Wrecker Works, L.L.C. v. City of Aberdeen

Case: 17-60810 Document: 00514650953 Page: 1 Date Filed: 09/20/2018

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

No. 17-60810 FILED

September 20, 2018

Lyle W. Cayce

WRECKER WORKS, L.L.C.; STEPHANIE THOMPSON, Clerk

Plaintiffs–Appellants,

v.

CITY OF ABERDEEN, MISSISSIPPI; HENRY RANDLE, in his individual

capacity,

Defendants–Appellees.

Appeal from the United States District Court

for the Northern District of Mississippi

USDC No. 1:16-CV-117

Before DENNIS, OWEN, and SOUTHWICK, Circuit Judges.

PER CURIAM:*

Stephanie Thompson sued the city of Aberdeen, Mississippi (the City)

and its Chief of Police, Henry Randle, under 42 U.S.C. § 1983, asserting a

deprivation of a property right in violation of the due process clause of the

Fourteenth Amendment. She also asserted a state-law claim against Randle

for tortious interference with business relations. The district court granted

summary judgment for the City and Randle on all claims. We affirm.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH

CIR. R. 47.5.4.

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I

When a traffic accident in Aberdeen necessitates the towing of a vehicle,

the local police department dispatches a private provider from the City’s

rotation list, unless the owner of the vehicle requests a specific company. The

requirements for inclusion on the rotation list are set forth in the City’s towing

or wrecking service ordinance.

Stephanie Thompson started a towing business in April 2016. She

formed a limited liability company, Wrecker Works, LLC, and bought the

equipment and tools of a local company, Irvin Wrecker Service, from Dean

Irvin. The asset purchase agreement purported to assign Irvin Wrecker

Service’s customer contracts and its place on several wrecker-service rotation

lists, including that of the City. Irvin told Thompson that he usually received

one to three rotation-list calls per week from the City. During a short

transition period before the sale, Thompson serviced clients (other than the

City) of Irvin Wrecker Service, which later transmitted the payments to

Thompson.

Unbeknownst to Irvin and Thompson, when Chief Randle learned of the

pending sale two weeks before the transaction was finalized, he removed Irvin

Wrecking Company from the rotation list. Chief Randle also operated a towing

company, H & M Towing. H & M Towing provided services primarily to private

clients, but occasionally received calls from the City if the vehicle owner

specifically requested H & M. Randle’s company had not been on the City’s

rotation list since 2014, when he was the subject of an ethics complaint to the

state attorney general. Randle had a fractious relationship with Irvin, a

former alderman who had voted to halve Randle’s pay due to personnel issues

not related to the wrecker/towing service rotation list.

Prior to the consummation of the transaction with Irvin, Thompson

submitted a request to the City Clerk on April 27, 2016, to have Wrecker Works

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added to the rotation list. Under the wrecker ordinance in place between

March 2014 and June 7, 2016, a towing company seeking to be on the rotation

list was required to file a written request with the Clerk. The City Building

Official and Zoning Administrator would then investigate the company,

including its equipment and insurance coverage, to ensure it was qualified to

be on the rotation list. When the “investigating officer” was “satisfied” of the

company’s qualifications, he or she would “direct the City Clerk to issue the

wrecker company an ‘Authorized Permit’ and the Clerk [would] direct the Chief

of Police to place the company on the City of Aberdeen Rotation list.” The

ordinance defined “Authorization Permit” as “[t]he written authorization by

the City Clerk (after receiving the Compliance Officer’s report of compliance)

which entitles a Wrecker Company’s name to be placed on the Wrecker

Rotation list.”

Neither Thompson nor city officials followed the requirements of the

wrecker ordinance to the letter. Thompson testified that she gave the Clerk a

certificate of insurance and that the Clerk ordered an investigation to

determine that Wrecker Works met all qualifications. Thompson appears to

have believed that because the equipment previously belonged to a company

on the rotation list, an inspection was unnecessary. She maintains that other

required steps were also completed. However, the record does not reflect that

an inspection took place or that Wrecker Works received an authorization

permit from the City Clerk. Instead, Thompson asked the Board of Aldermen

(Board), the City’s governing body, to put Wrecker Works on the rotation list.

