Court Opinion

ID: 4696599
Source: CourtListenerOpinion
Date Created: 2021-06-17 18:00:55.370416+00
Date Added: 2024-06-11T08:05:41.345242
License: Public Domain

Case: 20-50449         Document: 00515903982              Page: 1       Date Filed: 06/17/2021

             United States Court of Appeals
                  for the Fifth Circuit                                         United States Court of Appeals
                                                                                         Fifth Circuit

                                                                                       FILED
                                                                                   June 17, 2021
                                         No. 20-50449                             Lyle W. Cayce
                                                                                       Clerk

   Alamo Forensic Services, L.L.C.,

                                                                      Plaintiff—Appellant,

                                             versus

   Bexar County, Texas; Joe D. Gonzales,

                                                                   Defendants—Appellees,

                                             versus

   Debra Stephens,

                                                                                    Appellant.

                     Appeal from the United States District Court
                          for the Western District of Texas
                               USDC No. 5:20-CV-38

   Before Dennis and Engelhardt, Circuit Judges, and Hicks*, District
   Judge.

         *
             Chief District Judge of the Western District of Louisiana, sitting by designation.
Case: 20-50449     Document: 00515903982          Page: 2    Date Filed: 06/17/2021

                                   No. 20-50449

   Per Curiam:*
          Plaintiff–Appellant Alamo Forensic Services, LLC (AFS) appeals the
   dismissal of its action against Defendants-Appellees Bexar County, Texas,
   and Bexar County Criminal District Attorney Joe D. Gonzales for alleged
   breach of implied contract and violations of First Amendment Rights
   pursuant to 42 U.S.C. § 1983.       The district court granted Defendants’
   motion to dismiss, finding that AFS had failed to state a plausible breach of
   contract claim and that AFS lacked standing to assert the constitutional
   rights of an unnamed party. On appeal, AFS asserts that the district court
   erred in denying its motion for leave to file an amended complaint and
   granting Defendants’ motion to dismiss. We AFFIRM.
                                         I.
          Alamo Forensic Services, LLC provides breath alcohol testing and
   instrument calibration services to various Texas law enforcement agencies
   and governmental entities. Between September, 2012 and February, 2018,
   AFS contracted with Bexar County (the “Contract”) to provide
   maintenance of breath-test instruments, labor and parts for repair of those
   instruments, supervision of breath-test operators for the County, expert
   testimony on breath tests, clerical support, and training classes in exchange
   for a monthly fee and expense reimbursements from Bexar County.
          Under the terms of the Contract, either party could terminate the
   agreement with thirty days written notice. On December 29, 2017, AFS was
   informed in writing by the Director of Bexar County Judicial Support
   Services that the County was not going to renew when the Contract’s term
   expired on February 1, 2018. Bexar County subsequently contracted with

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.

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   one of AFS’s competitors, Quality Forensic Toxicology, LLC (QFT) for the
   same services. AFS alleges that after the Contract expired, Bexar County
   continued to request services from AFS, but failed to compensate for those
   services. As a result, AFS stopped providing records to the Bexar County
   District Attorney.
          Debra Stephens (Stephens), owner of AFS, is a Technical Supervisor
   approved by the Texas Department of Public Safety (DPS) under its Breath
   Alcohol Testing Program. Stephens allegedly became concerned about the
   practices being used by QFT and submitted a complaint to the Office of the
   Scientific Director of the Texas DPS Breath Alcohol Lab on February 2,
   2019. According to AFS, DPS conducted an audit and found that QFT “was
   in compliance.” Unsatisfied with the results of the DPS audit, Stephens
   submitted a letter to the Texas Attorney General on June 27, 2019, and
   shared her concerns with the Bexar County District Attorney’s office about
   QFT’s testing on August 26, 2019.          AFS claims that, in response to
   Stephens’ letter, Criminal District Attorney Joe Gonzales (Gonzales) issued
   a Memorandum of Disclosure that inaccurately attributed several false
   statements to Stephens.
          On January 13, 2020, AFS brought a claim for breach of implied
   contract, a claim in the alternative for quantum meruit, and a claim pursuant
   to 42 U.S.C. § 1983 alleging a violation of the First Amendment rights of
   Stephens. On February 25, 2020, Appellees filed a motion to dismiss
   pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil
   Procedure. On March 10, 2020, AFS filed a response in opposition to the
   motion, arguing the motion to dismiss should be denied because “a plaintiff
   is not required to plead facts supporting each and every element of [its] claim
   or legal theory,” “a plaintiff is not required to plead law or the legal elements
   of its claims,” and discovery has not yet begun.

