Lilley v. State of Mo.

• Decision Date: 27 February 1996
• Docket Number: No. 4:95-CV-0187 CAS.,4:95-CV-0187 CAS.
• Citation: 920 F. Supp. 1035
• Parties: Gary R. LILLEY, on behalf of himself and all holders of Missouri Defense Bonds issued during the Civil War, Plaintiff, v. The STATE OF MISSOURI, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

920 F. Supp. 1035

Gary R. LILLEY, on behalf of himself and all holders of Missouri Defense Bonds issued during the Civil War, Plaintiff, v. The STATE OF MISSOURI, et al., Defendants.

No. 4:95-CV-0187 CAS.

United States District Court, E.D. Missouri, Eastern Division.

February 27, 1996.

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John J. Carey and Joseph P. Danis, Carey and Danis, St. Louis, MO, for plaintiff.

Paul M. Rauschenbach and Gretchen E. Rowan, Office of the Attorney General of Missouri, St. Louis, MO, for defendants.

MEMORANDUM AND ORDER

SHAW, District Judge.

This matter is before the Court on pretrial motions. Plaintiff filed his four-count Complaint on January 27, 1995 against the State of Missouri, the Missouri Board of Fund Commissioners (the "Board"), and in their individual and official capacities, Board members Dick Hanson, Missouri Commissioner of Administration; Bob Holden, Missouri Treasurer; Margaret Kelly, Missouri State Auditor; Keith Thornburg, legal representative of the Missouri State Auditor; Jeremiah W. Nixon, Missouri Attorney General; Mel Carnahan, Governor of the State of Missouri; and Roger W. Wilson, Lieutenant Governor of the State of Missouri.

The Complaint asserts claims for payment of principal and interest on certain bonds (Count I), conspiracy (Count II), and deprivations of civil rights under 42 U.S.C. § 1983 (Count III), and 42 U.S.C. §§ 1985 and 1986 (Count IV). Plaintiff also seeks certification of this matter as a class action under Rule 23, Federal Rules of Civil Procedure.

The defendants filed a motion to dismiss the complaint on March 28, 1995. Thereafter, on April 6, 1995, plaintiff sought leave to file his First Amended Complaint ("Amended Complaint"), which appears to differ from the original complaint only by the addition of another named party plaintiff, Donna M. Hoback. Defendants have not opposed plaintiff's motion for leave to amend, but instead move to dismiss the proposed Amended Complaint.

Motion for Leave to Amend. Leave to amend is to be freely granted under Federal Rule of Civil Procedure 15(a). Nonetheless, the Court has discretion whether or not to grant leave to amend. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-32, 91 S.Ct. 795, 802-03, 28 L.Ed.2d 77 (1971). Factors to consider in determining whether leave to amend should be granted include but are not limited to (i) whether the motion was filed in bad faith or with dilatory motive; (ii) whether the motion was filed with undue delay; (iii) whether leave to amend would be unduly prejudicial to the opposing parties; and (iv) whether the proposed amendment would be futile. See Williams v. Little Rock Municipal Water Works, 21 F.3d 218, 224 (8th Cir.1994). The Court finds that the general rule of liberal amendment should apply here. Plaintiff's motion for leave to amend will be granted, and defendants' motion to dismiss the original complaint will be denied as moot.

Background. Plaintiffs assert the existence of federal jurisdiction on the basis of diversity of citizenship and federal question jurisdiction. Plaintiffs allege they are the owners and holders of certain Defense Bonds (the "Bonds") issued by the lawful government of the State of Missouri during the Civil War. (Amended Complaint, ¶ 1.) Plaintiffs seek to recover the principal and interest due and owing under the Bonds from the date of issue to the present, which would exceed several million dollars per Bond. (Id., ¶ 2.) Plaintiffs assert that the Bonds are valid and that "the State of Missouri is legally responsible to pay ... the principal and compounded interest due thereunder." (Id., ¶ 3.) Plaintiffs contend that defendants, acting in their official and individual capacities, inter alia, violated plaintiffs' civil rights by refusing to honor the Bonds when submitted for payment. (Id., ¶ 4.)

Defendants move to dismiss the Amended Complaint on the grounds that plaintiffs' claims (i) are barred by the Eleventh Amendment; (ii) fail to state a claim upon which relief can be granted; (iii) are subject to defendants' right to qualified immunity; (iv) are improperly based on a respondeat superior theory; and (v) are barred by the applicable statute of limitations. Plaintiffs oppose the motion.

Standard of Review. When ruling on a motion to dismiss, this Court must take the allegations of the complaint as true. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). The complaint must be liberally construed in a light most favorable to the plaintiff. Coleman v. Watt, 40 F.3d 255, 258 (8th Cir.1994); Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). Therefore, a motion to dismiss a complaint should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him or her to relief. Coleman, 40 F.3d at 258; Kohl v. Casson, 5 F.3d 1141, 1148 (8th Cir. 1993). With this standard in mind, the Court turns to the merits of defendants' motion.

I.

