Polenz v. Parrott

Decision Date22 August 1989
Docket NumberNo. 88-2895,88-2895
PartiesJerome POLENZ and Donna Polenz, Plaintiffs-Appellees, v. Thomas PARROTT and Russell Borland, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Robert N. Meyeroff, Milwaukee, Wis., for Jerome Polenz and Donna Polenz, plaintiffs-appellees.

Joseph D. McDevitt, Borgelt, Powell, Peterson & Frauen, Milwaukee, Wis., for Thomas Parrott and Russell F. Borland, defendants-appellants.

Before BAUER, Chief Judge, and CUMMINGS and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

Plaintiffs Jerome and Donna Polenz brought this action under 42 U.S.C. Sec. 1983 alleging that the defendants, an alderman and an electrical inspector for the City of Oak Creek, Wisconsin, deprived them of their right to a fair hearing on their applications for a tavern license and caused them to be arbitrarily and unreasonably denied an occupancy permit for their property. The issues on appeal are whether the plaintiffs were deprived of property or liberty under the fourteenth amendment, if so whether plaintiffs were denied due process, and if so whether the defendants are entitled to qualified immunity.

I.

In June 1984, the plaintiffs purchased two adjacent buildings in Oak Creek, one of which had a tavern on the first floor and an apartment on the second floor. That building had been a licensed tavern premises for over forty years, but the previous owner had surrendered the license in 1983. Upon purchasing the property, the plaintiffs applied for a new license. Over the next two years, the Common Council of Oak Creek voted to deny plaintiffs' application seventeen times.

During that two-year period, defendant Thomas Parrott was the Chairman of the Licensing Committee of the Common Council and defendant Russell Borland was the electrical inspector for Oak Creek. Plaintiffs alleged that Parrott and Borland, for a variety of reasons not relevant to this appeal, conspired to prevent the issuance of the tavern license. Plaintiffs alleged that Parrott, as Chairman of the Licensing Committee, presented false, scandalous, and irrelevant information to the Common Council in its hearings on the application, consistently voted to deny the license, and improperly influenced other council members to deny the license. Plaintiffs alleged that Borland refused to inspect the premises, used an inapplicable building code to determine that there were violations on the premises, refused to issue an occupancy permit after plaintiffs corrected the violations cited, improperly applied to the tavern building purported code violations existing in the other building, and continuously, arbitrarily, unreasonably and in conspiracy with Parrott denied or caused the Common Council to deny an occupancy permit for the tavern building.

The case proceeded to trial in August 1988 without a determination as to whether plaintiffs had stated a claim under Sec. 1983. In particular, the question of whether plaintiffs had a constitutionally protected property or liberty interest in either a tavern license or an occupancy permit was never addressed. The jury returned a special verdict finding that both defendants, either individually or in conspiracy, had "deprived[d] the plaintiffs of their right to a fair hearing on their applications for a liquor license" 1 and had "cause[d] the plaintiffs to be arbitrarily and unreasonably denied occupancy permits." The jury further found that the defendants had acted in willful, wanton, or reckless disregard of plaintiffs' rights and awarded punitive damages.

In a motion for directed verdict, on which the district court reserved judgment, and in motions after verdict, the defendants challenged the sufficiency of the evidence and asserted their claim of qualified immunity. In response to the post-trial motions, the district court held that the verdict and punitive damages award were supported by the evidence. Moving on to the qualified immunity issue, the court stated:

It would be anomalous for this court to hold that the defendants are shielded from Sec. 1983 liability because their conduct did not violate "clearly established statutory or constitutional rights of which a reasonable person would have known," yet at the same time hold that there was credible evidence to support a jury finding of punitive damages. "Consequently it would be illogical to extend good faith immunity to a government official who has intentionally violated an individual's constitutional rights."

(citations omitted). The district court accordingly denied defendants' motions and entered judgment for plaintiff. 694 F.Supp. 599.