The Board approved this request on May 3, 2016, even though Board approval

was not part of the procedures to gain inclusion on the rotation list set forth in

the wrecker ordinance in effect at the time. Two days later, Thompson and

Irvin formalized the asset purchase agreement, and Irvin Wrecker Service

eventually dissolved.

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When Wrecker Works did not initially receive calls from the City,

Thompson informed Alderman Jim Buffington, who agreed to address the

matter at the June 7, 2016 Board meeting. Buffington asked Chief Randle why

Wrecker Works was not on the rotation list. In this litigation, Randle stated

that he did not initially put Wrecker Works on the list because he was in the

process of drafting a new wrecker ordinance—which the Board approved in the

June 7 meeting—that gave Randle the authority to investigate the companies

seeking to be on rotation. He also claimed that Thompson had not given him

a certificate of insurance—a requirement of the new ordinance. About three

days after the meeting, Wrecker Works began receiving the expected number

of calls.

Later, Wrecker Works and Thompson sued, claiming that the City and

Chief Randle violated the due process clause by failing to place Wrecker Works

on the rotation list immediately after the May 3 Board meeting. They sought

to recover the estimated income lost (about $2,500) for the period between May

3 and June 10. Wrecker Works and Thompson also sued Randle for malicious

interference with business relations under state law.

The district court granted summary judgment in favor of the City and

Chief Randle. As to the constitutional claims, the court reasoned that Wrecker

Works did not have a property interest in being placed on the rotation list

immediately. Alternatively, the court held that the City could not be held

liable for Chief Randle’s actions and that Chief Randle had qualified immunity.

As to the state law claim, the court concluded that there was no evidence that

Chief Randle’s actions were motivated by malice. Wrecker Works and

Thompson appeal. Wrecker Works and Thompson expressly concede in their

Reply Brief that the City is not liable for the purported deprivations of due

process. We therefore limit our analysis to whether Chief Randle can be held

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liable—under the Constitution or under state law—for his delay in placing

Wrecker Works on the rotation list.

II

We review a district court’s grant of summary judgment de novo. 1 To

survive summary judgment on their procedural and substantive due process

claims, Wrecker Works and Thompson must establish that Chief Randle is not

entitled to qualified immunity. “The doctrine of qualified immunity protects

government officials from liability from civil damages insofar as their conduct

does not violate clearly established statutory or constitutional rights of which

a reasonable person would have known.” 2 “A plaintiff can overcome a qualified

immunity defense by showing ‘(1) that the official violated a statutory or

constitutional right, and (2) that the right was “clearly established” at the time

of the challenged conduct.’” 3

The Fourteenth Amendment prohibits state actors from “depriv[ing] any

person of life, liberty, or property, without due process of law.” 4 To obtain

redress under the due process clause, a plaintiff must show that (1) she has a

property interest and (2) a state actor has deprived her of that interest without

due process. 5 Property interests are not created by the text of the Constitution

itself, but by other sources such as “state law, local ordinances, contracts, and

mutually explicit understandings.” 6 While benefits distributed by the

government may give rise to property interests, 7 a mere “unilateral

1 Smith v. Reg’l Transit Auth., 827 F.3d 412, 417 (5th Cir. 2016) (citing United States

v. Lawrence, 276 F.3d 193, 195 (5th Cir. 2001)).

2 Rockwell v. Brown, 664 F.3d 985, 990 (5th Cir. 2011) (internal quotations omitted)

(quoting Pearson v. Callahan, 555 U.S. 223, 231 (2009)).

3 Allen v. Cisneros, 815 F.3d 239, 244 (5th Cir. 2016) (per curiam) (quoting Ashcroft v.

al–Kidd, 563 U.S. 731, 741 (2011)).

