Summary
In Felton v. Icon Properties, 2004 U.S. Dist. LEXIS 21413, another case relied upon by Plaintiff, the City of New Orleans obtained title to the plaintiff's property for failure to pay back taxes.
Summary of this case from Bouchard v. Clinton CountyOpinion
Civil Action No. 04-1326 Section "A" (4).
October 22, 2004
Before the Court are a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted and for Lack of Subject Matter Jurisdiction, Alternatively for More Definite Statement (Rec. Doc. 7) filed by defendant the City of New Orleans ("the City"), a Motion to Dismiss For Failure to State a Claim Upon Which Relief Can Be Granted, or in the Alternative, Motion for Judgment on the Pleadings, and for Lack of Subject Matter Jurisdiction (Rec. Doc. 13) filed by defendants Icon Properties, LLC ("Icon") and EWB, LLC ("EWB"), and a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted and for Lack of Subject Matter Jurisdiction, Alternatively for More Definite Statement (Rec. Doc. 18) filed by the City and defendant Joseph H. Riley, II ("Riley"). The motions, taken under submission on September 22, 2004, are before the Court on the briefs without oral argument. For the reasons that follow, the motions filed on behalf of the City, Icon, and EWB are DENIED. The motion filed on behalf of Riley with respect to the defense of qualified immunity is DENIED WITHOUT PREJUDICE pending Plaintiff's submission of a Rule 7 (a) reply.
I. BACKGROUND
Plaintiff, Michel John Felton, Sr. ("Plaintiff" or "Felton") has filed this action pursuant to 42 U.S.C. § 1983 and state law. Plaintiff alleges that Defendants have deprived him of property rights secured by the Fifth and Fourteenth Amendments to the United States Constitution.
On June 12, 1990, Felton purchased immovable property located at 1823 Ursulines Avenue in New Orleans, Louisiana. Felton concedes that the property was adjudicated to the City for the non-payment of taxes in 1995, 1996, and additional years thereafter. (Fir. Amd. Rest. Comp. ¶ IV). On January 22, 2004, Mr. Charles Bussey came to the property and informed Felton that Icon had purchased the property in November 2003. (Id. ¶ VII). In fact, on November 21, 2003, the City sold the property to Icon for $2,250.00, pursuant to La.R.S. 33:4720.11 and the City's Sale of Abandoned/Adjudicated Property Program ("the Blight Busters Program"). (Id. ¶ V).
Louisiana Revised Statute 33:4720.11, Sale of Abandoned Property, provides in pertinent part:
In an effort to control the rising number of abandoned properties throughout the state and to slow urban blight, the legislature finds it necessary to implement a mechanism by which political subdivisions are empowered to more readily obtain and sell or otherwise dispose of abandoned properties. The provisions of this Chapter are intended to provide a means by which political subdivisions may revitalize economically depressed areas by placing abandoned properties back into the economic stream of commerce.
La.Rev.Stat. Ann. § 33:4720.11 (West 2002).
Felton alleges that his property was not "abandoned" as required by state law and that Icon submitted erroneous information to the City in conjunction with its application for post-adjudication sale. (Id. ¶¶ VIII — XIII). Felton claims that the City "[p]ursuant to its established policy and/or custom" failed to sell his property without ascertaining the correctness of its information. (Id. ¶ VII, XIV).
The crux of Felton's complaint against the City is that he did not receive notice of the City's intent to sell his property to Icon and/or EWB prior to the sale. (Id. ¶ XVII). He believes that Icon did attempt to send him one notice but that it was returned undelivered in June 2003. (Id. ¶ XVII). He alleges that the City has an established policy or custom of failing to take additional, reasonable steps to notify property owners of its intent to sell their property. (Id. ¶ XVII).
Riley works in the Housing Unit of the City Attorney's office. With respect to Riley, Felton alleges that he reviewed Icon's application for post-adjudication sale and approved it notwithstanding its deficiencies. (Id. ¶ XVIII). Felton also alleges that Riley failed to take additional, reasonable steps to notify him of the City's intent to sell his property. (Id.). Felton alleges that Icon and EWB jointly participated with the City and Riley to deprive him of his rights. (Id. XXI).
