Court Opinion

ID: 1027813
Source: CourtListenerOpinion
Date Created: 2013-07-05 07:30:09.695361+00
Date Added: 2024-06-11T09:18:19.426246
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                              No. 07-2176

JOHN M. HERMAN,

                  Plaintiff - Appellant,

           v.

WILLIAM C. LACKEY, JR., individually and in his capacity as
a member of the North Carolina Real Estate Commission;
KEVIN   BROADWAY,  an   individual;   HOMESERVICES OF   THE
CAROLINAS,   INCORPORATED,   d/b/a   HomeServices  of   the
Carolinas School of Real Estate, a Delaware corporation;
JOHN DOE, 1 - 10, indentities unknown,

                  Defendants - Appellees.

Appeal from the United States District Court for the Western
District of North Carolina, at Charlotte.   Graham C. Mullen,
Senior District Judge. (3:06-cv-00251-GCM)

Argued:   December 2, 2008                  Decided:   February 4, 2009

Before GREGORY and AGEE, Circuit Judges, and Rebecca Beach
SMITH, United States District Judge for the Eastern District of
Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: James M. Harrington, THE HARRINGTON PRACTICE, P.L.L.C.,
Charlotte, North Carolina, for Appellant.    Bryan T. Simpson,
TEAGUE, CAMPBELL, DENNIS & GORHAM, L.L.P., Raleigh, North
Carolina;   Jonathan  Woodward   Yarbrough,  Asheville,   North
Carolina, for Appellees.  ON BRIEF: Charles A. Lamm, H. Edward
Knox, KNOX, BROTHERTON, KNOX & GODFREY,        Charlotte,   North
Carolina, for Appellee Kevin Broadway.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

     John     Herman        (“Herman”)      appeals       the     district     court’s

dismissal     of    his    amended    complaint        filed    against    William    C.

Lackey, Jr. (“Lackey”) (individually and in his capacity as a

member   of        the     North     Carolina      Real        Estate     Commission),

HomeServices       of     the   Carolinas,      Inc.    (“HSC”),    Kevin     Broadway

(“Broadway”), and ten “John Does,” “identities unknown.”                             The

district court dismissed all of Herman’s claims for failure to

state a claim upon which relief can be granted, pursuant to

Federal Rule of Civil Procedure 12(b)(6), including: violation

of 42 U.S.C. § 1983, breach of contract, tortious interference

with contract, tortious interference with prospective economic

advantage,    and       intentional      infliction      of    emotional    distress. 1

For the following reasons we affirm the judgment of the district

court.

                                   I. Background

                                           A.

     Herman,       a     real   estate   broker    in    North    Carolina,     taught

classes at HSC’s real estate school.                     In the summer of 2005,

Herman was the instructor of a licensing course that Broadway

     1
       Herman does not raise on appeal the district court’s
dismissal of his state law claims and thus we do not consider
them.

                                           3
took and failed.          Broadway then filed a complaint against Herman

with    the       North     Carolina   Real   Estate     Commission    (“the

Commission”) alleging certain defalcations by Herman during the

course and during the administration of the final examination.

Broadway is Lackey’s stepson, and Lackey is a member of the

Commission.

       At   the   time    Broadway’s   complaint   was   filed,   Herman   was

scheduled to teach courses at HSC during the upcoming term, “as

evidenced by the appearance of his name upon course schedules.”

J.A. 43.      He alleged that he had an “oral contract of employment

for a definite period and a reasonable expectation of continued

employment in that position for the duration of the classes for

which he had been scheduled and indefinitely thereafter.” J.A.

46.    Also pending at the time of Broadway’s complaint was an

application for licensure of a new real estate school (“the new

school”) that Herman and several other individuals had submitted

to the Commission.          Herman alleged that he intended to serve as

the director and an instructor at the new school. Herman pled in

the amended complaint that Lackey, “[a]cting with malice . . .

arising out of Lackey’s embarrassment at his stepson’s failure

in the course taught by the Plaintiff”, J.A. 48, “under color of

state law in his capacity as a Member of the Commission, . . .

orchestrate[d] a delay in approval of the new school . . .

thereby denying the Plaintiff of his opportunity to contract

                                        4
with the new school.” J.A. 44.                 Herman further contended that

time was of the essence in establishing the new school because

of “a change in the state law governing the licensure of real

estate brokers.” J.A. 44.           Although licensure was delayed, the

new school was ultimately licensed.

