First State Towing, LLC and Katharine E. Morris v. Div. of State Police, Dep't of Safety and Homeland Sec., State of Delaware ( 2016 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
TAMIKA R. MONTGOMERY-REEVES New Castle County Courthouse
VICE CHANCELLOR 500 N. King Street, Suite 11400
Wilmington, Delaware 19801-3734
Date Submitted: February 2, 2016
Date Decided: May 4, 2016
John M. LaRosa, Esquire Joseph C. Handlon, Esquire
Law Office of John M. LaRosa Department of Justice
Two East 7th Street State of Delaware
Suite 302 Deputy Attorneys General
Wilmington, DE 19801-3707 Carvel State Building
820 North French Street, 6th Floor
Wilmington, DE 19801
RE: First State Towing, LLC and Katharine E. Morris v. Div. of State
Police, Dep’t of Safety and Homeland Sec., State of Delaware, et al.
Civil Action No. 11045-VCMR
Dear Counsel:
This Letter Opinion addresses the defendants’ motion to dismiss the
plaintiffs’ complaint (the “Complaint”). For the reasons stated below, the
defendants’ motion to dismiss is granted.
I. BACKGROUND
Subject to certain qualifications, the Delaware Code authorizes “[a]ny police
officer of this State, or a county or municipality therein, while in the performance
of duty, [to] remove, store or cause to be removed or stored from any public
highway, right-of-way, street or alley, at the owner’s or operator’s expense, any
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motor vehicle, trailer or part thereof,”1 and further requires the Delaware
Department of Safety and Homeland Security (“DSHS”) to promulgate regulations
governing the selection of towers (the “Towing Regulations”).2 These Towing
Regulations define “Approved Tower” as “a towing operator that has applied to the
Division of State Police for certification and been approved by the Division after
meeting all criteria for approval, including but not limited to the inspection of the
operator’s tow vehicle(s).”3 Each Approved Tower must complete and submit a
renewal form to its assigned troop each January.
Plaintiffs, First State Towing, LLC (“FST”) and Katharine E. Morris, FST’s
President, majority owner, and operator, submitted an application to Defendant
Division of State Police, Department of Safety and Homeland Security, State of
Delaware (“Delaware State Police” or “DSP”), to become an Approved Tower as
early as 2000, were approved on or about January 2, 2001, and were assigned a
Troop Area (“Troop Area 6”) patrolled by Delaware State Police Troop 6 (“Troop
6”). As of the filing of the Complaint on May 20, 2015, Defendant Colonel
Nathaniel McQueen, Jr. was the superintendent of DSP and its highest-ranking
1
21 Del. C. § 6901(a).
2
Id. § 6901(c).
3
2 Del. Admin. § 1301 (“Towing Regulations”).
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officer, and Defendant John Doe was the current Troop Commander of Troop 6
(together with DSP, “Defendants”).
The purpose of the Towing Regulations is “to protect and promote public
safety and to maintain hazard-free streets and highways by: requiring tow vehicles
and equipment to meet minimum specifications; requiring tow truck operators to
be licensed and insured and to hire only competent and responsible drivers; and by
creating a more equitable and uniform system of handling towing calls.”4 The
Towing Regulations provide as follows:
6.1 Based on the needs of public safety, the Troop
Commander may designate part of the Troop Area as a
Special Assigned Area to be served by one or more
Approved Towers taking into account such criteria as,
but not limited to, motor vehicle accident statistics;
traffic patterns; and other criteria relating to the response
time of towing companies; the density of approved
towing companies; and prior history of reliable and
expeditious towing services.
6.2 Each Troop Commander shall have the discretion,
based on the needs of public safety, to designate one or
more Approved Towers to provide all non-consensual
towing services in either the Troop Area or a Special
Assigned Area. The Troop Commander shall establish
the number of Approved Towers based on the need to
maintain adequate and timely public services to minimize
management of a rotation system. The Troop
4
Towing Regulations § 1.0.
