Opinion ID: 202647
Heading Depth: 2
Heading Rank: 4

Heading: Official Versus Personal-Capacity Suits

Text: 56 The JUA argues that Flores Galarza, in his personal capacity, temporarily withheld approximately $173 million in compulsory liability insurance premiums for an unreasonable period[] of time, and, in so doing, appropriated $14.2 million in interest generated by those premiums. The JUA also argues that Flores Galarza personally appropriated $10 million in Overstated Reserve Funds and $13.6 million in Out-of-Pocket Funds. 57 However, the JUA does not seek to hold Flores Galarza personally liable for the full $173 million in withheld insurance premiums, most of which was subsequently paid to the JUA pursuant to the 2002 Settlement, nor does the JUA seek to hold Flores Galarza personally liable for the full $73 million in Reserve funds retained by Flores Galarza after the 2002 Settlement. Instead, the JUA seeks to hold Flores Galarza personally liable for interest lost on the $173 million plus two portions of the $73 million Reserve—i.e., the Overstated Reserve Funds and Out-of-Pocket Reserve Funds. The total amount sought by the JUA is approximately $38 million, that is, roughly $14.2 million in lost interest, $10 million in Overstated Reserve Funds, and $13.6 million in Out-of-Pocket Funds. Flores Galarza contends that he is not liable in his personal capacity based on qualified immunity. 58 Before analyzing whether Flores Galarza is entitled to qualified immunity, we pause to note the unusual nature of this personal-capacity suit. We are troubled by the notion that the personal-capacity claim against Flores Galarza, by which the JUA seeks enormous personal damages from him, is really a subterfuge for an official-capacity suit that seeks payment from the Commonwealth Treasury. Certainly the line between personal assets and the Commonwealth fisc seems indistinct. The JUA has sued the Secretary of the Treasury; the JUA claims that the Secretary temporarily withheld and permanently appropriated the JUA's funds for the benefit of the Commonwealth; and some of the damages sought by the JUA correspond to funds accumulated in the general fund pursuant to the 2002 Amendment. `[W]hen the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit....' Metcalf, 991 F.2d at 939 (quoting Ford Motor Co. v. Dep't of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 89 L.Ed. 389 (1945), overruled on other grounds by Lapides v. Bd. of Regents of Univ. Syst. of Ga., 535 U.S. 613, 122 S.Ct. 1640, 152 L.Ed.2d 806 (2002)). There is a plausible view of this case that the demand for damages from Flores Galarza is, in essence, a demand for the recovery of money from the Commonwealth. 59 In considering that possibility, we have looked closely at Hafer v. Melo, 502 U.S. 21, 112 S.Ct. 358, 116 L.Ed.2d 301 (1991), a case in which the Supreme Court tried to clarify the distinction between official- and personal-capacity suits. There, the plaintiffs sued the auditor general of Pennsylvania, Hafer, after she fired them from their jobs, alleging that they were fired for personal reasons in violation of the First Amendment; they sought monetary damages from Hafer personally. The claims against Hafer had nothing to do with her handling of funds in the state treasury, nor did the damages sought bear any relationship to funds accumulated in the state treasury. Id. at 23, 112 S.Ct. 358. 60 However, the principles set forth in Hafer make the factual distinctions between this case and Hafer seemingly irrelevant. There, the Court said that the phrase `acting in their official capacities' is best understood as a reference to the capacity in which the state officer is sued, not the capacity in which the officer inflicts the alleged injury. Id. at 26, 112 S.Ct. 358. Even earlier, the Supreme Court had suggested that in determining whether a suit involves a personal- or official-capacity claim, we should be guided by the complaint or, if not clearly specified in the complaint, by the [t]he course of proceedings. Kentucky v. Graham, 473 U.S. 159, 167 n. 14, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985). 61 Here, the complaint, in combination with the course of proceedings, see supra note 25, establishes that Flores Galarza is being sued for damages in his personal capacity. If the JUA wishes to seek a personal judgment against Flores Galarza in a ruinous and probably uncollectible amount for actions that he took as the Commonwealth Treasurer to serve the interests of the Commonwealth, they are entitled to do that. See generally Chemerinsky, supra, § 7.5.2, at 430 ([T]he fact that a government officer is acting in the scope of official duties is not enough to bar a suit as being in `official capacity'.). If such a judgment might induce the Commonwealth to indemnify Flores Galarza from the Commonwealth Treasury to spare him from ruin, that likelihood is irrelevant to the personal-capacity determination. See Berman Enters., Inc. v. Jorling, 3 F.3d 602, 606 (2d Cir.1993) (Whether or not a state would choose to reimburse an official for damages for constitutional harm he caused in his individual capacity is a matter of no concern to a federal court.). See generally Chemerinsky, supra, § 7.5.2, at 423 (State indemnification policies are irrelevant for Eleventh Amendment analysis and do not prevent federal court relief against individual officers.). 28 In short, in a suit against an officer for money damages when the relief would come from the officer's own pocket, there is no Eleventh Amendment bar even though the conduct was part of the officer's official duties. In such a suit, the officer could claim absolute or qualified immunity as a defense. Id. at 429. We turn, therefore, to Flores Galarza's qualified immunity defense.