Engle v. Illinois Department of Financial and Professional Regulation

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ELIZABETH ENGLE, )

)

Plaintiff, ) 19 C 402

)

v. ) Judge John Z. Lee

)

ILLINOIS DEPARTMENT OF )

FINANCIAL AND PROFESSIONAL )

REGULATION and MARIO J. TRETO, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff Elizabeth Engle filed this action under 42 U.S.C. § 1983, alleging that

Defendants, Illinois Department of Financial and Professional Regulation (“IDFPR”)

and its Acting Director, Mario J. Treto,1 have inappropriately commenced

administrative proceedings to revoke her real estate appraiser license.

Contemporaneously with the filing of her complaint, Engle moved for preliminary

injunctive relief to stop the administrative process. Defendants, in response, have

moved to dismiss the complaint based on the Younger abstention doctrine. For the

reasons stated herein, Engle’s motion for a preliminary injunction or temporary

restraining order [2] [3] is denied, and Defendants’ motion to dismiss [9] is granted.

This case is dismissed without prejudice to the extent that Plaintiff wishes to proceed

in state court. Civil case terminated.

1 The Court substitutes Mario J. Treto, Acting Director of the IDFPR, for Jessica Baer,

former Director of the IDFPR, pursuant to Fed. R. Civ. P. 25(d).

Factual and Procedural Background2

The IDFPR is an Illinois agency that regulates the practice of real estate

appraisals pursuant to the Real Estate Appraiser Licensing Act of 2002, 225 Ill.

Comp. Stat. 458/1-1 et seq. Compl. ¶ 10, ECF No. 1. Engle, an Illinois resident,

trained to receive such a license from 2011 to 2014. See id. ¶¶ 7, 13–14, 21.

To receive a real estate appraiser license in Illinois, an applicant must pass a

licensing exam, complete 2,500 hours of training, and submit a written application,

among other things. Id. ¶ 10. For the training hours, applicants must complete

appraisals under the supervision of an authorized licensed appraiser. Id. ¶ 11.

Applicants record their training hours on IDFPR forms known as “Experience Logs,”

which are signed by the supervising appraiser and submitted along with the

application materials. Id. The Experience Logs are used in conjunction with another

IDFPR document known as the “Matrix,” which contains recommended training

hours for given types of appraisals. Id.

The IDFPR’s Disciplinary Board reviews applications and decides whether to

grant or deny real estate appraiser licenses based on the information contained in the

applications and supporting materials. Id.

While Engle was completing her training hours in November 2011, one of her

supervisors, Hal London, passed away. Id. ¶ 13. Engle continued training, and in

2 At the motion-to-dismiss stage, the Court assumes the alleged facts in the complaint

are true and draws all possible inferences in favor of Plaintiff. See Tamayo v. Blagojevich,

526 F.3d 1074, 1081 (7th Cir. 2008).

2013, was ready to submit her licensing application. Id. ¶ 14a.3 She, along with

colleague Glenn Brown, who had also trained under London, were not sure how to

report their training hours given that London had not signed all the necessary

paperwork before his death. Id. They also had questions about reporting training

hours that exceeded the number of recommended hours listed in the Matrix. Id.

Accordingly, Brown contacted the IDFPR for guidance in August 2013. Id. ¶ 14b.

Brown spoke to Brian Weaver,4 Acting Director of the IDFPR’s Division of Real

Estate, and Mary Bates, the Disciplinary Board liaison, about this issue and conveyed

this information to Engle. Id. Based on Weaver’s and Bates’s recommendations,

Engle transposed London’s signature onto her Experience Log and submitted a cover

letter to the Disciplinary Board explaining that she had done so. Id. ¶ 15. She also

recorded her training hours only up to the amounts listed on the Matrix, leaving off

any excess hours. Id. Engle submitted her application and related materials in

October 2013. Id.

Despite his conversation with Brown, Weaver, who also serves on the

Disciplinary Board, initiated fraud charges against Engle for “submitting a false log”

on October 29, 2013. Id. ¶ 16. Weaver later issued a Notice of Intent to Deny the

3 The complaint contains two paragraphs labeled 14. Accordingly, the Court refers to

the first paragraph as ¶ 14a, and the second as ¶ 14b.

4 In various places in the complaint, Engle describes Weaver as “Defendant Weaver.”

See Compl. ¶¶ 12, 14b, 41. But the complaint does not list Weaver in either the caption or

the description of the parties. See id. ¶¶ 7–9. Nor does it appear that summons was issued

to Weaver. Accordingly, the Court does not consider Weaver to be a party to this litigation.

license to Engle, charging that she had falsified London’s signature on her Experience

Log. Id.