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Commander may revise the number of approved Towers
if he or she finds that the public is not being
appropriately served by the existing number of towers.
6.3 If there are more than one Approved Tower for the
Troop Area or Special Assigned Area, they shall be
placed on a rotating list and shall be called by the Troop
duty officer to remove a wrecked, disabled, stolen or
abandoned vehicle, or a vehicle following an arrest,
according to the tower’s placement on a Troop towing
rotation list for that area and according to the tow vehicle
classification for the size of the vehicle to be towed.
Approved Towers will be called in succession from the
top of the list.5
FST is one of Troop 6’s five Approved Towers. Troop 6 utilizes Special
Assigned Areas, to which only one Approved Tower is assigned, rather than a
rotating list. In 2002, after the owner of a then-Approved Tower, Colemery’s, was
accused of committing gun crimes, DSP revoked Colemery’s Approved Tower
status and reassigned its Special Assigned Area to FST. The next day, however,
DSP divided that area and assigned the newly created Special Assigned Areas to
two other Approved Towers, leaving FST without any Special Assigned Area.
Plaintiffs protested for two years until, in 2004, DSP assigned FST a small Special
Assigned Area and promised to give FST an area comparable to those assigned to
the other Troop 6 Approved Towers within one year.
5
Id. §§ 6.1-6.3.
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Plaintiffs allege that, to this day, Defendants have not assigned FST, the only
female-owned towing company in Delaware, additional territory. Additionally, all
male-owned Approved Towers tow vehicles for more than one Troop, whereas
Plaintiffs are the only Approved Tower assigned to just one Troop. Further, when
the Christiana Mall parking lot “most recently” became available, it was assigned
to B & F Towing (“B & F”). In fact, Plaintiffs allege that B & F removes the most
towable vehicles from Troop Area 6, while FST receives the fourth most calls from
Troop 6.6 This is despite the fact that FST’s average response times are within the
acceptable limit of thirty minutes, but the response times of B & F average forty-
five minutes or longer. Plaintiffs seem to suggest that B & F’s favored status
might result from its owner’s relationship to certain state employees. Specifically,
the owner of B & F has a male relative who is a retired State Trooper previously
assigned to Troop 6, and B & F also employed at least one Delaware State Police
officer part-time until he retired recently.
Plaintiffs allege that they have lost and continue to lose tens of thousands of
dollars in revenues each month as a result of Defendants’ refusal to implement an
equitable and uniform system of handling towing calls in the Troop Area, which
6
For example, in a three day period, B & F commonly receives thirty calls from
Troop 6 while Plaintiffs only receive one call.
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Plaintiffs argue is a failure to comply with the Towing Regulations. Plaintiffs state
that over the past fourteen years, from 2002 to the present, they made numerous
efforts (both on their own and with the help of state legislators in Dover) to resolve
this issue, including contacting prior Captains at Troop 6, the Colonel of the
Delaware State Police, and the DSHS, but Defendants transferred away the
Captains at Troop 6 who attempted to remedy this issue. Plaintiffs contend
Defendants unlawfully exclude Plaintiffs and use male-owned businesses instead.