4 U.S. CONST. amend. XIV.

5 Blackburn v. City of Marshall, 42 F.3d 925, 935 (5th Cir. 1995).

6 Id. at 936-37.

7 Ridgely v. FEMA, 512 F.3d 727, 735 (5th Cir. 2008).

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expectation of receiving government referrals” 8 is not sufficient—there must

be a “legitimate claim of entitlement.” 9 Whether the City’s rotation list confers

a property interest depends on whether the specific facts of this case create an

entitlement. 10

Over the course of this litigation, Wrecker Works has identified three

potential sources for its alleged property interest. First, Wrecker Works claims

that it has a right to be on the rotation list because Irvin Wrecker Service had

previously been on the list, and the purchase agreement between the two

entities purported to assign the relationship with the City. As an initial

matter, Wrecker Works had no property interest in assuming Irvin Wrecker

Service’s place on the list. The transaction between Wrecker Works and Irvin

Wrecker Service was structured as an asset purchase rather than a merger or

equity purchase, and Irvin Wrecker Service dissolved after the sale. Nothing

in the wrecker ordinance permits a towing company to assign a right to be

included on the rotation list. Rather, the ordinance states that any

authorization permit is “personal to the holder” and prohibits towing

companies from referring rotation calls to other companies. Inclusion on the

rotation list was specific to a particular company. Furthermore, there was no

understanding between the Board and Thompson that Wrecker Works would

occupy Irvin Wrecker Service’s place on the list. In fact, Thompson sought and

obtained Board approval for Wrecker Works to be on the list before the asset

purchase was finalized.

8 Blackburn, 42 F.3d at 937.

9 Id. at 936.

10 Id. at 937; see also Chavers v. Morrow, 354 F. App’x 938, 940-42 (5th Cir. 2009) (per

curiam) (unpublished) (observing that tow-rotation schemes may confer property interests

but holding that the ordinance at issue did not do so).

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Insofar as Wrecker Works seeks to litigate constitutional claims on

behalf of Irvin Wrecker Service, it lacks standing to do so. To have standing to

sue in federal court, plaintiffs must demonstrate:

(1) that they suffered an injury in fact, which is a concrete and

particularized invasion of a legally protected interest; (2) that the

injury is traceable to the challenged action . . . ; and (3) it is likely,

rather than merely speculative, the injury will be redressed by a

particular decision. 11

The district court held that Wrecker Works did not have standing to

argue this issue because any injury caused when Chief Randle removed Irvin

Wrecker Service from the rotation list affected only Irvin Wrecker Service. Any

redress would accrue to Irvin Wrecker Service, not Wrecker Works. On appeal,

Wrecker Works and Thompson argue that since Thompson was operating her

wrecker service under the Irvin Wrecker Service name shortly before the

official sale was completed, Thompson did experience an injury. Assuming

that Wrecker Works suffered an injury when Irvin Wrecker Service was

removed from the rotation list, Wrecker Works does not have standing because

any relief would belong to Irvin Wrecker Service. Since Wrecker Works merely

acquired enumerated assets of Irvin Wrecker Service—it did not acquire the

entity itself or its accounts receivable—it has no claim of damages for any

business lost by the removal from the rotation list. Because any relief

regarding the removal of Irvin Wrecker Service from the rotation list would

not redress harm experienced by Wrecker Works, Wrecker Works does not

have standing.

As a second source of a property interest, Wrecker Works argued before

the district court that the City’s wrecker ordinance granted it the right to be

on the list. Whether the ordinance creates a constitutionally protected

11Williams v. Parker, 843 F.3d 617, 620 (5th Cir. 2016) (quoting Hollis v. Lynch, 827

F.3d 436, 441 (5th Cir. 2016)); see also Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992).

