Stewart v. Hunt

• Decision Date: 28 November 1984
• Docket Number: No. 84-140-CIV-5.,84-140-CIV-5.
• Citation: 598 F. Supp. 1342
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Marshall STEWART III and Evelyn Stewart, Plaintiffs, v. Governor James B. HUNT, Jr., In his Official Capacity, et al., Defendants.

598 F. Supp. 1342

Marshall STEWART III and Evelyn Stewart, Plaintiffs, v. Governor James B. HUNT, Jr., In his Official Capacity, et al., Defendants.

No. 84-140-CIV-5.

United States District Court, E.D. North Carolina, Raleigh Division.

November 28, 1984.

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Thomas C. Manning, Raleigh, N.C., for plaintiffs.

T. Buie Costen, Millard R. Rich, Jr., N.C. Dept. of Justice, Raleigh, N.C., for defendants.

ORDER

JAMES C. FOX, District Judge.

Plaintiffs initiated this action pursuant to 42 U.S.C. §§ 1983, 1985(3) and 1986 by complaint filed February 17, 1984. Plaintiffs seek injunctive and declaratory relief as well as compensatory and punitive damages for injuries allegedly caused by defendants' refusal to renew a three-year lease that existed between the parties for the continued use of state property located at the North Carolina State Fairgrounds in Raleigh, North Carolina. The Stewarts predicate their action on a deprivation of their constitutional rights secured by the Fifth and Fourteenth Amendments. Jurisdiction is based on 28 U.S.C. §§ 1331 and 1343.

Named as defendants are the State of North Carolina; James B. Hunt, Jr., Governor of North Carolina; Jimmy Green, Lt. Governor of North Carolina; Rufus Edmisten, Attorney General; John Brooks, Commissioner of Labor; Thad Eure, Secretary of State; John Ingram, Commissioner of Insurance; Edward Renfrow, State Auditor; Harlan Boyles, State Treasurer; A. Craig Phillips, Superintendent of Public Instruction; James A. Graham, Commissioner of Agriculture; Jane Patterson, Secretary of the Department of Administration; Charles Grady, State Property Officer; William Parham, Deputy Commissioner of Agriculture; Alex Lewis, Comptroller of the Department of Agriculture; and Sam G. Rand, Manager of the North Carolina State Fair. Defendants Graham, Patterson, Grady, Parham, Lewis and Rand are sued in their individual and official capacities. The remaining defendants are sued solely in their official capacities.

This matter is presently before the court on defendants' motion to dismiss pursuant to Rules 12(b)(1), (2) and (6) of the Federal Rules of Civil Procedure. Defendants argue (1) lack of personal jurisdiction; (2) lack of jurisdiction over the subject matter; (3) abstention; (4) claim preclusion; (5) Eleventh Amendment immunity; and (6) failure to state a cognizable constitutional deprivation under 42 U.S.C. § 1983. The parties have extensively briefed the relevant issues and defendants' motion is now ripe for disposition.

Before the court proceeds to address these contentions, a brief description of the allegations in the complaint is in order as a preface to the discussions which follow. In this description as well as in the subsequent substantive discussions, the court accepts the allegations of the complaint as true, as the law requires it to do. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).¹

At the time plaintiffs complaint was filed, the Stewarts held a lease for certain buildings located at the Fairgrounds in Raleigh, commonly known as the "Flea Market Complex." This base lease was entered into on April 16, 1981, and expired on February 28, 1984.² Plaintiffs allege that a contract to renew the lease existed between themselves and defendants Lewis, Grady, Graham and Rand, individually and in their official capacities as employees of the State.

Plaintiffs contend the contract became effective on December 2, 1982, and provided that plaintiffs were to expend their own funds to repair and make habitable three buildings at the Fairgrounds.³ In consideration of plaintiffs' expenditures, defendants allegedly agreed to provide plaintiffs with a new three-year lease before the expiration of the current lease. This lease was also to contain provisions for two (2) three-year renewals, thus totalling a potential nine year occupancy for plaintiffs.

In addition, plaintiffs contend that when the State completed its renovation of the Education and Commercial Buildings, they were to be permitted to operate from those areas as well. The final term of this agreement allegedly provided the current rental rates would remain in effect for the life of the new lease.

Plaintiffs proceeded to perform extensive renovation work on the buildings after a December 2, 1982, meeting with State officials, at which time plaintiffs believe the final oral agreement described above was reached. No written contract was signed at that time nor have plaintiffs pled the existence of any such document.⁴ Defendants concede extensive renovation work took place at the Fairgrounds and that they knew of the work.