II. PROCEDURAL HISTORY AND CONTENTIONS
On May 20, 2015, Plaintiffs filed their three-count Complaint. Count I
alleges violations of 21 Del. C. § 6901 and 2 Del. Admin. § 1301; Count II alleges
Defendants discriminate against Morris on the basis of her sex and against FST as
a minority-owned business in violation of the Equal Protection Clause of the
Fourteenth Amendment and 42 U.S.C. § 1983; and Count III alleges Defendants
treat Plaintiffs differently for arbitrary or malicious reasons and without rational
basis in violation of the Equal Protection Clause of the Fourteenth Amendment and
42 U.S.C. § 1983. The Complaint seeks a judgment declaring Defendants’ acts to
be in violation of Plaintiffs’ rights under constitutional, statutory, and regulatory
law; a mandatory injunction directing Defendants to (1) implement a rotating list
of all Approved Towers for Troop 6 and to place Plaintiffs at the top of the rotating
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list of Approved Towers, (2) call FST to remove the next wrecked, disabled, stolen
or abandoned vehicle, or a vehicle following an arrest, located in the Troop Area 6,
and (3) continue to call FST to remove towable vehicles in succession according to
FST’s placement on the rotating list and equally as often as the other Approved
Towers; a judgment against Defendants, jointly and severally, for compensatory
damages, lost revenue, decreased earnings opportunities, humiliation,
embarrassment, injury to reputation, emotional distress, and other pecuniary and
non-pecuniary losses and permanent injuries; and award Plaintiffs attorneys’ fees,
costs, and pre- and post-judgment interest.
On August 10, 2015, Defendants moved to dismiss Plaintiffs’ Complaint on
several bases. First, Defendants contend the Delaware statutory and regulatory
claims should be dismissed under Court of Chancery Rule 12(b)(6) because no
private cause of action is available to enforce any perceived rights under the
statute. Second, Defendants assert that sovereign immunity bars the action. Third,
Defendants argue that Plaintiffs’ claims are time-barred. Fourth, Defendants
contend that the Complaint fails to state an equal protection claim. Fifth, and
finally, Defendants contend that the case should be dismissed under Court of
Chancery Rules 12(b)(7) and 19(b) for failure to join all Troop 6 Approved
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Towers. Several of these grounds are strong and potentially dispositive, but
because Plaintiffs’ claims are time-barred, I limit my discussion to that issue.
Plaintiffs argue Defendants’ laches defense fails because it is a factual
inquiry not well-suited for a motion to dismiss; no unreasonable delay, change of
position, or prejudice occurred; any analogous statute of limitations was tolled
until Plaintiffs were on inquiry notice that other towers were receiving more calls;
and the continuing violation doctrine preserves the § 1983 claims. On September
10, 2015, in support of their argument that no unreasonable delay occurred,
Plaintiffs attached an affidavit and a purported contract (the “Supplemental
Materials”) to their Answering Brief attempting to explain how they gained
knowledge of the facts underlying their cause of action during the winter of 2014.
Defendants argue that the Court should disregard the Supplemental Materials and
consider only the well-pled facts in the Complaint.
III. STANDARD OF REVIEW
The standard of review for dismissal pursuant to Rule 12(b)(6) is well
established. Delaware applies the reasonable conceivability standard, under which
a motion to dismiss will be denied if a plaintiff’s well-pled factual allegations
would entitle him or her to relief under any reasonably conceivable set of
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circumstances.7 The Court accepts all well-pled facts as true and draws all
reasonable inferences in favor of plaintiffs.8 The Court, however, need not accept
conclusory allegations unsupported by specific facts or draw unreasonable
inferences in favor of plaintiffs.9
I decline to accept and consider the Supplemental Materials purporting to
explain how Plaintiffs gained knowledge of facts underlying their causes of action
in the winter of 2014. Plaintiffs could have amended their Complaint or filed a
motion to amend in conformity with Court of Chancery Rule 15, but chose not to
do so. Furthermore, even if I consider the Supplemental Materials (and I do not),
the facts alleged therein relating to the dates on which Plaintiffs learn of the
alleged discrimination largely are contrary to those pled in the Complaint.
Therefore, I consider only the well-pled facts of the Complaint and all reasonable
inferences drawn therefrom in Plaintiffs’ favor.
7
Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 A.2d 531, 537
& n. 13 (Del. 2011).
8
Id. at 536.
9
Price v. E.I. duPont de Nemours & Co., Inc., 26 A.3d 162, 166 (Del. 2011).
