Duncan v. Peck

• Decision Date: 25 April 1988
• Docket Number: 87-3093,Nos. 87-3092,s. 87-3092
• Citation: 844 F.2d 1261
• Parties: James E. DUNCAN, Plaintiff-Appellant, Cross-Appellee, v. Mr. & Mrs. Harold PECK, Defendants-Appellees, Cross-Appellants, Highland Coal & Chemical Corporation, Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1261

844 F.2d 1261

95 A.L.R.Fed. 69

James E. DUNCAN, Plaintiff-Appellant, Cross-Appellee, v. Mr. & Mrs. Harold PECK, Defendants-Appellees, Cross-Appellants Highland Coal & Chemical Corporation, Defendant.

Nos. 87-3092, 87-3093.

United States Court of Appeals Sixth Circuit.

Argued Feb. 23, 1988.

Decided April 25, 1988.

Robert F. Ristaneo (argued), Lexington, Ky., for plaintiff-appellant, cross-appellee.

Mark E. Elsener (argued), Porter, Wright, Morris & Arthur, Cincinnati, Ohio, for defendants-appellees, cross-appellants.

Before ENGEL, Chief Judge, ^* and MERRITT and KENNEDY, Circuit Judges.

CORNELIA G. KENNEDY, Circuit Judge.

Plaintiff, James E. Duncan, appeals the November 12, 1986 decision of the United States District Court for the Southern District of Ohio granting summary judgment in favor of defendants Peck ¹ on the grounds of good faith immunity. Mr. Peck cross-appeals from the portion of the District Court's decision which held that while plaintiff's suit must fail because of defendant's good faith defense, it was not barred by the applicable Ohio statute of limitations. While we disagree with the District Court's reliance on an immunity to support its decision, we agree that the facts support defendant's claim of a good faith defense which entitles him to summary judgment, and dismissal of the suit. Therefore, we need not address the statute of limitations issue raised on the cross-appeal, and we AFFIRM the judgment of the District Court.

I.

This case originally arose out of a contract dispute between the parties. Defendant Peck sued plaintiff Duncan for $20,000 in the Ohio courts. But before serving process on Duncan, Peck's attorney secured a prejudgment attachment order against shares of stock located in Cincinnati and owned by Duncan, who was not a resident of Ohio. This attachment order was made pursuant to an Ohio statute subsequently declared unconstitutional by the Ohio Supreme Court, as violating the Due Process clause of the Constitution.

After successfully attaching Duncan's property, Peck's attorney attempted to serve process by certified mail. When these letters were returned and after further inquiries did not disclose a valid current address for Duncan, Peck's attorney served notice by publication in a local legal newspaper, which was apparently authorized by an Ohio statute. Because Duncan failed to appear at the appointed time, the court entered a default judgment against him in May, 1979. A sheriff's sale in September of that year executed the judgment and transferred ownership of the stock to Peck.

Duncan petitioned the Ohio Court of Common Pleas to set aside the default judgment on the grounds that he never received actual notice of the action against him. After a hearing, the court agreed with him and set aside the judgment. Peck appealed to the Ohio Court of Appeals on the grounds that Duncan had failed to comply with Ohio law which requires a litigant who seeks to set aside a default judgment to show that he had a meritorious defense to the contract action if relief was granted and the default was set aside. The Court of Appeals reversed on the grounds that even if the default judgment had been unconstitutional, Duncan had essentially waived his claim by not properly presenting a meritorious defense. Duncan appealed this decision to both the Ohio Supreme Court and the United States Supreme Court, which both refused to hear the case. ²

In June, 1980, while his state court appeal was still pending, Duncan filed this 42 U.S.C. Sec. 1983 suit in federal court asking the District Court to enjoin execution of the default judgment and for damages for deprivation of his property interest in the stock because he did not receive the constitutionally required notice of the prejudgment attachment or the default judgment and sheriff's sale. In October, 1982, after the United State Supreme Court had refused to hear Duncan's appeal in the state court action, the District Court granted Peck's motion for summary judgment in Duncan's section 1983 action on res judicata grounds. Duncan appealed the decision to this Court which reversed and remanded the case for further proceedings on the substantive constitutional issues. See Duncan v. Peck, 752 F.2d 1135 (6th Cir.1985). On remand the District Court granted summary judgment in favor of Peck on the grounds that Peck possessed good faith immunity from suit under section 1983.

