BBLI Edison LLC v. City of Chicago

Filing 32

MEMORANDUM Opinion and Order: For the stated reasons, the City of Chicago's motion to dismiss the amended complaint 17 is granted. Signed by the Honorable Mary M. Rowland on 3/7/2025. Mailed notice. (jg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BBLI EDISON LLC, a Delaware
limited liability company;
Plaintiff,

Case No. 24-cv-04925

v.

Judge Mary M. Rowland
Judge Young B. Kim

CITY OF CHICAGO,
Defendant.

MEMORANDUM OPINION AND ORDER
Plaintiff BBLI Edison, LLC, (“BBLI”) brings suit against the City of Chicago
(“Defendant” or “City”) alleging a provision relating to relocation fees pursuant to the
Keep Chicago Renting Ordinance, Municipal Code of Chicago, Ill. Chapter 5-14, is
impermissibly vague, overbroad, penal in nature, and unconstitutional. Before the
Court is the City’s motion to dismiss BBLI’s amended complaint under Federal Rules
of Civil Procedure 12(b)(6). [17, 17-1]. For the reasons stated herein, the City’s motion
is granted.
BACKGROUND
The Court incorporates the background section of its memorandum opinion
and order denying BBLI’s Motion for Preliminary Injunction and Temporary
Restraining Order by reference and assumes familiarity with the facts set forth
therein. [21] at 1–4. The incorporated factual allegations and the following factual
allegations taken from the amended complaint [8] are accepted as true for the
purposes of the motion to dismiss. See Lax v. Mayorkas, 20 F.4th 1178, 1181 (7th Cir.
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2021).
Plaintiff BBLI owns an apartment building with over 200 rental units in
Chicago, Illinois. [8] ¶ 1. It took ownership of the building after a foreclosure. Id. ¶29.
BBLI brought this suit challenging the Keep Chicago Renting Ordinance as amended
on July 21, 2021 (the “Amended Ordinance” or “Amended KCRO”). It alleged the
Amended KCRO violates Due Process, Equal Protection, and Takings clauses. BBLI
previously sought preliminary equitable relief prohibiting the City from enforcing the
provisions of the Amended KCRO relating to relocation fees. [7]. The Court denied
preliminary relief. [21].
Now before the Court is the City’s motion to dismiss the Amended Complaint
in its entirety. [17]. In its response to the City’s motion to dismiss, BBLI agreed to
voluntarily dismiss Count III, which raised an Equal Protection Clause claim, and
Count IV, which sought a writ of mandamus. [28] at 1 n.1.
STANDARD
“To survive a motion to dismiss under Rule 12(b)(6), the complaint must
provide enough factual information to state a claim to relief that is plausible on its
face and raise a right to relief above the speculative level.” Haywood v. Massage Envy
Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018) (quoting Camasta v. Jos. A. Bank
Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014)); see also Fed. R. Civ. P. 8(a)(2)
(requiring a complaint to contain a “short and plain statement of the claim showing
that the pleader is entitled to relief”). A court deciding a Rule 12(b)(6) motion
“construe[s] the complaint in the light most favorable to the plaintiff, accept[s] all

2

well-pleaded facts as true, and draw[s] all reasonable inferences in the plaintiff’s
favor.” Lax, 20 F.4th at 1181. However, the court need not accept as true “statements
of law or unsupported conclusory factual allegations.” Id. (quoting Bilek v. Fed. Ins.
Co., 8 F.4th 581, 586 (7th Cir. 2021)). “While detailed factual allegations are not
necessary to survive a motion to dismiss, [the standard] does require ‘more than mere
labels and conclusions or a formulaic recitation of the elements of a cause of action to
be considered adequate.’” Sevugan v. Direct Energy Servs., LLC, 931 F.3d 610, 614
(7th Cir. 2019) (quoting Bell v. City of Chicago, 835 F.3d 736, 738 (7th Cir. 2016)).
Dismissal for failure to state a claim is proper “when the allegations in a
complaint, however true, could not raise a claim of entitlement to relief.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 558 (2007). Deciding the plausibility of the claim is
“a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th
Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)).
ANALYSIS
I.