The IDFPR commenced disciplinary proceedings against Engle, and Engle

(with the aid of her counsel) reached an agreement with the IDFPR whereby the

Disciplinary Board would withdraw the charges and allow Engle to reapply for a

license, if she made up the hours she worked under London and submitted an

application reflecting the actual number of training hours she had worked. Id. ¶¶ 17–

18. Engle withdrew her application in May 2014, and the disciplinary proceedings

were closed. Id. ¶¶ 19–20.

After redoing her training hours, Engle submitted a new application in

September 2014. Id. ¶ 21. This application included an Experience Log that

documented all of her training hours, including those that went above and beyond

the recommended amounts listed in the Matrix. Id. As a result, the training hours

Engle recorded on her second application were higher than those listed on her first

application. Id. The Disciplinary Board granted Engle a real estate appraiser license

on December 8, 2014. Id.

Soon thereafter, Weaver raised the discrepancies in the hours reported on

Engle’s two applications to the IDFPR, and the Disciplinary Board again charged

Engle with fraud. Id. ¶ 22. In April 2015, Christopher Hage, the IDFPR’s Chief of

Real Estate Prosecutions, called Engle and told her to return her license immediately

or he would “press charges.” Id. ¶ 23. He then followed up with a letter, informing

Engle that she had ten days to return her license, or the IDFPR would begin

administrative action to revoke it. Id. Engle alleges that this request was in violation

of a statement on her IDFPR application, which required “appropriate due process”

to be given before she could be forced to give up her license. Id. ¶¶ 24, 28.

The Disciplinary Board filed a complaint against Engle on June 29, 2015,

alleging that Engle had made 126 false statements in her 2014 application, based on

the differences in training hours listed on that application as compared to the 2013

application. Id. ¶ 29. The complaint also alleged that Engle failed to explain these

discrepancies. Id.

Disciplinary proceedings commenced, and an administrative law judge (“ALJ”)

held Engle in default for failing to timely answer or otherwise plead. Id. ¶ 24. The

ALJ then referred Engle’s case to the full Disciplinary Board, which recommended

that her license be revoked. Id. The Director of the Real Estate Division accepted

the Disciplinary Board’s recommendation and revoked Engle’s license on March 8,

2016. Id. ¶ 25.

Engle subsequently filed a complaint for administrative review in the Circuit

Court of Cook County. Id. ¶ 26. The Circuit Court granted the IDFPR’s motion to

dismiss the complaint, but the Illinois Appellate Court reversed and remanded to the

IDFPR for further proceedings. Id.; see generally Engle v. Dep’t of Fin. & Prof’l

Regulation, 103 N.E.3d 382 (Ill. App. Ct. 2018).

Engle filed this lawsuit in January 2019, alleging that the IDFPR is violating

her right to due process. In particular, she states, the IDFPR’s charges against her

are based on actions she took in compliance with her settlement agreement with the

agency following the 2013 disciplinary proceedings. Id. ¶¶ 38–39. Furthermore,

Engle alleges that the IDFPR is improperly enforcing an unwritten rule that an

applicant should not list more than the recommended Matrix hours on his or her

Experience Log. Id. ¶¶ 27–29.

Along with her complaint, Engle moved for a temporary restraining order and

preliminary injunction to stop the renewed proceedings from going forward. See Mot.

TRO & Prelim. Inj., ECF No. 3. In the motion, she argues that Weaver will be a fact

witness at any renewed hearing, given that he participated in the discussions about

how to fill out the 2013 application and made statements about the IDFPR’s alleged

unwritten rule. See id. at 15. Accordingly, she argues, Weaver should not be allowed

to participate in the disciplinary proceedings as a member of the Disciplinary Board.

Id. at 15–18.

At an initial hearing, the Court entered and continued Engle’s request for a

temporary restraining order, based in part on the IDFPR’s agreement that it would

stay the disciplinary proceedings pending the Court’s ruling. See Minute Entry of

1/24/19, ECF No. 8. After the Court set a briefing schedule on Engle’s motion,

Defendants moved to dismiss her complaint under the Younger abstention doctrine,

see Younger v. Harris, 401 U.S. 37 (1971). Accordingly, now before the Court are

Engle’s motion for a temporary restraining order and preliminary injunction, and

Defendants’ motion to dismiss.

