Hinterberger v. City of Indianapolis

          ORDER ON MOTION FOR SUMMARY JUDGMENT AND OTHER PENDING MOTIONS (DKTS. 132, 137, 149, 157)

          SARAH EVANS BARKER, JUDGE UNITED STATES DISTRICT COURT

         Plaintiffs sued various Defendants, among them the City of Indianapolis (“the City”), under 42 U.S.C. § 1983 and state law for alleged harms arising from Plaintiffs' failed real-estate development bid. Now before the Court is the City's motion for summary judgment, Dkt. 132, see Fed. R. Civ. P. 56, and collateral motions. Dkts. 137 (sanctions), 149 (motion in limine), 157 (same). For the reasons given below, the motion for summary judgment is granted. The motions in limine are denied as moot without further discussion. The City's motion for sanctions is denied without prejudice on the terms described under “Conclusion and Order” below.

         Background

         Plaintiffs are Leif Hinterberger, an Indianapolis real estate developer, and his companies, whom we refer to collectively as “Hinterberger.” (The Clerk has previously entered the default of Defendant Mansur Real Estate Services, and Defendant Charles Cagann (“Cagann”) has been dismissed by stipulation.) Much of what follows is taken directly from the City's “Statement of Material Facts Not in Dispute, ” for reasons explained below.

         In spring 2005, Hinterberger had modest plans for a small retail development he called “The Uptown” to occupy five plots of land at the northwest corner of the intersection of 49th Street and College Avenue in Indianapolis. Hinterberger closed on the sale of the five plots in April of that year. As initially conceived, Hinterberger had no plans to pursue public financing, funding, or grant money for The Uptown.

         At the time, Maury Plambeck (“Plambeck”) was serving as the director of the City's Department of Metropolitan Development (DMD). Plambeck expressed excitement about Hinterberger's project and suggested that Hinterberger add apartments. Adding a housing component to the project required Hinterberger to acquire the remaining half of the block. Initially, Hinterberger did not want to add a housing component because in his opinion it did not make financial sense. Plambeck then suggested to Hinterberger that the City could put together a package of public funding taken from various sources to help finance the development.

         Hinterberger had never sought public financing before 2005 but he was interested in seeking public financing for The Uptown. Between 2007 and 2011, the City presented public financing options to Hinterberger. The options came with different contingencies outlined in four commitment letters. The City made clear the options were subject to detailed terms and execution of a final definitive project agreement. Hinterberger never satisfied the contingencies and conditions for receipt of public funds, and thus no final written agreement was ever executed.

         Plambeck recommended that Hinterberger work with Cagann, a partner with Mansur Real Estate Services (“Mansur”), who was familiar with development projects that entailed a public financing component. In 2000, the City's Metropolitan Development Commission had contracted with Mansur to oversee another development project in Indianapolis, which was substantially completed by 2004. This was the only contract Mansur ever entered into with the City.

         In late 2005, Hinterberger sought out Cagann to ask whether Mansur was interested in partnering with him on The Uptown. At Hinterberger's request, Cagann signed a nondisclosure agreement on behalf of Mansur (“the NDA”). The City was not a signatory to that agreement. The parties to the NDA were only Mansur and one of Hinterberger's companies.

         At some point in 2005, Hinterberger began sharing economic modeling information with Cagann and Plambeck related to the 49th Street and College Avenue corridor. By 2007, he had completed his economic modeling, acquired the other half-block of real estate at 49th and College (four additional lots, now nine in total), and rezoned the land to build an expanded project. But by 2008, the real estate market was in serious decline and nearly every developer was feeling those negative effects.

         By July 2010, Hinterberger was experiencing financial difficulty. He had defaulted on loans and lenders were looking to short-sell his properties. Hinterberger knew that if he lost control of the properties, there was a good chance the expanded project would not come to fruition. By December 2010, Hinterberger had sold the four additional lots he had acquired in 2007.

         By late 2011 or early 2012, Hinterberger was bankrupt. He lost the original five lots at 49th Street and College Avenue at a sheriff's sale in August 2012. By October 2012, Hinterberger's bankruptcy attorney was threatening the City with litigation. This lawsuit was filed on three-and-a-half years later on May 31, 2016. Dkt. 1.

         The complaint charges the following causes of action: Count I, a Section 1983 “Monell claim”; Count II, state-law promissory estoppel; Count III, state-law equitable estoppel (Count III has been withdrawn. Dkt. 131, at 8 n.1); Count IV, a Section 1983 Equal Protection Clause claim; Count V, a Section 1983 substantive due process claim; Count VI, a Section 1983 procedural due process claim; Count VII, state-law breach of contract; Count VIII, state-law misappropriation of trade secrets; and Count IX, state-law unjust enrichment. These claims are the subjects of the pending summary judgment motion filed by the City.

