Court Opinion

ID: 3172229
Source: CourtListenerOpinion
Date Created: 2016-01-26 18:01:35.360772+00
Date Added: 2024-06-11T12:00:50.493749
License: Public Domain

FILED
                                                      United States Court of Appeals
                                                             Tenth Circuit

                                 PUBLISH                     January 26, 2016

                UNITED STATES COURT OF APPEALSElisabeth A. Shumaker
                                                               Clerk of Court
                      FOR THE TENTH CIRCUIT
                        _________________________________

COLUMBIAN FINANCIAL
CORPORATION; THE
COLUMBIAN BANK & TRUST
COMPANY,

      Plaintiffs - Appellants,
                                                    No. 14-3274
v.

JUDI M. STORK; DERYL K.
SCHUSTER; OFFICE OF THE
STATE BANK COMMISSIONER
OF KANSAS; EDWIN G.
SPLICHAL; J. THOMAS THULL,

      Defendants - Appellees.
                        _________________________________

                Appeal from the United States District Court
                      for the District of Kansas
                 (D.C. No. 2:14-CV-02168-SAC-KGS)
                        _________________________________

Matthew J. Limoli, (John M. Edgar and Michael D. Pospisil with him on
the briefs), Edgar Law Firm, LLC, Kansas City, Missouri, for Plaintiffs-
Appellants.

Jay D. Befort, General Counsel, Special Assistant Attorney General
(Dustin L. Kirk, Staff Attorney, Special Assistant Attorney General, with
him on the brief), Office of the State Bank Commissioner, Topeka, Kansas,
for Defendants-Appellees.
                           _________________________________

Before GORSUCH, EBEL, and BACHARACH, Circuit Judges.
                    _________________________________
BACHARACH, Circuit Judge.
                  _________________________________

      Amidst the 2007–2008 financial crisis, the Office of the State Bank

Commissioner of Kansas declared The Columbian Bank and Trust Company

insolvent, seized the bank’s assets, and appointed the Federal Deposit

Insurance Corporation as receiver. The FDIC then sold many of the bank’s

assets. Columbian Financial Corporation, the bank’s sole shareholder, sued

the state bank commission and four commission officials (Ms. Judi Stork,

Mr. Deryl Schuster, Mr. Edwin Splichal, and Mr. J. Thomas Thull) under

42 U.S.C. § 1983. 1 In the complaint, Columbian Financial alleges denial of

due process from the seizure of bank assets, seeking equitable remedies

and damages. 2

      The district court dismissed the complaint. On the equitable claims,

the district court ordered dismissal without prejudice under Younger v.

Harris, 401 U.S. 37 (1971). On the claims for damages, the court ordered

dismissal, concluding that (1) Eleventh Amendment immunity applied to

all of the claims against the state bank commission and the official-

capacity claims against Ms. Stork and Mr. Schuster and (2) Ms. Stork and

1
      In district court, the bank was included as a plaintiff. The district
court dismissed the claims brought by the bank, concluding that it could
not sue under § 1983. This ruling has not been appealed.
2
      Ms. Stork is named in her individual and official capacities, Mr.
Schuster is named in his official capacity, and Mr. Splichal and Mr. Thull
are named in their individual capacities.
                                   2
Mr. Schuster, in their official capacities, were not considered “persons” for

purposes of § 1983. The district court ruled that Mr. Splichal had absolute

immunity and that all of the commission officials enjoyed qualified

immunity in their individual capacities. This appeal followed, with the

parties raising two issues.

      The first issue is whether the district court properly abstained under

Younger. Younger requires federal courts to refrain from ruling when it

could interfere with ongoing state proceedings. Sprint Commc’ns, Inc. v.

Jacobs, __ U.S. __, 134 S. Ct. 584, 591 (2013). Though a state court

proceeding was ongoing when the federal complaint was filed, the state

proceeding terminated while this appeal was pending. In light of this

change of circumstances, we vacate the dismissal without prejudice on the

equitable claims and remand for further proceedings.

