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Creek v. Village of Westhaven

March 19, 1996






Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 83 C 1851--Ann Claire Williams, Judge.

Before POSNER, Chief Judge, COFFEY, Circuit Judge, and SKINNER, District Judge. *fn1

POSNER, Chief Judge.



The plaintiff in this unfortunately protracted, thirteen-year-old civil rights suit appeals from the dismissal of the suit on summary judgment. The parties have showered us with 198 pages of briefs, but the essential facts, duly simplified, and the legal issues, can be stated briefly. Creek, the plaintiff, is a real estate developer who wanted to build a 216-unit apartment complex in the Village of Westhaven, Illinois. Westhaven, now known as "Orland Hills," is an all-white suburb of Chicago. Creek needed a permit from the Village in order to proceed. All was going swimmingly--the Village was eager for the development--until January 9, 1979, when the Village learned that Creek was asking the U.S. Department of Housing and Urban Development for federal rent support for 40 percent of the units. Creek contends--we must assume for purposes of this appeal correctly--that the Village, knowing that rent support would make the development attractive to black people and wishing to keep Westhaven white, determined to prevent Creek from going forward with the development. So it denied him the permit on pretextual grounds.

Creek sued in Illinois state court on August 29, 1979, for an injunction against the Village's withholding the permit. The court issued the injunction on April 14, 1980. This was a final judgment, terminating Creek's suit. The Village neither complied with the judgment nor appealed it. A month later the Westhaven Homeowners Association, acting in cahoots with the Village to block Creek's development, sued HUD in federal district court to invalidate HUD's approval of rent support for Creek's development. Creek returned to state court to seek enforcement of the injunction against the Village. On August 28, 1980, the court entered a consent order directing the Village to issue the permit and requiring the Homeowners Association, although it was not a party to the state court suit, to drop the federal suit. Which it did. But the Village defied the consent order by not issuing the permit. Shortly afterward, the defendants, who include not only the Village but also other municipal corporations and a variety of local officials, began what the parties describe as a "letter-writing campaign" but is better described as a far-reaching, concerted effort to enlist the efforts of state and federal officials to prevent Creek from building a rent-supported apartment complex in Westhaven. The motive, we assume for purposes of deciding this appeal, was racial.

On July 1, 1980, Creek had transferred his interest in the development to Pheasant Ridge Venture, a limited partnership in which he retained a 90 percent share as sole general partner, thus giving up 10 percent of his interest. He claims that he was forced to do this by the delays brought about by the defendants' unlawful behavior. A couple of months later Pheasant Ridge Venture transferred its interest to a joint venture with Shell Development Corporation. The joint venture, called PRV/Shell, reapplied for rent support, finally obtaining the necessary financial commitments in March 1983. Construction of the apartment complex was begun then and completed sometime before the end of 1993 (the record is unclear exactly when). PRV/Shell was permitted to intervene as a plaintiff in Creek's federal suit and eventually settled its claims for $1 million, out of which Creek, by virtue of his interest in the partnership, received some $136,000. The settlement agreement reserved "the individual claims not asserted or which later may be asserted by J. Fred Creek."

Creek contends that the complex as eventually built was smaller than it would have been but for the defendants' conduct (only 176 units) and less profitable. He seeks by way of damages the difference between the financial benefits that would have accrued to him had the defendants not delayed the project and the more modest though not negligible benefits that did accrue to him. He claims that the reduction in the size and profitability of the venture reflected, in part, changes in federal law. But he cannot recover damages for any lost profit that is due to those changes even if, as he also argues, he would have gotten the project under way before the changes went into effect had it not been for delay caused by the defendants' unlawful acts. Causation in the law is not to be equated to "but for" causation. E.g., Siefken v. Village of Arlington Heights, 65 F.3d 664, 666 (7th Cir. 1995); United States v. Marlatt, 24 F.3d 1005, 1007 (7th Cir. 1994); Brackett v. Peters, 11 F.3d 78, 82 (7th Cir. 1993). The delays did not make it more likely that federal law would change adversely to Creek. Therefore those changes cannot be deemed "caused" by the defendants, because, to count as a cause, an act must both be a necessary condition (but-for cause) of the result and make the result antecedently more likely to occur. Id. at 82; United States v. 1990 Toyota 4Runner, 9 F.3d 651, 652 (7th Cir. 1993). Creek's claim for damages caused by the changes in law would have merit, therefore, only if a delay in the project was itself a cause of legal changes adverse to him. For in that case the delay would have made it more likely that Creek would be harmed by changes in the law; it would not have been just a necessary condition, a but-for cause, of that harm.

The district judge, however, did not merely throw out part of Creek's damages claim; she threw out Creek's entire suit. The ground was res judicata. The district judge believed that Creek's only viable claim was the claim that he had asserted in the state court suit filed in 1979. That suit had been concluded by the entry of a final judgment on April 14 of the following year. Creek had actually requested damages in that suit, though he later abandoned that request. Neither the request for damages nor its abandonment has any significance to the issue of res judicata. You cannot split a claim into a request for damages and a request for injunction and litigate each in a separate suit. Torres v. Rebarchak, 814 F.2d 1219, 1224 (7th Cir. 1987); Meyers v. Kissner, 576 N.E.2d 1094, 1100 (Ill. App. 1991), rev'd on other grounds, 594 N.E.2d 336 (Ill. 1992); Restatement (Second) of Judgments sec. 24(1) and comment a (1982). To divide a claim in that way is precisely the vice against which the doctrine of res judicata, in its sense of claim preclusion (as distinct from issue preclusion, or in an older terminology collateral estoppel) is directed.

