Clarence Shed v. Joseph Bredemann

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted April 15, 2024 *
Decided April 16, 2024
Before
MICHAEL B. BRENNAN, Circuit Judge
MICHAEL Y. SCUDDER, Circuit Judge
JOSHUA P. KOLAR, Circuit Judge
No. 23-2508
CLARENCE SHED,
Plaintiff-Appellant,
v.
JOSEPH BREDEMANN, et al.,
Defendants-Appellees.
Appeal from the United States District
Court for the Northern District of
Illinois, Eastern Division.
No. 21-cv-5523
Steven C. Seeger,
Judge.
O R D E R
Clarence Shed sued a car dealership and several of its employees after a used car
he purchased there quickly developed mechanical problems. When the dealership
offered a refund but refused to repair the car, Shed filed this lawsuit alleging that the
dealership’s employees racially discriminated against him and breached the covenant of
* We have agreed to decide the case without oral argument because the briefs and
record adequately present the facts and legal arguments, and oral argument would not
significantly aid the court. FED. R. A PP. P. 34(a)(2)(C).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with FED. R. A PP. P. 32.1

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good faith and fair dealing implied into the purchase order. The district court dismissed
his complaint for failure to state a claim, and we affirm.
We recount the well-pleaded facts as alleged in Shed’s complaint, accepting them
as true. See Bronson v. Ann & Robert H. Lurie Child.’s Hosp. of Chi., 69 F.4th 437, 448
(7th Cir. 2023). In July 2021, Shed, a Black man, responded to an advertisement by
Bredemann Ford, a dealership in Glenview, Illinois, listing for sale a used 1999 Cadillac
sedan. Shed inspected the vehicle, deemed it acceptable, and returned several days later
to complete the purchase. The sales manager, Victor Martinez, told Shed that that the
dealership had inspected the car, and it was in good working condition. Shed signed a
purchase order, paid $7,450, and left with the car. The purchase order contained this
clause, which Shed signed:
USED VEHICLE “AS IS”: Purchaser will bear the entire expense of
repairing or correcting any defects that presently exist or that may at any
time hereafter occur in the vehicle … THIS VEHICLE IS SOLD AS IS WITH
NO WARRANTY AS TO MECHANICAL CONDITION.
Despite this language, the Illinois statutory used car warranty, 815 ILCS 505/2L, and
common-law implied warranties afford some protections to used-car buyers.
Several days after the purchase, the vehicle began causing problems for Shed. A
different dealership told him that the car was leaking large amounts of oil and coolant.
Shed had the car towed back to Bredemann Ford after Martinez told him that the
dealership would fix these issues.
After the car was inspected, Martinez told Shed that the repairs would cost
$3,500. Shed refused to pay and requested that Bredemann Ford cover the repair costs
under 815 ILCS 505/2L. The dealership’s president, Joseph Bredemann, called Shed
several days later to tell him that the dealership would not pay for repairing the
Cadillac. Shed again insisted that Illinois law required it to do so. Bredemann
responded by belittling him in a raised voice. And upon learning that Shed was from a
predominantly Black neighborhood in Chicago, Bredemann further berated him,
reiterated that he refused to fix the “damn car,” and demanded that Shed instead return
the title. Shed perceived that Bredemann was bullying him because of his race.
The dispute continued for several weeks. When Shed went to collect his
personal belongings from the car, staff told him, falsely, that the car was at a different
dealership. Then, the dealership’s manager, John Sagat, refused to help him open the

