Tri-State Development, Ltd. v. Johnston, TRI-STATE

• Citation: 160 F.3d 528
• Decision Date: 30 October 1998
• Docket Number: TRI-STATE,No. 97-35420,97-35420
• Parties: 98 Daily Journal D.A.R. 11,267, 98 Daily Journal D.A.R. 12,271 DEVELOPMENT, LTD., a Washington corporation, Plaintiff-Appellant, v. David A. JOHNSTON; Gayle Johnston; John H. Shields, Pierce County Sheriff, Defendants-Appellees. Attorney General of the State of Washington, Defendant-Intervenor Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 528

160 F.3d 528

98 Daily Journal D.A.R. 11,267,

98 Daily Journal D.A.R. 12,271

TRI-STATE DEVELOPMENT, LTD., a Washington corporation, Plaintiff-Appellant, v. David A. JOHNSTON; Gayle Johnston; John H. Shields, Pierce

County Sheriff, Defendants-Appellees.

Attorney General of the State of Washington,

Defendant-Intervenor Appellee.

No. 97-35420.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 10, 1998.

Decided Oct. 30, 1998.

Jeffrey P. Helsdon, McFerran & Helsdon, P.S., Tacoma, Washington, for plaintiff-appellant.

Jill Guernsey, Deputy Prosecuting Attorney, Pierce County, Tacoma, Washington, for defendant-appellee John H. Shields, Pierce County Sheriff.

Christine O. Gregoire, Attorney General of Washington, James K. Pharris, Senior Assistant Attorney General, Olympia, Washington, for defendant-intervenor-appellee Attorney General of the State of Washington.

No appearance for defendants-appellees David A. Johnston and Gayle Johnston.

Appeal from the United States District Court for the Western District of Washington; Robert J. Bryan, District Judge, Presiding. D.C. No. CV-96-05707 RJB.

Before: CANBY, JR. and TASHIMA, Circuit Judges, and EZRA, District Judge. ^*

TASHIMA, Circuit Judge:

Tri-State Development, Ltd. (Tri-State) appeals from the district court's order granting summary judgment to David and Gayle Johnston, and John Shields. We reverse.

I. BACKGROUND

Following a series of contractual disputes regarding the construction of their home, the Johnstons filed suit in Washington state court against Tri-State alleging breach of contract and breach of the implied warranty of habitability. Relying on RCW 6.25.070(2), which allows the attachment of real property without prior notice and a hearing, the Johnstons also filed an ex parte motion for the issuance of a writ of attachment in order to attach real property owned by Tri-State. ¹ Based on the pleadings and an affidavit filed by David Johnston, the Washington Superior Court ordered the issuance of the writ and, pursuant thereto, the sheriff attached the property. Tri-State did not receive notice of the Johnstons' complaint or of the motion for the issuance of the writ until after the writ had been issued.

Rather than asserting its right under RCW 6.25.070(3) to an early postattachment hearing, Tri-State filed this action in the district court against the Johnstons and Shields, the sheriff who attached the property. Tri-State sought injunctive relief, compensatory and punitive damages under 42 U.S.C. § 1983, and a declaration that RCW 6.25.070 violates the due process clause of the Fourteenth Amendment. The district court denied Tri-State's motion for partial summary judgment, then invited the State of Washington to intervene. It subsequently granted summary judgment in favor of the Johnstons and Shields, concluding that Tri-State had failed to show that the statute was unconstitutional.

II. STANDARD OF REVIEW

The district court's grant of summary judgment is reviewed de novo. Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir.1998). Here, the facts underlying the district court's conclusion that the statute is not unconstitutional are not in dispute; therefore, the only question we must determine is whether the district court correctly applied the law. Id. We review de novo the district court's ruling on the constitutionality of a state statute. Bland v. Fessler, 88 F.3d 729, 732 (9th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 513, 136 L.Ed.2d 403 (1996).

III. DISCUSSION

In Connecticut v. Doehr, 501 U.S. 1, 111 S.Ct. 2105, 115 L.Ed.2d 1 (1991), the Supreme Court held that a Connecticut statute that "authorizes prejudgment attachment of real estate without prior notice or hearing, without a showing of extraordinary circumstances, and without a requirement that the person seeking the attachment post a bond" violated the due process clause of the Fourteenth Amendment. ² Id. at 4, 111 S.Ct. 2105. In Doehr, John DiGiovanni sought an attachment of Doehr's home in conjunction with a civil suit he was filing against Doehr for an alleged assault and battery.

