Thomas Simstad v. Gerald Scheub , 816 F.3d 893 ( 2016 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-1056
THOMAS SIMSTAD, et al.
Plaintiffs-Appellants,
v.
GERALD SCHEUB, et al.
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, Hammond Division.
No. 2:07-CV-407-JVB-APR — Joseph S. Van Bokkelen, Judge.
____________________
ARGUED SEPTEMBER 25, 2015 — DECIDED MARCH 17, 2016
____________________
Before WOOD, Chief Judge, and BAUER and EASTERBROOK,
Circuit Judges.
WOOD, Chief Judge. Tom and Marla Simstad are longtime
developers in Lake County, Indiana. In late 2004, the Sim-
stads began the process of seeking approval from the Lake
County Plan Commission for a proposed subdivision project
called Deer Ridge South. In late 2006, the Commission ap-
proved the plans for the project. But this did not happen
quickly enough to satisfy the Simstads. They believed that
2 No. 15-1056
approval was delayed, at great cost to themselves, because of
their support in 1996 for commission member Gerald
Scheub’s opponent in the County Commissioner primary
race. They accordingly sued several members of the Com-
mission and Lake County, alleging violations of the First and
Fourteenth Amendments, the Racketeer Influenced and Cor-
rupt Organizations Act (RICO), and various Indiana laws.
The case went to trial before a jury, but the district court
eliminated some of the Simstads’ claims during the trial. The
remainder of their theories went to the jury, which found for
the defendants. The Simstads have raised a number of points
on appeal, but we conclude that the district court properly
disposed of each aspect of the case and thus affirm its judg-
ment.
I
The Lake County Plan Commission has nine members.
Ind. Code § 36-7-4-208. A simple majority of five votes is
necessary to approve a development plan. Ind. Code § 36-7-
4-302. A number of steps precede final approval. First, a de-
veloper must obtain any permits required by state and fed-
eral agencies. Two months before a public Commission hear-
ing, the developer files a “sketch plan” with the Commission
and reviews that plan with the relevant state and federal
agencies. Then the developer files a primary plat for Com-
mission approval. The Commission staff (which does not in-
clude any Commission members) prepares comments on the
plan for the Commission. At the public meeting, the devel-
oper presents the project, the staff comments on the plan,
and the public may speak. The staff makes recommenda-
tions to Commission members on the project’s compliance
No. 15-1056 3
with the relevant ordinances, but its views are nonbinding.
Then the Commission takes an initial vote.
The Commission next evaluates the primary plat to de-
termine whether it complies with the relevant subdivision
control ordinance. The plat must identify standards for the
size of individual lots, coordination between internal and
external public ways, and coordination with municipal ser-
vices. Ind. Code § 36-7-4-702. The Commission may waive
requirements of the subdivision control ordinance, but it has
no discretion to override the zoning ordinance. Ind. Code §
36-7-4-707.
Ken Bachorski was the lead developer for Deer Ridge
South, to which we refer as the Project. He filed the first
sketch plan on October 28, 2004. The Commission organized
a meeting among Bachorski, a planner from the Commis-
sion’s staff, and a highway department engineer to discuss
that plan on November 17, 2004. The engineer indicated that
the highway department wanted the Project to add accelera-
tion and deceleration lanes on Clark Street, the main road
bordering the subdivision. The planner told Bachorski to
apply for a waiver of the requirement that all subdivision
lots be rectangular. (The waiver was necessary because some
of the proposed lots would border the subdivision’s curved
road.) Bachorski filed the first primary plat on November 30,
2004. In it, he requested two waivers: one to permit the ir-
regular lot shapes, and one that would exempt him from
widening Clark Street, which had recently been upgraded
and did not seem to need further work.
Because of the highway engineer’s concerns about a pro-
posed internal road (129th Street) that would cross a wet-
land, Bachorski met again with the engineer, several plan-
4 No. 15-1056
ners, and the Commission’s Executive Director, Ned Ko-
vachevich, on February 17, 2005. At that meeting, the group
discussed both the wetland and sewer services. Kovachevich
and the highway engineer suggested eliminating one of the
two entrances to the subdivision because of the wetland con-
cerns. That approach triggered the need for two more waiv-
ers: one from the ordinance’s requirement of two entrances,
and the other from a part of the ordinance setting cul-de-sac
length.