      The second issue is whether Ms. Stork and Mr. Thull are entitled to

qualified immunity on the claims for damages. Columbian Financial

alleged violation of a clearly established right to procedural due process

when commission officials seized the bank’s assets and placed them under

FDIC receivership without a predeprivation hearing or a prompt

postdeprivation hearing. In our view, Ms. Stork and Mr. Thull enjoy

qualified immunity on this claim because the alleged conduct would not

have violated a clearly established constitutional right. Thus, we agree

                                   3
with the district court’s decision to dismiss the claims for damages against

Ms. Stork and Mr. Thull.

I.   The bank was declared insolvent, its assets were seized, and the
     FDIC was appointed as receiver.

     Because this appeal involves a ruling on a motion to dismiss, we take

the following facts from the complaint unless otherwise noted. See Brown

v. Montoya, 662 F.3d 1152, 1162-63 (10th Cir. 2011).

     Like many financial institutions, The Columbian Bank and Trust

Company experienced financial difficulties during the 2007–2008 financial

crisis. These difficulties led the FDIC to conduct an onsite examination of

the bank and downgrade its supervisory rating; months later, the bank

entered into a consent agreement with the FDIC and the state bank

commission.

     The consent agreement stated that the FDIC and the state bank

commission “had reason to believe that the [b]ank had engaged in unsafe

and unsound banking practices,” and the FDIC and the state bank

commission ordered the bank to “cease and desist” from those practices.

Appellant’s App’x at 72. The order stiffened regulatory oversight of the

bank, requiring written liquidity analyses, projections on sources of

liquidity and uses of funds, and review and amendment of the bank’s

management policies. The bank’s analyses, projections, and policy

amendments were to be submitted to the state bank commission and the

                                  4
FDIC for review and comment. The bank complied with these

requirements.

      Notwithstanding the bank’s compliance, the state bank commission

declared the bank insolvent, seized the bank’s assets, and appointed the

FDIC as receiver. The same day, the FDIC sold many of the bank’s assets

to a third party in a prearranged sale.

      Columbian Financial and the bank did not obtain a hearing until after

the state commission seized the bank’s assets and appointed the FDIC as

the receiver. But Columbian Financial and the bank petitioned a Kansas

trial court for review of the commission’s actions.

      About eighteen months later, the Kansas trial court remanded the

petition to the bank commission for a postseizure hearing. Roughly two

more years elapsed before the bank commission issued a decision, granting

summary judgment against Columbian Financial and the bank. They then

filed a new petition for judicial review in the Kansas courts. The trial court

dismissed the action as moot, and Columbian Financial and the bank

appealed. Columbian Bank & Trust Co. v. Splichal, No. 110,256-57, 329
P.3d 557 (Kan. Ct. App. July 25, 2014) (unpublished). Before the Kansas

Court of Appeals issued a decision, Columbian Financial filed this suit in

federal court for deprivation of due process. The federal district court

ordered dismissal, relying in part on Younger abstention and qualified

immunity.

                                    5
      This appeal followed. While our appeal was pending, the state-court

appeal terminated in favor of the state bank commission. Columbian Bank

& Trust Co. v. Spichal, No. 110,256-57, 329 P.3d 557 (Kan. Ct. App. July

25, 2014) (unpublished), rev. denied (Kan. June 29, 2015).

II.   In light of a change in circumstances, we vacate the district
      court’s dismissal of the equitable claims.

      We engage in de novo review of the district court’s decision to

abstain under Younger v. Harris, 401 U.S. 37 (1971). Brown ex rel. Brown

v. Day, 555 F.3d 882, 887 (10th Cir. 2009). Under Younger, federal courts

must abstain from exercising jurisdiction when three conditions are

satisfied:

      1.     There is an ongoing state proceeding.

      2.     The state court provides an adequate forum for the claims
             raised in the federal complaint.

      3.     The state proceedings “involve important state interests,
             matters which traditionally look to state law for their resolution
             or implicate separately articulated state policies.”

Amanatullah v. Colo. Bd. of Med. Exam’rs, 187 F.3d 1160, 1163 (10th Cir.

1999) (quoting Taylor v. Jaquez, 126 F.3d 1294, 1297 (10th Cir. 1997)). If

these three conditions are met, abstention under Younger is mandatory.

Taylor v. Jaquez, 126 F.3d 1294, 1297 (10th Cir. 1997).

