Wyatt v. Keating

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
4-12-2005
Wyatt v. Keating
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-2753
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-2753
WESLEY K. WYATT, ANNA WYATT; THE FINANCIAL GREENHOUSE,
Appellants
v.
TERRANCE A. KEATING; JEFFERSON PILOT INSURANCE COMPANY;
AMERICAN NATIONAL (LEGACY) INC.; LIFE USA (ALLIANCE) INC.;
JOHN DOE
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 03-cv-00726)
District Judge: Honorable Sylvia H. Rambo
Submitted Under Third Circuit L.A.R. 34.1(a)
March 11, 2005
Before: SCIRICA, ROTH, and FUENTES, Circuit Judges.
(Filed April 12, 2005)
OPINION OF THE COURT
FUENTES, Circuit Judge.
Wesley K. Wyatt, Anna Wyatt, and The Financial Greenhouse appeal the District
Court’s dismissal of their civil rights claims on statute of limitations grounds. Specifically,
they assert (1) that the District Court erred in finding that there was no duty to exhaust
administrative remedies with respect to an insurance license revocation before filing suit in
federal court under 28 U.S.C. § 1983 and (2) that the District Court erred in refusing to
consider their Rooker-Feldman argument that was first raised in a motion for reconsideration.
Because we find that both of these arguments are without merit, and that dismissal of the
claims was warranted, we affirm.
I.
Wesley K. Wyatt applied for and received a license to sell insurance from the
Pennsylvania Insurance Department (the “Department”) in 1992. As required by the
application, he disclosed an Oklahoma guilty plea to four criminal contempt counts for which
he served eighteen months in prison. He also provided a letter from the Oklahoma Insurance
Commissioner, in which the charges to which Wyatt pled guilty are described as
misdemeanors. In 1999, a Pittsburgh television station raised questions as to why Wyatt was
issued a license, noting that the contempt charges appeared to be felonies and that relevant
Pennsylvania insurance law allowed the Department to refuse to issue a license to a recent
felon. As a result of this media attention, the U.S. Attorney for the Western District of
Oklahoma provided a letter to the Pennsylvania Insurance Department, advising the
Department that the contempt charges were felony charges. Wyatt’s license was
subsequently revoked in September 2000 by the Department, on the grounds of his felonies.
2
Wyatt appealed the revocation and won in the Commonwealth Court, because the court found
that, although the contempt charges could properly be characterized as felonies, the
Department was estopped from revoking the license under the doctrine of laches because of
its failure to act with due diligence in investigating the original application.
Wyatt filed this § 1983 action in April 2003 against the head of the Insurance
Department, Terrence A. Keating, and three insurance companies that dismissed Wyatt as
an agent after his license was revoked.1 The complaint alleged violations of the First, Fourth,
and Fourteenth Amendments and the Commerce Clause arising from claims of malicious
prosecution and interference with the right to do business and freely choose one’s profession.
It also alleged state law claims of tortious interference with contractual relations. All of the
defendants moved for dismissal of the complaint or, in the alternative, for summary judgment
in their favor. The District Court held that all of the claims were time-barred, and granted
the motions to dismiss. It found that, in § 1983 actions, the statute of limitations is that of
personal injury actions in the state in which the alleged violations occurred, and that the
limitations period in Pennsylvania is two years. After determining that the revocation gave
notice of the existence of the claims filed, the District Court found that the claims accrued
in September 2000. The District Court held that a federal court would not have abstained
1
The companies allegedly also ceased dealings with Anna Wyatt, the wife of Wesley
Wyatt and a co-plaintiff in this case, because they both worked for The Financial
Greenhouse (another co-plaintiff), which is essentially owned and run by Anna Wyatt. In
this opinion, “Wyatt” will hereafter be used to refer to Wesley Wyatt, although the
discussion applies with equal force to whatever claims Anna Wyatt and The Financial
Greenhouse may have.
3
from hearing the § 1983 suit during the pendency of the state appeal in refusing to toll the
limitations period. Wyatt’s continuing violation argument, under which he suggested that
the state’s violations continued until the present, making the action timely, was rejected
because that doctrine focuses on the injurious acts rather than the resulting harm. Finally,
the District Court found that the state tortious interference claim was also governed by a two-
year statute of limitations, running from the revocation. Accordingly, the District Court
dismissed all of the claims, but allowed Wyatt to amend his complaint to state more
specifically a claim arising from the Department’s alleged refusal to reinstate his license after
the Commonwealth Court reversed the revocation.2
Wyatt moved for reconsideration, arguing that the Rooker-Feldman doctrine, which
bars federal courts from reconsidering final state decisions made on the merits, required the
District Court to find that his claims were filed in a timely manner. The District Court held
that the argument was waived, because Wyatt did not raise it in any prior papers even though
he had all of the facts necessary to make the argument.