         Standard of Decision

         Summary judgment is appropriate where there are no genuine disputes of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A party that does not bear the burden of persuasion may move for summary judgment ‘by showing-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case.'” Modrowski v. Pigatto, 712 F.3d 1166, 1167 (7th Cir. 2013) (nested quotation marks omitted) (quoting Celotex Corp. v. Catrett, 477 U.S. 137, 325 (1986)). If “‘the non-movant does not come forward with evidence that would reasonably permit the finder of fact to find in h[is] favor on a material question, then the court must enter summary judgment against h[im].'” Id. (emphasis omitted) (quoting Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994)).

         Under our local rules, a movant's brief “must include a section labeled ‘Statement of Material Facts Not in Dispute' containing the facts[] that are potentially determinative of the motion[, ] and as to which the movant contends there is no genuine issue.” S.D. Ind. L.R. 56-1(a) (internal subdivisions omitted). The nonmovant's brief similarly “must include a section labeled ‘Statement of Material Facts in Dispute' that identifies the potentially determinative facts and factual disputes that the party contends demonstrate a dispute of fact precluding summary judgment.” S.D. Ind. L.R. 56-1(b). Such statements should contain only material facts, “not . . . mere background facts, ” and must “state facts, not the party's argument . . . .” S.D. Ind. L.R. 56-1(a) cmt.; S.D. Ind. L.R. 56-1(b) cmt. “[E]ach fact” asserted in a brief must be supported by a “specif[ic]” citation to the record. S.D. Ind. L.R. 56-1(e). The court “has no duty to search or consider any part of the record not specifically cited” in this manner. Id. The movant's facts “are admitted without controversy” unless the nonmovant “specifically controverts” them in his fact statement; shows them to be unsupported by admissible evidence; or shows that reasonable inferences in his favor can be drawn from them sufficient to preclude summary judgment. S.D. Ind. L.R. 56(f)(1)(A)-(C).

         In outline form, this procedure has been well settled for more than thirty years. And for more than thirty years, nonmovants have frequently “‘misconceive[d] what is required of them.'” Modrowski, 712 F.3d at 1167 (quoting Waldridge, 24 F.3d at 921). Against even this backdrop, though, Hinterberger's opposition brief stands out as remarkable. It has all the appearance of diligence and competence without a crumb of their substance. It is difficult to overstate how frustrating this is to the Court; how breezily, almost cheerfully deficient; how negligent of the applicable law, not to mention the truth; how unrelentingly at war it is with a “just, speedy, and inexpensive determination” of this action. Fed.R.Civ.P. 1. A few observations and examples may help to illustrate the severity of the problem we have faced in our struggle to correctly and justly resolve the issues before us; an exhaustive account is simply beyond us.

         The summary judgment record spans nearly 2, 000 pages; 1, 935, to be precise. There are, thus, a great many “facts.” The City's disciplined “Statement of Material Facts Not in Dispute” is six pages in length, divided into thirty numbered paragraphs. Out of a forty-four-page brief, Hinterberger's “Material Facts Precluding Summary Judgment” is twenty-one pages long, none of which is responsive to, or shows more than a dim awareness of, the City's fact statement. “There is no attempt to controvert the factual averments set forth in [the City's] own statement[.]” Waldridge, 24 F.3d at 922. It is simply a narrative, one that is exceptionally difficult to follow and woven principally from strands of insinuation and innuendo. This “defeats the whole point” of the fact statement required by Local Rule 56-1(b)-“to identify just what facts are actually in dispute.” Bordelon v. Chi. Sch. Reform Bd. of Trs., 233 F.3d 524, 528 (7th Cir. 2000) (former N.D.Ill. L.R. 12(N)).

         Hinterberger's fact statement is divided into nine sections. The sections bear headings such as: “There are disputed issues of fact created by the uncontested facts of Hinterberger's performance and detrimental reliance.” “There are disputed issues of fact created by the City's acts and statements destroying Hinterberger's ability to work as an Indianapolis developer.” Br. Supp. i. But the respective sections do not speak to any disputes at all. For example, the latter section, two paragraphs long, simply asserts: “The City and its agents were actively involved in destroying not only the Uptown project and the neighboring Uptown Business Center but also Hinterberger's livelihood and reputation.” Br. Opp. 20. What is the dispute? “The statement is so full of argument” and tedious rhetoric that again “the whole point” of it is defeated. Bordelon, 233 F.3d at 528.

         The above-mentioned two paragraphs are supported by a total of three citations. They refer nonspecifically to a four-page e-mail exchange, a fifteen-page e-mail exchange, and a thirteen-page e-mail exchange, respectively. Pls.' Exs. 107, 108, 109. But procedural rules require that assertions of fact be supported by “specif[ic]” citations. S.D. Ind. L.R. 56-1(e). Also Ammons v. Aramark Uniform Servs., Inc., 368 F.3d 809, 817-18 (7th Cir. 2004). The e-mail exchanges occurred between City officials discussing two e-mails from Hinterberger in which they raise concerns about Hinterberger's mental health and stability. This is the only evidentiary support for the charge, “The City and its agents were actively involved in destroying . . . Hinterberger's livelihood and reputation.” Br. Supp. 20. It is beyond generous to say that no reasonable jury could infer the latter from the former.