      The parties disagree only on the first Younger prong: whether there is

an ongoing state proceeding. Under our precedent, we ask both whether

there is an ongoing state proceeding and whether this proceeding is the

                                    6
type afforded Younger deference. Brown, 555 F.3d at 888. The parties

agree that

            the state proceeding was ongoing when Columbian Financial
             filed its federal complaint and

            the state proceeding has terminated.

Thus, if Columbian Financial were to refile its federal complaint, Younger

would no longer present a jurisdictional hurdle.

      The termination of the state proceeding might render the Younger

issue moot. But we need not decide this issue. 3 Regardless of whether the

Younger issue is moot, Columbian Financial could now prosecute the

equitable claims in federal court in light of the termination of the state

administrative proceedings. For example, if we were to affirm the

dismissal, Columbian Financial could refile because the dismissal was

3
     Some courts have held that under Younger, a state proceeding is
considered ongoing if it was pending when the federal suit was filed. See
Tony Alamo Christian Ministries v. Selig, 664 F.3d 1245, 1250 (8th Cir.
2012) (“[T]he relevant time for determining if there are ongoing state
proceedings is when the federal complaint is filed.”); Bettencourt v. Bd. of
Registration in Med., 904 F.2d 772, 777 (1st Cir. 1990) (same); Beltran v.
California, 871 F.2d 777, 782 (9th Cir. 1988) (holding that Younger
abstention was required even where “the state court proceedings were
completed by the time the district court granted summary judgment”). But
Younger may also require abstention when the state proceeding is begun
during the pendency of the federal proceeding. See Hicks v. Miranda, 422
U.S. 332, 349 (1975) (“[W]here state criminal proceedings are begun
against the federal plaintiffs after the federal complaint is filed but before
any proceedings of substance on the merits have taken place in the federal
court, the principles of Younger v. Harris should apply in full force.”). In
this case, the opposite situation exists: the state case preceded initiation of
the federal case, but ended while our appeal was pending.
                                    7
without prejudice. And if we were to reverse the dismissal, Columbian

Financial could renew the equitable claims already filed.

       In these circumstances, we vacate dismissal of the equitable claims

and remand these claims to the district court so that it can reconsider them

without the need to abstain now that the state proceedings have ended. See

Citizens Potawatomi Nation v. Freeman, 113 F.3d 1245, 1297 WL 235624,

at *1-2 (10th Cir. 1997) (unpublished table decision). Thus, we vacate the

district court’s order dismissing Columbian Financial’s equitable claims on

Younger grounds and remand these claims for further consideration. 4

III.   Ms. Stork and Mr. Thull are entitled to qualified immunity on the
       claims for damages.

       Columbian Financial also seeks damages, claiming violation of its

clearly established right to procedural due process when

           the bank’s assets were seized and placed under FDIC
            receivership without a predeprivation hearing and

           the conclusion of the postdeprivation hearing was delayed by
            roughly three years and eight months. 5

4
      In similar circumstances, two federal circuits (the Third and D.C.
Circuits) have treated the Younger issue as moot. Bass v. Butler, 258 F.3d
176, 179 (3d Cir. 2001); Davis v. Rendell, 659 F.2d 374, 376 (3d Cir.
1981); Woods v. Several Unknown Metro. Police Officers, 835 F.2d 340,
341-42 (D.C. Cir. 1987). But in these circuits, the disposition was the same
as ours. Bass, 258 F.3d at 179; Woods, 235 F.3d at 342.
5
     The state bank commission issued the Declaration of Insolvency on
August 22, 2008, and the decision on April 18, 2012.
                                   8
On these claims, the federal district court held that Ms. Stork and Mr.

Thull were entitled to qualified immunity. We agree.

      A.    We engage in de novo review of the district court’s dismissal
            based on qualified immunity.

      We engage in de novo review when the district court orders dismissal

based on qualified immunity. Schwartz v. Booker, 702 F.3d 573, 579 (10th

Cir. 2012). To overcome a motion to dismiss based on qualified immunity,

Columbian Financial had to allege facts plausibly showing violation of a

clearly established constitutional right. For a constitutional right to be

clearly established, “there must be a Supreme Court or Tenth Circuit

decision on point, or the clearly established weight of authority from other

courts must have found the law to be as [Columbian Financial] maintains.”