Alleged Violation of Due Process Rights
a. Void for Vagueness Claim
BBLI alleges the Amended KCRO is arbitrary and void for vagueness under

the Fourteenth Amendment “because its purpose is inapposite of its writing.” [8] ¶¶
87. The Amended Ordinance requires
the owner of a foreclosed rental property shall pay a one-time relocation
assistance fee of $10,600 to a qualified tenant unless the owner
negotiates in good faith for a new rental agreement that lasts at least 12
months, offers such qualified tenant a new rental agreement according
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to these terms, and the qualified tenant accepts the owner's offer in
writing.
MCC § 5-14-050(a)(1). BBLI alleges “[t]here is no logical way of interpreting the
Amended Ordinance other than to assume it is an ‘either’ ‘or’ situation.” [8] ¶ 32.
BBLI claims it understood its obligations under the ordinance as either to offer a new
lease or pay the relocation fee, but not both. Id. ¶ 41. It asserts “one would have no
reason to interpret the Ordinance in any other way” given that the KCRO’s stated
purpose is “to prevent vacant foreclosed residential buildings and preserve tenancies
in these properties” even after it was amended. Id. ¶¶ 22, 33. The City contends the
plain language of the Amended Ordinance is unambiguous and frames BBLI’s claim
as a policy dispute. [17-1] at 4–6.
Overly vague laws are unconstitutional under the Due Process Clause of the
Fifth and Fourteenth Amendments. Planned Parenthood of Ind. & Ky, Inc. v. Marion
Cty. Prosecutor, 7 F.4th 594, 598 (7th Cir. 2021) (citing Connally v. Gen. Const. Co.,
269 U.S. 385, 391 (1926)). To sustain a vagueness challenge, a plaintiff must show
the law (1) does not provide a person of ordinary intelligence a reasonable opportunity
to know what is prohibited, or (2) fails to provide explicit standards to prevent
arbitrary and discriminatory enforcement by those enforcing the statute. Id. at 604.
Perfect clarity is not required. Hill v. Colorado, 530 U.S. 703, 733 (2000) (“[B]ecause
we are condemned to the use of words, we can never expect mathematical certainty
from our language.”) (cleaned up). The degree of tolerated vagueness varies based on
the nature of the enactment. Vill. of Hoffman Ests. v. Flipside, Hoffman Ests., Inc.,
455 U.S. 489, 498 (1982). For example, laws with civil rather than criminal penalties
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do not require a high level of clarity because “the consequences of imprecision are
qualitatively less severe.” Id. So too with economic regulations because businesses
facing economic demands “can be expected to consult relevant legislation in advance
of action.” Id.
Outside the context of the First Amendment, “a plaintiff can only succeed in a
facial challenge by “establish[ing] that no set of circumstances exists under which the
Act would be valid,” i.e., that the law is unconstitutional in all of its applications.”
Washington State Grange v. Washington State Republican Party, 552 U.S. 442, 449
(2008) (citing United States v. Salerno, 481 U.S. 739 (1987)). Plaintiff does not
contend its claim implicates the First Amendment. The question then is whether
there is “no set of circumstances [ ] under which the Act would be valid,” which
includes in its application to BBLI. United States v. Salerno, 481 U.S. 739, 745 (1987).
An ordinary person would understand that tenants are entitled under the
Amended KCRO to the relocation fee even if the foreclosing landlord makes a good
faith offer to sign a new lease for the property. This meaning is reiterated in various
provisions and is clear when the Amended Ordinance is read as a whole. See, e.g.,
MCC § 5-14-040(a)(1) (stating a tenant “may reject the offer of a new rental
agreement and still receive $10,600 in relocation assistance”). Indeed, even BBLI
pleads that very interpretation is possible. [8] ¶ 25. Whether the Amended Ordinance
contradicts the stated purpose, as BBLI pleads, is a policy dispute, not the source for
a constitutional vagueness claim.
BBLI’s other vagueness contentions are insufficient to state a claim.