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vehicle and, speaking in expletives, demanded that Shed bring back the title. Shed
eventually returned with the title and offered to sign it back to the dealership if he got a
refund of the purchase price. The dealership agreed, but it also required Shed to
provide a release, which he signed under “inordinate pressure.” Throughout the whole
ordeal, Bredemann Ford employees were disrespectful and dishonest toward Shed,
who attributed the mistreatment to racial discrimination.
Shed sued the dealership’s parent company, Martinez, Bredemann, and Sagat,
asserting that they had discriminated against him in violation of 42 U.S.C. § 1981 and
breached the covenant of good faith and fair dealing implied into all Illinois contracts.
After multiple dismissals and amendments of the complaint, the district court recruited
counsel, who filed another amended complaint on Shed’s behalf. The defendants
moved to dismiss the operative complaint for failure to state a claim, see FED. R. C IV.
P. 12(b)(6), and the district court granted the motion. As to the § 1981 claim, the court
concluded that Shed failed to allege facts which plausibly suggested that the defendants
deprived him of the right to make or enforce a contract because of his race. The court
also rejected Shed’s claim for breach of the implied covenant of good faith and fair
dealing because Shed failed to identify any contract term that the defendants had
exploited. Shed filed a motion for reconsideration within 28 days of the ruling, see FED.
R. C IV. P. 59(e), but the court found his arguments unpersuasive and denied it.
Shed’s brief on appeal largely reproduces his motion for reconsideration in
challenging the dismissal of his complaint. See Norfleet v. Walker, 684 F.3d 688, 691
(7th Cir. 2012). Both decisions are before us because Shed filed his notice of appeal
within 30 days of the district court denying his timely motion for reconsideration,
see FED. R. A PP. P. 4(a)(1)(A), (a)(4)(A)(iv). We review de novo the decision to dismiss
the complaint. Bronson, 69 F.4th at 447. A complaint will survive a motion to dismiss so
long as it alleges “enough facts to state a claim to relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In other words, the plaintiff must plead
“factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
We begin with Shed’s assertion of racial discrimination under 42 U.S.C. § 1981,
which the district court viewed as too “conclusory” to state a claim without allegations
of explicitly race-based comments or superior treatment for white customers. We have
explained, however, that the plaintiff in a discrimination suit need not allege specific
facts beyond the type of discrimination that he thinks occurred, by whom, and when.
Swanson v. Citibank, N.A., 614 F.3d 400, 405 (7th Cir. 2010); see also Swierkiewicz v. Sorema

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N.A., 534 U.S. 506 (2002). And here, Shed’s complaint asserts that the defendants
discriminated against him based on his race by refusing to repair his car.
Even assuming that Shed adequately described the alleged discrimination for
purposes of notice pleading, dismissal of the complaint was appropriate because he did
not identify a contract that the defendants impeded. See DJM Logistics, Inc. v. FedEx
Ground Package Sys., Inc., 39 F.4th 408, 413 (7th Cir. 2022). Section 1981 protects against
race discrimination in the specific context of making and enforcing contracts. Domino's
Pizza, Inc. v. McDonald, 546 U.S. 470, 474-75 (2006). But, as the district court explained of
Shed’s claim: “the reality is that the dealership sold him the car, and then returned his
money, so there is no allegation of a deprivation of his rights under section 1981.”
Shed disagrees, contending that under an Illinois law implied into his purchase
agreement, he had a contractual right to have the car repaired as long as the cost of the
repairs did not exceed the price of the car.1 See 815 ILCS § 505/2L(f)–(g). He asserts that
the defendants interfered with this right by forcing him to accept a refund instead of
repairing the car as he asked. But the statute does not confer on the buyer a right to free
repairs. Instead, it requires a buyer to give a dealer a “reasonable opportunity” to repair
the used car before escalating to additional remedies. And its sets the dealer’s
maximum liability as “the purchase price paid for the used motor vehicle, to be
refunded to the consumer … in exchange for return of the vehicle.” Id. Shed’s complaint
establishes that the dealership jumped straight to offering him a full refund in exchange
for the title—the maximum relief available to him. Therefore, Shed was not denied the
“enjoyment of all benefits, privileges, terms, and conditions of the contractual
relationship,” 42 U.S.C. § 1981(b), even if we accept as true the allegation that the
defendants displayed racial animus toward Shed when he requested repairs.
Shed’s complaint also failed to state a claim for breach of contract based on the
implied covenant of good faith and fair dealing because he did not allege that the
defendants exercised contractual discretion in an unexpected and unreasonable
manner. See Barwin v. Vill. of Oak Park, 54 F.4th 443, 454 (7th Cir. 2022) (applying Illinois
law). Under Illinois law, breach of the implied covenant is not a standalone cause of
action to remedy the poor behavior of a contracting party. See Wilson v. Career Educ.
Corp., 844 F.3d 686, 688 (7th Cir. 2016) (applying Illinois law). Instead, it is a form of
breach of contract. See Barwin, 54 F.4th at 452; Voyles v. Sandia Mortg. Corp., 751 N.E.2d
1126, 1130 (Ill. 2001). The implied covenant requires a party vested with discretion by a
1 The parties apparently agree that Illinois law governs the contract.

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contract to exercise that discretion reasonably and with proper motive. Eckhardt v. Idea
Factory, LLC, 193 N.E.3d 182, 194 (Ill. App. Ct. 2021). Here, Shed points to the
defendants’ decision to refund the purchase price instead of repairing the vehicle. But
granting a party the maximum recourse available to him under the contract is not
arbitrary, capricious, or “inconsistent with the reasonable expectations of the parties.”
Barwin, 54 F.4th at 454.
AFFIRMED

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