Price–Cornelison v. Brooks, 524 F.3d 1103, 1108 (10th Cir. 2008).

      The parties agree that the Fourteenth Amendment’s Due Process

Clause applies, entitling Columbian Financial to due process; the disputed

question is what process was due. See Cleveland Bd. of Educ. v.

Loudermill, 470 U.S. 532, 541 (1985) (“[O]nce it is determined that the

Due Process Clause applies, ‘the question remains what process is due.’”

(quoting Morrissey v. Brewer, 408 U.S. 471, 481 (1972))).

      The Supreme Court has explained that while “the right to due process

of law is quite clearly established by the Due Process Clause,” not every

due process violation involves a clearly established right. Anderson v.

                                    9
Creighton, 483 U.S. 635, 639-40 (1987). Rather, Columbian Financial must

show that the desired process was clearly established given the particular

facts. See id. 6

      B.       The seizure of the bank’s assets and the appointment of the
               FDIC as receiver without a prior hearing did not violate a
               clearly established constitutional right.

      Columbian Financial claims a denial of procedural due process based

on the lack of a hearing prior to seizure of the bank assets and appointment

of a receiver. On this claim, the two sides point to dueling lines of

authorities.

      Ms. Stork and Mr. Thull point to precedent stating that a

predeprivation hearing is unnecessary when state officials seize bank

assets and appoint a conservator. In response, Columbian Financial argues

that conservators can control bank assets only temporarily while receivers

can permanently dispose of the bank’s assets. Our precedents have not

squarely addressed the need for a predeprivation hearing when a bank’s

assets are placed in the control of a receiver (rather than a conservator).

      Columbian Financial points to our precedent requiring a

predeprivation hearing for a pawnshop when a state official returns an item

6
      Ms. Stork and Mr. Thull argue that the postdeprivation hearing was
timely because it complied with Kansas law. Appellees’ Resp. Br. at 23-27.
This argument is invalid, for Kansas law does not bear on what process is
due under the Fourteenth Amendment. See Cleveland Bd. of Educ. v.
Loudermill, 470 U.S. 532, 541 (1985) (explaining that state law may bear
on whether due process is required, but not on what process is due).
                                   10
to its owner after it had been stolen and pawned. But as Ms. Stork and Mr.

Thull point out, this precedent does not involve the need for quick

intervention when a bank faces imminent collapse.

      The result is a gray area where state officials appoint a receiver over

bank assets and allow those assets to be sold without a predeprivation

hearing. In this gray area, the constitutional right to a predeprivation

hearing is not clearly established.

      1.    Ms. Stork and Mr. Thull rely on precedent allowing
            appointment of conservators without a predeprivation
            hearing.

      Ms. Stork and Mr. Thull rely in part on Fahey v. Mallonee, where the

Supreme Court upheld the constitutionality of a statute permitting ex parte

appointment of a conservator. 332 U.S. 245, 249, 253-54 (1947). In that

case, a federal agency appointed a conservator for a savings and loan

association, which complained about the unavailability of a predeprivation

hearing. Id. at 247. The Supreme Court held that a postdeprivation hearing

satisfied due process and that a predeprivation hearing was not

constitutionally required. Id. at 253-54.

      Guided by Fahey, we held in Franklin Sav. Ass’n v. Director, Office

of Thrift Supervision that the opportunity for a postdeprivation hearing

“precludes any due process violations” when a conservator is appointed for

a bank that had been seized. 934 F.2d 1127, 1140 (10th Cir. 1991). There a

federal agency appointed a conservator for a savings and loan association

                                      11
without a prior hearing. Id. at 1135, 1140. The federal statute permitted the

ex parte appointment of a conservator without any notice, but allowed

post-seizure judicial review. Id. at 1136. We held that the availability of a

postdeprivation hearing satisfied due process. Id. at 1140.

      2.    Columbian Financial relies on a precedent involving loss of
            ownership of a single item (a ring) without a predeprivation
            hearing.

      Columbian Financial relies on Winters v. Bd. of Cnty. Comm’rs,

which involved the lost ownership of a ring. 4 F.3d 848, 850 (10th Cir.

