Richardson v. Town of Eastover

• Decision Date: 14 January 1991
• Docket Number: No. 89-2490,89-2490
• Citation: 922 F.2d 1152
• Parties: Robert RICHARDSON, Plaintiff-Appellee, v. TOWN OF EASTOVER; Lewis N. Scott, Mayor of the Town of Eastover, in his official and individual capacities; Mildred Patterson; W.Y. Taylor; Edna Scott; Richard J. Johnson, Jr., Members of the Eastover Town Council in their official capacities, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1152

922 F.2d 1152

59 USLW 2451

Robert RICHARDSON, Plaintiff-Appellee, v. TOWN OF EASTOVER; Lewis N. Scott, Mayor of the Town of Eastover, in his official and individual capacities Mildred Patterson; W.Y. Taylor; Edna Scott; Richard J Johnson, Jr., Members of the Eastover Town Council in their official capacities, Defendants-Appellants.

No. 89-2490.

United States Court of Appeals Fourth Circuit.

Argued Oct. 29, 1990.

Decided Jan. 14, 1991.

James Lewis Mann Cromer (argued), Cromer & Mabry, Columbia, S.C., for defendants-appellants.

John Wesley Foard, Jr., Columbia, S.C., for plaintiff-appellee; Joseph C. Coleman, on brief.

Before RUSSELL and NIEMEYER, Circuit Judges, and CACHERIS, United States District Judge for the Eastern District of Virginia, sitting by designation.

NIEMEYER, Circuit Judge:

The mayor and town council of Eastover, South Carolina, decided to "clean up" Main Street and therefore not to renew the licenses of the two nightclubs or discos which came up for renewal on April 1, 1988. The town also turned down a third applicant for a license. Robert Richardson, the owner of one of the clubs which were closed, filed suit under 42 U.S.C. Sec. 1983, contending that he was deprived of his property without due process in violation of the Fourteenth Amendment. He named as defendants the Town of Eastover, its mayor, and the members of the town council.

Following a bench trial, the district court found that Richardson was deprived of a property interest and that the process involved did not provide Richardson with adequate notice and an opportunity to be heard. The court rejected the defendants' immunity defenses because it found that the individuals acted in violation of clearly established due process rights. The court entered judgment against all defendants, "including the Town of Eastover and the individual defendants in both their official and individual capacities," for $7,500.

For the reasons that follow, we reverse.

I

Eastover is a small town, and its procedures for conducting business are simple. Its mayor and a town council of four other persons meet in the evening on the first Monday of each month to conduct the town's business. One council member is the sister-in-law of the mayor; another is the sister of the appellee Richardson. The chief of police is the brother-in-law of the mayor, and the mayor and Richardson have known each other for most of their lives.

Main Street had been the focus of some complaints over the years. The record shows that, in the neighborhood of the town's two nightclubs, there had been shooting incidents, drug usage, fights, and noise. Richardson himself had been charged at one point with slapping a patron at his club when the patron "attempted to relieve himself at the front door." App. at 54.

Richardson's club, known as the Apollo Club or Apollo Disco Club, served beer and wine and also provided a disc jockey, a juke box, a pool table, a pinball machine, and a video poker game. It operated primarily on Thursday and Friday evenings from 5:30 p.m. until 2:00 a.m. the next morning, and on Saturday from 5:30 p.m. until midnight in order to avoid being open on Sunday.

In 1988 the mayor, with the concurrence of the town council, decided to "clean up" Main Street by not renewing the business licenses of the nightclubs located there. The mayor testified that he had no objection if the nightclubs were located elsewhere.

The reasons given for the town's action are not in dispute. The minutes of the May 1988 meeting state that "all nightclubs on Main Street will not have their business licenses renewed in an effort to clean up Main Street." App. at 150. Minutes of the July 1988 meeting add that the decision is "for the welfare of the citizens of Eastover." App. at 154.

Word about the impending decision to close the nightclubs on Main Street was "on the street" even before the May meeting, and when Richardson went to renew his license on April 1, 1988, the clerk refused his application. Richardson, whose license had been renewed from year to year since 1981 when the Apollo Club opened, complained to the mayor who told him to come to the next town council meeting on May 2, 1988. In the meantime, the mayor told Richardson to continue to operate the Apollo Club until he, the mayor, "got back further" with Richardson.