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property interest depends on “whether [it] place[s] ‘substantive limitations on

official discretion.’” 12 “[A] benefit is not a protected entitlement if government

officials may grant or deny it in their discretion.” 13 “In determining whether

statutes and regulations limit official discretion, the Supreme Court has

explained that we are to look for ‘“explicitly mandatory language,” i.e., specific

directives to the decisionmaker that if the regulations’ substantive predicates

are present, a particular outcome must follow.’” 14 In Ridgley, for example, this

court held that the plaintiffs did not have a property interest in rent assistance

from FEMA because the relevant statutes and regulations said only that

FEMA “may” give assistance to qualifying individuals. 15

The City’s wrecker ordinance provides that, after the required

inspections and investigations, if the “Investigating Officer is satisfied that the

wrecker company is qualified, he will direct the City Clerk to issue the wrecker

company an ‘Authorized Permit’ and the Clerk will direct the Chief of Police to

place the company on the City of Aberdeen Rotation list.” The district court

held that Thompson and Wrecker Works did not have a property interest in

immediate placement on the list and that the ordinance does not mandate that

the Chief of Police follow directives from the City Clerk to put companies on

the rotation list.

Wrecker Works concedes this point on appeal, stating that Wrecker

Works’ property interest was “not dependent upon the ordinance itself.” Even

if Wrecker Works had pressed the issue, the record does not reflect that

Wrecker Works had undertaken all of the steps necessary to qualify under the

ordinance. The definitions section of the ordinance states that companies that

12 Ridgely, 512 F.3d at 735 (quoting Olim v. Wakinekona, 461 U.S. 238, 249 (1983)).

13 Id. (quoting Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005)).

14 Id. at 735-36 (quoting Ky. Dep't of Corr. v. Thompson, 490 U.S. 454, 463 (1989)).

15 Id. at 736.

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obtain an “authorization permit” have a “written authorization by the City

Clerk . . . which entitles a Wrecker Company’s name to be placed on the

Wrecker Rotation list.” But the record does not contain an authorization

permit from the City Clerk, nor is there evidence of the inspections and report

of compliance required for Wrecker Works to receive a permit. Rather,

Thompson’s testimony reflects that there was no investigation of her

equipment—she believed it unnecessary because the equipment had

previously been used by Irvin Wrecker Service when it was on the rotation list.

As a third potential source of a property right, Wrecker Works argues

that when the Board voted in its May 3 meeting to put Wrecker Works on the

rotation list, there was a “mutually explicit understanding” between Thompson

and the Board that Wrecker Works would be placed on the rotation list. The

district court did not address this argument, likely because Wrecker Works

referenced it only obliquely in the proceedings below. It is well-established

that “‘property’ interests subject to . . . due process protection are not limited

by a few rigid, technical forms,” but can arise from “mutually explicit

understandings.” 16 In defining such an understanding, the Supreme Court has

analogized to the doctrine of implied contracts and to labor doctrines that

emphasize course of dealing and historical practice. 17

In this case, we must evaluate whether such an understanding existed

with reference to state law. 18 In Mississippi, “where a public board engages in

business with another entity, ‘no contract can be implied or presumed, it must

be stated in express terms and recorded on the official minutes and the action

16Perry v. Sindermann, 408 U.S. 593, 601 (1972).

17Jago v. Van Curen, 454 U.S. 14, 17-21 (1981).

18 Blackburn v. City of Marshall, 42 F.3d 925, 937 (5th Cir. 1995) (quoting Bishop v.

Wood, 426 U.S. 341, 344 (1976)).

