PB&J Towing Svc., I&II, LLC v. Hines

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

)

PB&J TOWING SVC., I&II, LLC, )

)

Plaintiff, )

)

)

v. ) No. 18-CV-02556

)

SAMUEL HINES, INDIVIDUALLY )

AND AS COMMANDER OF )

TRAFFIC/SPECIAL OPERATIONS )

DIVISION OF THE MEMPHIS )

POLICE DEPARTMENT; DEBRA )

STREETER, INDIVIDUALLY AND AS )

MEMBER OF MEMPHIS POLICE )

DEPARTMENT BOARD; NATHANIEL )

JACKSON, INDIVIDUALLY AND AS )

MEMBER OF MEMPHIS POLICE )

DEPARTMENT BOARD; KAREN )

ARMSTRONG, INDIVIDUALLY AND )

AS MEMBER OF MEMPHIS POLICE )

DEPARTMENT BOARD; STACY )

SMITH, INDIVIDUALLY AND AS )

MEMBER OF MEMPHIS POLICE )

DEPARTMENT BOARD; MARK )

TAYLOR, INDIVIDUALLY AND AS )

MEMBER OF MEMPHIS POLICE )

DEPARTMENT BOARD; AND )

THE CITY OF MEMPHIS, )

)

Defendants.

ORDER

This is a procedural due process action under 42 U.S.C. §

1983. Plaintiff PB&J Towing Svc., I&II, LLC (“PB&J Towing”)

alleges that it was deprived of its property interest in its

place on the Memphis Police Department rotational call list for

wrecker1 companies without a pre-deprivation hearing. (ECF No.

1.) Before the Court are plaintiff’s motion for partial summary

judgement and defendants’ motions for partial summary judgement

and for summary judgement. (ECF No. 92; ECF No. 88; ECF No.

91.)

I. Background

Defendant the City of Memphis (the “City”), through its

police department, maintains a list of wrecker companies to be

called on a rotating basis when emergency wrecker services are

required (the “List”). See Memphis City Ord. § 6-88-26(D). A

company must meet requirements listed in Memphis City Ordinances

to be placed on the List and may only be removed from the List

for reasons defined in Memphis City Ordinances. See id.; Memphis

City Ord. § 6-88-50. Defendant Samuel Hines is the Commander of

the Traffic and Special Operations Division of the Memphis Police

Department. Hines is the designee of the Director of Police

Services charged with maintaining the List. (See Dep. of Hines,

ECF No. 86-1, at 586.)2

The City has created geographic zones with a certain number

of companies comprising the List for each zone. See Memphis

1 A wrecker is a tow truck. See Memphis City Ord. § 6-88-2.

2 Unless otherwise noted, pin cites for record citations refer to the PageID

page number.

City Ord. § 6-88-29(B). Zone decals are issued to wrecker

companies denoting their position on the List for a particular

zone. (See Dep. of Fullilove, ECF No. 96-2, at 1190-91.) The

List applies only to zones. See Memphis City Ord. § 6-88-29(B).

Other decals issued, such as those indicating that a wrecker

company has an emergency services permit, apply to the City as

a whole and do not specify a zone. See Memphis City Ord. § 6-

88-33(4). Only a decal indicating a zone denotes a place on the

List, and then, only for the specified zone.

In the years leading up to 2017 and until at least May 2017,

plaintiff PB&J Towing maintained a place on the List for Zone 6.

(Pl.’s Resp. to Statement of Undisputed Facts, ECF No. 95-2, at

1048-51.) On May 18, 2017, after a dispute over lot inspections,

PB&J Towing received a Cease and Desist Order preventing it from

conducting any wrecker services in the City. (ECF No. 89, at

738-39.) Because of the Cease and Desist Order, the Memphis

Police Department removed PB&J Towing from the List for Zone 6.

(ECF No. 89, at 745.)

On May 19, 2017, after the Cease and Desist Order, PB&J

Towing applied for a citywide emergency wrecker services permit

and to be on the List for Zone 6. (ECF No. 89, at 740.) PB&J

Towing’s application to provide general and emergency wrecker

services was approved on August 16, 2017. (Dep. of Fullilove,

ECF No. 92-3, at 922.) PB&J Towing was also issued decals for

Zone 6. (Id.) Later that day, PB&J Towing was informed that

the Zone 6 decals had been issued in error. (Dep. of Fullilove,

ECF No. 96-2, at 1196.) PB&J Towing returned the Zone 6 decals,

and the check paying for those decals was voided. (Id.) PB&J

Towing was correctly issued emergency services decals. (See

Id.)

