Taake, Gene A. v. County of Monroe ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 07-2620
GENE A. TAAKE,
Plaintiff-Appellant,
v.
COUNTY OF MONROE, a Body Corporate
and Politic of the State of Illinois,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Southern District of Illinois.
No. 06 C 579—G. Patrick Murphy, Judge.
____________
ARGUED APRIL 15, 2008—DECIDED JUNE 18, 2008
____________
Before CUDAHY, KANNE, and SYKES, Circuit Judges.
KANNE, Circuit Judge. Gene Taake brought suit in fed-
eral district court, under 42 U.S.C. § 1983, in an attempt to
force the County of Monroe into selling him a piece of
land that Taake argues the County contractually agreed
to sell him. Taake alleged a deprivation of his rights to
procedural and substantive due process under the United
States Constitution. See U.S. Const. amend. XIV. He also
raised a state-law breach-of-contract claim, sought
specific performance from the County, and requested a
preliminary injunction. Because there is no basis for fed-
2 No. 07-2620
eral jurisdiction in this case, we vacate the district court’s
decision and remand with instructions to dismiss the
case without prejudice.
The County listed a piece of land for sale in July 2005. In
August, Taake submitted a bid to purchase the property.
The ultimate factual dispute at the heart of this case is
whether the County accepted the bid and entered into a
contract with Taake for the sale of the land; Taake, of
course, contends that the County entered into a contract
with him, while the County denies it did so. The district
court proceeded to the merits of the contract claim, and
decided that the County had not accepted Taake’s offer
to purchase the property. It granted summary judgment
to the County and dismissed the case.
Neither party addressed the issue of federal jurisdic-
tion, and thus the district court moved directly to the
substantive contract claim. At oral argument, we asked
the parties to explain the basis for federal jurisdiction, and
informed them that caselaw from our circuit dispels the
notion that a substantive constitutional property interest
arises simply because a state actor breaks a contract with
a state citizen. See Garcia v. Kankakee County Hous. Auth.,
279 F.3d 532, 535 (7th Cir. 2002); Mid-Am. Waste Sys., Inc. v.
City of Gary, Ind., 49 F.3d 286, 290 (7th Cir. 1995); Sudeikis
v. Chicago Transit Auth., 774 F.2d 766, 770 (7th Cir. 1985).
We asked the parties to provide supplemental briefing on
the issue of jurisdiction. The briefing confirmed the con-
viction we had from the outset: this case has no place in
federal court because it presents only state-law claims
that cannot come into federal court by way of a § 1983
action.
Taake readily conceded upon supplemental briefing
that there is no federal jurisdiction in this case and asked
No. 07-2620 3
that we vacate the judgment of the district court and
instruct the court to dismiss the case without prejudice,
thus allowing Taake to proceed with the action in
state court. The County, on the other hand, argues—in a
last ditch attempt to save the favorable disposition it
received below—that there is jurisdiction under § 1983
because Taake raised “serious constitutional issues to
invoke the jurisdiction of the court” on the face of the
complaint. The County also argues that our previous
decisions do not “foreclose” the possibility of jurisdic-
tion in a case such as this, so the case should live on in
federal court.
If the County means to say by its “not foreclosed”
argument that we have not before said: “there is no fed-
eral jurisdiction simply because a state actor allegedly
breached a contract for the sale of land,” the County is
reading our precedent very narrowly. For we have said:
“the Constitution does not require states to keep all
promises made in their contracts and regulations. . . . [A]
unit of state or local government does not violate the
federal Constitution just because it violates a state or
local law, including the law of contracts,” Garcia, 279 F.3d
at 535 (internal citations omitted); “[i]t has long been
settled that a mere breach of contract by the government
does not give rise to a constitutional claim,” Sudeikis, 774
F.2d at 770; “[i]f a state’s violation of its own laws and
regulations does not violate the due process clause, it is
hard to see how failure to keep a promise contained in a
contract can violate the due process clause,” Mid-Am.