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          AFS also included with its response to the motion to dismiss a request
   for leave to file an amended complaint. The proposed amended complaint
   abandoned AFS’s implied contract and quantum meruit claims, and instead
   asserted a claim for unconstitutional deprivation of property rights based on
   the same facts, and sought to add Stephens as a named plaintiff. The district
   court entered an order granting the Defendants’ motion to dismiss and
   denying AFS’s motion seeking leave to file the amended complaint. AFS
   timely appealed.
                                          II.
          We review the district court’s grant of a motion to dismiss de novo.
   See Budhathoki v. Nielsen, 898 F.3d 504, 507 (5th Cir. 2018). To survive a
   12(b)(6) motion, the plaintiff’s complaint must assert “enough facts to state
   a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
   U.S. 544, 570 (2007). The facts asserted must allow “the court to draw the
   reasonable inference that the defendant is liable for the misconduct alleged.”
   Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Limiting its review to the face of
   the pleadings, this court accepts as true all well-pleaded facts and views them
   in the light most favorable to the plaintiff. Spivey v. Robertson, 197 F.3d 772,
   774 (5th Cir. 1999). Nevertheless, the plaintiff must provide more than
   “conclusory    allegations,   unwarranted        factual   inferences,   or   legal
   conclusions.” Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007).
   The factual bases for the plaintiff’s complaint “must be enough to raise a
   right to relief above the speculative level on the assumption that all the
   allegations in the complaint are true.” Twombly, 550 U.S. at 555.
          Rule 8(a)(2) of the Federal Rules of Civil Procedure provides, in a
   general way, the applicable standard of pleading. It requires that a complaint
   contain “a short and plain statement of the claim showing that the pleader is
   entitled to relief,” FED. R. CIV. P. 8(a)(2), “in order to give the defendant

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   fair notice of what the claim is and the grounds upon which it rests,”
   Twombly, 550 U.S. at 555. Although a complaint need not contain detailed
   factual allegations, the “showing” contemplated by Rule 8 requires the
   plaintiff to do more than simply allege legal conclusions or recite the elements
   of a cause of action. Id.
                                              III.
           Defendants argue AFS failed to state a viable claim for breach of
   implied contract or quantum meruit and failed to state a viable First
   Amendment claim. AFS argues the motion should be denied because they
   set forth additional facts that state a legally cognizable claim. 1
           Breach of Implied Contract and Quantum Meruit
           In response to the motion to dismiss, AFS requests leave to file an
   amended complaint which removes the breach of contract and quantum
   meruit claims, adds Stephens as a plaintiff in her individual capacity, and
   adds a claim for unconstitutional deprivation of property rights, based on the
   same facts.
           Defendants assert Bexar County is entitled to governmental immunity
   against breach of contract and quantum meruit claims. The Supreme Court
   of Texas has provided significant guidance on issues of immunity. “A unit
   of state government is immune from suit and liability unless the state
   consents.” Dallas Area Rapid Transit v. Whitley, 104 S.W.3d 540, 542 (Tex.
   2003) (citations omitted). Unless the party suing the governmental entity
   meets its burden of establishing that governmental immunity is waived, the

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             Plaintiff’s response to Defendants’ motion to dismiss was filed concurrently with
   Plaintiff’s request for leave to file an amended complaint. The court will analyze the
   proposed amended complaint on the issue of futility. The discussion of the proposed
   amended complaint is based on the district court’s evaluation denying the motion for leave.

