145 Fisk, LLC v. F. William Nicklas

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 20-1868

145 FISK, LLC,

Plaintiff-Appellant,

v.

F. WILLIAM NICKLAS,

Defendant-Appellee.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Western Division.

No. 19-cv-50093 — Philip G. Reinhard, Judge.

____________________

ARGUED DECEMBER 10, 2020 — DECIDED JANUARY 26, 2021

____________________

Before SYKES, Chief Judge, and FLAUM and KANNE, Circuit

Judges.

FLAUM, Circuit Judge. Illinois authorizes municipalities to

invest in revitalizing areas of “commercial blight.” See 65 Ill.

Comp. Stat. 5/11-74.4 et seq. The City of DeKalb, Illinois (the

“City”), entered into a preliminary agreement to allocate just

such an incentive to 145 Fisk, LLC (“Fisk”). After more due

diligence, however, the City reversed course.

2 No. 20-1868

Fisk is convinced the City would have proceeded with the

funding as planned but for the meddling of City Manager F.

William Nicklas. According to Fisk, Nicklas sought to retali-

ate against it and favor other local developers in violation of

its First and Fourteenth Amendment rights. The district court

dismissed Fisk’s suit for failure to state a claim upon which

relief can be granted and relinquished supplemental jurisdic-

tion over the remaining state law claims. Because we agree

that Fisk has not plausibly stated grounds for relief, we affirm

the judgment of the district court.

I. Background

Plaintiff-appellant Fisk is a limited liability company. The

entity was formed on December 13, 2018, and it consisted of

two members, one of whom is an attorney (“Attorney Mem-

ber”).

Fisk alleges that for over two years it collaborated with the

City regarding a proposed redevelopment of a dilapidated

property at 145 Fisk Avenue in DeKalb. On December 18,

2018, the City adopted Resolution 2018-166 approving a Pre-

liminary Development Incentive Agreement (“PDA”) with

Fisk regarding potential financing for the project. The PDA,

into which the parties entered on or about January 1, 2019,

provided that if Fisk met certain contingencies set forth

therein, the City would provide an approximate $2,500,000

Development Incentive (“Development Incentive”) in Tax In-

crement Financing (“TIF”) to Fisk for the redevelopment. Per

the PDA, the Development Incentive was “intended to be re-

paid as a forgivable incentive, payable through the generation

of revenues from the development of the Property after the

date of final plan approval.”

No. 20-1868 3

Both the PDA and the Resolution, however, imposed con-

ditions and obligations on both parties before finalizing the

development agreement and distributing the funds. The Res-

olution provided that the City Council “hereby approves of

the Development Incentive Agreement … subject to such

amendments as shall be acceptable to the Mayor with the rec-

ommendation of the City Manager. Staff is authorized to ne-

gotiate and proceed with presentation of [the] Final Develop-

ment Agreement for consideration of approval at a future

date.”

The PDA likewise subjected the Development Incentive to

various contingencies. For example, Recital C of the PDA

states “the Parties have entered into this Agreement so as to

provide an incentive for [Fisk] to … proceed with the pro-

posed project, subject to the contingencies outlined herein.”

Recital E continued: “[Fisk] acknowledges that the City is not

required to provide the incentive contemplated herein ….” In-

deed, the extent of the arrangement is an “agreement to con-

ditionally approve.” The PDA further states in Article II(A)

that “[Fisk] acknowledges all contingencies outlined in this

Agreement, and agrees and acknowledges that until all such

contingencies are fully satisfied, it has no basis to detrimen-

tally rely upon the representations of the City with respect to

the availability of incentive funding.” With respect to costs in-

curred, under Article II(A) “[Fisk] agrees and acknowledges

that any costs incurred prior to approval of a planned devel-

opment agreement as contemplated herein … are incurred at

[Fisk]’s sole risk and cost until such point in time as the Prop-

erty is rezoned and the planned development agreement is

approved, and any other conditions or contingencies outlined

herein are satisfied in full.” (Emphasis added). Even in defin-

ing the “Development Incentive,” Article V(B) states “All

4 No. 20-1868

provisions of this Article V are contingent upon [Fisk] obtain-

ing final approval of its plans, rezoning the Property, lender

financing, and executing a planned development agreement

as described above.”

Amid the negotiations over the redevelopment project, a

transition in the City’s personnel marked the beginning of the

end for Fisk’s proposed Development Incentive. Around Jan-

uary 1, 2019, F. William Nicklas became the new City Man-

ager. Unsatisfied with previous due diligence, Nicklas

opened his own inquiries into Fisk’s financial affairs and de-

velopment plans. This included a series of in-person meetings

and exchanges during February and March 2019 between

Nicklas and Fisk’s principals. Nicklas requested “personal in-

formation” about the principals, their affiliates, and their fi-

nancial situation. Nicklas even spoke with the Attorney Mem-

ber’s personal banker. Nicklas also requested information

about the corporate entity itself, including a worksheet to in-

dicate its “financial viability.” Fisk never, however, affirma-

tively states in the record what amount of working capital the

principals or the corporate entity specifically had to fund the

project contemplated by the PDA. By Fisk’s account, all Nick-

las’s requests duplicated the City’s prior ones and were not

required by the Resolution or PDA.