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Conclusory allegations that the City engaged in “arbitrary and discriminatory
enforcement” of the Amended KCRO without any elaboration regarding these
allegedly deficient enforcement actions do not support a due process claim. See [8] ¶¶
21, 91. Likewise, BBLI’s complaint that the Amended Ordinance lacks guidance as to
how many times an owner must offer a new lease or the relocation fee to the tenant
and that it does not contain a deadline for tenants to accept or decline such an offer
is insufficient. Id. ¶¶ 40–41. The Amended Ordinance requires the owner to negotiate
in good faith. MCC § 5-14-050(a)(1). Additionally, BBLI is seeking a more exacting
level of clarity than courts require of civil laws regulating economic activity. See Vill.
of Hoffman Ests, 455 U.S. at 498.
Finally, BBLI cannot save its claim by arguing the online “Notice to Tenant”
form is vague. [28] at 3–4. This argument fails for several reasons. First, although
the Amended Complaint acknowledges the existence of the online form, it is devoid
of any allegations that the form contradicts the Amended KCRO. [8] ¶ 37. A brief in
opposition to a motion to dismiss ordinarily cannot serve to amend the complaint by
expanding on the factual allegations contained therein. See e.g., Car Carriers, Inc. v.
Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir. 1984), cert. denied, 470 U.S. 1054
(1985). Second, the vagueness inquiry examines the text of the challenged law, not
summary administrative forms. See Pittway Corp. v. United States, 102 F.3d 932, 943
(7th Cir. 1996). BBLI cannot assert its vagueness claim based on extra-statutory text.
Finally, the complete plain text of the online form does not contradict the Amended
KCRO.

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BBLI cannot establish that the Amended KCRO is vague in all its applications.
Therefore, Count I is dismissed.
b. Procedural Due Process Claim
In Count II of the Amended Complaint, BBLI pleads that the City violated its
due process rights under the Fourteenth Amendment to meaningful notice and
opportunity to be heard when being deprived of fundamental liberty interests. [8] ¶¶
95–99. To plead a procedural due process violation, Plaintiffs must allege (1) a
cognizable property interest, (2) a deprivation of that interest, and (3) a denial of due
process. Palka v. Shelton, 623 F.3d 447, 452 (7th Cir. 2010). BBLI contends the
relocation fee provision of the Amended KCRO limits its use of its property, however,
the City made “no attempt to notify Plaintiff or any lender” before discussing and
enacting the Amended Ordinance. [8] ¶¶ 96–98.
The City disputes that Plaintiff is entitled to any process, and specifically not
individualized notice, other than as the legislative process provides. [17-1] at 6–7.
Parties challenging legislative actions are not entitled to any process beyond that
provided by the legislative process. Bi-Metallic Inv. Co. v. State Bd. of Equalization,
239 U.S. 441, 445–46 (1915); Texaco, Inc. v. Short, 454 U.S. 516, 535 (1982) (“it has
never been suggested that each citizen must in some way be given specific notice of
the impact of a new statute on his property before that law may affect his property
rights”); Protect Our Parks, Inc. v. Chicago Park Dist., 971 F.3d 722, 738 (7th Cir.
2020) (“legislative determination provides all the process that is due”) (quoting Dibble
v. Quinn, 793 F.3d 803, 809 (7th Cir. 2015)). A claim based on a failure to provide

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individualized notice of legislative action, therefore, is not cognizable.
In its opposition, however, BBLI abandons any claim that it was entitled to
individualized notice 1 and asserts that its procedural due process claim is rooted in
the City’s failure to follow the procedures mandated under the Illinois Constitution,
the Illinois Municipal Code, and the Municipal Code of Chicago. [28] at 6–7. But BBLI
only pleaded that the City “made no attempt to notify Plaintiff or any lender,” which
sounds like the individualized notice claim from which BBLI has retreated. [8] ¶98.
It did not allege any other facts about the legislative procedures much less violations
of specific statutory notice requirements. 2 See [8]. Instead, Plaintiff only complains of
violations of rights under the Fourteenth Amendment. BBLI’s allegations are
insufficient to identify denied process.
Plaintiff’s attempts to distinguish the City’s case law are unavailing. [28] at 6–
7. That there were multiple public hearings at which residents could raise objections
in Protect Our Parks is inconclusive here, where Plaintiffs have not pleaded any facts
about the legislative process. Conversely, according to BBLI, the Amended KCRO