     Herman asserted that Lackey induced Broadway to file the

complaint with the Commission, that he knew the complaint was

unfounded,   and    that   Lackey      “issued      an   ultimatum    to   HSC    to

terminate its contract with [Herman] or face retributive action”

from the Commission.          J.A. 107.        Herman also pled that Broadway

asked Lackey to intercede and use his authority to cause Herman

“irreparable      damage   to    [his]    reputation,      ability    to   earn    a

living, and mental and emotional state.” J.A. 45.

                                         B.

     The district court found that Herman failed to allege HSC

was a state actor, and that he failed to allege a cognizable

deprivation of rights based on the termination of his employment

because   Herman     did   not    have    “a     constitutional      due   process

protection   with    respect     to”     his    employment    with   HSC   or    the

licensure    of   the   new     school    and     therefore   did    not   have    a

property interest in continued employment.                   The district court

also found that Herman’s amended complaint failed to set forth a

viable claim for an equal protection violation because he is not

                                          5
a    member    of       a    suspect      class,        and    because       “one    can    easily

hypothesize        ‘rational’         .   .     .    scenarios        for    Lackey’s      alleged

conduct.” J.A. 112.               Judgment was entered in favor of all the

Defendants on June 15, 2007.

       In October 2007, Herman requested the district court reopen

the time in which to file an appeal, pursuant to Federal Rule of

Appellate Practice 4(a)(6).                   Herman asserted he had not received

timely notice of the entry of judgment, fewer than 180 days had

passed since the order was entered, fewer than seven days had

passed since he received actual notice of the entry of judgment,

and that neither party would be prejudiced by the reopening of

the   period       to       appeal.       The       district        court    granted    Herman’s

motion to reopen on November 15, 2007, finding that no party

would be prejudiced by reopening and giving Herman fourteen days

to    file    an    appeal.           Herman        then      noted    a    timely    appeal    on

November      20,       2007.    Appellees          moved      to     reconsider      the    order

granting Herman’s request to reopen the time to file an appeal,

but the district court denied the motion.                                   Appellees contend

that Herman’s appeal is untimely and should be dismissed for

lack of jurisdiction.

       Herman raises two primary issues on appeal.                             He argues that

the    district         court    erred        by     dismissing        his    claims       against

Broadway because the district court-albeit mistakenly-found that

Broadway had not filed a motion to dismiss pursuant to Rule

                                                    6
12(b)(6).    Herman also contends that the district court erred in

granting Lackey’s and HSC’s motions to dismiss because he had

protected property interests in his employment contract and in

the licensure of the new school.               Herman also argues an equal

protection     violation    as    to    the    granting   of    the    motion   to

dismiss.

                           II. Standard of Review

     This Court reviews de novo a district court’s dismissal of

a complaint under Rule 12(b)(6), accepting all allegations in

Herman’s amended complaint as true. Republican Party v. Martin,

980 F.2d 943, 952 (4th Cir. 1992).              To survive a Rule 12(b)(6)

motion, “[f]actual allegations must be enough to raise a right

to relief above the speculative level” and have “enough facts to

state a claim to relief that is plausible on its face.” Bell

Atl. Corp. v. Twombly, 550 U.S. 544, ____, 127 S. Ct. 1955,

1960-65    (2008).     However,        the    court   “need    not    accept    the

[plaintiff’s] legal conclusions drawn from the facts,” nor need

it   “accept     as   true       unwarranted      inferences,         unreasonable

conclusions, or arguments.” Eastern Shore Mkts., Inc. v. J.D.

Assocs. Ltd. Pshp., 213 F.3d 175, 180 (4th Cir. 2000).

                                         7
                            III. Analysis

                           A.   Jurisdiction

     Federal Rule of Appellate Practice 4(a)(6) states that a

district court “may” grant a motion to reopen, therefore, the

exercise of this permissive authority is reviewed for abuse of

discretion. See Nguyen v. Southwest Leasing & Rental Inc., 282

F.3d 1061, 1064 (9th Cir. 2002); see also Carter v. Tate & Lyle,

58 Fed. Appx. 12, 13 (4th Cir. 2003) (unpublished).   A district

court abuses its discretion when it relies on clearly erroneous

findings of fact, when it improperly applies the law, or when it

uses an erroneous legal standard. See Thorn v. Jefferson Pilot

Life Ins. Co., 445 F.3d 311, 317 (4th Cir. 2006) (“A district

court per se abuses its discretion when it makes an error of law

or clearly errs in its factual findings.”).

