### In the



# United States Court of Appeals

For the Seventh Circuit

No. 17

‐ 2498

B OBBI K ILBURN

‐ W INNIE

, Plaintiff

‐ Appellant

, and

M ICHELLE A LLEN

‐ G REGORY

, Appellant

,

v.

T OWN OF F ORTVILLE

, et al

., Defendants

‐ Appellees.

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:15

‐ cv

‐ 01784

‐ RLY

‐ MPB

— Richard L. Young

, Judge.

A RGUED A PRIL 11, 2018

— D ECIDED M AY 30, 2018

Before B AUER

, S YKES

, and B ARRETT

, Circuit Judges

.

B AUER

, Circuit Judge. Bobbi Kilburn

‐ Winnie and Michelle

Allen

‐ Gregory (collectively, “Appellants”) filed suit against the2 No. 17

‐ 2498

Town of Fortville, Indiana, Fortville Waterworks, and Fortville

Utilities (collectively, “Fortville”), alleging that their Four

‐

teenth Amendment procedural due process rights were

violated when Fortville disconnected their water service. The

district court granted summary judgment in favor of Fortville,

holding that res judicata barred Appellants’ claim because the

parties had settled a prior class action that involved the same

claim. We affirm.

I. BACKGROUND

In July 2014, Allen

‐ Gregory filed a putative class action

alleging that Fortville violated the class members’ Fourteenth

Amendment right to procedural due process when it termi

‐

nated their water service without affording them a hearing.

See Allen

‐ Gregory v. Town of Fortville

, No. 1:14

‐ cv

‐ 01148

‐ RLY

‐

DML (S.D. Ind.) (“ Fortville I ”). Two months later, the class

filed a motion for preliminary injunction to prevent Fortville

from disconnecting any customer’s water without a hearing.

In response, Fortville revised its notice and disconnection

procedures, instituting a hearing process effective November

2014. In December 2014, however, the class plaintiffs filed

another motion for preliminary injunction, alleging that the

new procedures still did not comport with due process.

On January 23, 2015, while that motion was pending, the

parties agreed to the terms of settlement at a settlement

conference, which was later reduced to a formal written

agreement. On September 10, 2015, the district court entered an

order granting final approval of the settlement agreement and

dismissing the case with prejudice. Though the case was fully

resolved at that point, the district court entered another orderNo. 17

‐ 2498 3

twelve days later dismissing as moot both motions for prelimi

‐

nary injunction.

The settlement agreement stated that its purpose was to

“fully, finally, and forever resolve, discharge and settle all

claims released herein on behalf of the named plaintiffs and

the entire class.” It defined the class and class members as

“[a]ll customers of the Town of Fortville, Fortville Utilities

and/or Fortville Water Department from July 9, 2012 through

October 31, 2014 who had their water service terminated and

who paid a reconnection fee to reestablish their water service.”

The agreement included an expansive and global release of all

claims, stating, as relevant to this case:

Named Plaintiffs and the Class will release any

and all claims against [Fortville] and any related

entities which claims relate to the actions alleged

to have violated the due process provision of the

14th Amendment to the Constitution of the

United States, including pre

‐ litigation, litigation,

and post

‐ litigation activities. The claims released

by Named Plaintiffs and the Class will include

all claims that were or could have been raised in

[ Fortville I ].

Allen

‐ Gregory received settlement proceeds as a member

of the class, as well as an additional award for acting as the

named plaintiff and class representative. Kilburn

‐ Winnie was

a member of the class based upon water disconnections that

occurred in February and June of 2014, and she received

settlement proceeds pursuant to the agreement.4 No. 17

‐ 2498

In November 2015, Kilburn

‐ Winnie filed the instant case

alleging that Fortville disconnected her water service again as

a result of her failure to pay her water bill on time in March

and April of 2015. The complaint was later amended to add

Allen

‐ Gregory as a named plaintiff and include allegations that

she had her service disconnected in December 2015 because

she failed to pay her bill on time. The amended complaint

claimed that the hearing procedures Fortville implemented in

November 2014 were so complicated and burdensome that

they violated Appellants’ Fourteenth Amendment procedural

due process rights.

Fortville moved to dismiss the complaint, citing the release

of claims in the settlement agreement in Fortville I

. The district

court converted the motion into one for summary judgment

and proceeded to analyze whether the terms of the release

acted as a waiver of Appellants’ due process rights. It held that

Allen

‐ Gregory had waived her rights, but Kilburn

‐ Winnie had

not because waiver of a constitutional right requires a knowing

and voluntary relinquishment, and she did not personally sign

the agreement.

Ten months later, however, the court revisited that ruling

sua sponte and granted summary judgment to Fortville as to

both Appellants, but on different grounds. It found that the

claim in the present complaint was identical to the claim raised

by the second motion for preliminary injunction in Fortville I

. Therefore, because the claim was completely resolved by way

of the settlement agreement, the doctrine of res judicata barred

the present suit. Appellants timely appealed.No. 17

‐ 2498 5

II. DISCUSSION

We review a grant of summary judgment on res judicata

grounds de novo

. Hicks v. Midwest Transit, Inc.