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of the board.’” 19 When the minutes reflect an agreement, the “entire contract

need not be placed on the minutes,” but the agreement can be enforced only

“where ‘enough of the terms and conditions of the contract are contained in the

minutes for determination of the liabilities and obligations of the contracting

parties without . . . resort[] to other evidence.’” 20

The official minutes from the Board’s May 3 meeting state that the Board

unanimously voted to “add Wrecker Works, Wrecker Services, Robert and

Stephanie Thompson to the Aberdeen Police Department[’]s rotation list.” The

minutes could be construed to adopt the terms of participation in the rotation

list outlined in the wrecker ordinance (even though the Board did not hold

Wrecker Works to the qualification requirements in the ordinance). We

therefore assume that the Board’s vote could constitute an implied contract

that Wrecker Works would be placed on the rotation list. However, neither the

minutes nor the ordinance say when Wrecker Works would be added to the

rotation list. As a result, there was no “mutually explicit understanding” that

Wrecker Works would immediately begin to receive calls. Absent such an

understanding, Wrecker Works did not have a property right in immediate

inclusion on the list. Without a constitutionally protected property interest,

Wrecker Works cannot overcome the first prong of qualified immunity.

Even if we determined that Wrecker Works had a property interest in

being placed on the rotation list immediately, Chief Randle did not violate

clearly established law by his one-month delay. The “clearly established”

prong of qualified immunity requires that a government official’s conduct not

violate clearly established constitutional or statutory rights that a reasonable

19 Wellness, Inc. v. Pearl River Cty. Hosp., 178 So. 3d 1287, 1291 (Miss. 2015) (quoting

Burt v. Calhoun, 231 So. 2d 496, 499 (Miss. 1970)).

20 Id. (quoting Thompson v. Jones Cty. Cmty. Hosp., 352 So. 2d 795, 797 (Miss. 1977)).

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person would know. 21 Although we “do[] not require a case directly on

point” 22—government officials may violate clearly-established law even in

novel factual scenarios if previous cases provide reasonable warning 23—there

must be case law “‘particularized’ to the facts of the case” 24 that puts the

question “beyond debate.” 25 The Supreme Court has recently reiterated the

“longstanding principle that ‘clearly established law’ should not be defined ‘at

a high level of generality’” 26 or couched in “abstract” terms that would

effectively eviscerate immunity. 27 In brief, “qualified immunity protects ‘all

but the plainly incompetent or those who knowingly violate the law.’” 28

Citing Bowlby v. City of Aberdeen, 29 Wrecker Works and Thompson

contend that Chief Randle contravened settled law when he delayed in putting

Wrecker Works on the rotation list. In Bowlby, the City of Aberdeen’s zoning

board granted the plaintiff a permit to operate a snow-cone business for a

specific street corner near the entrance to town. 30 Shortly thereafter, the

zoning board changed its mind and revoked the permit at a meeting to which

the snow-cone proprietor was not invited. 31 The plaintiff sued, claiming that

21 Rockwell v. Brown, 664 F.3d 985, 990 (5th Cir. 2011).

22 Kisela v. Hughes, 138 S. Ct. 1148, 1152 (2018) (per curiam).

23 Kinney v. Weaver, 367 F.3d 337, 350 (5th Cir. 2004) (en banc).

24 White v. Pauly, 137 S. Ct. 548, 552 (2017) (per curiam) (quoting Anderson v.

Creighton, 483 U.S. 635, 640 (1987)).

25 Id. at 551.

26 Id. at 552 (quoting Ashcroft v. al–Kidd, 563 U.S. 731, 742 (2011)).

27 Id.; see also Kisela, 138 S. Ct. at 1152-53 (noting that “[s]pecificity is especially

important in the Fourth Amendment context” due to the difficulties that officers face in

determining whether to use force) (internal quotations and citations omitted); Davidson v.

City of Stafford, 848 F.3d 384, 394 (5th Cir. 2017), as revised (Mar. 31, 2017) (assuming,

arguendo, that White’s emphasis on specificity applies to cases other than excessive force,

such as warrantless arrests and limits on speech).

28 Mullenix v. Luna, 136 S. Ct. 305, 308 (2015) (per curiam) (quoting Malley v.

Briggs, 475 U.S. 335, 341 (1986)).

29 681 F.3d 215 (5th Cir. 2012).

