Stivers v. Pierce
| Decision Date | 01 December 1995 |
| Docket Number | 94-15966,Nos. 93-16756,s. 93-16756 |
| Citation | 71 F.3d 732 |
| Parties | 95 Cal. Daily Op. Serv. 9034, 95 Daily Journal D.A.R. 15,866 Martin STIVERS; Mary Chase Ernsberger; Chamar, Inc., Plaintiffs-Appellants, v. Richard PIERCE; George D. Wendell; Denise Conrad; Gary T. Robey; Brian McKay; Carol Widmer-Hanna; Robert J. Rodefer; Bill Bertram; individually and as members of the Nevada State Private Investigators Licensing Board; The Nevada State Private Investigators Licensing Board; and Does 1-10, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Terri Keyser-Cooper, Reno, Nevada, for the plaintiffs-appellants.
P. Mark Ghan, Assistant Attorney General, Carson City, Nevada, for the defendants-appellees.
Appeals from the United States District Court for the District of Nevada.
Before: FLETCHER, REINHARDT, and JOHN T. NOONAN, Jr., Circuit Judges.
Opinion by Judge REINHARDT; Concurrence by Judge NOONAN.
This action arises out of decisions by the Nevada State Private Investigators Licensing Board ("the Board"), denying the plaintiffs' applications for licenses in the fields of private investigation, private patrol, and process serving. The plaintiffs contend that one of the Board members had a pecuniary interest in the outcome and was biased against them. They also contend that, influenced by that member's bias, the other Board members and certain employees prejudged their applications and acted in an arbitrary and improper manner.
Plaintiffs Martin Stivers, Mary Chase Ernsberger, and Chamar, Inc. brought suit under section 1983 for declaratory relief, injunctive relief, and damages. The plaintiffs contend that the denial of their license applications violated their due process right to a fair hearing before an impartial tribunal. After this action was filed, the Board granted Stivers' application for individual licenses in order to settle the plaintiffs' claims for injunctive relief. The district court subsequently granted summary judgment to the defendants on the remaining claims, and rejected the plaintiffs' motion for attorney's fees for time spent pursuing injunctive relief. We affirm the grant of summary judgment as to Stivers' claim for damages against the Board, but reverse the grant of summary judgment as to his claim for damages against the individual defendants. We also reverse the denial of attorney's fees.
In March 1988, the plaintiffs filed license applications with the Board. Plaintiff Martin Stivers applied for licenses as a private investigator, private patrolman, and process server. Stivers, along with co-plaintiff Mary Chase Ernsberger, also submitted an application for a corporate license on behalf of "Chamar Inc.," a newly formed company. Between June 1988 and December 1989, the Board conducted five separate hearings to consider the plaintiffs' license applications. At the September 1988 meeting, it denied Chamar's application for corporate licenses because of alleged "unlicensed activity." It later denied Stivers' application for "lack of integrity." The plaintiffs allege that, in denying their applications, members and employees of the Board violated their due process rights. In particular, they contend that defendant Richard Pierce, a member of the Board, had a pecuniary and personal interest in ensuring that their applications were denied, that Pierce was actually biased against the plaintiffs, and that the Board's actions were influenced by Pierce's bias.
To understand the plaintiffs' allegations regarding Pierce's bias, it is helpful to step back several years. 1 In the mid-1970's, Pierce was employed as a private investigator, polygraph examiner, and process server for Russ Jones and Associates, a private security and investigation firm that was at that time owned by Russ Jones. When Jones refused to permit Pierce to become a co-owner, Pierce became angry and resentful. While Jones was away on vacation, and had temporarily left Pierce in charge of Jones' company, Pierce started his own business in direct competition with Russ Jones and Associates. Not surprisingly, the two men exchanged angry words upon Jones' return. During their heated exchange, Pierce threatened to run Jones' company out of business.
