Akbar v. Squares

JAMAL A. AKBAR, Plaintiff, v. SAVOY SQUARES, Defendant.

17-cv-05447

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

August 12, 2020

Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER

In July 2017, Jamal Akbar filed this civil-rights lawsuit, 42 U.S.C. § 1983—without a lawyer—against "Savoy Squares,"¹ which he alleged was a property-management company in Chicago. Savoy Squares allegedly enters into low-income housing contracts with the Chicago Housing Authority and the U.S. Department of Housing and Urban Development. Also named in the suit was one of Savoy's employees, Roshawn Perry See R. 1, Compl.; R. 12, Am. Compl.^{2 3}

In January 2018, Akbar amended the Complaint, and then in October of that year—after Defendant Savoy Square failed to appear—the Court entered a defaultjudgment in Akbar's favor. R. 31. Shortly after, Interstate Realty Management Corp. and Legends A-2, LLC appeared and moved to vacate the default judgment. R. 34, Mot. Vacate. The two companies asserted that they were the potentially proper defendants in the lawsuit, not "Savoy Squares," and that the default judgment should be vacated in light of excusable neglect. Id. at 11-12. The Court vacated the default judgment because no authorized employee accepted service of the complaint. R. 50.

Now, Interstate and Legends have moved to dismiss the Amended Complaint for failure to adequately state a claim. Fed. R. Civ. P. 12(b)(6); R. 51, Mot. Dismiss. For the reasons explained below, the motion to dismiss is granted, but without prejudice to allow Akbar to amend the complaint one more time.

I. Background

A. Amended Complaint

For purposes of this motion, the Court accepts as true the factual allegations in the Amended Complaint, Erickson v. Pardus, 551 U.S. 89, 94 (2007), as well as those in Akbar's response and sur-reply briefs (to the extent they are consistent with the Amended Complaint), see Heng v. Heavner, Beyers & Mihlar, LLC, 849 F.3d 348, 354 (7th Cir. 2017). See also Thompson v. Ill. Dep't of Prof. Reg., 300 F.3d 750, 753 (7th Cir. 2002) (on a Rule 12(b)(6) motion, the pleadings "consist generally of the complaint, any exhibits attached thereto, and supporting briefs." (citing Fed. R. Civ. P. 10(c))).

In February 2016, Akbar applied to live at the Legends South Apartment Complex, a mixed-income, tax-credit property allegedly managed by Savoy Squareand located at 4448 S. State St., Chicago, Illinois 60609. Am. Compl. at 2.⁴ According to Akbar, Savoy Square contracts with the Chicago Housing Authority and the U.S. Department of Housing and Urban Development to provide property-management services and to screen tenant applications. See id. at 1-2. On the application, Akbar disclosed that he received $731 per month in disability-benefits income, listing no other source of income. R. 53, Pl.'s Resp. Br., Exh. 1. His application for residency was rejected in March 2016. Am. Compl. at 2. Although the rejection letter stated that Akbar's application was rejected because he "[did] not meet the minimum income requirements," Akbar alleges that Savoy Square actually denied it because his income came from disability benefits. Id. at 2-3; Pl.'s Resp. Br. at 3. He brought this lawsuit the following year, claiming that Savoy Square discriminated against him, failed to apply the CHA's Minimum Tenant Selection Plan for Mixed-Income/Mixed-Finance Communities to his application, and denied him due process of law by not giving him the opportunity to question the basis for the denial. See generally Compl.; Am. Compl. at 1-3.

B. Procedural History

The Amended Complaint names the "Savoy Square" management company and site manager Roshawn Perry as defendants. Am. Compl. at 1-2. Dominique Beck, who was identified as the General Manager for the apartment complex, purported to accept service for the Defendants in June 2018. R. 23, Am. Return Service. Though the Court continued to send correspondence to Beck at the apartment complex'saddress, the Defendant never filed an answer. See generally R. 24; R. 26; R. 27. In early October 2018, Akbar voluntarily dismissed Roshawn Perry from the suit, and the Court entered a default judgment for $15,000 in Akbar's favor and against Savoy Square. R. 30; R. 31.

