The opinion
Revised May 4, 2001
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-21033
CONROE CREOSOTING COMPANY; CONROE CREDIT CORPORATION; H.M.
HAWTHORNE; LYN HAWTHORNE,
Plaintiffs-Appellees,
versus
MONTGOMERY COUNTY TEXAS; ET AL,
Defendants,
J.R. MOORE, Tax Assessor and Collector
of Montgomery County, Texas,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Texas
April 18, 2001
Before KING, Chief Judge, and HIGGINBOTHAM and DUHÉ, Circuit
Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
We are asked to decide an official’s plea of qualified
immunity to a damages claim for assorted violations of due
process—the substantive variety. J.R. Moore appeals the district
court's denial of his motion for summary judgment on a substantive
due process claim. The claim of qualified immunity presents issues
of fact, and we dismiss for lack of jurisdiction.
I
This case arises out of a tax levy against Conroe Creosoting
Company. Conroe Creosoting conducted business on a 155-acre
facility in Montgomery County, Texas. The company's facility
included a creosoting plant, administrative offices, an outlet
store, and the corporate offices of a separate company, Conroe
Credit Corporation. On June 19, 1996, Montgomery County and Conroe
Independent School District obtained a final tax judgment against
Conroe Creosoting in the respective amounts of $16,274.97 and
$58,209.11, a total of $74,448.08. The judgment contained a finding
that the personal property of Conroe Creosoting possessed a "fair
market value" of $803,670.00.
On March 13, 1997, the court issued a writ of execution on
behalf of the County and school district. J.R. Moore, the Tax
Assessor and Collector for the County, promptly sent Charles
Podeyn, a representative from his office, to take possession of the
entire facility. Kay Applewhite and other members of the law firm
of Heard, Goggan, Blair & Williams, the County’s lawyers in this
collection effort, accompanied Podeyn. Deputy constables from the
County also participated in the seizure of the facility. Applewhite
demanded that company operations cease and that all employees leave
with their belongings within one hour. The entire
2
facility—including all real estate and personal property, as well
as the offices of Conroe Credit Corporation—was seized and held for
almost sixty days. Conroe Credit Corporation was not included in
the scope of the tax judgment. During this period, H.M. Hawthorne
and Lyn Hawthorne, who were principals of Conroe Creosoting, were
repeatedly prevented from entering the property or conducting
business. Conroe Creosoting did not seek relief in state or federal
court at this time.
The law firm of Heard, Goggan entered into a contract with a
group of auctioneers on behalf of the County. Louise Starks, a
paralegal employed by the law firm, stated in her deposition that
Moore authorized the contract, which called for a "complete
dispersal" of the assets of Conroe Creosoting.
Pursuant to Rule 637 of the Texas Rules of Civil Procedure,
the Hawthornes designated an "order of sale."1 They designated
certain vehicles and other nonessential plant equipment for sale in
satisfaction of the approximately $75,000 tax judgment. Conroe
Creosoting contends that, because Moore authorized a "complete
dispersal" of the company's assets, the persons conducting the
execution ignored the Hawthornes' designation of assets. Instead,
the auctioneers kept the vehicles on display to increase public
interest in the auction. These vehicles ultimately were never sold.
1
See Tex. Rules Civ. Proc. 637 (2000) ("The officer shall
first call upon the defendant . . . to point out property to be
levied upon, and the levy shall first be made upon the property
designated by the defendant.").
3
Conroe Creosoting argues that important plant machinery and other
items critical to the functioning of the company were sold instead.
Moreover, in preparation for the auction of the company's
assets, $69,000 in security costs were incurred. The execution sale
ultimately realized $361,909.85 in proceeds, of which $241,251.49
was paid to various taxing authorities with judgments, delinquent
taxes due other taxing authorities, and to Heard, Goggan for
attorney's fees and expenses. Conroe Creosoting was given the net
excess proceeds of $120,658.36. After the March 1997 seizure,
Conroe Creosoting never reopened for business.
Moore says that he acted under the mistaken impression that a
tax warrant—and not a writ of execution—authorized the County to
organize the seizure and sale of the company's assets. He asserts
that he learned of his mistake the day after the sale and
immediately withdrew from further participation. Under Texas law,
a tax warrant empowers both a peace officer and the tax
collector/assessor to seize and dispose of a debtor's property.2
Texas law relating to the execution of judgments only grants peace
officers the authority to enforce writs of execution.3
Appellees contest Moore's assertion, arguing that he remained
involved long after he learned that his office had no authority to
proceed. They argue that Moore approved the auction contract
2
See Tex. Tax Code Ann. § 33.23 (West 2000).