1993). In Winters, the police retrieved a stolen ring from a pawnshop and

returned the ring to its rightful owner, all without affording the pawnshop

a hearing. Id. at 850-51. We held that this action had deprived the

pawnshop of procedural due process. Id. at 858.

      3.    Columbian Financial did not plead facts showing the
            violation of a clearly established constitutional right.

      For the sake of argument, we can assume that Columbian Financial’s

reading of Winters is correct and that the U.S. Constitution required a

hearing before state officials could appoint a receiver or allow transfer of

the bank’s assets. For qualified immunity, however, the question is

whether that constitutional requirement was clearly established. It was not:

Winters is at least arguably distinguishable, and Franklin and Fahey are at

least arguably applicable even when the governmental action results in the

permanent loss of bank assets.

                                  12
      The facts in Winters differ from ours and would have provided little

guidance to commission officials, for they could reasonably regard the

possibility of a bank failure as a far greater public danger than the inability

to return a pawned item to a pawnshop. The danger of a bank failure could

require commission officials to react quickly; in contrast, the need for

quick governmental action would not have been readily apparent in

Winters.

      But Columbian Financial views Franklin and Fahey as

distinguishable, arguing that the appointment here involved a receivership

(rather than a conservatorship) and would have resulted in permanent loss

of Columbian Financial’s ownership interests.

      Our court has acknowledged that the consequences of a receivership

and conservatorship are different. See Franklin Sav. Ass’n v. Dir., Office of

Thrift Supervision, 934 F.2d 1127, 1141 (10th Cir. 1991); Franklin Sav.

Ass’n v. Office of Thrift Supervision, 35 F.3d 1466, 1471 (10th Cir. 1994).

Based on this difference, Columbian Financial argues that appointment of a

receiver would trigger a right to a predeprivation hearing even if no such

right exists when a conservator is appointed.

      For the sake of argument, we can assume that Columbian Financial is

correct. The issue, however, is whether this distinction would have been

clear to state officials like Ms. Stork and Mr. Thull. In our view, that

distinction would have been hazy, to say the least, in light of Supreme

                                   13
Court precedent, treatment of the issue in other circuits, state law, and our

own precedent.

      The Supreme Court has held that government officials can seize

property without a prior hearing when three circumstances exist:

      1.    The seizure “is directly necessary to secure an important
            governmental or general public interest.”

      2.    There is a “special need for very prompt action.”

      3.    The government “kept strict control over its monopoly on
            legitimate force; the person initiating the seizure has been a
            government official responsible for determining, under the
            standards of a narrowly drawn statute, that it was necessary and
            justified in the particular instance.”

Fuentes v. Shevin, 407 U.S. 67, 91-92 (1972).

      Ms. Stork and Mr. Thull could reasonably conclude that these factors

would allow the seizure of bank assets without a prior hearing. For

example, Ms. Stork and Mr. Thull could reasonably consider the first and

second factors as supportive, viewing the safety of the banking system as

an important governmental interest requiring immediate action. See id.

(“[T]he Court has allowed summary seizure of property . . . to protect

against the economic disaster of a bank failure.”); see also James Madison

Ltd. v. Ludwig, 82 F.3d 1085, 1099-1100 (D.C. Cir. 1996) (concluding that

the first factor supported seizure and disposal of bank assets prior to a

hearing because the government “has a substantial interest in moving

quickly to seize insolvent institutions” and a preseizure hearing could

                                  14
increase losses to depositors and the FDIC insurance fund). In addition,

Ms. Stork and Mr. Thull could reasonably regard the third factor as

supportive, for Kansas has strictly controlled the power to seize bank

assets. See Kan. Stat. Ann. § 9-1903 (2015) (establishing the state bank

commission’s power to seize “critically undercapitalized” or “insolvent”

banks).

      This application of the three factors is subject to reasonable debate.

But Ms. Stork and Mr. Thull had to decide whether to allow a

predeprivation hearing, without any dispositive precedent, by applying the

three factors to the appointment of a receiver for a bank facing possible

collapse.

