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Parvati Corporation v. City of Oak Forest

December 23, 2010

PARVATI CORPORATION, PLAINTIFF-APPELLANT,
v.
CITY OF OAK FOREST, ILLINOIS, AN ILLINOIS MUNICIPAL CORPORATION, ET AL., DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:06-cv-01772-Amy J. St. Eve, Judge.

The opinion of the court was delivered by: Sykes, Circuit Judge.

ARGUED MAY 19, 2010

Before O'CONNOR, Associate Justice, and WILLIAMS and SYKES, Circuit Judges.

This appeal arises from a zoning dispute between Parvati Corporation and the City of "The Honorable Sandra Day O'Connor, Associate Justice of the United States Supreme Court (Ret.), sitting by designation pursuant to 28 U.S.C. § 294(a).

Oak Forest, Illinois, over a hotel in the city that Parvati owned but wanted to sell. In 2004 Parvati contracted to sell the property to Bethlehem Enterprise, Inc., contingent upon the latter's securing the City's approval to convert the hotel into a senior-living facility. The City's Zoning Commission denied approval because the proposed use was prohibited by a recently enacted zoning ordinance. Parvati and its buyer then sought judicial review in state court; they also asserted other claims for relief against the City and several of its officials. The suit was removed to federal court, and on July 20, 2007, a district judge upheld the Zoning Commission's decision. This resolved the administrative-review claim- which was dismissed with prejudice-but left the other claims pending. Parvati then moved for voluntary dismissal of its remaining claims. The motion was granted, and the judge entered judgment terminating the case.

About a year later, Parvati, acting without Bethlehem, moved for postjudgment relief under Rule 60(b)(3) of the Federal Rules of Civil Procedure, claiming that the City had misrepresented material facts during the zoning proceedings. Parvati asked the judge to vacate her July 20, 2007 order affirming the Zoning Commission's decision. By this time, however, Parvati no longer owned the hotel; it had conveyed the property to its mortgage lender to resolve foreclosure proceedings initiated a few months earlier. In the meantime Parvati filed a new lawsuit repleading the claims it voluntarily dismissed from this suit. The judge denied Parvati's Rule 60(b)(3) motion, and its Rule 59(e) motion for reconsideration as well, and Parvati appealed.

We cannot reach the merits. Based on the interim developments we have just described, this case is now moot. The relief Parvati wants-a decision vacating the court's July 20, 2007 order and reversing the Zoning Commission's action-is a remedy that can benefit only the property owner. Because Parvati no longer owns the property, it lacks standing to challenge the Zoning Commission's decision. It is true that Parvati's other claims-seeking damages from the City and several municipal officials-do not depend on its continued ownership of the property. But they were dismissed at Parvati's request and are now the subject of the second lawsuit. To the extent that the July 20, 2007 order-later reduced to a final merits judgment-has preclusive effect on Parvati's effort to resuscitate the dismissed claims in the second suit, that injury is entirely self-inflicted; it is not fairly traceable to the defendants' conduct. As such, the potential preclusive effect of the July 20 order does not suffice to supply standing; stated differently, it does not "unmoot" this case.

I. Background

Parvati is an Illinois corporation owned by Balkrishna Ambalal Patel and his wife Nirmala Balkrishna Patel. For several years Parvati owned and operated a Ramada Inn in the City of Oak Forest. In March 2004 Parvati agreed to sell the hotel to Bethlehem Enterprise, an Illinois corporation owned by the Bethlehem Temporary Missionary Baptist Church. The sale of the hotel was contingent upon Bethlehem receiving the City's permission to operate the property as a senior-living facility.*fn1

On February 1, 2006, the City's Zoning Commission held a hearing to consider whether to grant Bethlehem a commercial business license for this purpose. At that hearing City officials explained that the City had recently enacted Zoning Ordinance 2836, and under that ordinance a senior-living facility was not a permissible use of the property. On this basis the Commission denied Bethlehem's application for a business license.

Parvati and Bethlehem responded with this lawsuit against the City, the Zoning Commission, and certain city officials alleging a potpourri of federal and state-law claims. The suit was filed in state court and*fn2 sought judicial review of the Zoning Commission's decision pursuant to the Illinois Administrative Review Law, see 735 ILL. COMP. STAT. 5/3-110, as well as money damages for violation of 42 U.S.C. §§ 1981 and 1982; the Fair Housing Act, 42 U.S.C. §§ 3601 et seq.; and the guarantees of equal protection and due process under the Fourteenth Amendment and 42 U.S.C. § 1983.*fn3 The defendants removed the case to federal court. In an order dated July 20, 2007, the district court affirmed the Zoning Commission's decision and dismissed the state-law administrative-review claim. Parvati and Bethlehem then moved for voluntary dismissal of the constitutional and statutory claims. On September 28, 2007, the district court granted the motion, dismissed the remaining claims without prejudice, and entered a judgment terminating the case.*fn4

In early 2008 Parvati claims to have discovered information suggesting that the City and its officials misrep-resented material facts at the hearing before the Zoning Commission and in their filings in the district court. Specifically, Parvati maintains that city officials misrepresented the validity of Ordinance 2836 knowing that the City had failed to follow the proper legal procedures when enacting the ordinance. Parvati contends that because of these procedural anomalies, Ordinance 2836 is a nullity and Bethlehem's license application should have been evaluated under the prior zoning ordinance.

Accordingly, Parvati-acting without Bethlehem, which is no longer a party to the case -moved for post-*fn5 judgment relief under Rule 60(b)(3) alleging "fraud . . . , misrepresentation, or misconduct by an opposing party." This motion was filed on July 14, 2008, nearly a year after the district court entered its July 20, 2007 order affirming the Zoning Commission's decision. Parvati asked the district court to vacate its July 20, 2007 order and reevaluate the Zoning Commission's action under the prior zoning ordinance.

The City responded to the Rule 60(b)(3) motion on the merits, but also maintained that Parvati lacked standing to reopen the administrative-review claim because it had transferred ownership of the property to Mutual Bank, its mortgage lender, a few months earlier. Mutual Bank had initiated foreclosure proceedings against Parvati, and on March 18, 2008, the parties entered into an "Agreement in Lieu of Foreclosure" whereby Parvati conveyed the property to the bank in exchange for a release from its obligations ...


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