National Camera, Inc. v. Sanchez

• Decision Date: 24 October 1991
• Docket Number: No. 90CA1924,90CA1924
• Citation: 832 P.2d 960
• Parties: 76 Ed. Law Rep. 220 NATIONAL CAMERA, INC., Plaintiff-Appellant, v. Anita SANCHEZ, Jay L. Fox, Rolf F. Anderson, Glenda C. Barry, Reuben Guttierez, Julianne F. Haefelt, Lawrence E. Hamilton, Jane S. Quimby, and Raymond Wilder, in their official capacities, The State Board for Community Colleges and Occupational Education, and Robert Smith, in his official and individual capacities, Defendants-Appellees. . I
• Court: Colorado Court of Appeals

Page 960

832 P.2d 960

76 Ed. Law Rep. 220

NATIONAL CAMERA, INC., Plaintiff-Appellant, v. Anita SANCHEZ, Jay L. Fox, Rolf F. Anderson, Glenda C.

Barry, Reuben Guttierez, Julianne F. Haefelt, Lawrence E.

Hamilton, Jane S. Quimby, and Raymond Wilder, in their

official capacities, The State Board for Community Colleges

and Occupational Education, and Robert Smith, in his

official and individual capacities, Defendants-Appellees.

No. 90CA1924.

Colorado Court of Appeals,

Div. I.

Oct. 24, 1991.

As Modified on Denial of Rehearing Nov. 21, 1991.

Certiorari Denied June 22, 1992.

Charles F. Kaiser, Denver, for plaintiff-appellant.

Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Lisa LaBelle Scott, Asst. Atty. Gen., Denver, for defendants-appellees.

Opinion by Judge DAVIDSON.

Plaintiff, National Camera, Inc. (NCI), appeals from the trial court's dismissal pursuant to C.R.C.P. 12(b)(5) of its 42 U.S.C § 1983 (1988) action against defendants, Anita Sanchez, Jay L. Fox, Rolf F. Anderson, Glenda C. Barry, Reuben Guttierez, Julianne F. Haefelt, Lawrence E. Hamilton, Jane S. Quimby, and Raymond Wilder (members of the board), in their official capacities, the State Board for Community Colleges and Occupational Education (SBCCOE), and Robert Smith, in his official and individual capacities. We reverse and remand for further proceedings.

SBCCOE is the governing authority for the state system of community colleges. At the times pertinent here, its function was to conduct occupational, technical, and community college programs pursuant to § 23-60-101, et seq., C.R.S. (1988 Repl.Vol. 9). Until this dispute arose, NCI had operated a private occupational school in Colorado since 1952 and was licensed to do business by SBCCOE under a certificate of approval issued pursuant to § 12-59-101, et seq., C.R.S. (1985 Repl.Vol. 5).

Section 12-59-108, C.R.S. (1985 Repl.Vol. 5) sets forth procedures to obtain new or renewed certificates of approval. In February 1988, in accordance with that statute, NCI applied to SBCCOE for renewal of its certificate which was due to expire on June 30, 1988. Smith, vice president of SBCCOE in charge of regulating private occupational schools, rejected the application on the grounds that NCI's submitted financial statements were not prepared by an independent accountant using a format which reflected accepted accounting principles and procedures as required by § 12-59-108(1)(c), C.R.S. (1985 Repl.Vol. 5).

In June, NCI submitted revised financial statements, but Smith rejected these on the grounds that they were inadequate in substance and again not prepared by an independent accountant. However, with SBCCOE's approval, Smith allowed NCI's certificate to continue past the June 30 expiration date on a month to month basis until October 15, 1988, to enable NCI to correct the deficiencies.

Again in September, NCI submitted revised financial statements. Although this time the statements were prepared by an independent accountant, Smith determined that they still did not provide full disclosure of NCI's financial position nor reflect accepted accounting principles. Thus, Smith advised NCI by letter that its certificate would expire on October 15, 1988.

In October, SBCCOE adopted Smith's recommendation that NCI's certificate be allowed to expire by operation of law pursuant to § 12-59-108(4), C.R.S. (1985 Repl.Vol. 5). Smith then notified NCI of SBCCOE's decision and of NCI's right to appeal that decision under § 24-4-105, C.R.S. (1988 Repl.Vol. 10A).

Proceeding under the Administrative Procedure Act (APA), § 24-4-101, et seq., C.R.S. (1988 Repl.Vol. 10A), NCI requested and duly received a hearing before an Administrative Law Judge (ALJ) in March 1989. On August 3, 1989, the ALJ issued an initial decision pursuant to § 24-4-105(14), C.R.S. (1988 Repl.Vol. 10A) finding that SBCCOE's action in letting NCI's license expire was, in effect, a revocation under § 24-4-104(7), C.R.S. (1988 Repl.Vol. 10A) and that SBCCOE had established no grounds to justify such a revocation nor provided a hearing in accordance with § 12-59-113, C.R.S. (1985 Repl.Vol. 5) and § 24-4-104, C.R.S. (1988 Repl.Vol. 10A). Thus, the ALJ ordered that NCI's certificate be restored pending further proceedings with SBCCOE.

