Christopher Stoller v. Walworth County, Wisconsin ( 2019 )

NONPRECEDENTIAL DISPOSITION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 May 17, 2019*
Decided May 30, 2019
Before
MICHAEL S. KANNE, Circuit Judge
AMY C. BARRETT, Circuit Judge
MICHAEL B. BRENNAN, Circuit Judge
No. 18-1770
CHRISTOPHER STOLLER, Appeal from the United States District
Plaintiff-Appellant, Court for the Eastern District of Wisconsin.
v. No. 17-CV-1349-JPS
WALWORTH COUNTY, et al., J.P. Stadtmueller,
Defendants-Appellees. Judge.
ORDER
Christopher Stoller (along with Michael Stoller, who is not a party to this appeal)
sued Walworth County, Wisconsin, and many of its public officials for allegedly selling
tax-delinquent property at inflated prices based on “sham” appraisals. Stoller contends
* The appellees were not served with the complaint in the district court and so are
not participating in this appeal. We have agreed to decide this case without oral
argument because the brief and the 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. 18-1770 Page 2
this practice violates the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§§ 1961–68, and many state laws. The district court concluded Stoller failed to state a
claim upon which relief could be granted. But Stoller was not granted leave to amend
his complaint, and he pleaded jurisdiction over his state-law claims based upon
diversity of citizenship, so we vacate the judgment and remand the case.
This case was dismissed on the pleadings, so we recount the facts as alleged in
the complaint and the documents described in it, making all reasonable inferences in
Stoller’s favor. Loja v. Main Street Acquisition Corp., 906 F.3d 680, 682 (7th Cir. 2018). We
construe his pro se complaint liberally, Erickson v. Pardus, 551 U.S. 89, 93 (2007), and
accept all factual allegations as true, DeGuelle v. Camilli, 664 F.3d 192, 195 (7th Cir. 2011).
Christopher and Michael Stoller own land in Walworth County. The county
treasurer wrote to them in 2017, informing them that a tax-delinquent parcel of land sat
next to their property. Believing the value of the parcel to be $2,500, the Stollers made a
bid for that amount. Walworth County rejected that bid because it was below the
county’s appraised value of $11,400. The Stollers alleged that this appraisal, along with
Walworth County’s other appraisals on its 2017 tax foreclosure list, was a “sham.”
The Stollers filed suit, primarily claiming that Walworth County officials had
violated and conspired to violate RICO through a corrupt scheme to inflate the
appraisal values of real property sold through tax bid sales. They alleged the county
failed to obtain valid independent appraisals by using estimates instead of methods
consistent with the Uniform Standards of Professional Appraisal Practice. The district
court sua sponte dismissed the complaint under the statute concerning proceedings in
forma pauperis, 28 U.S.C. § 1915(e)(2)(ii), for failure to state a claim. First, the court
explained that the Wisconsin law governing the sale by counties of tax-delinquent
property does not require counties to adhere to the Uniform Standards. WIS. STAT.
§ 75.69(1). The district court also concluded the Stollers did not allege fraud with
particularity, as required by Federal Rule of Civil Procedure 9(b). Finally, the court
determined that the Stollers could not state a RICO conspiracy claim without plausibly
alleging a substantive RICO violation. The district court dismissed the federal claims,
and it also declined to exercise supplemental jurisdiction over the state-law claims.
28 U.S.C. § 1367(c)(3). Because of the failure to state a claim, the district court also
denied as moot the Stollers’ application for leave to proceed in forma pauperis. The
district court also entered a final judgment order. See FED R. CIV. P. 58.
Christopher Stoller appeals. We review the district court’s dismissal of this case
under 28 U.S.C. § 1915(e)(2)(B)(ii) under the same standards we apply to Federal Rule of
No. 18-1770 Page 3
Civil Procedure 12(b)(6) dismissals—de novo review. Luevano v. Wal-Mart Stores, Inc.,
722 F.3d 1014, 1027 (7th Cir. 2013).
Stoller argues the district court erred by dismissing the complaint with prejudice
without granting him leave to amend his complaint.1 We agree. We have repeatedly
stated that the “usual standard in civil cases is to allow defective pleadings to be
corrected, especially in early stages, at least where amendment would not be futile.”
