Surplus Store and Exchange, Inc. v. City of Delphi, 89-3494

• Citation: 928 F.2d 788
• Decision Date: 05 April 1991
• Docket Number: No. 89-3494,89-3494
• Parties: SURPLUS STORE AND EXCHANGE, INC., Plaintiff-Appellant, v. CITY OF DELPHI, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 788

928 F.2d 788

SURPLUS STORE AND EXCHANGE, INC., Plaintiff-Appellant, v. CITY OF DELPHI, Defendant-Appellee.

No. 89-3494.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 22, 1990.

Decided April 5, 1991.

Carolyn S. Holder, Holder & Davis, Lafayette, Ind., for plaintiff-appellant.

William W. Kurnik, Kurnik, Cipolla, Stephenson & Barasha, Arlington Heights, Ill., James S. Stephenson, Stephenson & Kurnik, Indianapolis, Ind., for defendant-appellee.

Before BAUER, Chief Judge, EASTERBROOK, Circuit Judge, and WILL, Senior District Judge. ^*

BAUER, Chief Judge.

Possession may be "rather more than nine points of the law," Corporation of Kingston-upon-Hull v. Horner, [1774] Lofft 576, 591 (Lord Mansfield), but, as this case demonstrates, nine points is not always enough--especially if the holder of the tenth point is assisted by a police officer.

At stake here are a couple of gold rings worth about $1,100. On May 26, 1988, Patrolman Steve Mullin of the Delphi City Police Department spotted the rings at the Surplus Store and Exchange ("Surplus") on Main Street in Lafayette, Indiana. Mullin believed that the rings had been stolen from their true owner, Joyce Fowler. Surplus claimed (and still claims) that it obtained the rings in a bona fide purchase. Undaunted by this claim, Officer Mullin seized the rings, but not before signing a receipt that read: "The above items are released with the understanding that at this time [Surplus] has a vested interest in them and disposition [of] such is to be made by a court of law." Officer Mullin promptly disregarded the receipt and, later that same day, released the rings to Ms. Fowler. No notice of this release was given to Surplus, nor was any hearing or other proceeding held before Mullin gave away the rings.

This incident spawned a suit by Surplus in federal district court under 42 U.S.C. Sec. 1983 ("Sec. 1983"). ¹ Surplus named as a defendant only Mullin's employer, the City of Delphi ("Delphi"). In its brief, broadly-drafted complaint (and amended complaint), Surplus charged that Mullin violated its fourth and fourteenth amendment rights by seizing the rings and giving them to Fowler, "the purported owner." The fourteenth amendment claim--the heart of Surplus' complaints--sounds in procedural due process; to wit, Mullin's actions deprived Surplus of its property interest in the rings "without proper judicial hearing." Surplus alleged further that Mullin took these actions "under color of State law," citing in support three Indiana statutes: Ind.Code Secs. 35-33-5-5, 35-43-4-4(h), and 35-43-4-5 (1986 Supp.). The first provision states that all items of property seized by a law enforcement agency "shall be securely held" by the agency, with the exception that, if the item is "property obtained unlawfully from its owner," it may be returned to the owner before trial "in accordance with [Ind.Code Sec. ] 35-43-4-4(h)." Ind.Code Secs. 35-33-5-5(a) & (b). The second provision, in turn, allows a law enforcement agency "that is holding as evidence property over which a person is alleged to have exerted unauthorized control or to have otherwise obtained unlawfully" to return the property to its owner, if the agency follows certain procedures (e.g., photographing the item, obtaining a receipt from the owner, etc.). Ind.Code Sec. 35-43-4-4(h). The third provision, which is found in the "Defenses" section of the "Theft; Conversion" chapter, shields from criminal liability a person who attempts to return stolen personal property to its owner. Ind.Code Sec. 35-43-4-5(d). None of these statutes provide for a judicial hearing or other proceeding before the subject property is returned to its owner. Finally, Surplus' complaints allege that Mullin was acting "in his capacity as an employee of the City of Delphi."

Delphi moved to dismiss both the original and amended complaints, arguing that Indiana tort law provides an adequate remedy for Surplus' alleged injury. Surplus proffered a lengthy response to Delphi's motion. In light of the briefing that had taken place, the district court treated Delphi's motion as one for summary judgment under Fed.R.Civ.P. 56 and, on October 5, 1989, entered a memorandum opinion dismissing Surplus' complaint. (A judgment order to the same effect followed six days later.) The court's dismissal was "without prejudice to enable the plaintiff to pursue whatever claims may be available under the law of Indiana and in the courts of Indiana." From this final order, Surplus brought a timely appeal.

