In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 02-2708

SHAHID SHAIKH,

Plaintiff-Appellant,

v.

CITY OF CHICAGO, JULIA STASCH,

and DAVID SALTZMAN,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 00 C 4235—Matthew F. Kennelly, Judge.

____________

ARGUED APRIL 18, 2003—DECIDED AUGUST 25, 2003

____________

Before EASTERBROOK, KANNE, and DIANE P. WOOD,

Circuit Judges.

KANNE, Circuit Judge. Plaintiff Shahid Shaikh (an EastAsian Muslim, born in India, now a U.S. citizen and

Connecticut resident) outbid his competitors at a public

auction and entered into a purchase agreement with the

U.S. Department of Housing and Urban Development to

buy the Lowe Avenue Terrace Apartments—an apartment

building located at 6531 South Lowe Avenue in Chicago,

Illinois. HUD had acquired the building through foreclosure proceedings. Before the closing, the City of Chicago

(acting through its then-Commissioner of the Department

of Housing, Julia Stasch, and then-Deputy Commissioner
2 No. 02-2708

of the Department of Housing, David Salzman) attempted

repeatedly to persuade both HUD and Shaikh to cancel

their purchase agreement. The City had sought to acquire

the Lowe apartments for a possible expansion of the

Kennedy-King City College campus, located a few blocks

away at 6800 South Wentworth Avenue. To that end, the

City had informed both HUD and Shaikh that it was

considering condemning the property. HUD held to its

agreement, but ultimately Shaikh withdrew after the City

further offered him $20,000 to recoup his out-of-pocket

expenses.

With Shaikh out of the picture, HUD offered the property to the second-highest bidders at the auction, John

Schlick and David Horn (two Caucasian, non-Muslim

residents of Washington, D.C.). The City once again tried

to convince HUD and the potential buyers to withdraw,

informing Schlick and Horn of its intention to take the

property by eminent domain. This time though, HUD

refused to allow Schlick and Horn to back out of their

agreement.

After the sale had completed, the City never used its

powers of eminent domain to acquire the property from

Schlick and Horn nor did it proceed with the KennedyKing campus relocation or expansion plans. It also reneged on its offer to pay Shaikh $20,000 for his expenses.

Shaikh then brought this action against the City, Stasch,

and Salzman, arguing that in causing him to withdraw

from his purchase agreement with HUD, the defendants

(hereinafter collectively referred to as the City) intentionally discriminated against him on account of his race

and nationality in violation of 42 U.S.C. § 1981 (which

prohibits discrimination in contractual relations) and 42

U.S.C. § 1982 (which prohibits discrimination in the sale

of property) and violated 42 U.S.C. § 1983 by depriving

him of equal protection under the law and by imped-
No. 02-2708 3

1 Shaikh’s original complaint advanced four additional counts

under the Fair Housing Act. 42 U.S.C. §§ 3601 et seq. (2003).

Those claims were previously dismissed by the district court in

a ruling that is not challenged here.

ing his substantive-due-process rights and his right to

travel.1

The district court granted summary judgment to the

City on Shaikh’s §§ 1981 and 1982 claims and his equalprotection, right-to-travel, and substantive-due-process

claims under § 1983, finding that Shaikh could neither

prove that the City treated similarly situated individuals outside his protected class (whether based on race,

nationality, or citizenship) more favorably than he was

treated nor that the City’s stated reason for persuading

Shaikh to cancel his contract (the Kennedy-King college

expansion) was either illegitimate or pretextual. It also

rejected Shaikh’s “class of one” equal-protection argument because Shaikh failed to produce any evidence that

tended to suggest that the City had a personal vendetta

against him. Shaikh appeals.

Although in the final analysis we agree with the district court that the City behaved as inefficiently, irrationally, and for that matter impolitely, in trying to convince Shaikh not to proceed with the Lowe-apartments

purchase as it did in trying to dissuade Schlick and Horn

or any other potential purchaser without regard to preferences of race, nationality, citizenship, or personality,

Shaikh’s §§ 1981 and 1982 claims fail for a more fundamental reason: Because the City had no power directly to

affect HUD’s proposed sale of the property to Shaikh, it

did not unlawfully or unconstitutionally impede upon

Shaikh’s ability to purchase the building. More fundamentally still, the possibility that the City would seek to take

the Lowe apartments by eminent domain is a risk every

private property owner bears, but it is a risk balanced by
4 No. 02-2708

constitutional requirements to take the property only for

the public use and then to compensate the owner for the

property’s fair market value. And Shaikh has not presented any theory that would allow him to recover under

§§ 1981 or 1982 for the City providing him with advance

notice of its intent to exercise that power within those

constitutionally mandated limits.