PB&J Towing found out that it had not been added to the

Zone 6 List on September 7, 2017, when Hines sent PB&J Towing a

letter saying that its application to be on the List had been

denied. (ECF No. 90, at 794.) PB&J Towing timely appealed.

(Dep. of Hines, ECF No. 86-1, at 623.) On September 28, 2017,

Hines convened an appeal hearing. (Id.) At that hearing, the

Individual Defendants provided PB&J Towing with a list of

complaints and violations and asked PB&J Towing to respond. (See

id. at 630.) Because PB&J Towing was unprepared to respond,

having heard the complaints for the first time, it asked for a

continuance. (See id. at 632.) The hearing was reset to October

18, 2017. (See id. at 637.) At the second hearing, the panel

voted to uphold Hines’s decision to deny PB&J Towing’s

application for inclusion on the List. (ECF No. 95-8, at 1154.)

On August 14, 2018, PB&J Towing filed this lawsuit against

the City and the Individual Defendants under 42 U.S.C. § 1983,

alleging due process violations and a civil conspiracy arising

from PB&J Towing’s removal from the Zone 6 List. (ECF No. 1.)

PB&J Towing asserts that it was deprived of its constitutionally

protected procedural due process property interest under the

Fourteenth Amendment when Hines removed it from the List without

notice or hearing. (Id. ¶¶ 29-34.)

On August 6, 2019, the Individual Defendants moved to

dismiss PB&J Towing’s claims. (See ECF No. 40.) The Court

granted the motion to dismiss defendants Streeter, Armstrong,

Smith, and Taylor. (ECF No. 69, at 363.) Defendant Jackson was

dismissed separately in a later order. (ECF No. 74.) The Court

also granted the motion to dismiss on the conspiracy claim as to

all defendants. (ECF No. 69, at 369.)

Defendants Hines and the City moved for partial summary

judgement on issues related to damages on April 28, 2020. (ECF

No. 85.) That motion was amended on May 8, 2020. (ECF No. 88.)

On May 13, 2020, defendants Hines and the City moved for summary

judgement. (ECF No. 91.) On May 14, 2020, PB&J Towing moved

for partial summary judgement on the issue of liability. (ECF

No. 92.) All parties have responded and replied, and the motions

are now ripe for consideration. (ECF No. 93; ECF No. 95; ECF

No. 96; ECF No. 97; ECF No. 98; ECF No. 99.)

For the reasons stated below, plaintiff’s motion for partial

summary judgement is DENIED. Defendants’ motion for partial

summary judgement is DENIED as moot. Defendants’ motion for

summary judgement is GRANTED.

II. Jurisdiction

The Court has federal question jurisdiction. Under 28

U.S.C. § 1331, district courts have original jurisdiction “of

all civil actions arising under the Constitution, laws, or

treaties of the United States.” PB&J Towing asserts violations

of its constitutional rights and seeks relief under 42 U.S.C.

§ 1983. (ECF No. 1 ¶ 9.) Its claims arise under the laws of

the United States.

III. Standard of Review

A. Motions for Summary Judgement

Under Federal Rule of Civil Procedure 56, on motion of a

party, the court “shall grant summary judgment if the movant

shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a). “[T]he moving party is entitled to summary

judgment when the nonmoving party ‘fails to make a showing

sufficient to establish the existence of an element essential to

that party’s case, and on which that party will bear the burden

of proof at trial.’” George v. Youngstown State University, 966

F.3d 446, 458 (6th Cir. 2020) (quoting Celotex Corp. v. Catrett,

477 U.S. 317, 322–23 (1986)).

The non-moving party has the duty to point out specific

evidence in the record sufficient to justify a jury decision in

its favor. See Fed. R. Civ. P. 56(c)(1); InterRoyal Corp. v.