Analysis

I. Applicability of Younger Abstention

Defendants contend that the Court must abstain from hearing Engle’s

complaint or issuing any injunctive relief pursuant to the Younger abstention

doctrine. This doctrine “generally requires federal courts to abstain from taking

jurisdiction over federal constitutional claims that involve or call into question

ongoing state proceedings.” FreeEats.com, Inc. v. Indiana, 502 F.3d 590, 595 (7th Cir.

2007). The Supreme Court’s holding in Younger “was based partly on traditional

principles of equity, but rested primarily on the even more vital consideration of

comity.” Id. (quoting New Orleans Pub. Serv., Inc. v. Council of City of New Orleans,

491 U.S. 350, 364 (1989)).

Although the Younger doctrine originated in the context of criminal

prosecutions, it “has since been expanded beyond criminal prosecutions to various

civil proceedings in state court implicating important state interests.” Id. at 595 n.5

(quotation omitted); see SKS & Assocs., Inc. v. Dart, 619 F.3d 674, 678 (7th Cir. 2010)

(“The civil brand of Younger extends only to a federal suit filed by a party that is the

target of state court or administrative proceedings in which the state’s interests are

so important that exercise of federal judicial power over those proceedings would

disregard the comity between the states and federal government.”) (citations

omitted). Such civil proceedings include state administrative proceedings that are

judicial in nature. Id.; see Tr. & Inv. Advisers, Inc. v. Hogsett, 43 F.3d 290, 294–95

(7th Cir. 1994).

Accordingly, under Younger, “federal courts must abstain from enjoining or

otherwise interfering in ongoing state court proceedings that are (1) judicial in

nature, (2) involve important state interests, and (3) provide an adequate opportunity

to raise federal claims, as long as (4) no exceptional circumstances exist that would

make abstention inappropriate.” Stroman Realty, Inc. v. Martinez, 505 F.3d 658, 662

(7th Cir. 2007); see Majors v. Engelbrecht, 149 F.3d 709, 711 (7th Cir.1998) (citing

Middlesex Cty. Ethics Comm’n. v. Garden State Bar Assoc., 457 U.S. 423, 429 (1982)).

Exceptional circumstances include when “(1) the state proceeding is motivated by a

desire to harass or is conducted in bad faith, (2) there is an extraordinarily pressing

need for immediate equitable relief, or (3) the challenged provision is flagrantly and

patently violative of express constitutional prohibitions.” Stroman Realty, Inc., 505

F.3d at 664 (internal quotations and citation omitted). If Younger abstention is

warranted, either a stay or dismissal of the action may be appropriate based on the

circumstances. See FreeEats.com, Inc., 502 F.3d at 600.

Here, as Defendants correctly point out, the IDFPR proceedings meet the

necessary criteria for Younger abstention. First, Engle does not challenge the notion

that the disciplinary proceedings are judicial in character. Nor could she. An

administrative proceeding that is “coercive” and involves investigation and

enforcement of liability, such as the proceeding here, is generally considered to be

judicial in nature. See Stroman Realty, Inc., 505 F.3d at 662. It is well-established

in the Seventh Circuit that administrative disciplinary proceedings—including those

specifically brought by the IDFPR or its predecessor—are judicial. See id. (concluding

that IDFPR disciplinary proceedings brought against an unlicensed timeshare broker

were judicial in nature); Green v. Benden, 281 F.3d 661, 666 (7th Cir. 2002) (holding

that disciplinary proceedings brought by the Illinois Department of Professional

Regulation against a clinical psychologist were “plainly judicial in nature”); see also

Majors, 149 F.3d at 712 (concluding that disciplinary proceedings brought against a

nurse by the Indiana State Board of Nursing were judicial in nature).

Nor does Engle challenge the important state interests involved in Illinois’s

real estate appraisal licensing program. These interests are apparent from the fact

that Illinois has codified an extensive set of statutes regulating real estate appraisals.

See 225 Ill. Comp. Stat. 458/1-1 et seq. Furthermore, as Defendants point out, the

Seventh Circuit has recognized Illinois’s “legitimate and substantial interest in

setting and enforcing the standards for those who deal with property sales involving

its citizens.” Stroman Realty, Inc., 505 F.3d at 663. Although Stroman Realty dealt

with a real-estate broker as opposed to an appraiser, the same interests are

implicated here.

