J.P. STADTMUELLER, District Judge.
On July 1, 2010, the plaintiff, Mirbeau of Geneva Lake LLC ("Mirbeau"), filed its Second Amended Complaint that, in relevant part, added defendants (collectively "non-city defendants") Lower Density Development, LLC, ("LDD"), Thomas Muenster ("Muenster"), James Connors ("Connors"), and Richard Malmin ("Malmin") as parties to the action. (Docket # 77). A bevy of motions soon followed. On August 5, 2010, the plaintiff filed a motion for default judgment against Mr. Malmin. (Docket #91). The following day, LDD and Mr. Muenster filed a motion to dismiss the complaint. (Docket # 96). Within the hour, two additional motions were filed. Mr. Malmin filed a motion to set aside the default judgment (Docket # 100), and Mr. Connors filed a motion to dismiss the complaint. (Docket #101). On August 27, 2010, the plaintiff filed a response to the three motions filed on August 5, 2010 (Docket #'s 115, 116, 118), and also filed a motion for leave to file the Third Amended Complaint to repair infirmities with the Second Amended Complaint. (Docket # 119). Less than a month later, the plaintiff filed a motion for leave to file a "sur-response" brief in opposition to the motions to dismiss. (Docket # 127). On October 20, 2010, the plaintiff filed an expedited motion to strike a supplemental response to the motion to dismiss by Messrs. Connors and Malmin. (Docket # 135). In response to the plaintiff's motion to strike, defendants Connors and Malmin submitted a motion to file supplemental authority on October 22, 2010. (Docket # 136). As promised in this court's August 10, 2010 order (Docket #111), the court, in this order, will now resolve the various motions pending on this case's docket such that this action can get back on track. The court begins by addressing the motions to dismiss.
As this court has noted in its previous orders, this case arises from Mirbeau's
Most relevant to the present motions to dismiss, the Second Amended Complaint alleges two central claims against LDD and Messrs. Muenster, Connors, and Malmin. Before delving into those claims, however, it is important for the court to note who the newest parties to this dispute are. LDD is a Delaware limited liability company that attempted to purchase the same plot of land that Mirbeau was expecting to develop. (Sec. Am. Compl. ¶¶ 14; 44). Mr. Muenster, a resident of South Dakota, "is the manager of LDD." Id. ¶ 15. Mr. Connors is the current Mayor of Lake Geneva and, according to the latest complaint, at the time of the events driving the legal claims alleged against him, was the "founder and treasurer of Vote-No Mirbeau-Hummel," ("Vote-No"), a political action subcommittee formed to oppose Mirbeau's zoning amendment application. Id. ¶¶ 16, 132. Mr. Malmin is a resident of Lake Geneva and was an "active" member
In its eighth claim for relief,
Mirbeau's seventh claim for relief in its Second Amended Complaint, in contrast to the eighth claim for relief, is rather terse. Mirbeau generally alleges that the "City Defendants and the Noncity Defendants agreed to a plan to violate Mirbeau's federal and state constitutional rights and intentionally interfere with Mirbeau's Purchase Contract." Id. ¶ 113. The seventh claim for relief further explains that the collective "plan" of the defendants was aimed at ... "prevent[ing] Mirbeau from purchasing and developing the property,... delay[ing] the rezone review process until Mirbeau's purchase contract expires,... forc[ing] a sale of the property to LDD for less than its market value and ... allow[ing] the Noncity defendants, FOGL members, and other to control development" of the property in question. Id. The complaint alleges that the use of the referendum was a central means by which the defendants "delay[ed] and ultimately den[ied] Mirbeau's development." Id.