Nicklas’s review exposed cracks in the project’s founda-

tion. In an email to Fisk dated April 1, 2019, Nicklas stated he

felt “duty-bound” to inform the Council that in his opinion

Fisk did not have “the financial capacity or the experience”

needed for the funding. Nicklas based this conclusion on sub-

missions from Fisk, including the financial worksheet, a

budget for three years of operation following 145 Fisk Ave-

nue’s completion, and the principals’ own

No. 20-1868 5

“acknowledgment” during a March 2019 meeting that neither

“ha[d] ever developed a hotel property in the past.” Nicklas

recommended Fisk withdraw its application. Specifically,

Nicklas stated:

[M]y judgment is based upon the following con-

clusions:

1. No balance sheet for 145 Fisk LLC has been

submitted, but your submittal shows no current

or long-term assets that can be pledged as col-

lateral. The corporation controls a 24,000 square

foot, uninhabitable facility with an estimated

market value of only $300,000.

2. 145 Fisk LLC has not secured any sources of

income to complete the project or operate the

project upon its completion.

3. 145 Fisk LLC has no working capital and its

operations are not generating any capital to pay

for current expenses, much less the ongoing

professional consulting fees incurred to date in

the conceptual planning phase of the project.

4. On the basis of your submittal, it appears that

145 Fisk LLC is relying upon a $2.5 million TIF

grant from the City and 100% of the balance of

the equity funding from one or more financial

institutions. Your submittal offers no working

cash from the principals, or pledged private as-

sets, or lines of credit, or other private equity to

help finance the project.

5. You do not reveal the real and comparable ho-

tel development upon which you are basing the

6 No. 20-1868

projected three-year profit and loss prospectus

you submitted. Since you have not developed a

hotel, your numbers are not rooted in an actual

operation, so far as you have revealed. They

[sic] are so many numbers on a page.

6. As you may know, TIF assistance carries a

federal income tax liability. Your submittal

shows no indication that 145 Fisk LLC could

carry that liability except at the expense of the

project’s development. 1

Disagreement ensued. In a series of subsequent ex-

changes, the Attorney Member reiterated that the corporate

entity was “simply a holding [LLC] at this point” and Nick-

las’s “specific comments 1-6 [were]n’t accurate, include[d] er-

roneous assumptions, [we]re disingenuous, or [we]re com-

pletely out of context.” The Attorney Member emphasized

“[a]ll [they] need is a loan commitment to proceed, but …

commitment and income sources cannot be secured until a

formal commitment from the City is finalized.” Fisk also re-

jected Nicklas’s recommendation to withdraw its application

for the Development Incentive.

1 The City Attorney reiterated these concerns as well. In an April 2, 2019

email attached as an exhibit to Fisk’s operative complaint, he wrote the

“fundamental question that the City Manager is trying to address is the

appropriateness of and/or necessity for a financial incentive.” Moreover,

he contextualized that the City required submission of a detailed financial

pro forma (along with other documents) in its review of previous requests

for incentives for hotel projects that a third-party consultant reviewed for

completeness, reasonableness, and accuracy. The City Attorney also in-

vited Fisk to share any additional information in its possession.

No. 20-1868 7

As it turns out, the events of 2019 were not the first en-

counter between Nicklas and Fisk’s members. The Attorney

Member represented a client in a state court lawsuit involving

the City of Sycamore. In response to an interrogatory dated

April 21, 2017, that client identified Nicklas—who was previ-

ously Sycamore’s City Manager—as a witness. Through the

proceedings, an email surfaced in which Nicklas referred to

regulatory requirements imposed by “[t]hat pesky Constitu-

tion” which “has strictures against artificial distinctions.”

However, the client in that suit was not Fisk. In fact, Fisk had

not yet come into corporate existence.

During that same period, Nicklas considered two other

development projects with which, Fisk alleges, Nicklas had

previous financial and personal ties for funding incentives.

The first was a TIF-backed hotel project with a developer

named Shodeen. Nicklas had previously collaborated on a ho-

tel with Shodeen that never came to fruition. The second was

a TIF-backed apartment development project with John Pap-

pas. Nicklas had previously represented Pappas’s major in-

vestor, who intended to invest in the TIF-backed apartment,

in consulting work.

Nicklas ultimately recommended the City terminate the

PDA with Fisk. During an April 22, 2019, meeting, the City

Council addressed Nicklas’s findings. The City’s Agenda

notes indicated the City did not receive “the necessary finan-

cials and development plans to justify a permanent commit-

ment to the allocation of $2.5 million” within 120 days of the

Resolution. Specifically, the Council found the financial doc-

uments “were barren of any assurance that the LLC could af-

ford ongoing preliminary planning and engineering fees.”