Furthermore, the state disciplinary proceedings offer an adequate forum for

Engle to raise her due-process claims. Engle contends that the IDFPR routinely

refuses to hear constitutional claims such as hers, and this may be true. But there is

still a state-court administrative review process available, where she can seek review

of the agency proceeding, even on due-process grounds. In fact, she has already done

so successfully. See generally Engle, 103 N.E.3d 382 (reversing and remanding the

dismissal of Engle’s complaint for administrative review on unrelated due-process

grounds). Contrary to Engle’s assertions, courts widely agree that the availability of

state administrative review constitutes an adequate forum under the Younger

analysis. See Ohio Civil Rights Comm’n v. Dayton Christian Schs., 477 U.S. 619, 629

(1986) (“[E]ven if Ohio law is such that the Commission may not consider the

constitutionality of the statute under which it operates . . . it is sufficient . . . that

constitutional claims may be raised in state-court judicial review of the

administrative proceeding.”); Stroman Realty, Inc., 505 F.3d at 662 (“We see no

reason why [a constitutional claim] could not also be adequately addressed on judicial

review in the event of an adverse administrative decision.”); Green, 281 F.3d at 666–

67 (“[S]tate-court administrative review of the . . . proceedings constitutes an

adequate opportunity for [the plaintiff] to raise his due process and equal protection

challenges.”). Nor does an administrative-review suit need to be presently underway

for this reasoning to apply. See Ohio Civil Rights Comm’n, 477 U.S. at 629.

Finally, Engle fails to show that there are any exceptional circumstances that

would make abstention inappropriate. First, as Defendants point out, Weaver has

agreed that he will not participate in any Disciplinary Board deliberations or have

any ex parte communications with board members about Engle’s case. See Defs.’

Mem. Supp. Mot. Dismiss, Ex. A, Weaver Decl. ¶¶ 4–5, ECF No. 10-1. Although this

would seem to moot Engle’s request for a preliminary injunction (which focuses

almost exclusively on Weaver’s role on the Disciplinary Board), she now argues that

even Weaver’s presence at the hearing as a witness will taint the proceedings.

Because Weaver is a member of the Disciplinary Board, she posits, the other board

members will simply take his testimony at face value.

But, although Engle cites a number of cases suggesting that an impartial

disciplinary panel may violate her right to due process, she does not explain why that

issue could not be adequately addressed in the agency or state-court proceedings.

Instead, the Court concludes that Weaver’s presence at the hearing does not

constitute an extraordinary circumstance for three reasons.

First, the disciplinary hearing will proceed first before an ALJ, not the full

Disciplinary Board. Yet Engle does not argue that the ALJ has any relationship with

Weaver or is biased in his favor.

Second, Engle only speculates that the Disciplinary Board members have an

inappropriate relationship with Weaver that would undermine their impartiality.

This speculation is insufficient in light of the presumption that agency officials are

unbiased quasi-judicial officers. See Schweiker v. McClure, 456 U.S. 188, 195–97

(1982). Because agency proceedings often involve overlap between investigative and

judicial functions, it is not automatically apparent that Weaver’s testimony would

require the recusal of the entire Disciplinary Board. See Amundsen v. Chi. Park Dist.,

218 F.3d 712, 716 (7th Cir. 2000) (explaining that the presumption that

administrators are impartial can be rebutted only by proof that an adjudicator has “a

pecuniary interest in the outcome” or has been “the target of personal abuse or

criticism from the party before him”). This is not to say that Engle could never prove

that individual Disciplinary Board members are biased, but her mere speculation is

not enough to show the type of flagrant constitutional violation necessary to avoid

the application of Younger. See Stroman Realty, Inc., 505 F.3d at 664.

Furthermore, even if the result of the proceedings were to be tainted in some

way by Weaver’s testimony, Engle can raise that issue in an administrative-review

complaint. For instance, in one case Engle cites, the Illinois Appellate Court reversed

and remanded the denial of an administrative-review petition, finding that an agency

board member had an impermissible conflict of interest and should have recused

herself. Bd. of Educ. of Niles Twp. High Sch. Dist. 219, Cook Cty. v. Reg’l Bd. of Sch.

Trs. of Cook Cty., 468 N.E.2d 1247, 1249–50 (Ill. App. Ct. 1984). Engle does not

explain why the state process is so inadequate that it requires federal-court

intervention. Accordingly, Weaver’s participation as a witness—particularly where

Engle’s own allegations establish that he has relevant information to provide about

her license applications—does not show that the proceedings are motivated by a

desire to harass, require immediate equitable relief, or are based on any flagrant

constitutional violation.