With the content of the Second Amended Complaint sufficiently in mind, the court proceeds to address the two pending motions to dismiss the complaint by: (1) Mr. Muenster and LDD; and (2) Messrs. Connors and Malmin. While there are two separate motions to dismiss, the legal standards guiding the court in addressing both motions remain the same. Fed. R.Civ.P. 12(b)(6) permits a defendant to make a motion to dismiss a complaint for failure to state a claim upon which relief can be granted. To survive a 12(b)(6) motion to dismiss, the plaintiff's complaint must only "contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)) (emphasis added). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
The briefing on the issue of the federal claim against the non-city defendants has been a bit disjointed to say the least. The plaintiff, in its Second Amended Complaint, alleged that its seventh claim for relief arose under 42 U.S.C. § 1985(3). Of course, no such statute exists. As a result, the non-city defendants were forced to guess at what claim for relief the plaintiff was attempting to allege against the two defendants. The non-city defendants guessed that Mirbeau was trying to allege a 42 U.S.C. § 1985(3) claim, a seemingly logical conclusion given that: (1) the Second Amended Complaint's seventh claim for relief was entitled "conspiracy to injure Mirbeau and violate its constitutional rights," (Sec. Am. Compl. ¶ 113); and (2) 42 U.S.C. § 1985(3) is the federal cause of action for "conspiracy to interfere with civil rights." Mirbeau stated in its response brief that "the statutory reference in ... the Second Amended Complaint is a `typo.'" (Pl.'s Resp. Br.
To recover under Section 1983, a plaintiff must show that: (1) they were deprived of a right secured by the Constitution or laws of the United States; and (2) the deprivation was visited upon them by a person or persons acting under color of state law. McKinney v. Duplain, 463 F.3d 679, 683 (7th Cir.2006). Ordinarily, the latter requirement prevents private citizens, such as the non-city defendants, from being held liable under Section 1983. However, "if a private citizen conspires with a state actor, then the private citizen is subject to Section 1983 liability." Brokaw v. Mercer County, 235 F.3d 1000, 1016 (7th Cir.2000). "To establish Section 1983 liability through a conspiracy theory, a plaintiff must demonstrate that: (1) a state official and private individual(s) reached an understanding to deprive the plaintiff of his constitutional rights, and (2) those individual(s) were willful participants in joint activity with the State or its agents." Reynolds v. Jamison, 488 F.3d 756, 764 (7th Cir.2007) (internal citations omitted); see also Stagman v. Ryan, 176 F.3d 986, 1003 (7th Cir.1999) ("We have held that to establish joint action, a plaintiff must demonstrate that the public and private actors shared a common, unconstitutional goal.").
With the general legal framework for examining a Section 1983 conspiracy claim discussed, the court now examines the Section 1983 claim with respect to LDD and Mr. Muenster. In its brief to the court, Mirbeau does not contend that Muenster and LDD conspired with the city defendants to violate the plaintiff's First Amendment rights, the second claim for relief in the Second Amended Complaint. Rather, Mirbeau merely argues that Mr. Muenster and LDD conspired with the city defendants to violate the plaintiff's equal protection rights. (Pl.'s Resp. Br. at 6) ("The Court has already ruled that Mirbeau's original complaint [with respect to an equal protection violation] stated a claim for violation of § 1983 against the City and the City defendants ... The same deprivation forms the basis of conspiracy claims against LDD and Muenster"). The underlying equal protection violation alleged by Mirbeau arises under the "class of one" equal protection theory, where the government intentionally treats a plaintiff differently from others similarly situated without any rational basis for the difference in treatment other than perhaps a "totally illegitimate animus." See Vill. of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000) (per curiam). As such, in order for Mirbeau's federal claim against LDD and Muenster to survive the Fed.R.Civ.P. 12(b)(6) challenge, the complaint must allege that LDD, Muenster and the City officials had a "meeting of the minds" to deprive Mirbeau of its constitutional right to not be irrationally treated by the City government.
