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Karen Jesso, Michael Jesso, Cafe Borgia, Inc., and Cafe Borgia Real Estate, LLC v. Daniel R. Podgorski

December 14, 2010

KAREN JESSO, MICHAEL JESSO, CAFE BORGIA, INC., AND CAFE BORGIA REAL ESTATE, LLC, PLAINTIFFS,
v.
DANIEL R. PODGORSKI, LIQUOR COMMISSIONER, IN HIS OFFICIAL CAPACITY; VILLAGE OF LANSING BOARD OF TRUSTEES, IN ITS OFFICIAL CAPACITY; AND VILLAGE OF LANSING, A MUNICIPAL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Sharon Johnson Coleman

Magistrate Judge Morton Denlow

MEMORANDUM OPINION AND ORDER

Plaintiffs Karen Jesso, Michael Jesso, Cafe Borgia, Inc. and Cafe Borgia Real Estate, LLC (collectively "Plaintiffs") filed a four count complaint against Defendants Daniel R. Podgorski ("Podgorski"), in his official capacity as Liquor Commissioner of the Village of Lansing, and the Village of Lansing ("Lansing" or "the Village")*fn1 stemming from Defendants' alleged failure to act upon Plaintiffs' application for a renewal of a liquor license for the 2008 calendar year. Plaintiffs now move the Court for summary judgment on Counts I and II of the complaint while Defendants seek summary judgment on all four counts. For the reasons that follow, Plaintiffs' Motion for Summary Judgment is granted in part and denied in part. Defendants' Motion for Summary Judgment is granted in part and denied in part.

BACKGROUND

The following relevant facts are undisputed, unless specified otherwise. Plaintiffs began operating an Italian restaurant in Lansing, Illinois in 1986. (Corrected Defs.'s Resp. to Pls.'s Rule 56.1 Statement of Facts ("Defs.'s Resp.") ¶ 1.) Lansing, Illinois was very conservative in issuing local liquor licenses. (Pls.' Resp. to Defs.' Rule 56.1 Statement of Facts ("Pls.' Resp.") ¶ 21.) In 1993, Plaintiffs applied for a local liquor license for calendar year 1994 and initiated legal proceedings when the application was denied. (Id. at ¶ 23.) As part of a settlement agreement, the Village issued Plaintiffs a local liquor license in 1995 to sell beer and wine. (Id. at ¶ 24.) From 1995 until 2007, Plaintiffs submitted a yearly renewal application and the Village approved Plaintiffs' local liquor license for the following calendar year. (Defs.' Resp. ¶ 31.) Defendant Podgorski served as the Mayor and Liquor Commissioner for the Defendant Village from 2001 until 2008. (Id. at ¶ 5.)

In 2004, Plaintiffs began renovations on their Lansing restaurant. (Id. at ¶ 32.) After the renovations were completed in 2005, the Village authorized an expansion of Plaintiffs' local liquor license to include hard alcohol in addition to beer and wine. (Id. at ¶ 33.) In 2005, Plaintiffs initiated plans to open a second restaurant in Munster, Indiana and subsequently listed their Lansing restaurant for sale or lease in 2006. (Pls.' Resp. ¶¶ 6, 8; Defs.' Resp. ¶ 36.) Plaintiffs allege that when they attempted to renew their Lansing liquor license in 2006 for the 2007 calendar year, Defendant Podgorski informed Plaintiff Karen Jesso that she made him "look like a fool" by persuading him to expand Plaintiffs' liquor license and then listing the Lansing restaurant for sale or lease. (Defs.' Resp. ¶¶ 40, 42.) Nonetheless, Defendants approved Plaintiffs' renewal application for the calendar year 2007. (Id. at ¶ 44.)

In August 2007, Plaintiffs opened their new restaurant in Munster, Indiana. (Id. at ¶ 45.) Plaintiffs moved their entire staff and management to the Munster location and closed the Lansing restaurant. (Pls.' Resp. ¶¶ 10-11, 13.) Plaintiffs have not operated the Lansing restaurant since August 6, 2007. (Id. at ¶ 17.) In late December 2007 when the Lansing restaurant was closed, Plaintiffs completed a liquor license renewal application for the calendar year 2008. (Id. at ¶ 31.) Plaintiffs alleged that the Lansing restaurant was only temporarily closed at the time that the renewal application was completed and that they were considering different alternatives to reopen the restaurant. (Defs.' Resp. ¶ 48.) The Village did not renew Plaintiffs' local liquor license for calendar year 2008. (Pls.' Resp. ¶ 34.) Defendants admit that the Lansing Liquor Code requires a formal proceeding and official record before an individual may file an administrative appeal of a Liquor Commission decision. (Defs.' Resp. ¶ 60.) The parties dispute whether Defendants provided Plaintiffs with notice or a public hearing regarding Plaintiffs' renewal application for calendar year 2008. (Id. at ¶ 57.)