Bachorski filed a second primary plat on April 1, 2005,
accompanied by all four waiver requests. Despite the fact
that outside agencies recommended approval, the staff did
not support most of the necessary changes: it endorsed the
irregular lot waiver, but it opposed the single-entry and cul-
de-sac waivers and took no position on the widening of
Clark Street. At the public meeting on May 18, 2005, numer-
ous members of the public spoke against the Project. The
Commission denied all four waivers and voted to defer the
plat for 30 days.
The Project team responded by restoring the 129th Street
entrance to the plat. But this was not enough. At an August
17, 2005 meeting, Kovachevich asked to review the declara-
tions of the Property Owners’ Association regarding the
maintenance of the subdivision’s private park. He also said
that an easement from the cul-de-sac to the adjoining prop-
erty was necessary before he could propose approval.
Bachorski filed the third plat on August 31, 2005, with two
entrances and no waiver requests. Kovachevich removed the
plat from the October meeting agenda because it did not
contain requests for waivers from the requirements to widen
and improve Clark Street.
No. 15-1056 5
At Bachorski’s insistence, Kovachevich put the plat on the
agenda for the November 16, 2005 public meeting. Once
again, the Commission withheld its approval. Kovachevich
sent the Project team a letter citing six reasons for denial, in-
cluding failure to request a waiver for Clark Street. The Plan
Commission ultimately approved the plat on October 24,
2006, almost exactly two years after the first sketch was filed.
But by the time the Simstads were ready to build, the hous-
ing market had collapsed. Eventually they had to sell the
Deer Ridge South property at a steep loss to avoid default.
That, in a nutshell, is what led to this litigation. If the Pro-
ject had been approved promptly, the Simstads believe, they
could have made money from it. They sued everyone who
was responsible for the approval process, but at this point
they are asserting claims only against Scheub, who was on
the Plan Commission’s Board, Executive Director Ko-
vachevich, and Lake County. They argue principally that
Scheub violated their First Amendment rights by retaliating
against them for their support of his opponent (Wilbur Cox)
in the 1996 County Commissioner primary race; the com-
plaint also included claims under the Fourteenth Amend-
ment and RICO, 18 U.S.C. §§ 1962, 1964. They also raised
supplemental claims under the Indiana Tort Claims Act, Ind.
Code § 34-13-3-8.
Eight years may sound like a long time to hold a grudge,
but the Simstads believe that this is exactly what Scheub did.
Their lawsuit also followed a slow track. They initially filed
it in the district court on November 15, 2007; the defendants
filed a timely answer. On April 9, 2008, the Simstads filed an
amended complaint, along with a number of discovery re-
quests. The defendants filed a motion to dismiss the amend-
6 No. 15-1056
ed complaint and requested that the court stay discovery. It
did so pending resolution of the motion to dismiss.
There the case sat until September 30, 2010, when the dis-
trict court addressed the defendants’ motion to dismiss. It
issued an order dismissing the RICO claims, but denying de-
fendants’ motion with respect to the First Amendment, Four-
teenth Amendment, and state-law claims. At that point, de-
fendants’ answer to the amended complaint was due on Oc-
tober 14, 2010, according to Federal Rule of Civil Procedure
12(a)(4)(A). That date came and went with no new answer.
The district court returned to the subject of discovery on
December 3, 2010, noting that no one was doing anything:
the defendants had failed to answer the Simstads’ discovery
requests, and the Simstads had not followed up with a mo-
tion to compel. The district court set new discovery dead-
lines. Following the close of discovery on October 26, 2011,
the parties agreed to a trial date a year out, on October 1,
2012. That date slipped away too. The Simstads moved to
reopen discovery on November 9, 2012, but the district court
denied the request, which it viewed as an attempt to “re-
start [the] litigation.” On September 11, 2013, nearly a year
later, the Simstads filed a Notice of Intent to Rely on Deemed
Admissions based on the defendants’ failure to respond to
discovery requests and their failure to file an answer to the
amended complaint. Defendants filed a motion for leave to
file a belated answer and set aside the admissions. The dis-
trict court granted the defendants’ motion after full briefing.
At long last, in December 2014 the case went to trial. Af-
ter the Simstads presented their case, the district court dis-
posed of most of the case with judgments as a matter of law.