At the May meeting the mayor addressed Richardson personally. As Richardson recalls, the mayor said, "Bobby, we are trying to clean up Eastover, Main Street, the honky tonks, juke joints, we are not going to allow and not reissuing any licenses, renew any licenses." App. at 25. At the next meeting, on June 6, 1988, Richardson again attended and "presented his views to the council." The minutes provide:

Mr. Richardson stated that he felt that the decision of the council was unfair because his business has not been a nuisance to the Town and he expressed a concern for his future as a business person. Mayor Scott stated that a decision had been made and the matter was final.

App. at 152. Finally, at the July meeting, the council voted unanimously not to permit any nightclubs on Main Street.

By letter dated August 2, 1988, the town's attorney notified Richardson that the town had refused to renew his license pursuant to paragraph 3 of its business license ordinance. It also advised Richardson that he would have to close his business by August 31, 1988, or face legal action. Paragraph 3 of the ordinance, on which the attorney relied, provides:

WHENEVER it shall appear to the council that the granting of any license for the pursuit of any trade, business or occupation or profession would be detrimental to the security, welfare, convenience, health, peace, or good government of the town, it may revoke any license previously issued or may refuse to grant a license not yet issued where conditions are such as are set forth in this section.

App. at 160. Richardson closed the Apollo Club as directed and brought this action.

In his complaint Richardson claims that he was given neither a formal written notice of the decision to close his business nor a formal opportunity to present his views. At oral argument, when counsel for Richardson was asked what evidence he would have presented had Richardson been given a more formal hearing, he said he would have proved that (1) Richardson had never been arrested; (2) he had received no complaints about the operation of the Apollo Club; and (3) he was not aware of the reasons why it should be closed.

II

The district court, following the two-step process described in Logan v. Zimmerman Brush Co., 455 U.S. 422, 428, 102 S.Ct. 1148, 1153, 71 L.Ed.2d 265 (1982) (the court must determine "whether [the plaintiff] was deprived of a protected interest, and, if so, what process was his due"), concluded that the Eastover ordinance granted a property right to Richardson:

[T]he Eastover business license tax ordinance grants the plaintiff both a benefit, namely, the ability to operate a business, and a claim of entitlement to that benefit upon payment of the business license tax. Accordingly, the Court concludes that the Eastover ordinance has granted the plaintiff a property right in the continued operation of his business.

App. at 172. Having decided that Richardson had a property interest, the district court then concluded that due process was not afforded to Richardson when he was ordered to close his business. It found that Richardson had not been provided adequate notice and that he had "absolutely no opportunity to be heard." The court acknowledged that Richardson had received informal notice and that, as a result, he attended town meetings on his own initiative. It concluded, however, that when he did make his presentations to the town meeting, he was not given a meaningful opportunity to be heard since the town council had already made up its mind. App. at 173-74.

Eastover argues that Richardson had no property interest in the license because the license was extended essentially on an at-will basis and the town could refuse to renew it without a showing of cause. Citing a town ordinance adopted in 1946 and South Carolina law, Eastover argues that a municipality has "absolute discretion" to protect the public morals, health, safety, and general welfare and that this discretion gives Eastover the power to prohibit a business from operating in a given geographical area. The fact that the town has this discretion precludes Richardson from claiming an entitlement in the renewal of his license. Therefore, Richardson had no property interest in having his license renewed. Brief of Appellant at 2-4, citing Charleston v. Jenkins, 243 S.C. 205, 133 S.E.2d 242, 243 (1963), and Darlington v. Stanley, 239 S.C. 139, 122 S.E.2d 207, 210 (1961). Eastover also suggests that its decision not to renew nightclub licenses was legislative in nature and that due process is therefore not required.

Finally, Eastover contends that due process was afforded to Richardson because he "received an adequate hearing [when he appeared before the town council in June 1988] since he could not have changed the town council's decision and there was no risk of an erroneous deprivation of any property rights." Brief of Appellant at 7.

While the Fourteenth Amendment protects against deprivations of property without due process, it does not itself create a property interest. The nature and extent of a property interest is determined by "existing rules or understandings that stem from an independent source such as state law." Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). A property interest is not limited to ownership of tangible property but includes those interests that "a person has already acquired in specific benefits." Id. at 576, 92 S.Ct. at 2708. As the Court in Roth noted:

To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have...