3
See Tex. R. Civ. P. 622, 630, 637 (West 2000).
4
sometime after Stark's meeting with the auctioneers on March 20,
1997. Moore also signed an affidavit on May 7, 1997 supporting a
tax warrant in which he asserted that the personalty, which at that
time had already been seized by the constables, was in danger of
being removed from the County by the plaintiffs.4 Appellees also
contend that Moore represented to the Office of the State
Comptroller that there would be surplus properties after the sale
from which a state sales tax claim could be satisfied, resulting in
a Notice of Freeze against Conroe Creosoting. Appellees argue that
Moore took the preceding actions after he learned about the writ of
execution and prior to his withdrawal from the execution.
Conroe Creosoting, Conroe Credit Corporation, H.M. Hawthorne,
and Lyn Hawthorne filed this section 1983 suit against Moore, the
County, the constables involved in the seizure, Applewhite, and the
firm of Heard, Goggan. The suit claims violations of substantive
due process, procedural due process, and the Texas Constitution.
Moore moved for summary judgment, asserting qualified immunity. The
district court, following a magistrate judge's recommendations,
granted the motion as to all claims except for the claim resting on
substantive due process. The court also dismissed all claims of
H.M. Hawthorne and Conroe Credit Corporation, as there was no
evidence linking Moore's actions to their property. Moore appeals
4
This tax warrant apparently was for additional delinquent
taxes which had accrued following issuance of the writ of
execution.
5
the court's refusal to grant him qualified immunity on the
substantive due process claim.
II
This Court employs a three-part inquiry in assessing a claim
of qualified immunity. First, we examine whether the plaintiff has
alleged the violation of a constitutional right. Second, we
determine whether the constitutional right was clearly established
at the time the defendant acted. A constitutional right is "clearly
established" if "the unlawfulness of the conduct would be apparent
to a reasonably competent official."5 The second prong of the
qualified immunity inquiry therefore requires an assessment of
whether the official's conduct would have been objectively
reasonable at the time of the incident.6 Finally, we determine
whether the record indicates that the violation occurred, or gives
rise to a genuine issue of material fact as to whether the
defendant actually engaged in the conduct that violated the clearly
established right.7 As this case comes to us from the denial of a
summary judgment motion, the facts which inform our analysis must
be construed in favor of the nonmovants.8
5
Morris v. Dearborne, 181 F.3d 657, 665-66 (5th Cir. 1999).
6
See Shipp v. McMahon, 234 F.3d 907, 911-12 (5th Cir. 2000).
7
See Morris, 181 F.3d at 666.
8
See Turner v. Houma Mun. Fire & Police Civil Serv. Bd., 229
F.3d 478, 482 (5th Cir. 2000).
6
Turning to the first phase of the qualified immunity inquiry,
we address Conroe Creosoting's assertion that Moore's actions
violated its right to substantive due process.9 The Supreme Court
has noted that, "historically, this guarantee of due process has
been applied to deliberate decisions of government officials to
deprive a person of life, liberty, or property."10 The overarching
objective of this doctrine is to prevent government officials from
"abusing [their] power, or employing it as an instrument of
oppression."11 Courts generally examine due process challenges to
executive action by asking "whether the behavior of the
governmental officer is so egregious, so outrageous, that it may
fairly be said to shock the contemporary conscience."12 Recognizing
that the Supreme Court has "always been reluctant to expand the
9
Conroe Creosoting's claims might also be viewed through a
more "explicit textual source of constitutional protection," County
of Sacramento v. Lewis, 523 U.S. 833, 842 (1998), such as the
Takings Clause or the Fourth Amendment. See John Corp. v. City of
Houston, 214 F.3d 573, 578-79 (5th Cir. 2000). We need not address
this possibility, however, as neither side discusses the relevance
of these alternative textual sources.
10
Daniels v. Williams, 474 U.S. 327, 331 (1986) (emphasis
omitted).
11
Lewis, 523 U.S. at 846.
12
Id. at 847 n.8.
7
concept of substantive due process,"13 we apply the doctrine with
the "utmost care."14
To prevail on a substantive due process claim, Conroe
Creosoting must first establish the existence of a property
interest protected by the Fourteenth Amendment. Texas law defines
the relevant property interest.15 Conroe Creosoting's claims appear
to rest on its right to designate property for sale under Rule 637
of the Texas Rules of Civil Procedure. Conroe Creosoting relies on
Moore's authorization of the "complete dispersal" of its assets, an
act which allegedly nullified the company's right to designate
assets of its choosing. Although Rule 637 has a substantive effect,
it implies only a procedural right. It is axiomatic that a
procedural right can not, in and of itself, give rise to a property
interest. To the extent that Conroe Creosoting relies on Rule 637,
the company does not state a substantive due process claim.