However, Mirbeau's Section 1983 claim against LDD and Muenster simply does not indicate that the two defendants conspired with the City officials for the purpose of violating the plaintiff's Fourteenth Amendment rights to equal protection under the law. In fact, nearly all of the passages of the latest complaint
While the plaintiff may argue that the court is splitting hairs by distinguishing between an alleged goal to violate Mirbeau's constitutional rights and an alleged goal to profit at Mirbeau's expense, the Seventh Circuit's jurisprudence mandates such a distinction. In Hanania, the plaintiff, per the advice of her private lawyer, signed a "worthless settlement agreement" that extinguished the plaintiff's claims against the City of Cicero. Hanania, 212 F.3d at 357. The plaintiff filed a Section 1983 suit against her lawyer, arguing that the lawyer "was in cahoots with the Cicero officials when he convinced [her] to sign off on a settlement that was not in her interests," as the settlement agreement was brazen enough to include a section committing Cicero to refer litigation matters involving the city to the attorney's law firm. Id. 355-56. The Seventh Circuit affirmed the decision of the district court to dismiss the Section 1983 claim against the plaintiff's lawyer, noting that the "most that can be said about the [plaintiff's] allegations is that [the defendant's] actions do not appear to go beyond greed." Id. at 357. For the appellate court, the lawyer's actions were "not connected to the acts underlying the" Section 1983 claim, i.e., violations of the plaintiff's constitutional rights.
The court finds Hanania indistinguishable from the present case. The facts as alleged by Mirbeau indicate that LDD and Muenster merely desired to acquire land at a cheaper price, an allegation that, while perhaps demonstrative of a greedy motivation by LDD and Muenster, "fail[s] to demonstrate a desire by [the defendants] to snatch away [Mirbeau's] constitutional rights." Id. Moreover, LDD and Muenster's alleged actions are "not connected" to the acts underlying the Section 1983 claim—namely, the deprivation of Mirbeau's right to be free of "conduct of a government agent ... that evidences a spiteful effort to `get' [them] for reasons wholly unrelated to any legitimate state objective." Forseth v. Village of Sussex, 199 F.3d 363, 368-70 (7th Cir.2000). Here, Mirbeau has simply not alleged that it was LDD and Mr. Muenster's goal or interest to have the government act in a wholly arbitrary fashion in denying Mirbeau's zoning change application, requiring granting of the defendants motion with respect to the Section 1983 conspiracy claim
The only case cited by Mirbeau to oppose LDD's and Muenster's motion to dismiss the Section 1983 conspiracy claim is Hoskins v. Poelstra, 320 F.3d 761 (7th Cir.2003). Hoskins, which pre-dates the Supreme Court's watershed decisions in Twombly and Iqbal, stands for the proposition that a plaintiff alleging a conspiracy claim did not need to "plead a meeting of minds in detail." 320 F.3d at 764. The Seventh Circuit, influenced by the Supreme Court's decisions in Twombly and Iqbal, implicitly discarded the holding of Hoskins in Cooney, where the Court of Appeals held that a complaint alleging a conspiracy claim that was "bereft of any suggestion, beyond a bare conclusion, that the ... defendants were leagued in a conspiracy" was "not enough" to survive a Fed.R.Civ.P. 12(b)(6) challenge. 583 F.3d at 971. The value of Hoskins is minimal: the plaintiff has failed to allege in detail that LDD and Mr. Muenster shared a goal with City officials to deprive Mirbeau of its constitutional rights. The court is obliged to dismiss the Section 1983 conspiracy claim against LDD and Mr. Muenster. The court next proceeds to discuss whether the Section 1983 conspiracy claim can survive Messrs. Connors' and Malmin's motion to dismiss.
Given the above discussion, the court must determine whether the allegations made in the Second Amended Complaint against Messrs. Connors and Malmin, two private citizens at the time of the alleged conspiracy, show that the two defendants conspired with the City officials with the "ultimate goal" of depriving Mirbeau of its constitutional rights to not be irrationally treated by the government. See Hanania, 212 F.3d at 357. However, even when the court assumes Mirbeau's allegations to be true, Mirbeau has not alleged that Messrs. Connors' and Malmin's "desire" was to have the City officials "snatch away" the plaintiff's constitutional rights. Id. Rather, much like the allegations levied against LDD and Mr. Muenster, the claims against Connors and Malmin indicate that the "agreement" between the latter two defendants and the City officials was to merely interfere with Mirbeau's contract. See, e.g., Sec. Am. Compl. ¶ 120 ("Together they formulated
Additionally, the deficiencies with Mirbeau's complaint with respect to the Section 1983 conspiracy claim against Connors and Malmin go far beyond the fact that the complaint does not allege that the two defendants wanted Mirbeau's constitutional rights to be trampled. Even if the court could somehow equate Connors' and Malmin's desires to interfere with Mirbeau's contract with a desire to have the City violate Mirbeau's constitutional rights, the latest complaint simply does not allege any sort of agreement between Connors and Malmin and the City officials regarding any illicit conduct. It is true that the complaint alleges that Connors and Malmin regularly communicated with Ms. Roehrer, see Sec. Am. Compl. ¶¶ 127, 134, 144-47), and LDD's representatives, id. ¶¶ 130, 133, 134, 144-47), with respect to interfering with Mirbeau's contract. However, both Roehrer and the representatives of LDD were private citizens for the overwhelming bulk of time the alleged incidents giving rise to the federal conspiracy claim occurred.