BBLI’s position is contrary to the arguments it advanced in support of its motion for
preliminary injunctive relief ([7] at 7–8 (arguing no attempts were made to notify interested
parties of the public hearing at which the Amended KCRO was adopted and contending notice
would not have imposed a burden on the City)) and contrary to its other arguments opposing
the City’s instant motion ([28] at 7 (distinguishing Texaco on the grounds that the Amended
KCRO “only impacts certain residential landlords” and therefore the Amended Ordinance is
not a law “uniformly affecting all citizens” such that individual notice may be required and
Bi-Metallic Inc on the basis that the plaintiff had the individualized opportunity to appeal
his taxes through the usual process)). The Court previously rejected that BBLI and other
lenders were entitled to individualized notice. [21] at 6–7.
2 BBLI erroneously argues the City “fails to provide evidence that it has adhered to the proper
procedures mandated by the Illinois Constitution,” the “Illinois Municipal code,” and the
Municipal Code of Chicago. [28] at 6. At this stage of litigation, a defendant need only
establish the legal insufficiency of the complaint, not to present evidence to defeat the claims.
1

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was addressed during at least two hearings. [7] at 2 (citing the livestreamed July 14,
2021 Committee on Housing and Real Estate meeting and the July 21, 2021 City
Council meeting at which the Amended Ordinance unanimously passed). As a result,
the due process claim fails.
c. Substantive Due Process Claim
BBLI claims the Amended KCRO arbitrarily, irrationally, and illegitimately
deprives Plaintiff and property owners like BBLI of their property rights. [8] ¶¶ 149–
50, 158. BBLI also contends the Amended Ordinance “does not rationally advance
any legitimate government purpose.” Id. ¶¶ 148–49. These claims sound in
substantive due process. Id. ¶¶ 132–53 (Counts VII and IX). Count VIII presents a
facial challenge, which means Plaintiff bears the burden of establishing the Amended
KCRO’s application is unconstitutional in every conceivable circumstance. Ezell v.
City of Chicago, 651 F.3d 684, 698 (7th Cir. 2011) (“[A] law is not facially
unconstitutional unless it ‘is unconstitutional in all of its applications.’”) (citing Wash.
State Grange, 552 U.S. at 449). The City argues BBLI’s substantive due process
claims fail because BBLI misrepresents the requirements of the Amended Ordinance
and because the Amended KCRO is supported by a rational basis. [17-1] at 7–9. The
Court agrees. BBLI has not pleaded facts sufficient to establish a facial or applied
substantive due process claim.
Substantive due process is “a modest limitation that prohibits government
action only when it is random and irrational.” Gen. Auto Serv. Station v. City of
Chicago, 526 F. 3d 991, 1000 (7th Cir. 2008). Where no fundamental right is

