stating that “[t]he deficiency in [the plaintiff’s] takings claim is conclusive regarding her due process claim, as there can be no deprivation of property without procedural or substantive due process of law without an underlying property interest”
How later courts described this case
- stating that “[t]he deficiency in [the plaintiff’s] takings claim is conclusive regarding her due process claim, as there can be no deprivation of property without procedural or substantive due process of law without an underlying property interest”
- finding no claim of entitlement to tax rebate where language of applicable ordinance and tax rebate application form “demonstrate[d] that the City explicitly retained the discretion to reject applications from homeowners”
- finding that a tax rebate for homeowners was no longer a protected property interest after the repeal of the municipal ordinance providing for the tax rebate
- holding that “there can be no deprivation of property without procedural or substantive due process of law without an underlying property interest”
Written by the judges who cited it.
The opinion
In the
United States Court of Appeals
For the Seventh Circuit
Nos. 16-1245 and 16-1448
LEORA H. BELL, individually and on
behalf of all others similarly situated,
Plaintiff-Appellant,
v.
CITY OF COUNTRY CLUB HILLS,
Defendant-Appellee.
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15 C 4227 — James B. Zagel, Judge.
ARGUED SEPTEMBER 13, 2016 — DECIDED NOVEMBER 8, 2016
Before BAUER, KANNE, and HAMILTON, Circuit Judges.
BAUER, Circuit Judge. Plaintiff-appellant, Leora H. Bell, filed
suit against Defendant-appellee, City of Country Club Hills,
claiming a deprivation of her constitutional rights in violation
of 42 U.S.C. § 1983. Bell’s claims arise from the City’s decision
to repeal an ordinance that provided a twenty-five percent tax
rebate to qualifying homeowners. The district court granted
the City’s motion to dismiss for failure to state a claim under
2 Nos. 16-1245 and 16-1448
Federal Rule of Civil Procedure 12(b)(6), holding that the tax
rebate did not confer a vested property right upon Bell. Bell
appeals, arguing that she maintains a vested property right in
the rebate program, and that the City unlawfully repealed the
ordinance. For the reasons stated below, we affirm.
I. BACKGROUND
On April 23, 2012, the City of Country Club Hills City
Council adopted Ordinance No. O-02-12, which provided to
homeowners a twenty-five percent rebate of 2010 city property
taxes paid in 2011, subject to the completion of an application
by the homeowner and approval by the City Clerk. According
to the application, this was the City’s twelfth consecutive year
of offering a rebate program. The application stated that the
“FILING OF THIS APPLICATION DOES NOT GUARANTEE
APPROVAL BY THE CITY OF COUNTRY CLUB HILLS.”
The city prepared the rebate checks but never distributed
them to homeowners. In 2012, the Cook County treasurer
overpaid the City by more than $6 million, and the County
brought suit against the City in Cook County Circuit Court to
collect the overpayment in July 2012.1 Judgment was entered
against the City a year later for nearly $6.6 million.
1
This fact is not included in Bell’s complaint. However, Judge Zagel
recited it as part of his oral ruling in this case. His consideration of this fact
was proper, as it originates from a report of an administrative body,
permitting him to take judicial notice. Menominee Indian Tribe of Wis. v.
Thompson, 161 F.3d 449, 456 (7th Cir. 1998). Courts may “consider judicially
noticed documents without converting a motion to dismiss into a motion
for summary judgment.” Id. Although our analysis does not turn on this
fact, it does provide context to the City’s actions, and we have therefore
included it as background.
Nos. 16-1245 and 16-1448 3
Bell filed the instant action on May 15, 2015, on behalf of
herself and others similarly situated. She asserted a claim
under § 1983, arguing that the City’s refusal to issue the rebates
constituted a taking in violation of the Fifth and Fourteenth
Amendments to the United States Constitution, as well as
Article I, § 15 of the Illinois Constitution. Bell also asserted
state law claims for conversion and unjust enrichment. On
August 24, 2015, the City Council passed Ordinance O-11-15,
which repealed the April 2012 Ordinance. On September 1,
2015, the City filed a motion to dismiss under Rule 12(b)(6),
contending that Bell had no constitutionally protected property
interest in the expectation of a rebate, and that she had ade-
quate state court remedies for her claims under state law. The
district court agreed with the City, and granted its motion on
January 6, 2016.2
Bell filed a motion for relief from a final judgment under
Federal Rule of Civil Procedure 60(b) on February 4, 2016,
arguing that the City’s August 2015 repeal of the April 2012
Ordinance was invalid because it violated the Illinois Open
Meetings Act, 5 Ill. Comp. Stat. 120/2(e). The district court
denied Bell’s motion. On March 28, 2016, the City Council
responded to concerns over the validity of its August 2015
2
It appears that Bell maintains doubt as to whether the district court
dismissed the complaint under Rule 12(b)(6) or Rule 12(b)(1). However,
after reviewing the judge’s oral ruling, we think it is clear from the
substance of his remarks that in his view Bell failed to state a claim under
federal law. Therefore, the dismissal is properly considered under Rule
12(b)(6).
