Groten v. State of California

• Decision Date: 01 June 2001
• Docket Number: PLAINTIFF-APPELLANT,No. 99-56475,DEFENDANTS-APPELLEES,99-56475
• Citation: 251 F.3d 844
• Parties: (9th Cir. 2001) STUART GROTEN, AN INDIVIDUAL,, v. STATE OF CALIFORNIA, A POLITICAL ENTITY; JOHN S. BRENAN, AS AN INDIVIDUAL AND AS AN EMPLOYEE OF THE OFFICE OF REAL ESTATE APPRAISERS, STATE OF CALIFORNIA; WILLIAM DRABICK, AS AN INDIVIDUAL AND AS AN EMPLOYEE OF THE OFFICE OPINION OF REAL ESTATE APPRAISERS, STATE OF CALIFORNIA; PENNY BLUMER, AS AN INDIVIDUAL AND AS AN EMPLOYEE OF THE OFFICE OF REAL ESTATE APPRAISERS, STATE OF CALIFORNIA,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 844

251 F.3d 844 (9th Cir. 2001)

STUART GROTEN, AN INDIVIDUAL, PLAINTIFF-APPELLANT, v. STATE OF CALIFORNIA, A POLITICAL ENTITY; JOHN S. BRENAN, AS AN INDIVIDUAL AND AS AN EMPLOYEE OF THE OFFICE OF REAL ESTATE APPRAISERS, STATE OF CALIFORNIA; WILLIAM DRABICK, AS AN INDIVIDUAL AND AS AN EMPLOYEE OF THE OFFICE OPINION OF REAL ESTATE APPRAISERS, STATE OF CALIFORNIA; PENNY BLUMER, AS AN INDIVIDUAL AND AS AN EMPLOYEE OF THE OFFICE OF REAL ESTATE APPRAISERS, STATE OF CALIFORNIA, DEFENDANTS-APPELLEES.

No. 99-56475

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted February 12, 2001

Filed June 1, 2001

[Copyrighted Material Omitted] Richard Hamlish, Westlake Village, California, for the plaintiff-appellant.

Julie Ann Cabos, Deputy Attorney General, Los Angeles, California, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California;

Edward Rafeedie, District Judge, Presiding D.C. No. CV-98-10703-ER

Before: Robert R. Beezer, Thomas G. Nelson, and Marsha S. Berzon, Circuit Judges.

T. G. Nelson, Circuit Judge

Stuart Groten appeals the district court's dismissal of his amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Groten brought his complaint under 42 U.S.C. § 1983 and 12 U.S.C. § 3351 against the State of California and state officials in the Office of Real Estate Appraisers. Groten alleges that the appellees violated his constitutional rights when they denied him the opportunity to apply for a temporary real estate appraiser's license and a reciprocal real estate appraiser's license and delayed the issuance of his permanent license. The district court had jurisdiction pursuant to 28 U.S.C. § 1331. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we review the district court's decision de novo.¹ We affirm in part, reverse in part, and remand.

I. Facts and Procedural History²

Groten has been a real estate appraiser since 1964 and has licenses in Montana, Connecticut, and Washington. On June 1, 1997, Groten contacted the appellees for the purpose of applying for a temporary license under 12 U.S.C.§ 3351(a) and for a reciprocal license under 12 U.S.C. § 3351(b), California Code of Regulations Section 3569, and California Business and Professions Code Section 11350. He was told that he could not apply for a temporary license under the federal statute or a reciprocal license under state law. He was told to apply for a permanent license instead.

On June 19, 1997, Groten submitted an application for a new license to the Office of Real Estate Appraisers. Over the next weeks, the appellees informed Groten that his application contained deficiencies. His application would not have been deficient had he been applying for a temporary license or a reciprocal license. The application for a new license required more detailed information than did the applications for temporary or reciprocal licenses. The appellees eventually informed him that he did not meet the requirements for an appraiser's license and suggested he reapply as a trainee. They continued to refuse to permit Groten to apply for either a temporary license or a reciprocal license.

On December 31, 1998, Groten filed the complaint in the present action against the State of California. After the complaint was filed, the appellees issued Groten a real estate appraiser's license. On April 28, 1999, the district court granted the appellees' motion to dismiss but gave Groten leave to amend.

On May 17, 1999, Groten filed an amended complaint, adding claims against the individual defendants and alleging a violation of his Fourteenth Amendment rights, a violation of 12 U.S.C. § 3351(a), a violation of California Code of Regulations Section 3569, and a violation of California Business and Professions Code Section 11350. On July 20, 1999, the district court granted the appellees' motion to dismiss.