Mirbeau argues, citing to Hostrop v. Bd. of Jr. Coll. Dist. No. 515, 523 F.2d 569, 576 (7th Cir.1975), that it is irrelevant that the plaintiff did not allege that each defendant took "some action in furtherance of the conspiracy," because "liability attaches to every conspirator if any of them takes action in furtherance of the conspiracy." (Pl.'s Resp. Br. 9). The court is unclear as to the thrust of Mirbeau's argument, leaving the court to conclude that Mirbeau is confused about the holding of Hostrop. As the court noted in Hostrop, it is a basic concept that a "civil conspiracy extends liability for a tort ... to persons other than the actual wrong doer." Hostrop,
The seventh claim for relief alleged against LDD and Messrs. Connors, Malmin, and Muenster in Mirbeau's Second Amended Complaint is a claim for tortious interference with the April 23, 2007 contract the plaintiff had with Geneva Ridge. (Sec. Am. Compl. ¶¶ 116-158). The non-city defendants contend that the plaintiff's tortious interference claim is time-barred.
Turner v. Sanoski, 2010 WI App 92, ¶¶ 8-9, 327 Wis.2d 503, 787 N.W.2d 429 (Ct. App.2010). As such, the plaintiff's citation to the Segall case is of little use to the court and leaves open the question as to whether there is a specific statute of limitations that controls tortious interference with contractual relations claims in lieu of Wisconsin's residual statute of limitations for tort claims.
However, that very question was resolved last year by the Wisconsin Court of Appeals in an unpublished opinion
The jurisprudence of the Wisconsin Supreme Court casts doubts on the legal efficacy of the interpretation of § 893.57 made by the plaintiff, and assumed to be true by the court, in Turner. The Wisconsin Supreme Court in Beloit Liquidating Trust v. Grade, 2004 WI 39, 270 Wis.2d 356, 677 N.W.2d 298 (2004), concluded that what the Turner court assumed to be law—that only intentional torts that were of a personal nature had a limitations period governed by § 893.57— was indeed not the law. Specifically, the Grade court held that "the two-year statute of limitations set forth in Wis. Stat. § 893.57 is applicable, because a breach of fiduciary duty claim involves an intentional tort." Id. ¶ 40. The Wisconsin Supreme Court, in interpreting § 893.57, seems to discard the words "to the person" in the statute and allows § 893.57 to dictate the controlling limitations period for all intentional torts, even those of an economic nature. Id. (holding that Wis. Stat. § 893.57 is the relevant statute of limitations for a breach of fiduciary duty); see also Jones v. Secura Ins. Co., 2002 WI 11, ¶ 23, 249 Wis.2d 623, 638 N.W.2d 575 (2002) (holding that § 893.57 governs the intentional tort of insurer bad faith); Warmka v. Hartland Cicero Mut. Ins. Co., 136 Wis.2d 31, 36, 400 N.W.2d 923 (1987) (same); see generally Gouger v. Hardtke, 167 Wis.2d 504, 511, 482 N.W.2d 84 (1992) ("[T]he statute of limitations for an intentional tort is two years."). "In a case in federal court in which state law provides the rule of decision, the federal court must predict how the state's highest court would decide the case and decide it in the same way." MindGames, Inc. v. W. Publ'g Co., 218 F.3d 652, 655 (7th Cir.2000). Here, all of the relevant case law indicates that the Wisconsin Supreme Court would find that § 893.57 provides the limitations period for a tortious interference with contractual relations claim, and this court holds as such.