4 Nos. 16-1245 and 16-1448
repeal by again repealing the April 2012 Ordinance. This
appeal followed.
II. DISCUSSION
We review the district court’s granting of a motion to
dismiss under Rule 12(b)(6) de novo, accepting all well-pleaded
facts as true and drawing all reasonable inferences in favor of
the non-moving party. Golden v. State Farm Mut. Auto. Ins. Co.,
745 F.3d 252, 255 (7th Cir. 2014). A Rule 12(b)(6) motion
challenges the sufficiency of the complaint itself. Gibson v. City
of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990) (citation omitted).
To state a claim, a complaint must first provide “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). The statement of the
claim must sufficiently give to the defendants “fair notice of
what the … claim is and the grounds upon which it rests.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation
omitted). Additionally, the complaint's factual allegations
must raise the claim above a mere “speculative level.” Id.
“While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a plaintiff's
obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Id.
(citations and internal alterations omitted).
Bell asserts her constitutional claims against the City under
§ 1983, which provides that “[e]very person who, under color
of any statute, ordinance, regulation, custom, or usage, of any
State … subjects, or causes to be subjected, any citizen of the
United States … to the deprivation of any rights, privileges, or
Nos. 16-1245 and 16-1448 5
immunities secured by the Constitution and laws, shall be
liable to the party injured in an action at law … .” In order to
state a claim under this provision, the following conditions
must be met: “(1) the offending conduct [must be] committed
by someone who acted under the color of state law; (2) the
actions deprive the plaintiff of a constitutionally protected
property interest; and (3) the alleged deprivation occurred
without due process of law.” Germano v. Winnebago Cnty., 403
F.3d 926, 927 (7th Cir. 2005). The parties do not appear to
dispute that the City acted under color of law.
Bell contends that the City’s failure to issue the rebate
constitutes a taking of a government benefit without due
process of law in violation of the United States and Illinois
Constitutions. The Takings Clause of the Fifth Amendment,
made applicable to the states through the Fourteenth Amend-
ment, provides: “[N]or shall private property be taken for
public use, without just compensation.” Sorrentino v. Godinez,
777 F.3d 410, 413 (7th Cir. 2015) (quoting U.S. Const. amend.
V). The Due Process Clause of the Fourteenth Amendment
provides: “[N]or shall any State deprive any person of life,
liberty, or property, without due process of law.” U.S. Const.
amend. XIV, § 1. “[I]n any due process case where the depriva-
tion of property is alleged, the threshold question is whether
a protected property interest actually exists.” Cole v. Milwaukee
Area Tech. Coll. Dist., 634 F.3d 901, 904 (7th Cir. 2011).
“To have a property interest in a benefit, a person clearly
must have more than an abstract need or desire for it. He must
have more than a unilateral expectation of it. He must, instead,
have a legitimate claim of entitlement to it.” Bd. of Regents of
6 Nos. 16-1245 and 16-1448
State Colls. v. Roth, 408 U.S. 564, 577 (1972). “Property interests
are not created by the Constitution but rather ‘they are created
and their dimensions are defined by existing rules or under-
standings that stem from an independent source such as state
law.’” Cole, 634 F.3d at 904 (quoting Roth, 408 U.S. at 577).
“Accordingly, federal property interests under the 14th
Amendment usually arise from rights created by state statutes,
state or municipal regulations or ordinances, and contracts
with public entities.” O’Gorman v. City of Chi., 777 F.3d 885, 890
(7th Cir. 2015) (citation omitted). “Although we look to state
law for the source of the plaintiff’s alleged property interest,
whether a particular state-created interest rises to the level of
a ‘legitimate claim of entitlement’ is a question of federal law.”
Dibble v. Quinn, 793 F.3d 803, 808 (7th Cir. 2015) (quoting
Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9 (1978)).
Bell’s principal contention is that her property interest in
the rebate is derived from the April 2012 Ordinance. She
argues further that the rebate is a “vested right” under Illinois
law, and thus the City is precluded from using subsequent
legislation to deny homeowners their rebates.
Under Illinois law, vested rights are “interests that are
protected from legislative interference by [the Illinois] due
process clause[.]” Dardeen v. Heartland Manor, Inc., 710 N.E.2d
827, 830 (Ill. 1999) (quoting First of Am. Tr. Co. v. Armstead, 664
N.E.2d 36, 39 (Ill. 1996)). “Although whether a particular
expectation rises to the level of a vested rights is not capable
of a precise definition[,]” a vested right is “so complete and
unconditional that it may be equated with a property interest.”