Felton alleges that La.R.S. 33:4720.12 (2) (a) is facially unconstitutional in that it does not provide property owners with the procedural due process guaranteed by the United States Constitution. (Id. ¶ XXIII). Felton alleges that he has no administrative recourse under state law and that the procedure authorized by La.R.S. 33:4720.12(2) (a) caused him to be deprived of his property without due process of law. (Id. ¶ XXVII). Under state law, Felton seeks a judgment annulling the sale. (Id. ¶ XXXI). Alternatively, he seeks a refund of taxes that he paid in 2003 and 2004 that inured to Icon's benefit. (Id.).
Section 4720.12, subparagraph 2 provides as follows:
(a) "Notice" as applied in this Chapter, is the sending of written communication to interested parties:
(i) By means of registered or certified mail, return receipt requested.
(ii) In the same manner as service of citation or other process, whether made by sheriff, deputy sheriff, or constable.
(iii) By a duly authorized building inspector or other representative of the political subdivision, as provided by ordinance.
(b) In the event that the interested parties are absent or unable to be served in accordance with Subparagraph (2) (a) of this Section, notice may be made by publication once a week for two consecutive weeks in the official journal of the political subdivision.
La.Rev.Stat. Ann. § 33:4720 (2) (a)-(b) (West 2002).
All Defendants have moved for dismissal.
II. DISCUSSION 1. The City's Motion
The City posits several arguments in support of its motion to dismiss. First, the City argues that Felton has failed to allege facts sufficient to show that his rights were violated as a result of a policy or custom on the part of the City. Second, the City argues that Felton lacks standing to bring this lawsuit. Finally, the City argues that this Court has no subject matter jurisdiction over this action because the Tax Injunction Act, 28 U.S.C. § 1341 and principles of comity bar the federal courts from involvement in matters concerning the administration of taxes. Alternatively, the City requests that the Court order Felton to furnish a more definite statement of the nature of his claim because his complaint is so vague and ambiguous that the City cannot possibly prepare an adequate and responsive pleading.
Sufficiency of Plaintiff's Allegations
When considering a motion to dismiss under Federal Rule of Civil Procedure Rule 12(b)(6), the court must take the factual allegations of the complaint as true. David v. Assumption Parish Police Jury, 2003 WL 57039, *2 (E.D. La. Jan. 6, 2003). "All questions of fact and any ambiguities in the current controlling substantive law must be resolved in the plaintiff's favor."Lewis v. Fresne, 252 F.3d 352, 357 (5th Cir. 2001). A Rule 12 (b) (6) motion should be granted only if it appears beyond a doubt that the plaintiff cannot prove any set of facts in support of his claim which would entitle him to relief. McKinney v. Irving Independent School District, 309 F.3d 312 (5th Cir. 2002). "However, conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss." David, 2003 WL 57039 at *2. Nevertheless, a motion to dismiss under Rule 12(b)(6) is viewed with "disfavor and is rarely granted." Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999) (quoting Kaiser Aluminum Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir. 1982)).
In the landmark case of Monell v. Department of Social Services, 436 U.S. 658, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978), the United States Supreme Court reversed its prior restrictive interpretation of § 1983 and held that local municipalities are "persons" subject to liability under § 1983. Imposition of § 1983 liability against a municipality is appropriate in the limited circumstance of when a constitutional deprivation is caused by the execution of a policy or custom of the municipality.Bowen v. Watkins, 669 F.2d 979, 989 (5th Cir. 1982) (citingMonell, 436 U.S. at 694, 98 S. Ct. at 2037). An "official policy" is (1) a policy statement, ordinance, regulation, or decision that is officially adopted and promulgated by the government entity or by an official to whom the entity has delegated policy-making authority, or (2) a persistent, widespread practice of officials or employees which although not authorized by officially adopted and promulgated policy is so common and well-settled as to constitute a custom that fairly represents the entity's policy. Cozzo v. Tangipahoa Parish Council, 279 F.3d 273, 289 (5th Cir. 2002) (citing Johnson v. Moore, 958 F.2d 92, 94 (5th Cir. 1992)).
Prior to Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163 (1993), the law in this circuit required Monell plaintiffs to meet a "heightened" pleading standard such as the one imposed in cases against individuals entitled to immunity. See, e.g., Fraire v. City of Arlington, 957 F.2d 1268 (5th Cir. 1992). However, inLeatherman, a unanimous Supreme Court rejected the Fifth Circuit's approach and held that federal courts cannot impose a pleading requirement more stringent in Monell cases than that imposed by Federal Rule of Civil Procedure 8(a). 507 U.S. at 164. Rule 8 requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a).