Engle next contends that the IDFPR’s use of an “unwritten rule” about how to

record training hours violates her due-process rights. She argues that the unwritten

rule—that recorded hours should not exceeded the recommended hours listed on the

Matrix—is both contrary to advice given to her by IDFPR employees and unsupported

by the IDFPR’s written standards. As a result, Engle contends, this rule violates the

due-process requirement that she be given sufficient notice of the standards to which

she is being held. See Ctr. for Individual Freedom v. Madigan, 697 F.3d 464, 478–79

(7th Cir. 2012) (explaining that the vagueness doctrine prohibits the enforcement of

laws that “fail[ ] to provide a person of ordinary intelligence fair notice of what is

prohibited, or [are] so standardless that [they] authorize[ ] or encourage[ ] seriously

discriminatory enforcement”).

But even if Engle could establish that the so-called unwritten rule violates her

due-process rights, she has not shown that it constitutes an extraordinary

circumstance for purposes of the Younger doctrine. Assuming the IDFPR is enforcing

an unwritten rule or inconsistent standards with respect to the recording of training

hours, it still does not necessarily follow that the agency is targeting Engle for

harassment or that enforcement of the rule is incapable of being cured on appeal or

administrative review. As the Supreme Court has noted, even a “constitutional

attack on state procedures themselves” does not “automatically vitiate[ ] the

adequacy of those procedures for purposes of the Younger-Huffman line of cases.”

Ohio Civil Rights Comm’n, 477 U.S. at 628 (internal quotations and citation omitted).

The Circuit Court of Cook County has demonstrated its willingness and ability to

adjudicate due-process claims on administrative review, see Engle, 103 N.E.3d at

391–97, and it is in a better position than the federal courts to interpret the IDFPR’s

standards. Accordingly, this issue also does not present a flagrant constitutional

violation or other extraordinary circumstance.

Because the Court holds that Younger abstention is warranted, the next

question is whether the Court should stay or dismiss this action. See FreeEats.com,

502 F.3d at 600 (citing Majors, 149 F.3d at 714). In determining whether to stay or

dismiss, the “pivotal question” facing the Court is “whether any of the relief sought

by the plaintiff in its federal action is unavailable in the state action.” Id. Here,

Engle seeks only injunctive relief concerning the agency proceedings, which as

already described, can be addressed effectively in the state agency or on

administrative review in the Circuit Court. As a result, the Court concludes that

dismissal is the appropriate course of action.5

II. Preliminary Injunctive Relief

A party seeking a preliminary injunction must show (1) that its case has “some

likelihood of success on the merits,” and (2) that it has “no adequate remedy at law

and will suffer irreparable harm if a preliminary injunction is denied.” Ezell v. City

of Chi., 651 F.3d 684, 694 (7th Cir. 2011). If the moving party meets these threshold

requirements, the district court “weighs the factors against one another, assessing

whether the balance of harms favors the moving party or whether the harm to the

nonmoving party or the public is sufficiently weighty that the injunction should be

denied.” Id. The district court’s weighing of the factors is not mathematical in nature;

rather, it is “more properly characterized as subjective and intuitive, one which

permits district courts to weigh the competing considerations and mold appropriate

relief.” Ty, Inc. v. Jones Group, Inc., 237 F.3d 891, 895–96 (7th Cir. 2001) (quoting

Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 12 (7th Cir. 1992)).

5 Because the Court concludes that Younger abstention applies, the Court does not

reach Defendants’ alternative argument that the Eleventh Amendment bars suit against the

IDFPR as an arm of the state.

In determining that Younger abstention applies, the Court necessarily holds

that injunctive relief is not available from this Court. Since dismissal is warranted

under Younger, it would be impossible for Engle to demonstrate a likelihood of success

on the merits. See Ezell, 651 F.3d at 694. Furthermore, as already described, it is

not clear that Engle will suffer irreparable harm absent an injunction, given the

availability of comparable state remedies. See id. Accordingly, even if there is no

adequate damages remedy for Engle, the balance of harms weighs strongly against

Engle and in favor of Defendants. See id. Engle’s motion for a preliminary injunction

is therefore denied.

Conclusion

For the reasons stated herein, the Court denies Engle’s motion for a temporary

restraining order and preliminary injunction and grants Defendants’ motion to

dismiss on Younger abstention grounds. This action is dismissed without prejudice

to refiling in state court. Civil case terminated.

IT IS SO ORDERED. ENTERED 5/28/19

Jam fe

John Z. Lee

United States District Judge

15