The Council further cited “insufficient project details” to

8 No. 20-1868

advance “to a formal development hearing.” Specifically, the

lack of documentation for a traffic impact study, final site en-

gineering plans, “storm water management report examining

the site’s runoff,” floor plans, and “variances or exceptions

from the City’s development ordinances.” Accordingly, “[t]he

Council determined that—on the basis of all known docu-

ments—there was no reasonable or informed basis upon

which the project could be considered viable.” The City Coun-

cil unanimously voted to terminate the PDA. Fisk filed suit

that same day.

Fisk commenced this action in federal court against Nick-

las in his individual capacity claiming violations of state and

federal law. The state law claims included tortious interfer-

ence with Fisk’s business expectancy, defamation per se, and

defamation per quod. Relevant to this appeal, Fisk sued under

42 U.S.C. § 1983 for violations of its rights under the First and

Fourteenth Amendments.

Nicklas moved to dismiss the complaint for failure to state

a claim under Federal Rule of Civil Procedure 12(b)(6). In lieu

of a reply to Nicklas’s Rule 12(b)(6) motion, Fisk obtained

leave to file an amended complaint. Fisk filed the First

Amended Complaint, the operative complaint for this appeal,

on November 5, 2019. Pertinent here, Fisk claims Nicklas vio-

lated its First Amendment right (Count II), as well as its Four-

teenth Amendment rights to due process (Count III) and

equal protection (Count IX). Nicklas again moved to dismiss

pursuant to Rule 12(b)(6). Fisk opposed and alternatively re-

quested leave to replead.

On April 27, 2020, the district court dismissed Fisk’s fed-

eral claims against Nicklas for failure to state a claim with

No. 20-1868 9

prejudice and relinquished jurisdiction over the supple-

mental state law claims. 2

II. Discussion

We review the district court’s grant of Nicklas’s motion to

dismiss de novo to determine whether Fisk has stated a claim

upon which relief can be granted. Bridges v. Gilbert, 557 F.3d

541, 545 (7th Cir. 2009). “We accept well-pleaded facts as true

and draw all reasonable inferences in the plaintiff[’s] favor.”

Shipley v. Chi. Bd. of Election Comm’rs, 947 F.3d 1056, 1060–61

(7th Cir. 2020). Notwithstanding that deference, “[t]o survive

a motion to dismiss, a plaintiff must allege ‘enough facts to

state a claim to relief that is plausible on its face.’” Boucher v.

Fin. Sys. of Green Bay, Inc., 880 F.3d 362, 365–66 (7th Cir. 2018)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

A. First Amendment

Count II of the complaint alleges that Nicklas retaliated

against Fisk for exercising its First Amendment right. Specifi-

cally, Fisk alleges that as City Manager of DeKalb, Nicklas

blocked the Development Incentive and “orchestrated [a]

campaign” against Fisk because its Attorney Member ex-

posed unflattering information about Nicklas and named him

in discovery in connection with the unrelated 2017 lawsuit.

Fisk pleaded that the Attorney Member’s representation in

2 Fisk also added the City of DeKalb as a defendant in the First Amended

Complaint, claiming breach of contract and the duty of good faith and fair

dealing. The City moved to dismiss, or transfer, based on a forum selection

clause in the PDA. The district court relinquished the state law claims

against the City and therefore denied its motion to transfer as moot.

10 No. 20-1868

the 2017 lawsuit fell within “the First Amendment’s right to

petition the government for the redress of grievances.” The

district court dismissed Fisk’s First Amendment retaliation

claim, reasoning that Fisk did not engage in protected activ-

ity. That is because the client in the 2017 lawsuit, who is not a

party to this litigation, engaged in protected activity by exer-

cising his or her right to petition the government when he or

she accessed the courts. Thus, that nonparty client has the

right to be free from retaliation for exposing Nicklas, not Fisk.

To make a prima facie showing on its First Amendment

retaliation claim, Fisk must establish that “(1) it engaged in

activity protected by the First Amendment, (2) it suffered a

deprivation that would likely deter First Amendment activity

in the future, and (3) the First Amendment activity was … ‘at

least a motivating factor’ in the Defendant[’s] decision to take

the retaliatory action.” Woodruff v. Mason, 542 F.3d 545, 551

(7th Cir. 2008) (quoting Massey v. Johnson, 457 F.3d 711, 716

(7th Cir. 2006)). We have recognized that a plaintiff’s exercise

of “[t]he First Amendment right to petition the government

for the redress of grievances” may qualify for the first prong

of a First Amendment retaliation claim. See id. Furthermore,

the right to petition “extends to the courts in general and ap-

plies to litigation in particular.” Id. (citing Cal. Motor Transp.

Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972); NAACP v.

Button, 371 U.S. 415, 429–30 (1963)).

