Lord Abbett Mun. Income Fund, Inc. v. Tyson

• Decision Date: 25 January 2012
• Docket Number: No. 11–10797.,11–10797.
• Citation: 671 F.3d 1203
• Parties: The LORD ABBETT MUNICIPAL INCOME FUND, INC., a Maryland corporation, Plaintiff–Appellant, v. John M. TYSON, Jr., in his official capacity as Special Prosecutor and Commander of the Task Force on Illegal Gambling of the Governor of Alabama, Governor of Alabama, Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

671 F.3d 1203

The LORD ABBETT MUNICIPAL INCOME FUND, INC., a Maryland corporation, Plaintiff–Appellant,

v.John M. TYSON, Jr., in his official capacity as Special Prosecutor and Commander of the Task Force on Illegal Gambling of the Governor of Alabama, Governor of Alabama, Defendants–Appellees.

No. 11–10797.

United States Court of Appeals, Eleventh Circuit.

Jan. 25, 2012.

William G. Somerville, III, Andrew P. Walsh, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Rebecca A. Beers, Wyatt R. Haskell, Peter J. Tepley, Haskell, Slaughter, Young & Rediker, LLC, Birmingham, AL, Carter Glasgow Phillips, Sidley Austin, LLP, Washington, DC, for Plaintiff–Appellant.

John Cowles Neiman, Jr., Prim F. Escalona, Luther J. Strange, III, Roland Cooper Shattuck, Office of Governor of Alabama, Legal Office, Montgomery, AL, Martha A. Tierney, Mobile County District Attorney's Office, Mobile, AL, for Defendants–Appellees.

Appeal from the United States District Court for the Middle District of Alabama.Before DUBINA, Chief Judge, COX, Circuit Judge, and HUNT,^* District Judge.PER CURIAM:

The Lord Abbett Municipal Income Fund, Inc. (the “Fund”) owns bonds issued by The Cooperative District of Houston County Alabama–Country Crossing Project (“Cooperative District”). The Fund alleges that Alabama state officials¹ have interfered with the income stream it expected to receive from these bonds. By not affording the Fund a hearing to challenge this interference, the Fund claims a violation of its Fourteenth Amendment procedural due process rights. The district court dismissed the Fund's 42 U.S.C. § 1983 claim for injunctive relief. It ruled that the Fund's claim was not ripe. And, it questioned whether the Fund had Article III standing to assert its claim. We affirm the district court's dismissal, though on different grounds.

I. BACKGROUND

The Cooperative District issued bonds to finance a mixed-use development project known as Country Crossing.² These bonds were to be paid, in part, by fees levied on electronic bingo machines operated at Country Crossing. After Country Crossing opened, these electronic bingo machines came to the attention of Alabama's Task Force on Illegal Gambling (the “Task Force”). John Tyson, the Task Force's Commander, threatened to seize the electronic bingo machines and planned a raid to take the machines because they violated Alabama's anti-gambling laws. In response, Country Crossing closed its doors to prevent seizure of the machines.

The Fund's complaint states that it has a property interest in the bonds and the revenue stream funding the bonds. It asserts that the Alabama state officials' interference with the operation of the bingo machines has deprived it of this property interest. Because the Fund has not been given an opportunity to challenge the state officials' interference with the machines, the Fund contends a procedural due process violation has occurred. The Complaint seeks injunctive relief under 42 U.S.C. § 1983 and requests a hearing to decide the legality of the electronic bingo machines under state law. The Defendants moved to dismiss this claim for lack of jurisdiction based on Fed.R.Civ.P. 12(b)(1) and for failure to state a claim under Fed.R.Civ.P. 12(b)(6). The district court granted the motion to dismiss on Rule 12(b)(1) grounds as an unripe claim.³

On appeal, the Fund presents three arguments in support of its position that the district court erred by dismissing its case. First, the Fund rejects the district court's ripeness analysis by arguing that the Supreme Court's decision in Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), controls. Second, it argues that the district court erred in its standing analysis by overlooking the government coercion that forced Country Crossing to close. In the alternative, the Fund contends it should be granted leave to amend its complaint to allege why Country Crossing closed.

II. STANDARD OF REVIEW

“A district court's decision to grant a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) is a question of law we review de novo.” Sinaltrainal v. Coca–Cola Co., 578 F.3d 1252, 1260 (11th Cir.2009) (citing McElmurray v. Consol. Gov't of Augusta–Richmond Cnty., 501 F.3d 1244, 1250 (11th Cir.2007)). Like the district court, we construe the Defendants' attack on the court's jurisdiction as a facial one. “Accordingly, ‘the court must consider the allegations in the plaintiff's complaint as true.’ ” McElmurray, 501 F.3d. at 1251 (quoting Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir.1981)). Similarly, the court reviews de novo a Rule 12(b)(6) dismissal for failure to state a claim and construes the factual allegations in the complaint in the light most favorable to the plaintiff. Mills v. Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir.2008) (citing Castro v. Sec'y of Homeland Sec., 472 F.3d 1334, 1336 (11th Cir.2006)).