Waste, 49 F.3d at 290; and, “the purely commercial interest
of which the plaintiff was deprived [a contract to purchase
142 acres] doesn’t seem to be the kind of contractual
interest that the values that inform the concept of due
4 No. 07-2620
process require to be classified as property,” Ind. Land Co.
v. City of Greenwood, 378 F.3d 705, 709-10 (7th Cir. 2004).
Notwithstanding our precedent, the County counters
that because Taake invoked “procedural due process” and
“substantive due process” in his complaint, jurisdiction
was proper from the outset because “jurisdiction depended
upon the allegations of the bill, and not upon the facts
as they subsequently turned out to be.” City Ry. Co. v.
Citizens’ St. R.R. Co., 166 U.S. 557, 562 (1897). But
the County’s reliance on City Railway—a Contracts
Clause case—is misplaced. The issue in City Railway was
whether the city of Indianapolis impaired a contract in
violation of the Contracts Clause, U.S. Const. art. I, § 10,
cl. 1. A Contracts Clause claim presents a different jurisdic-
tional analysis than that of a due process claim under the
Fourteenth Amendment. Cf. City Ry. Co., 166 U.S. at 563
(explaining that, for a contracts claim, “[a]ll that is neces-
sary to establish the jurisdiction of the court is to show
that the complainant had, or claimed in good faith to
have, a contract with the city, which the latter had at-
tempted to impair”); Kahn v. Gallitano, 180 F.3d 829, 832-
36 (7th Cir. 1999) (explaining what must be demonstrated
to sustain a Contracts Clause claim and what must be
demonstrated for procedural and substantive due pro-
cess claims); Horwitz-Matthews, Inc. v. City of Chicago, 78
F.3d 1248, 1249-50, 1252 (7th Cir. 1996) (analyzing
whether the district court was correct to dismiss the
case for lack of jurisdiction by way of the Contracts
Clause).
Taake did not argue under the Contracts Clause that the
County had legislatively impaired the contract it allegedly
entered into with Taake. His failure to make such an
argument was prudent, as we have refuted the notion
that the Contracts Clause is at issue simply because a state
No. 07-2620 5
actor allegedly broke a contract with a citizen. See Horwitz-
Matthews, 78 F.3d at 1250 (“For when a state repudiates
a contract to which it is a party it is doing nothing dif-
ferent from what a private party does when the party
repudiates a contract; it is committing a breach of con-
tract. It would be absurd to turn every breach of contract by
a state or municipality into a violation of the federal
Constitution.”).
The County would have us exercise jurisdiction in this
case simply because the plaintiff stated in the complaint
that he was raising procedural and substantive due pro-
cess claims. In so arguing, the County asks us to turn a
blind eye to the unfounded invocation of federal juris-
diction and to ignore the very task we are required to
undertake as a court of limited jurisdiction—determining
whether we are permitted by the Constitution and Con-
gress to adjudicate a particular matter. See Goros v. County
of Cook, 489 F.3d 857, 860 (7th Cir. 2007). “Distinguishing
between ‘essentially fictitious’ claims that do not invoke
federal jurisdiction and those in which a fairly debatable
claim fails on the merits is essential if the federal courts
are to remain tribunals of limited jurisdiction.” Id. (quoting
Bailey v. Patterson, 369 U.S. 31, 33 (1962) (internal cita-
tion omitted)).
With respect to the substantive due process claim, Taake
appears to have initially assumed that because the
alleged contract had to do with land, a substantive con-
stitutional property interest was at stake. In reality, Taake’s
interest was a commercial interest under a contract to
benefit from the deal he believes he struck with the
County. There are only a “handful of fundamental rights
[for which] the due process clause has a substantive com-
ponent,” id. at 860; see also Washington v. Glucksberg, 521
6 No. 07-2620
U.S. 702, 719 (1997), and neither party suggests that the
right to force another party to make good on a contract
for the sale of land is one such right. See Mid-Am. Waste,
49 F.3d at 291 (“ ‘The only interest at stake is the interest
in obtaining the maximum return on investment. That is
not a ‘fundamental’ right.’ ” (quoting Nat’l Paint & Coatings
Ass’n v. City of Chicago, 45 F.3d 1124, 1129-30 (7th Cir.
