In the
United States Court of Appeals
For the Seventh Circuit
No. 10-2141
A RLIN-G OLF, LLC, R ONALD P OPP, and
V ICTOR V ALENTI,
Plaintiffs-Appellants,
v.
T HE V ILLAGE OF A RLINGTON H EIGHTS,
A RLENE J. M ULDER, W ILLIAM V. E NRIGHT,
B RIAN P ROPERTIES, INC., JACK B. W HISLER,
V ILLAGE B ANK & T RUST, and S. M ICHAEL P OLANSKI,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 C 1907—David H. Coar, Judge.
A RGUED N OVEMBER 2, 2010—D ECIDED JANUARY 21, 2011
Before C UDAHY, FLAUM, and K ANNE, Circuit Judges.
F LAUM , Circuit Judge. Arlin-Golf, LLC, (“Arlin-Golf”)
sued The Village of Arlington Heights (“the Village”) in
Illinois state court in 2006. The two entered a settlement
2 No. 10-2141
agreement in 2008 pursuant to which Arlin-Golf volun-
tarily dismissed the case with prejudice. In 2009, the
plaintiffs in this case sued the defendants in this case
based on facts and legal theories similar to those
asserted in the 2006 state suit. Accordingly, the district
court dismissed the federal suit based on res judicata,
among other grounds. We affirm.
I. Background
The plaintiffs-appellants, Arlin-Golf and Arlin-Golf’s
two partners, Ronald Popp and Victor Valenti, purchased
the Arlin-Golf Shopping Center (“the Center”) in June
2001. On January 22, 2002, the Village announced a Tax
Increment Financing (“TIF”) District that included the
property on which the Center was built. The Village
implemented the TIF District in a July 2002 ordinance, in
which the Village announced that the Center would be
condemned, knocked down, and redeveloped in roughly
six months. But the Village never executed this plan.
Instead, from 2002 to 2008, the Village allegedly encour-
aged tenants to move out from the Center or break
their lease agreements with Arlin-Golf, discouraged
prospective tenants from renting space, repeatedly an-
nounced that the Center was condemned and would be
knocked down in a few months, and asserted that the
Village already owned the Center, when in fact it did not.
Due to the actions of the Village and its agents, the plain-
tiffs allege that they have been unable to use or profit
from the Center since 2002.
No. 10-2141 3
In 2006, Arlin-Golf filed a lawsuit against the Village
in Illinois state court, alleging that the Village’s imple-
mentation of the TIF District was improper under
Illinois statutory law, and that the Village’s conduct
constituted a constructive taking under Illinois’s con-
stitution.
In 2008, the plaintiffs contacted Brian Properties, Inc.,
a real estate brokerage, to help them sell the Center. The
plaintiffs allege that Brian Properties, Jack Whisler, a
broker and owner of Brian Properties, the Village,
Arlene Mulder, the Village’s mayor, William Enright, the
Village’s Deputy Director of Planning and Community
Development, Village Bank & Trust of Arlington
Heights (“the Bank”), which lent money to the plaintiffs,
and S. Michael Polanski, the Bank’s Chairman and CEO,
worked together to coerce the plaintiffs into selling the
Center to the Village. The plaintiffs claim that they
were threatened physically and financially—they allege
that they were threatened with the foreclosure of loans
they had outstanding with the Bank that were unrelated
to their mortgage on the Center and that were not in
default.
The plaintiffs eventually accepted a settlement offer
from the Village pursuant to which the Village would
purchase the Center for $1.6 million and Arlin-Golf
would agree to withdraw the state suit with prejudice. On
September 18, 2008, Arlin-Golf voluntarily dismissed
the state suit with prejudice. On November 3, 2008, Arlin-
Golf and the Village executed a real estate contract
that provided for the sale of the Center to the Village for
$1.6 million. The sale closed on March 4, 2009. The plain-
4 No. 10-2141
tiffs claim to have lost millions from their investment in
the Center, which they attribute to the Village’s and its
agents’ conduct.
On March 27, 2009, the plaintiffs in this case sued the
defendants in this case, alleging that the defendants’
conduct resulted in financial losses to Arlin-Golf in con-
nection with its ownership of the Center. In a ten-count
complaint, the plaintiffs allege violations of the Equal
Protection Clause (Count I), the Due Process Clause
(Count II), and the Takings Clause (Count III), claims
under the parallel provisions of the Illinois Constitution
(Counts I-III), a § 1983 conspiracy (Count IV), a § 1983
claim against several defendants for violations of well-
known rights (Count V), and supplemental state law
claims for interference with contract relations (Count VI),
interference with economic expectancy (Count VII), civil
conspiracy (Count VIII), breach of fiduciary duty (Count
IX), and inducement of breach of fiduciary duty (Count X).
