Court Opinion

ID: 23940
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:16:27+00
Date Added: 2024-06-11T15:04:43.328369
License: Public Domain

Revised May 4, 2001

                 IN THE UNITED STATES COURT OF APPEALS

                              FOR THE FIFTH CIRCUIT

                                  No. 99-21033

CONROE CREOSOTING COMPANY;               CONROE     CREDIT   CORPORATION;       H.M.
HAWTHORNE; LYN HAWTHORNE,
                                                     Plaintiffs-Appellees,

                                     versus

MONTGOMERY COUNTY TEXAS; ET AL,
                                                     Defendants,

J.R. MOORE, Tax Assessor and Collector
     of Montgomery County, Texas,
                                                     Defendant-Appellant.

            Appeal from the United States District Court
                 for the Southern District of Texas

                                 April 18, 2001

Before KING, Chief Judge, and HIGGINBOTHAM and DUHÉ, Circuit

Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

     We    are   asked   to    decide    an     official’s   plea   of   qualified

immunity    to   a   damages     claim    for     assorted   violations    of   due

process—the substantive variety.              J.R. Moore appeals the district

court's denial of his motion for summary judgment on a substantive
due process claim. The claim of qualified immunity presents issues

of fact, and we dismiss for lack of jurisdiction.

                                     I

       This case arises out of a tax levy against Conroe Creosoting

Company.   Conroe    Creosoting   conducted       business    on    a    155-acre

facility   in    Montgomery   County,    Texas.    The   company's       facility

included a creosoting plant, administrative offices, an outlet

store, and the corporate offices of a separate company, Conroe

Credit Corporation. On June 19, 1996, Montgomery County and Conroe

Independent School District obtained a final tax judgment against

Conroe Creosoting in the respective amounts of $16,274.97 and

$58,209.11, a total of $74,448.08. The judgment contained a finding

that the personal property of Conroe Creosoting possessed a "fair

market value" of $803,670.00.

       On March 13, 1997, the court issued a writ of execution on

behalf of the County and school district. J.R. Moore, the Tax

Assessor and Collector for the County, promptly sent Charles

Podeyn, a representative from his office, to take possession of the

entire facility. Kay Applewhite and other members of the law firm

of Heard, Goggan, Blair & Williams, the County’s lawyers in this

collection effort, accompanied Podeyn.        Deputy constables from the

County also participated in the seizure of the facility. Applewhite

demanded that company operations cease and that all employees leave

with     their     belongings     within     one      hour.        The     entire

                                     2
facility—including all real estate and personal property, as well

as the offices of Conroe Credit Corporation—was seized and held for

almost sixty days. Conroe Credit Corporation was not included in

the scope of the tax judgment. During this period, H.M. Hawthorne

and Lyn Hawthorne, who were principals of Conroe Creosoting, were

repeatedly prevented from entering the property or conducting

business. Conroe Creosoting did not seek relief in state or federal

court at this time.

     The law firm of Heard, Goggan entered into a contract with a

group of auctioneers on behalf of the County. Louise Starks, a

paralegal employed by the law firm, stated in her deposition that

Moore    authorized   the   contract,   which   called   for   a   "complete

dispersal" of the assets of Conroe Creosoting.

     Pursuant to Rule 637 of the Texas Rules of Civil Procedure,

the Hawthornes designated an "order of sale."1 They designated

certain vehicles and other nonessential plant equipment for sale in

satisfaction of the approximately $75,000 tax judgment. Conroe

Creosoting contends that, because Moore authorized a "complete

dispersal" of the company's assets, the persons conducting the

execution ignored the Hawthornes' designation of assets. Instead,

the auctioneers kept the vehicles on display to increase public

interest in the auction. These vehicles ultimately were never sold.

     1
       See Tex. Rules Civ. Proc. 637 (2000) ("The officer shall
first call upon the defendant . . . to point out property to be
levied upon, and the levy shall first be made upon the property
designated by the defendant.").

                                    3
Conroe Creosoting argues that important plant machinery and other

items critical to the functioning of the company were sold instead.

       Moreover, in preparation for the auction of the company's

assets, $69,000 in security costs were incurred. The execution sale

ultimately realized $361,909.85 in proceeds, of which $241,251.49

was paid to various taxing authorities with judgments, delinquent

taxes due other taxing authorities, and to Heard, Goggan for

attorney's fees and expenses. Conroe Creosoting was given the net

excess proceeds of $120,658.36. After the March 1997 seizure,

Conroe Creosoting never reopened for business.

