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Pelfresne v. Village of Lindenhurst

June 26, 2007

C. PELFRESNE, TRUSTEE UNDER ILLINOIS LAND TRUST NO. 25, DATED MAY 29, 1998, PLAINTIFF,
v.
VILLAGE OF LINDENHURST, AN ILLINOIS MUNICIPAL CORPORATION; ZALE EQUITIES, INC., AN ILLINOIS CORPORATION; ZALE EQUITIES, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY; ZALE GROUP, INC., AN ILLINOIS CORPORATION; NATURE'S RIDGE-LINDENHURST, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY; ZALE ENTERPRISES, INC., AN ILLINOIS CORPORATION; KB HOME, A DELAWARE CORPORATION; KB HOME ILLINOIS, INC., A DELAWARE CORPORATION; LASALLE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION, AS TRUSTEE UNDER TRUST NO. 11844; LEON JOFFE, AN INDIVIDUAL; GORDON WHITE, AN INDIVIDUAL; PAUL BAUMUNK, AN INDIVIDUAL; KEN CZYZEWICZ, AN INDIVIDUAL; MARK FEDERMAN, AN INDIVIDUAL; MARY MCCARTHY, AN INDIVIDUAL; FRED MESSMER, AN INDIVIDUAL; CARL NORLIN, AN INDIVIDUAL; BARBARA STOUT, AN INDIVIDUAL; PAT DUNHAM, AN INDIVIDUAL; CAROL ZERBA, AN INDIVIDUAL; AND JAMES B. STEVENS, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Plaintiff C. Pelfresne is the alleged trustee of a private land trust that owns a parcel of land in unincorporated Lake County, Illinois. A dispute arose when the Village of Lindenhurst, Illinois approved a petition to remove and relocate a road that had been situated along the edge of this parcel of land. Plaintiff filed suit seeking declaratory and injunctive relief and compensation for the loss of his property value resulting from the removal of the road. After the court dismissed Plaintiff's sole federal claim, the only remaining basis for subject matter jurisdiction in the case was diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Defendants argued that the requirements for diversity jurisdiction were not satisfied in the case and filed a motion for an award of sanctions under Rule 11 of the Federal Rules of Civil Procedure, for filing a lawsuit for which there is no subject matter jurisdiction. In response, Plaintiff argued, inter alia, that the court should deny the motion for sanctions because Defendants failed to comply with the procedural requirements of Rule 11(c)(1)(A). For the reasons set forth below, Defendants' motion for sanctions is denied.

BACKGROUND

A. The Parties

Plaintiff is a Michigan-based real estate developer who is the alleged trustee of a private land trust holding approximately 100 acres of land located on what was formerly the northeast corner of Savage Road and Grass Lake Road in unincorporated Lake County, Illinois. (Amended Complaint ¶¶ 1-2.) The lawsuit that underlies this motion for sanctions arose from the removal and relocation of a 1,000-foot portion of Savage Road situated along the edge of this property. (Id. ¶ 27.) As a result of the relocation, Plaintiff lost access to the road. He filed suit on September 30, 2003 seeking declaratory and injunctive relief and compensation for the loss of his property value. Plaintiff initially asserted claims of restraint of trade, trespass, private nuisance, and civil conspiracy against the following Defendants: real estate developers Nature's Ridge-Lindenhurst, LLC, Zale Equities, Inc., Zale Equities, LLC, Zale Group, Inc., and Leon Joffe (collectively, the "Zale Defendants"); LaSalle Bank National Association; and the Village, Village Trustees Ken Czyzewicz, Mark Federman, Mary McCarthy, Fred Messmer, Carl Norlin, Barbara Stout, Pat Dunham, and Carol Zerba, Village President Paul Baumunk, and Village Administrator James Stevens (collectively, the "Village Defendants"). On September 3, 2004, Plaintiff filed an Amended Complaint adding real estate development companies KB Home and KB Home Illinois, Inc. (collectively, the "KB Defendants"), Zale Enterprises, Inc., and Gordon White as Defendants.

Nearly all of the Defendants are citizens of Illinois. The Village is an Illinois municipal corporation located in Lake County, Illinois. (Id. ¶ 3.) Defendant Paul Baumunk is a citizen and resident of Illinois who served as President of the Village from approximately April 1999 through April 2003. (Id. ¶ 12.) Defendants Ken Czyzewicz, Mark Federman, Mary McCarthy, Fred Messmer, Carl Norlin, Barbara Stout, Pat Dunham, and Carol Zerba are current or former Trustees of the Village. (Id. ¶ 13.) All are residents and citizens of Illinois. (Id.) Defendant James B. Stevens is also a resident and citizen of Illinois and serves as the Village Administrator. (Id. ¶ 14.)

Defendant Zale Equities, LLC conducted real estate development and related activities as an Illinois limited liability company until it was involuntarily dissolved on October 31, 2002. (Id. ¶ 5.) Prior to its dissolution, Zale Equities LLC's principal place of business was in Lake County, Illinois, and its former members-Edward Zale, Roberta Zale, Amy Joffe, Melissa Norris, and Leon Joffe-are all citizens of Illinois. (Id.) Defendants Zale Equities, Inc. and Zale Group, Inc. were Illinois real estate development corporations with principal places of business in Lake County, Illinois. (Id. ¶¶ 4, 6.) Zale Equities was involuntarily dissolved on September 2, 2003, and Zale Group was involuntarily dissolved on November 1, 2000. (Id.) Defendant Zale Enterprises, Inc. is an Illinois corporation with is principal place of business in Lake County, Illinois; it conducts real estate development and related activities in, among other places, Lake County and Cook County, Illinois. (Id. ¶ 7.)