The City did not own the Lowe apartment building—HUD

did—and so the City could not refuse to sell it to Shaikh.

HUD had acquired the property by foreclosing on a Federal Housing Authority administered loan and, under the

terms of the Multifamily Property Disposition Reform Act

of 1994, it had informed the City of its acquisition. 12

U.S.C. § 1701z-11(c)(3)(A) (2003). At that time, the City

took no action to acquire the property, even though the

statute grants the City a right of first refusal. See id. at

§ 1701z-11(i). When the City later changed its mind and

informed HUD of its interest in the property for the

Kennedy-King expansion, it was too late: HUD had decided to proceed to auction. At this point, the City was

powerless to stop the auction sale. The Act afforded them

no further opportunity to lay claim to the property after

they had passed on their right of first refusal. And under

the Supremacy Clause, the City could not pursue condemnation proceedings against HUD to obtain the property in advance of, and for the purpose of cancelling, the

auction. See Utah Power & Light Co. v. United States, 243

U.S. 389, 404-05 (1917) (holding that private rights in

public lands of the United States within a state cannot

be acquired under the state’s power of eminent domain,

unless Congress confers that right).

Unable to prevent HUD from proceeding to auction and

eventual sale, the City redirected its persuasive efforts

towards the successful bidder, Shaikh. After the auction,

Shaikh and HUD entered into a purchase agreement for

the property. For the same reasons discussed above, the
No. 02-2708 5

City lacked leverage over HUD to get it to break its bargain with Shaikh (although that didn’t stop it from urging

HUD to adhere strictly to the purchase agreement and

not to overlook any technical violations by Shaikh). Instead, it tried to convince Shaikh to back out of the deal,

“threatening” him with condemnation proceedings. This,

Shaikh suggests, was unconstitutional and unlawful conduct if motivated by discriminatory animus.

We disagree. To succeed on this theory under §§ 1981

and 1982, Shaikh must argue that advance notice of a local

government’s intent to use its eminent-domain power can

constitute unlawful interference with his contractual

rights and otherwise make unavailable or deny him the

opportunity to purchase the target property. See Morris v.

Office Max, Inc., 89 F.3d 411, 413 (7th Cir. 1996) (holding

that to succeed on a § 1981 or a § 1982 claim, a plaintiff

must allege, inter alia, intentional discrimination concerning the making and enforcing of a contract or the

sale or lease of real property). Shaikh is correct in noting

that a third party’s interference with an individual’s

equal opportunity to enter into contracts or purchase

property can support civil-rights claims under §§ 1981

and 1982. See Sullivan v. Little Hunting Park, Inc., 396

U.S. 229, 237 (1969) (“The right to ‘lease’ is protected by

§ 1982 against the actions of third parties, as well as

against the actions of the immediate lessor. . . . A narrow

construction of the language of § 1982 would be quite

inconsistent with the broad and sweeping nature of the

protection meant to be afforded by [the Act].” (citations

omitted)); Faraca v. Clements, 506 F.2d 956, 959 (5th Cir.

1975) (extending Sullivan’s rationale to § 1981 claims for

interference with contractual relations). The problem for

Shaikh, however, is that what he alleges the City did in

this case—inform him that it was contemplating the use

of its eminent-domain power—never interfered with his

ability to purchase the building.
6 No. 02-2708

The Supreme Court in Sullivan did not discuss what type

of action it anticipated would constitute third-party interference. But the concept of third-party interference with

contractual or business relationships is not novel; it is

a well-recognized common-law tort. And that tort is essentially what Shaikh complains about here—that the

City, a competitor, interfered with his business opportunity to purchase and develop the Lowe avenue apartments by “threatening” to take the property from him by

eminent domain. To succeed on a tortious-interference

claim under Illinois law the plaintiff must show inter alia

“an intentional interference by the defendant which prevents the [plaintiff’s] expectancy from ripening into a

valid business relationship.” Heying v. Simonaitis, 466

N.E.2d 1137, 1140-41 (Ill. App. Ct. 1984) (citation omitted).

Here, the City’s actions never prevented Shaikh’s legitimate interest in purchasing the property from ripening.

HUD at all times remained a willing seller and Shaikh

was free to proceed with the transaction. The City could

not stop him. The gravamen of Shaikh’s complaint is that

he withdrew from the sale because he had envisioned the

Lowe-apartment purchase as a long-term investment and

no longer considered that prospect lucrative in light of

the City’s statements. But whether or not the City informed

him of the possibility that it could seek to take the property by eminent domain, it was always a risk he bore.