9

implicated, substantive due process requires “only that the practice be rationally
related to a legitimate governmental interest.” Gen. Auto Serv. Station, 526 F. 3d at
1000. And a law will be deemed “constitutional even if it is unwise, improvident, or
out of harmony with a particular school of thought.” Goodpaster v. City of
Indianapolis, 736 F.3d 1060, 1071 (7th Cir. 2013) (quotation omitted).
The City has a legitimate interest in keeping newly foreclosed buildings
occupied with tenants, maintaining quality rental properties, and mitigating the
damaging effects of foreclosures on individuals and communities. MCC § 15-40-010.
Contrary to BBLI’s argument that the relocation fee provision incentivizes tenants to
vacate foreclosed properties ([28] at 9), the relocation fee provision facilitates the
KCRO’s goal of keeping buildings occupied. It encourages foreclosing lenders to offer
leases at rates agreeable to existing tenants and to address building code violations.
Moreover, this arguably serves the broader purpose of the Amended KCRO and
benefits the community at large, not just tenants of an individual building because
the Ordinance encourages maintaining affordable, quality housing in the area. See
[29] at 6. If some tenants choose to vacate even after being offered an affordable lease,
that does not destroy the relationship to the aims of the Amended KCRO. Likewise,
the City does not violate substantive due process by utilizing multiple avenues to
achieve its aims, such as addressing building code violations through the Amended
Ordinance and in building court. See Johnson v. Daley, 339 F.3d 582, 594 (7th Cir.
2003) (“Legislatures often, and legitimately, select multiple devices” to “achieve a
given objective”).

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In its response, BBLI newly contends the Amended Ordinance is another form
of rent control and a “way around” Rivera v. Bank of New York Mellon, 2021 IL App
(1st) 192188, which struck down the Original KCRO. [28] at 4. This argument is
unavailing. Unlike the provision of the Original KCRO that set a limit on the rental
rate foreclosing landlords could offer tenants, the Amended KCRO does not restrict
rental rates an owner may charge. Rivera, 2021 IL App (1st) 192188, ¶¶ 25, 27.
Furthermore, BBLI does not allege a violation of the Illinois Rent Control Preemption
Act. [29] at 7; see also Car Carriers, 745 F.2d at 1107 (factual allegations cannot be
added to a complaint through an opposition to a motion to dismiss).
Thus, the Amended KCRO is rationally related to the City’s goals to protect
renters and rental properties. Counts VII and IX are dismissed.
II.

Alleged Regulatory Taking
“The Takings Clause of the Fifth Amendment [made applicable to the States

through the Fourteenth Amendment] states that ‘private property shall not be taken
for public use, without just compensation.’” Knick v. Twp. of Scott, Penn., 588 U.S.
180, 184 (2019) (cleaned up); see also Murr v. Wisconsin, 582 U.S. 383, 392 (2017).
BBLI contends the Amended KCRO constitutes an unconstitutional taking in
contravention of the Fifth Amendment. [8] ¶¶ 121–42 (Counts VI and VII). BBLI
alleges two theories of liability: (1) the relocation fee provision benefits private
parties—renters—rather than the general public, thus violating Public Use Clause
(id. ¶¶ 121–31); and (2) the relocation payments are a taking in the form of an

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“improper monetary exaction” (id. ¶¶ 132–42). Plaintiff failed to allege facts to
plausibly support either theory.
a. Public Use Claim
BBLI contends the Amended KCRO enacts a taking for a private purpose. The
Constitution forbids the state from taking private property for the sole purpose of
transferring it to another private party, even with just compensation. Kelo v. City of
New London, 545 U.S. 469, 477 (2005); Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229,
245 (1984) (“A purely private taking could not withstand the scrutiny of the public
use requirement; it would serve no legitimate purpose of government and would thus
be void.”). Likewise, private property may not be taken under the mere pretext of a
public purpose when its actual purpose is to bestow a private benefit. Kelo, 545 U.S.
at 478. But “a transfer to a private owner can still be constitutional if it is done for a
‘public purpose,’” Protect Our Parks, Inc. v. Chicago Park Dist., 971 F.3d 722, 737 (7th
Cir. 2020). The concept of public use is broadly interpreted as “public purpose.” Kelo,
545 U.S. at 480. Governments are afforded “broad latitude in determining what
public needs justify the use of the takings power.” Id. at 483. “[A] taking should be
upheld as consistent with the Public Use Clause as long as it is ‘rationally related to
a conceivable public purpose.’” Id. at 490; see also Daniels v. Area Plan Comm’n of
Allen Cnty., 306 F.3d 445, 460 (7th Cir. 2002) (explaining the burden on the
government to show the existence of a public use is “remarkably light”).
BBLI alleges the relocation fee provision of the Amended KCRO mandates
owners of rental properties to transfer their money to tenants without restriction on