On appeal, Fisk argues the district court erred in conclud-

ing it did not engage in protected conduct to satisfy the first

prong of a First Amendment retaliation claim. Fisk asserts

that its protected conduct was “the work of one of its princi-

pals in [the 2017] litigation.” It appears that Fisk now contends

that the Attorney Member exercised his own First

No. 20-1868 11

Amendment right to free speech, as distinct from his right to

petition the government. Specifically, Fisk asserts that the At-

torney Member exposed Nicklas in the 2017 litigation, while

acting as Fisk’s agent, and thus the protected conduct is at-

tributable to Fisk. Failing that, Fisk argues that even if we re-

ject its arguments based on agency theory, Nicklas’s retalia-

tory conduct against the Attorney Member for exercise of his

free speech right nonetheless chilled Fisk from exercising its

own First Amendment rights.

The district court did not “erroneously ignore[] agency

principles” when it concluded that Fisk did not engage in pro-

tected activity in the 2017 lawsuit. The agency question is ir-

relevant because the district court rightfully found that the

underlying right to be free from retaliation for petitioning the

government belonged to neither Fisk nor the Attorney Mem-

ber. As the district court explained, “[t]he Attorney Member

named Nicklas as a witness in that suit on behalf of his client

in that case. He did not do so on behalf of [Fisk].” (Emphasis

added). Stated another way, the client’s exercise of its First

Amendment petition rights in 2017 cannot be Fisk’s “pro-

tected conduct” for the purposes of Fisk’s “petition for redress

of grievances retaliation claim.” See Bridges, 557 F.3d at 553

(dismissing claim because individual not party to lawsuit

“ha[d] no ‘underlying claim’ that implicates his own right of

access to the courts” (emphasis added) (quoting Christopher v.

Harbury, 536 U.S. 403, 415 (2009))). Fisk did not exercise its

First Amendment petition right; in fact, Fisk did not even exist

prior to 2018. That First Amendment right ran to the client in

the 2017 suit. Fisk cannot “rely on another plaintiff’s injury in

support of [its] own … claim” to show it engaged in protected

activity. Id. at 554.

12 No. 20-1868

To the extent that Fisk advances a retaliation argument

based on the exercise of free speech rights through the Attorney

Member, that argument was waived.3 Fisk contends that it en-

gaged in protected free speech when the Attorney Member

filed evidence and witness disclosures implicating Nicklas in

the 2017 suit. Cf. id. at 551–52 (reasoning plaintiff’s affidavit

supplying his eyewitness account of alleged incident of in-

mate mistreatment by prison officials could plausibly amount

to protected First Amendment speech). However, Fisk did not

frame Count II in the operative complaint as a retaliation

claim based on its exercise of its free speech rights. Rather,

Count II referred exclusively to “[t]he First Amendment right

to petition the government for the redress of grievances [that]

extends to the courts in general and is protected activity,” and

alleged “[t]hat filing, prosecuting and defending the lawsuit

where Defendant Nicklas was discovered as referring to the

3 In its opening brief on appeal, Fisk refers broadly to a single form of

protected conduct to satisfy the first prong of its First Amendment retali-

ation claim: “the work of one of its principals in parallel litigation.” Then,

in reply, Fisk appears to refer to two forms of “protected conduct”: “Par-

agraph 139 of the Amended Complaint alleges a retaliation against speech

and for accessing the courts, which is also a speech claim.” To the extent

Fisk attempts to add a new argument regarding the Attorney Member’s

own “access[] [to] the courts,” Fisk may not raise a new theory in its reply

brief. United States ex rel. Berkowitz v. Automation Aids, Inc., 896 F.3d 834,

843 (7th Cir. 2018) (“Arguments raised for the first time in an appellate

reply brief are waived.”). However, whether we characterize this argu-

ment as two theories or one does not affect the crux of Fisk’s argument:

The Attorney Member, acting as Fisk’s agent, engaged in protected con-

duct when it participated in the 2017 lawsuit, which in Fisk’s view satis-

fied the first prong for a First Amendment retaliation claim. Nor does it

affect our analysis. As we stated above, the petition right belonged to the

client, and as we explain infra, Fisk never presented the free speech argu-

ment to the district court, and therefore it is waived.

No. 20-1868 13

Constitution as ‘pesky’ was a protected activity because ‘the

First Amendment’s right to petition the government for the

redress of grievances extends to the courts in general and ap-

plies to litigation in particular.’” In opposition to Nicklas’s

Rule 12(b)(6) motion in the district court, Fisk referred to

“[t]he right to petition for redress of grievances … includ[ing]

the right to file a claim before a judicial body. [Cal. Motor

Transp., 404 U.S. at 510]. The right to petition provides addi-

tional protection for communication specifically aimed at the

redress of grievances.”

Fisk therefore advances this free speech theory for the first

time on appeal. “In civil litigation, issues not presented to the

district court are normally forfeited on appeal.” Russian Media

Grp., LLC v. Cable Am., Inc., 598 F.3d 302, 308 (7th Cir. 2010).

As a final backstop, Fisk asserts that “[e]ven setting agency

principles aside” the First Amendment applies to close par-

ties. In Fisk’s view, Nicklas retaliated against the Attorney

Member for his protected speech, which then chilled Fisk’s

speech. As with its free-speech-retaliation theory described

above, Fisk did not argue this close-party theory to the district

court below, so we decline to reach it on appeal. Id. (“[I]t will

be a rare case in which failure to present a ground to the dis-

trict court has caused no one—not the district judge, not us,

not the appellee—any harm of which the law ought to take

note.” (citation and internal quotation marks omitted)).

