Hanania, Ray v. Torshen, Spreyer , 212 F.3d 353 ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-2862
RAY HANANIA and ALISON RESNICK,
Plaintiffs-Appellants,
v.
BETTY LOREN-MALTESE, individually and
in her official capacity as president
of the Town of Cicero,
TOWN OF CICERO, THE CICERO TOWN NEWS, CICERO
TOWN REPUBLICAN ORGANIZATION, THE CICERO
OBSERVER, BOARD OF TRUSTEES MICHAEL FREDERICK,
RUPERTO ALEJANDRO, MOISES ZAYAS, JOHN KOCIOLKO,
JOSEPH VIRRUSO, RICHARD SMETANA, and JANET
POROD, individually and in their official
capacities, JEROME TORSHEN, and TORSHEN,
SPREYER, GARMISA & SLOBIG, LTD.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern District.
No. 98 C 5232--James B. Moran, Judge.
Argued March 28, 2000--Decided May 5, 2000
Before EASTERBROOK, MANION, and EVANS, Circuit
Judges.
EVANS, Circuit Judge. This case marks another
chapter in the colorful history of Cicero, a
western Chicago suburb where Al Capone once set
up shop and where more recent political
shenanigans have been keeping federal
investigators and attorneys busy.
Leading off this tale’s cast of characters is
Betty Loren-Maltese, president since 1993 of the
Town of Cicero and the widow of Frank Maltese, a
prominent Cicero politician who confessed to
being a mob bookmaker and pleaded guilty to a
federal gambling charge. See United States v.
Maltese, 1993 WL 222350 (N.D. Ill. 1993). Loren-
Maltese is a defendant in this civil case, along
with the town itself, some affiliated officials
and organizations, and Chicago attorney Jerome H.
Torshen and his law firm, Torshen, Spreyer,
Garmisa & Slobig, Ltd. The plaintiffs are two ex-
employees of the town: Alison Resnick and her
husband, Ray Hanania. Resnick was appointed the
town collector in February 1996, replacing her
father, Gerald Resnick, who held the position for
26 years before being nabbed in the government’s
"Silver Shovel" public corruption probe.
Hanania/1 is a former reporter for the Chicago
Sun-Times who served as the town spokesman from
1993 to 1996.
Taking all facts alleged in the complaint to be
true, as we must do at this time (without, of
course, vouching for their accuracy), Loren-
Maltese fired Hanania in October 1996 when he
refused to defend her in the press against
charges of rampant corruption. Resnick also made
noise about corruption, requesting the State’s
attorney to investigate and helping to organize
an opposition slate of candidates that ran
unsuccessfully against Loren-Maltese in the
February 1997 Republican primary. Loren-Maltese
is not the sort of lady you want to cross, and
Resnick paid the price. Loren-Maltese stripped
the town collector’s office of authority and
employees, exiled the office to shabby quarters,
denied Resnick access to her files, and refused
to accept the monthly statements Resnick was
required to file.
In June 1997 Loren-Maltese took away two of
Resnick’s last three employees. This, for
Resnick, was the last straw. She hired Torshen,
who helped her get a temporary restraining order
in state court that stopped Loren-Maltese from
impeding Resnick’s duties. The order also
reinstated two of Resnick’s employees. With the
TRO in place (it was even extended) the case
moved forward but, on Torshen’s recommendation,
Resnick signed a settlement agreement in August
in which she agreed to let it drop. The attorneys
Cicero retained to work out this agreement were
Merrick Rayle and Edward "Fast Eddie" Vrdolyak,
the former aldermanic nemesis and failed
electoral opponent of the late Chicago mayor,
Harold Washington. Incredibly, the Resnick-Cicero
settlement called for Cicero to refer some of its
future legal work to Torshen--and Torshen has
since represented Rayle in a lawsuit filed
against Cicero by the town’s former police chief
and his deputy.
There was a period of detente between Resnick
and Loren-Maltese, but in December 1997 the
Cicero board of trustees sacked Resnick with
three weeks to go in her term. Resnick called
Torshen, who by this time was happily
representing Cicero in other matters. He finagled
two weeks of vacation time for Resnick and
persuaded her to leave it at that.