In October 2018, Interstate and Legends appeared in the case and moved to vacate the default judgment, arguing that they are the actual entities that manage the relevant property. Mot. Vacate at 12. They explained that, after the default judgment was entered, Akbar sent a "Letter of Notification" to Savoy Square. See R. 34-1, Exh. 7A. According to Interstate and Legends, this letter was the first time that anyone in management heard about Akbar's lawsuit. R. 34-1, Exh. 7, Walker Aff. ¶¶ 5-6, 29-30. Dominique Beck, who had purported to accept service, had been only a temporary receptionist at the apartment complex (she worked there from May to August 2018), and had apparently failed to inform any supervisor of the lawsuit. Id. at 6, 10. In light of this credible explanation, the Court vacated the default judgment, noting that the record evidence showed that Akbar almost certainly did not name the correct corporate entity as a defendant despite the Court's attempts to guide him. R. 50.

Now, Interstate and Legends have moved to dismiss the Amended Complaint, asserting that "Savoy Square" is nothing more than the name of a portion of the housing redevelopment project located at the relevant property, and not a management company in its own right. Mot. Dismiss ¶¶ 5-6. Interstate and Legendscontend that, if anyone, they are the correct defendants because "they potentially had/have a role in the management of the relevant property." Id. ¶ 5.

II. Legal Standard

A complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (cleaned up).⁵ The Seventh Circuit has explained that this rule "reflects a liberal notice pleading regime, which is intended to 'focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (cleaned up). These allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.

III. Analysis

A. Procedural Vehicle

Before getting to the merits of the arguments, there is a threshold question: is Interstate and Legends's motion to dismiss properly brought under Rule 12(b)(6)? In the dismissal motion, they do not really argue that Akbar failed to adequately plead the § 1983 claims, Mot. Dismiss ¶ 9, so there is a mismatch between the argument and Rule 12(b)(6) as the vehicle.⁶ Rather, their primary argument is that Akbar has incorrectly named "Savoy Square" as a defendant and that they are the appropriate defendants because they had a role in managing the relevant property. Id. ¶ 5; see also id. ¶ 9 ("Should the Court allow Plaintiff leave to file an Amended Complaint naming the correct parties, the correct defendants will address the myriad deficiencies under Federal Rules 8 and 12 ... ."). Because the motion seeks to correct the parties in this lawsuit, it seems more like a motion to substitute parties (which would be brought under Rule 25) than a motion to dismiss for failure to state a claim. See, e.g., Sullivan v. Running Waters Irrigation, Inc., 739 F.3d. 354, 360 (7th Cir. 2014) (allowing a motion to substitute as a procedural mechanism to allow the plaintiff to recover from the entities holding the assets of the original corporate defendant, which no longer existed); Ma v. CVS Pharmacy, Inc., 2020 WL 533702, at *3 (N.D. Ill. Feb. 3, 2020) (considering a motion to substitute to allow the properdefendant—the company that managed the store in which the underlying incident happened—to be a party to the lawsuit).

But Rule 25 does not strictly fit either. Specifically, "[m]isidentification is a formal defect in the complaint and therefore does not implicate the type of substitution addressed in Federal Rule of Civil Procedure 25." Ma v. CVS Pharmacy, Inc., 2020 WL 533702 at *3 (citing Worthington v. Wilson, 8 F.3d 1253, 1256 (7th Cir. 1993)). Courts typically view Rule 25 as applicable only to the enumerated circumstances in the rule, such as when a party dies or becomes incompetent, when the legal interest in the claim is transferred, or when the action involves a public officer who is replaced in their position. See Glover v. Carr, 949 F.3d 364, 369 n.5 (7th Cir. 2020) (stating that pro se plaintiff's Rule 25 motion to substitute a prison medical director should have been a Rule 15 motion to amend because the director was not a public officer). Because none of those enumerated circumstances apply here—and because Interstate and Legends cannot bring a motion to amend on Akbar's behalf—Rule 25 does not apply, so Interstate and Legends resorted to Rule 12(b)(6).

Having said that, courts typically do not look outside the pleadings when deciding a Rule 12(b)(6) motion. Here, Interstate and Legends's entire argument is based on information not alleged in the Amended Complaint. Given this unusual procedural posture, and...