       Moore says that he acted under the mistaken impression that a

tax warrant—and not a writ of execution—authorized the County to

organize the seizure and sale of the company's assets. He asserts

that       he    learned    of   his   mistake        the   day   after   the   sale   and

immediately withdrew from further participation. Under Texas law,

a   tax         warrant    empowers    both       a   peace   officer     and   the    tax

collector/assessor to seize and dispose of a debtor's property.2

Texas law relating to the execution of judgments only grants peace

officers the authority to enforce writs of execution.3

       Appellees contest Moore's assertion, arguing that he remained

involved long after he learned that his office had no authority to

proceed. They argue that Moore approved the auction contract

       2
           See Tex. Tax Code Ann. § 33.23 (West 2000).
       3
           See Tex. R. Civ. P. 622, 630, 637 (West 2000).

                                              4
sometime after Stark's meeting with the auctioneers on March 20,

1997. Moore also signed an affidavit on May 7, 1997 supporting a

tax warrant in which he asserted that the personalty, which at that

time had already been seized by the constables, was in danger of

being removed from the County by the plaintiffs.4 Appellees also

contend   that   Moore   represented   to   the   Office   of   the   State

Comptroller that there would be surplus properties after the sale

from which a state sales tax claim could be satisfied, resulting in

a Notice of Freeze against Conroe Creosoting. Appellees argue that

Moore took the preceding actions after he learned about the writ of

execution and prior to his withdrawal from the execution.

     Conroe Creosoting, Conroe Credit Corporation, H.M. Hawthorne,

and Lyn Hawthorne filed this section 1983 suit against Moore, the

County, the constables involved in the seizure, Applewhite, and the

firm of Heard, Goggan. The suit claims violations of substantive

due process, procedural due process, and the Texas Constitution.

Moore moved for summary judgment, asserting qualified immunity. The

district court, following a magistrate judge's recommendations,

granted the motion as to all claims except for the claim resting on

substantive due process. The court also dismissed all claims of

H.M. Hawthorne and Conroe Credit Corporation, as there was no

evidence linking Moore's actions to their property. Moore appeals

     4
       This tax warrant apparently was for additional delinquent
taxes which had accrued following issuance of the writ of
execution.

                                   5
the   court's     refusal   to   grant    him   qualified     immunity    on    the

substantive due process claim.

                                         II

      This Court employs a three-part inquiry in assessing a claim

of qualified immunity. First, we examine whether the plaintiff has

alleged     the   violation    of   a   constitutional       right.   Second,    we

determine whether the constitutional right was clearly established

at the time the defendant acted. A constitutional right is "clearly

established" if "the unlawfulness of the conduct would be apparent

to a reasonably competent official."5 The second prong of the

qualified immunity inquiry therefore requires an assessment of

whether     the   official's     conduct      would   have    been    objectively

reasonable at the time of the incident.6 Finally, we determine

whether the record indicates that the violation occurred, or gives

rise to a genuine issue of material fact as to whether the

defendant actually engaged in the conduct that violated the clearly

established right.7 As this case comes to us from the denial of a

summary judgment motion, the facts which inform our analysis must

be construed in favor of the nonmovants.8

      5
          Morris v. Dearborne, 181 F.3d 657, 665-66 (5th Cir. 1999).
      6
          See Shipp v. McMahon, 234 F.3d 907, 911-12 (5th Cir. 2000).
      7
          See Morris, 181 F.3d at 666.
      8
       See Turner v. Houma Mun. Fire & Police Civil Serv. Bd., 229
F.3d 478, 482 (5th Cir. 2000).

                                         6
     Turning to the first phase of the qualified immunity inquiry,

we address Conroe Creosoting's assertion that Moore's actions

violated its right to substantive due process.9 The Supreme Court

has noted that, "historically, this guarantee of due process has

been applied to deliberate decisions of government officials to

deprive a person of life, liberty, or property."10 The overarching

objective of this doctrine is to prevent government officials from

"abusing [their]       power,   or   employing    it   as   an   instrument    of

oppression."11 Courts generally examine due process challenges to

executive     action    by   asking    "whether    the      behavior   of     the

governmental officer is so egregious, so outrageous, that it may

fairly be said to shock the contemporary conscience."12 Recognizing

that the Supreme Court has "always been reluctant to expand the

     9
       Conroe Creosoting's claims might also be viewed through a
more "explicit textual source of constitutional protection," County
of Sacramento v. Lewis, 523 U.S. 833, 842 (1998), such as the
Takings Clause or the Fourth Amendment. See John Corp. v. City of
Houston, 214 F.3d 573, 578-79 (5th Cir. 2000). We need not address
this possibility, however, as neither side discusses the relevance
of these alternative textual sources.
     10
       Daniels v. Williams, 474 U.S. 327, 331 (1986) (emphasis
omitted).
     11
          Lewis, 523 U.S. at 846.
     12
          Id. at 847 n.8.