Defendant Nature's Ridge-Lindenhurst, LLC ("NRL") is in the business of "owning, developing, and marketing real estate" in Lindenhurst, Illinois. (Id. ¶ 8.) NRL is an Illinois limited liability company with its principal place of business in Lake County, and its members-Edward Zale, Roberta Zale, Amy Joffe, Melissa Norris, and Leon Joffe-are all citizens of Illinois. (Id.) Defendant LaSalle Bank National Association is a national banking association with its principal place of business in Chicago, Illinois. (Id. ¶ 9.) Defendant Leon Joffe, a resident and citizen of Illinois, is in the business of developing and marketing real estate in Lake and Cook counties

"[t]hrough Zale Equities, Zale LLC, Zale Group, Zale Enterprises, NRL, [LaSalle], and other entities." (Id. ¶ 10.)

Defendants KB Home and KB Home Illinois, Inc. are Delaware corporations with their principal places of business in Los Angeles, California. (Id. ¶¶ 15, 16.) The KB Defendants conduct real estate and related activities in, among other places, Lake County, Illinois. (Id.) On or about September 5, 2003, the KB Defendants acquired the assets of the Zale Defendants. (Id. ¶ 36.) Gordon White is in the business of developing and marketing real estate in Lake and Cook counties "[t]hrough Zale Equities, Zale LLC, Zale Group, Zale Enterprises, NRL, [LaSalle], KB Home, KB Illinois, and other entities." (Id. ¶ 11.) He is a citizen and resident of Illinois. (Id.)

B. Procedural History

On September 30, 2003, Plaintiff filed a complaint alleging restraint of trade in violation of 15 U.S.C. § 1, civil conspiracy, trespass, private nuisance, and requested a declaratory judgment and injunctive relief. Plaintiff alleged that the court had jurisdiction over the matter pursuant to 15 U.S.C. § 26 and 15 U.S.C. § 1337 based on the Defendants' alleged violation of 15 U.S.C. § 1. (Id. ¶ 13.) As another independent basis for the court's jurisdiction, Plaintiff cited 28 U. S. C. § 1332(a) and stated "that plaintiff is a citizen of Michigan, all defendants are citizens of Illinois, and the amount in controversy exceeds $75,000 exclusive of interest or costs." (Id.) The Zale Defendants and the Village Defendants separately moved to dismiss the complaint. Pelfresne v. Vill. of Lindenhurst, No. 03 C 6905, 2004 WL 1660812, *5 (N.D. Ill. July 23, 2004). In an opinion dated July 23, 2004, this court dismissed, without prejudice, Plaintiff's request for injunctive relief (Count I) and his claims for a violation of 15 U.S.C. § 1 (Count IV), civil conspiracy (Count V), trespass (Count VI), and private nuisance (Count VII). Id. at *17. The court granted Plaintiff leave to file an amended complaint. Id.

On September 3, 2004, Plaintiff filed his Amended Complaint which included several counts: Count I sought a declaratory judgment that the relocation of the road violated state law; Count II alleged a claim under Article I, Section 15 of the Illinois Constitution; Count III sought damages under 65 ILCS 5/11-91-1; Count IV alleged a violation of 15 U.S.C. § 1; Count V alleged unjust enrichment; Count VI alleged tortious interference with prospective economic advantage; Count VII alleged malicious injury and impairment of property rights; and Count VIII alleged a civil conspiracy. As in his original complaint, Plaintiff claimed two independent grounds for subject matter jurisdiction. (Amended Complaint ¶ 17.) First, Plaintiff claimed the court had jurisdiction over this matter pursuant to 15 U.S.C. § 26 and 15 U.S.C § 1337 based on the Defendants' alleged violation of 15 U.S.C. § 1. (Id.) Second, Plaintiff claimed that the court had diversity jurisdiction pursuant to 28 U. S. C. § 1332(a) because "Plaintiff is a citizen of Michigan, all defendants are citizens of Illinois, Delaware or California, and the amount in controversy exceeds $75,000 exclusive of interests and costs." (Id.)

On September 28, 2004, the Village of Lindenhurst filed a motion to dismiss Counts I, IV, and VIII. (Def. Mem. at 3.)*fn1 On October 19, 2004, the Zale and KB Defendants filed a motion to dismiss all counts directed at them. (Id.) In an opinion dated September 16, 2005, the court granted the Village Defendants' motion to dismiss Counts I, IV, and VIII, and granted the Zale and KB Defendants' motion to dismiss in part, dismissing Counts I, IV, V, and VII. Pelfresne v. Vill. of Lindenhurst, No. 03 C 6905, 2005 WL 2322228, *17 (N.D. Ill. Sept. 16, 2005). Among the dismissed counts was Count IV, Plaintiff's sole federal claim. Id. Because the court dismissed Plaintiff's sole federal claim, diversity jurisdiction pursuant to 28 U.S.C. § 1332(a) was the only remaining basis for subject matter jurisdiction. Plaintiff alleges that diversity jurisdiction is satisfied here because he is a citizen of Michigan and all Defendants are citizens of Illinois, Delaware or California, and the amount in controversy exceeds $75,000 exclusive of interest or costs. (Amended Complaint ¶ 17.) ...


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