See United States v. 16.92 Acres of Land, 670 F.2d 1369,

1371 (7th Cir. 1982) (“Every person who acquires or occupies land does so at the risk of being evicted by the

exercise of the superior right of the government or its

delegate to acquire his interest upon payment of just

compensation.” (citation omitted)). Shaikh’s choice to

withdraw from his purchase agreement with HUD was a

means to avoid a possibility that any purchaser of residential rental property that has been foreclosed upon may

face—the local government may seek to have the property

condemned.
No. 02-2708 7

2 The regulations pertaining to discriminatory conduct under

the Fair Housing Act explain that

(b) It shall be unlawful, because of race, color, religion,

sex, handicap, familial status, or national origin, to

engage in any conduct relating to the provision of hous-

(continued...)

But to hear Shaikh tell it, the City’s presale “threats”

sound ominous. After all, Shaikh alleges that the

City, without any concrete authority or intent to follow

through, strongarmed him out of his purchase agreement

by suggesting that after he invested his time, money,

and efforts into acquiring the property, the City would

snatch it from him. Moreover, he argues that the only

reason the City advanced these threats was to prevent

him, an out-of-state U.S. citizen of Indian-Muslim descent,

from acquiring the property in the first place. Shaikh

argues we should analogize the City’s statements to

threats against potential purchasers to enforce the housing code vigorously, to deny future zoning permits, or to

withhold municipal services such as police and fire protection, all in an effort to prevent the purchase. See, e.g.,

Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000)

(per curiam) (affirming appellate court’s reversal of district court’s dismissal of plaintiff’s “class of one” equal

protection claim, which alleged discriminatory animus in

municipality’s demand for a 33-foot easement to property

in return for a connection to the municipal water supply

in excess of standard requirement of 15-foot easement);

Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights, 558

F.2d 1283, 1294 (7th Cir. 1977) (finding statutory obligation under Fair Housing Act to refrain from zoning policies that effectively foreclose the construction of lowcost housing within municipality; remanding to determine whether that obligation was violated); 24 C.F.R.

§ 100.70(b) & (d)(4) (2003).2
8 No. 02-2708

2 (...continued)

ing or of services and facilities in connection therewith

that otherwise makes unavailable or denies dwellings to

persons.

. . . .

(d) Prohibited activities relating to dwellings under

paragraph (b) of this section include, but are not limited

to:

. . . .

(4) Refusing to provide municipal services or property or

hazard insurance for dwellings or providing such services

or insurance differently because of race, color, religion,

sex, handicap, familial status, or national origin.

24 C.F.R. § 100.70(b) & (d)(4) (2003).

Shaikh’s comparisons are not apt. The City didn’t

threaten to harm Shaikh’s person if he bought the property. See, e.g., Vietnamese Fisherman’s Ass’n v. Knights

of the Ku Klux Klan, 518 F. Supp. 993, 1008 (S.D. Tex.

1981) (permitting § 1981 claim where plaintiffs complained

of defendants’ threats and intimidation, which interfered

with their ability to make contractual relationships with

dock owners and thereby engage in commercial fishing

business). It didn’t threaten to withhold fire or police

protection, which could endanger Shaikh or others residing in the building, result in the destruction of his property, or prevent him from obtaining necessary hazard

insurance. See, e.g., 24 C.F.R. 100.70(b) & (d)(4). And

it didn’t engage in any conduct under the veil of legal

authority (such as rezoning or the refusal to rezone) having the effect of making the property unavailable for

purchase. See, e.g., Metro. Hous. Dev. Corp., 558 F.2d at

1294. In the first two examples the threat of personal injury or catastrophic loss without recompense may legitimately and reasonably impair an individual’s freedom to

contract or purchase property. In the third, the municipal-
No. 02-2708 9

ity’s action directly prevents the sale. In contrast to

these examples, all that the City did here is state its

intention to exercise its statutory authority to pursue

condemnation proceedings at some future point in time.

That authority, if ever exercised, would have to be

carried out within constitutionally and statutorily mandated limits. And considering those limits, we cannot

construe the City’s prospective statements as “interference” with Shaikh’s ability to purchase the property.

The takings clause of the Fifth Amendment (made

applicable to state and local governments vis a vis Fourteenth Amendment incorporation, see Chicago, Burlington

& Quincy R.R. Co. v. City of Chicago, 166 U.S. 226 (1897))

imposes considerable limits on the exercise of the eminentdomain power. Primary among them are that the taking

must be for public use and that the government must

pay the owner just compensation, which is determined

to be the property’s fair market value. See, e.g., United

States v. Miller, 317 U.S. 369, 373-74 (1943); United States

v. 58.16 Acres of Land, 478 F.2d 1055, 1058 (7th Cir. 1973).