On June 10, 2009, the defendants filed a motion to
dismiss under Rule 12(b)(6) based on res judicata arising
from the settlement of the state action, among other
grounds. On March 9, 2010, the district court granted the
motion to dismiss based on res judicata, among other
grounds on particular counts and for particular defen-
dants. It dismissed Counts I through V and X with preju-
dice, and VI through IX with prejudice to the Village and
without prejudice to the other defendants. On April 6,
2010, the plaintiffs moved to vacate the judgment and to
amend their pleadings. The district court denied the
plaintiffs’ motion on April 7, 2010. This appeal followed,
challenging solely the application of res judicata.
No. 10-2141 5
II. Analysis
The appellants primarily assert four arguments on
appeal. First, they argue that the causes of action in the
state and federal suits were not identical, and, thus, that
the second element for applying res judicata is not satis-
fied. Second, they argue that applying res judicata
would be unfair under the circumstances of this case.
Third, they argue that the settlement agreement should
not be enforced because of the circumstances under
which it was procured. Finally, they argue that the
district court erred by dismissing their case with preju-
dice and, thus, without leave to amend their complaint.
We review de novo the district court’s decision to grant
the defendants’ motion to dismiss. Brzostowski v. Laidlaw
Waste Sys., Inc., 49 F.3d 337, 338 (7th Cir. 1995).
To determine whether res judicata applies, we apply
the preclusion law of Illinois, the state that rendered the
judgment. Hicks v. Midwest Transit, Inc., 479 F.3d 468,
471 (7th Cir. 2007); see also 28 U.S.C. § 1738. The
Supreme Court of Illinois explained Illinois’s doctrine of
res judicata:
The doctrine of res judicata provides that a final judg-
ment rendered by a court of competent jurisdiction
on the merits is conclusive as to the rights of the
parties and their privies, and, as to them, constitutes
an absolute bar to a subsequent action involving the
same claim, demand or cause of action. When res
judicata is established as a bar against the prosecution
of a second action between the same parties upon the
same claim or demand it is conclusive not only as to
every matter which was offered to sustain or defeat
6 No. 10-2141
the claim or demand, but as to any other matter
which might have been offered for that purpose.
Nowak v. St. Rita High Sch., 757 N.E.2d 471, 477 (Ill. 2001);
see also Licari v. City of Chi., 298 F.3d 664, 666 (7th Cir. 2002).
Res judicata applies when “(1) there was a final judg-
ment on the merits rendered by a court of competent
jurisdiction, (2) there is an identity of cause of action,
and (3) there is an identity of parties or their privies.”
Nowak, 757 N.E.2d at 477; see also Licari, 298 F.3d at 666.
To determine whether the second requirement is
met, Illinois employs a transactional test:
[S]eparate claims will be considered the same cause
of action for purposes of res judicata if they arise
from a single group of operative facts, regardless of
whether they assert different theories of relief. . . .
[T]he transactional test permits claims to be con-
sidered part of the same cause of action even if there
is not a substantial overlap of evidence, so long as
they arise from the same transaction.
River Park, Inc. v. City of Highland Park, 703 N.E.2d 883, 893
(Ill. 1998); see also Licari, 298 F.3d at 667. Illinois courts
apply the transactional test “pragmatically, giving
weight to such considerations as whether the facts are
related in time, space, origin, or motivation, whether
they form a convenient trial unit, and whether their
treatment as a unit conforms to the parties’ expectations
or business understanding or usage.” Altair Corp. v. Grand
Premier Trust & Inv., Inc., 742 N.E.2d 351, 355 (Ill. App. Ct.
2000) (internal quotation marks and citations omitted).
No. 10-2141 7
Accordingly, the addition of new theories of relief in
a subsequent suit arising from the same operative facts
satisfies the second requirement for applying res judi-
cata. See River Park, Inc., 703 N.E.2d at 893-96.
The second requirement for applying res judicata is
satisfied because the plaintiffs’ complaints in the state
and federal suits rely on the same operative facts. In
both complaints, the operative facts regard the Village’s
implementation of the TIF District, and the economic
harm that Arlin-Golf and its principals experienced due
to the Village’s and its agents’ conduct that interfered
with Arlin-Golf’s ability to profit from the Center. The
state-court complaint included a claim for constructive
taking under a provision in Illinois’s constitution that
prohibits taking or damaging private property “for
public use without just compensation,” Ill. Const. art. I,
§ 15, which was based on an assertion that the Village’s
and its agents’ conduct discouraged tenants from
leasing the property and economically harmed Arlin-
Golf. The federal-court complaint seeks recovery based
on additional theories not mentioned in the state-
court complaint, but res judicata is nonetheless appro-
priate because, as explained above, both complaints rely
on the same operative facts. Further, Illinois courts con-
sider the facts “as they exist at the time of judgment
[to] determine whether res judicata bars a subsequent
action.” Altair Corp., 742 N.E.2d at 355. The state suit
was dismissed on September 18, 2008, and the federal
suit was filed on March 27, 2009. The plaintiffs do not
allege that any significant additional facts occurred be-
tween those two dates, of course other than the execution
8 No. 10-2141
of the agreement to sell the Center. But the plaintiffs’
complaint relies on the defendants’ actions that resulted
in the agreement, not the execution of the agreement
itself. The second requirement for applying res judicata
is satisfied.
