316 F. Supp. 3d 1061
E.D. Ill.2018Background
- Keystone Montessori (a 501(c)(3) school) leased and then purchased a River Forest property in 1998 after being steered away from another site; the Village's zoning prohibited school use at the new site without a Planned Development Permit.
- Keystone requested forbearance and began occupying the site while applying for the Planned Development Permit; the Village conditioned the permit on Keystone agreeing not to seek a property tax exemption.
- The executed Agreement required Keystone to remain fully subject to real estate taxes, threatened permit nullification if the property became tax-exempt, and provided large liquidated-damage remedies and waiver of procedural rights (including waiver of appeal and discovery).
- Keystone later sought amendments and tax-relief proposals (2002–2011); taxes for 2016–2017 went delinquent and the property entered foreclosure; Keystone paid ~$1.1M in property taxes to date.
- Keystone sued in state court (claims: public policy voidance, unconstitutional condition, illegal zoning contract, perpetual contract, and equal protection); Village removed to federal court and moved to dismiss; both parties sought preliminary injunctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Agreement violated the unconstitutional-conditions doctrine (federal Takings analysis) | Village coerced Keystone into surrendering right to seek statutorily-created property-tax exemption by conditioning the permit on tax payments | Claims accrued at contract formation and in any event conditioning permit on tax payment does not implicate federal Takings/Takins-Clause protections | Dismissed: right to seek a statutory tax exemption is not a federal constitutional right; taxation is not a taking under the Takings Clause, so unconstitutional-conditions claim fails as a matter of law |
| Whether Keystone stated an Equal Protection (class-of-one) claim | Village irrationally singled out Keystone as the only nonprofit required to forfeit tax-exemption rights | Village acted to secure tax revenue and granted Keystone favorable zoning relief (a permit) that others did not need | Dismissed: complaint does not plausibly allege Keystone was treated differently than similarly situated parties; granting the permit was favorable treatment, not an irrational singling out |
| Whether federal claims are time-barred (limitations) | (Implicit) Claims are timely or tolling applies | Claims accrued at Agreement formation in 1998, so federal claims are barred by statute of limitations; contract claims likewise time-barred | Court did not decide merits of limitations at pleading stage for all claims but noted Village's defense; ultimately federal claims dismissed on merits, so remand to state court for contract claims |
| Whether to grant preliminary injunctions | Keystone sought relief against enforcement of Agreement/tax collection | Village opposed injunctions | Motions for preliminary injunction denied as moot after dismissal of federal claims and remand; court remanded remaining state-law contract claims to state court |
Key Cases Cited
- Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013) (articulates unconstitutional-conditions test in land-use permit context)
- Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987) (establishes essential-nexus requirement for permit conditions)
- Dolan v. City of Tigard, 512 U.S. 374 (1994) (requires rough proportionality between permit condition and government interest)
- Empress Casino Joliet Corp. v. Giannoulias, 231 Ill.2d 62 (2008) (Illinois Supreme Court: Takings Clause does not apply to taxation)
- Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) (plurality/concurring views limiting Takings analysis for monetary obligations)
- Village of Willowbrook v. Olech, 528 U.S. 562 (2000) (class-of-one equal protection framing)
- RWJ Mgmt. Co. v. BP Prods. N. Am., Inc., 672 F.3d 476 (7th Cir. 2012) (district court should remand state-law claims if federal claims are dismissed)