Because Fisk has not alleged that the corporate entity itself

engaged in any protected conduct, its First Amendment claim

fails at the outset.

14 No. 20-1868

B. Due Process

We consider next Fisk’s claim in Count III that Nicklas de-

prived it of its property in violation of the Fourteenth Amend-

ment’s Due Process Clause. Relying on our decision in Bar-

rows v. Wiley, 478 F.3d 776 (7th Cir. 2007), the district court ex-

plained that Fisk had no constitutionally protected property

interest because the PDA and contract for the purchase pro-

vided only “a right to acquire the property,” not a right in the

property itself, see id. at 780.

To prevail on a procedural due process claim, a plaintiff

must make a threshold showing that it “possessed a constitu-

tionally protected property interest.” Kim Constr. Co., Inc. v.

Bd. of Trs. of Vill. of Mundelein, 14 F.3d 1243, 1245 (7th Cir. 1994)

(citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538

(1985)). “A property interest for purposes of the Due Process

Clause is created by ‘existing rules or understandings that

stem from an independent source such as state law—rules or

understandings that secure certain benefits and that support

claims of entitlement to those benefits.’” Id. at 1245–46 (quot-

ing Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972)). But as we

reiterated in Kim, “property is what is securely and durably

yours under state … law, as distinct from what you hold sub-

ject to so many conditions as to make your interest meager,

transitory, or uncertain.” Id. at 1246 (alteration in original)

(quoting Reed v. Village of Shorewood, 704 F.2d 943, 948 (7th Cir.

1983), overruled on other grounds by Brunson v. Murray, 843 F.3d

698 (7th Cir. 2016)).

On appeal, Fisk argues that the Resolution and PDA cre-

ated a specific property right to the incentive. Alternatively,

Fisk contends that the business relationship created by the

No. 20-1868 15

Resolution, the contract to purchase the underlying land

(which was contingent on receipt of the incentive), and the

right to zoning approval were, on their own, each sufficient

for Fourteenth Amendment purposes.

Fisk’s argument that the Resolution created a protectable

interest fails. We have stated that “[t]o demonstrate a prop-

erty interest worthy of protection under the [F]ourteenth

[A]mendment’s [D]ue [P]rocess [C]lause, a party may not

simply rely upon the procedural guarantees of state law or

local ordinance.” Cain v. Larson, 879 F.2d 1424, 1426 (7th Cir.

1989). “[O]nly when the mandated procedure contains within

it a substantive liberty or property interest” can such “purely

procedural rules of … local law” give rise to a due process

claim. Lavite v. Dunstan, 932 F.3d 1020, 1033 (7th Cir. 2019).

The Illinois Supreme Court has pronounced that “[a] resolu-

tion or order is not a law, but merely the form in which the

legislative body expresses an opinion.” Chi. & N. Pac. R.R. Co.

v. City of Chicago, 51 N.E. 596, 598 (Ill. 1898). The existence of

the Resolution alone thus does not suffice to create a protected

property interest; Fisk must identify some other “substantive

liberty or property interest embedded within [relevant] pro-

cedural regulations.” Lavite, 932 F.3d at 1034.

Fisk has not met that burden, as the plain language of the

Resolution belies Fisk’s characterization of it as “non-discre-

tionary,” i.e., as offering anything more than procedural

rights. The Resolution was entitled “Authorizing A Prelimi-

nary Development Incentive Agreement,” and the City Coun-

cil resolved that “[s]taff is authorized to negotiate and pro-

ceed with presentation of Final Development Agreement for

consideration of approval at a future date.” (Emphases

added). By its own terms, the Resolution did not bind or

16 No. 20-1868

otherwise “substantively limit[]” the City “by mandating a

particular result when certain clearly stated criteria are met.”

See Kim, 14 F.3d at 1248 (“Where ‘the requisite ... mandatory

language’ is lacking, no protected interest is created.” (altera-

tion in original) (quoting Ky. Dep’t of Corr. v. Thompson,

490 U.S. 454, 464 (1989))); Hohmeier v. Leyden Cmty. High Schs.

Dist. 12, 954 F.2d 461, 465 (7th Cir. 1992) (“A rule or regula-

tion … must have ‘binding force’ in order to create constitu-

tionally protected property.”). We therefore agree with the

district court’s conclusion that no constitutionally protected

property interest arose from the Resolution.

