Melara v. Kennedy, 74-2831
| Decision Date | 02 August 1976 |
| Docket Number | No. 74-2831,74-2831 |
| Citation | 541 F.2d 802 |
| Parties | 19 UCC Rep.Serv. 1381 Carlos MELARA, Plaintiff-Appellant, v. James J. KENNEDY et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Before CHAMBERS and CHOY, Circuit Judges, and VAN PELT, * District Judge.
The issue for consideration on this appeal is whether the extra-judicial sale of stored goods to enforce a warehouseman's lien under California Commercial Code § 7210 is a deprivation, under color of state law, of the due process rights of the owner of those goods. The district court held that it is not. We affirm.
Carlos Melara's home in San Francisco was sold by his conservator, Fluss, in 1972. In December of that year, either Fluss or Boyd, agent for the purchaser of the home, stored Melara's household goods with Kennedy Van and Storage Company (Kennedy). Melara was not notified of the storage until he received a bill on March 15, 1973, for $227.00. That amount represented packing, moving and storage costs.
Disgruntled, Melara approached Boyd, who offered to pay storage costs prior to March 15, 1973, but not the packing and moving costs. Melara rejected this offer. He then attempted to reach an accord with Kennedy limiting his liability to storage costs accruing after March 15, 1973, but Kennedy refused those terms.
Because of alleged confusions in billing, Melara made no payment to Kennedy until July of 1974. A month prior to the payment, however, Kennedy had mailed a foreclosure of lien notice to Melara. The notice said that unless the entire amount due, $416.74, was paid by June 17, 1974, the stored goods would be sold on July 23, pursuant to California Commercial Code § 7210.
Melara then filed this suit seeking injunctive and declaratory relief from the proposed extra-judicial sale as being violative of his due process rights and 42 U.S.C. § 1983. 1 The district court issued a temporary restraining order, but denied Melara's motion for a preliminary injunction. It then dismissed the complaint for failure to state a claim, holding that the threatened sale did not constitute state action.
On appeal, Melara questions the constitutional validity of the extra-judicial sale. We note that Melara does not challenge Kennedy's right to hold the goods subject to payment of the charges due under the storage contract.
The question is whether Melara has stated a claim under 42 U.S.C. § 1983. 2 Since only those actions taken under color of law state a claim under § 1983, the challenged action must have been taken "under color of state law", or be "state action" within the meaning of the fourteenth amendment. Adams v. Southern California First National Bank, 492 F.2d 324, 328-329 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974).
Melara's claim that the threatened sale without prior judicial authorization violates his due process rights need not be reached unless Kennedy's conduct constitutes state action. For purposes of our inquiry, actions taken under color of law and state action can be treated as equivalent. See Ouzts v. Maryland National Insurance Company, 505 F.2d 547 (9th Cir. 1974), cert. denied, 421 U.S. 949, 95 S.Ct. 1681, 44 L.Ed.2d 103 (1975).
It is well established that purely private action is immune from the restrictions of the fourteenth amendment, but to distinguish between private action and state action can sometimes be difficult. See, e. g., Jackson v. Metropolitan Edison Company, 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 447 (1974). State action is an elusive concept and cannot be discerned by a precise formula. Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). The many factors involved must be sifted and all circumstances weighed. Id.
Where the challenged action is that of a private individual, there must be "significant state involvement" before the due process guarantees of the Constitution will attach. Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 173, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972). The authorization by statute of the challenged conduct does not by itself require a finding of state action. See Culbertson v. Leland, 528 F.2d 426, 431 (1975), and Adams v. Southern California First National Bank, 492 F.2d 324, 330 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974). The central inquiry is whether the state of California is significantly involved or entangled in Kennedy's proposed extra-judicial sale.
There are two major precedents in this circuit which deal with the question of state action in similar contexts: Adams v. Southern California First National Bank, 492 F.2d 324 (9th Cir. 1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974), and Culbertson v. Leland, 528 F.2d 426 (9th Cir. 1975).
In Adams we rejected a due process challenge to California's statutorily authorized pre-judgment self-help repossession procedures for secured property. 3 We held that the state's involvement was not so significant as to constitute state action under § 1983.
In Culbertson, with each judge writing independently and no opinion representing a majority, we held it to be state action for a landlady to summarily seize, as security for unpaid rent, an evicted tenant's household goods pursuant to an Arizona statute. 4
While there is no specific formula for defining state action, there are certain questions the answers to which are worthy of consideration in determining whether a state is "significantly involved" in the statutorily authorized private conduct. What is the source of authority for the private individual action? Is regulation of the private conduct by statute so pervasive as to entangle the state in the activity? Is the state a joint participant in the activity or are mutual benefits conferred between the state and the private actor? What relationship exists between the property involved and the underlying debt? Does a contract exist which makes provision for the challenged activity? Has there been a delegation of what has traditionally been a state function through the enactment of the statute?
California Commercial Code § 7210 provides warehousemen with an extra-judicial sale remedy for the lien that they have on goods deposited with them. 5 Its historical predecessor was enacted in 1851. 1851 Stats., c. 12, p. 170. 6 This statutory authorization of a private right of sale was a departure from the common law, under which enforcement of a warehouseman's lien was by sheriff's sale. Melara argues that, since the statute is the only source of the extra-judicial sale remedy, the enactment alone significantly involves the state in the conduct challenged.
We note, however, that even though private enforcement of warehouseman's liens was unknown at common law, this is not determinative of the state action issue. This lack of common law origin is a factor of dubious worth. See Culbertson, supra. 7 Moreover, the challenged statute has been in existence in California in some form or another for over 120 years, and there is no claim that it was enacted so that the state could avoid its obligations under the fourteenth amendment. See Adams v. Southern California First National Bank, supra, at 333.
Further, the statute creates only the right to act; it does not require that such action be taken. Kennedy's "exercise of the choice allowed by state law where the initiative comes from (him) and not from the State, does not make (his) actions in doing so 'state action' for the purposes of the Fourteenth Amendment." Jackson v. Metropolitan Edison Co., 419 U.S. 345, 357, 95 S.Ct. 449, 457, 42 L.Ed.2d 447 (1974).
Many private activities suffer a modicum of state regulation. The fact that the conduct of a business is subject to state regulation will not convert its otherwise private activity into state action under the fourteenth amendment unless the state has become entangled in the activity. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350, 95 S.Ct. 449, 42 L.Ed.2d 447 (1974); see also Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 176-177, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972). State regulation is not a basis for finding the state to be significantly involved in the conduct where the creditor has not requested help from the state and where there has been no direct action or review by state officials. Adams v. Southern California First National Bank,supra, at 329. 8
Sales pursuant to California Commercial Code § 7210 do not require any direct action or review on the part of the state or any state official. And Kennedy has not sought the aid of the state to enforce the warehouseman's lien. The statute requires only that notice be given and that certain procedural limitations be observed. The major concern of § 7210 is that the sale, whether private or public, be conducted in a commercially reasonable manner. Thus, the state has not so entwined itself in the lien enforcement remedy through its regulation of the private activity as to convert it into state action.
The rendering of mutual benefits between a private creditor and the state will support a finding that a "symbiotic relationship" exists between the private actor and the state properly characterized as state action. See Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). In the instant case, however, there is no such relationship. Here, the state was not a joint participant, as it was in Burton, in the extra-judicial sale proposed by Kennedy, and no mutual services were...
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