The District Court held that section 1983 was not intended to "subject private individuals to liability who, in good faith, resorted to state garnishment or prejudgment attachment procedures." The court granted Peck immunity reasoning that because state statutes are presumptively constitutional, private persons should not be penalized for resorting to the courts to vindicate rights which they in good faith had probable cause to believe they possessed. Since a reasonable person at the time would not have known that Ohio's prejudgment attachment procedures were unconstitutional, Peck was entitled to summary judgment based on good faith immunity.

II.

We begin by examining the scope of the immunity doctrine as developed by the Supreme Court. In spite of the fact that section 1983 allows no immunities on its face, the Supreme Court has repeatedly recognized various forms of immunity for government officials sued under section 1983, including absolute immunity for judges acting in a judicial capacity, and qualified, or good faith immunity for other public officials who are sued for their actions done under the color of state law. These immunities are based on the Supreme Court's assumption that the "members of the 42d Congress were familiar with common-law principles, including defenses previously recognized in ordinary tort litigation, and that they likely intended these common-law principles to obtain, absent specific provisions to the contrary." City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 258, 101 S.Ct. 2748, 2755, 69 L.Ed.2d 616 (1981).

However, the Supreme Court has been cautious about broadening these defenses which include various immunities. As the Supreme Court warned in Newport,

it would defeat the promise of the statute to recognize any preexisting immunity without determining both the policies that it serves and its compatability with the purposes of Sec. 1983. Only after careful inquiry into considerations of both history and policy has the Court construed Sec. 1983 to incorporate a particular immunity defense.

453 U.S. at 259, 101 S.Ct. at 2755 (citations omitted). Thus the Supreme Court has adopted a two-part test to determine whether a particular immunity is consistent with the intent of section 1983. The first part requires the party claiming immunity to show that the immunity was recognized at common law. The second part requires a showing of strong public policy reasons for granting such an immunity. ³ The question here is whether, using this two-part test, private parties acting under the color of state law are entitled to immunity from suit when they act in good faith. Because we find no evidence that private parties were immune from suit at common law, and because the various rationales for good faith immunity are inapplicable to private parties, we hold that private parties are not eligible for immunity from suit.

The common law doctrine of immunity from suit originated from the concept that because "the King can do no wrong," it would be a contradiction of his sovereignty to allow him to be sued as of right in his own courts. W. Prosser and W. Keeton, The Law of Torts, Sec. 131 (5th Ed.1984). Gradually, this concept was broadened to cover other government officials. Scheuer v. Rhodes, 416 U.S. 232, 239, 94 S.Ct. 1683, 1687, 40 L.Ed.2d 90 (1974). Yet, we find no evidence that the common law ever extended the immunity to include private citizens.

In addition to the lack of a common law history of immunity for private individuals, the second part of the test is not met in this case because the strong policy reasons justifying official immunity do not apply to private actors. In Scheuer, the Supreme Court identified two public policy justifications for the doctrine of official immunity:

(1) the injustice, particularly in the absence of bad faith, of subjecting to liability an officer who is required, by the legal obligations of his position, to exercise discretion; (2) the danger that the threat of such liability would deter his willingness to execute his office with the decisiveness and the judgment required by the public good.

Id. at 240, 94 S.Ct. at 1688. Neither of these public policy goals are furthered by extending immunity to private parties. Private parties do not face the dilemma of being required by law to use their discretion in a way that might unfairly expose them to lawsuits. The second rationale is also unavailable to a private party because a private party is governed only by self-interest and is not invested with the responsibility of executing the duties of a public official in the public interest.

Our conclusion is supported by the Supreme Court's recent decision in Forrester v. White, --- U.S. ----, 108 S.Ct. 538, 542, 98 L.Ed.2d 555 (1988), which highlights why the policies justifying immunity for public officials do not apply to private parties acting under the color of state law:

Suits for monetary damages are meant to compensate the victims of wrongful actions and to discourage conduct that may result in liability. Special problems arise, however, when government officials are exposed to liability for damages.... [T]he threat of liability can create perverse incentives that operate to inhibit officials in the proper performance of their duties. In many contexts, government officials are expected to make decisions that are impartial or imaginative, and that above all are informed by considerations other than the personal interests of the decisionmaker.... In this way, exposing government officials...