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   trial court lacks jurisdiction to consider the claim. Rusk State Hosp. v. Black,
   392 S.W.3d 88, 95 (Tex. 2012).
          To establish such a waiver of governmental immunity, a plaintiff must
   either point to an express legislative waiver or a constitutional provision that
   allows the plaintiff to bring the claim against the governmental unit. Luttrell
   v. El Paso Cty., 555 S.W.3d 812, 826 (Tex.App.—El Paso 2018, no pet.). AFS
   has failed to identify any waiver of governmental immunity that would permit
   those claims to proceed, and has therefore failed to plead facts showing either
   that any court may exercise subject matter jurisdiction over those claims or
   that they are viable. We affirm dismissal of the breach of contract and
   quantum meruit claims.
          Due Process Deprivation of Property
          In the proposed amended complaint, AFS adds a new claim against
   Bexar County: that AFS and Stephens “had property taken from them
   without compensation in violation of Plaintiffs’ due process rights under the
   [Fourteenth] Amendment in violation of 42 U.S.C. § 1983.” To establish
   municipal liability under § 1983, a plaintiff must plead three elements: “(1)
   an official policy (or custom) of which (2) a policymaker can be charged with
   actual or constructive knowledge, and (3) a constitutional violation whose
   ‘moving force’ is that policy or custom.” Id. at 541–42 (quoting Pineda v.
   City of Houston, 291 F.3d 325, 328 (5th Cir. 2002)). AFS fails to address
   these elements in its original or proposed amended complaint.
          To establish a § 1983 procedural due process claim, a plaintiff must
   show: (1) that he or she was deprived of a property interest protected by the
   Fourteenth Amendment, and (2) that the process attendant to the
   deprivation was constitutionally deficient. Ky. Dep’t of Corr. v. Thompson,
   490 U.S. 454, 460 (1989). A plaintiff must demonstrate a “legitimate claim
   of entitlement” to that property interest. Nunez v. Simms, 341 F.3d 385, 387

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   (5th Cir. 2003). An implied contract may provide the source of such a
   property interest. White v. Miss. State Oil and Gas Bd., 650 F.2d 540, 543
   (5th Cir. Unit A 1981). AFS’s proposed amended complaint, however, fails
   to show that AFS had an implied contract that would be enforceable under
   Texas law. Because AFS has not adequately pled a violation of the Due
   Process Clause, its § 1983 procedural due process claim fails.
          First Amendment
          AFS alleges that Defendants issued the Memorandum of Disclosure
   after Stephens complained about QFT in an attempt to mischaracterize her
   concerns and attack her personally. In their motion to dismiss, Defendants
   argue this claim should be dismissed because: (1) AFS lacks standing to seek
   redress based on a Memorandum of Disclosure issued regarding Stephens;
   (2) the claim is barred by the Eleventh Amendment, and by both
   governmental and prosecutorial immunity; (3) District Attorney Gonzales,
   acting in his official capacity in issuing the Memorandum of Disclosure, is
   immune from claims for damages under the Eleventh Amendment; (4)
   District Attorney Gonzales, as prosecutor, is immune from a § 1983 claim for
   acts that are within the scope of his prosecutorial duties; (5) the official-
   capacity suit is barred by governmental immunity; and (6) the claim is more
   accurately described as a defamation claim, and such claims are not
   actionable under § 1983. We need only address the issue of standing.
          The requirement that a claimant have standing is an “essential and
   unchanging part of the case-or-controversy requirement of Article III.”
   Davis v. FEC, 554 U.S. 724, 733 (2008) (quoting Lujan v. Defenders of
   Wildlife, 504 U.S. 555, 560 (1992)). A plaintiff must demonstrate that he or
   she has suffered an “injury in fact” that is “fairly traceable” to the
   defendant’s actions and will “likely…be redressed by a favorable decision.”
   Lujan, 504 U.S. 560-61. The claimant bears the burden of establishing

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   standing, and “each element [of the three-part standing inquiry] must be
   supported in the same way as any other matter on which the plaintiff bears
   the burden of proof; i.e., with the manner and degree of evidence required at
   the successive stages of the litigation.” Id. at 561. To prove an injury in fact
   sufficient to raise a First Amendment facial challenge, “a plaintiff must
   produce evidence of an intention to engage in a course of conduct arguably
   affected with a constitutional interest, but proscribed by statute.”
   Zimmerman v. City of Austin, Texas, 881 F.3d 378, 388 (5th Cir. 2018)
   (quoting Miss. State Democratic Party v. Barbour, 529 F.3d 538, 545
   (5th Cir. 2008)).
          In addition to those constitutional requirements, the Supreme Court
   has also established prudential constraints, one of which requires courts to
   refrain from adjudicating claims that assert the rights of third parties. Warth
   v. Seldin, 422 U.S. 490, 498–99 (1975). One principle of prudential standing
   requires “that a plaintiff generally must assert his own legal rights and
   interests, and cannot rest his claim to relief on the legal rights or interests of
   third parties.” Superior MRI Servs., Inc. v. All. Healthcare Servs., Inc., 778
   F.3d 502, 504 (5th Cir. 2015) (quoting United States v. Johnson, 632 F.3d 912,
   919–20 (5th Cir. 2011)).
          One exception in which a litigant may assert the rights of a third party
   is when, in addition to his or her own Article III standing, the litigant also has
   a close relationship to the third party such that the parties’ interests are
   aligned and there is some “hindrance to the third party’s ability to protect
   his or her own interests.” Powers v. Ohio, 499 U.S. 400, 411 (1991). AFS
   pleads nothing to support the notion that Stephens is hindered from
   protecting her own interests. We find AFS lacks standing to assert the First
   Amendment rights of Stephens and affirm dismissal of this claim.

