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Image Media Advertising, Inc. v. City of Chicago

United States District Court, N.D. Illinois, Eastern Division

December 7, 2017

IMAGE MEDIA ADVERTISING, INC., Plaintiff,
v.
CITY OF CHICAGO, JUDY FRYDLAND, Commissioner of the Department of Buildings for the City of Chicago, and PATRICIA SCUDIERO, Zoning Administrator for the City of Chicago, Defendants.

          MEMORANDUM OPINION AND ORDER

          Gary Feinerman, Judge

         Image Media Advertising, Inc. brought this suit under 42 U.S.C. § 1983 and Illinois law against the City of Chicago and its Building Commissioner and Zoning Administrator (collectively, the “City”), alleging that the denial of Image Media's permit applications for four oversized billboards (called “signs” in municipal parlance) violated the First, Fifth and Fourteenth Amendments and the Contracts Clause of the United States Constitution and their analogs in the Illinois Constitution. Doc. 1. The City moves under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint. Doc. 26. The motion is granted in part and denied in part.

         Background

         On a Rule 12(b)(6) motion, the court must accept the complaint's well-pleaded factual allegations, with all reasonable inferences drawn in Image Media's favor, but not its legal conclusions. See Smoke Shop, LLC v. United States, 761 F.3d 779, 785 (7th Cir. 2014). The court must also consider “documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice, ” along with additional facts set forth in Image Media's brief opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to Image Media as those materials permit. See Meade v. Moraine Valley Cmty. Coll., 770 F.3d 680, 682 (7th Cir. 2014). In setting forth those facts at the pleading stage, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A., 610 F.3d 382, 384 (7th Cir. 2010).

         Image Media owns and operates billboards in the Chicago area. Doc. 1 at ¶ 1. No later than 2014, Image Media began to make preparations to construct billboards, each exceeding 100 square feet, at four locations in Chicago. Id. at ¶¶ 19, 47; Docs. 1-2, 1-5, 1-6, 1-10.

         Applicants wishing to “maintain, erect, [or] install” certain billboards in Chicago must receive a permit from the City's Building Commissioner. Chicago Municipal Code (“MCC”) § 13-20-550. An applicant for a sign exceeding 100 square feet or 24 feet in height, however, must obtain both a “normal [sign] permit” from the Building Commissioner and a “city council order approving [the] sign.” MCC § 13-20-680. Moreover, before applying to the Building Commissioner, an applicant must “submit a duplicate of [its] application to the alderman of the ward in which the sign [was] to be located” and “submit to the city clerk an order for the approval or disapproval of the sign for introduction at the next regular meeting of the city council.” Ibid. At the time Image Media submitted that applications at issue in this suit, the City had a “longstanding practice of deferring to the alderman of the ward in which a sign [was] proposed with respect to the approval of sign permit applications.” Doc. 1 at ¶ 16.

         The Municipal Code provides that the Building Commissioner “shall issue a permit for a sign [that exceeds 100 square feet or 24 feet in height] unless” the City Council issues an “order disapproving the application” or the sign “for which the application is submitted is not or will not be in compliance with any provision of this chapter [Chapter 13-20, which sets forth, among other things, requirements for billboards].” MCC § 13-20-680. The Code further provides that “[t]he provisions of the Comprehensive Zoning Ordinances shall regulate the type and size and the permissibility of signs and their supporting structures.” MCC § 13-20-660. While “the building commissioner may not take final action on [an] application until the city council issues or is deemed to issue an order to recommend approval or disapproval of the application, ” she “must take final action on the application no later than 75 days after the order for the sign permit was submitted to the city clerk.” MCC § 13-20-680.

         Prior to commencing the application process for its four oversized billboards, Image Media entered into a lease agreement with Meade Electric Company to operate a billboard at 5401 West Harrison Street and an “Outdoor Advertising Sign Lease Agreement” with an unidentified non-party to operate a billboard at 3200 South Archer Avenue. Doc. 1 at ¶¶ 19, 40. Consistent with MCC § 13-20-680, Image Media submitted permit applications to the aldermen of the wards in which those properties are located and also submitted proposed approval ordinances to the City Council. Id. at ¶¶ 20, 41. In addition, Image Media submitted permit applications to the alderman of the ward encompassing two other properties on which it planned to install oversized billboards, 2100 North Elston Avenue and 2160 North Elston Avenue, and also submitted proposed approval ordinances to the City Council. Id. at ¶ 28.