     Appellees argue that Herman asserted no valid excuse for

his failure to receive the entry of the judgment and thus the

district court abused its discretion in granting his request to

reopen.   However, the district court found that “plaintiff’s

counsel represents that he never received notice of the Entry of

Judgment” and that “no party will be prejudiced by reopening the

time period for appeal.”   J.A. 121.

     Herman properly averred the reasons for which he argues

that he did not receive timely notice of entry of judgment, and

did so within seven days after he alleges that he did receive

                                   8
actual   notice.        Herman    also   properly    noted    an     appeal   within

fourteen days of the district court’s order granting the motion

to reopen.       It was within the court’s discretion to find that

the moving party did not receive notice and that no party would

be prejudiced.      We therefore conclude the district court did not

abuse    its     discretion       in   granting     the     motion     to     reopen.

Accordingly, this Court has jurisdiction to hear the appeal.

                          B.     Herman’s § 1983 Claim

       Herman alleges that the conduct of Lackey, HSC, Broadway,

and others led to a deprivation of his “right of contract, his

property interest in his contract with Defendant HSC, and his

right to the due process of law and to the equal protection of

the laws, in violation of 42 U.S.C. § 1983.”                         J.A. 45.       A

plaintiff must prove three elements in order to succeed on a §

1983    claim:   “(1)    the   deprivation    of    a     right   secured     by   the

Constitution or a federal statute; (2) by a person; (3) acting

under color of state law.” Jenkins v. Medford, 119 F.3d 1156,

1159–160 (4th Cir. 1997); see also 42 U.S.C. § 1983; Dowe v.

Total Action Against Poverty, 145 F.3d 653, 658 (4th Cir. 1998).

We first review the dismissal of the § 1983 claim as to HSC and

Broadway.

                                         9
                                    1.      State Actor

       The     “under-color-of-state-law               element       of   §      1983    excludes

from     its     reach       ‘merely       private       conduct,           no     matter        how

discriminatory or wrongful,’” American Mfrs. Mut. Ins. Co. v.

Sullivan, 526 U.S. 40, 50 (1999) (quoting Blum v. Yaretsky, 457

U.S. 991, 1002, 102 S. Ct. 2777, 2785 (1982)).                                     “The person

charged must either be a state actor or have a sufficiently

close relationship with state actors such that a court would

conclude       that   the    non-state         actor   is     engaged        in    the    state’s

actions.” DeBauche v. Trani, 191 F.3d 499, 506 (4th Cir. 1999).

“[P]rivate activity will generally not be deemed ‘state action’

unless the state has so dominated such activity as to convert it

into   state     action:      ‘Mere       approval      of    or     acquiescence          in    the

initiatives of a private party’ is insufficient.” Id. at 507

(quoting Blum, 457 U.S. at 1004); see also Dowe, 145 F.3d at

659.

       Herman fails to allege any facts upon which to conclude

that     Broadway       or    HSC        acted      under      color        of     state        law.

Furthermore, on appeal, Herman does not challenge the district

court’s finding that “there is no allegation that HSC is a state

actor, or anything other than a private employer.” J.A. 109.

Herman    claims      only    that       Lackey,     Broadway,        and     HSC       “acted   in

concert.”        J.A.       45.      This      allegation       is     not       sufficient       to

include      Broadway       and   HSC     as     state       actors.          Although      joint

                                               10
participation         of    public    and    private       actors   may    turn     private

conduct into state conduct for purposes of a § 1983 claim, this

is   not      the    case   here.      The    state     has    neither     “coerced       the

private actor to commit an act that would be unconstitutional if

done by the state, . . . sought to evade a clear constitutional

duty through delegation to a private actor, . . . delegated a

traditionally         and    exclusively      public        function      to    a   private

sector, or . . . committed an unconstitutional act in the course

of enforcing a right of a private citizen.”                         Andrews v. Federal

Home Loan Bank of Atlanta, 998 F.2d 214, 217 (4th Cir. 1993).

Therefore, Herman’s complaint failed to assert a § 1983 claim

upon which relief could be granted as to HSC and Broadway.