12

future use of the funds after the tenant receives the money. [8] ¶¶ 123–25. The
tenants are not required to use the relocation fee for rent or other relocation expenses
and may use the transferred money for any private purpose of the private party’s
choosing, thus conferring a benefit on the tenants that outbalances any benefit to the
general public. Id. ¶¶ 124–25. According to BBLI, the fee provision serves both a
private purpose and a private use. Id. ¶ 128.
The City argues the relocation fee provision is rationally related to the
Amended Ordinance’s goal of providing tenants with financial resources to relocate if
their new landlord raises rents or fail to correct unsafe housing conditions. [17-1] at
11–12. However, BBLI asserts the Amended KCRO does not advance any of the City’s
interests under certain circumstances, such as when there are no code violations, and
the landlord offers the tenant a reasonable lease without an increase of rent. 3 [28] at
5 n.3.
At least one federal court recognized a similar unrestricted lump-sum payment
from one private party (a landlord) to another (a tenant) is consistent with the Public
Use Clause. Levin v. City & Cnty. of San Francisco, 71 F. Supp. 3d 1072, 1080 (N.D.
Cal. 2014), appeal dismissed and remanded, 680 F. App’x 610 (9th Cir. 2017). San
Francisco’s relocation fee was paid by property owners to tenants experiencing nofault evictions to mitigate the consequences of eviction and prevent displacement.
There, the court reasoned that the city of San Francisco “could have concluded that
3 The City argues BBLI’s response abandons its Public Use claim. Failure to respond to an

argument result in waiver. Bonte v. U.S., N.A., 624 F.3d 461, 466 (7th Cir. 2020).
Nevertheless, the Court will address the claim, which BBLI references in a footnote. See [28]
at 5 n.3.
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at least some tenants will use the payments on housing and at least some will
purchase housing in San Francisco, which on the margin will lessen displacement
and promote community stability.” Id. So too here. Even if some tenants elect to move
and collect payment regardless of the renewal rate or condition of the building does
not sever the connection between the Ordinance’s stated purpose and its enforcement,
regardless of whether some of those tenants do not use the fee for housing.
BBLI has failed to allege sufficient facts to support its claim that the Amended
KCRO amounts to an impermissible private purpose taking under the Fifth
Amendment. At most, Plaintiff alleges that there are limited circumstances under
which enforcement of the Ordinance will not promote the City’s goals. Judicial review
over this claim is “extremely narrow” and the Court will not engage in judicial
oversight over complicated policy considerations. Accordingly, BBLI’s Taking for a
Private Purpose Claim is dismissed.
b. Exaction Claim
BBLI pleads the relocation fee payments are an impermissible monetary
exaction and taking of private property. To state a claim for a violation of the Takings
Clause, a plaintiff must allege “(1) that the governmental entity ‘took’ his property,
either through a physical taking or through unduly onerous regulations; (2) that the
taking was for a public use; and (3) that, no matter what type of property (real or
personal) was taken, the government has not paid just compensation.” Conyers v. City
of Chicago, 10 F.4th 704, 710–11 (7th Cir. 2021) (cleaned up). “The Supreme Court
has long recognized, however, that while property may be regulated to a certain