, 479 F.3d 468, 470

(7th Cir. 2007). Res judicata bars a claim that was “litigated or

could have been litigated in a previous action when three

requirements are met: (1) an identity of the causes of action;

(2) an identity of the parties or their privies; and (3) a final

judgment on the merits.” Bell v. Taylor

, 827 F.3d 699, 706 (7th

Cir. 2016) (internal quotation marks and citation omitted).

In their brief before this Court, Appellants concede that

there is an identity of the causes of action for purposes of this

analysis. At oral argument, however, Appellants’ counsel

seemed to equivocate on that point, so we will briefly address

it. “[T]he test for an identity of the causes of action is whether

the claims arise out of the same set of operative facts or the

same transaction.” Bernstein v. Bankert

, 733 F.3d 190, 226 (7th

Cir. 2013) (internal quotation marks and citation omitted). The

operative complaints in the two cases raise technically different

claims. However, there can be no dispute that the claim

Appellants raised in their second motion for preliminary

injunction in Fortville I is identical to the only claim they raise

in the complaint in this case. In both instances, Appellants

alleged that the new hearing process, implemented in Novem

‐

ber 2014, violates their Fourteenth Amendment procedural due

process rights. It is irrelevant that the claim in Fortville I was

raised in a motion that was not specifically adjudicated. See

Bell

, 827 F.3d at 706 ( Res judicata “bars any claims that were

litigated or could have been litigated in a previous action.”)

(emphasis added). “[T]he nature of the claims, the legal basis

for recovery, the law involved, and the respective factual6 No. 17

‐ 2498

backgrounds” are the same, and therefore, there is identity for

purposes of res judicata

. Bernstein

, 733 F.3d at 227.

The second element, an identity of the parties, is also

satisfied, as Appellants again concede. Allen

‐ Gregory was the

named plaintiff in Fortville I

, and Kilburn

‐ Willie was a member

of the class who received monies pursuant to the terms of the

settlement agreement in that case. Both are named plaintiffs in

the instant suit, which names as defendants the same parties as

those named in Fortville I.

The main issue in this appeal, then, is whether the third

res judicata element is present. Appellants contend that because

the motion for preliminary injunction was dismissed as moot,

there was no final judgment on the merits of that claim for

purposes of res judicata

. As support, they cite DiGore v. Ryan

, where we explained that there is “no reason to conclude that

a decision based upon the conclusion that a claim is moot

creates a barrier for future litigation.” 172 F.3d 454, 466 (7th

Cir. 1999), overruled on other grounds by Whetsel v. Network Prop.

Servs., LLC

, 246 F.3d 897 (7th Cir. 2001). However, that argu

‐

ment misapprehends the meaning of the order denying the

motion as moot, as well as the effect of the settlement agree

‐

ment and the ensuing dismissal with prejudice.

When the district court entered an order approving the

settlement and dismissing the case with prejudice, the case was

completely resolved. The settlement agreement plainly stated

that it was intended to “fully, finally, and forever resolve” any

and all Fourteenth Amendment due process claims based on

any “pre

‐ litigation, litigation, and post

‐ litigation activities” that

“were or could have been raised” in Fortville I. Although theNo. 17

‐ 2498 7

court entered a separate order dismissing the preliminary

injunction motion as moot, the language of the agreement

makes it clear that the motion was only “moot” in the sense

that it had already been resolved, along with the entire case.

As explained above (and as Appellants conceded in their

brief), the claim raised in this case is materially identical to the

claim that provided the basis for their second motion for

preliminary injunction. By its explicit terms, the settlement

agreement fully resolved that claim. Therefore, the district

court’s order dismissing the case with prejudice, which

specifically incorporated the release language of the settlement

agreement, represented a final judgment on the merits of that

claim. See Brooks

‐ Ngwenya v. Indianapolis Public Sch.

, 564 F.3d

804, 809 (7th Cir. 2009) (holding that dismissal with prejudice

based on a settlement agreement is a final judgment for

purposes of res judicata ). Accordingly, the requirements of

res judicata are satisfied, and the present claim is barred.

We must briefly address one final point. Likely because of

the district court’s initial ruling relying on a waiver analysis,

Appellants dedicated a significant portion of their brief before

this Court to a discussion of whether the Fortville I settlement

agreement effectively waived their constitutional rights. That

discussion, however, is not relevant to the outcome of this case.

Regardless of whether Appellants waived their claim that the

new procedures violated their Fourteenth Amendment rights,

that specific claim, as it relates to both of them individually,

was fully resolved by the terms of the Fortville I settlement

agreement. Therefore, as we have explained, and as the district

court ultimately held, Appellants are not barred from bringing8 No. 17

‐ 2498

that claim here because they waived it; they are barred by

operation of the distinct doctrine of res judicata

.

III. CONCLUSION

For the foregoing reasons, the judgment of the district court

is AFFIRMED.