Bowden Building v Real Estate Comm'n, 98-00175

• Decision Date: 20 July 1999
• Docket Number: 98-00175
• Parties: BOWDEN BUILDING CORPORATION, Plaintiff/Appellee, VS. TENNESSEE REAL ESTATE COMMISSION, ET AL, Defendants/Appellants. AppealIN THE COURT OF APPEALS OF TENNESSEE AT JACKSON Filed
• Court: Tennessee Court of Appeals

BOWDEN BUILDING CORPORATION, Plaintiff/Appellee VS TENNESSEE REAL ESTATE COMMISSION, ET AL, Defendants/Appellants

Appeal No. 02A01-9807-CH-00175

IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON

Filed July 20, 1999

APPEAL FROM THE CHANCERY COURT OF SHELBY COUNTY AT MEMPHIS, TENNESSEE

Shelby Chancery No. 108519-2 R.D.

THE HONORABLE FLOYD PEETE, JR., CHANCELLOR

The Tennessee Real Estate Commission ("the Commission"), the individual members of that commission ("the Commission members"), and the Tennessee Attorney General sought permission to appeal from the trial court's interlocutory order denying their motion to dismiss. We granted their application for permission to appeal and, for the reasons hereafter stated, we reverse the trial court's denial of the Defendants' motion to dismiss.

PAUL G. SUMMERS, Attorney General & Reporter, MICHAEL E. MOORE, Solicitor General, CHARLES L. LEWIS, Assistant Attorney General, Nashville, Tennessee

Attorneys for Appellants

RICHARD GLASSMAN, JOHN BARRY BURGESS, HEATHER W. THOMPSON, GLASSMAN, JETER, EDWARDS & WADE, P.C., Memphis, Tennessee

Attorneys for Appellee

REVERSED AND DISMISSED

ALAN E. HIGHERS, J.

CONCUR:

W. FRANK CRAWFORD, P.J., W.S., DAVID R. FARMER, J.

FACTS AND PROCEDURAL HISTORY

This action, which was originally commenced by Bowden Building Corporation ("Bowden") in November 1996, pertains to the construction, enforcement, and constitutionality of particular provisions of the Tennessee Real Estate Broker License Act of 1973 ("the Licensing Act"),¹ and involves claims for declaratory relief, injunctive relief, compensatory damages, punitive damages, and attorney fees. Bowden asserts its claims for relief in reliance upon: (1) 42 U.S.C. sections 1983 and 1988 (for alleged violations of the First and Fourteenth Amendments to the United States Constitution); (2) Article I, section 8 and Article XI, section 8 of the Tennessee Constitution; (3) Tennessee Code Annotated section 39-17-309; (4) Tennessee Code Annotated section 29-14-101 et seq. ("the Declaratory Judgment Act"); and (5) the Uniform Administrative Procedures Act.² Claims for declaratory and injunctive relief are asserted against the Commission, the Attorney General³ (who is expressly sued in his official capacity only), and each Commission member (based upon both the individual capacity and the official capacity of each such member). Bowden's claims for compensatory damages are asserted only against each individual Commission member (based only upon the personal or individual capacity of each such member), and its claim for punitive damages is asserted only against defendant Bobbi Gillis, who is one of the named Commission members. The facts alleged by Bowden to support its claims for relief are set forth in the following paragraph.

Bowden is a Tennessee corporation "engaged in the business of acquiring and selling real estate for its own account in Shelby County, Tennessee, through . . . corporate representatives," some of which are not licensed real estate brokers. These corporate representatives "are salaried employees and are not paid on a commission basis in relation to the value of the corporate real estate which is sold by the representative." On or about December 9, 1996, the Commission, by and through counsel, notified Bowden that "the Commission voted unanimously to request counsel to take action to prevent violations of the Real Estate Broker's Act by [Bowden]." The letter that was sent to Bowden explained that an investigation had revealed that Bowden (through its employees) was violating the Licensing Act, which is a criminal offense.⁴ This letter further stated,

This office hereby directs [Bowden] to Cease and Desist. Any continued illegal activity . . . will result in this office requesting action by the State Attorney General and also by the local District Attorney.

Also, on December 9, 1996, the Commission sent letters to two named Bowden employees similarly informing them that an investigation indicated that they were "acting as real estate broker[s] without proper licensure," and explaining, "This activity is a criminal offense, which could be subject to criminal prosecution, or to civil action by the State Attorney General." Bowden's complaint claims that the Commission's action, through its members, amounts to "bad faith harassment" and that the Commission has selectively enforced the Licensing Act in an improper manner. Other allegations were asserted by Bowden in relation to specific claims, but we will address any such pertinent allegations below in context with our analysis of the claims to which the allegations specifically relate.