The Court is persuaded that Plaintiff's allegations vis à vis the City meet the liberal requirements of Rule 8 which is all that is required under Leatherman. Plaintiff alleges inter alia that "[p]ursuant to its established policy and/or custom," City employees administering the Blight Busters Program "failed to ensure the correctness of the 'No Interest Form,' despite the City's actual knowledge of its incorrectness; failed to ensure that the photograph of the Property submitted by Icon and/or EWB was a photograph of the Property; failed to ensure that the Application was otherwise in order, and failed to ensure that [the] 'Property Database' contained correct and accurate information concerning the Property." (Fir. Amd. Rest. Comp. ¶ XIV). Plaintiff contends that he received no notice of the sale to Icon and/or EWB. (Fir. Amd. Rest. Comp. at ¶ XXI). He also alleges that the City could have easily located him via information contained in public records and via documents already in the City's possession. Id. ¶ XXII. He asserts that pursuant to its established policy/custom the City failed to take additional, reasonable steps of its intention to sell his property to Icon. Id. ¶ XVII.
Given that this matter is before the Court on a Rule 12(b) (6) motion to dismiss, the Court must construe all factual allegations and inferences in Plaintiff's favor. At this juncture the facial validity of the notice provisions provided in La.R.S. 33:4720.12(2) (a) and La.R.S. 33:4720.17 are irrelevant because according to Plaintiff's allegations he did not receive the notice mandated by the statute. The crux of his federal claim is that the City's failure to provide notice violated his due process rights and that the City did so pursuant to a policy or custom. Discovery will surely unveil all of the facts surrounding the sale of Plaintiff's property and ultimately the Court might conclude that the City has no liability to Plaintiff-either because Plaintiff cannot establish a policy or custom or because the City's actions regarding notice to Plaintiff complied with federal constitutional standards. For now, however, it suffices to say that Plaintiff has stated a claim for relief. Accordingly, the City's motion to dismiss grounded on Plaintiff's failure to state a claim is DENIED.
Plaintiff did not take issue with the City's assertion that a policy or custom is an integral part of Plaintiff's case against the City. The Court notes, however, that the purpose of the policy/custom requirement is to insure that municipalities do not incur vicarious liability for the constitutional torts of their employees. See Monell, 436 U.S. at 694. For instance, a far more common Monell situation is that of a plaintiff seeking to hold the municipality liable for the actions of a rogue police officer in its employ. Because § 1983 allows for no vicarious liability, the plaintiff can only recover from the employer-municipality by demonstrating actual fault, i.e., a municipal policy or custom pursuant to which the employee-officer acted.
However, in the instant case, the City was an actual party to or participant in a juridical act, i.e., the act of sale which purported to transfer ownership of Plaintiff's property to Icon/EWB. The City, like any other juridical person or corporate entity, can only act through its human agents like defendant Riley. It would seem then that when the City is challenged on the actions it takes as a juridical person, actions which clearly have to be taken via a human agent like Riley, that liability would be direct as opposed to vicarious. Again, where the plaintiff is not attempting to impose vicarious liability on a municipality under § 1983, the Court questions whether plaintiff's ability to allege or establish a policy or custom is of consequence. However, until this issue is raised and briefed by the parties, the Court makes no determination as to whether a policy/custom is a crucial part of Plaintiff's case against the City.
Standing
The City's memorandum includes a two paragraph argument regarding Plaintiff's standing to bring this suit. The City's argument, while not easy to follow, appears to be that because Plaintiff's only remedy prior to the sale was the right of redemption, Plaintiff cannot object to the City's disposition of his property after-the-fact. The most recent authority cited by the City in support of this argument is nearly a century old and none of the cited authorities were issued by federal courts in conjunction with civil rights claims. The Court finds that this issue has not been adequately briefed and therefore has not been properly raised. The City's motion to dismiss due to lack of standing is DENIED.Tax Injunction Act
The Tax Injunction Act ("TIA"), codified at 28 U.S.C. § 1341, reads in its entirety:
The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.28 U.S.C.A. § 1341 (West 1993). Congress enacted the TIA to target taxpayers who seek to avoid paying their tax bill by pursuing a challenge route other than the one specified by the taxing authority. Hibbs, 124 S. Ct. at 2288. The Supreme Court has recently rejected the notion that the TIA sweeps so broadly as to prevent "federal court interference with all aspects of state tax administration." Id. (emphasis added). The Court also summed up its TIA jurisprudence as applying the TIA only where a state taxpayer seeks a federal-court order enabling him to avoid paying state taxes. Id. at 2289.