                                       7
concept of substantive due process,"13 we apply the doctrine with

the "utmost care."14

      To    prevail    on   a   substantive    due      process   claim,     Conroe

Creosoting     must    first    establish    the   existence      of   a   property

interest protected by the Fourteenth Amendment. Texas law defines

the relevant property interest.15 Conroe Creosoting's claims appear

to rest on its right to designate property for sale under Rule 637

of the Texas Rules of Civil Procedure. Conroe Creosoting relies on

Moore's authorization of the "complete dispersal" of its assets, an

act which allegedly nullified the company's right to designate

assets of its choosing. Although Rule 637 has a substantive effect,

it   implies    only   a    procedural   right.    It    is   axiomatic     that   a

procedural right can not, in and of itself, give rise to a property

interest. To the extent that Conroe Creosoting relies on Rule 637,

the company does not state a substantive due process claim.

      If we consider Conroe Creosoting's arguments in light of the

broader array of property rights to which the company is entitled,

      13
           Id. at 842.
      14
           Simi Inv. Co. v. Harris County, 236 F.3d 240, 249 (5th Cir.
2000).
      15
       See Simi, 236 F.3d at 249-50; see also Hidden Oaks Ltd. v.
City of Austin, 138 F.3d 1036, 1046 (5th Cir. 1998) ("Under this
analysis, the hallmark of property . . . is an individual
entitlement grounded in state law, which cannot be removed except
'for cause.'").

                                         8
a substantive due process claim is stated.16 Texas recognizes a

corporation's right to acquire and own realty and personalty.17

Where a state official deprives a corporation of its property in a

manner that "shocks the conscience," substantive due process may be

violated.18

     The right to be free from this kind of oppressive executive

conduct was also clearly established at the time of the events in

question.19 Conroe Creosoting asserts that Moore's conduct "shocks

the conscience" for the following reasons: (1) he selected the

     16
       At oral argument, counsel for Conroe Creosoting argued that
it ultimately relies on a more generalized right to private
property, and not on Rule 637. While Conroe Creosoting's briefs
seem contrary to this characterization, the ambiguity of the briefs
on this point preclude a finding of waiver.
     17
       See Berry v. Humble Oil & Ref. Co., 205 S.W.2d 376, 388
(Tex. Civ. App. 1947).
     18
       See Brown v. Nationsbank Corp., 188 F.3d 579, 590-92 (5th
Cir. 1999) (finding that plaintiffs stated a Bivens claim for
federal agents' violation of their substantive due process rights,
which resulted in financial and other intangible, non-physical
injury); see also Regents of the Univ. of Michigan v. Ewing, 474
U.S. 214, 223 (1985) (assuming without deciding that the
deprivation of a property interest violated substantive due
process); Simi, 236 F.3d at 253-54 (finding that a county land-use
decision, which arbitrarily infringed on private property
interests, violated substantive due process). Cf. Mahone v. Addicks
Util. Dist., 836 F.2d 921, 929 (5th Cir. 1988) (noting that, at a
minimum, "property interest" as defined in the Fourteenth Amendment
includes both real and personal property).
     19
       See Shipp v. McMahon, 234 F.3d 907, 915 (5th Cir. 2000) ("To
show that a right is clearly established, the plaintiff does not
have to refer to precedent that is directly on point, or that
declares that the conduct in question is unlawful. Rather, the
right is clearly established if based on pre-existing law, the
unlawfulness of the conduct in question is apparent.").

                                9
auctioneers, who were allegedly his friends; (2) he notified state

authorities of the sale; (3) he signed a false affidavit in support

of a tax warrant; and (4) he authorized the "complete dispersal" of

the company's assets without legal authority. If a jury found that

this conduct occurred in the manner asserted by Conroe Creosoting,

these actions, taken together, would be unlawful in light of then-

existing substantive due process law.

     We    are   persuaded   that   there   are   genuine   issues   of   fact

regarding Moore’s role in this unfortunate affair. These questions

deprive us of jurisdiction, and we must dismiss Moore’s appeal.20

Specifically, we are troubled by the circumstances of Moore’s

signing an order authorizing a dispersal sale and the summary

seizure and closing of the business. Whether Moore was simply a

county official acting on the advice of the County’s legal counsel

when he signed the dispersal order, as he would have it, can not be

determined as a matter of law from this record. A trier of fact

might conclude that he knew the effect of the dispersal order and

dispatched the lawyers and County employees to take possession of

the property—to close the business. A trier of fact might also find

that he later signed a false affidavit asserting that the seized

property was not secure.

     There is a point at which an official’s conduct constitutes a

clear violation of substantive due process.         This is so despite our

     20
          See Johnson v. Jones, 515 U.S. 304 (1995).

                                     10
insistence that it has a narrow compass and is not easily found.

Even if, as some maintain, it is oxymoronic and without textual

support in the Constitution, the doctrine does exist. The Supreme

Court said so, and that ends the matter for this inferior court.

                                  III

       In light of the preceding, we dismiss the appeal for want of

jurisdiction.

       Appeal DISMISSED.

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