Next, the plaintiffs argue that applying res judicata
would be unfair under the circumstances of this case.
But they cited no relevant legal authority to the district
court to support the proposition that the district court
should not have applied res judicata due to the alleged
unfairness in this case, and they cite no such authority
on appeal. Thus, the argument is waived. See Weems v.
Potter, 68 Fed.Appx. 734, 736 (7th Cir. 2003) (failure to
cite relevant legal authority on appeal waives the argu-
ment); Rickard v. Sternes, 44 Fed.Appx. 738, 739-40 (7th
Cir. 2002) (failure to adequately raise an argument
before the district court waives the argument on appeal).
Third, the plaintiffs argue that the settlement agree-
ment should not be enforced because of the alleged cir-
cumstances under which it was procured. Again, however,
they cited no authority to the district court indicating
that the settlement agreement is void under Illinois
law, which would negate the finality requirement for
applying res judicata. Instead, the case law they cited
below and on appeal demonstrates that the agree-
ment is merely voidable, not void. See, e.g., Laemmar v.
J. Walter Thompson Co., 435 F.2d 680, 682 (7th Cir. 1970). Ac-
cordingly, any argument that the settlement agree-
ment was improperly procured is either unhelpful to
the plaintiffs’ case or waived. See Weems, 68 Fed.Appx. at
736; Rickard, 44 Fed.Appx. at 739-40.
No. 10-2141 9
Fourth, the district court did not commit reversible
error by dismissing the plaintiffs’ complaint without
prejudice and, thus, without leave to amend. The gen-
eral rule is to freely permit plaintiffs to amend their
complaint “once as a matter of course.” FED. R. C IV. P. 15(a);
see Foster v. DeLuca, 545 F.3d 582, 583-84 (7th Cir. 2008).
But “ ‘the right to amend as a matter of course is not
absolute,’ and a district court may deny a motion to
amend ‘if the proposed amendment fails to cure the
deficiencies in the original pleading, or could not
survive a second motion to dismiss.’ ” Foster, 545 F.3d at
584 (quoting Crestview Vill. Apartments v. U.S. Dep’t of
Housing & Urban Dev., 383 F.3d 552, 558 (7th Cir. 2004));
see also Airborne Beepers & Video, Inc. v. AT & T Mobility
LLC, 499 F.3d 663, 666 (7th Cir. 2007) (“Reasons for
finding that leave should not be granted include ‘undue
delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amend-
ments previously allowed, undue prejudice to the op-
posing party by virtue of allowance of the amend-
ment, [and] futility of amendment.’ ” (emphasis removed)
(quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). After
reviewing the record below and the allegations on
appeal, we have no reason to believe that an amend-
ment would not be futile in this case. Further, the plain-
tiffs did not attach a proposed amended complaint to
their motion for reconsideration, which “may indicate a
lack of diligence and good faith.” Otto v. Variable Annuity
Life Ins. Co., 814 F.2d 1127, 1139 (7th Cir. 1986). Notably,
to the extent that the district court’s order constituted
error due to its brevity, that error was harmless. See F ED.
R. C IV. P. 61.
10 No. 10-2141
The plaintiffs also mention that we do not afford full
faith a credit to a judgment when a party was denied a
full and fair opportunity to litigate. See, e.g., Kremer v.
Chem. Constr. Corp., 456 U.S. 461, 480-85 (1982); Hicks,
479 F.3d at 471. Again, the plaintiffs fail to point out any
relevant authority on appeal indicating that the circum-
stances surrounding the settlement agreement in this
case denied them a full and fair opportunity to litigate
their claims, and we find none. Accordingly, any argu-
ment that this exception applies is meritless or waived.
Finally, the plaintiffs state without explanation that
the defendants are improperly using res judicata as a
sword and not a shield. See Fed. Signal Corp. v. SLC Techs.,
Inc., 743 N.E.2d 1066, 1077-78 (Ill. App. Ct. 2001). To the
contrary, however, the defendants are using res judicata
to shield them from repetitive litigation, not as a sword.
III. Conclusion
For the foregoing reasons, we A FFIRM the judgment of
the district court.
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