On appeal, the defendants contend that the district court inappropriately relied on the jury's findings of willfulness to determine the qualified immunity issue and that under the correct analysis the defendants are entitled to such immunity.

II.

The record in this case reflects several misunderstandings of the law concerning both qualified immunity and the establishment of constitutionally protected interests under the due process clause of the fourteenth amendment. We will begin by briefly outlining the legal framework for a qualified immunity analysis. Although this ground has been covered in previous opinions of this court, it is apparent from this case that further amplification is appropriate.

Prior to the Supreme Court's decision in Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982), a determination of whether a public official was entitled to immunity under the qualified immunity doctrine required an inquiry into the official's subjective belief as to the lawfulness of his/her actions. Consequently, qualified immunity was often referred to as good faith immunity. In Harlow, the Supreme Court eliminated the subjective or good faith element from the qualified immunity analysis and held that "government officials performing discretionary functions, generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Id. at 818, 102 S.Ct. at 2738. In Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 3039, 97 L.Ed.2d 523 (1987), the Court refined the Harlow standard by holding that the alleged constitutional right must be "clearly established" in a particularized sense. The Anderson Court stated that "[t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right. This is not to say that an official action is protected by qualified immunity unless the very action in question has previously been held unlawful; but it is to say that in the light of pre-existing law the unlawfulness must be apparent." Id. at 640, 107 S.Ct. at 3039. Thus, and as discussed in two recent opinions of this court, Cleveland-Perdue v. Brutsche, 881 F.2d 427 (7th Cir.1989) and Doe v. Bobbitt, 881 F.2d 510 (7th Cir.1989), a qualified immunity analysis entails a purely objective inquiry to determine whether, at the time of the alleged illegal act, the right asserted by the plaintiff was clearly established in the particular factual context presented.

In Wade v. Hegner, 804 F.2d 67 (7th Cir.1986), we set out a two-step approach to the qualified immunity analysis. Under this approach, the court must ask "(1) Does the alleged conduct set out a constitutional violation? and (2) Were the constitutional standards clearly established at the time in question?" Id. at 70. In Rakovich v. Wade, 850 F.2d 1180 (7th Cir.1988), we further explained that where a particular state of mind (e.g., intent, discriminatory motive, retaliatory motive) is an element of the alleged constitutional violation, and the qualified immunity issue arises at the summary judgment or directed verdict stage, in order to answer the step one inquiry, the court must determine whether the plaintiff has factually supported the allegations as to the state of mind element. 2 We made clear, however, that the defendant's subjective state of mind is not relevant to the determination of question two. 3 Id. at 1210-11.

The error in this case began at step one. At no time was a determination made as to whether the defendants' alleged (and later proven) conduct set out a violation of plaintiffs' constitutional rights. The error was compounded at step two. Assuming that the denial of a tavern license and an occupancy permit implicated constitutionally protected property or liberty interests under the fourteenth amendment (one of the issues that should have been determined at step one), the court concluded that the constitutional standards were clearly established at the time in question (the step two determination) solely on the ground that defendants had acted willfully (a state of mind consideration that is irrelevant to step two). 4 The confusion took a new turn on appeal to come full circle. Plaintiffs argue that the willful, malicious, and conspiratorial nature of defendants' acts dictates a finding of a constitutional violation (i.e the step one question). The problem, of course, is that the defendants' state of mind has nothing to do with whether the plaintiffs have asserted constitutionally protected property or liberty interests under the fourteenth amendment.

The determination of entitlement to qualified immunity is a question of law which we review de novo. Rakovich, 850 F.2d at 1204. As such, we will begin with step one.

III.

Plaintiffs alleged in their complaint violations of both the fifth and fourteenth amendments. The references to the fifth amendment hint at a "takings" violation under the just compensation clause. The complaint also refers to the equal protection clause of the fourteenth amendment. It is clear from the record, however, that the trial of the case was limited to plaintiffs' theories under the due process clause. Our discussion is therefore...

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