361–62 (defendant brought s
);
3
t
successive lawsuits even
though the substa
antive issu “had be
ues
een finally and concl
lusively ad
djudicated” and
the cour “had rep
rts
peatedly decided that the defen
t
ndant had n grievance”).
no
The compla
T
aint is dism
missed for failure to plead spec
cial injury. Villarreal has
l
attempt
ted to plea a malic
ad
cious-prose
ecution cla
aim once b
before, and she filed an
d
d
amende complai
ed
int in resp
ponse to one motion to dismi
o
n
iss. Anothe amendm
er
ment
would be futile, so the dismis
b
o
ssal is with prejudice
h
e.
ENTER:
____
__________
___________
_____
Man
nish S. Sha
ah
Uni
ited States District Ju
s
udge
Date: Se
eptember 11, 2017
1

4