Sponseller, 889 F.2d 108, 111 (6th Cir. 1989). When confronted

with a properly supported motion for summary judgment, the non-

moving party must set forth specific facts showing that there is

a genuine dispute for trial. See Fed. R. Civ. P. 56(c). A

genuine dispute for trial exists if the evidence is “‘such that

a reasonable jury could return a verdict for the nonmoving

party.’” See Wasek v. Arrow Energy Servs., 682 F.3d 463, 467

(6th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 248 (1986)). “[I]n order to survive a summary

judgement motion, the non-moving party ‘must do more than simply

show that there is some metaphysical doubt as to the material

facts.’” Lossia v. Flagstar Bancorp, Inc., 895 F.3d 423, 428

(6th Cir. 2018) (quoting Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 586 (1986)).

Although summary judgment must be used carefully, it “is an

integral part of the Federal Rules as a whole, which are designed

to secure the just, speedy, and inexpensive determination of

every action[,] rather than a disfavored procedural shortcut.”

FDIC v. Jeff Miller Stables, 573 F.3d 289, 294 (6th Cir. 2009)

(internal quotation marks and citations omitted).

The standard remains the same when both parties move for

summary judgment. Taft Broad. Co. v. United States, 929 F.2d

240, 248 (6th Cir. 1991). “When reviewing cross-motions for

summary judgment, the court must evaluate each motion on its own

merits and view all facts and inferences in the light most

favorable to the nonmoving party.” Wiley v. United States, 20

F.3d 222, 224 (6th Cir. 1994) (citing Taft, 929 F.2d at 248).

B. Procedural Due Process

Plaintiffs must prove three elements to establish a

procedural due process claim under § 1983: (1) “that they have

a life, liberty, or property interest protected by the Due

Process Clause of the Fourteenth Amendment”; (2) “that they were

deprived of this protected interest within the meaning of the

Due Process Clause”; and (3) “that the state did not afford them

adequate procedural rights prior to depriving them of their

protected interest.” Med Corp., Inc. v. City of Lima, 296 F.3d

404, 409 (6th Cir. 2002) (quoting Hahn v. Star Bank, 190 F.3d

708, 716 (6th Cir. 1999)).

“To have a property interest in a benefit, a person must

have a ‘legitimate claim of entitlement to it,’ rather than a

mere ‘abstract need or desire for it,’ or a ‘unilateral

expectation of it.’” Joelson v. United States, 86 F.3d 1413,

1421 (6th Cir. 1996) (quoting Bd. of Regents of State Colleges

v. Roth, 408 U.S. 564, 577 (1972)).

IV. Analysis

PB&J Towing fails to cite any evidence establishing a

genuine dispute about the property interest element of its case.

To prove a procedural due process claim, PB&J Towing must

establish that it was deprived of a property interest. To do

that, PB&J Towing must “point to some policy, law, or mutually

explicit understanding that both confers the benefit and limits

the discretion of the City to rescind the benefit.” Med Corp.,

296 F.3d at 410. PB&J Towing asserts three theories purporting

to show that it had a property interest in a place on the List.

Even if a place on the List constituted a property interest,

none of PB&J Towing’s theories demonstrates that it was entitled

to be on the List at the relevant time. It had no property

interest.

A. PB&J Towing was removed from the List because of the

Cease and Desist Order.

PB&J Towing argues that it was not removed from the List

for Zone 6 before Hines acted in September 2017, which, if true,

would mean that PB&J Towing was on the List at the relevant time.

Defendants argue that PB&J Towing was removed from the List

because of the Cease and Desist Order in May 2017. PB&J Towing

counters that the terms of the Cease and Desist Order did not

mention removal from the List and, because it complied with the

terms of the Cease and Desist Order by allowing inspection of

its lots, it was never removed from the List.

Uncontroverted evidence demonstrates that PB&J Towing was

removed from the List in May or June 2017, before Hines acted in

September 2017. Defendants point to a June 2017 order from the

Memphis Transportation Commission upholding the Cease and Desist

Order. In that order, the Commission states that “MPD removed

PB&J from the MPD Emergency Rotation List” following the Cease

and Desist Order. PB&J Towing does not point to any

contradictory evidence in the record. No reasonable trier of

fact could find that PB&J Towing was still on the List as of May

or June 2017, following the Cease and Desist Order.

B. The decals given to PB&J Towing in August 2017 did not

create a property interest.

A misunderstanding or erroneous belief cannot be the basis

for a mutually explicit understanding that supports a claim of

entitlement. See Perry v. Sindermann, 408 U.S. 593, 601 (1972).

