Court Opinion

ID: 770561
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:36:23+00
Date Added: 2024-06-11T08:51:26.729721
License: Public Domain

227 F.3d 950 (7th Cir. 2000)
Rixson Merle Perry, Plaintiff-Appellant,v.Globe Auto Recycling, Inc., William  J. Zuccaro, William M. Zuccaro, Robert  Zuccaro, and Daniel Carmin Tarry, Defendants-Appellees.
No. 99-1976
In the  United States Court of Appeals  For the Seventh Circuit
Argued January 4, 2000Decided September 19, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 4092--William T. Hart, Judge.
Before Cudahy, Kanne, and Diane P. Wood, Circuit  Judges.
Diane P. Wood, Circuit Judge.

1
Rixson Perry is a  well- known user of this court's services. See  Perry v. Sheahan, 207 F.3d 309(7th Cir.2000); Perry v.  Sullivan, 207 F.3d 379 (7th Cir. 2000); Perry v.  Village of Arlington Heights, 186 F.3d 826 (7th  Cir. 1999); Perry v. Pogemiller, 16 F.3d 138 (7th  Cir. 1993); and Perry v. Federal Bureau of  Investigation, 759 F.2d 1271 (7th Cir. 1985), on  rehearing en banc, 781 F.2d 1294 (7th Cir. 1986).  The present case arises out of his challenges to  the ordinances maintained by the Village of  Arlington Heights, Illinois, regarding the  seizure of abandoned automobiles. (His standing  to pursue some of these claims was at issue in  the earlier Arlington Heights litigation, 186 F.3d 826, supra.) In the course of challenging  the vehicle seizure ordinances, Perry claimed to  have discovered evidence of municipal corruption  that prompted him to sue Daniel Tarry, a Village  employee, and Globe Auto Recycling (Globe) under  the civil RICO provisions, 18 U.S.C. sec.  1964(c).

2
Perry's own RICO case was dismissed with  prejudice and is not now before us. Instead,  Perry purchased for $100 the claims of another  Arlington Heights resident, Roy Lahucik, and is  now pursuing those claims. The district court  dismissed the case on the ground that it was  barred by claim preclusion. This, we conclude,  was error. It is possible that the Lahucik claims  may be barred by the RICO statute of limitations,  but the record as it now stands is not developed  enough for us to make a judgment on that point.  We therefore remand the case to the district  court for further proceedings.

3
Perry's crusade against the Arlington Heights  vehicle seizure ordinance began on October 27,  1992, when Arlington Heights Code Enforcement  Officer Daniel Tarry ordered the seizure of  Perry's 1975 Ford LTD. The Village ordinance then  permitted seizure of abandoned vehicles without  prior notice to the owner of record. In order to  get his vehicle back, Perry had to pay certain  fees, despite the fact that he was not given the  opportunity to have a hearing concerning the  validity of the seizure in the first place. Perry  sued both the Village and Tarry, claiming that  his federal due process rights have been violated  by the Village's procedure. The district court  agreed, to the extent of granting partial summary  judgment in Perry's favor on the question whether  the practice was unconstitutional. In the damages  phase of the case, however, Perry failed to  comply with various discovery requests, and  eventually the judge dismissed the action as a  sanction.

4
Down but not out, Perry responded with a number  of actions based on the civil provisions of the  Racketeer Influenced and Corrupt Organizations  Act, more commonly known as RICO. He believed  that Tarry and Globe, the company that the  Village used to provide towing services, were  engaged in a corrupt conspiracy to violate the  rights of the hapless individuals who left their  cars unattended on the streets of Arlington  Heights. This group of cases, exemplified by  Perry v. Tarry, No. 96-C-7027, 1997 WL 361453  (N.D. Ill. June 20, 1997), arose out of the  seizure of Perry's own car. At least one of the  later cases was dismissed on res judicata  grounds, and an exasperated district judge  ordered that "in any civil litigation commenced  by Perry within this circuit against the  defendants involved in this motion, the  defendants may ignore his filing unless the court  explicitly orders them to respond." Perry v.  Tarry, No. 96-C-7027, slip op. at 9-10 (N.D. Ill.  Apr. 16, 1997).

5
Determined to right the wrongs he perceived,  Perry then went out and paid Roy Lahucik $100 for  "all claims, demands, and causes of action of  whatever kind and nature" arising out of the  seizure and towing of Lahucik's 1984 Chevy  Suburban. The assignment was dated July 1, 1998,  but the record does not reveal when the Suburban  was towed. On July 2, 1998, Perry was back in  court, suing in his capacity as Lahucik's  assignee, again raising the RICO theory that had  failed in his own lawsuits. The district court  dismissed in a brief order relying on res  judicata. The order stated that "[t]he assignment  of the claim does not preclude privity," found  that all the requirements for claim preclusion  were satisfied, and bounced the case out.