1995))). In Kahn v. Gallitano, we declined to find a sub-
stantive due process interest in the right to be free from
tortious interference with a contract by state actors, both
because the petitioner did not show that the right was
“deeply rooted in our history and tradition or implicit
in the concept of ordered liberty,” and because the peti-
tioner did not demonstrate that the available state-law
remedy for the injury was “inadequate under the federal
constitution.” 180 F.3d at 835. We refused to “create a
redundant federal right that simply mirrors the available
state-law tort.” Id. Just as the Due Process Clause of the
Fourteenth Amendment “does not transform every tort
committed by a state actor into a constitutional violation,”
see DeShaney v. Winnebago County Dep’t of Soc. Servs., 489
U.S. 189, 202 (1989), nor does it transform every breach of
contract committed by a state actor into a constitutional
violation. See Garcia, 279 F.3d at 535.
Our caselaw already explains that mere breaches of
contract by the government do not support substantive
due process claims under the Constitution, see e.g., Garcias,
279 F.3d at 536; Mid-Am. Waste, 49 F.3d at 290-91; Sudeikis,
774 F.2d at 770, but we will explain it again, for the sake
of future litigants who may think it a good idea to bring
regular state-law contract claims to federal court via
§ 1983. When a state actor breaches a contract it has with
a private citizen, and the subject matter of that contract
No. 07-2620 7
does not implicate fundamental liberty or property inter-
ests, the state acts just like any other contracting private
citizen, cf. Horwitz-Matthews, Inc., 78 F.3d at 1250; the
proper tribunal to adjudicate issues arising from the
contract (or alleged contract) is a state court, because
contract law is a creature of state law, see IFC Credit Corp.
v. United Bus. & Indus. Fed. Credit Union, 512 F.3d 989, 991-
92 (7th Cir. 2007) (“There is no general federal law of
contracts after Erie R.R. v. Tompkins . . . .”). If a party
believes that the contract contemplates fundamental
rights that are susbtantively protected by the Due Process
Clause, but which have not yet been recognized by our
court or the Supreme Court, the party’s burden will be
“great,” see Kahn, 180 F.3d at 834, because it must show
that the rights at stake are “deeply rooted in our history
and tradition or implicit in our concept of ordered lib-
erty,” see Glucksberg, 521 U.S. at 710-17, and that the
remedies available in state courts do not adequately pro-
tect those rights, see Kahn, 180 F.3d at 834-85.
As for procedural due process, the Fourteenth Amend-
ment’s Due Process Clause affords state citizens with the
right to notice and an opportunity to be heard before
being deprived of “property” as defined by state law. See
Goros, 489 F.3d at 859. Taake used the words “procedural
due process” in his complaint, but the remedies he seeks
belie any suggestion that Taake is interested in notice
and a hearing on the County’s decision not to sell him the
land. The only remedies Taake desires are for the alleged
breach of contract: damages, specific performance of the
land sale, and an injunction prohibiting the County from
transferring or disposing of the land in a manner that
violates the purported contract. Taake wanted the
land—not a hearing at which the County would give
8 No. 07-2620
Taake an opportunity to contest the County’s decision
not to sell him the land. See id. at 860 (“Plaintiffs don’t
want process; they want money.”). “[U]nless the plaintiff
maintains that the state actor had to offer a hearing to
resolve some contested issue of fact, the dispute belongs
in state court under state law.” Id. at 860.
We will not consider the merits of the state-law con-
tract claim. That task is left to an Illinois state court.
We thus VACATE the judgment of the district court and
REMAND with instructions to dismiss the case, without
prejudice, for lack of subject matter jurisdiction.
USCA-02-C-0072—6-18-08