Murphy v. Society of Real Estate Appraisers

• Decision Date: 07 February 1975
• Docket Number: No. 75-C-24.,75-C-24.
• Citation: 388 F. Supp. 1046
• Parties: John R. MURPHY and John P. McCrank, Plaintiffs, v. SOCIETY OF REAL ESTATE APPRAISERS, an unincorporated association, et al., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

388 F. Supp. 1046

John R. MURPHY and John P. McCrank, Plaintiffs, v. SOCIETY OF REAL ESTATE APPRAISERS, an unincorporated association, et al., Defendants.

No. 75-C-24.

United States District Court, E. D. Wisconsin, Milwaukee Division.

February 7, 1975.

Thomas St. John and John D. Finerty, Samson, Friebert, Finerty & Burns, Milwaukee, Wis., for plaintiffs.

Geoffrey Greiveldinger, Foley & Lardner, Milwaukee, Wis., for defendants.

MEMORANDUM AND ORDER

WARREN, District Judge.

This is an action brought by two real estate appraisers in an effort to enjoin and instill various procedural formalities into a disciplinary proceeding that has been instituted against them by the Society of Real Estate Appraisers (hereinafter referred to as the society).

The society is a private unincorporated association with headquarters in Chicago, Illinois; the plaintiffs are currently members¹ of the society who have been subjected to the initial investigatory phases of what may prove to be a serious disciplinary proceeding. The plaintiffs bring this action against the society and five individual members of the Professional Practice Committee of the Milwaukee Chapter of the society; they present claims for relief that arise under the provisions of the Constitution of the United States. The action is brought under 28 U.S.C. § 2201 and 42 U.S.C. § 1983; jurisdiction is alleged to exist in this Court through 28 U.S.C. §§ 1331 and 1343.

On January 13, 1975, the plaintiffs filed their complaint and a motion for a temporary restraining order. Proper notice was issued, briefs and affidavits were submitted on behalf of each party, and a hearing was held on January 17 where counsel argued their respective positions as to the propriety of the issuance of preliminary relief.

I. FACTUAL BACKGROUND

A review of the thorough briefs that have been filed, as supplemented by the oral argument that has been heard, reveals that the following factual circumstances have been established.

The defendants named above have attempted to institute an investigation into the conduct of the named plaintiffs as professional real estate appraisers. As an initial step in the procedure, the Milwaukee Chapter of the society caused a notice to be mailed to the plaintiffs on November 19, 1974; this notice described various parcels of realty, requested that the plaintiffs appear before the Professional Practice Committee of the Milwaukee Chapter at a specified date and time, and asked that true copies of relevant appraisal reports be supplied along with any relevant supporting data. The notice stated that the purpose of this meeting was to "conduct an investigation" into the appraisal reports that had been made by the plaintiffs on the particular parcels therein described.

Amended letters of notification were sent by the chapter on December 13, 1974. The amended notices stated that the investigatory meetings would be held on January 17, 1975, thereby allowing the full 30 days of preparation to which the plaintiffs were entitled under the rules issued by the society.²

Prior to the meetings set for January 17, this action was filed; the plaintiffs have requested that this Court enjoin the meetings until a hearing on the merits of their claims can be held, or in the alternative, until a motion for a preliminary injunction can be filed and argued.

Counsel for the defendants has stated that the meetings at issue here will be voluntarily stayed by the Milwaukee Chapter of the society, pending a decision by this Court on the motion for the temporary restraining order; he requests that the motion currently before the Court not be considered one for a preliminary injunction so as to enable him to present additional factual evidence in opposition to the issuance of such an injunction. The Court will limit the form of its ruling here to the motion for the temporary restraining order that has been filed by the plaintiffs, although, as a practical matter, it is generally thought that where the opposing party has had notice of the application for a temporary restraining order, the application does not differ functionally from a motion for a preliminary injunction. A temporary restraining order, like a preliminary injunction, is an extraordinary remedy which will not be granted unless there is a clear showing of both probable success and irreparable injury. See, Norwalk Core v. Norwalk Board of Education, 298 F.Supp. 203, 206 (D.Conn., 1968); Dilworth v. Riner, 343 F.2d 226, 229 (5th Cir., 1965).