30 Id. at 218.

31 Id.

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she had a property interest in the permit to operate at the original location and

that the board had deprived her of that property without due process of law. 32

We agreed, holding that because “[p]rivileges, licenses, certificates, and

franchises . . . qualify as property interests,” 33 “once issued, a license or permit

cannot be taken away by the State without due process.” 34

Wrecker Works argues that Bowlby clearly establishes that Chief

Randle could not delay including Wrecker Works on the City’s rotation list

without affording Wrecker Works due process. But Bowlby is distinguishable.

Whereas the snow-cone operator in Bowlby received a permit expressly

granting her the right to do business in a specific location, 35 there is no

evidence in the record that Wrecker Works had a right to immediate inclusion

on the rotation list. Neither the minutes from the Board’s May 3 meeting nor

the wrecker ordinance gave Chief Randle any indication that he was required

to put Wrecker Works on the rotation list without any delay.

Moreover, the Board’s vote to put Wrecker Works on the rotation list was

a departure from the wrecker ordinance, which did not provide for any Board

involvement in determining whether a towing company could be included on

the list. As noted, it is questionable whether there was a valid “mutually

explicit understanding” under Mississippi law. If such an understanding did

exist, its parameters are far from clear—even after discovery—and make no

mention of timing. A reasonable law enforcement officer therefore could not

be expected to know Wrecker Works had a property interest in immediate

inclusion on the rotation list or that a one-month delay in placing Wrecker

Works on the list would constitute a deprivation of that property. Given the

32 Id. at 218-19.

33 Id. at 220 (quoting Wells Fargo Armored Serv. Corp. v. Ga. Pub. Serv. Comm’n, 547

F.2d 938, 941 (5th Cir. 1977)).

34 Id.

35 Id. at 218.

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unique facts of this case, Chief Randle’s actions did not violate clearly

established law. Chief Randle is entitled to qualified immunity.

III

Wrecker Works contends that the district court erred by granting

summary judgment on its state-law claim that Chief Randle maliciously

interfered with its business relationships. Wrecker Works asserts that Randle

interfered with the agreement between the Board, acting for the City, and

Wrecker Works when Randle did not add Wrecker Works to the rotation list

immediately.

To establish a claim for tortious interference with business relations, a

plaintiff must show:

(1) The acts were intentional and willful; (2) The acts were

calculated to cause damage to the plaintiffs in their lawful

business; (3) The acts were done with the unlawful purpose of

causing damage and loss, without right or justifiable cause on the

part of the defendant (which constitutes malice); (4) Actual

damage and loss resulted. 36

Under this conjunctive test, “[i]f any of the factors are not met, there cannot be

a finding of tortious inference with business.” 37

Wrecker Works cannot establish that Chief Randle’s delay in adding

Wrecker Works to the rotation list was “without right or justifiable cause.” If

the without-right-or-justifiable-cause requirement is not satisfied, any

interference with business relations, however intentional, is not, in fact,

tortious. 38 For example, a landowner who intentionally blocked a parking lot

that he owned because he was annoyed with noise from a neighboring saloon

did not tortiously interfere with business relations because he acted within his

36 Biglane v. Under The Hill Corp., 949 So. 2d 9, 16 (Miss. 2007) (quoting MBF Corp.

v. Century Bus. Comms., Inc., 663 So. 2d 595, 598 (Miss. 1995)).

37 Id.

38 Id.

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rights as a property holder. 39 In this case, Chief Randle did not act outside of

the legal rights attached to his position. Under the original wrecker ordinance,

a wrecker service was required to comply with certain requirements that were

not met by Wrecker Works. The Board’s vote to place Wrecker Works on the

list was not in compliance with this ordinance. There was at least justifiable

cause for the Chief of Police to question the Board’s authority. Under the

subsequent ordinance, the Chief of Police was in charge of the process, and the

ordinance did not indicate that a delay of three days in placing an approved

towing/wrecker service on the list was unreasonable.

* * *

For the foregoing reasons, we AFFIRM the judgment of the district court.

39 Id.

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