      In making this decision, Ms. Stork and Mr. Thull could reasonably

consider what other circuits had done in similar circumstances. Three other

circuits had held that a predeprivation hearing was unnecessary even when

the bank is placed in the hands of a receiver rather than a conservator. See

James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1101 (D.C. Cir. 1996)

(holding that the right to due process did not require a hearing before the

government seized banks and allowed the FDIC to liquidate the banks);

First Fed. Sav. Bank & Trust v. Ryan, 927 F.2d 1345, 1358 (6th Cir. 1991)

(holding that a postdeprivation hearing satisfies due process because “[i]n

the event of wrongful appointment of a receiver, [the plaintiff] could sue

for all damages arising out of the wrongful appointment”); FDIC v. Am.

                                  15
Bank Trust Shares, Inc., 629 F.2d 951, 953-54 (4th Cir. 1980) (rejecting a

bank’s due process claim when the bank was not provided notice prior to

appointment of the FDIC as a receiver and sale of the bank’s assets); see

also Woods v. Fed. Home Loan Bank Bd., 826 F.2d 1400, 1410 (5th Cir.

1987) (“The Supreme Court has held that there is no constitutional

requirement that an association be given an adjudicatory hearing prior to

the [Federal Home Loan Bank Board’s] appointment of a receiver.”).

     Columbian Financial counters that two of the cited opinions are

distinguishable and that state law provided a mechanism for a

predeprivation hearing while state officials protected the public. We reject

both arguments.

     According to Columbian Financial, Woods and American Bank Trust

Shares are distinguishable because they involved greater evidence

justifying the immediate appointment of receivers. But Ms. Stork and Mr.

Thull could reasonably regard the present circumstances as similar, for the

complaint reflects close scrutiny by regulators prior to the appointment of

a receiver. With this scrutiny already underway, state officials could

reasonably debate the necessity of a predeprivation hearing. As a result, we

reject Columbian Financial’s reliance on factual distinctions between their

circumstances and the circumstances in Woods and American Bank Trust

Shares. Even if we were to fully credit these purported distinctions, we

                                  16
could not regard the right to a predeprivation hearing as clearly

established.

      In addition, Columbian Financial contends that state law provided a

mechanism to protect the public by allowing a hearing to take place before

the seizure of any bank assets. This argument is based on a

misinterpretation of Kansas law.

      Columbian Financial relies on § 9-1903 of the Kansas Statutes, which

allows state officials to appoint a special deputy commissioner to take

control of a bank if it is insolvent or critically undercapitalized. Kan. Stat.

Ann. § 9-1903 (2015). But the special deputy commissioner is to take

control only until a receiver is appointed. Id. That appointment is to take

place “forthwith” if the commissioner determines that the bank cannot

sufficiently recapitalize, resume business, or liquidate its indebtedness to

the satisfaction of depositors and creditors. Kan. Stat. Ann. § 9-1905

(2015).

      Columbian Financial pleaded in the complaint that the commissioner

had declared the bank insolvent. Thus, under state law, the commissioner

was required to appoint a receiver “forthwith.” In these circumstances, the

appointment of a special deputy commissioner would not have provided a

mechanism to allow a hearing prior to the appointment of a receiver. To

the contrary, state law required the state bank commissioner to appoint the

receiver “forthwith.” He did that by appointing the FDIC as the receiver.

                                   17
      Ms. Stork and Mr. Thull could reasonably rely not only on Supreme

Court precedent and case law in other circuits, but also on our own

precedent in Franklin Sav. Ass’n v. Office of Thrift Supervision, 35 F.3d
1466 (10th Cir. 1994). There the government appointed a conservator over

a savings and loan association, provided a hearing, and appointed a

receiver. See Franklin Sav. Ass’n, 35 F.3d at 1468, 1472. Complaining

about the receivership, the savings and loan association claimed that it was

entitled to additional process before the government replaced the

conservator with a receiver. See id. at 1471. For this claim, the savings and

loan association made an argument similar to Columbian Financial’s: that

“the decision to replace the conservator with a receiver entails a

permanent, rather than temporary, deprivation of property.” Id. We

rejected this argument. Id. at 1472.

