Potthoff v. Morin

• Decision Date: 20 October 2000
• Docket Number: No. 99-2999,99-2999
• Citation: 245 F.3d 710
• Parties: (8th Cir. 2001) ROGER POTTHOFF, AN INDIVIDUAL, APPELLANT, v. WILLIAM MORIN, IN HIS INDIVIDUAL CAPACITY; PORT AUTHORITY OF THE CITY OF ST. PAUL, A PUBLIC CORPORATION, APPELLEES. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 710

245 F.3d 710 (8th Cir. 2001)

ROGER POTTHOFF, AN INDIVIDUAL, APPELLANT, v. WILLIAM MORIN, IN HIS INDIVIDUAL CAPACITY; PORT AUTHORITY OF THE CITY OF ST. PAUL, A PUBLIC CORPORATION, APPELLEES.

No. 99-2999

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: October 20, 2000

Filed: April 5, 2001

Appeal from the United States District Court for the District of Minnesota

[Copyrighted Material Omitted] Before McMILLIAN, Bowman and Loken, Circuit Judges.

McMILLIAN, Circuit Judge

Roger Potthoff appeals from a final order entered in the United States District Court ¹ for the District of Minnesota dismissing his state and federal claims against William M. Morin, the Port Authority of the City of St. Paul ("Port Authority"), Hines Interests Limited Partnership ("Hines"), and John Doe. See Potthoff v. Morin, No. 98-1715 (D. Minn. June 14, 1999) (order dismissing complaint with prejudice pursuant to Fed. R. Civ. P. 12(c)). For reversal, Potthoff argues that the district court erred in dismissing for lack of standing his claim against Morin brought pursuant to 42 U.S.C. 1983. For the reasons discussed below, we affirm the order of the district court.

Jurisdiction was proper in the district court under 28 U.S.C. 1331, 1343, and 1367. Jurisdiction is proper in this court under 28 U.S.C. 1291. The notice of appeal was timely filed pursuant to Fed. R. App. P. 4(a).

Background

Potthoff is the sole shareholder of ComReal Corporation ("ComReal"), a Minnesota corporation that has no parent corporation. On or about June 30, 1998, Potthoff and ComReal (together "plaintiffs") filed the underlying complaint in Minnesota state court against Morin, the Port Authority, Hines, and John Doe. The following is a summary of the pertinent factual allegations set forth in the complaint. See Addendum to Brief for Appellant at 2-6 (complaint 8-31).

On January 23, 1996, Hines, a Delaware limited partnership with offices in Ramsey County, Minnesota, entered into an Asset Management and Marketing Agreement ("Marketing Agreement") with the Port Authority. ² Under the Marketing Agreement, Hines agreed to manage, operate and maintain the Piper Jaffray Plaza ("Plaza"), which is located within the geographical limits of the City and is owned by the Port Authority. The Marketing Agreement also required Hines to lease the Plaza's office space to individual tenants. In exchange, the Port Authority agreed to pay Hines a fee.

On February 1, 1996, Hines and ComReal entered into an Exclusive Leasing Agreement ("Leasing Agreement"), which provided that ComReal would have the exclusive right to solicit and lease office space to tenants for the Plaza in exchange for a fee to be paid by Hines to ComReal. The Leasing Agreement required Potthoff to act as the principal employee of ComReal, and it provided Potthoff the opportunity to earn significant commissions.

On or about May 1, 1997, a local newspaper published an article in which Potthoff was quoted criticizing the Mayor of St. Paul regarding a matter involving municipal parking lots. The same day, Morin, the manager of the Port Authority, telephoned Potthoff and advised Potthoff "that he worked for the City, and that such criticism of the Mayor would not be tolerated"; Morin further stated that the Leasing Agreement would be terminated if Potthoff "did not recant and desist from such criticism of Mayor Coleman." Addendum to Brief for Appellant at 4 (complaint 19, 20). In response, Potthoff indicated that he "would not stand by and allow [Morin] or other individuals acting on behalf of the Port Authority or the City of St. Paul to censor him and otherwise interfere with his freedom of speech and other civil rights." Id. (complaint 21).

On or about May 6, 1997, Potthoff had a telephone conversation with William Chopp, the Group Property Manager of Hines, who told Potthoff that Hines had been directed by Morin to terminate the Leasing Agreement. Chopp told Potthoff that Morin and the Port Authority wanted Hines to terminate the Leasing Agreement because "'The Port [Authority] is pissed-off that you won't shut up in criticizing the Mayor on parking. They are the client, the owner, and they want you gone.'" Id. (complaint 24 (purportedly quoting William Chopp's statement)). Potthoff and ComReal sent a letter to Morin and the Port Authority indicating that they (Morin and the Port Authority) were illegally interfering with the Leasing Agreement as well as Potthoff's civil rights.