There are so many problems with this lawsuit, it is hard to know where to begin. Indeed, this fact is well-illustrated by the district court's opinion, which touches on a number of possible rationales for the dismissal of Surplus' action. The district court seems ultimately to rely upon the ground that Indiana tort law provides an adequate remedy, following Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), and Hudson v. Palmer, 468 U.S. 517, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984). See generally Guenther v. Holmgreen, 738 F.2d 879, 882 (7th Cir.1984), cert. denied, 469 U.S. 1212, 105 S.Ct. 1182, 84 L.Ed.2d 329 (1985) (discussing and applying Parratt 's teaching that "a victim of a property or liberty deprivation who has recourse to an adequate state remedy has not been denied 'due process of law' "). We choose a different tack. ²

As mentioned above, Surplus has sued only the municipality of Delphi. "[O]ur first inquiry in any case alleging municipal liability under Sec. 1983 is the question whether there is a direct causal link between a municipal policy or custom and the alleged constitutional deprivation." City of Canton v. Harris, 489 U.S. 378, 385, 109 S.Ct. 1197, 1203, 103 L.Ed.2d 412 (1989). See also City of Oklahoma City v. Tuttle, 471 U.S. 808, 816-20, 105 S.Ct. 2427, 2432-35, 85 L.Ed.2d 791 (1985); Monell v. New York Dept. of Social Services, 436 U.S. 658, 690-95, 98 S.Ct. 2018, 2035-38, 56 L.Ed.2d 611 (1978); Leahy v. Board of Trustees, 912 F.2d 917, 922 (7th Cir.1990) ("Proximate causation between the municipality's policy or custom and the plaintiff's injury must be present.") (quoting Strauss v. City of Chicago, 760 F.2d 765, 767 (7th Cir.1985)). Our search for a Delphi policy that meets this requirement begins with Surplus' pleadings, but they provide no help. In its complaints, Surplus not only fails to point to a specific Delphi policy or custom directly and causally linked to the alleged deprivation, but fails altogether to refer to any sort of Delphi policy or custom linked in any way to the alleged deprivation. In fact, the sole mention of Delphi is a reference to its employment of Officer Mullin, which is both revealing and dooming: the former because, under Surplus' allegations the only thing that Delphi did or failed to do that could possibly make it culpable for the constitutional violation is employ Officer Mullin, and the latter because that very ground for municipal liability has been explicitly rejected by the Supreme Court. See Harris, 489 U.S. at 385, 109 S.Ct. at 1203 ("[A] municipality can be found liable under Sec. 1983 only where the municipality itself causes the constitutional violation at issue. Respondeat superior or vicarious liability will not attach under Sec. 1983.") (emphasis in original) (discussing Monell, 436 U.S. at 694-95, 98 S.Ct. at 2037-38); Tuttle, 471 U.S. 808, 818, 105 S.Ct. 2427, 2433 (municipal liability cannot be imposed "merely because of an employment relationship") (also discussing Monell ).

Surplus' failure to allege in its pleadings facts which, if true, would meet the municipal policy requirement is itself a sufficient ground on which to dismiss Surplus' Sec. 1983 claim. See Leahy, 912 F.2d at 922 (citing cases). Moving beyond Surplus' pleadings and examining its briefs in this court, however, we discover that Surplus believes that it has satisfied the municipal policy requirement (as well as the separate "under color of state law" requirement) by citing in its complaints three particular Indiana statutes that authorized Officer Mullin to seize and dispose of the rings. ³ These statutes, Surplus argues, are unconstitutional because they fail to require a pre-disposition hearing. Surplus then attempts to make the conceptual leap from these Indiana statutes to Delphi city policy by arguing that Delphi has a "policy" of enforcing the statutes. ⁴ In other words, it is Surplus' contention that Delphi's decision simply to enforce these "unconstitutional" Indiana statutes was a "municipal policy" that "caused" the wrongful deprivation of Surplus' property interest in the rings, and thus the requirements of Monell and Harris, et al. are satisfied.

To formulate this argument is to see its fatal flaws. First, consider what Surplus has not alleged. (The meritless suggestion rejected supra in note 4 aside), Surplus has not claimed that the alleged constitutional violation was caused by a "policy statement, ordinance, regulation, or decision officially adopted and promulgated by" Delphi that was itself unconstitutional. See Sims v. Mulcahy, 902 F.2d 524, 541-42 (7th Cir.1990) (quoting Patrick v. Jasper County, 901 F.2d 561, 565 (7th Cir.1990) (quoting in turn Monell, 436 U.S. at 690, 98 S.Ct. at 2035)). Nor has Surplus claimed that the constitutional violation was caused by an "entrenched practice with the effective force of a formal policy" that Delphi allowed to develop, which practice or custom was itself unconstitutional. See Gray v. Dane County, 854 F.2d 179, 183-84 (7th Cir.1988). Nor has Surplus argued that Delphi, as a matter or policy or custom, enforces the law in a manner or method that caused the constitutional violation, which differentiates Surplus' claim from the one class of claims in which municipal liability can lie absent a showing of a municipal policy or custom that is itself unconstitutional: the "inadequate training" or "inadequate procedures" case...