State taxation, for § 1341 purposes includes local taxation. Hibbs v. Winn, 124 S. Ct. 2276, 2285 n. 1 (2004) (citing 17 C. Wright, A. Miller, E. Cooper, Fed. Prac. Proc. § 4237, pp. 643-44 (2d ed. 1988)).
In the wake of the Hibbs decision this Court is confident that Plaintiff's suit is not one that falls within the ambit of the TIA's jurisdictional bar. Plaintiff has not brought this suit to circumvent the procedural mechanisms that the City surely has in place to allow a taxpayer to challenge property tax assessments or to seek a tax refund. Although Plaintiff's property had been adjudicated to the City for non-payment of taxes, and although the Blight Busters program does apply to property adjudicated to the City for non-payment of taxes, Plaintiff is not challenging those tax assessments or his tax liability. Rather, he is challenging the City's ability to, consistent with principles of due process, sell his property without notice. It is simply not enough for purposes of the TIA that the Blight Busters program is related to a tax payer's failure to pay property tax. The City's motion to dismiss is therefore DENIED on this ground.
Request for More Definite Statement
The City moves the Court to order Plaintiff to furnish a more definite statement of the nature of his claim because his complaint is so vague and ambiguous that the City cannot possibly prepare an adequate and responsive pleading. With the exception of the allegations pertaining to Riley which are addressed below, the Court finds no merit to the City's contention that the complaint is either vague or ambiguous.
2. Riley's Motion
Riley's motion is supported by a memorandum that was copied nearly verbatim from the City's motion. With some effort, the Court has ascertained from the morass of argument that Riley believes that his conduct arises only to the level of mere negligence and that he is therefore entitled to the defense of qualified immunity.
Riley's memorandum in support of his motion is 31 pages in length yet the arguments pertinent to Riley do not appear until page 19 and span only two pages. Riley's memorandum is not only difficult to follow but it was filed in contravention of Local Rule 7.8.1E which requires leave of Court to file a memorandum in excess of 25 pages. All parties are forewarned that any future motions filed in contravention of the rules of this Court will be summarily denied.
Federal courts conduct a bifurcated analysis to assess the defense of qualified immunity. Collins v. Ainsworth, 382 F.3d 529, 537 (5th Cir. 2004) (citing Bazan ex rel. Bazan v. Hidalgo County, 246 F.3d 481 (5th Cir. 2001)). First, plaintiff must allege that the defendant violated a clearly established constitutional right. Id. A right is clearly established so long as prior decisions, while perhaps factually distinguishable, gave reasonable warning that the conduct then at issue violated constitutional rights. Id. (citing Hope v. Pelzer, 536 U.S. 730 (2002)). Second, if plaintiff has alleged such a violation, the court next must consider whether the defendant's conduct was objectively reasonable under the circumstances. Id. In other words, the court must decide whether a reasonably competent official would have known that his actions violated law which was clearly established at the time of the disputed action. Id. Officials who reasonably but mistakenly commit a constitutional violation are entitled to qualified immunity. Id. (quotingBazan, 246 F.3d at 490). To prevail on a § 1983 claim, plaintiffs must prove that the alleged constitutional or statutory deprivation was intentional or due to deliberate indifference, not the result of mere negligence; negligent deprivation of life, liberty, or property is not a constitutional violation. Holland v. City of Houston, 41 F. Supp. 2d 676, 688 (S.D. Tex. 1999).
At the time of this incident the law was well-established that a property owner is entitled to notice prior to the government's attempt to deprive him of his property rights. See Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (U.S. 1983). But most of the allegations in Plaintiff's complaint refer to actions taken by "Defendants" or "the City" as opposed to Riley individually. While the Court is convinced that Plaintiff has properly alleged a claim against the City for the deprivation of his property rights, the Court is not persuaded that the actions specifically attributed to Riley are sufficient to overcome his defense of qualified immunity — a defense not available to the City. Plaintiff alleges that Riley reviewed Icon's and/or EWB's Application for Post-Adjudication Sale and approved it despite the deficiencies in the application. (Fir. Amd. Rest. Comp. ¶ XVIII). Plaintiff also alleges that Riley advised Icon of its responsibility to provide notice to Plaintiff of the proposed sale of his property. Id. Plaintiff also claims that Riley failed to take additional, reasonable steps to notify Plaintiff of the City's intent to sell his property. Id.