On May 15, 1997, Hines notified ComReal in writing that it was terminating the Leasing Agreement pursuant to 5.2 of the Leasing Agreement. Section 5.2 of the Leasing Agreement provided Hines with the right to terminate the agreement if:

5.2 (a) Owner [Port Authority] so requests of Manager [Hines]; or

5.2 (b) Broker [ComReal] shall fail to perform its duties under this Leasing Agreement and such failure shall continue for ten (10) days after written notice from Manager to Broker; or

5.2 (c) Manager, in good faith, delivers to Broker a written description of the deficiencies of Broker as determined by Manager in performing Broker's duties under this Leasing Agreement and such deficiencies are not corrected within (10) days after Broker receives such description.

On or about May 14, 1998, counsel for plaintiffs wrote a letter to Hines requesting clarification as to which of the three provisions in 5.2 of the Leasing Agreement Hines relied upon for authority to terminate. Hines did not respond to plaintiffs' letter.

Based upon the above-stated factual allegations, the complaint set forth the following claims: Count I, "interference with contractual relations," against Morin and the Port Authority; Count II, "claim under 42 U.S.C. 1983," against Morin, for violating the free speech and due process rights of Potthoff; Count III, "breach of contract," against Hines; and Count IV, "liability of undiscovered parties." See id. at 6-8 (complaint 31-43).

Morin and the Port Authority removed the case to federal court. They moved to dismiss the complaint and to stay discovery. The matter was referred to a magistrate judge ³ pursuant to 28 U.S.C. 636(b)(1)(B). Following a hearing, the magistrate judge issued a report and recommendation. Potthoff v. Morin, No. 98-1715 (D. Minn. Apr. 30, 1999) (hereinafter "report and recommendation"). In addressing Count II of the complaint the magistrate judge observed that the 1983 cause of action against Morin alleged a deprivation of only Potthoff's rights and, therefore, Potthoff was the only plaintiff asserting the claim. The magistrate judge further noted that Potthoff, as the sole shareholder of ComReal, only alleged losses that flowed from the termination of the Leasing Agreement between ComReal and Hines. Thus, the magistrate judge reasoned, Potthoff's allegations merely stated a claim of derivative injury, not injury that was separate and independent from the injury allegedly suffered by ComReal. The magistrate judge concluded that Potthoff lacked standing to bring his 1983 claim against Morin. See id. at 15-19 (citing Bellows v. Amoco Oil Co., 118 F.3d 268 (5th Cir. 1997), cert. denied, 522 U.S. 1068 (1998), and Erlich v. Glasner, 418 F.2d 226 (9th Cir. 1969)). The magistrate judge recommended dismissal with prejudice of the claims against Morin and the Port Authority, pursuant to Fed. R. Civ. P. 12(c), ⁴ and sua sponte dismissal without prejudice of the claims against Hines and John Doe, pursuant to Fed. R. Civ. P. 4(m). See id. at 19.

Plaintiffs filed objections to the magistrate judge's report and recommendation. Upon review, the district court adopted the recommendations of the magistrate judge. See id. (June 14, 1999) (order dismissing the complaint) (hereinafter "slip op."). Regarding Potthoff's 1983 claim, the district court observed that compensatory damages may not be recovered under 1983 based upon an alleged violation of an abstract constitutional right, unaccompanied by some other form of harm. See id. at 5-6 (citing Memphis Community Sch. Dist. v. Stachura, 477 U.S. 299, 310 (1986) (Stachura)). ⁵ The district court agreed with the magistrate judge that Potthoff had not pled any damages other than a derivative claim for compensatory damages based upon economic harm suffered by ComReal. See id. at 6. Thus, the district court concluded that, "[b]ecause damages may not be recovered for the abstract value of a constitutional right, and Potthoff has not alleged any other cognizable damages, his claim under 1983 must be dismissed for lack of standing as recommended by the magistrate judge." Id.

The district court therefore dismissed the claims against Morin and the Port Authority with prejudice pursuant to Fed. R. Civ. P. 12(c), and dismissed the claims against Hines and John Doe without prejudice pursuant to Fed. R. Civ. P. 4(m). See id. at 7. Judgment was entered accordingly, and Potthoff timely appealed.

Discussion

We review a judgment on the pleadings de novo. National Car Rental Sys., Inc. v. Computer Assocs. Int'l, Inc., 991 F.2d 426, 428 (8th Cir.), cert. denied, 510 U.S. 861 (1993). Judgment on the pleadings is appropriate only where the moving party has clearly established that no material issue of fact remains and the moving party is entitled to judgment as a matter of law. See id. (quoting Iowa Beef Processors, Inc. v. Amalgamated Meat Cutters, 627 F.2d 853, 855 (8th Cir. 1980)). We must accept as true all facts pled by the non-moving party and grant all reasonable inferences from the pleadings in favor of the non-moving party. See id.

"Article III of the United Constitution confines the federal courts to adjudicating actual 'cases and controversies.'" Boyle v. Anderson, 68 F.3d 1093, 1100 (8th Cir. 1995) (citation omitted), cert. denied, 516 U.S. 1173 (1996). To acquire Article III standing, a plaintiff must have a "personal stake in the outcome of the controversy." Baker v. Carr, 369 U.S. 186, 209 (1962). To satisfy this requirement, the...