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extent, if regulation goes too far it will be recognized as a taking.” Mogan v. City of
Chicago, 115 F.4th 841, 847 (7th Cir. 2024) (cleaned up), reh’g denied, No. 22-2801,
2024 WL 4534752 (7th Cir. Oct. 21, 2024).
BBLI argues the Amended KCRO makes an extortionate demand for
property—potentially large sums of money in the form of relocation fee payments—
as a condition to the exercise of property rights—an owner’s right to remove a
building from the rental market. [28] at 8–9; [8] ¶ 133. BBLI asserts this violates the
unconstitutional conditions doctrine, as articulated in Nollan v. California Coastal
Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994).
Id. The City disputes that an exaction occurs under the Amended Ordinance and
instead contends the legislation should be analyzed as a regulatory taking. [17-1] at
12. The City also contends BBLI’s unconstitutional conditions doctrine argument
“repackages” BBLI’s exaction claim under a different name despite asserting the
same theory. [29] at 8–9.
Under the unconstitutional conditions doctrine, “the government may not
require a person to give up a constitutional right … in exchange for a discretionary
benefit conferred by the government where the benefit sought has little or no
relationship to the property.” Dolan, 512 U.S. at 385. “A predicate for any
unconstitutional conditions claim is that the government could not have
constitutionally ordered the person asserting the claim to do what it attempted to
pressure that person into doing.” Koontz v. St. Johns River Water Mgmt Dist., 570
U.S. 595, 612 (2013). In other words, BBLI must first show that the Amended KCRO

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constitutes a taking of a property interest under the Takings Clause to trigger the
unconditional conditions doctrine analysis. See Home Builders Ass’n of Greater
Chicago v. City of Chicago, 213 F. Supp. 3d 1019, 1026 (N.D. Ill. 2016). If the City
could not have ordered BBLI to take the actions required under the Amended
Ordinance without violating the Constitution, then the City must show an “essential
nexus” between the condition and the end it seeks to achieve, and a “rough
proportionality” between the condition and the proposed development.” Id.
BBLI has not plausibly stated a claim that the Amended Ordinance effects an
exaction. Therefore, there can be no valid unconstitutional conditions takings claim.
The Amended KCRO restricts the way the property owners may use its property by
imposing a relocation fee payment if tenants do not renew their leases. See Yee v.
Escondido, 503 U.S. 519, 532 (1992) (describing mobilehome park rent control
ordinance as “a regulation of [the mobilehome park owners’] use of their property,
and thus does not amount to a per se taking”). A restriction on the use of property—
including money—is not a taking that would require just compensation, unless the
restriction constitutes a physical taking or goes so far as to be a regulatory taking
under Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). See
Yee, 503 U.S. 519, 528–29 (“This Court has consistently affirmed that States have
broad power to regulate housing conditions in general . . . without paying
compensation for all economic injuries that such regulation entails.”).
Here, BBLI claims if the City “demanded that Plaintiff give its money to
displaced tenants, it would be responsible for a per se physical taking of Plaintiff’s

16

property in violation of the Constitution.” [8] ¶ 135. As the Court previously held, the
per se taking doctrine is inapplicable to BBLI’s alleged theory. [21] at 13; see also FCC
v. Fla. Power Corp., 480 U.S. 245, 252 (1987) (“statutes regulating the economic
relations of landlords and tenants are not per se takings”).
BBLI does not allege the Amended Ordinance deprives it of all economically
beneficial use of its land. When a regulation impedes a property’s use but does not
deprive the owner of all economic benefits, courts examine: (1) “the economic impact
of the regulation”; (2) “the extent to which the regulation has interfered with distinct
investment-backed expectations”; and (3) “the nature of the governmental action.”
Goodpaster, 736 F.3d at 1074.
The Amended KCRO is not a regulatory taking. BBLI has not alleged a
diminishment of its property’s value with and without application of the Amended
KCRO nor has it alleged the Amended KCRO will make it commercially impracticable
for it to continue renting at the property. See Concrete Pipe & Products of California,
Inc. v. Constr. Laborers Pension Trust for S. California, 508 U.S. 602, 645 (1993)
(“[M]ere diminution in the value of property, however serious, is insufficient to
demonstrate a taking.”). BBLI also has not alleged any interference with its
investment backed expectations because it acquired the Property well after the
enactment of the KCRO and the relevant amended version. See Goodpaster, 736 F.3d
at 1074 (finding no interference with investment backed expectations where
ordinance was in place for years and thus there should be no surprise that the
ordinance was later expanded). Finally, the Amended KCRO falls squarely within the

17

category of “public program[s] adjusting the benefits and burdens of economic life to
promote the common good.” Penn Central, 438 U.S. at 124. This character of the
regulation weighs against finding a taking. See Goodpaster, 736 F.3d at 1074–75.
Accordingly, BBLI’s Exaction and Taking of Private Property is dismissed.
III.