6
It is impossible to fault the district judge  for having the reaction he did to this case. At  least with respect to the towing claims, Perry  has been an abusive litigant, and it is easy to  see why the judge concluded that the expedient of  persuading other individuals to assign their  claims to him should not be enough to avoid the  ban on Perry's own filings. But we are concerned  with the breadth of the judge's rationale, which  we think would--if generalized--cast doubt on  many legitimate assignments that occur every day  in the world of civil litigation. There are other  ways to control the misuse of judicial processes  by a person like Perry, which the court will be  free to consider on remand.

7
The court's claim preclusion rationale properly  focused on the three elements of federal claim  preclusion: identity of claims, identity of  parties, and a prior final judgment on the  merits. See, e.g., Roboserve, Inc. v. Kato Kagaku  Co., 121 F.3d 1027, 1034 (7th Cir. 1997). The  only element at issue here is identity of  parties; Perry concedes that the claims were  exactly the same (in the sense that they arose  out of exactly the same ordinances and procedures  used by the Village) and that there was a prior  final judgment on the merits in his own case. But  what about the parties? Globe argues that if  Lahucik himself had brought the present case he  too would be claim precluded, because of the  "virtual representation" theory, but that is  wrong. Indeed, one of the cases on which Globe  relies is the district court's opinion in Tice v.  American Airlines, Inc., 959 F. Supp. 928 (N.D.  Ill. 1997), which this court later reversed in  Tice v. American Airlines, Inc., 162 F.3d 966  (7th Cir. 1998), expressly finding that the idea  of "virtual representation" cannot override an  individual's right to his own day in court unless  the facts show a strong reason why the first  litigant was, in effect, a real representative  (not a virtual one) of the second. See also  DeBraska v. City of Milwaukee, 189 F.3d 650, 653  (7th Cir. 1999) (noting that this circuit takes  a "dim view of preclusion by virtual  representation in suits other than class  actions"). Perry was not Lahucik's representative  in any sense of the term, and thus Lahucik would  have been fully entitled to bring the present  litigation on his own.

8
The question thus becomes whether Lahucik's  decision to assign his claim to Perry transforms  the claim from one that could be brought to one  that is barred by Perry's earlier unsuccessful  efforts. We see no reason why this should be so.  Indeed, it is routine for institutions like banks  or insurance companies to take assignments of  large numbers of claims arising out of a single  transaction or occurrence, and given the vagaries  of litigation they undoubtedly win some and lose  some. The more common problem arises when the  assignor tries to evade claim preclusion by  selling the claim to another party; in that  situation, the district court's statement that  assignment does not prevent a finding of privity  is certainly true. As the Supreme Court put it  long ago in Postal Telegraph Cable Co. v. City of  Newport, 247 U.S. 464, 474-75 (1918), "[t]he  ground upon which, and upon which alone, a  judgment against a prior owner is held conclusive  against his successor in interest, is that the  estoppel runs with the property, that the grantor  can transfer no better right or title than he  himself has."

9
But we have the opposite situation here. The  applicable rule is therefore the one holding that  "the assignee stands in the shoes of the assignor  and assumes the same rights, title and interest  possessed by the assignor." Plumb v. Fluid Pump  Service, Inc., 124 F.3d 849, 864 (7th Cir. 1997)  (internal quotation marks and citations omitted).  So, even though Perry could receive no more than  Lahucik had, it is also true that he received no  less. Since Lahucik had the right to bring his  own claim, that is what he conveyed to Perry in  the assignment. See also Kane v. Magna Mixer Co.,  71 F.3d 555, 563 (6th Cir. 1995) (holding that  assignee is bound by assignor's waiver); Rhode  Island Hospital Trust Nat'l Bank v. Ohio Casualty  Ins. Co., 789 F.2d 74, 82 (1st Cir. 1986) (noting  that where judgment precedes assignment, assignee  is precluded in same manner as assignor).

10
Globe also argues that Perry could have brought  Lahucik's claim as part of his earlier  litigation, but that is also not correct.  Ordinarily, of course, people have no standing to  assert the rights of third parties. See, e.g.,  Retired Chicago Police Ass'n. v. City of Chicago,  76 F.3d 856, 862 (7th Cir. 1996). None of the  exceptions to that rule that permit jus tertii  litigation would have permitted Perry, without a  hint of consent from Lahucik, to litigate  Lahucik's claims. And there is definitely no rule  (and never will be one, as far as we are  concerned) under which strangers to a lawsuit  might be precluded in a later action just because  the first litigant hypothetically could have  tried to persuade a court to certify a class.

11
Thus, the specific ground on which the district  court dismissed Perry's action in his capacity as  Lahucik's assignee was not correct. That does not  mean, however, that district courts are powerless  to prevent this genre of abuse. Even as an  assignee, Perry was subject to the normal  strictures of Rule 11 of the Federal Rules of  Civil Procedure, under which both parties and  their lawyers can be sanctioned for bringing  frivolous lawsuits. The string of defeats Perry  knew that he had suffered in his own suits gave  him a very good idea of the likelihood of success  another person would have on precisely the same  question. In addition, if the district court is  concerned that its earlier order attempting to  prevent Perry from cluttering up the court with  frivolous litigation was inadvertently too  narrow, it can always craft a broader injunction  that would cover the possibility of assignments.

