Court Opinion

ID: 155154
Source: CourtListenerOpinion
Date Created: 2010-08-14 04:11:27+00
Date Added: 2024-06-11T12:29:21.040904
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                 UNITED STATES COURT OF APPEALS                            AUG 7 1997

                                 TENTH CIRCUIT                        PATRICK FISHER
                                                                               Clerk

 WAL-MART STORES, INC., dba
 Sam’s Club #6430,

          Plaintiff-Appellant,
                                                         No. 96-8080
 v.
                                                   (D.C. No. 95-CV-276-D)
                                                          (D. Wyo.)
 CITY OF CHEYENNE; CITY
 COUNCIL FOR THE CITY OF
 CHEYENNE,

          Defendants-Appellees.

                          ORDER AND JUDGMENT *

Before SEYMOUR, Chief Judge, PORFILIO and TACHA, Circuit Judges.

      Wal-Mart Stores, Inc., d/b/a Sam’s Club, sued the City of Cheyenne and its

City Council in state court, asserting constitutional and state law claims arising

out of Cheyenne’s decision to deny WalMart a retail liquor license. Cheyenne

removed the action to federal court and moved for judgment on the pleadings,

      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
which the district court granted. We affirm the district court’s ruling with respect

to the constitutional claims, and we remand the state law claims with instructions

to dismiss them without prejudice. 1

      The facts are essentially undisputed. Wal-Mart began its attempts to obtain

a retail liquor license in Cheyenne in 1994. It first applied for a recently-expired

license that had been held by a restaurant. When that application was denied, it

applied for a new license that had become available due to a population change.

This license was ultimately given to another applicant. During the proceedings

pertaining to this application, two unidentified Council members asked Wal-Mart

whether it had attempted to purchase a retail liquor license from another holder in

Cheyenne. Wal-Mart thereupon arranged to purchase a retail liquor license from

      1
                    A motion for judgment on the pleadings under
             Fed.R.Civ.P. 12(c) is treated as a motion to dismiss
             under Fed.R.Civ.P. 12(b)(6). We review the sufficiency
             of a complaint de novo, and will uphold dismissal “only
             when it appears that the plaintiff can prove no set of
             facts in support of the claims that would entitle the
             plaintiff to relief.” We must accept all well-pleaded
             allegations in the complaint as true and “construe them
             in the light most favorable to the plaintiff.”

Mock v. T.G. & Y. Stores Co., 971 F.2d 522, 528-29 (10th Cir. 1992) (citations
omitted). Although the record reflects that some material outside the pleadings
may have been submitted to and not excluded by the district court, both parties
assert on appeal that the district court’s disposition of the suit was made under
Rule 12(c), and we therefore treat it as such. Accordingly we do not consider
material outside the pleadings.

                                         -2-
another establishment and submitted an application to transfer the ownership and

location of this license. The Council denied Wal-Mart’s application without

giving any reasons. Wal-Mart then filed this suit alleging that it was entitled to

relief under state law in several regards, and that Cheyenne had deprived it of

substantive due process under 42 U.S.C. § 1983.

      Wal-Mart contends the Council’s decision to deny it a liquor license was

arbitrary and capricious and thereby violated Wal-Mart’s substantive due process

rights. Wal-Mart asserts it was entitled to substantive due process protection

when applying to transfer the purchased liquor license because it had a property

interest in the approval of that application. 2 Wal-Mart first argues that such a

property interest is created by the liquor statutes and ordinances governing

applications to obtain new licenses, renew licenses, and transfer licenses. As the

district court pointed out, however, these provisions do not state that fulfillment

of specified conditions assures approval of an application. See Aplt. App. at 135-

36 (discussing W YO . S TAT . A NN . § 12-4-104(b) (Michie 1986) (a license shall not

be issued, renewed, or transferred if one of five factors is present) and

C HEYENNE , W YO ., C ODE art. II, § 4-21 (City has discretionary authority to issue

      2
        Although the pleadings allege only that Wal-Mart was denied substantive
due process, Wal-Mart has upon occasion in these proceedings asserted a denial
of procedural due process as well. Given our conclusion infra that Wal-Mart has
failed to establish a property interest, Wal-Mart’s procedural due process claim
fails as well. See Board of Regents v. Roth, 408 U.S. 564, 569-70 (1972).