Smith appealed the ALJ's decision to SBCCOE pursuant to § 24-4-105(15), C.R.S. (1988 Repl.Vol. 10A). Before SBCCOE's final decision, NCI moved for recusal on the grounds that SBCCOE's prior involvement in the case was so extensive as to render it "not impartial in fact or appearance." SBCCOE denied the motion and reversed the decision of the ALJ.

Thereafter, NCI filed this § 1983 action, alleging that SBCCOE, under color of state law, had violated its constitutional right to due process by failing to provide a hearing before its certificate expired pursuant to § 24-4-104 and § 12-59-113 and by failing to provide an impartial tribunal during the administrative appeal.

Specifically, NCI sought damages against SBCCOE and Smith, in his individual capacity, and injunctive relief against the members of the board to require them to restore its certificate and to prohibit them from acting in a judicial capacity in any future revocation proceedings against NCI. Simultaneously with this § 1983 action, NCI filed an action for judicial review of the final agency decision pursuant to § 24-4-106, C.R.S. (1988 Repl.Vol. 10A).

The trial court denied NCI's motion to consolidate the two actions and granted SBCCOE's C.R.C.P. 12(b)(5) motion to dismiss the § 1983 claims on the grounds that SBCCOE is a state board and that, thus, under Will v. Michigan Department of State Police, 491 U.S. 58, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989), SBCCOE and its employees are not "persons" subject to suit under § 1983. NCI filed this appeal and the judicial review was stayed pending the outcome here.

I.

In addressing this appeal, we note that in reviewing the trial court's dismissal of the complaint for failure to state a claim, we must view the allegations of the complaint as true, Denver & Rio Grand Western R.R. v. Wood, 28 Colo.App. 534, 476 P.2d 299 (1970), and in a light most favorable to the plaintiff. Bell v. Arnold, 175 Colo. 277, 487 P.2d 545 (1971). The complaint cannot be dismissed unless it appears that the nonmoving party is entitled to no relief under any statement of facts which may be proved in support of the claims. People ex rel. Kinsey v. Sumner, 34 Colo.App. 61, 525 P.2d 512 (1974).

II.

NCI first contends that the trial court erred in dismissing its § 1983 damage claims against SBCCOE and Smith based on Will.

Section § 1983 provides in relevant part:

Every person who, under color of any statute, ordinance, regulation, custom, or usage ... 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.

In Will, the United States Supreme Court held that states and arms of the state, which have traditionally enjoyed Eleventh Amendment immunity, are not "persons" within the meaning of § 1983 and that they therefore are not subject to liability for damages under § 1983 in either federal or state court. See Dillingham v. University of Colorado Board of Regents, 790 P.2d 851 (Colo.App.1989).

A.

We disagree with NCI's contention that the trial court erred in determining that SBCCOE is an arm of the state and thus not subject to liability for damages.

The question whether an entity is to be treated as an arm of the state, immune from liability for damages by the Eleventh Amendment, or instead is to be treated as a political subdivision to which the Eleventh Amendment does not extend, depends, at least in part, upon the nature of the entity created by state law. Mount Healthy City School District v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977); see Stjernholm v. Colorado State Board of Chiropractic Examiners, 820 P.2d 1166 (Colo.App.1991).

Applying this guideline here, we observe that, under Colorado law at the times pertinent here, SBCCOE was the state regulatory body of private occupational schools. Section 12-59-105, C.R.S. (1985 Repl.Vol. 5). It established state policy for occupational education and governed a state system of community colleges, § 23-60-102, C.R.S. (1988 Repl.Vol. 9), is designated as a state board, § 23-60-104(1)(b), C.R.S. (1988 Repl.Vol. 9), and is by definition a state agency, § 24-4-102(3), C.R.S. (1988 Repl.Vol. 10A). See Stjernholm v. Colorado State Board of Chiropractic Examiners, supra.

We conclude, therefore, that SBCCOE, being a state agency, is not a "person" under § 1983 and, thus, no action for damages may be maintained against it under that statute.

B.

Again basing its decision on Will v. Michigan Department of State Police, supra, the trial court dismissed NCI's § 1983 claim for damages against Smith in his individual capacity. Although NCI correctly argues that, under Will, state officials in their official capacities are not persons under § 1983, because we hold that Smith cannot be sued as a matter of law under the doctrine of qualified immunity, we agree with the decision of the trial court to grant Smith's motion to dismiss.

In his C.R.C.P. 12(b)(5) motion filed in the trial court, Smith asserted that he is protected from suit for his actions as vice president for SBCCOE by the doctrine of qualified immunity. The trial court did not reach and, thus, did not address this issue.

However, the determination of qualified immunity is a question of law. Abouzari v. Foster, 795 P.2d 1386 (Colo.App.1990). Thus, based upon the undisputed facts in the record, and assuming the allegations in the complaint to be true, we are able to decide that question here. See ...