      As Columbian Financial points out, the savings and loan association

had already had a hearing by the time a receiver was appointed. Id. But we

relied not only on the availability of a hearing, but also on our conclusion

that replacement of a conservator with a receiver did not result in any

further property loss:

      Once a conservator is appointed, the conservator gains “all the
      powers of the members, the stockholders, the directors, and the
      officers of the [savings and loan] association and shall be
      authorized to operate the association in its own name or to
      conserve its assets.” 12 U.S.C.A. § 1464(d)(2)(E)(i) (Supp.
      1994). Because the [a]ssociation and its stockholders do not
      retain authority to control specific assets after the conservator

                                  18
      takes control of the savings and loan, a later decision to employ
      a receiver does not deprive the owners or operators of more
      property.

Id. at 1471-72.

      Columbian Financial argues that its situation is different because it

did not obtain any hearing before the appointment of a receiver. That is

true and perhaps this difference is enough to distinguish Franklin. But

even if we credit this distinction, Ms. Stork and Mr. Thull could

reasonably rely on Franklin’s explanation that replacement of a

conservator with a receiver did not result in any further loss of property

for the savings and loan association. And as discussed above, our

precedents had already held that there was no constitutional right to a

predeprivation hearing prior to the appointment of a conservator. In these

circumstances, we cannot regard the necessity of a predeprivation hearing

as “clearly established.”

      Even Columbian Financial acknowledges that no predeprivation

hearing is necessary when the State faces a “need for ‘swift or expedited

action.’” Appellant’s Opening Br. at 32-33 (quoting Winters v. Bd. of Cnty.

Comm’rs, 4 F.3d 848, 857 (10th Cir. 1993)). Ms. Stork and Mr. Thull could

reasonably conclude that they needed to move quickly once the bank was

declared insolvent.

      At a minimum, the constitutional necessity of a predeprivation

hearing would have been unclear to state officials pondering whether to

                                  19
immediately appoint a receiver or wait until Columbian Financial could

obtain a hearing. In these circumstances, the denial of a predeprivation

hearing did not violate a clearly established constitutional right. Thus, we

affirm the district court’s ruling that Ms. Stork and Mr. Thull are entitled

to qualified immunity on the claim involving denial of a predeprivation

hearing.

      C.    The delay in the postdeprivation hearing did not violate a
            clearly established constitutional right.

      Columbian Financial also contends that the delay between the bank’s

seizure and the conclusion of the postdeprivation hearing violated a clearly

established right to procedural due process. We disagree.

      “The Due Process Clause requires provision of a hearing ‘at a

meaningful time.’” Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532,

534 (1985) (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)). And

prompt postdeprivation proceedings are particularly important when a

predeprivation hearing is unavailable. FDIC v. Mallen, 486 U.S. 230, 241-

42 (1988). Thus, at some point, an unjustifiable delay in postdeprivation

proceedings may become a constitutional violation. But locating that line

is sometimes difficult.

      To decide whether the delay is excessive, we balance three factors:

      1.    “the importance of the private interest and the harm to this
            interest occasioned by delay,”

                                  20
     2.    “the justification offered by the government for delay and its
           relation to the underlying governmental interest,” and

     3.    “the likelihood that the interim decision may have been
           mistaken.”

Id. Based on these factors, “the determination of the constitutionality of a

delay is a fact-intensive analysis.” Collvins v. Hackford, 523 F. App’x 515,

520 (10th Cir. 2013) (unpublished). 7

     The first factor (the importance of the private interest and harm from

the delay) could cut either way. Columbian Financial enjoys an important

private interest in being free from the unlawful deprivation of its property

by the government. 8 See Mallen, 486 U.S. at 240. But Ms. Stork and Mr.