Defendants initially contend that the State of Missouri is the real party in interest to this action, and plaintiffs' ultimate goal is to recover payment on the Bonds. Thus, defendants argue this action is barred by the Eleventh Amendment to the United States Constitution, which prohibits any suit that would have the effect of imposing retroactive monetary liability against a State's treasury. Defendants rely on Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 100-01, 104 S.Ct. 900, 908, 79 L.Ed.2d 67 (1984) (Pennhurst II); Edelman v. Jordan, 415 U.S. 651, 661-69, 94 S.Ct. 1347, 1354-59, 39 L.Ed.2d 662 (1974); and Ford Motor Co. v. Dept. of Treasury of State of Indiana, 323 U.S. 459, 464, 65 S.Ct. 347, 350-51, 89 L.Ed. 389 (1945). Defendants assert that federal courts have determined they lack jurisdiction over cases asserting similar claims, citing Ex parte Ayers, 123 U.S. 443, 8 S.Ct. 164, 31 L.Ed. 216 (1887); State of Louisiana ex rel. Elliott v. Jumel, 107 U.S. 711, 2 S.Ct. 128, 27 L.Ed. 448 (1883); and Barry v. Fordice, 814 F.Supp. 511 (S.D.Miss.1992), aff'd, 8 F.3d 1 (5th Cir.1993).

Plaintiffs respond that defendants have mischaracterized their lawsuit, which predominantly seeks declaratory and injunctive relief and not monetary damages. Plaintiffs argue that because their complaint principally seeks a declaration that Article 4, Section 52 of the Missouri Constitution is unconstitutional,¹ the Eleventh Amendment bar does not apply. Plaintiffs rely in large part on Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908).

This Court is obligated to review the allegations of the Amended Complaint to determine if its jurisdiction over this suit is barred by the Eleventh Amendment. See Pennhurst II, 465 U.S. at 121, 104 S.Ct. at 919. The Eleventh Amendment bars suits against non-consenting states by their own citizens, citizens of another states, citizens of foreign states, or foreign nations. U.S. Const. amend. XI; Pennhurst II, 465 U.S. at 97-98, 104 S.Ct. at 906-07; Principality of Monaco v. Mississippi, 292 U.S. 313, 329-31, 54 S.Ct. 745, 750-51, 78 L.Ed. 1282 (1934).

The Eleventh Amendment bar is not limited to suits seeking monetary relief, but may also bar actions seeking equitable relief. Pennhurst II, 465 U.S. at 100-01, 104 S.Ct. at 908; Cory v. White, 457 U.S. 85, 90-91, 102 S.Ct. 2325, 2328-29, 72 L.Ed.2d 694 (1982). The Eleventh Amendment also prohibits suits which are nominally against state officials in their official as opposed to personal capacities, where the action is in fact against the state as the real party in interest. Ford Motor Co., 323 U.S. at 464, 65 S.Ct. at 350. A state is the real party in interest if "the decision rendered would operate against the sovereign, expending itself on the public treasury, interfering with public administration, or compelling the State to act or refrain from acting." Pennhurst II, 465 U.S. at 101, 104 S.Ct. at 908. Thus, the Eleventh Amendment bars a suit against state officers who are "joined as collective representatives of the state, not as individuals against whom a personal judgment is sought." Ford Motor Co., 323 U.S. at 463-64, 65 S.Ct. at 350.

These principles are dispositive of a significant portion of plaintiffs' claims. Plaintiffs are citizens of other states who have sued the State of Missouri, one of its official boards, and state officials in their official capacities as collective representatives of the state and in their individual capacities. The suit is primarily for payment on allegedly valid and past due Civil War bonds owned or held by plaintiffs. The State of Missouri is the real party in interest, as the relief sought by plaintiffs would ultimately require expenditure from the public treasury. See Pennhurst II, 465 U.S. at 101, 104 S.Ct. at 908; Ford Motor Co., 323 U.S. at 464, 65 S.Ct. at 350. Compare Barry v. Fordice, 814 F.Supp. at 512-15 (state was real party in interest in action against state officials for declaratory and injunctive relief, which would require payments of bonds from state funds).

Suits by debt holders against state officials are barred by the Eleventh Amendment, even where the plaintiffs have alleged that an unconstitutional state statute precludes payment, and have framed their complaints to seek equitable rather than monetary relief against state officials in their official capacity. See State of North Carolina v. Temple, 134 U.S. 22, 10 S.Ct. 509, 33 L.Ed. 849 (1890); Ayers, 123 U.S. at 500-08, 8 S.Ct. at 180-84; Jumel, 107 U.S. at 719-24, 2 S.Ct. at 134-39. These decisions and the principles set forth therein remain good law. Barry, 814 F.Supp. at 515, and cases cited therein.

Plaintiff's reliance on the narrow exception to the Eleventh Amendment recognized by the Supreme Court in Ex parte Young is misplaced. In Ex parte Young, the Court held that the Eleventh Amendment did not bar an action in federal court seeking to enjoin a state attorney general...