If we consider Conroe Creosoting's arguments in light of the
broader array of property rights to which the company is entitled,
13
Id. at 842.
14
Simi Inv. Co. v. Harris County, 236 F.3d 240, 249 (5th Cir.
2000).
15
See Simi, 236 F.3d at 249-50; see also Hidden Oaks Ltd. v.
City of Austin, 138 F.3d 1036, 1046 (5th Cir. 1998) ("Under this
analysis, the hallmark of property . . . is an individual
entitlement grounded in state law, which cannot be removed except
'for cause.'").
8
a substantive due process claim is stated.16 Texas recognizes a
corporation's right to acquire and own realty and personalty.17
Where a state official deprives a corporation of its property in a
manner that "shocks the conscience," substantive due process may be
violated.18
The right to be free from this kind of oppressive executive
conduct was also clearly established at the time of the events in
question.19 Conroe Creosoting asserts that Moore's conduct "shocks
the conscience" for the following reasons: (1) he selected the
16
At oral argument, counsel for Conroe Creosoting argued that
it ultimately relies on a more generalized right to private
property, and not on Rule 637. While Conroe Creosoting's briefs
seem contrary to this characterization, the ambiguity of the briefs
on this point preclude a finding of waiver.
17
See Berry v. Humble Oil & Ref. Co., 205 S.W.2d 376, 388
(Tex. Civ. App. 1947).
18
See Brown v. Nationsbank Corp., 188 F.3d 579, 590-92 (5th
Cir. 1999) (finding that plaintiffs stated a Bivens claim for
federal agents' violation of their substantive due process rights,
which resulted in financial and other intangible, non-physical
injury); see also Regents of the Univ. of Michigan v. Ewing, 474
U.S. 214, 223 (1985) (assuming without deciding that the
deprivation of a property interest violated substantive due
process); Simi, 236 F.3d at 253-54 (finding that a county land-use
decision, which arbitrarily infringed on private property
interests, violated substantive due process). Cf. Mahone v. Addicks
Util. Dist., 836 F.2d 921, 929 (5th Cir. 1988) (noting that, at a
minimum, "property interest" as defined in the Fourteenth Amendment
includes both real and personal property).
19
See Shipp v. McMahon, 234 F.3d 907, 915 (5th Cir. 2000) ("To
show that a right is clearly established, the plaintiff does not
have to refer to precedent that is directly on point, or that
declares that the conduct in question is unlawful. Rather, the
right is clearly established if based on pre-existing law, the
unlawfulness of the conduct in question is apparent.").
9
auctioneers, who were allegedly his friends; (2) he notified state
authorities of the sale; (3) he signed a false affidavit in support
of a tax warrant; and (4) he authorized the "complete dispersal" of
the company's assets without legal authority. If a jury found that
this conduct occurred in the manner asserted by Conroe Creosoting,
these actions, taken together, would be unlawful in light of then-
existing substantive due process law.
We are persuaded that there are genuine issues of fact
regarding Moore’s role in this unfortunate affair. These questions
deprive us of jurisdiction, and we must dismiss Moore’s appeal.20
Specifically, we are troubled by the circumstances of Moore’s
signing an order authorizing a dispersal sale and the summary
seizure and closing of the business. Whether Moore was simply a
county official acting on the advice of the County’s legal counsel
when he signed the dispersal order, as he would have it, can not be
determined as a matter of law from this record. A trier of fact
might conclude that he knew the effect of the dispersal order and
dispatched the lawyers and County employees to take possession of
the property—to close the business. A trier of fact might also find
that he later signed a false affidavit asserting that the seized
property was not secure.
There is a point at which an official’s conduct constitutes a
clear violation of substantive due process. This is so despite our
20
See Johnson v. Jones, 515 U.S. 304 (1995).
10
insistence that it has a narrow compass and is not easily found.
Even if, as some maintain, it is oxymoronic and without textual
support in the Constitution, the doctrine does exist. The Supreme
Court said so, and that ends the matter for this inferior court.
III
In light of the preceding, we dismiss the appeal for want of
jurisdiction.
Appeal DISMISSED.
S:\OPINIONS\PUB\99\99-21033.CV0
March 16, 2001 (9:26AM) 11