         All four proposed ordinances received aldermanic approval, and all four were passed by the City Council. Id. at ¶¶ 21-24, 29-31, 42-44. The ordinances stated, in relevant part:

Be it Ordained by the City Council of the City of Chicago:
SECTION 1. That the Commissioner of Buildings is hereby authorized and directed to issue a sign permit … for the erection of a sign/signboard over 24 feet in height and/or over 100 square feet (in area of one face) at [the designated location] …
Notwithstanding any provisions of Title 17 of the Municipal Code of the City of Chicago (the Chicago Zoning Ordinance) to the contrary, the Commissioner of Buildings is hereby directed and authorized to issue a sign permit to the address referenced within this ordinance.

Id. at ¶ 48; see Docs. 1-2, 1-5, 1-6, 1-10. The Chair of the City Council's Committee on Zoning, Landmarks & Building Standards then informed the Building Commissioner that ordinances approving permits for the four properties had been enacted. Doc. 1 at ¶¶ 24, 31, 44.

         In reliance on its anticipated receipt of the permits, Image Media took certain actions and made certain expenditures. For the Harrison property, Image Media entered into a “First Amendment to Lease Agreement” with Meade Electric, which required Image Media to pay $10, 000 to extend its lease payment commencement date, and which specified that if construction of a new billboard did not commence by April 1, 2017, Image Media would forfeit that money and Meade Electric would have “the right to cancel the lease unless Image Media began lease payments.” Id. at ¶ 25. For the Archer property, Image Media's expenditures included “various fees and expenses to prepare for the erection of the sign.” Id. at ¶ 45. And for the Elson properties, Image Media entered into a Purchase Agreement with Elston Development and Elston Signs to purchase two existing signs, the property on which they were located, and a “New Billboard Easement Area” permitting it to erect its oversized billboards. Id. at ¶ 32. The Purchase Agreement had an initial purchase price of $2 million, which Image Media paid on January 25, 2017. Id. at ¶ 36.

         In late 2016, the Zoning Administrator informed Image Media that its applications were denied due to “other zoning ordinance restriction.” Id. at ¶ 51. The Zoning Administrator advised Image Media that if it wished to appeal, it would have to request “‘official' letters of denial from the Zoning Administrator.” Id. at ¶ 51. The Zoning Administrator never provided official letters, and the Building Commissioner, who “must take final action on [a sign permit application] … no later than 75 days after [a City Council] order for the sign permit [is] submitted to the city clerk, ” MCC § 13-20-680, failed to take action on Image Media's applications before the 75-day clock expired. Doc. 1 at ¶ 51.

         On or around April 19, 2017, the City Council ratified an amendment to MCC § 13-20-680. Id. at ¶ 54. The Amendment states:

No member of the City Council or other municipal officer shall introduce, and no Committee of the City Council shall consider or recommend, any ordinance or order that is contrary in any way to any of the requirements of this section or Title 17 of the Code [the Chicago Zoning Ordinance]. No member of the City Council shall propose, and no Committee of the City Council shall consider, any amendment to an ordinance which, if passed, would render the ordinance contrary to any of the requirements of this section or Title 17 of the Code. No member of the City Council may recommend action on, and no Committee of the City Council shall consider, any ordinance or order that authorizes the approval of a sign that does not comply with all applicable provisions of this section, Title 17 of the Code, and all other applicable Code provisions governing the construction and maintenance of outdoor signs, signboards, and structures.

Id. at ¶ 55; Doc. 1-13. The practical effect of the Amendment is to bar the City Council from passing ordinances for oversized billboards that do not comply with all requirements of the newly amended § 13-20-680 and of the Chicago Zoning Ordinance. That is, the Amendment bars the City Council from passing ordinances like Image Media's that directed the Building Commissioner to issue permits “[n]otwithstanding any provisions of … the Chicago Zoning Ordinance.” The Amendment also “repealed in their entirety” twenty ordinances, including the four Image Media ordinances referenced above, as well as “any other ordinance or order, authorizing a sign for which a permit has not issued, in contravention of [the Chicago Zoning Ordinance].” Doc. 1-13 at 3-4.

         The Building Commissioner then issued Notices of Sign Permit Denial for all four of Image Media's applications. Doc. 1 at ¶ 57. The Notices stated, in relevant part:

The sign permit application was reviewed by the Zoning Administrator and was denied on November 22, 2016 because the proposed sign is not allowed under the Chicago Zoning Ordinance. Section 13-20-660 of the MCC provides that the Zoning Ordinance shall regulate the type, size and the permissibility of signs and their supporting structures … .
Further, the sign permit application is not approved because the proposed sign does not have a city council order authorizing the sign as required under Section 13-20-680 of the MCC. Although [Image Media's ordinances were] passed [in Fall 2016] … [those ordinances are] no longer in effect. On April 19, 2017, ...

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