Slightly complicating matters is that Wis. Stat. § 893.57 was amended last year to expand the limitations period within which an intentional tort claim can be commenced from two years to three years. 2009 Wis. Act. 120. However, the act that amended § 893.57 provides that the relevant change "first applies to injuries occurring on the effective date of" the act, February 25, 2010. Id. As such, any injuries occurring before the date of February 25, 2010, are governed by a two-year limitations period, as previously provided under Wis. Stat. § 893.57. Because Mirbeau readily acknowledges that its injury did not occur after February 25, 2010, the relevant limitations period is two years.
Mirbeau's argument adds another wrinkle into the court's analysis of whether the plaintiff's state law claim is barred by the statute of limitations. Wisconsin courts, in interpreting Wisconsin statutes of limitations, have noted that it would be "manifestly unjust for the statute of limitations to begin to run before a claimant could reasonably become aware of the injury." Hansen v. A.H. Robins, Inc., 113 Wis.2d 550, 559, 335 N.W.2d 578 (1983). Accordingly, the so-called "discovery rule" "tolls the statute of limitations until the plaintiff discovers or with reasonable diligence should have discovered that he or she has suffered actual damage due to wrongs committed by a particular, identified person." Doe v. Archdiocese of Milwaukee, 211 Wis.2d 312, 335, 565 N.W.2d 94 (1997) (internal citations omitted). Moreover, even where an injury is known, the statute of limitations does not begin running until the claimant has an "objective belief to a reasonable certainty as to the cause of the injury." Deborah S.S. v. Yogesh N.G., 175 Wis.2d 436, 445, 499 N.W.2d 272 (Ct.App.1993). Here, Mirbeau argues that the City defendants imposed "many roadblocks and challenges"
However, Mirbeau's statement in its response brief is belied by several allegations in its Second Amended Complaint that indicate that Mirbeau knew about the four defendants' efforts to interfere with Mirbeau's contract before April 23, 2008. The plaintiff broadly asserts in its Second Amended Complaint that LDD, Muenster, Connors, and Malmin "worked ... publically... to improperly, and without justification interfere with Mirbeau's" contract from January 2008 through the April 28, 2008 City Council vote defeating the zoning amendment application. (Sec. Am. Compl. ¶ 150) (emphasis added). Mirbeau
The court can only conclude that Mirbeau knew that the non-city defendants were interfering with the contractual relationship Mirbeau had with Geneva Ridge in December of 2007. While it is "irregular" to dismiss a claim as untimely under a Fed.R.Civ.P. 12(b)(6), as a complaint does not need to anticipate potential affirmative defenses, when the plaintiff "effectively pleads [itself] out of court by alleging facts that are sufficient to establish" an affirmative defense, such as the statute of limitations, dismissal is appropriate. Hollander v. Brown, 457 F.3d 688, 691 n. 1 (7th Cir.2006); see also Fed. R.Civ.P. 8. Such is what occurred in the instant case. The elements of a claim for tortious interference with contract require that the claimant show: (1) the plaintiff had a current or prospective contractual relationship with a third party; (2) the defendant interfered with that relationship; (3) the interference was intentional; (4) a casual connection exists between the defendant's interference and the plaintiff's damages; and (5) the defendant was not justified or privileged to interfere. Wolnak v. Cardiovascular & Thoracic Surgeons of Central Wis., S.C., 2005 WI App 217, ¶ 14, 287 Wis.2d 560, 706 N.W.2d 667 (Ct.App.2005). The alleged public actions of the non-city defendants that occurred in late 2007 and early 2008—if Mirbeau is correct that the defendants were acting in an unprivileged capacity by influencing the government to "follow an unlawful course,"
In conjunction with its brief in response, Mirbeau filed a motion for leave to file the Third Amended Complaint to correct the typographical errors in the Second Amended Complaint and to incorporate the allegations of tortious interference with contract into the Section 1983 claim against the non-city defendants. (Docket # 119). A district court may deny leave to amend for "undue delay, bad faith, dilatory motive, prejudice, or futility." Winters v. Fru-Con Inc., 498 F.3d 734, 740 (7th Cir.2007). Futile repleadings include "restating the same facts using different
The only remaining issue for the court to resolve at this juncture is whether the court should enter a default judgment against Mr. Malmin. On August 5, 2010, the plaintiff moved, pursuant to Fed. R.Civ.P. 55(a), for an entry of a default judgment against Mr. Malmin and an order "setting a date and time for a hearing for purposes of determining the amount of default judgment damages to be awarded in favor of Mirbeau and against Malmin." (Docket #91). The following day, Mr. Malmin filed a motion to set aside default pursuant to Fed.R.Civ.P. 55(c) and requested that the court grant Mr. Malmin leave to file a motion to dismiss. (Docket # 100).