Although the mere “threat” to use the power of eminent

domain doesn’t constitute a taking and trigger these

protections, see, e.g., Tahoe-Sierra Pres. Council, Inc. v.

Tahoe Reg’l Planning Agency, 535 U.S. 302, 321-23 (2002)

(a taking requires government confiscation or physical

occupation, or in the case of a regulatory taking, a regulation so severe that it leaves no reasonably economically

viable use of the property), if the City ever followed through

and initiated condemnation proceedings it would have

to comply with these constitutional strictures. The publicuse protections would resolve Shaikh’s concerns that

the City was not motivated to take his property for the

stated intention of relocating the Kennedy-King campus

but rather by unlawful, discriminatory animus. See, e.g.,

58.16 Acres of Land, 478 F.2d at 1060 (observing that

allegations of bad faith, arbitrariness, and capriciousness
10 No. 02-2708

in the exercise of the eminent-domain power all bear

upon the public-use determination). And if the City’s

intentions were valid, Shaikh would be entitled to receive the fair market value for the property, regardless if

the City in its negotiations with Shaikh suggested otherwise. See Miller, 317 U.S. at 374 (1943).

Moreover, the City, as an Illinois municipal corporation,

holds no sovereign power of eminent domain. Instead, the

state legislature must delegate that authority by specifically conferring the right by legislative enactment. And

the City must exercise that delegated authority in strict

compliance with the State’s statutory grant. Forest Preserve Dist. v. Chicago, 513 N.E.2d 22, 23 (Ill. App. Ct.

1987); see, e.g., 65 ILL. COMP. STAT. ANN. § 5/11-61-1 (2003)

(delegating to all municipalities the exercise of eminent

domain by condemnation proceedings, in conformity

with the Illinois constitution and state statutes, to acquire property for municipal purposes).

Under Illinois law, a person who wishes to challenge

the propriety of a condemnation proceeding must file a

motion to dismiss during the preliminary stage of the

condemnation proceedings. Towne v. Town of Libertyville, 546 N.E.2d 810, 813 (Ill. App. Ct. 1989). And the

state-court condemnation process, with possibility of ultimate appeal to the U.S. Supreme Court, provides the

appropriate venue to raise constitutional or statutory

challenges to the exercise of the eminent-domain power

by state or local governments. See Green St. Ass’n v.

Daley, 373 F.2d 1, 6-7 (7th Cir. 1967); S.W. Ill. Dev. Auth.

v. Vollman, 600 N.E.2d 926, 928-29 (Ill. App. Ct. 1992)

(noting availability of interlocutory appeal to challenge

exercise of eminent-domain power); Towne, 546 N.E.2d

at 814 (noting trial court’s ability to determine constitutional challenges to the exercise of the eminent-domain

power). Thus, Shaikh would have a venue to raise his

challenges to the City’s actual exercise of their eminent-
No. 02-2708 11

domain power at the earliest opportunity, once the City

undertook action in a state court to initiate condemnation proceedings.

If, on the other hand, the City had no concrete authority to pursue condemnation proceedings at the time it

spoke and never intended to follow through, then Shaikh

never had any reason to worry. Cf. Garry v. Geils, 82 F.3d

1362, 1368 (7th Cir. 1996) (observing that the takings

injury alleged was only complete when state court actually condemned the property). In Geils, we held that

we had no federal jurisdiction under the Rooker-Feldman

doctrine to consider plaintiff’s civil-rights claims, which

alleged that local authorities had unconstitutionally

exercised their eminent-domain power. 82 F.3d at 1368-70.

The injury that the plaintiff suffered was not complete

until the state court, in a condemnation proceeding, issued

an order condemning the property. Id. at 1368. Thus, the

plaintiff essentially claimed injury at the hands of the

state court (for failure to root out the municipality’s improper motives) and sought collateral review of that

decision under the guise of a federal civil-rights action. Id.

While the plaintiff could have raised his constitutional

challenges in the state-court condemnation proceedings

and appealed an adverse result to the highest court in

the land, he could not seek to attack the result collaterally in a federal civil-rights action. Id. at 1369-70.