The Court applied the three-part inquiry of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), in order to determine whether Connecticut's attachment statute satisfied due process. See Doehr, 501 U.S. at 10-11, 111 S.Ct. 2105. First, the court must consider the private interest that will be affected by the prejudgment action. Second, the court examines the risk of erroneous deprivation and the probable value of additional safeguards. Third, in the case of a dispute between private parties rather than between an individual and the government, the court must consider the interest of the party seeking the prejudgment remedy, with "due regard for any ancillary interest the government may have in providing the procedure or forgoing the added burden of providing greater protections." Id. at 11, 111 S.Ct. 2105.

Applying the Mathews factors, the Court determined that Connecticut's procedures inadequately protected Doehr's due process rights. First, the Court stated that attachment affects significant property interests, despite the State's argument that attachment did not involve a complete, physical, or permanent deprivation of real property. Id. at 11-12, 111 S.Ct. 2105. The Court then discussed the inadequacy of the standard of "probable cause," whose meaning was unclear even to the State, to guard against the risk of erroneous deprivation. Id. at 13-14, 111 S.Ct. 2105. If probable cause only required the plaintiff to state a facially valid complaint, the risk of erroneous deprivation was substantial, as it would allow "deprivation of the defendant's property when the claim would fail to convince a jury, [or] when it rested on factual allegations that were sufficient to state a cause of action but which the defendant would dispute." Id. Even if probable cause required a finding of probable cause that the plaintiff would receive a favorable judgment, the Court reasoned that a judge could not make a realistic assessment of the likelihood of the action's success based on only one side's version of an incident such as an alleged assault. Id. at 14, 111 S.Ct. 2105. Finally, the Court concluded that DiGiovanni's interests were minimal. He had no existing interest in the property and attached it only "to ensure the availability of assets to satisfy his judgment if he prevailed on the merits of his action." Id. at 16, 111 S.Ct. 2105. Nor were there any allegations that Doehr was going to take any action that would have rendered his property unavailable to satisfy a judgment, an exigent circumstance that would have permitted attachment without notice and a hearing. Id.

Although Doehr held only that the Connecticut statute was unconstitutional "as applied to [that] case," id. at 4, 111 S.Ct. 2105, both the facts and the statute at issue in this case are virtually indistinguishable from those in Doehr. Like the Connecticut statute in Doehr, the Washington statute allows prejudgment attachment without prior notice or a hearing, requiring only a finding of "probable cause to believe the allegations of plaintiff's affidavit." RCW 6.25.070(2). Thus, RCW 6.25.070(2) could potentially allow deprivation of the defendant's property when the plaintiff has merely stated allegations sufficient to state a cause of action, but which the defendant would dispute.

Also similar to the Connecticut statute, RCW 6.25.070(2) does not require a showing of extraordinary circumstances, such as an allegation that the defendant is about to transfer or encumber the property, or otherwise make it unavailable to satisfy a judgment. Contrary to the State's assertion Washington does not require a finding of exigent circumstances if the attachment is sought only for real property. RCW 6.25.070(2)(a)(ii) clearly states that exigent circumstances, those appearing in RCW 6.25.030(5) through (7) or RCW 6.25.040(1), are required only if the attachment is to be levied on personal property. ³

Washington provides for prompt notice of the seizure and of the right to an early hearing; however, an expeditious postattachment hearing did not save the Connecticut statute. The Court concluded that the safeguards provided by Connecticut law--an expeditious hearing, notice for such a hearing, judicial review of an adverse decision, and a double damages action if the original suit is commenced without probable cause--were insufficient to "cure the temporary deprivation that an earlier hearing might have prevented." Doehr, 501 U.S. at 15, 111 S.Ct. 2105. The Court contrasted the situation with that in Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974), where the Court upheld a Louisiana statute that had similar safeguards, yet no requirement of predeprivation notice or hearing. The Court noted that in Mitchell, "the plaintiff had a vendor's lien to protect, the risk of error was minimal because the likelihood of recovery involved uncomplicated matters that lent themselves to documentary proof, and the plaintiff was required to put up a bond," factors all missing in Doehr. Doehr, 501 U.S. at 15, 111 S.Ct. 2105 (citation omitted).

With the exception of the requirement of a bond, Tri-State's situation is more similar to that in Doehr than that in Mitchell. In Mitchell, the party seeking sequestration had a vendor's lien on household goods sold on an installment contract to Mitchell, and there was no question of the vendor's interest in the property. Thus, unlike the instant case, the vendor clearly had an interest in the property, Mitchell's interest in the property was limited to any surplus remaining after foreclosure and sale of the property in the event of his default, and there was the risk that the buyer could conceal, transfer, or damage the goods. See Mitchell, 416 U.S. at 604, 607-09, 94 S.Ct. 1895.

Applying the Mathews factors to the instant case,...