II. Section 1983 Claims

Groten alleges that he attempted to apply for temporary and reciprocal real estate appraiser's licenses pursuant to 12 U.S.C. § 3351(a) and 3351(b), but the appellees refused to give him the proper materials. Groten argues that he may maintain a cause of action under 42 U.S.C. § 1983 for a violation of both § 3351(a) and his Fourteenth Amendment rights. We agree.

A. Violation of 12 U.S.C. § 3351(a)

Section 1983 provides a private right of action for violations of federal statutes "only if the statute creates enforceable rights and if Congress has not foreclosed such enforcement in the statute itself."³

A statute creates a right enforceable under § 1983 if: (1) the statute was intended to benefit the plaintiffs; (2) the statute imposes a binding obligation on the government unit rather than merely expressing a congressional preference for a certain kind of conduct, and; (3) the interest asserted by the plaintiff is not so vague or amorphous that it is beyond the competence of the judiciary to enforce.⁴

We hold that each of these three requirements is satisfied here.

First, 12 U.S.C. § 3351(a) was intended to benefit plaintiffs such as Groten. In order to determine whether plaintiffs such as Groten were intended to benefit from § 3351(a), we must determine the intent of Congress. To determine the intent of Congress we look first to the language of the statute.⁵

Section 3351(a) is titled, "Temporary practice." Subsection (a)(1) of the statute requires states to allow an appraiser not licensed in the state to engage temporarily in the business of appraising if three requirements are met:

A State appraiser certifying or licensing agency shall recognize on a temporary basis the certification or license of an appraiser issued by another State if

(A) the property to be appraised is part of a federally related transaction,

(B) the appraiser's business is of a temporary nature, and

(C) the appraiser registers with the appraiser certifying or licensing agency in the State of temporary practice.⁶

Section 3351 was enacted as part of the Financial Institutions Reform Recovery and Enforcement Act ("FIRREA").⁷ Appellees note that the general purpose of FIRREA, as expressed in the statute, is:

to provide that Federal financial and public policy interests in real estate related transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.⁸

Appellees correctly point out that this statement of purpose suggests that the statute was not necessarily intended to benefit private individuals like Groten.

In determining whether a particular provision of a statute creates a federal right enforceable under § 1983, however, we do not confine our consideration to the stated purpose of the Act. Rather, we are required to analyze the particular statutory provisions at issue, to determine whether the three requirements for an enforceable right under § 1983 are satisfied.⁹

Here, the provision at issue requires a state agency to recognize, if certain conditions are met, "the certification or license of an appraiser issued by another State" on a temporary basis.¹⁰ Because § 3351 "focus[es] on the individual [appraiser] and [his or her license,] the intent to benefit [qualified appraisers] is undeniable."¹¹ Groten alleged that he qualified as a temporary real estate appraiser under§ 3351(a). Accordingly, we conclude that he was an intended beneficiary of § 3351(a).

In addition to holding that individuals such as Groten are beneficiaries of the federal statute, we also hold that § 3351(a) "unambiguously impose[s] binding obligations on the States."¹² The statute uses the mandatory term "shall" when describing the requirement that the states recognize an out-of-state license. Thus, if an applicant demonstrates that he or she meets the three prerequisites listed in § 3351, the state must issue a temporary license. There is no discretion afforded to the appraiser licensing agency in this section; the federal statute is not merely intended to be hortatory, but places a binding obligation on the Office of Real Estate Appraisers.

The third requirement for creating a right enforceable under § 1983, that the "interest asserted by the plaintiff is not so vague or amorphous that it is beyond the competence of the judiciary to enforce,"¹³ is also met. Groten argues that § 3351(a) grants him the right to the issuance of a temporary license. The interest asserted by Groten is not so vague or amorphous that it is beyond the competence of the judiciary to enforce. Courts could, after all, order the issuance of a license if an applicant meets the required qualifications.

We conclude that Groten may maintain a cause of action under § 1983. Accordingly, the district court erred when it dismissed Groten's § 1983 claim for a violation of § 3351(a).

B. Violation of Groten's Fourteenth Amendment Rights

Groten's second cause of action stated a claim under the Fourteenth Amendment that the appellees violated his property and due process rights by refusing to permit him to apply for a temporary and reciprocal real estate appraiser's license. Groten argues that § 3351(a) and California laws passed pursuant to § 3351(b)¹⁴ have created a property right that cannot be deprived without due process. For the reasons set forth below, we agree.

1. Section 3351(a).

We must determine whether Groten, as a first-time applicant for a temporary appraiser's license, had a property interest protected by the Due Process Clause. A constitutionally protected property interest results "from a legitimate claim of entitlement . . . defined by existing rules or understandings that stem from an independent source" ¹⁵ such as a statute. Whether a statute creates a property interest depends largely upon the extent to which the statute limits an...