Although not directly controlling precedent (because

the City never initiated condemnation proceedings), we find

the deference we exercised in Geils to the state court’s

opportunity to resolve the types of challenges Shaikh

asserts here, informative. It seems incongruous to hold, on

the one hand, that because a state court has the opportunity and responsibility in condemnation proceedings to

ensure the lawful exercise of a local government’s eminentdomain power, a federal court must abstain from rendering civil-rights relief that would essentially invalidate
12 No. 02-2708

the result of those proceedings, and yet allow, on the

other hand, a property owner to avoid those state-court

condemnation proceedings altogether by seeking preemptive federal civil-rights relief at the first suggestion of

a municipality’s intent to take the property.

As a matter of fact, instead of complaining about the

government talking too much or too early about seizing

property by eminent domain, a more typical complaint

from property owners is that the government talked too

little or too late, and violated due process by not timely or

adequately informing them of its intention to exercise its

eminent-domain power. See, e.g., United States v. 125.2

Acres of Land, 732 F.2d 239 (1st Cir. 1984) (when the

government knew the landowner’s name and hometown

and could have looked up his street address in the telephone book it could easily have notified the owner of

condemnation proceeding by mail or other direct means,

such as leaving a notice at his residence; its failure to do

so and decision instead to content itself with publishing

and posting rendered the notice defective). We hesitate

to impose a Catch-22 rule whereby those governments

contemplating the use of their eminent-domain powers

are subjected to liability regardless of whether they

choose to remain silent or to speak.

Shaikh’s §§ 1981 and 1982 claims are therefore barred

because the City’s statements never interfered with his

ability to purchase the property, accord Morris, 89 F.3d

at 414-15 (upholding grant of summary judgment to

defendants on §§ 1981 and 1982 claims where plaintiff

failed to show actual loss of contract interest or denial of

right to purchase property; possible loss of future contract possibilities was insufficient). It may be, however,

that Shaikh’s assorted § 1983 claims alleging discrimination on account of his race, nationality, citizenship, or

personality survive the §§ 1981 and 1982 analysis. To

succeed under § 1983, Shaikh need only show that the
No. 02-2708 13

City acted under color of law intentionally to deprive him

of “rights, privileges, or immunities secured by the Constitution or laws of the United States.” New Burnham

Prairie Homes, Inc. v. Village of Burnham, 910 F.2d 1474,

1479 (7th Cir. 1990) (quotations omitted). And the equalprotection and due-process clauses of the Fourteenth

Amendment carry neither the contractual nor sale-ofproperty elements found in §§ 1981 and 1982 respectively.

Thus, it is at least conceivable that the City’s statements—although of no ultimate effect upon Shaikh’s ability to proceed with the transaction—could nevertheless

constitute invidious racial, religious, ethnic, or other discrimination actionable under § 1983. For example, we

could envision some municipal government that, motivated by unlawful discriminatory animus to prohibit the

introduction of a particular minority group into a community, employs a policy of contacting each prospective

minority purchaser and informing them that if they buy

the property, it will seek to take it from them by eminent

domain a short time later. Confronted with evidence of

such blatantly discriminatory harassment, we might be

less sanguine about the prospective nature of the municipality’s statements and their resulting immateriality.

But we need not consider that issue here since Shaikh’s

own pleadings and materials reveal that the City treated

both him and the second set of buyers (Caucasian, nonMuslim, out-of-state citizens) the same. The only difference between the two is that the second set of purchasers were unsuccessful in withdrawing from their purchase agreement with HUD. Nor has Shaikh provided

any facts suggesting that the City treated any other

similarly situated, non-minority individual differently

than he. Therefore, even if we must construe the City’s

prospective statements as an action triggering the protections of the Fourteenth Amendment, Shaikh’s § 1983

claims cannot survive summary judgment because he
14 No. 02-2708

has not shown that he was the victim of any differential

treatment, let alone that the City intended to treat him

unfavorably.

In sum, because the City was not the property owner,

it lacked any authority directly to affect the sale between HUD and Shaikh and thus did not prevent Shaikh

from buying the property. Furthermore, Shaikh, like all

citizens, acquires or occupies his property subject to the

superior right of eminent domain exercised in accordance

with constitutionally and statutorily mandated restrictions upon that power. Reasonably construed against

those restrictions (and the opportunity that state-court

condemnation proceedings provide to enforce them), the

City’s statements here were not intimidating threats that

restrained or interfered with Shaikh’s ability to purchase the property. Shaikh therefore has no civil-rights

remedy under §§ 1981 or 1982. And even if Shaikh could

still assert equal-protection or due-process claims under

§ 1983 on the basis of the City’s statements alone, he

cannot survive summary judgment on those claims because he has not shown that he was a victim of invidious

discrimination. We therefore AFFIRM the district court’s

grant of summary judgment.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—8-25-03