Judges: Per Curiam
Filed: Apr. 29, 2019
Latest Update: Mar. 03, 2020
Summary: NONPRECEDENTIAL DISPOSITION To be cited only in accordance with Fed. R. App. P. 32.1 United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 Submitted April 22, 2019* Decided April 29, 2019 Before DIANE P. WOOD, Chief Judge WILLIAM J. BAUER, Circuit Judge DIANE S. SYKES, Circuit Judge No. 18-3221 JERRY DILLON, Appeal from the United States District Plaintiff-Appellant, Court for the Northern District of Illinois, Eastern Division. v. No. 17 C 9165 VILLAGE OF FLOSSMOOR, et
Summary: NONPRECEDENTIAL DISPOSITION To be cited only in accordance with Fed. R. App. P. 32.1 United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 Submitted April 22, 2019* Decided April 29, 2019 Before DIANE P. WOOD, Chief Judge WILLIAM J. BAUER, Circuit Judge DIANE S. SYKES, Circuit Judge No. 18-3221 JERRY DILLON, Appeal from the United States District Plaintiff-Appellant, Court for the Northern District of Illinois, Eastern Division. v. No. 17 C 9165 VILLAGE OF FLOSSMOOR, et a..
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NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted April 22, 2019*
Decided April 29, 2019
Before
DIANE P. WOOD, Chief Judge
WILLIAM J. BAUER, Circuit Judge
DIANE S. SYKES, Circuit Judge
No. 18‐3221
JERRY DILLON, Appeal from the United States District
Plaintiff‐Appellant, Court for the Northern District of Illinois,
Eastern Division.
v. No. 17 C 9165
VILLAGE OF FLOSSMOOR, et al., Sara L. Ellis,
Defendants‐Appellees. Judge.
O R D E R
Jerry Dillon sued the Village of Flossmoor, village officials, and a grocery store
chain, alleging that they conspired to frustrate his sale of land and swindle it away from
him for their own gain. The district court dismissed his complaint because he was not
the real party in interest to any claim concerning the property. We affirm the judgment.
* We have agreed to decide this case without oral argument because the briefs
and record adequately present the facts and legal arguments, and oral argument would
not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 18‐3221 Page 2
We take the facts from the complaint and its attachments, in addition to
documents that are critical to the complaint and referred to in it and information subject
to proper judicial notice, and view them in the light most favorable to Dillon. See FED. R.
CIV. P. 10(c); Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). In 2002 an
Illinois corporation named D & M Enterprises of Illinois, Ltd. purchased a plot of land
in Flossmoor for Dillon’s dental practice. Ten years later, the Illinois secretary of state
involuntarily dissolved D & M Enterprises; the land apparently reverted to D & M’s
parent corporation, Dillon Dental Services, Ltd.,1 which, in turn, was wholly owned by
plaintiff‐appellant Dillon. Dillon listed the lot for sale in 2013 and, after about a year, a
developer approached him feigning interest in purchasing it. According to Dillon, the
developer secured unspecified information about the lot and then shared it with an
“alliance”—his development company, the Village of Flossmoor and a grocery store
chain—which later used the information so that the village could acquire the tax‐
delinquent property through a Cook County “scavenger sale.” In the meantime, Dillon
adds, village officials discouraged interested parties from purchasing the lot from
Dillon, suggesting that potential buyers wait and buy it from the village.
Dillon, pro se, sued the developer, the developer’s company, the grocery store
chain, the village, and several village officials. He claimed that they breached the
“public trust,” tortiously interfered with his contractual relations, committed
racketeering, 18 U.S.C. § 1962, and violated his civil rights, 42 U.S.C. § 1981. The
defendants moved to dismiss, arguing that Dillon did not own the property and thus
was not a real party in interest who could bring suit. In response, Dillon (now with
counsel) simultaneously asserted that he was pursuing a “derivative” suit as a majority
shareholder of D & M Enterprises and that he became the lot’s sole owner upon
D & M’s dissolution (even though D & M had two shareholders).
The district judge then ordered briefing addressing whether Dillon was
impermissibly asserting the rights of a third party.2 Responding to the court’s order,
1 Dillon referred to “Dillon Dental Services, LLC,” but as the defendants and the
district court observe, only “Dillon Dental Services, Ltd.” is registered with the Illinois
Secretary of State, so we too presume this was merely a typographical error.