On May 27, 2008, Plaintiffs filed a four count complaint asserting various constitutional claims stemming from Defendants' alleged failure to act upon Plaintiffs' renewal application for a local liquor license for 2008. (Dkt. No. 1.) The complaint alleges that: Defendants violated Plaintiffs' due process rights as protected by the Fourteenth Amendment when Defendants failed to act upon Plaintiffs' liquor license renewal application without providing Plaintiffs with any notice or an opportunity to be heard (Count I); Defendants violated Plaintiffs' due process rights as protected by the Fifth Amendment when Defendants failed to offer just compensation when they refused to renew Plaintiffs' liquor license for 2008 (Count II); Defendants violated the equal protection clause of the Fourteenth Amendment by treating Plaintiffs differently than others similarly situated, including Moeller Lanes, with no rational basis and rooted only in Defendant Podgorski's illegal animus for Plaintiffs (Count III); and Defendants violated the equal protection clause of the Fourteenth Amendment by treating Plaintiffs differently than others similarly situated, including Pipes and Pizza Restaurant, with no rational basis and rooted only in Defendant Podgorski's illegal animus for Plaintiffs (Count IV). (Id.)

LEGAL STANDARD

Summary judgment is appropriate when the "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 judgment as a matter of law." Vision Church v. Vill. of Long Grove, 468 F.3d 975, 988 (7th Cir. 2006); FED. R. CIV. P. 56(c). The moving party bears the initial burden of demonstrating that there is no genuine issue of material fact, and judgment as a matter of law should be granted in its favor. Vision Church, 468 F.3d at 988. Once the moving party has met the initial burden, the non-moving party must offer more than a mere scintilla of evidence to survive summary judgment. Roger Whitmore's Auto Servs. v. Lake County, Ill., 424 F.3d 659, 667 (7th Cir. 2005). The non-moving party must produce specific facts showing there is a genuine issue of material fact, and that the moving party is not entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). All evidence and inferences must be viewed in the light most favorable to the non-moving party. Id. at 255.

A party moving for summary judgment in this district must comply with Local Rule 56.1. N.D. ILL. R 56.1(a). Under the rule, the moving party is required to file a statement of material facts as to which the moving party contends there is no genuine issue and that entitles the moving party to a judgment as a matter of law. Cracco v. Vitran Express, Inc., 559 F.3d 625, 632 (7th Cir. 2009); LR56.1(a)(3). The opposing party is required to file a response, which in the event of a disagreement, includes specific references to the affidavits, parts of the record, and any other supporting materials relied upon. Cracco, 559 F.3d at 632; N.D. ILL. R. 56.1(b)(3). When a responding party fails to dispute the facts set forth in the moving party's statement in the manner dictated by the rule, those facts are deemed admitted for purposes of the motion. Cracco, 559 F.3d at 632.

DISCUSSION

1. Count I -- Procedural Due Process Violation

To establish a procedural due process violation, a plaintiff must show: (1) a cognizable property interest; (2) a deprivation of that property interest; and (3) a denial of due process. Moss v. Marion, 473 F.3d 694, 700 (7th Cir. 2007). Plaintiffs rely upon Club Misty, Inc. v. Laski, 208 F.3d 615, 618 (7th Cir. 2000) and Reed v. Shorewood, 704 F.2d 943, 949 (7th Cir. 1983) for the proposition that a business owner's interest in the renewal of its liquor license is a property right for purposes of the Fourteenth Amendment. (Dkt. No. 55 pp. 10-11.) Defendants contend that Plaintiffs had no federally protected property right to a liquor license for a restaurant that closed prior to the filing of the renewal application. (Dkt. No. 59 pp. 3-6.) Defendants further argue that the Illinois Liquor Control Act requires the existence of a suitable place of business as a prerequisite to the issuance of a liquor license. (Id. at p. 6; 235 ILCS 5/6-1 ("[a]ny licensee may renew his license at the expiration thereof, ...


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