The clear lack of binding language also defeats Fisk’s un-

supported assertion that the PDA created a protectable inter-

est. The PDA was riddled with discretionary language. True,

the PDA states, “the Parties agree and acknowledge that the

Development Incentive as described herein is necessary in or-

der to induce this project to occur, and satisfies all require-

ments applicable to such an incentive.” However, tellingly,

Fisk itself describes the PDA as a “mandatory consideration of

the project.” (Emphasis added). The PDA provided that Fisk

“acknowledge[d] that the City is not required to provide the

incentive contemplated herein.” Elsewhere, the PDA further

stated that until Fisk met all contingencies outlined in the

PDA, “it ha[d] no basis to detrimentally rely upon the repre-

sentations of the City with respect to the availability of incen-

tive funding.” The PDA therefore lacked “sufficient directives

to the decisionmaker to support a claim of entitlement” to the

Development Incentive. See Kim, 14 F.3d at 1248. For that

same reason, Fisk’s reliance on Barrows is misplaced; unlike

Barrows, the parties here did not agree that “a right to” the

contract existed. 478 F.3d at 779. Even setting that issue aside,

Barrows offers little help to Fisk, because we held in that case

No. 20-1868 17

that the plaintiff did not have a cognizable procedural due

process claim. Id. at 781–82.

Nor does Fisk’s argument that the Resolution created a

“business relationship” affect our analysis. Under Illinois law,

the existence of a business relationship may be cognizable for

tort protection. See Miller v. Lockport Realty Grp., Inc.,

878 N.E.2d 171, 175 (Ill. App. Ct. 2007). But Illinois tort law

only “recognizes that a person’s business relationships consti-

tute a property interest” for purposes of creating an “enti-

tle[ment] to protection from unjustified tampering by an-

other.” Id. (citing Belden Corp. v. InterNorth, Inc., 413 N.E.2d 98

(Ill. App. Ct. 1980)). Illinois tort law does not transform a busi-

ness relationship into a constitutionally protected property

right. See Reed, 704 F.2d at 948 (urging courts to “look behind

labels” and instead “ask whether under Illinois law” the in-

terest in question is “securely and durably” the plaintiff’s); see

also Rebirth Christian Acad. Daycare, Inc. v. Brizzi, 835 F.3d 742,

747–48 (7th Cir. 2016) (“[W]hen determining the existence of

a property interest … ‘we must look behind labels.’” (quoting

Reed, 704 F.2d at 948)). For the reasons already stated, the Res-

olution did not create a constitutionally protected property

interest.

We find similarly unavailing Fisk’s remaining argument

that the underlying contract for the building and the rezoning

decision established cognizable constitutional property inter-

ests. No cognizable interest stems from the underlying con-

tract for the building. The contract was conditioned on the ex-

ecution of a final development agreement, and thus that con-

tract represented not a secure property interest but rather the

hope to acquire one. See Cole v. Milwaukee Area Tech. Coll. Dist.,

634 F.3d 901, 904 (7th Cir. 2011) (“To have a protectable

18 No. 20-1868

property interest in a benefit … a plaintiff must have more

than an ‘abstract need or desire for it’ and more than a ‘uni-

lateral expectation of it.’” (quoting Roth, 408 U.S. at 577)).

Meanwhile, the contention that Fisk lost “a mechanism for the

property to be rezoned” fares no better because the zoning

process is merely a “local procedural protection[],” which

“do[es] not by [itself] give rise to [a] federal due process inter-

est[].” Lavite, 932 F.3d at 1033.

Finally, adequate state law remedies remained available to

Fisk. The district court relinquished supplemental jurisdiction

over Fisk’s state law claims, and whether Nicklas’s or the

City’s conduct violated state laws is for the state courts to de-

cide. In line with Nicklas’s arguments, “[w]e have similarly

held that, regardless of how a plaintiff labels an objectionable

land-use decision (i.e., as a taking or as a deprivation without

substantive or procedural due process), recourse must be

made to state rather than federal court.” CEnergy-Glenmore

Wind Farm No. 1, LLC v. Town of Glenmore, 769 F.3d 485, 489

(7th Cir. 2014).

Fisk cannot claim a constitutionally protected property in-

terest, and so its procedural due process claim fails at the

threshold. Accordingly, the issue of whether Fisk “was af-

forded due process before being deprived of that interest does

not arise.” Kim, 14 F.3d at 1245.

C. Equal Protection

Fisk argues in Count IV that Nicklas singled it out for dis-

parate treatment without a rational basis in violation of the

Fourteenth Amendment’s guarantee against “den[ial] to any

person within its jurisdiction the equal protection of the

laws.” U.S. Const. amend. XIV, § 1. Specifically, Fisk claims

No. 20-1868 19

that Nicklas, in his role as City Manager, blocked the Devel-

opment Incentive arbitrarily and discriminately because of

personal animus or favoritism toward other developers. The

district court concluded that Fisk pled itself out of court by

providing several legitimate reasons for Nicklas’s conduct,

defeating any “class of one” equal protection claim under the

standard articulated in Miller v. City of Monona, 784 F.3d 1113,

1121 (7th Cir. 2015) (quoting Village of Willowbrook v. Olech,

528 U.S. 562, 564 (2000)).

Under the Fourteenth Amendment’s Equal Protection

Clause, a plaintiff who is not a member of a “protected class”