2 The district court discussed this question by referencing the doctrine of
“prudential standing”; however, we have clarified that “whether a shareholder has the
ability to assert a corporation’s rights is a matter determined under the substance of
corporate and agency law rather than federal jurisdiction.” Knopick v. Jayco, Inc.,
895 F.3d 525, 529 (7th Cir. 2018) (citing Lexmark Intʹl, Inc. v. Static Control Components,
No. 18‐3221 Page 3
Dillon once more presented new allegations. This time, he reported that D & M was a
subsidiary of Dillon Dental Services, of which Dillon was the sole shareholder and to
which the property reverted during D & M’s winding down. Citing Federal Rule of
Civil Procedure 17(a), the judge dismissed Dillon’s complaint. She explained that
“Dillon [did] not claim that he as an individual ever owned the [p]roperty,” and that
Dillon cannot sue as an individual to enforce the rights of either D & M Enterprises or
Dillon Dental Services.
On appeal, Dillon (again pro se) acknowledges that his pleadings “provide[d]
conflicting allegations.” Nevertheless, he argues that he is the real party in interest
because he is the rightful owner of the lot. How he believes he came to own the lot that
belonged to D & M Enterprises, though, is unclear: Dillon asserts, inconsistently, both
that (1) when the corporation dissolved, the property passed to him as the majority
shareholder and (2) it passed to his other company, Dillon Dental Services.
Regardless of whether the “power to dismiss this case on prudential standing
grounds … survives Lexmark,” Knopick, 895 F.3d at 530, the district court was right to
dismiss Dillon’s case because he is not the real party in interest. See FED. R. CIV. P. 17(a).
If Dillon Dental Services is the property’s rightful owner, “a natural person [normally]
is not the real party in interest for bringing a suit based on a corporation’s rights, even
when the person is the sole owner of the corporation.” Knopick, 895 F.3d at 529 (citing
Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 477 (2006)). Though Dillon asserts that he
suffered a unique personal injury of his own, he does not say what that injury is, and
we see none. We will not consider his conclusory allegation. See Williams v. Dieball, 724
F.3d 957, 961 (7th Cir. 2013). And because Dillon alleged in the district court that Dillon
Dental Services owns the property, we cannot allow him to argue on appeal that he is
the owner. See Chapman v. Yellow Cab Coop., 875 F.3d 846, 849 (7th Cir. 2017).
Dillon suggests that, if we cannot conclude that he owns the land personally, we
should construe his case as a shareholder derivative suit on behalf of the dissolved
corporation, D & M Enterprises.3 But even setting aside this proposal’s other flaws,
Inc., 572 U.S. 118, 127 (2014)); see also United States v. Funds in the Amount of $239,400,
795 F.3d 639, 645 (7th Cir. 2015) (“[L]abels like ‘prudential standing’ and ‘statutory
standing’ are misleading and should be avoided.”).
3 Because D & M is dissolved, we note that our analysis would not change if
Dillon instead argued that he brought this suit as a shareholder of Dillon Dental
Services.
No. 18‐3221 Page 4
Dillon admits that he, as a shareholder, never demanded that the corporation’s directors
pursue this action, and his argument that this “formality” should be set aside as futile is
meritless. He argues that a demand would have been futile because he maintained
“decision‐making powers” over D & M. But that serves only to demonstrate that his suit
is not “derivative” at all; with Dillon in control, nothing stopped D & M from suing to
protect its own rights. In any case, in Illinois, a demand is excused only if, “under the
particularized facts alleged, a reasonable doubt is created that: (1) the directors are
disinterested and independent [or] (2) the challenged transaction was otherwise the
product of a valid exercise of business judgment.” Westmoreland Cty. Employee Ret. Sys.
v. Parkinson, 727 F.3d 719, 725 (7th Cir. 2013) (quoting Aronson v. Lewis, 473 A.2d 805,
814 (Del. 1984)); see also In re Abbott Labs. Derivative Shareholders Litig., 325 F.3d 795, 803
(7th Cir. 2003)). Dillon does not allege that either condition is present here.
Lastly, Dillon argues that the district court erred in denying him additional time
to substitute the real party in interest. See FED R. CIV. P. 17(a)(3). But he maintains that
he is the real party in interest, and he has never said what entity he would like to
substitute as plaintiff. Moreover, Dillon first raised Rule 17(a)(3) in his response to the
defendants’ motion to dismiss—five months before the court dismissed the case.
Although he claims to control Dillon Dental Services and D & M Enterprises (before its
dissolution), neither corporation ever sought to participate in this litigation. The court
did not abuse its discretion. See Jones v. Las Vegas Metro. Police Depʹt, 873 F.3d 1123, 1128
(9th Cir. 2017) (reviewing for abuse of discretion); Stichting Ter Behartiging Van de
Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Intʹl B.V. v. Schreiber, 407 F.3d
34, 43–44 (2d Cir. 2005) (same).
AFFIRMED