II. THE NATURE OF THE SHOWING REQUIRED TO OBTAIN A TEMPORARY RESTRAINING ORDER

A review of the relevant authorities convinces this Court that four basic elements must be considered prior to the issuance of a temporary restraining order under the provisions of Rule 65(b), Federal Rules of Civil Procedure:

(1) Plaintiffs' showing that without such relief they will be irreparably injured;

(2) The public interest, on balance;

(3) Possible harm to other interested parties; and

(4) Plaintiffs' likelihood of success on the merits of their contentions.

See, e.g., Ann Arbor Railroad Company v. United States, 358 F.Supp. 933, 935 (E.D.Penn., 1973).

The defendants urge that the facts of this case cannot be said to establish the requisite showing of irreparable harm to the plaintiffs, and they maintain that the law is such as to preclude a finding of any reasonable likelihood of success on the merits of the contentions raised.

The Court is of the opinion that the application for the temporary restraining order can be resolved by consideration of only one of the four elements named above: absent a showing of reasonable probability of success on the merits, no such order can issue. See, e. g., Playgirl Lounge, Inc., et al. v. Town of Layfayette, et al., 333 F.Supp. 736 (E.D.Wis., 1971).

Because the Court is of the opinion that no reasonable probability of success on the merits of both of two critical contentions has been demonstrated, the application for the temporary restraining order will be denied.

(A) No Reasonable Probability of Success as to the Contention that "State Action" Exists.

In order to prevail on the claims that § 1983 provides a cause of action here and that the fourteenth amendment serves to protect the plaintiffs, it must be established that state action exists.

In cases arising under 42 U.S.C. § 1983, the requirement that the deprivation be inflicted "under color of law" has been consistently treated by the courts as identical to the "state action" required by the terms of the fourteenth amendment. See, e.g., Bright v. Isenbarger, 314 F.Supp. 1382, 1389 (N.D. Ind., 1970), citing United States v. Price, 383 U.S. 787, 794 at note 7, 86 S. Ct. 1152, 16 L.Ed.2d 267 (1966). A finding that no state action is present in this case would have a fatal impact: no cause of action would exist under 42 U. S.C. § 1983, no jurisdiction would lie under 28 U.S.C. § 1343, and, even if alternative means of establishing a cause of action and jurisdiction were to exist, the plaintiffs' claims would be foreclosed on their merits because the provisions of the fourteenth amendment would not be applicable.

In their attempt to establish state action in this case, the plaintiffs argue that the State of Wisconsin has by statute recognized this society as a licensing authority for real estate appraisers; it is urged that a statutory delegation of duty has transformed the action of the private society into that of the state. For the reasons that follow, the Court cannot agree.

The United States Supreme Court has handed down a most recent decision dealing with the question of when the activity of a private organization can be attributed to the state which it is purported to represent; this Court must be guided by the principles set forth therein. See: Jackson v. Metropolitan Edison Company, 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974); see too, Bright v. Isenbarger, supra, 314 F.Supp. at p. 1392 et seq. (a thorough analysis of the history and application of the state action doctrine presented by Chief Judge Eschbach).

It is clear that as a part of the complex scheme regulating state savings and loan associations, the Commissioner of Savings and Loan has been given the duty to approve those appraisers who are to perform real estate appraisals for state savings and loan associations. Wis.Stats. § 215.21(9). To fulfill his obligation, the Commissioner has determined that real estate appraisers may be deemed "approved" in a variety of ways: approval may be obtained by membership in "a recognized professional appraisal group organization or society . . ."; approval may also be obtained if the appraiser has done at least ten years of appraisal work, or possesses training and experience sufficient to convince a board of directors of savings and loan institution that he is qualified to perform appraisal duties. See, Wisconsin Administrative Code § S-L 18.05(1)(a).

The plaintiffs contend that the statute and regulation heretofore described have effected a situation whereby the State of Wisconsin has delegated to the society the task of determining who will be approved as an appraiser for purposes of § 215.21(9); they urge that since the society has the authority to determine who will maintain membership therein it necessarily performs a function sanctioned by and under color of state law.

The Court notes that state action can be shown to exist either by proof that a private entity performs a "public function," or by proof that the activities of the state are inextricably intertwined with those of the private organization. While the plaintiffs have not clearly set forth their claims in such a bifurcated analysis, what they do urge lends itself to such an approach; the Court will consider their contentions in terms of these two theories.

In the Jackson case, noted above, the Supreme Court felt that it was necessary to review those cases which had theretofore created the "public function"...