It dismissed the First Amendment claim, finding that there
No. 15-1056 7
was insufficient evidence of a connection between the 1996
election and the approval process for the Project; it dis-
missed the state-law claim for failure to provide timely no-
tice under the Indiana Tort Claims Act; and it tossed the in-
dividual-capacity claim against Kovachevich for lack of evi-
dence. The Equal Protection claim went to the jury, which
found for the defendants.
On appeal, the Simstads complain that the district court
should not have allowed the defendants to file such a late
answer to the amended complaint, nor should it have per-
mitted them to withdraw their admissions. They also argue
that the court erred by refusing to instruct the jury on cat’s-
paw liability and the class-of-one theory of Equal Protection.
Finally, they attack the court’s grant of judgment as a matter
of law on their First Amendment claim, their individual-
capacity claim against Kovachevich, and their state-law
claims.
II
A
Before we reach any of these arguments, we must first
consider a potential bar to this entire lawsuit. Indiana’s
courts have already considered the ramifications of the
Commission’s refusal to approve the Project. The state trial
court ordered mediation, and the parties reached a settle-
ment, which provided that the Commission would approve
a revised sketch plan for the Project at its regular meeting on
August 16, 2006, or earlier. The Simstads filed a motion in
Jasper County Circuit Court to enforce the settlement
agreement on August 21, 2006, because the Project at that
point had not yet been approved. On September 25, the state
8 No. 15-1056
court ordered enforcement and required the Commission to
pay all the mediation fees. But the court refused to impose
sanctions. The Simstads appealed the latter ruling, and the
Commission cross-appealed from the decision that it had
acted in bad faith in failing to approve the Project in August.
Ultimately, the Indiana Supreme Court found that the
Commission was not immune from sanctions, but that it had
not acted in bad faith because the settlement agreement
could not bind the Commission to approve the Project in
violation of Indiana’s Open Door Laws, which give the pub-
lic the right of final approval. Lake Cnty. Trust Co. v. Advisory
Plan Comm’n of Lake Cnty., 904 N.E.2d 1274, 1278, 1279 (Ind.
2009).
When the case reached the federal court, the defendants
raised the defense of claim preclusion in their motion to
dismiss the first amended complaint. At that stage, the dis-
trict court decided to postpone any definitive ruling on the
defense, for several reasons. It was not sure whether the nec-
essary identity of the parties existed; it was not sure from the
record before it what issues had been raised and resolved in
the state action; and it was not sure whether the plaintiffs
had a full and fair opportunity to litigate the issues in that
state court proceeding. These concerns suggest that the court
had not decided whether claim or issue preclusion was im-
plicated. Identity of parties is required for both, but actual
litigation of particular issues is necessary only for issue pre-
clusion. See, e.g., Miller Brewing Co. v. Indiana Dep’t of State
Revenue, 903 N.E.2d 64, 68 (Ind. 2009) (issue preclusion); Reed
v. State, 856 N.E.2d 1189, 1194 (Ind. 2006) (claim preclusion).
But the difference in these doctrines does not matter for pre-
sent purposes, for a simple reason: the defendants never re-
newed their motion on any theory of preclusion. Had they
No. 15-1056 9
done so, we might have been able to end our opinion here.
But under the circumstances, they have waived their preclu-
sion defense, see Kratville v. Runyon, 90 F.3d 195, 198 (7th Cir.
1996), and we must press on.
B
We begin with the Simstads’ procedural arguments. They
urge that the district court erred by permitting the defend-
ants to file an untimely answer and to be relieved of certain
deemed admissions they made. On the one hand, these mis-
steps are inexplicable: the defendants were represented by as
many as five lawyers at any time, and it seems that at least
someone would have known to take action. On the other
hand, we review this type of ruling only for abuse of discre-
tion. See Lock Realty Corp. IX v. U.S. Health, LP, 707 F.3d 764,
772 (7th Cir. 2013); Banos v. City of Chicago, 398 F.3d 889, 892
(7th Cir. 2005). From that standpoint, the district court may
well have thought that there was blame enough to go around
in the way this suit was being handled, and that it was best
to clear the way for adjudication on the merits.