Nos. 16-1245 and 16-1448 7
Dardeen, 710 N.E.2d at 830 (quoting Armstead, 664 N.E.2d at 40)
(internal alterations and quotation marks omitted).
We note that while Bell raises takings claims under both the
United States and Illinois Constitutions, federal jurisdiction has
been conferred based on her § 1983 claim. As stated above,
§ 1983 remedies deprivations of federal constitutional rights; it
does not contemplate state constitutional errors. Therefore, to
the extent Bell is seeking a remedy for state constitutional
violations, she would need to raise her claim in state court, as
the district court here relinquished supplemental jurisdiction
over any such claim. We agree that this was the proper course
of action. See Petra Presbyterian Church v. Vill. of Northbrook, 489
F.3d 846, 848 (7th Cir. 2007) (affirming the relinquishment of
supplemental jurisdiction of a state law “vested rights” claim).
However, to the extent Bell seeks protection of a vested
property right under the Fourteenth Amendment, we reject
that argument on the merits. In People ex. rel. Eitel v. Lindheimer,
21 N.E.2d 318 (Ill. 1939), plaintiffs were property owners who
sought refunds for excess property tax payments that they
made in previous years. State law in effect at the time permit-
ted a refund or credit of taxes when property owners overpaid
as a result of errors in the property value assessment. Id. at 320.
The legislature repealed the state law subsequent to plaintiffs
filing suit in Cook County Circuit Court. Id. at 319. Nonethe-
less, the circuit court ordered the County to issue the rebates to
plaintiffs. Id. at 320. The County treasurer and clerk appealed,
arguing that plaintiffs lacked a vested right in the rebates, and
therefore the repeal was a valid legislative action that should
be enforced. Id.
8 Nos. 16-1245 and 16-1448
The court noted that because a citizen’s obligation to pay
taxes arises from statute, any refund offered by the legislature
must also be “purely of statutory origin[,]” which it character-
ized as a “special remedial statute.” Id. at 320–21 (citations
omitted). In fact, the court observed that without a statute
expressly providing for a refund, the county could not refund
taxes that were overpaid. Id. at 320 (citation omitted). The
court then inquired “whether the granting of a special remedy
creates a vested right in the remedy that cannot be abrogated
by repeal of the remedy.” Id. at 321 (citation omitted). The
court answered in the negative, finding that “[t]he uncondi-
tional repeal of a special remedial statute without a saving
clause stops all pending actions where the repeal finds them.”
Id. at 321.
The court held that plaintiffs did not possess a vested right
in the rebate because they could not show more than “a mere
expectation based upon an anticipated continuance of the
existing law.” Id. The court also found that the legislature had
the right to repeal the statute because “there is no vested right
in a public law which is not in the nature of a private grant.” Id.
at 322 (citation omitted). The guiding principle from Lindheimer
is that when a right is derived from a remedial statute, the right
is not vested, and the legislature has ongoing authority to
repeal or amend the statute.
Lindheimer is factually similar to the instant case, and
applying its guiding principle, we find that April 2012 Ordi-
nance is also a special remedial statute that does not confer
vested rights upon Bell or the City’s other homeowners.
Without the ordinance, the City is powerless to provide the
Nos. 16-1245 and 16-1448 9
rebate to homeowners. Further, the granting of this special
remedy does not create a vested right under Illinois law.
Bell’s attempt to distinguish Lindheimer is unpersuasive.
She argues that while the refund in Lindheimer is a special
remedial statute, the rebate program in the instant case is a
private grant that is immune to repeal. Bell contends that the
remedial statute in Lindheimer is distinguishable because it was
available to the general public, and the specific individuals
who would invoke their rights under the statute were un-
known at the time of the statute’s passage. In contrast, she
argues that the City’s rebate program is a private grant because
the April 2012 Ordinance is directed toward a specific group
of individuals—“all eligible homeowners”—instead of the
general public. Thus, Bell concludes that the City’s rebate
program is a private grant.
However, we could not discern the basis of Bell’s theory of
general versus specific applicability, as it is not rooted in any
case law or statute that we could locate. Bell fails to raise any
meaningful substantive distinctions between the April 2012
Ordinance and the special remedial statute in Lindheimer.
Accordingly, we decline to adopt her novel interpretation of a
“private grant.” Indeed, it is clear under Lindheimer that the
right to a property tax rebate can only stem from a remedial
statute. Thus, we conclude that the April 2012 Ordinance is
a remedial statute incapable of conferring vested rights, and
10 Nos. 16-1245 and 16-1448
therefore the City acted within the scope of its legal authority
in repealing the April 2012 Ordinance.3
Having examined the source of the Bell’s property interest,
we now analyze whether it rises to the level of a protected
property interest. See Quinn, 793 F.3d at 808. We have held that
“[a] protected property interest exists only when the state’s
discretion is ‘clearly limited such that the plaintiff cannot be
denied the interest unless specific conditions are met.’” Booker-
El v. Superintendent, Ind. State Prison, 668 F.3d 896, 900 (7th Cir.