A mistake is such a “misunderstanding” or “erroneous belief.”

Mistake, Black’s Law Dictionary, (11th ed. 2019).

PB&J Towing argues that the issuance of decals in August

2017 demonstrates that it was put on the List at that time.

First, PB&J Towing argues that it was issued Zone 6 decals that

denote a place on the List. Second, PB&J Towing argues that it

was issued emergency services decals that denote a place on the

List. Because both conclusions are based on mistakes, PB&J

Towing demonstrates only a unilateral expectation of a place on

the List, which is insufficient to create a property interest.

1. The mistaken issuance of Zone 6 decals created

only a unilateral expectation of a property

interest.

In this case, Zone 6 decals were issued to PB&J Towing by

mistake; however, PB&J Towing was promptly notified of the

mistake, was refunded its payment, and returned the decals. Such

a mistake does not create the type of “reliance” in a property

interest that must not be “arbitrarily undermined.” Roth, 408

U.S. at 577.

Where a mistake creates no legitimate expectation of a

benefit, there can be no property interest. For example, in

House v. Univ. of Central Ark., an instructor received an

appointment letter that mistakenly identified her appointment

for the following academic year as tenure-track instead of

terminal. 684 F. Supp. 222, 226 (E.D. Ark. 1988). Because she

had already served as an instructor for the maximum number of

years in a tenure-track role without gaining tenure, she argued

that the letter saying she was to serve an additional year in a

tenure-track role proved she had been granted tenure. Id. at

227-28. However, plaintiff had removed herself from

consideration for a tenured position and so could not have been

granted tenure. Id. The court held that there was no property

interest because the plaintiff should have realized that a

mistake had been made in the appointment letter and so could

have had no legitimate expectation of tenure. Id. at 228.

A mistake can only create a property interest where there

was reason to rely on it. That was the situation in Leland v.

Miss. State Bd. Of Registration for Prof’l Eng’rs and Land

Surveyors. 841 F. Supp. 192 (S.D. Miss. 1993). Plaintiff had

been issued a license as an engineer by mistake, but the court

held that he had a property interest in his professional license.

Id. at 198-99. In that case, the license issued in June and the

plaintiff was not notified of the mistake until November. Id.

at 194. Mississippi law established that the issuance of a

license was evidence that the person named on the license was

entitled to the rights and privileges of an engineer. Id. at

199. The court held that under these circumstances, the

plaintiff had a property interest in his license. Id.

The instant case is more like House than Leland. Like

House, but unlike Leland, PB&J Towing had timely notice that

there was a mistake, which reduces reliance on the mistake.

Although in House notice of the mistake was immediate because

the mistake was obvious, PB&J Towing was notified of the mistake

later the same day, not months later as in Leland. Most

importantly, notice of the mistake came well before Hines acted

in September 2017. PB&J Towing did not have reason to rely on

the mistaken issuance of decals as evidence that it was on the

List when Hines acted.

2. PB&J Towing’s mistaken understanding of the

significance of the decals it was correctly

issued creates no property interest.

PB&J Towing disputes the meaning of the citywide emergency

services decals that it was correctly issued in August 2017.

PB&J Towing insists that the emergency decals denote a place on

the List for Zone 6. It is unclear why, if that were the case,

there would be a need for separate zone decals.

City ordinances demonstrate that emergency services decals

do not limit emergency towing to a zone, meaning that emergency

services decals cannot be evidence that a wrecker company was

added to the List for a zone. Section 6-88-33(4)(c) is the

relevant section for the issuance of emergency decals. See

Memphis City Ord. § 6-88-33(4)(c). That section states that

“[t]he term ‘emergency wrecker service’ means the removal of

motor vehicles from the streets, alleys, roads, highways and

thoroughfares within the area of the metropolitan government. .

. .” Id. The section provides that an emergency services decal

authorizes emergency towing throughout the City, meaning that no

zone limitation is implied by the issuance of an emergency

services decal. See id. Zones are created only for purposes

of the List. See Memphis City Ord. § 6-88-29(B).