With respect to the late answer, the Simstads push back
against the abuse-of-discretion standard by arguing that
oversight is, as a matter of law, insufficient to excuse the late
filing. They point to Federal Rule of Civil Procedure
6(b)(1)(B), which generally governs extensions of time when
permission is not sought until after the expiration of a dead-
line, and adopts the “excusable neglect” standard. We do not
find so much rigidity in the rule. The district court offered
several reasons in support of its decision. It noted that it had
not ruled on the defendants’ motion to dismiss for approxi-
mately two and a half years, and that when it did, the ruling
was “sort of a split decision” that meant that an answer to
10 No. 15-1056
the amended complaint was required even though time had
passed. During the hiatus, the defendants’ team of attorneys
had changed. The court also observed that the Simstads had
not notified the defendants that they intended to pursue de-
fault admissions based on the failure to answer.
We accept that a party must show that its neglect is ex-
cusable. Cf. United States v. Marbley, 81 F.3d 51, 52 (7th Cir.
1996) (“inadvertence” in the context of Federal Rule of Ap-
pellate Procedure 4(b) is simply a synonym of “neglect,” and
a party must demonstrate more to show excusable neglect).
The Simstads contend that the defendants’ “oversight” is
nothing more than the “inadvertence” that Marbley found
inadequate. But as we have just noted, the court found more
than simple inadvertence. See Mommaerts v. Hartford Life &
Accident Ins. Co., 472 F.3d 967, 968 (7th Cir. 2007)
(“[e]xtensions may be granted, after the time for action has
passed … ‘[in] situations in which the failure to comply with
a filing deadline is attributable to negligence’ if the oversight
is excusable”) (quoting Pioneer Investment Servs. Co. v. Bruns-
wick Assocs. Ltd. P’ship, 507 U.S. 380, 394 (1993)). The district
court’s decision whether to allow a late filing is “at bottom
an equitable one, taking account of all relevant circumstanc-
es … includ[ing] … the danger of prejudice … the length of
the delay … the reason for the delay, including whether it
was within the reasonable control of the movant, and
whether the movant acted in good faith.” Pioneer Investment
Servs. Co., 507 U.S. at 395.
The court addressed any potential prejudice to the Sim-
stads by reopening discovery only for them. The Simstads
moved for reconsideration, arguing that because one Com-
mission member had since died, the reopening of discovery
No. 15-1056 11
did not cure their prejudice. The district court, however,
found that this was not reason enough to exempt the Sim-
stads from litigation on the merits. It was plain from the rec-
ord that the Simstads had ample notice of the defendants’
position. The district court did not abuse its discretion in al-
lowing a belated answer to the amended complaint.
For similar reasons, we find no abuse of discretion in the
district court’s decision to permit the defendants to with-
draw their deemed admissions. Federal Rule of Civil Proce-
dure 36(b) allows a court to permit withdrawal of deemed
admissions “if it would promote the presentation of the mer-
its of the action and if the court is not persuaded that it
would prejudice the requesting party.” That is the language
of discretion. Any prejudice—and we do not think the Sim-
stads have demonstrated any—was mitigated by the reopen-
ing of discovery for them alone. The inability to rely on de-
fault admissions and the obligation to litigate a case on the
merits were not prejudicial here, nor did they reflect an
abuse of discretion.
C
The district court granted judgment as a matter of law on
several aspects of the case: the Simstads’ First Amendment
theory; their individual-capacity suit against Kovachevich;
and their state-law claims. Judgment as a matter of law is
appropriate where “a party has been fully heard on an issue
during a jury trial and the court finds that a reasonable jury
would not have a legally sufficient evidentiary basis to find
for the party on that issue.” FED. R. CIV. P. 50(a). We review
the district court’s grant of judgment as a matter of law de
novo. Murray v. Chicago Transit Auth., 252 F.3d 880, 886 (7th
Cir. 2001).