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IV. LACHES ANALYSIS
“[A]ffirmative defenses, such as laches, are not ordinarily well-suited for
treatment on [a Rule 12(b)(6) motion to dismiss].” 10 Nevertheless, laches can be
applied at the pleadings stage if “the complaint itself alleges facts that show that
the complaint is filed too late.”11 Under Delaware law, laches bars a cause of
action if a plaintiff waited an unreasonable length of time before asserting the
claim and the delay unfairly prejudiced the defendant.12 Laches requires the Court
to determine whether a defendant can show three elements: “first, knowledge by
the claimant; second, unreasonable delay in bringing the claim; and third, resulting
prejudice to the defendant.”13
Because equity generally follows the law,14 “a party’s failure to file within
the analogous period of limitations will be given great weight in deciding whether
10
Reid v. Spazio, 970 A.2d 176, 183 (Del. 2009); see also Capano v. Capano, 2014
WL 2964071, at *7 (Del. Ch. June 30, 2014) (“Thus, motions to dismiss based
upon laches are not routinely granted . . . .”).
11
Kahn v. Seaboard Corp., 625 A.2d 269, 277 (Del. Ch. 1993).
12
Bean v. Fursa Capital P’rs, LP, 2013 WL 755792, at *4 (Del. Ch. Feb. 28, 2013).
13
Whittington v. Dragon Gp., L.L.C., 991 A.2d 1, 8 (Del. 2009) (citation omitted).
14
See State ex rel. Brady v. Pettinaro Enters., 870 A.2d 513, 527 (Del. Ch. 2005)
(“[W]hen claims are barred by a controlling statute of limitations, a court of equity
need not engage in a traditional laches analysis.”).
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the claims are barred by laches.”15 The analogous period for an action based on a
statute is three years,16 and claims brought for violation of the United States
Constitution pursuant to 42 U.S.C. § 1983 are subject to a two-year statute of
limitations.17
A. Plaintiffs Knew of Their Claims, but Unreasonably Delayed
The Complaint itself alleges facts that show it was filed long after Plaintiffs’
claims accrued and the analogous statute of limitations expired. All of the specific
facts Plaintiffs plead to support their causes of action occurred in or before 2005, at
the latest. In short, FST became an Approved Tower in 2001; Defendants
assigned, then unassigned, a large Special Assigned Area to FST in 2002; and
Plaintiffs protested for two years until Defendants assigned FST a small Special
Assigned Area in or around 2004 and promised to give FST an area comparable to
15
Whittington, 991 A.2d at 9 (citing Adams v. Jankouskas, 452 A.2d 148, 157 (Del.
1982)); In re Sirius XM S’holder Litig., 2013 WL 5411268, at *4 (Del. Ch. Sept.
27, 2013) (“[A] filing after the analogous statute of limitations has run cannot be
justified except in the ‘rare’ and ‘unusual’ circumstances that a recognized tolling
doctrine excuses the late filing.”) (citing Gordon Scott Levey v. Brownstone Asset
Mgmt., 76 A.3d 764, 772 (Del. 2013); IAC/InterActiveCorp v. O’Brien, 26 A.3d
174, 177-78 (Del. 2011); Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital
Hldgs. LLC, 2012 WL 3201139, at *15 (Del. Ch. Aug. 7, 2012)).
16
See 10 Del. C. § 8106(a) (“[N]o action based on a statute . . . shall be brought after
the expiration of 3 years from the accruing of the cause of such action.”).
17
Parker v. Gadow, 893 A.2d 964, 968 (Del. 2006).
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those assigned to the other Troop 6 Approved Towers within one year, i.e., in or
before 2005. Accordingly, the Complaint pleads that Plaintiffs objectively were
aware that Defendants were using Special Assigned Areas instead of a rotating list
as early as 2002 and that the size of their Special Assigned Area was smaller and
the number of towing calls they received was lower than those of other Approved
Towers in or before 2005 at the latest.
