Thompson v. Village of Hales Corners

• Decision Date: 30 November 1983
• Docket Number: No. 82-488,82-488
• Citation: 115 Wis.2d 289,340 N.W.2d 704
• Parties: Jeff THOMPSON, Plaintiff-Respondent and Cross-Appellant, v. VILLAGE OF HALES CORNERS, a municipal corporation, Defendant-Appellant and Cross-Respondent, Walter Nowicki, Inc., a Wisconsin corporation, Defendant and Cross-Respondent.
• Court: Wisconsin Supreme Court

Page 704

340 N.W.2d 704

115 Wis.2d 289

Jeff THOMPSON, Plaintiff-Respondent and Cross-Appellant, v. VILLAGE OF HALES CORNERS, a municipal corporation, Defendant-Appellant and Cross-Respondent, Walter Nowicki, Inc., a Wisconsin corporation, Defendant and Cross-Respondent.

No. 82-488.

Supreme Court of Wisconsin.

Argued Sept. 8, 1983.

Decided Nov. 30, 1983.

David J. Schoetz, Milwaukee, for defendant-appellant and cross-respondent.

Mark J. Rogers, Milwaukee, for plaintiff-respondent and cross-appellant.

DAY, Justice.

This is an appeal from a judgment of the Milwaukee County Circuit Court, Honorable Michael T. Sullivan, Reserve Judge, presiding, awarding damages and attorney's fees to the plaintiff, Jeff Thompson (Thompson), against the Village of Hales Corners (Village) for violation of his civil rights under section 1983 of Title 42 of the United States Code. The court also awarded damages to defendant Walter Nowicki, Inc. (Nowicki) against Thompson in its counterclaim for unpaid rents. This court accepted the case on certification from the court of appeals pursuant to section 809.61, Stats. 1981-82. The two principal questions raised on appeal are: (1) whether the state may limit the amount a claimant may recover against a municipality in a section 1983 civil rights action, and (2) whether the trial court applied the correct standards in awarding attorney's fees under 42 U.S.C. section 1988. We conclude that a state statutory recovery ceiling on damages awards against governmental bodies is inapplicable in section 1983 suits, and that the attorney's fees of $23,180.80 were reasonable and should not have been reduced by the trial court. Other issues raised by the parties will be dealt with in the balance of this opinion.

In the fall of 1977, Thompson began investigating the possibility of opening a combination sandwich shop and amusement arcade in the Hales Corners area. In January of 1978, he reached an agreement with a representative of Nowicki on the terms of a lease in the Postal Plaza Shopping Center and began making improvements in anticipation of opening sometime in the spring. The shop, known as "Pinnochios," opened on May 1, 1978. It consisted of one room where food was served and a second smaller room that contained from eight to twelve coin operated amusement devices--pinball machines, pool tables and electronic video games. Though Pinnochios' clientele included people of all ages, the restaurant was directed toward and attracted a large number of young people.

Pinnochios did its best business during the first months of operation. Sales fell off sharply in the late summer and into the fall. On December 23, 1978, Mr. Thompson closed Pinnochios.

Throughout 1978 and at all other times relevant to this lawsuit, the Village had an ordinance forbidding minors to play coin operated amusement devices unless accompanied by a parent or adult guardian. ¹ Thompson testified that he was first made aware of this rule in March of 1978, when a member of the Hales Corners Police Department delivered a copy of the ordinance to him. A few days later, Thompson met with the chief of police who told him that the ordinance would be enforced and might even prevent the business from opening. In April, Thompson unsuccessfully attempted to have the ordinance changed and was again informed, this time by the village attorney, that the law would be enforced.

Thompson testified that he made an effort to comply with the law. He posted a sign in the game room, checked patrons' identification cards, and refused to allow several known minors to play the games.

On May 12, the village commissioner sent Thompson a letter which noted his failure to license some of his games and warned against violations of section 11.06. There was testimony that police presence in and around Pinnochios increased over the course of the operation of the business. On May 14, an officer for the village police department observed minors playing games and reported the violation to Pinnochios' manager. Policemen entered the premises on a number of occasions to check identification cards of patrons in the game room.

Police patrols outside Pinnochios also increased. One employee testified to observing as many as three to five police cars per hour. Others reported seeing police cars two or three times an hour. One witness reported seeing policemen in parked cars watching what was going on inside the restaurant with binoculars.