12 No. 15-1056
1
We consider first the Simstads’ argument that the real
reason why approval of the Project was delayed was retalia-
tion for their political support of Gerald Scheub’s opponent
in the 1996 County Commissioner election. In order to pre-
vail on a First Amendment theory, the plaintiffs must show
that their conduct (1) was constitutionally protected and (2)
was a substantial or motivating factor in the defendant’s
challenged actions. Roger Whitmore’s Auto. Servs. v. Lake
Cnty., 424 F.3d 659, 668 (7th Cir. 2005). The parties agree that
the conduct—supporting Scheub’s opponent in the County
Commissioner race—was protected. Cf. O’Hare Truck Serv.,
Inc. v. City of Northlake, 518 U.S. 712 (1996) (state may not re-
fuse to contract with a party because of his exercise of First
Amendment rights). The question for us is whether any jury
could find that the Simstads’ exercise of their First Amend-
ment rights during the 1996 race had anything to do with the
Project.
The district court concluded that the answer was no.
Even accepting the general idea that the passage of time
alone does not defeat a claim, it is certainly relevant. The
Simstads rely on our decision in Radentz v. Marion Cnty., 640
F.3d 754 (7th Cir. 2011), which held that an 18-month period
between the time when the defendants made comments ex-
pressing a desire to hire an African-American and their ter-
mination of a contract with the white plaintiffs did not de-
feat an Equal Protection claim. Id. at 759. The length of time
here, however, is 9 years! Without powerful evidence that
the alleged grudge lasted that long, no jury could base its
decision on that fact.
No. 15-1056 13
And there is, for all intents and purposes, no other evi-
dence, powerful or otherwise. The only shred we can find is
Tom Simstad’s testimony that Wilbur Cox had told him that
Scheub is a political animal who would get back at him. This
statement obviously could not be used for the truth of the
matter asserted; at most it would shed light on the effect it
had on Tom. But without the ability to use the Cox statement
for its truth, there is no evidence that Scheub even knew of
the Simstads, let alone that he had any desire to retaliate
against them.
The Simstads insist that Commission approval is a “min-
isterial” act and that therefore the fact that it voted against
the Project once it complied with all ordinances is competent
evidence of improper motive. But whether a proposal meets
ordinances is not as cut-and-dried as the Simstads suggest.
Rather, the determination of whether their project or any
other meets the ordinances, with or without waivers, in-
volves some degree of discretion.
2
The Simstads next contend that they should have reached
the jury on their claim that Kovachevich personally violated
their right to Equal Protection by influencing the Commis-
sion’s vote in some way. This claim is woefully underdevel-
oped in the Simstads’ briefs in this court; they do not even
identify the basis or legal standard for an equal protection
claim. But even if they have narrowly avoided waiver, they
cannot prevail. As the Executive Director of the Commission,
Kovachevich did not have a vote. Several voting members
testified that they did not rely exclusively on staff comments,
and Kovachevich was not the sole author of the staff com-
ments on the Project. Furthermore, the Simstads have almost
14 No. 15-1056
no evidence of animus on his part. They point only to one
heated exchange that took place between them in 1996, relat-
ed to an earlier project.
Problems of causation aside, the Simstads’ Equal Protec-
tion claim also stumbles on the standard of review. They do
not assert that they were disadvantaged because of any sus-
pect classification. That means that Kovachevich’s actions
must be examined solely for a rational basis. From that
standpoint, it is easy to find reasons why the Project was de-
layed: the concern about wetlands, the debate about the
number of entrances to the subdivision, and the adequacy of
Clark Street, to name a few. Add to these Kovachevich’s lim-
ited power to influence the final decision, and only one con-
clusion is possible: he was entitled to judgment as a matter
of law for the Equal Protection claims against him in his in-
dividual capacity.
3
The district court dismissed the Simstads’ state-law claim
for tortious interference with business relationships for fail-
ure to file timely notice in accordance with the Indiana Tort
Claims Act. That Act requires a person with a claim against a
governmental entity to file notice within 180 days of when
the events giving rise to the claim occur. Ind. Code § 34-13-3-
8. The Simstads contend that the defendants forfeited this
defense by stating that they were ready to go to trial on the
claims that survived the motion to dismiss. But the defend-
ants had raised the notice defense in both their original an-
swer and their answer to the amended complaint. That was
enough. In fact, if anyone was guilty of forfeiture, it is the
Simstads, who said nothing about this point until their briefs
on appeal.