Plaintiffs allege they received continuous assurances from various state officials named as defendants, some of whom plaintiffs had dealt with for fourteen years, that they would be awarded the renewed lease as promised. The essence of plaintiffs' complaint is the State breached its December, 1982 agreement with the plaintiffs and awarded the new lease to a third party. Plaintiffs also contend that during the negotiation process, various State officials fraudulently misrepresented and conspired to conceal the State's position with respect to the process for awarding the new lease.

Defendants deny the existence of any oral or written agreement renewing plaintiffs' lease. Defendants further deny any fraudulent misrepresentations to plaintiffs, the existence of any conspiracy to conceal the actual award process for the new lease and any attempt to deny plaintiffs a fair opportunity to gain a renewed lease.

On February 27, 1984, plaintiffs voluntarily dismissed Claims for Relief 5-8 of their complaint without prejudice pursuant to Rule 41(a) of the Federal Rules of Civil Procedure. In addition, plaintiffs amended their complaint to allege the Fourth Claim for Relief contained therein is predicated upon a violation of 42 U.S.C. § 1983 and not § 1985(3) as originally stated. This amendment effectively eliminates any § 1985(3) claim from the litigation.⁵

On March 14, 1984, the court denied plaintiffs' motion for a temporary restraining order and preliminary injunction, finding (1) plaintiffs had not met their burden of showing they would suffer irreparable injury without the requested relief; (2) granting the preliminary injunction would substantially harm the defendants and other interested parties, particularly the new third party lessee; and (3) plaintiffs had not met their burden of establishing they would likely succeed on the merits of this dispute.

The court will now proceed to consider ad seriatim all defendants' contentions heretofore summarized.

(1). LACK OF PERSONAL AND SUBJECT MATTER JURISDICTION

Defendants' 12(b)(2) motion alleging lack of in personam jurisdiction is DENIED, as it is apparent on the face of the pleadings that both the controversy and the defendants have sufficient contacts with this forum to give the court the right to exercise judicial power over the defendants.

Defendants' 12(b)(1) motion alleging lack of subject matter jurisdiction is also DENIED, as 28 U.S.C. § 1331 and § 1343 have long been recognized as the jurisdictional counterparts to 42 U.S.C. § 1983 actions brought under the Constitution.

(2). ABSTENTION

Defendants contend that even if the court has jurisdiction over this action, it nonetheless should abstain. According to defendants all the issues raised in this action are identical to those raised by plaintiffs in a pending state court action. The court does not agree.

On January 27, 1984, plaintiffs filed a pure breach of contract claim in the Superior Court of Wake County, North Carolina, predicated on essentially the same set of facts set forth in plaintiffs' complaint at bar. No federal or constitutional issue was raised in the state complaint. On February 8, 1984, Superior Court Judge B. Craig Ellis granted defendants' motion to dismiss pursuant to N.C.R.Civ.P. 12(b)(1) and (2).⁶ Plaintiffs have appealed this ruling to the North Carolina Court of Appeals.

Were plaintiffs to prevail on appeal, it is possible the state courts would decide for them on the merits, thereby potentially mooting this action. According to the defendants, a federal court is required to abstain where issues of state law, which issues could moot the federal issues, will be decided by a state court.

Abstention is a judicially-created exception to the general grant of jurisdiction set forth in Article III of the Constitution. See Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). The doctrine allows federal courts to decline or postpone the exercise of jurisdiction so that a state court will have the opportunity to decide the matters at issue. Colorado River Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). However, abstention is an extraordinary and narrow exception to the duty of a federal court to adjudicate controversies properly before it. Id. at 813, 96 S.Ct. at 1244. This duty may be abdicated in deference to the existence of concurrent litigation in a state court involving the same issues only in exceptional circumstances. See Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Abstention is justified only where there are important countervailing state interests.

There are three generally recognized categories of abstention: Pullman abstention, Younger abstention and Burford abstention. See Colorado River Conservation District, 424 U.S. at 814, 96 S.Ct. at 1244. Each category represents a unique set of circumstances which justify abstention by a federal court.

A. Pullman Abstention

The first and oldest form of abstention was judicially created in Railroad Commission v. Pullman, supra. The doctrine applies where there are federal constitutional issues which might be mooted by state court determination of relevant state law. Id. 312 U.S. at 501, 61 S.Ct....