may nonetheless bring a claim under the “so-called ‘class-of-

one’ theory.” Fares Pawn, LLC v. Ind. Dep’t. of Fin. Insts.,

755 F.3d 839, 841 (7th Cir. 2014). To state a claim under this

theory, a plaintiff must allege “(1) that [it] has been intention-

ally treated differently from others similarly situated, and

(2) that there is no rational basis for the difference in treat-

ment.” Id. at 845 (citing Olech, 528 U.S. at 564). For the second

criteria, we ask whether “a conceivable rational basis for the

difference in treatment” exists. D.B. ex rel. Kurtis B. v. Kopp,

725 F.3d 681, 686 (7th Cir. 2013). In fact, the rational basis need

not even be “the actual justification.” Id. “[A]ny reasonably

conceivable state of facts that could provide a rational basis”

will suffice. See Scherr v. City of Chicago, 757 F.3d 593, 598 (7th

Cir. 2014) (quoting Lauth v. McCollum, 424 F.3d 631, 634 (7th

Cir. 2005)). We have further clarified that “[i]t is only when

courts can hypothesize no rational basis for the action that al-

legations of animus come into play.” Flying J Inc. v. City of New

Haven, 549 F.3d 538, 547 (7th Cir. 2008).

Fisk is not a member of a protected class, so it proceeds

under this class-of-one theory. On appeal, Fisk argues there

20 No. 20-1868

was no rational basis for Nicklas’s conduct. Failing that, Fisk

contends that McDonald v. City of Winnetka, 371 F.3d 992 (7th

Cir. 2004), held that even if Fisk’s complaint revealed a ra-

tional basis, its class-of-one-claim can nonetheless survive be-

cause Nicklas blocked the Development Incentive out of ani-

mus for embarrassing him in the 2017 lawsuit or favoritism,

see id. at 1001 (quoting Olech, 528 U.S. at 564).

The parties dispute whether Fisk can point to an appropri-

ate comparator to satisfy the first criteria for a class-of-one

claim, which requires intentionally different treatment from

others similarly situated. “Normally, a class-of-one plaintiff

will show an absence of rational basis by identifying some

comparator—that is, some similarly situated person who was

treated differently.” Fares Pawn, 755 F.3d at 845. “[I]f all prin-

cipal characteristics of the two individuals are the same, and

one received more favorable treatment, this may show there

was no proper motivation for the disparate treatment.” Id.

(quoting Swanson v. City of Chetek, 719 F.3d 780, 784 (7th Cir.

2013)). As explained below, however, because we conclude

that Nicklas had a rational basis for blocking the Develop-

ment Incentive, we need not resolve the issue of whether Fisk

can satisfy the first criteria for a class-of-one claim. Id. at 846

(holding summary judgment appropriate where no reasona-

ble jury could find “[plaintiff] and the comparator were simi-

larly situated, or there was a rational basis for any differential

treatment”).

We agree with the district court that Fisk’s complaint re-

vealed a rational basis to explain why Nicklas recommended

termination of the PDA. Relying on Fisk’s own submissions

about the corporate entity and principals’ finances, Nicklas

ultimately concluded the project was not “financially viable.”

No. 20-1868 21

Nicklas’s due diligence revealed that Fisk had “no current or

long-term assets that can be pledged as collateral”—other

than the prospect of the Development Incentive—to obtain a

loan for the estimated approximate $4,600,000 balance needed

to pursue the project. Nicklas’s concerns about Fisk’s financial

wherewithal to execute the planned multimillion-dollar pro-

ject alone qualifies as a “reasonably conceivable state of facts

that could provide a rational basis.” Scherr, 757 F.3d at 598

(emphasis omitted) (citation omitted). Likewise, those finan-

cial concerns together with the litany of others cited in the

City Council’s April 22, 2019, meeting, including Fisk’s failure

to submit plans for a traffic study, square footage, storm wa-

ter management, and variances and ordinances, could pro-

vide a conceivable rational basis for blocking the Develop-

ment Incentive.

Fisk attempts to cast doubt on Nicklas’s stated reasons for

blocking the Development Incentive, but Fisk does not carry

its burden to “negative any reasonably conceivable state of

facts that could provide a rational basis” for Nicklas’s con-

duct. Bd. of Trs. of Univ. of Ala. v. Garrett, 531 U.S. 356, 367

(2001) (citation and internal quotation marks omitted); Bell v.

Duperrault, 367 F.3d 703, 707 (7th Cir. 2004) (burden lies with

plaintiff). Fisk makes three arguments why “[l]ogic, reason,

and common sense are missing” from this case, “given the pa-

tently and knowingly false statements being publicly re-

leased.” First, Fisk appears to assert that Nicklas’s public

statements to the media regarding concerns about Fisk repre-

sent nothing more than “an orchestrated campaign of retalia-

tion” for the 2017 lawsuit and thus evidence illegitimate ani-

mus. Fisk thus questions Nicklas’s motivation in blocking the

Development Incentive, which we do not consider until we

can “hypothesize no rational basis.” Flying J, 549 F.3d at 547.