PB&J Towing points to the application that it completed in

May 2017 as evidence that the emergency services decals denote

a place on the List. PB&J Towing argues that its application

demonstrates that emergency towing services and the List are the

same thing. However, the application clearly shows that a towing

company can apply for an emergency services permit while choosing

not to apply for a place on the List. A check box allows a

company to apply for an emergency services permit. A separate

check box allows a company to select “No” to a request to be on

the List. If emergency services and the List were synonymous,

a company could not apply for one without also applying for the

other. The application in use at the relevant time demonstrates

that it was possible to apply for an emergency services permit

without applying to be on the List. PB&J Towing’s mistaken

belief that emergency services decals denote a place on the List

creates only a unilateral expectation of a place on the List.

PB&J Towing cannot demonstrate a property interest because it

was issued emergency services decals.

C. There was no mutually explicit understanding that PB&J

Towing was entitled to a place on the List.

A mutually explicit understanding that is cognizable under

state law, such as an implied contract, can create a property

interest. See Bishop v. Wood, 426 U.S. 341, 344 (1976) (“A

property interest in employment can, of course, be created by

ordinance, or by an implied contract. In either case, however,

the sufficiency of the claim of entitlement must be decided by

reference to state law.”); Woolsey v. Hunt, 932 F.2d 555, 563-

64 (6th Cir. 1991) (holding that analysis of state law is

necessary to determine whether there is a valid implied contract

creating a property interest). PB&J Towing argues that, even if

it was not on the List at the relevant time, there was a mutually

explicit understanding between the City and towing companies

that being added to the List was a “rubber stamp affair.” PB&J

Towing points to no evidence establishing such an understanding

or implied contract.

Tennessee law recognizes implied contracts. Paschall’s,

Inc. v. Dozier, 407 S.W.2d 150, 153 (Tenn. 1966). “A contract

implied in fact is one that arises under circumstances which

show mutual intent or assent to contract . . . . Such a contract

or agreement may result as a legal inference from the facts and

circumstances of the case.” Givens v. Mullikin ex rel. Estate

of McElwaney, 75 S.W.3d 383, 407 (Tenn. 2002) (internal

quotations omitted). An implied contract “must be sufficiently

definite to be enforced” and “cannot be accomplished by the

unilateral action of one party, nor . . . by an ambiguous course

of dealing between the two parties from which differing

inferences . . . might reasonably be drawn.” Jamestowne on

Signal, Inc. v. First Federal Sav. & Loan Ass’n, 807 S.W.2d 559,

564 (Tenn. Ct. App. 1990).

No implied contract or mutually explicit understanding

cognizable under Tennessee law between PB&J Towing and the City

supports PB&J Towing’s claim of entitlement to a property

interest. PB&J Towing points out that the City had not denied

any application to be on the List from any towing company during

the prior twenty years. That course of dealing is too indefinite

to establish a mutually explicit understanding between PB&J

Towing and the City. The alleged course of dealing fails to

establish even which towing companies would be parties to such

an implied contract with the City. The terms of such a contract

for rubber stamp approval of applications to be on the List are

hardly established in a sufficiently definite form that a court

could enforce them.

PB&J Towing’s reliance on Gregg v. Lawson to show that a

course of dealing can create a property interest in being placed

on the List is misplaced. 732 F. Supp. 849 (E.D. Tenn. 1989).

In Gregg, a course of dealing helped to establish a property

interest for a towing company. Id. at 853. However, the property

interest in that case was remaining on the rotating call list

and not having an application for a rotating call list approved.

Id.; cf. Durham v. Jones, 698 F.2d 1179, 1181 (11th Cir. 1983)

(holding that towing company that was not on a rotating call

list had no property interest in being added to that list).

PB&J Towing fails to cite evidence establishing a mutually

explicit understanding that it was entitled to a place on the

List that would be recognized by state law. It has shown no

property interest in being added to the List.

V. Conclusion

PB&J Towing fails to create a genuine dispute of material

fact about whether it was entitled to a place on the List when

Hines denied its application. Because a property interest is an

element of PB&J Towing’s § 1983 claim, and it has not shown it

had a property interest, plaintiff’s motion for partial summary

judgement is DENIED. Defendants’ motion for partial summary

judgement is DENIED as moot. Defendants’ motion for summary

judgement is GRANTED.

So ordered this _15th_ day of September, 2020.

/s/ Samuel H. Mays, Jr.

SAMUEL H. MAYS, JR.

UNITED STATES DISTRICT JUDGE