                                          -3-
licenses to those it deems proper recipients)). Absent a provision under which an

applicant has a legitimate claim of entitlement to a license when specified

conditions are met, an entity’s failure to follow its own procedures does not give

rise to a due process violation. Jacobs, Visconti & Jacobs v. City of Lawrence,

927 F.2d 1111, 1116 (10th Cir. 1991). A promise to follow certain procedural

steps in considering an application does not of itself create a property interest in

that application, Bunger v. University of Okla. Bd. of Regents, 95 F.3d 987, 991

(10th Cir. 1996), nor does a requirement that application decisions be reasonable,

Jacobs, 927 F.2d at 1116. 3

      Wal-Mart also contends it has a constitutionally protected property interest

because of its ownership of the existing license. This assertion puts the cart

before the horse. While Wal-Mart may have an item of value that is transferrable

under state law, that item is not the right to sell liquor, but only the right to apply

      3
        In view of the authority from this circuit set out above, Wal-Mart’s
reliance on Hornsby v. Allen, 326 F.2d 605 (5th Cir. 1964), is misplaced. The
court in Hornsby held that the denial of a liquor license deprived the plaintiff of
her due process rights even though under state law a liquor license was a privilege
and not a right. Id. at 609-10. The Fifth Circuit has indicated that Hornsby is of
doubtful continuing vitality, see Atlanta Bowling Ctr., Inc. v. Allen, 389 F.2d 713
(5th Cir. 1968), and has refused to extend it to zoning cases, see South Gwinnett
Venture v. Pruitt, 491 F.2d 5, 7 n.1 (5th Cir. 1974). No recent circuit case has
relied on Hornsby as Wal-Mart asks this court to do, and the viability of its
holding is doubtful in light of the legion of more recent cases stating that failure
to follow procedures does not violate due process if no property interest is
involved.

                                          -4-
for the right to sell liquor. The bootstrap argument posed by Wal-Mart would in

effect eliminate the application process entirely with respect to transfer

applications, a result directly at odds with state law.

      Finally, Wal-Mart asserts it has a property interest based on the queries by

two Council members concerning Wal-Mart’s efforts to purchase an existing

license. Wal-Mart contends these comments created an implied agreement

between it and the Council that if Wal-Mart did purchase an existing license, the

Council would approve Wal-Mart’s application to transfer the license. The

district court held that state law does not provide for the creation of a contract

giving rise to a property interest in these circumstances, and we agree. “The

members of a board cannot act as individuals to bind an agency because the board

must act as a body to validly act for and obligate the agency by an express

contract.” Robert W. Anderson Housewrecking & Excavating, Inc. v. Board of

Trustees, 681 P.2d 1326, 1329-30 (Wyo. 1984). Even if the representations by

the two Council members could be viewed as an implicit agreement that they

personally would vote to approve the transfer application, those members could

not bind the Council.

      We accordingly conclude that Wal-Mart’s pleadings, viewed most favorably

                                          -5-
to it, fail to establish that it had a constitutionally protected property interest. 4

We therefore affirm the district court’s judgment for Cheyenne on the claims

asserted under section 1983.

       We turn now to Wal-Mart’s claims that it is entitled to relief under various

state law theories. The district court addressed these claims on the merits and

dismissed them under Rule 12(c). We have held that when, as here, the federal

claims are resolved prior to trial, the district court should usually decline to

exercise jurisdiction over pendent state law claims and allow a plaintiff to pursue

them in state court. See Ball v. Renner, 54 F.3d 664, 669 (10th Cir. 1995). We

believe this general practice is particularly appropriate here. Liquor licensing is

highly regulated by the state and is a matter of particular state concern. We

therefore reverse the dismissal with prejudice of the state law claims and remand

with instructions to remand them to state court. Carnegie-Mellon Univ. v. Cohill,

       4
         “Authority in this circuit is unclear on what interest is required to trigger
substantive due process guarantees.” Jacobs, Visconti & Jacobs v. City of
Lawrence, 927 F.2d 1111, 1119 (10th Cir. 1991) (comparing cases). What is
clear, however, is that Wal-Mart’s asserted interest in a liquor license “bears
‘little resemblance to the fundamental interests that previously have been viewed
as implicitly protected by the Constitution.’” Lehman v. City of Louisville, 967
F.2d 1474, 1476 n.2 (10th Cir. 1992) (quoting Regents of Univ. of Mich. v.
Ewing, 474 U.S. 214, 229 (1985)).

                                            -6-
484 U.S. 343, 357 (1988). 5

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

WITH INSTRUCTIONS.

                                             ENTERED FOR THE COURT

                                             Stephanie K. Seymour
                                             Chief Judge

      5
       In light of our disposition, we deny Wal-Mart’s Motion to Certify
Questions of State Law.

                                       -7-