Thull could reasonably conclude that the delay did not substantially harm

7
      Columbian Financial relies in part on Barry v. Barchi, 443 U.S. 55
(1979), and Lawrence v. Reed, 406 F.3d 1224 (10th Cir. 2005). This
reliance is misguided. The Supreme Court in Barchi held only that the
plaintiff was entitled to a “prompt postsuspension hearing,” and the Court
did not address what would constitute a prompt hearing. 443 U.S. at 66.
And Lawrence involved the right to a predeprivation hearing, not delay in
a postdeprivation hearing. 406 F.3d at 1239.
8
      The district court found Columbian Financial’s interest diminished
due to the “constant and intensive government regulation” of banks.
Appellant’s App’x at 204. Some other courts have engaged in similar
reasoning. See First Nat’l Bank & Trust v. Dept. of the Treasury, 63 F.3d
894, 896 (9th Cir. 1995) (concluding that the private interest was
diminished because the bank’s shareholders “had full knowledge” of
extensive bank regulations); Woods v. Fed. Home Loan Bank Bd., 826 F.2d
1400, 1411 (5th Cir. 1987) (concluding that the private interest was
diminished because the shareholder “was aware of the extensive regulatory
system” for banks). We need not decide whether to adopt this approach. In
our view, Ms. Stork and Mr. Thull would enjoy qualified immunity even if
we disregard the existence of bank regulations in connection with the first
factor.
                                  21
Columbian Financial because its property interest in the bank’s assets had

already been “destroyed” when the bank was declared insolvent.

Appellant’s Opening Br. at 35; Oral Arg. at 14:06-14:18. Thus, this factor

does not clearly favor Columbian Financial.

      The second factor (whether a governmental interest can justify the

delay) could also point either way. Part of Columbian Financial’s wait

could be attributed to normal court processes, but the state bank

commission likely prolonged the state court proceedings by opposing a

postdeprivation hearing. In these circumstances, much of the delay can be

justified. But the state bank commission likely extended the delay by

challenging Columbian Financial’s right to a postdeprivation hearing.

Thus, this factor does not clearly cut either way.

      The third factor (the likelihood that the interim decision could be

mistaken) could also cut either way. Columbian Financial argues that the

Declaration of Insolvency was “conclusory” and “devoid of factual

findings.” Appellant’s Opening Br. at 41. But Columbian Financial alleged

in the complaint that prior to the Declaration of Insolvency

           the FDIC had conducted an onsite investigation,

           the FDIC had downgraded the bank’s ratings, and

           the bank had entered into a consent decree with the FDIC and
            the state bank commission.

                                  22
Based on these factual allegations, Ms. Stork and Mr. Thull could

reasonably minimize the possibility of a mistake. See Spiegel v. Ryan, 946
F.2d 1435, 1440 (9th Cir. 1991) (finding “substantial assurance” that a

temporary cease and desist order was not “baseless or unwarranted” due to

a “long investigation” by the agency); Woods v. Fed. Home Loan Bank Bd.,

826 F.2d 1400, 1412-13 (5th Cir. 1987) (engaging in similar reasoning).

      The three factors do not clearly cut in favor of Columbian Financial.

                                   *    *   *

      The balancing of these factors is fact intensive, and “a rule of law

determined by a balancing of interests is inevitably difficult to clearly

anticipate.” Melton v. City of Oklahoma City, 879 F.2d 706, 729 (10th Cir.

1989). That difficulty was present here, for Ms. Stork and Mr. Thull faced

two obstacles in determining the constitutionality of the delay.

      The first was the absence of any “precedent sufficiently on point

with this case that could have put [defendants] on notice that the delay was

unconstitutional.” Collvins v. Hackford, 523 F. App’x 515, 520 (10th Cir.

2013) (unpublished).

      The second was the inherent uncertainty in how our court or the

Supreme Court would apply the fact-intensive balancing test governing the

constitutionality of delay in postdeprivation hearings. See Humphries v.

Cnty. of Los Angeles, 554 F.3d 1170, 1202 (9th Cir. 2008) (holding that the

defendant was entitled to qualified immunity because the issue involving

                                   23
procedural due process turned on an unpredictable application of a

complicated balancing test), rev’d on other grounds, Los Angeles Cnty. v.

Humphries, 562 U.S. 29 (2010); see also Benson v. Allphin, 786 F.2d 268,

276 (7th Cir. 1986) (“It would appear that, whenever a balancing of

interests is required, the facts of the existing caselaw must closely

correspond to the contested action” to defeat qualified immunity.).

      For both reasons, the delay in a postdeprivation hearing did not

violate a clearly established constitutional right.

IV.   Disposition

      We vacate the dismissal without prejudice on the equitable claims,

remanding them for further consideration without the need to abstain now

that the state proceedings have terminated. We affirm the dismissal of the

damage claims against Ms. Stork and Mr. Thull based on qualified

immunity.

                                   24