Or so he thought. Resnick and Hanania later
filed a 42 U.S.C. sec. 1983 suit in federal court
against Torshen, his law firm, Loren-Maltese, the
Town of Cicero, and others. The lawsuit claims
that the defendants deprived Resnick and Hanania
of their constitutional right to speech by firing
them in retaliation for speaking out about
corruption. Torshen was named as a defendant on
the theory that he was in cahoots with the Cicero
officials when he convinced Resnick to sign off
on a settlement that was not in her interests.
Judge James B. Moran let Resnick and Hanania
proceed with their suit against the rest of this
crowd but dismissed the claims against Torshen
and his law firm. Resnick and Hanania now appeal
the decision that let Torshen off the hook.
A complaint is properly dismissed under Federal
Rule of Civil Procedure 12(b)(6) if, taking all
facts alleged by the plaintiffs to be true and
construing all inferences in favor of the
plaintiffs, the plaintiffs have failed to state
a claim upon which relief can be granted. Pleva
v. Norquist, 195 F.3d 905, 911 (7th Cir. 1999).
And this complaint is full of so many mushy
"facts" ("it was widely believed" . . . "it was
widely rumored that") that Judge Moran shrewdly
branded it "an exercise in investigative
journalism." Nevertheless, we review its
dismissal de novo. Id.
A cause of action under sec. 1983 requires a
plaintiff to demonstrate that he was deprived of
a right secured by the Constitution or a federal
law at the hand of someone acting under color of
law. Fries v. Helsper, 146 F.3d 452, 457 (7th
Cir.), cert. denied, 525 U.S. 930 (1998). A
private individual has acted under color of law
if there was a concerted effort between the
individual and a state actor. Id. Establishing
sec. 1983 liability through a conspiracy theory
requires a plaintiff to demonstrate that (1) the
private individual and a state official reached
an understanding to deprive the plaintiff of her
constitutional rights and (2) the private
individual was a willful participant in joint
activity with the state or its agents. Id. We
turn, then, to the question of whether the
allegations in this complaint are sufficient to
demonstrate, even at the notice pleading stage,
that a conspiracy, involving Torshen, was afoot.
See Ryan v. Mary Immaculate Queen Center, 188
F.3d 857 (7th Cir. 1999).
Why Resnick, who certainly is no idiot, signed
a settlement agreement that she claims achieved
nothing for her is anybody’s guess, but sign it
she did. The agreement contained six provisions:
1. Resnick would drop her case.
2. "Plaintiff shall serve out her Term as Town
Collector through December 31, 1997. She shall
come to work and Board Meetings as appropriate
and assist in the transition of her elected
successor, whose Term commences January 1, 1998.
She shall perform all of the duties and functions
of her appointive Office."
3. Resnick would not file any new suits arising
out of the claims in this case.
4. The agreement would be confidential.
5. Cicero would refer to Torshen’s law firm the
town’s defense in a pending personal injury case.
6. Resnick would try to persuade her husband,
Hanania, to stop publicly slamming Cicero and its
officials.
Cicero’s promise to hire Torshen--who at the
time was representing Resnick, Cicero’s adversary
in this litigation--for future legal work strikes
us as highly unusual. Settlement agreements
sometimes provide for one side to pay the other
side’s attorneys fees, but a settlement like this
in which one side essentially hires the other
side’s lawyer is new to us. Whether it violates
the duty of loyalty an attorney owes to the best
interests of his client is not for us to say, but
it should make one a little queasy (see Preamble
to the Illinois Rules of Professional Conduct,
Article VIII, Illinois Supreme Court Rules, 134
Ill. 2d 470; ABA Model Rule of Professional
Conduct 1.8(f); Kling v. Landry, 686 N.E.2d 33,
39 (Ill. App. Ct. 1997) ("When in the course of
his professional dealings with a client, an
attorney places his personal interest above the
interest of the client, the attorney is in breach
of his fiduciary duty by reason of the
conflict.")).
The question for us, however, is not whether
Torshen acted unethically or committed legal
malpractice, but rather whether this fact-laden
complaint shows that, under color of state law,
he conspired with others to deprive Resnick of
her constitutional rights. Ironically, the fact
that Torshen’s alleged conflict of interest was
so blatantly spelled out in the settlement
agreement undercuts the complaint’s conspiracy
claim. Whatever scheming might have gone on here
was certainly not covert.