Abu-Shawish v. United States, 898 F.3d 726, 738 (7th Cir. 2018) (collecting cases); Runnion
ex rel. Runnion v. Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 520 (7th Cir. 2015).
This proposition has even more force in pro se cases, like this, in which pleading
standards are relaxed. Abu-Shawish, 898 F.3d at 738; Perez v. Fenoglio, 792 F.3d 768, 783
(7th Cir. 2015) (explaining that the “screening requirement does not—either explicitly or
implicitly—justify deviation from the usual procedural practice”). Applicable
authorities provide that plaintiffs enjoy leave to amend once as a matter of course
before service of the complaint, and liberally thereafter “when justice so requires”; this
right survives dismissal. FED. R. CIV. P. 15(a); Luevano, 722 F.3d at 1024.
The district court did not find that any attempt by Stoller to amend would be
futile because of incurable defects. Nor can we say that any amendment would be
“futile or otherwise unwarranted from the face of the complaint.” Barry Aviation Inc. v.
Land O'Lakes Mun. Airport Comm’n, 377 F.3d 682, 687 (7th Cir. 2004). True, Stoller did
not request leave to amend, see James Cape & Sons Co. v. PCC Const. Co., 453 F.3d 396, 400
(7th Cir. 2006), but we hesitate to strictly require such a motion under the circumstances
in this case for several reasons, especially when a litigant is pro se. First, the district
court entered judgment immediately upon dismissing the original complaint, so Stoller
would have had to convince the district court to reopen the case. Also, simultaneously
dismissing a complaint and entering judgment is improper unless the defect clearly
cannot be corrected, or an amendment has been unduly delayed or would cause undue
prejudice to other parties. Runnion, 786 F.3d at 520. Further, because of the failure to
state a claim, the district court also denied Stoller’s application to proceed in forma
pauperis. Stoller then might not have believed himself eligible to file a new complaint
or a new case without paying a fee. Under these circumstances, the court should not
have denied Stoller the opportunity to amend his complaint after dismissal. See id. at
1The district court did not expressly deem the dismissal of the federal claims as
“with prejudice,” but a district court’s entry of a Rule 58 judgment shows that the court
“believes it is done with a case” and renders the decision final and appealable. Luevano,
722 F.3d at 1020.
No. 18-1770 Page 4
522 (“[A] district court cannot nullify the liberal right to amend under Rule 15(a)(2) by
entering judgment prematurely at the same time it dismisses the complaint that would
be amended.”).
The pleadings present another jurisdictional issue for remand. The district court
dismissed without prejudice Stoller’s state-law claims by declining to exercise
supplemental jurisdiction over them. 28 U.S.C. § 1367(c)(3). But Stoller appears to have
invoked the court’s jurisdiction based upon diversity of citizenship, see 28 U.S.C.
§ 1332(a)(1), alleging that the amount in controversy exceeded that statute’s
requirement of an amount in excess of $75,000 and that the Stollers reside in Illinois
while the defendants are citizens of Wisconsin. Of course, “residence” is not
synonymous with domicile, Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670
(7th Cir. 2012), but the district court did not base its jurisdictional decision on this
deficiency. The district court could not dismiss the claims under § 1367(c)(3) if federal
subject-matter jurisdiction based on diversity of citizenship existed, and on remand the
court should consider the possibility that diversity jurisdiction existed. See Robinson v.
Alter Barge Line, Inc., 513 F.3d 668, 675 (7th Cir. 2008) (explaining that the disposition of
relinquishing jurisdiction “is barred” when there is diversity jurisdiction).
For these reasons, we VACATE the judgment and REMAND with instructions to
permit Stoller to file an amended complaint.