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          Retaliation under Section 1983
          In the proposed amended complaint, AFS and Stephens assert a claim
   that Defendants retaliated against AFS in response to Stephens’ complaints
   about QFT by failing to compensate for services provided to Bexar County
   and not contracting with AFS again.
          The First Amendment prohibits adverse governmental action against
   an individual in retaliation for the exercise of protected speech activities.
   Keenan v. Tejeda, 290 F.3d 252, 258 (5th Cir. 2002). To assert a claim for
   retaliation under Section 1983, a plaintiff must show: (1) he or she was
   engaged in constitutionally protected activity, (2) the defendants’ actions
   caused plaintiff to suffer an injury that would chill a person of ordinary
   firmness from continuing to engage in that activity, and (3) the defendants’
   adverse actions were substantially motivated against the plaintiff’s exercise
   of constitutionally protected conduct. Id.
          The retaliation claim asserted by AFS and Stephens is inconsistent
   with the record. The alleged failure to compensate AFS began in 2018;
   Stephens made her complaints a year later, beginning in February 2019. The
   complaints made by Stephens cannot have caused the failure to pay when the
   failure to pay predated the complaints. Further, to the extent Plaintiffs’
   retaliation claim is based on the alleged failure to consider AFS as a future
   contractor, such an allegation, without pleading more, is speculative and
   hypothetical and thus does not form the basis of a justiciable case or
   controversy sufficient to confer Article III standing. Lujan, 504 U.S. at 560.
   Consequently, the claim for retaliation under Section 1983 fails.
                                           IV.
          AFS also asserts that the district court erred in denying leave to amend
   its complaint as to the claims under the First Amendment and for an unlawful
   taking under 42 U.S.C. §1983.

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                                     No. 20-50449

            We review the district court’s denial of leave to amend a complaint
   under Federal Rule of Civil Procedure 15 for abuse of discretion. N. Cypress
   Med. Ctr. Operating Co., Ltd. v. Aetna Life Ins. Co., 898 F.3d 461, 477 (5th Cir.
   2018). Although leave to amend under Rule 15(a) is to be freely given, that
   generous standard is tempered by the necessary power of a district court to
   manage a case. Schiller v. Physicians Res. Grp., Inc., 342 F.3d 563, 566 (5th Cir.
   2003). “Denying a motion to amend is not an abuse of discretion if allowing
   an amendment would be futile.” Marucci Sports, L.L.C. v. Nat’l Collegiate
   Athletic Ass’n, 751 F.3d 368, 378 (5th Cir. 2014).
            In deciding whether to grant leave to amend, the district court may
   consider a variety of factors in exercising its discretion, including undue
   delay, bad faith or dilatory motive on the part of the movant, repeated failures
   to cure deficiencies by amendments previously allowed, undue prejudice to
   the opposing party by virtue of allowance of the amendment, and futility of
   the amendment. Schiller, 342 F.3d at 566. After analyzing the motion, the
   district court determined that AFS’s proposed amended complaint was futile
   as to the claims for retaliation and for an unlawful taking under 42 U.S.C.
   §1983.     Specifically, the court found that AFS’s proposed amended
   complaint failed to show that Plaintiff had a property interest—the alleged
   implied contract—that would be enforceable under state law. The district
   court also found that “there is no basis by which the court could find that
   Plaintiffs’ allegedly protected speech caused Bexar County to fail to
   compensate Plaintiffs for their work or consider them as a potential
   contractor.” The district court did not abuse its discretion in denying leave
   to amend the complaint.
                                          V.
            For the foregoing reasons, the judgment of the district court is
   AFFIRMED.

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