2012) (quoting Brown v. City of Mich. City, Ind., 462 F.3d 720,
729 (7th Cir. 2006)); see also Barrow v. Wiley, 478 F.3d 776, 780
(7th Cir. 2007) (“Where state law gives people a benefit and
creates a system of nondiscretionary rules governing revoca-
tion or renewal of that benefit, the recipients have a secure and
durable property right, a legitimate claim of entitlement.”
(citation omitted)). In essence, a plaintiff must “point to a
state law, or another independent source, that guarantees him”
entitlement to a government benefit. Brown, 462 F.3d at 729.
Bell argues that the mandatory language “shall” used in the
April 2012 Ordinance removes any discretion on the part of the
City to refuse issuing the rebates. See Lexecon, Inc. v. Milberg
Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998) (“[T]he
3
In so holding, we do not reach the issue of whether the City Council’s
August 2015 repeal of the April 2012 Ordinance violated the Illinois Open
Meetings Act, 5 Ill. Comp. Stat. 120/2(e). It is clear that no vested rights
were at issue, and therefore the City had an ongoing right to amend or
repeal the ordinance. Therefore, the validity of the repeal is immaterial to
our takings analysis. Any violation of the Illinois Open Meetings Act
committed by the City should be addressed in state court.
Nos. 16-1245 and 16-1448 11
mandatory ‘shall’ … normally creates an obligation impervious
to judicial discretion.”). However, the language used in both
the text of the April 2012 Ordinance and on the face of the
rebate application demonstrates that the City explicitly
retained the discretion to reject applications from homeowners.
Therefore, it cannot be said that “nondiscretionary rules”
governed the granting of the rebate, thereby creating a legal
entitlement. The Lindheimer court described the tenuous
relationship between property owners and property tax
rebates as a “mere expectation” rather than a vested right. See
Lindheimer, 21 N.E.2d at 321. And as the district court judge
noted, the rebate program was a discretionary measure taken
by the City that it was free to nullify under Illinois law.
Accordingly, no state law or ordinance guarantees Bell an
entitlement to the rebate.
We recognize that the City offered the rebate program for
a number of years prior to 2012, but this fact alone is insuffi-
cient to confer the status of a constitutionally protected
property interest upon the rebates. See, e.g., Brown, 462 F.3d at
729 (city’s historical practice of allowing its residents to use its
parks free of charge did not create a property interest because
city possessed discretion to decide whether and under what
conditions members of the public can access the parks); Hussey
v. Milwaukee Cnty., 740 F.3d 1139, 1145–46 (7th Cir. 2014)
(county’s historical practice of providing cost-free health
insurance to retirees did not create a vested property right in
free health insurance because no state law or municipal
ordinance explicitly provided for free health insurance). We
find that the rebate program is the type of “unilateral expecta-
tion” that does not rise to the level of a property interest. See
12 Nos. 16-1245 and 16-1448
Roth, 408 U.S. at 577. Thus, Bell has no constitutionally pro-
tected property interest in the rebate. Consequently, she cannot
state a claim for an unconstitutional taking.
The deficiency in Bell’s takings claim is conclusive regard-
ing her due process claim, as there can be no deprivation of
property without procedural or substantive due process of law
without an underlying property interest. See Khan v. Bland, 630
F.3d 519, 533–35 (7th Cir. 2010).
We briefly turn to Bell’s remaining state law claims. We
affirm the district court’s dismissal of Bell’s state law claims
because Bell has no viable federal claim, and neither party
contends that we should retain jurisdiction over state law
claims. See United Mine Workers v. Gibbs, 383 U.S. 715, 726
(1966).
Nonetheless, while Bell has failed to state a viable claim
under the federal Constitution, assuming arguendo that she
had, we and the district court would still be obliged to abstain
from granting relief based on the principles of comity and
abstention set forth in Fair Assessment in Real Estate Ass’n v.
McNary, 454 U.S. 100 (1981), and Capra v. Cook Cnty. Bd. of
Review, 733 F.3d 705, 712–13 (7th Cir. 2013).
In conclusion, Bell cannot state a claim under § 1983 for a
taking or due process violation because she lacks a protected
property interest. Having no viable federal claim, the district
court correctly concluded that Bell’s only path forward was to
file her state law claims in state court.
Nos. 16-1245 and 16-1448 13
III. CONCLUSION
For the foregoing reasons, the judgment of the district court
is AFFIRMED.