But that is provided that you can obtain both forms of relief in one suit. If, when the claim arises, the amount of damages cannot be quantified, then you can delay bringing your suit for damages until they can be quantified. E.g., Brunswick Corp. v. Riegel Textile Corp., 752 F.2d 261, 271 (7th Cir. 1984); Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 669 F.2d 490, 494 (7th Cir. 1982); Meekins v. United Transportation Union, 946 F.2d 1054, 1058 (4th Cir. 1991). We cannot find an Illinois case that says this in so many words, and it is Illinois law that determines the preclusive effect, in this federal suit, of an Illinois judgment. 28 U.S.C. sec. 1738. There is even some old law in Illinois to the effect that the plaintiff in a suit for breach of an employment contract cannot sue more than once and therefore must wait until the term of the contract expires before he can sue if before then his full damages would be speculative. Doherty v. Schipper & Block, 95 N.E. 74, 76 (Ill. 1911); Lewis v. Loyola University, 500 N.E.2d 47, 52 (Ill. App. 1986). The current validity of the rule is open to question, however, see Gasbarra v. Park-Ohio Industries, Inc., 655 F.2d 119, 122 (7th Cir. 1981), and there is no indication that the Illinois courts would extend the principle beyond the employment setting. We have even found an Illinois case in which res judicata is said not to apply in the case of a continuing or recurrent wrong, Airtite v. DPR Ltd., 638 N.E.2d 241, 244 (Ill. App. 1994), and this, as we are about to see, when properly qualified, is just another way of saying that you can bring successive suits if you cannot get complete relief in one suit, and describes Creek's second suit exactly.

Not only when the state court suit was filed in 1979 but also when it was concluded in April of 1980, and at all times in between, Creek knew that he had lost valuable time but he could not estimate his full damages because he did not know when he would, at last, obtain the permit and the necessary federal financing and thus be able to go forward with the project. He could not--or at least there is no indication that he did--know that in July of 1980 he would have to abandon his hope of developing the apartment complex all by himself and bring in a 10 percent partner, thereby surrendering 10 percent of the profits from the project. Of course, if he surrendered this expectation for a commensurate present-value sum, he would no more be injured than any other entrepreneur who decides to share risk and reward by selling a piece of his enterprise. But we must assume in the present posture of the case that he received inadequate consideration because of his distressed circumstances brought about by the defendants' conspiracy.

In a case of continuing injury the victim can bring successive suits unless it is feasible (as in a personal-injury suit for lost earnings caused by a permanent disability) to quantify the entire future damages and reduce them, through discounting, to a present value that can then be awarded to the plaintiff in a lump sum as his damages. That was not the case here, so Creek was entitled to bring a fresh suit even if the conduct complained of in it was the same conduct complained of in the state court suit. Id. at 244; Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 745 F.2d 441, 448-50 (7th Cir. 1984); Restatement, supra, sec. 26(1)(e).

There is an alternative basis for not treating the first judgment as res judicata--that the second (that is, the present) suit challenged unlawful acts committed after the first suit, and hence is based on different facts, see LaSalle National Bank v. County of DuPage, 856 F.2d 925, 931-33 (7th Cir. 1988), facts, moreover, that could not have been made the basis (or a basis) of the first suit because they did not yet exist. But for this to signify requires that those acts have resulted in injury beyond that caused by the acts complained of in the first suit. Creek cannot obtain damages without proving injury and, the project having been completed, damages are all he is seeking. The district judge thought that Creek could not prove injury, and her conclusion has common-sense appeal if, as the defendants argue, Creek cannot obtain damages for any injury that occurred after July 1, 1980, when he transferred his interest in the development to the first joint venture. The only fresh acts by the defendants between April 14, 1980, and July 1 of that year were the Village's refusal to issue the permit notwithstanding a court order and the Homeowners Association's lawsuit. The Association is no longer a party but the Village as a coconspirator would be liable for the Association's acts committed within the scope of the conspiracy. The Association's lawsuit is claimed to be such an act. Could these acts have precipitated Creek's decision to give up 100 percent ownership of the project? Probably not, but no stronger statement is possible and this one is not strong enough to justify summary judgment for the defendants. On April 14 it must have seemed to Creek that the last obstacles to HUD financing and the commencement of the project had been cleared away. When a month later the Village had not complied with the court order and the Homeowners Association had sued HUD to block the financing, imminent commencement was no longer in the cards. Granted, if negotiations for transferring Creek's interest to a partnership had begun before these untoward events, any inference that the events had caused the transfer would be greatly undermined. But apparently the transfer was a spur of the moment affair, and there is some possibility that the spur was the defendants' continued, pertinacious, last-ditch efforts to thwart Creek.

We have focused on events between April 14, 1980, and July 1, 1980, for Creek must prove that he was injured in consequence of those events in order to counter the defense of res judicata by showing that he was injured by wrongful conduct that occurred after the final judgment in his first suit. But that is only his alternative counter to the defense of res judicata. His main counter, which we also found meritorious, is that the first judgment was not res judicata because damages could not yet be quantified, and this ...

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