B. Tolling Doctrines Do Not Apply
Plaintiffs’ claims presumptively will be barred unless a tolling doctrine
exists that would justify the late filing.18 “[A] cause of action ‘accrues’ under
Section 8106 at the time of the wrongful act, even if the plaintiff is ignorant of that
cause of action.”19 Plaintiffs bear the burden of pleading facts demonstrating that a
tolling doctrine applies.20 But “no theory will toll the statute beyond the point
where the plaintiff was objectively aware, or should have been aware, of facts
18
Sunrise Ventures, LLC v. Rehoboth Canal Ventures, LLC, 2010 WL 363845, at *6
(Del. Ch. Jan. 27, 2010) (“In the absence of an applicable tolling doctrine, a claim
cannot be pressed in the Court of Chancery if the statute of limitations has
passed.”), aff’d, 7 A.3d 485 (Del. 2010).
19
Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 62 A.3d 62, 77 (Del.
Ch. 2013).
20
Smith v. Mattia, 2010 WL 412030, at *3 (Del. Ch. Feb. 1, 2010); Albert v. Alex.
Brown Mgmt. Servs., Inc., 2005 WL 1594085, at *19 (Del. Ch. June 25, 2005).
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giving rise to the wrong.”21 Here, Plaintiffs argue that the doctrine of inherently
unknowable injuries, equitable tolling, and the continuing violation doctrine
preserve their claims.
The inherently unknowable injury doctrine, which tolls the limitations
period until a plaintiff has reason to know that a wrong was committed,22 is facially
inapplicable because Plaintiffs pled that they knew a wrong was committed by
2005, at the latest.
Plaintiffs’ equitable tolling argument fails for the same reason. Plaintiffs
argue that, “[u]nder the theory of equitable tolling, the statute . . . is tolled for
claims of wrongful self-dealing, even in the absence of actual fraudulent
concealment, where a plaintiff reasonably relies on the competence and good faith
of a fiduciary.”23 Defendants challenge whether equitable tolling can apply to
these claims, but I need not resolve that dispute because if any of Plaintiffs’
theories toll the limitations period, “it is tolled only until the plaintiff discovers (or
exercising reasonable diligence should have discovered) his injury. Thus, the
21
Capano, 2014 WL 2964071, at *9 (citing In re Tyson Foods, Inc., 919 A.2d 563,
585 (Del. Ch. 2007)).
22
In re Dean Witter P’ship Litig., 1998 WL 442456, at *5 (Del. Ch. July 17, 1998).
23
Pls.’ Answering Br. 42 (citing Dean Witter, 1998 WL 442456, at *6).
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limitations period begins to run when the plaintiff is objectively aware of the facts
giving rise to the wrong, i.e., on inquiry notice.”24 Plaintiffs’ effort to invoke the
equitable tolling doctrine fails because they pled that they objectively were aware
of the conduct they now allege was wrongful by 2005 at the latest.
Finally, Plaintiffs rely on federal case law to argue that the continuing
violation doctrine preserves their § 1983 claims, stating as follows:
Here, Defendants are engaging in a prohibited course of
conduct by refusing to create a more equitable and
uniform system of handling towing calls still to this day.
Alternatively, their conduct in providing an inequitable
and non-uniform system with significantly more calls to
B & F is a continuing practice. Thus, the two year
limitations period for § 1983 claims runs from the date of
the last alleged violation. Here, Plaintiffs allege that
“[a]s a result, an inequitable and non-uniform system of
handling towing calls in the Troop Area remains in place
to this day.”25
The United States Court of Appeals for the Third Circuit applies the
continuing violation doctrine to Section 1983 claims.26 “To allege a continuing
24
Dean Witter, 1998 WL 442456, at *6 (citations omitted).
25
Pls.’ Answering Br. 47 (quoting Compl. ¶ 76).