12
Last, Globe has vaguely argued that the Lahucik  claim is barred by the four-year RICO statute of  limitations. It has not developed that argument  in any detail, but given the district court's  prior order telling Globe that it need not  respond to Perry at all, we do not think it  appropriate to find waiver on Globe's part. The  greater problem with the limitations argument is  the lack of facts in the record that would permit  us to rule on it right now. The Supreme Court has  recently made clear the fact that the RICO  limitations period runs from "discovery of the  injury, not discovery of the other elements of a  claim." Rotella v. Wood, 120 S. Ct. 1075, 1081  (2000). The injury here would be the towing of  Lahucik's Suburban. Even though Lahucik would not  have known at the time whether the towing was  wrong, the examples in Rotella drawn from the  area of medical malpractice demonstrate that this  makes no difference. He would have known that  something amounting to injury in fact had  occurred, and it would have been up to him to  inquire further to see if this was also a legal  wrong. Here, we know that Perry filed Lahucik's  claim on July 2, 1998, but we have no idea when  the vehicle was towed. On remand, the district  court will be free to explore this defense if it  remains relevant to the litigation.

13
We therefore REVERSE and REMAND this case to the  district court for further proceedings consistent  with this opinion. Costs on appeal will be taxed  against Perry.

14
Cudahy, Circuit Judge, concurring in the  judgment.

15
I cannot agree that the essential  element of identity of parties is absent here.  Nonetheless, because I believe that the two  claims may not be identical, I concur in the  result.

16
The majority cites the following as the  applicable rule: "the assignee stands in the  shoes of the assignor and assumes the same  rights, title and interest possessed by the  assignor." Maj. Op. at 953, quoting Plumb v. Fluid  Pump Service, Inc., 124 F.3d 849, 864 (7th Cir.  1997). From this rule, the majority reasons that,  when Perry took the assignment of Lahucik's  claim, Perry also took Lahucik's right to bring  the claim. However, whether Perry bought a valid  claim from Lahucik--which be doubtless did--does  not resolve whether the parties in the previous  case and in this case are identical. The  inescapable fact is that Perry was the plaintiff  in the previous case and Perry is the plaintiff  in the present case. Federal Rule of Civil  Procedure 17(a) states that "every action shall  be prosecuted in the name of the real party in  interest." Further, "[t]he federal courts . . .  and all of the state courts . . . have been in  full accord in holding that the unconditional  assignee of a complete chose in action is the  real party in interest . . . ." Overseas  Development Disc Corp. v. Sangamo Construction  Co., Inc., 686 F.2d 498, 505 n. 17 (7th Cir.  1982) (quoting 3A James Wm. Moore et al., Moore's  Federal Practice para. 17.09(1.-1) at 17-84) (now  found at 4 James Wm. Moore et al., Moore's  Federal Practice sec. 17.11[1][a] (3d ed. 1998)).  Hence, the claim in the present case belonged to  Lahucik, but the party in the present case is  Perry. Put another way, Perry bought Lahucik's  claim, but he did not buy his identity.

17
The majority intimates two policy justifications  for grounding the reversal in a lack of identity  between parties. First, every individual has a  right to his day in court, and barring Perry  because of an identity of claims might impair  Lahucik's right. But that cannot be so; the  majority correctly states that, regardless of  Perry's initial failure on his claim, Lahucik was  entitled to bring his own claim in his own name.  At most, barring Perry from bringing the suit  because of his prior failure would reduce by one  the number of people interested in buying  Lahucik's claim.

18
The majority also states that banks and  insurance companies routinely take assignments of  large numbers of claims arising out of a single  transaction or occurrence, "and given the  vagaries of litigation they undoubtedly win some  and lose some." Maj. Op. at 953. However, banks and  insurance companies must buy the bulk of their  claims before litigating them. If a bank bought  a single claim, litigated it and lost, one might  argue that the bank is (or should be) precluded  from rustling up a second case to try its luck  again. The situation seems different when a bank  buys claims without any forewarning that the  claims lack merit and then pursues them  simultaneously to mixed results. In such cases,  as well as here, it may be more appropriate to  deny claim preclusion because the claims  themselves are different in some respects.

19
In spite of the fact that an identity of  parties is present here, the result reached by  the majority is sustainable under another  analysis that seems to be more consistent with  the basic principles of claim preclusion. Beyond  the question of identity of parties lies the need  for identity of claims, and here the requirements  of claim preclusion may not be met. The present  RICO suit involves allegations of predicate acts  of acceptance of bribes and conspiracy. Since  Perry appears to have alleged a later terminal  date for the conspiracy than in his previous  complaints, he seems to have alleged new  predicate acts of bribery. Consequently, even  though Perry may have made a concession on this  point, there may well be different claims here.  So, even though the same party is bringing both  claims, the second claim may still survive  preclusion. However, on remand, Perry's claim  should be limited to only the new dates of  conspiracy he has alleged