         2.     Herman Fails to Allege Deprivation of his Rights

      Although the state actor requirement is fulfilled as to

Lackey, in order to survive a motion to dismiss Herman must also

allege        that    he    was   deprived        of   a    right    secured        by    the

Constitution or a federal statute.                     42 U.S.C. § 1983.             Herman

argues that he was unconstitutionally deprived both of his right

to further employment with HSC as well as his right to the

license of the new school.             We disagree.

      The burden of showing a protectable property interest is on

the plaintiff. See Bd. of Regents v. Roth, 408 U.S. 564, 579

(1972)     (plaintiff        failed    to    show      “that   he    was       deprived    of

                                             11
liberty or property protected by the Fourteenth Amendment”)).

In the employment context, it is not enough for a plaintiff to

demonstrate that he has lost his job.                        Instead, the relevant

inquiry    is   whether       the    plaintiff         possessed       a    protectable

property   interest      in   his    or    her     continued       employment.          See

Holland v. Rimmer, 25 F.3d 1251, 1257 (4th Cir. 1994).                         “To have

a property interest in a benefit, a person clearly must have

more than an abstract need or desire for it.                       He must have more

than a unilateral expectation of it.                   He must, instead, have a

legitimate claim of entitlement to it.” Roth, 408 U.S. at 577.

Herman alleges that he had a protected property interest both in

his employment contract and in the licensure of the new school.

We find that he did not.

                               a. HSC Employment

      We look to state law to determine whether a plaintiff had a

protectable     property       interest          in    his      or    her     continued

employment.     See Knight v. Vernon, 214 F.3d 544, 553 (4th Cir.

2000).     North   Carolina        law    mandates      that,      when    there   is    no

contract    establishing       a     definite         term    of     employment,        the

employment will be considered at-will.                  Tarrant v. Freeway Foods

of   Greensboro,   163    N.C.      App.    504,      508,   593     S.E.2d   808,      811

(2004); see also Pittman v. Wilson County, 839 F.2d 225, 227

(4th Cir. 1988) (“Under North Carolina law, subject to a few

                                           12
well-defined       exceptions,          ‘absent         some   form        of   contractual

agreement       between    an     employer         and    employee         establishing       a

definite period of employment, the employment is presumed to be

an ‘at-will’ employment, terminable at the will of either party,

irrespective       of     the     quality      of       performance        by     the    other

party....’”) (quoting Harris v. Duke Power Company, 319 N.C.

627,     629,    356    S.E.2d     357    (1987)).             The    presumption          that

indefinite employment is at-will is a strong one.                                 The North

Carolina Supreme Court has consistently “held that assurances of

continued       employment,       permanent        employment        or    employment      for

life are insufficient to rebut the at-will presumption.” Worley

v. Bayer Corp., 154 N.C. App. 743, 572 S.E.2d 874 at *2 (Table)

(unpublished)      (citing       Kurtzman      v.    Applied      Analystical           Indus.,

Inc., 347 N.C. 329 (1997); Still v. Lance, 279 N.C. 254, 182

S.E.2d    403    (1971);    Tuttle       v.   Lumber       Co.,      263   N.C.    216,     139

S.E.2d 249 (1964); Malever v.                      Jewelry Co., 223 N.C. 148, 25

S.E.2d 436 (1943)).         An at-will employment relationship does not

create a protectable property interest in continued employment

for § 1983 purposes.            Roth, 408 U.S. at 577-78.

       Although Herman attempts to rebut the presumption of at-

will employment by stating that he had “an oral contract of

employment for a definite period” in his amended complaint, J.A.

46, that does not sufficiently read his pleading in context.

That   “definite        period”    is    only      “a    reasonable        expectation       of

                                              13
continued employment” and not a contractual right by the terms

of   his   own    pleading.       Therefore     Herman    does   not    rebut   the

presumption that his employment was at-will and the district

court did not err in dismissing his § 1983 claim as to his HSC

employment.

                      b. Licensure of the New School

      As   discussed     above,    in   order    to    successfully      allege   a

protectable property interest, a plaintiff must show that he or

she had a “legitimate claim of entitlement” to the property, and

not merely an “abstract need” or “expectation.” Roth, 408 U.S.

at 577.    Herman fails to allege that he had anything more than a

desire or expectation for the licensure of the new school.