The court may set aside an entry of default "for good cause shown." Fed.R.Civ.P. 55(c). The court considers whether the moving party has shown: (1) good cause for default; (2) quick action to correct it; and (3) a meritorious defense to plaintiff's complaint. See Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42, 45 (7th Cir.1994). Here, Mr. Malmin has demonstrated that: (1) he took quick action to remedy the default, acting promptly with a motion to the court to set aside the entry of default; and (2) he has, as discussed above, a meritorious defense to the complaint. The only issue is whether there was good cause for the default. Before exploring each sides' arguments, the court notes that default judgments are generally disfavored because they are inconsistent with the courts' preference to resolve disputes on the merits. See Coon v. Grenier, 867 F.2d 73 (1st Cir.1989). Moreover, the district court is given great latitude in assessing the circumstances of the case to discern if good cause for setting aside an entry of default exists. Jones v. Phipps, 39 F.3d 158, 164 (7th Cir.1994).
Mr. Malmin's motion to set aside default states that the failure to file a response to the plaintiff's complaint occurred as a result of miscommunication between the client and the attorney, with Mr. Malmin's counsel understanding that the date of service occurred on July 19, 2010, instead of July 12, 2010, the actual date the defendant was served. (Def. Malmin's Mot. ¶ 15). Additionally, Mr. Malmin, in an affidavit to the court, contends that he mistakenly told his attorney the wrong date because of a serious illness that affected his mental health. (Malmin Aff. ¶¶ 8-9). Moreover, the defendant's attorney argues that it was reasonable for the attorney to not question the date of service being July 19, 2010, as Mr. Connors was served on July 18, 2010. Id. ¶ 16. The plaintiff responds, citing to Pretzel & Stouffer, that a simple "miscommunication" over the service date of a summons does not constitute "good cause" to set aside default. (Pl.'s Resp. Br. at 2).
The facts of this case counsel the court to set aside the entry of default. Unlike in Pretzel & Stouffer, the attorney in this case never knew the actual date that his client was served with the complaint until the motion for default judgment was made. Mr. Malmin, who avers that he is battling serious health problems, mistakenly told his attorney the wrong date the plaintiff
In closing, the court notes that on August 10, 2010, the court stayed discovery in this action until the court ruled on the pending motions to dismiss. Consistent with this court's August 30, 2010 order, the stay is now lifted and the remaining defendants have forty days following the date of this order by which to disclose expert witnesses and produce expert reports. However, before continuing this litigation any further, both parties should contemplate whether this case, which, unlike fine wine, is not improving with age, can be resolved short of this court further involving itself in the process. Such an alternative may prove to be far less costly and may, in the end, resolve the competing concerns and interests of the remaining parties. Moreover, the parties are reminded that the remaining federal claims in this case are extremely narrow avenues for relief, as "federal courts are ordinarily not vehicles to review zoning board decisions." Harding v. County of Door, 870 F.2d 430, 432 (7th Cir.1989). Before following what has regrettably become the routine of this case of filing motions before communicating with opposing counsel, counsel for all sides should very seriously contemplate whether this forum is truly the most appropriate and the most advantageous venue in which to satisfy the concerns of each of their respective clients.
Accordingly,
Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).