A substantial portion of Riley's alleged conduct would seem to sound in mere negligence rather than a civil rights violation. The only act that Riley committed that would seem to implicate a due process problem would be Riley's alleged failure to take additional, reasonable steps to notify Plaintiff of the City's intent to sell his property. For instance, even though Plaintiff complains that Riley did not ascertain whether the property was in fact "abandoned," that would seem to be of little consequence to the constitutional issue because Plaintiff concedes that the property had already been adjudicated to the City for non-payment of taxes for several years in a row. But Plaintiff has not even made clear that Riley knew or should have known that Icon had not provided notice to Plaintiff. Without such knowledge, Riley could hardly be liable for failing to take additional steps to provide notice to Plaintiff. Moreover, in light of the legal issues presented in footnote 2, supra, the Court questions whether personal liability on the part of Riley is appropriate under these facts given that the City was a direct participant in the act that Plaintiff is challenging.
The Court therefore concludes that if Plaintiff intends to pursue a claim against Riley in his personal capacity, Plaintiff must submit a Rule 7(a) reply to 1) specifically allege those acts committed by Riley that would expose him to personal liability under § 1983, and 2) identify legal authority for the proposition that a municipal employee faces personal liability when the entity for which he acts violates a citizen's constitutional rights. Accordingly, the Court DENIES Riley's motion at this time pending Plaintiff's submission of a Rule 7(a) reply. Riley can reurge his qualified immunity defense via motion after Plaintiff files his reply. The reply shall be filed in accordance with the order given below.
The Court makes no determination at this time that Plaintiff's rights were actually violated. Plaintiff has alleged that the City sold his property without giving him notice and therefore has alleged a constitutional violation. The Court need not go further at this time.
3. Icon EWB's Motion
Icon and EWB argue that the § 1983 claims should be dismissed because no evidence will ever be shown that Icon did anything but follow the mandates of state and local law. Icon argues that Felton's claims are conclusory and cannot be substantiated. With respect to the state law claims, Icon and EWB argue that redemption is not an option and that the complaint should therefore be dismissed. Finally, EWB argues that it should be dismissed because it has no ownership interest in the subject property.
In opposition, Plaintiff argues that EWB is named as a defendant because its name appears on several documents pertaining to the purchase. Plaintiff points out that EWB's role in the sale can only be determined following discovery and that at some point dismissal might be appropriate although it is premature at this point. Plaintiff also argues that redemption is not precluded in this case because Defendants did not provide Plaintiff with the notice that due process would require.
The Court DENIES Icon/EWB's motion in its entirety at this time. This matter is before the Court pursuant to a motion to dismiss so the Court need not concern itself at this time with what Plaintiff can ultimately prove. Further, under certain circumstances private citizens can be liable under § 1983. See Priester v. Lowndes County, 354 F.3d 414, 420 (5th Cir. 2004) (citing Mylett v. Jeane, 879 F.2d 1272, 1275 (5th Cir. 1989) (recognizing potential liability of private citizens under § 1983 when they act in concert with state actors)). The Court pretermits the issue of whether redemption is a possible remedy in this litigation until the respective roles of Icon and EWB in the alleged due process violation are brought to light via discovery.
Accordingly;
IT IS ORDERED that the Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted and for Lack of Subject Matter Jurisdiction, Alternatively for More Definite Statement (Rec. Doc. 7) filed by defendant the City of New Orleans should be and is hereby DENIED; IT IS FURTHER ORDERED that the Motion to Dismiss For Failure to State a Claim Upon Which Relief Can Be Granted, or in the Alternative, Motion for Judgment on the Pleadings, and for Lack of Subject Matter Jurisdiction (Rec. Doc. 13) filed by defendants Icon Properties, LLC and EWB, LLC should be and is hereby DENIED; IT IS FURTHER ORDERED that the Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted and for Lack of Subject Matter Jurisdiction, Alternatively for More Definite Statement (Rec. Doc. 18) filed by the City and defendant Joseph H. Riley, II should be and is hereby DENIED as to the City and DENIED WITHOUT PREJUDICE as to defendant Riley as explained above. Plaintiff shall submit his Rule 7(7)(a) reply within ten (10) days of entry of this order or the complaint will be dismissed as to Riley upon his filing of an appropriate motion.