26
Gould v. Council of Bristol Borough, 2014 WL 296944, at *1 (E.D. Pa. Jan. 27,
2014), aff’d sub nom., Gould v. Borough, 615 F. App’x 112 (3d Cir. 2015); see,
e.g., Cowell v. Palmer Twp., 263 F.3d 286 (3d Cir. 2001); Centifanti v. Nix, 865
F.2d 1422 (3d Cir. 1989); Burnette v. City of Phila., 2003 WL 21293682, at *2
(E.D. Pa. Jan. 14, 2003).
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violation, the plaintiff must show that all acts which constitute the claim are part of
the same unlawful . . . practice and that at least one act falls within the applicable
limitations period.”27 “[A] continuing violation is occasioned by continual
unlawful acts, not continual ill effects from an original violation,” and “[t]he focus
of the . . . doctrine is on affirmative acts of the defendants.”28 However, “discrete
[violations] are not actionable if time barred, even when they are related to acts
alleged in timely filed charges.”29
Here, the affirmative acts of which Plaintiffs complain occurred over ten
years ago when (1) Defendants assigned FST a large Special Assigned Area one
day and took it away the next, and (2) Defendants gave FST a small Special
Assigned Area and promised to assign FST a larger Special Assigned Area within
a year, which never happened. Plaintiffs also allege that DSP “frequently” assigns
additional areas within the Troop 6 Area or the state to B & F and that DSP
transferred Captains away from Troop 6 when they attempted to remedy Plaintiffs’
27
Mandel v. M & Q Packaging Corp., 706 F.3d 157, 165-66 (3d Cir. 2013).
28
Cowell, 263 F.3d at 293 (emphasis added); Sameric Corp. of Del., Inc. v. City of
Phila., 142 F.3d 582, 599 (3d. Cir. 1998).
29
Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113 (2002).
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grievances, but the Complaint fails to plead facts placing those affirmative acts
specifically within the statute of limitations.
Further, allegations that Defendants are allowing an inequitable and non-
uniform system to remain in place to this day exemplifies the “ill effects from an
original violation” that the Third Circuit does not consider a continuing violation,
rather than the affirmative acts on which the Third Circuit’s analysis focuses.
Thus, taking the well-pled facts of the Complaint and drawing all reasonable
inferences therefrom in favor of Plaintiffs, I conclude Plaintiffs have not satisfied
their burden of demonstrating that the continuing violation doctrine preserves their
§ 1983 claims.
C. Plaintiffs’ Unreasonable Delay Prejudiced Defendants
Finally, Plaintiffs’ failure to file within the analogous statute of limitations
prejudiced Defendants. Such prejudice arises primarily from the extent to which
facts and circumstances change, witnesses retire or relocate, and memories fade
over the course of fifteen years. For example, to defend against Plaintiffs’ claim
that the current system is discriminatory, Defendants would have to explain how
Troop Area 6 evolved since 2001 and justify Approved Tower applications and
area assignments during that period, which includes establishing the motivations
and decision-making processes of unnamed officials. More specifically, Plaintiffs
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plead that an unnamed person promised them a larger Special Assigned Area in
2004 and that multiple unnamed Captains at Troop 6 attempted to remedy the issue
over the years. Defendants cannot fairly be expected to defend adequately against
Plaintiffs’ claims more than ten years after the analogous statutes of limitations
ran. In addition, Plaintiffs seek damages for the entire fifteen-year period; had they
filed suit before 2015, Defendants could have avoided significant losses by taking
interim corrective action.30 Accordingly, Plaintiffs’ claims are barred by laches.
V. CONCLUSION
Defendants established that the Complaint itself alleges facts that show it
was filed too late, and Plaintiffs failed to carry their burden of pleading facts
demonstrating that tolling applies. Therefore, Defendants’ motion to dismiss is
granted.
IT IS SO ORDERED.
Sincerely,
/s/ Tamika Montgomery-Reeves
Vice Chancellor
TMR/jp
30
See, e.g., Fike v. Ruger, 752 A.2d 112, 114 (Del. 2000) (holding that the plaintiffs’
unreasonable delay in bringing its claims prejudiced the defendants by preventing
them from avoiding significant losses).