22 No. 20-1868

Second, and more relevant on appeal, Fisk challenges

Nicklas’s doubts about Fisk’s financial health as a rational ba-

sis. However, Fisk does not affirmatively state what working

capital or collateral the principals had in hand. Fisk’s general-

ized, conclusory argument that Nicklas’s stated reasons for

terminating the PDA were “untrue reasons” and were “false,

illegitimate claims” does not “negative” Nicklas’s specific

doubts about Fisk’s financial health. 4 See id. at 546 (applying

Lauth standard on Rule 12(b)(6) motion). In its reply brief, Fisk

adds “alleging depend[e]nce on lender financing is an irra-

tional dichotomy: if [Fisk] had no working capital or collat-

eral, it could not receive lender financing.” It was not irrational

for Nicklas to conclude the City should not finance a company

that relies solely on those City-provided funds to obtain the

remainder of the money needed to complete the project. “The

rational-basis requirement sets the legal bar low ….” Kopp,

725 F.3d at 686. Nicklas’s concerns about the use of millions

of dollars in taxpayer funds easily clear that bar.

Third and finally, Fisk argues that another of Nicklas’s

proffered reasons for terminating the PDA, that the entity

lacked hotel experience, is not a rational basis either. Fisk con-

tends that it should have been “evaluated in its own right sep-

arate from its principal members or … only … through its two

principal-agent members.” We do not need to opine on whose

experience matters: Fisk has not claimed that Fisk or its

4At oral argument, Fisk for the first time affirmatively stated that it had

“working capital.” It referred to a March 2019 phone call between Nicklas

and the principal’s banker about the principal’s personal finances. Fisk did

not raise this argument before the district court, and it is therefore waived.

See Jackson v. Parker, 627 F.3d 634, 640 (7th Cir. 2010).

No. 20-1868 23

principals were not inexperienced. 5 Therefore, Fisk has not

negated Nicklas’s claim that it was inexperienced as a “con-

ceivable” rational basis either. See Miller v. City of Monona,

784 F.3d at 1121–22 (reasoning dismissal is warranted where

“the complaint reveals a rational basis … for the actions of

[the defendant]”).

In sum, the only evidence to which Fisk points to support

its position that Nicklas’s reasons were neither legitimate nor

true is unavailing. Fisk does not refute any of Nicklas’s con-

cerns about Fisk’s financial health or inexperience. The only

thing lacking “logic, reason, and common sense” is Fisk’s con-

voluted attempt to invalidate these justifications.

Even failing to show a valid comparator, Fisk pushes for-

ward, insisting that its class-of-one claim can proceed because

it has alleged that Nicklas acted on animus flowing from the

2017 litigation. Fisk relies on our decision in McDonald to ar-

gue that “the existence of a rational basis is not necessarily

fatal” to its case. Specifically, Fisk points to our statement in

McDonald that a plaintiff’s burden is an either–or proposition:

either “there is no rational basis for the difference in treatment

or the cause of the differential treatment is a ‘totally illegiti-

mate animus.’” McDonald, 371 F.3d at 1001 (emphasis added).

However, since McDonald we have clarified that “[i]t is only

when courts can hypothesize no rational basis for the action

that allegations of animus come into play.” Flying J, 549 F.3d

at 547. Thus, even assuming Nicklas had an ulterior motive,

5 Fisk’s broad statements that Nicklas’s stated reasons were “untrue” do

not suffice here either. Although Fisk affirmatively argued that the princi-

pals had experience for the first time during oral argument, it did not raise

this argument before the district court or in its briefing on appeal, and it

is therefore waived as well. See Jackson, 627 F.3d at 640.

24 No. 20-1868

the finding of a rational basis is “the end of the matter—ani-

mus or no.” Fares Pawn, 755 F.3d at 845.

Up to this point, Fisk has not adequately pleaded any of

its claims. Fisk’s additional arguments relying on our deci-

sions in Esmail v. Macrane, 53 F.3d 176 (7th Cir. 1995), and

Swanson v. City of Chetek do not help Fisk because unlike this

case, in those cases we did not find a legitimate basis for the

state actors’ conduct. See Esmail, 53 F.3d at 179–80 (reversing

dismissal where “the unequal treatment is alleged to have

been the result solely of a vindictive campaign by the

mayor”); Swanson, 719 F.3d at 784–85 (reversing in absence of

alternative explanation for government actor’s facially illegit-

imate, hostile conduct).

Fisk’s allegations do not carry its burden to invalidate

Nicklas’s rational basis for blocking the Development Incen-

tive. Thus, the only way Fisk could proceed at this juncture

would be to identify a sufficiently similar developer with “red

flags” regarding its financial wherewithal and other deficien-

cies. Fares Pawn, 755 F.3d at 848. Fisk did not do so. Accord-

ingly, nothing in the complaint “cause[s] us to question”

Nicklas’s treatment of Fisk. See Sung Park v. Ind. Univ. Sch. of

Dentistry, 692 F.3d 828, 833 (7th Cir. 2012). Fisk has therefore

failed to state a violation of its Fourteenth Amendment equal

protection rights.

III. Conclusion

For the foregoing reasons, we AFFIRM the opinion of the

district court granting defendant’s motion to dismiss.