         Other assertions dispense with even the appearance of support:

With this inflammatory slander expressed to the head of DMD, Hinterberger's ability to get any project off the ground in Indianapolis were significantly undermined, as seen by the fact that Thies would not discuss the Uptown (even though he recognized that the project was not dead). Indeed, it was Vaughn (not Hinterberger) who [in order] to change directions on the communications, inserted lawyers into the mix. However, Hinterberger did not make such threats against the City.

Id. (no citations omitted) (footnote text moved to body text). These are only two paragraphs from the brief but they are fairly representative of Hinterberger's entire fact statement.

         “[I]f a material fact is not disputed (or if there is no evidence that controverts the fact), the district court is entitled to know that up front, without first having to examine citations to evidence having only marginal bearing on the question.” Bordelon, 233 F.3d at 528. “And a mere disagreement with the movant's asserted facts is inadequate if made without reference to specific supporting material.” Smith v. Lantz, 321 F.3d 680, 683 (7th Cir. 2003) (citing Edward E. Gillen Co. v. City of Lake Forest, 3 F.3d 192, 196 (7th Cir. 1993)). “In short, ‘judges are not like pigs, hunting for truffles buried in briefs.'” Id. (alteration omitted) (quoting United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991)). Had we enough time and patience and fortitude, a detailed study could be made of Hinterberger's citation practices. Their effects range from the comical to bewildering to profoundly misleading.

         For example, Hinterberger's opposition brief adverts repeatedly to the claim that DMD official Reginald Walton (“Walton”), in accordance with City policy, used his position to frustrate Hinterberger's designs through the use of sham environmental remediation work. At one point in his fact statement, Hinterberger states,

As [he] [was] arrang[ing] for his Uptown Business Center LLC to file for bankruptcy so as to negotiate repurchase of the property, Reggie Walton's DMD department [sic] sent environmental remediation trucks to the site (Ex. 103), and similar to what occurred at the Uptown, a sudden appearance of environmental remediation trucks made it virtually impossible to arrange for refinancing. (Ex. 104; Ex. 105, ¶ 7)

         Br. Opp. 19. Though we focus below on the three record citations, “Walton's DMD department” is also an instructive example of Hinterberger's dubious tendency toward insinuation. “Walton's official title was Assistant Administrator for the Department of Metropolitan Development” and he was later convicted of honest-services fraud on the City and on the department for which he worked. United States v. Johnson, 874 F.3d 990, 994, 998-99 (7th Cir. 2017) (proceedings on which Hinterberger places considerable reliance).

         Plaintiffs' Exhibit 103 comprises a series of three unidentified, undated photographs: one of a white pickup truck bearing the inscription “MIDWAY SERVICES, INC.”; one of a group of nine black barrels or drums; and one of a white van bearing the inscription “VAPOR PROTECTION SERVICES.” There is no foundation established for these photos or further explanation. There is not even a “buried truffle” to be rooted out.

         Exhibit 104 is a document comprising twenty-eight blacked-out pages. There is nothing else. It is simply a series of twenty-eight, eight-and-a-half by eleven, blacked-out rectangles. In the CM/ECF system, it is marked “REDACTED.” Quite apart from its inherent obfuscation, there is absolutely no procedural warrant for such a submission. See Fed. R. Civ. P. 5.2; S.D. Ind. L.R. 5-11(c)(2).

         Exhibit 105 purports to be the affidavit of “Michael Mergell, ” a person nowhere identified, filed in connection with the bankruptcy of Uptown Business Center, LLC.

         Paragraph 7 reads in full:

In our view this Uptown Business Center is refinanceable, with terms commensurate to the terms offered, once the issues surrounding chain of title, warrantees, insured closing and now environmental are resolved. The indubitable, actual value of the existing note purchased has many clouds within the title. In my opinion for the open market to purchase this note, for this junk note to have the note valued at the offering these issues would need to be cleared up.

Pls.' Ex. 105 ¶ 7.

         Nowhere in any of this “evidence” is there any mention of (1) DMD, (2) Walton, (3) the sudden appearance of environmental remediation trucks, or (4) refinancing being made virtually impossible because of the sudden appearance of environmental remediation trucks. Indeed, in stating that the Uptown Business Center “is refinanceable, ” Pls.' Ex. 105 ¶ 7, Mergell's affidavit (whoever he may be) flatly contradicts point (4) above. We can only conclude Hinterberger has wagered that no one will look into the matter too closely.