There was never any completed formal prosecution for violations of section 11.06 at Pinnochios. The police did issue "Police Department Referral Memos" to two employees and a summons and complaint to Thompson for violation of the ordinance during a Halloween party in late October.

There was testimony that the police presence made customers uneasy and caused some to leave or stay away. Mr. Thompson claimed that as the police presence increased, business declined. By December, the operation was no longer profitable and was closed.

On November 15, 1978, Thompson filed suit in the Milwaukee County Circuit Court. His complaint alleged four separate causes of action. The first was for tortious misrepresentation. Thompson alleged that both the village and Nowicki falsely represented that there were no legal impediments to operating the business. The second claim, for negligence, was dismissed on motion of the plaintiff before trial. The third claim sought rescission of the lease with Nowicki on the grounds of mutual mistake of fact, and the fourth was for violation of Thompson's civil rights under 42 U.S.C. section 1983. The section 1983 claim charged that the Village had selectively enforced its ordinance number 11.06 to Thompson's injury. Nowicki counterclaimed against Thompson for unpaid rents.

The matter was tried before a jury in October of 1981 which found in favor of the Village and Nowicki on the misrepresentation claim. A verdict for Thompson on the mutual mistake claim was overturned by the trial court. On the civil rights claim, the jury found for Thompson and awarded $88,000 in damages consisting of $38,000 for capital and operational losses and $50,000 for lost profits. The court also made a finding and award of attorney's fees as authorized by federal law. The jury found for Nowicki in its counterclaim and the court entered judgment for $2,852 against Thompson for unpaid rents. Both the Village and Thompson raise a number of issues on appeal.

The first issue concerns the enforceability of an $88,000 damage award against a municipality in a section 1983 action. The Village contends that its maximum exposure in any tort action, including a section 1983 claim, is limited by section 893.80(3), Stats. 1979-80 ² at $25,000. Thompson, while not challenging the general validity of the statute, argues that the Supremacy Clause of the United States Constitution forbids the state to limit recovery on a civil rights claim under section 1983.

Article VI, clause 2 of the United States Constitution provides: "[T]his constitution, and the Laws of the United States which shall be made in pursuance thereof ... shall be the supreme law of the land." The United States Supreme Court has interpreted the Supremacy Clause to require that "any state law, however clearly within a state's acknowledged power, which interferes with or is contrary to federal law, must yield." Free v. Bland, 369 U.S. 663, 666, 82 S.Ct. 1089, 1092, 8 L.Ed.2d 180 (1962); Gibbons v. Ogden, 22 U.S. 1, 210-211, 6 L.Ed. 23 (1824). In considering the validity of a state act under the Supremacy Clause, the question is whether the challenged statute "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," Perez v. Campbell, 402 U.S. 637, 649, 91 S.Ct. 1704, 1711, 29 L.Ed.2d 233 (1970) or results in "frustration and erosion of the congressional policy embodied in federal rights." Ridgway v. Ridgway, 454 U.S. 46, 54, 102 S.Ct. 49, 54, 70 L.Ed.2d 39 (1981). Furthermore, "[t]he relative importance to the State of its own law is not material when there is a conflict with a valid federal law...." Free v. Bland, 369 U.S. at 666, 82 S.Ct. at 1092. In determining the validity of the state recovery limit we must first inquire into the purposes underlying section 1983 and then determine whether giving effect to the state statute would frustrate those purposes.

Title 42 U.S.C. section 1983 enacted as section 1 of the Civil Rights Act of 1871 provides:

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

United States Supreme Court cases construing section 1983 have identified two principal purposes behind the statute: to create a species of tort liability in favor of persons deprived of constitutional rights and to deter governmental authorities from future constitutional violations. Robertson v. Wegmann, 436 U.S. 584, 590-591, 98 S.Ct. 1991, 1995-96, 56 L.Ed.2d 554 (1978).

The United States Supreme Court made an analysis of tort liability under section 1983 in the case of Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978). That case involved a suit by public school students against school officials because they had been suspended from school without due process of law. The question before the Court was whether the students' recovery under the federal statute should be governed by traditional tort damages doctrines or whether they should be permitted to recover damages without any showing of actual injury. The Court held that the guiding principle in section 1983 damage awards is compensation. "[T]he basic purpose of...