Request for Declaratory Relief
Finally, BBLI asserts a claim for declaratory relief. [8] ¶¶ 110–20 (Count V).

BBLI seeks a determination of several issues, most of which are addressed and
dismissed above, such as whether the Amended KCRO is invalid as vague,
impermissibly permits a taking, or violates due process. Id. ¶ 120. Unique to Count
V is Plaintiff’s request to have the Amended KCRO declared “impermissibly penal in
nature.” Id. ¶ 120(a). The City argues BBLI’s claim for declaratory relief fails. The
Court agrees and dismisses Count V.
The City argues the Declaratory Judgment Act does not create an independent
cause of action. [17-1] at 15 (citing Powers v. United States, 218 F.2d 828, 829 (7th
Cir. 1954)). Indeed, the Declaratory Judgment Act does not create new substantive
rights and a claim under the Act “must present a recognizable previously existing
justiciable controversy.” Powers, 218 F.2d at 829. Accordingly, BBLI’s claim for
declaratory judgment is not cognizable as an independent cause of action and is
dismissed. See Sieving v. Cont’l Cas. Co., 535 F.Supp.3d 762, 774 (N.D. Ill. 2021)
(dismissing claim “because requests for declaratory judgment . . . are not independent
causes of action” (cleaned up)); Keesler v. Electrolux Home Prods., Inc., No. 16 C 199,
2016 WL 3940114, at *3 (N.D. Ill. July 21, 2016) (striking count seeking declaratory

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relief because “the federal Declaratory Judgment Act provides only a form of relief,
not an independent claim for relief” (citation omitted)).
BBLI asserts it is entitled to declaratory relief even if it cannot assert an
independent claim for a declaratory judgment. [28] at 10 n.7. Courts have
discretionary power to issue declarations under the Declaratory Judgment Act
Deveraux v. City of Chicago, 14 F.3d 328, 330 (7th Cir. 1994) (citing 28 U.S.C. § 2201).
“[H]owever . . . courts may not exercise this discretionary power in the absence of an
‘actual controversy’ between the parties.” Id. The controversy must be “real and
substantial . . . as distinguished from an opinion advising what the law would be upon
a hypothetical state of facts.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 138
(2007) (cleaned up).
Here, BBLI has not plausibly pleaded an actual controversy to permit
declaratory relief. As described above, BBLI has stated a claim that the Amended
KCRO violates Due Process or the Takings clauses. Moreover, BBLI’s request for a
declaration that the Amended KCRO is impermissibly penal also fails to establish an
actual controversy. The City contends the Amended KCRO is civil in nature ([17-1]
at 15), but BBLI asserts its effect on lenders is punitive ([28] at 11 n.8). When
assessing whether a law is punitive, Courts defer to the legislature’s stated intent.
Hope v. Comm’r of Indiana Dep’t of Corr., 9 F.4th 513, 530 (7th Cir. 2021) (citing
Kansas v. Hendricks, 521 U.S. 346, 361 (1997)). Only the “clearest proof that the
statutory scheme is so punitive in either purpose or effect” will suffice to override
legislative intent to enact a civil law. Id. Allegations that the Amended KCRO

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punishes owner-landlords for exercising their property rights to remove their
buildings from the rental markets are insufficient. See, e.g., [8] ¶¶ 147, 157. The fact
that the Amended Ordinance allows for an additional payment if the owner does not
make a relocation payment within seven days of the tenant vacating the property
does not automatically make it punitive in nature. Id. ¶ 20.
Count V asserting a claim for declaratory judgment is dismissed.
CONCLUSION
For the stated reasons, the City of Chicago’s motion to dismiss the amended
complaint [17] is granted.

E N T E R:
Dated: March 7, 2025
MARY M. ROWLAND
United States District Judge

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