         A second set of examples taken from the argument section of Hinterberger's brief fleshes out the point. Hinterberger states,

[City officials] assail[ed] Hinterberger's good name, reputation, honor, and integrity in a manner that “seriously affected” his work as a real estate developer. The DMD director-the head of the office that handles developments and zoning-testified that he could not work with Hinterberger due to Vaughn's statements. (Ex. 88, Thies 176:15-177:24) Hinterberger attempted to establish relationships with other Indianapolis real estate development firms as investors, and after the City spoke with them they refused to work further with Hinterberger. (Ex. 131; Ex. 15, Cagann 238-240) It was impossible for Hinterberger to act as a developer in Indianapolis given the City's statements and conduct.

Br. Opp. 32 (no citations omitted).

         The cited excerpts of Thies's deposition, Pls.' Ex. 88, neither mention Vaughn, nor reference his comments, nor contain any statement by Thiel that he could no longer work with Hinterberger. “Ex. 131” is a nonspecific citation to a thirteen-minute audio recording apparently of a telephone conversation between Hinterberger and “Austin Carmony, ” who (like Mergell) is nowhere identified. It is in addition obviously inadmissible hearsay. More notably, throughout their conversation, “Austin Carmony” does nothing but express a willingness to work with Hinterberger. Finally, the cited excerpts of Cagann's deposition, Pls.' Ex. 15, like the citations to Thies's, have nothing to do with the statement it allegedly supports. Cagann Dep. 238:1-240:25 (explaining real estate developers “that do the affordable housing thing” require municipal backing of prospective development partners). As above, we conclude that Hinterberger can only have operated on the assumption that no one would be checking his factual assertions against his record citations.

         These and other problems are compounded by Hinterberger's persistent equivocations on matters nominally at the heart of his case and by his seemingly studied refusal to understand materiality. For example, the second section of his fact statement bears the heading, “There are disputed issues precluding summary judgment based on evidence that the City required Hinterberger to work under a gag order and through and with not for profit groups and Cagann.” Br. Opp. i. Hinterberger elaborates: “[A]s a quid pro quo for continuing the City's commitment” to Hinterberger, the City “made Hinterberger agree to not publicly complain about delays or conditions imposed on upon him by the City, and not take actions” against the City's mayoral administration. Br. Supp. 6. But which was it-a “gag order” (a phrase that appears seven times in Hinterberger's opposition and a notion that appears several times more) or a “quid pro quo” and an “agree[ment]”? Later in his fact statement, Hinterberger settles on “‘gag order' agreement.” Br. Supp. 14.

         In any event, the only record support for an “agreement” in the above cited passage relates to Hinterberger's promise, contained in an e-mail between City officials and “not adhere[d] to” by him, to communicate with the City “not as a one-off project” but as part of a “team” with other project partners. Pls.' Ex. 49, at 1. Hinterberger designates this e-mail twice, Pls.' Exs. 49, 126, and cites it twice within the same citation under two different exhibit numbers, fairly eliminating the possibility of mistake on his part and creating the false appearance of greater support than his factual assertion is entitled to receive. Again we are forced to conclude that Hinterberger has assumed no one would be checking.

         It appears to have struck Hinterberger belatedly that he must make a distinction between voluntariness and coercion in order to convert a businessman's poor business decisions into a campaign of constitutional and state-law torts. In his fact statement, Hinterberger states, “Plambeck stated that [if Hinterberger pursued an expanded Uptown project, ] the City would make the zoning approval for such development smooth, but would on the other hand make zoning difficult were Hinterberger not to accede to the City's demands.” Br. Opp. 3. This apparently is the City's original sin, the primary coercive act that laid the chains of necessity upon Hinterberger in all his future dealings with the City. For this proposition Hinterberger cites only his own deposition and his own affidavit. Hinterberger Dep. (Pls.' Ex. 1) 67:4-69:19, 70:22-71:14; Hinterberger Aff. (Pls.' Ex. 4) ¶ 2.

         In his deposition, there is nary a whiff nor a whisper of coercion. “And I crunched the numbers . . . [a]nd I said, you know, ‘Maury, I'll try and add apartments to do a second story.'” Hinterberger Dep. 67:9-15. “So we looked at crunching numbers to do that. We said, ‘Okay, Maury. We'll entertain looking at that . . . .'” Id. 68:4-6. He described his conversations with Plambeck as “[leading] into the excitement and then wanting to do more than just my base ideas.” Id. 65:9-1. He characterized his working relationship with the City from 2005 to 2007 as “everything-everybody's working together. We were all-it all seemed very, very ordinary. What was going on seemed great.” Id. 163:2-4. And Hinterberger identified “assistance with the zoning” as one of the City's promises to him. Id. 77:1. See also Dkt. 131, at 7 (Pls.' Statement of Claims) ...