      In his amended complaint, Herman asserts that he applied

“to the [Commission] for licensure of a new real estate school,”

J.A. 43, and that Lackey knew “of the impending approval of the

new school,” but “orchestrate[d] a delay in the approval of the

new school.” J.A. 44.             These allegations are insufficient to

show that Herman possessed a constitutionally protected property

interested in the licensure of the new school.                   Although Herman

alleges    that    the   licensure      was   “impending,”       he    had   merely

applied for a license for the school.              This Court has held that

a    “property      interest      requires      more     than    a     ‘unilateral

expectation’ that a permit or license will be issued; instead,

                                        14
there must be a ‘legitimate claim of entitlement.’” Biser v.

Town of Bel Air, 991 F.2d 100, 104 (4th Cir. 1993) (quoting

Roth, 408 U.S. at 577).              Herman’s claim that the new school was

due to soon receive licensure does not rise above the level of a

mere expectation, even if the licensure was “impending.” 2

       Herman had no cognizable property interest in the licensure

of the new school, and no actual loss as a result of the delay.

Therefore, the district court appropriately granted Appellees’

motions to dismiss his § 1983 claim.

                             c. Broadway’s 12(b)(6) Motion

       Herman      contends       that   the     district    court    erroneously

dismissed his claims as to Broadway upon its own motion.                      Herman

points       to   the    district     court’s    opinion,    which   states     that

“Defendant Broadway fail[ed] to file any motion at all.” J.A.

116.       However, Broadway did file a motion to dismiss pursuant to

Rule       12(b)(6)     on    December   20,    2006.   In    its    opinion,    the

district court apparently failed to recognize that Broadway had

filed the motion.             Because Broadway did, in fact, file a motion

       2
       Furthermore, Herman did actually receive licensure for the
school. He alleges in his complaint only that the licensing was
delayed and that “time was of the essence in the new school’s
application.” J.A. 44.       Even if he were able to show a
cognizable property interest in the license, that interest was
ultimately realized by him, and he fails to allege that he
suffered any actual loss as a result of the delay.

                                          15
to dismiss, and the motion was not raised sua sponte, there was

no    error    of     law   in     dismissing       the    claims     against       Broadway

pursuant to Rule 12(b)(6).

                                d. Equal Protection Claim

       Although Herman admits that he is not a member of a suspect

class and thus his claim must be examined under rational basis

review, (Br. 16), he argues that there was no rational basis for

Lackey’s alleged conduct.                 He contends that the district court

erred   when     it    found       that   one      could    “hypothesize         ‘rational’

scenarios      for    Lackey’s       alleged       conduct.”        J.A.    112.     Herman

asserts instead that Lackey was “motivated by personal animus

toward Herman” and “used his power as a member of the Commission

to demand that Herman be fired.”

       To    state    an    equal    protection        claim   under       any   theory,    a

plaintiff must plead sufficient facts to “demonstrate that he

has    been    treated          differently     from      others    with     whom    he    is

similarly situated and that the unequal treatment was the result

of    intentional          or     purposeful       discrimination.”          Williams      v.

Hansen, 326 F.3d 569, 576 (4th Cir. 2003) (quoting Morrison v.

Garraghty, 239 F.3d 648, 654 (4th Cir. 2001)).                             Under rational

basis       review,     a       plaintiff      must       “negate     ‘any       reasonably

conceivable state of facts that could provide a rational basis

for the classification.’” Kirby v. Elizabeth City, 388 F.3d 440,

                                              16
448 (4th Cir. 2004) (quoting Bd. of Trustees v. Garrett, 531

U.S. 356, 367 (2001)).           Herman’s amended complaint fails to make

this showing.

      Although Herman’s claim that he was a “class of one” is

viable, see, e.g., Village of Willowbrook v. Olech, 528 U.S. 562

(2000)    (per    curiam),     the    district     court      was   correct    when    it

stated that “one can easily hypothesize ‘rational’ scenarios for

Lackey’s alleged conduct.”             Whether Broadway’s allegations were

true,    they    nonetheless      raised    questions         about   Herman     as    an

instructor       and   merited    a   review     by    the     Commission.        These

serious     allegations       certainly    could      raise    concerns   about       the

reputation of HSC, and about Herman’s behavior.                       Because Herman

did   not    negate     the    hypothetical      rational        basis,   his     equal

protection claim fails.

                                          IV.

      For the foregoing reasons, the judgment of the district

court is

                                                                              AFFIRMED.

                                          17