No. 15-1056 15
The Simstads filed their notice-of-claim with the state on
February 16, 2007. The district court found that this was too
late, on the assumption that the clock began to run in No-
vember 2005, when the Commission first denied approval of
the Project. The Simstads now argue that the clock did not
begin to run until the Commission’s ultimate approval vote
in October 2006. If that is correct, then their notice was time-
ly. But it would be perverse to look to the date when they
succeeded in obtaining approval, and ignore the date when
they failed. And their own actions support this view. They
considered the November 2005 denial sufficiently final to
appeal in state court.
The Simstads argue in the alternative that they can reach
the October 2006 trigger date by virtue of the “continuing
wrong” doctrine. But it does not apply here. The continuing
wrong doctrine requires that “the plaintiff … demonstrate
that the alleged injury-producing conduct was of a continu-
ous nature.” Gradus-Pizlo v. Acton, 964 N.E.2d 865, 871 (Ind.
Ct. App. 2012). The doctrine “will not prevent the statute of
limitations from beginning to run when the plaintiff learns
of facts which should lead to the discovery of his cause of
action even if his relationship with the tortfeasor continues
beyond that point.” Fox v. Rice, 936 N.E.2d 316, 322 (Ind. Ct.
App. 2010).
As the district court correctly recognized, the time pro-
vided by state law began to run in November 2005. The Sim-
stads were thus barred from asserting their state-law claims
for failure to file timely notice.
16 No. 15-1056
D
Last, the Simstads urge that they are entitled to a new tri-
al because of two alleged errors in the instructions to the ju-
ry: first, the absence of an instruction on cat’s paw liability,
and second, the absence of an instruction on a “class-of-one”
Equal Protection violation. In order to obtain a new trial on
this basis, an appellant must demonstrate that the given in-
structions failed to state the law properly, the jury was likely
to be misled or confused, and prejudice resulted.
The Simstads wanted the jury to consider whether the
improperly motivated conduct of subordinate employees of
the Plan Commission caused the voting members of the
board to vote as they did. This theory is known as “cat’s
paw” liability. Staub v. Proctor Hosp., 562 U.S. 411, 422 (2011).
The Simstads wished to impute Kovachevich’s or Scheub’s
alleged animus to the rest of the Commission, which they
believe was swayed by Kovachevich’s recommendations
against approval prior to October 2006.
It is not clear how, or whether, this type of imputed mo-
tive applies in the municipal liability context. Monell v. Dep’t
of Social Servs. of City of New York, 436 U.S. 658, 690-91 (1978),
prohibits finding municipal liability through the theory of
respondeat superior. We have wondered whether the cat’s-paw
theory can support entity liability under the civil rights laws
when the entity is a municipal corporation and the biased or
retaliatory subordinate is not a policy-maker. Smith v. Bray,
681 F.3d 888, 899 (7th Cir. 2012); Waters v. City of Chicago, 580
F.3d 575, 586 n.2 (7th Cir. 2009). This is not the case, however,
in which we need to confront that issue. As our discussion
thus far shows, there is insufficient evidence of animus or
improper motive held by anyone involved to warrant a jury
No. 15-1056 17
instruction on the theory. The Simstads suggest that the fact
that it took the Commission two years to approve the project
is somehow evidence of improper motive or animus, but we
cannot accept that circular reasoning.
The Simstads’ request for a class-of-one instruction fares
no better. Such a claim exists where “a public official, ‘with
no conceivable basis for his action other than spite or some
other improper motive ... comes down hard on a hapless
private citizen.’” Swanson v. City of Chetek, 719 F.3d 780, 784
(7th Cir. 2013) (quoting Lauth v. McCollum, 424 F.3d 631, 633
(7th Cir. 2005)). A class-of-one plaintiff must “negat[e] any
reasonably conceivable state of facts that could provide a ra-
tional basis for the classification.” Miller v. City of Monona,
784 F.3d 1113, 1121 (7th Cir. 2015) (quoting Scherr v. City of
Chicago, 757 F.3d 593, 598 (7th Cir. 2014)).
The Simstads’ evidence fell far short of that showing, and
so the district court properly refused to instruct the jury on
this theory.
III
We are distressed that it took this case so long to be re-
solved. Some of the problems might have been avoided with
better control over the schedule, and some might have been
resolved in a way that did not prompt an appeal. But in the
final analysis, we find no error in the district court’s proce-
dural rulings or its Rule 50 decisions. We therefore AFFIRM
its judgment.