After leaving Russ Jones and Associates, Pierce's own business prospered. Dick Pierce and Associates soon becoming the largest private security company in Northern Nevada. In 1986, Pierce became one of the five members of the Nevada Private Investigators Licensing Board. A creature of Nevada Statute, the Board consists of the Attorney General (or his designate) and four members appointed by the Governor. Nev.Rev.Stat. Sec. 648.020(1). Of the Governor's appointees, one must be a private investigator, one a private patrolman, one a polygraph examiner, and one a representative of the general public. Nev.Rev.Stat. Sec. 648.020(2). The Board is responsible for licensing and regulating private investigators, private patrolmen, process servers, polygraph operators, repossessors, dog handlers, and companies providing these services. Nev.Rev.Stat. Secs. 648.030, 648.060, 648.070. No person or company may engage in any such business unless licensed by the Board. Nev.Rev.Stat. Sec. 648.060. As a member of the Board, Pierce had authority to vote on the licensing of companies which would compete directly with Dick Pierce and Associates.
Stivers has a long history in the private investigation and security business. He has worked as a private patrolman, private investigator, and process server for a total of 30 years. He was licensed in North Dakota in 1980 and, when he left that state in 1986, his license was still in good standing. Stivers arrived in Nevada in 1986, intending to start his own business. That same year, he became the general manager of the Reno branch office of Great Western Security, a Carson City based company.
As manager of Great Western's Reno branch, Stivers aggressively sought new business. Among the more lucrative opportunities pursued by Stivers was security for the convention business for Bally's Casino in Reno. Bally's had previously employed Dick Pierce and Associates for the vast majority of its convention security needs. Under Stivers' direction, however, Great Western was "very successful" in outbidding Pierce's company and "took away a substantial amount of business from Mr. Pierce," including business at Bally's. Great Western's successful bidding cost Pierce approximately $55,000 overall.
Upon arriving in Reno, Stivers became friends with Ernsberger, and the two made plans to enter the private security business together: Ernsberger would put up the cash to purchase a company; Stivers, with his long history in the industry, was to run the business.
While employed with Great Western, Stivers became acquainted with W.G. "Butch" Tamblyn, who was then owner of Russ Jones and Associates. Tamblyn had purchased the company from Russ Jones in the early 1980's and, by 1987, was hoping to sell it. Stivers and Ernsberger reached an agreement with Tamblyn. Stivers and Ernsberger formed Chamar, Inc. for the purpose of purchasing the assets of Russ Jones and Associates. Under the agreement, Tamblyn would not sell the corporation itself, at least immediately. Until licenses could be obtained for Chamar, they would all do business under the name of Russ Jones and Associates.
Under Nevada law, corporations providing private investigation and security services are required to have a licensed "qualifying agent"--a person meeting the individual licensing requirements for the type of work in which the company engages. Nev.Rev.Stat. Sec. 648.110. Tamblyn agreed to remain the "qualifying agent" of Russ Jones and Associates until August 1992. Stivers expected that he would be able to obtain a license to act as Chamar's qualifying agent after that date.
Pursuant to the agreement, Chamar purchased the assets of Russ Jones and Associates in August 1987. Shortly after the sale, Tamblyn notified Carol Widmer-Hanna, the Board's executive secretary, of the change in ownership. Tamblyn explained that the corporation's assets had been sold to Chamar, but that the business would temporarily continue to operate under the name Russ Jones and Associates, with Tamblyn remaining the corporation's qualifying agent. Widmer-Hanna told him that they were "proceeding fine." At Widmer-Hanna's request, Tamblyn sent written notification of the change in corporate structure. Neither Widmer-Hanna nor any other representative of the Board informed Tamblyn that there was anything improper about the arrangement to which he, Stivers, and Ernsberger had agreed.
In December 1987, Ernsberger and Stivers began the process of filing applications for the appropriate licenses, in accordance with Nev.Rev.Stat. Sec. 648.070. Ernsberger and Stivers delivered to Widmer-Hanna a copy of Chamar's certificate of corporate good standing, along with the purchase agreement between Chamar and Russ Jones and Associates. In March 1988, applications were submitted for the license of Chamar, and for licenses for Stivers and Ernsberger as corporate officers of Chamar, along with their application fee of $750. Stivers filed an application for qualifying agent status as a private investigator, private patrolman, and process server for Chamar, with additional fees of $1,550.
Problems began to develop in June 1988, when the plaintiffs appeared before the Board for the first time. Despite her prior communications with Tamblyn, the Board's executive secretary, Widmer-Hanna, had erroneously placed plaintiffs on the agenda as a "name change." Pierce led the questioning, insisting that it was inappropriate to consider Chamar's application as a name change, since Stivers and Ernsberger were in fact seeking licenses for...
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