III. DISCUSSION

The district court ruled that the Fund did not allege a claim ripe for federal adjudication. It refused to hold that the state officials' threatened interference with the electronic bingo machines amounted to a deprivation of the Fund's property rights. Therefore, the court ruled, “[a]t this stage, Defendants have done nothing to invoke the Fund's procedural due process rights.” (Dkt. 32 at 16.) The Fund contends it can allege a ripe due process claim without waiting for the actual seizure of the bingo machines because the threatened seizure of the machines caused a reduction in its anticipated income from the bonds. According to the Fund, these threats trigger a procedural due process obligation to provide the Fund a hearing on the legality of the electronic bingo equipment. The Fund relies heavily on Ex Parte Young to support this claim.

In Young, the state attorney general of Minnesota challenged a court's decision to hold him in contempt. 209 U.S. at 126–27, 28 S.Ct. at 443. He questioned the validity of the contempt order by arguing that the court lacked subject matter jurisdiction over the underlying controversy. Id. at 143, 28 S.Ct. at 447. In the underlying action, shareholders of a railroad company asserted that recently passed state laws limiting the rates charged by railroads would deprive them of property in violation of the due process clause. Id. at 130, 28 S.Ct. at 444. The Court held that the alleged unconstitutionality of the state laws constituted a federal question giving the court jurisdiction over the case. Id. at 144–45, 28 S.Ct. at 447–48.

The Fund argues that like the shareholders in Young, it is a bondholder whose investment is threatened by state action on the activity intended to generate a return on its investment. It suggests that under Young the court has jurisdiction to hear the case even though Alabama officials have not seized the bingo machines. The Defendants contend this goes too far. They emphasize that Young addressed a party's right to challenge the validity of state statutes under federal constitutional law in federal court. It did not require, “States to give criminal suspects a preseizure hearing in circumstances like these.” (Appellee Br. at 42.)

We agree with the Defendants that Young does not require the state to afford the Fund a hearing prior to any enforcement action against the bingo machines. Regardless of Young, we agree with the Fund that its Complaint alleges a ripe claim.⁴ That does not end our inquiry, however. In the district court, the Defendants moved to dismiss the Fund's § 1983 claim for failure to state a claim and lack of jurisdiction. (Dkt. 13 at 8 & 10.) In the Fund's response to the Defendants' motion, it addressed both of these grounds for dismissal. (Dkt. 18 passim) While the district court did not reach the Defendants' 12(b)(6) motion for failure to state a claim, we may affirm the district court's dismissal on any ground found in the record. Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209, 1218 n. 11 (11th Cir.1999) (citing Powers v. United States, 996 F.2d 1121, 1123–24 (11th Cir.1993)); see also Pitt Cnty. v. Hotels.com, L.P., 553 F.3d 308, 315 (4th Cir.2009) (disagreeing with district court's determination that plaintiff lacked standing but affirming dismissal of complaint on ground that it failed to state a claim upon which relief can be granted), Gemtel Corp. v. Cmty. Redevelopment Agency of City of L.A., 23 F.3d 1542, 1546 (9th Cir.1994) (affirming dismissal of action for failure to state a claim after rejecting district court's conclusion case should be dismissed on ripeness and mootness grounds). We affirm the district court's dismissal because the Complaint fails to state a claim upon which relief can be granted.

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007)). We are not required to accept as true the Fund's legal conclusion that a Fourteenth Amendment violation occurred. Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir.2010). In order to state a procedural due process claim under § 1983, the Fund had to allege a constitutionally inadequate process. See Grayden v. Rhodes, 345 F.3d 1225, 1232 (11th Cir.2003) (“In this circuit, a § 1983 claim alleging a denial of procedural due process requires proof of ... constitutionally-inadequate process.” (citing Cryder v. Oxendine, 24 F.3d 175, 177 (11th Cir.1994))). Because the facts as pled in the Fund's Complaint do not allege a due process violation, the complaint fails to state a claim for which relief can be granted and should be dismissed.

Ex parte Young provides no refuge for the Fund. In Young, the Court found jurisdiction where a party challenged a state statute as unconstitutional even though the state had yet to enforce the...