Resnick’s sec. 1983 claim as to Torshen is
based on the premise that this agreement gave her
nothing, gave Cicero everything, and gave at
least a little something to Torshen. The first
question is whether the agreement was as lopsided
as she claims. If not--if she actually got
something out of the settlement--then her claim
against Torshen is a nonstarter. Torshen says the
second provision of the settlement allowed
Resnick to serve out her term, thereby achieving
the litigation’s purpose. Resnick says she was
entitled to serve out her term the day she was
appointed and the settlement did nothing to
shield her from Loren-Maltese’s ongoing
harassment. We might be inclined to adopt
Torshen’s interpretation if the agreement
explicitly allowed Resnick to finish her term
without interference, but the agreement contains
no such language. Because all inferences must be
construed in the plaintiff’s favor, we treat the
settlement as a sham that provided Resnick with
no benefits.
The next question is whether Torshen’s success
in persuading his client to sign a worthless
settlement agreement raises an inference that he
and Cicero reached an understanding to deprive
Resnick of her constitutional rights. Torshen and
Cicero’s representatives clearly reached an
understanding that it would be advantageous for
Resnick to drop her state lawsuit. Sharing the
goal of having Resnick abort her state case does
not necessarily translate, however, into a mutual
goal of trampling upon Resnick’s constitutional
rights. It is true that participants need not
share the same motives to share the same general
conspiratorial objective. See United States v.
Irwin, 149 F.3d 565, 573 (7th Cir.), cert.
denied, 525 U.S. 1031 (1998). So, for instance,
if Torshen’s motive (allegedly ginning up some
new business) differed from Cicero’s motive
(stifling Resnick), Torshen would still be liable
if he shared with the Cicero defendants the
ultimate goal of depriving Resnick of her
constitutional rights. Whether characterized as
motive or objective, however, the most that can
be said about the allegations is that Torshen’s
actions do not appear to go beyond greed. Viewed
favorably to the plaintiffs, Torshen wanted what
apparently turned out to be lucrative legal
business from a town that often finds itself in
court. The settlement was the means to Torshen’s
pecuniary ends. But even if this is all true, the
allegations fail to demonstrate a desire by
Torshen to snatch away Resnick’s constitutional
rights.
Furthermore, the settlement of Resnick’s state
lawsuit is not connected to the acts underlying
the sec. 1983 claim. The sec. 1983 claim is that
Loren-Maltese and the Town of Cicero retaliated
against Resnick for exercising her First
Amendment right to speech. Resnick says the
defendants were unconstitutionally squeezing her
office before she filed the state lawsuit, but
Torshen was not involved in any of this. Resnick
also says the defendants forced her out of office
after she settled the state lawsuit, but Torshen
was not involved in this, either. Resnick argues
that if Torshen had done a better job of
protecting her in August of 1997 she would not
have lost her job in December, but that, if true,
is legal malpractice, not a federal sec. 1983
claim. If the settlement agreement had foreclosed
Resnick from ever filing suit against Loren-
Maltese and Cicero in the future, then perhaps
Torshen could be tied into an alleged conspiracy
to deny Resnick her constitutional rights. The
dismissal of the state lawsuit, though, did not
prevent Resnick from bringing her sec. 1983
claim-- her federal case is going forward against
the Cicero defendants. The nastiness that gave
rise to the sec. 1983 claim took place before and
after Torshen was on the scene, but he was not
involved in the nastiness.
To wrap up, if these allegations against
Torshen are true, i.e., that he railroaded
Resnick by getting her to sign the settlement
agreement and later negotiated vacation pay on
her behalf when by that time he was representing
the town that had just fired her, Torshen may
have acted unethically or committed legal
malpractice. This complaint, loaded as it is with
factual allegations, does not show, however, that
Torshen conspired with the Cicero defendants to
deprive Resnick of her constitutional rights. We
affirm the district court’s dismissal of Torshen
and his law firm from this case.
/1 Hanania is only a bit player in this present
dispute so we’ll focus on Resnick’s claims as we
move along.