A really quick one from the U.S. Court of Appeals for the Seventh Circuit.
In Willow Way, LLC v. Village of Lyons, No. 22-1775 (Oct. 5, 2023), the panel held that the plaintiff/property owner did not sufficiently plead federal diversity of citizenship jurisdiction over his state law takings claim.
After providing notice, the Village demolished Willow’s dilapidated house, which the Village deemed a nuisance. Willow instituted a federal court lawsuit, alleging violation of the U.S. Constitution’s Due Process Clause, and an Illinois law inverse condemnation claim. Federal subject matter jurisdiction was based on a federal question (due process) and supplemental (Illinois takings claim). The district court dismissed the due process claim, and declined to continue to exercise supplemental jurisdiction over the state law takings claim.
What about diversity of citizenship jurisdiction?, Willow argued at the Seventh Circuit oral argument. Sure, why not, responded the panel. The court “invited Willow Way to propose an amended complaint with the necessary allegations.” Slip op. at 3. You know the necessary allegations are the citizenship of the parties, and an amount in controversy.
Willow Way tried: “[i]t tendered such a complaint[.]” Id. But sadly (for it), the amended complaint “is as deficient as the original.” Id.
The sole jurisdictional allegation in the proposed amended complaint reads: “Jurisdiction rests with this Court pursuant to 28 U.S.C. §§1331, 1332(a), 1343 and 1367.” Not one word about Willow Way’s citizenship (or that of the Village) nor any allegation about the amount in controversy. Elsewhere the complaint avers that Willow Way’s sole member is Stonecrest Realty Management, LLC, whose sole member is Jon O. Freeman, a citizen of California. The Village is a citizen of Illinois, see Moor v. Alameda County, 411 U.S. 693 (1973), though the complaint does not allege this. Paragraph 5 of the proposed amended complaint alleges that Willow Way bought the parcel in July 2016 for $111,350, and ¶52 alleges that it was sold at auction on March 23, 2021, for $25,446.90. The difference between these prices is roughly $86,000, which Willow Way believes meets the $75,000 jurisdictional minimum.
The problem with this submission is that a change in price over five years differs from injury caused by demolition of the house. The structure was razed in February 2020, about four years after Willow Way bought the parcel and about a year before it was sold. The Village is not liable for a change in the market price of real estate or a decline in the value of a house while it was standing empty. Cf. Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005) (distinguishing transaction causation from loss causation). The question is whether the demolition caused loss exceeding $75,000.
Slip op. at 4.
We even made it clear we wanted you to “pay particular attention to the value of the parcel immediately before and after the demolition,” noted the court. Id. But no deal: “[y]et Willow Way’s supplemental filing and proposed amended complaint do not pay the slightest attention to the before-and-after valuation. Complaints need not be accompanied by expert reports, but their jurisdictional allegations must at least address the right question.” Id.
You can lead a horse to water Your Honors, but you can’t make it plead properly.
Willow Way, LLC v. Village of Lyons, No. 22-1775 (7th Cir. Oct. 5, 2023)