by Ericka J. Thomas  (Summer 2018)

It is not uncommon for municipalities to encounter the same businesses or citizens over and over on code or zoning violations. Despite the frustration that these types of repeated contacts may produce, municipalities must ensure that violations are dealt with equally and in the same manner for all violators and that frequent violators are not singled out or targeted.

The Village of Park Forest found itself embroiled in a decade long legal skirmish over a large townhouse complex within its boundaries in Thorncreek Apartments, LLC v. Village of Park Forest, 886 F.3d 626 (7th Cir. March 27, 2018). In 1989, the complex changed ownership and was divided into three separate limited liability corporations. In 2007, the owner sold one section of the complex. However, because that section housed the leasing office for the entire complex, the owner was required to move the leasing office to an unoccupied townhouse in one of the remaining areas of the complex. In order to legally accomplish this, the owner needed the Village to grant a conditional use permit to use the vacant townhouse as a business office.

After applying for the permit, but before it was granted, the owner began to conduct business out of the vacant townhouse. The Village, in turn, refused to issue the permit and cited the complex for zoning violations and operating a business without the required permit. The Village also attempted to enforce a new electrical upgrade ordinance for that portion of the complex. After several months, the Village filed suit to shut down the unpermitted business operations of the complex.

Soon thereafter, foreclosure notices were filed against the townhouse complex. The townhouse complex blamed the foreclosure on the regulatory overreach by the Village and filed a lawsuit alleging civil rights violations. The townhouse complex alleged that the Village violated its equal protection rights under a “class of one” theory and violated its civil rights by interfering with its business operations, refusing to grant the conditional use permit, and unequally enforcing a building-code provision. The basic theory of the case was that the Village caused the mortgage default by unfairly singling out the complex for regulatory action based on irrational animus against the owner and racial bias against its mostly black residents.

After a two-week jury trial, the jury found the Village, the Village Manager and the Director of Community Development liable and awarded the complex $2 million in compensatory damages and $6,000 in punitive damages. The trial judge vacated the jury’s verdict against the Director of Community Development as being contrary to the evidence. The trial judge later awarded almost $500,000 in attorney’s fees and costs. The trial judge also awarded over $1 million in pre-judgment interest. Both sides appealed the verdict.

On appeal, the parties mostly contested the damages awarded. The Village asserted that the nominal damage award was inconsistent with the evidence. The court determined that there had been evidence introduced that, before the foreclosure, the complex was set to be sold to a third-party and, but for the Village’s interference, the sale would have gone through. The appellate court noted that the jury’s award of the contract value minus the mortgage was consistent with the evidence. The amount of the nominal damage award also made it clear that the jury had not incorporated prejudgment interest in its ultimate award. The appellate court found no error in the award of prejudgment interest itself or the amount of the award.

Similarly, the appellate court concluded that the amount of attorney’s fees awarded by the district court was appropriate. Ordinarily, attorney’s fees are calculated by multiplying a reasonable fee by the number of hours reasonably expended on the litigation. In this case, that would have resulted in an award of attorney’s fees close to $1.3 million. However, this is not an automatic calculation and the trial judge has broad discretion on the amount of attorney’s fees to award. The trial judge considered the amount of damages sought from the jury ($20.5 million) versus the amount that was actually awarded (just over $2 million) as one of the factors in determining attorney’s fees. The appellate court concluded that the trial court reasonably exercised its discretion in reducing the amount of attorney’s fees awarded based on the unique factors of this case.

What started as a simple permit application turned into a decade-long legal battle that cost both the Village and the complex owners significant time and attorney’s fees. It is always advisable to consult with your counsel when dealing with repeat violators to ensure that all actions are being dealt with in a fair and even-handed manner. In many cases, these violations can be worked out by the parties before issues escalate or end up in court.