Bowden's complaint, as amended, requests the trial court to afford the following relief:

a)Enter a judgment against all defendants declaring that the actions of the plaintiff through its duly authorized representatives involving the disposition of real estate owned by the plaintiff as described herein are exempt from the provisions of the [Licensing Act] as provided by T.C.A. 62-13-104.

b)In the alternative, enter a judgment declaring T.C.A. 62-13-104(6) to be unconstitutional and that the provisions of the [Licensing Act] are therefore unenforceable against corporations engaged in the practice of selling real estate owned by said corporation.

c)Issue a temporary injunction and permanent injunction enjoining future enforcement of the [Licensing Act] by the [Commission], the Attorney General, in his official capacity, or the individual members of the [Commission] in their personal/individual and/or official capacities, against [Bowden] for the sale of property owned by [Bowden] by authorized officers and/or representatives of [Bowden].

d)Issue a temporary injunction and permanent injunction enjoining the future enforcement of T.C.A. 62-13-109 or 62-13-110 by the [Commission], the Attorney General, in his official capacity, or the individual members of the [Commission] in their personal/individual and/or official capacities, against [Bowden] in relation to the sale of any property owned by [Bowden] through duly authorized officers and/or representatives of [Bowden].

e)Award damages against the individual members of the [Commission] in their personal or individual capacities to [Bowden] for the deprivation of [Bowden's] fundamental constitutional and civil rights in the amount of $500,000.00 and an additional $100,000.00 actual and $250,000.00 in punitive damages against the Defendant, Gillis.

f)Award attorney's fees pursuant to 42 U.S.C. Section 1988.

g)Award [Bowden] the costs of this action.

On August 6, 1997, the Defendants collectively filed a motion to dismiss Bowden's complaint, as amended. In their motion to dismiss, the Defendants asserted that dismissal was proper as to Bowden's general claims for declaratory relief because Bowden failed to seek such relief in the Davidson Chancery Court in accordance with the Uniform Administrative Procedures Act.⁵ The Defendants also asserted that dismissal was proper as to any 42 U.S.C. section 1983 claims because "the defendants are entitled to absolute and/or qualified immunity," and because Bowden "failed to state a claim under 42 U.S.C. 1983." Furthermore, the Defendants asserted that Bowden "failed to state a claim for relief under Tenn. Code Ann. 39-17-309." Last, the Defendants sought dismissal of this suit "in its entirety" based upon Bowden's failure to state a claim upon which relief can be granted.

On November 13, 1997, the trial court denied the Defendants' motion to dismiss. In its order, it stated:

Based upon T.C.A. 20-4-107, it is the opinion of the Court that venue is proper within this judicial district and that further this Court does have jurisdiction over the issues and parties outlined in the pleadings. To allow for any appeal which might be taken as to this ruling of the Court, the Defendants' Motion to Dismiss is otherwise denied subject to the Defendants' renewal of the Motion after appropriate discovery is conducted.

Both the trial court and this Court thereafter granted the Defendants permission to appeal this interlocutory order pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure.

ANALYSIS

Before reviewing the trial court's denial of the Defendants' motion to dismiss, we find it appropriate to note that, on appeal, Bowden contends that the trial Court expressly ruled only upon the Defendants' venue challenge, and that this Court's review should be limited to jurisdictional or venue matters relating to Bowden's general claims for declaratory relief. We reject this contention, however, because, while the trial court's November 13, 1997 order may have specifically discussed the Defendants' venue challenge, the order further expressly provided, "the Defendants' Motion to Dismiss is otherwise denied." Accordingly, contrary to Bowden's position, the trial court's order did in fact deny all aspects of the Defendants' motion to dismiss (regardless of the order's added language stating "subject to the Defendants' renewal of the Motion after appropriate discovery is conducted").

I. Federal Civil Rights

A. Section 1983 Claims Against the State

Bowden failed to state a claim against the Commission to whatever extent that its claims were asserted based upon section 1983. Section 1983 establishes,

Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State . . . subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress . . . .

42 U.S.C.S. 1983 (Supp. 1998) (emphasis added). A state, however, is not a "person" as contemplated by section 1983, and may not be sued under the statute. Will v. Michigan Dep't of State Police, 491 U.S. 58, 64, 71, ...