Wyatt appeals from the District Court’s dismissal of his claims.
II.
Wyatt makes two specific challenges on appeal, along with general rhetorical
2
Wyatt amended his complaint to focus on the Department’s alleged refusal to reinstate
his license and its refusal to return the $1000 fine levied upon him. The District Court
granted summary judgment in favor of the defendants, finding that no genuine dispute
existed with respect to the material evidence and that no reasonable trier of fact could find
that the Department refused to reinstate the license or that the Department actually
collected the civil fine.
4
challenges to the District Court’s orders. First, he argues that his § 1983 claims did not
accrue until after the completion of his state appeals because he had a duty to exhaust his
available state remedies before proceeding to federal court. Second, he argues that the
Rooker-Feldman doctrine would have prevented a federal court from ruling on the state-law
issues that must necessarily be decided in order to evaluate his federal claims. Each of these
arguments is considered in turn.
A. The Alleged Exhaustion Requirement
The District Court found that statute of limitations might be tolled (or,
alternatively, that the date of accrual might be tolled) for a federal claim if a federal court
would not exercise jurisdiction over the claims until the conclusion of on-going state
proceedings or the exhaustion of available remedies. Accordingly, it looked to whether a
district court would have abstained from hearing Wyatt’s § 1983 suit during the pendency
of his state appeal under Younger v. Harris, 401 U.S. 37 (1971) and its progeny.3
As recognized by the District Court, the Supreme Court has noted that, in some
cases, exhaustion of state administrative remedies is not required before bringing § 1983
claims in federal court. See Ohio Civil Rights Comm’n v. Dayton Christian Sch., Inc.,
477 U.S. 619, 627 n.2 (1986). In finding that exhaustion was required in the case before
it, the Court stated:
3
Although Younger dealt with federal court abstention in the face of on-going state
criminal actions, it has been applied to administrative proceedings. See Middlesex
County Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423 (1982).
5
The application of the Younger principle to pending state administrative
proceedings is fully consistent with Patsy v. Florida Board of Regents, 457
U.S. 496 (1982), which holds that litigants need not exhaust their
administrative remedies prior to bringing a § 1983 suit in federal court.
Unlike Patsy, the administrative proceedings here are coercive rather than
remedial, began before any substantial advancement in the federal action
took place, and involve an important state interest.
Id. (emphasis added). In elaborating on the coercive-remedial dichotomy, we have noted:
The critical distinction between Dayton Christian Schools and Patsy is that
Patsy involved a remedial action brought by the plaintiff to vindicate a
wrong which had been inflicted by the State. In contrast, Dayton Christian
Schools involved an administrative proceedings initiated by the State,
before a state forum, to enforce a violation of state law. That is, in Dayton
Christian Schools, the action taken by the Ohio Civil Rights Commission
was coercive rather than remedial, just as the action taken by the City of
Philadelphia, to enforce its traffic tickets against O’Neill and Goodman,
was coercive action which the plaintiffs sought to circumvent by filing their
complaint in federal court.
O’Neill v. City of Philadelphia, 32 F.3d 785, 791 n.13 (3d Cir. 1994). The District Court
found that the appeals process that Wyatt initiated in order to get his license reinstated
was a remedial process, because it was initiated by Wyatt at his own option to remedy a
perceived wrong by the state–the revocation of his license. It was not coercive because it
was not instituted by the state to penalize an alleged violation of law by Wyatt.
Accordingly, the District Court found that a federal court would not have abstained under
Younger if Wyatt had brought his claims immediately after the revocation and it refused
to toll the limitations period. We see no error in this analysis. Wyatt’s “argument” about
how the District Court’s analysis is unfair due to its complexity and ambiguity is
unfounded. Here, a plaintiff in Wyatt’s situation could have filed his § 1983 claim in
6
federal court immediately after discovering the alleged constitutional violations and then
the District Court could have dismissed the claims without prejudice or stayed
proceedings while the plaintiff pursued his state remedies if abstention was found to be
required.4
B. The Rooker-Feldman Doctrine
Wyatt concedes that he failed to raise his Rooker-Feldman argument until after the
District Court first ruled on his claims, but he argues (with counsel citing to his extensive
experience with respect to sanctions) that the District Court went too far in refusing to
consider the argument. He asserts that it was clearly raised in a timely fashion because it
was raised during “motion practice on the amended complaint.” However, although the
District Court allowed Wyatt to amend his complaint with respect to the alleged refusal to
reinstate the license, that has no bearing on the timeliness of an argument made with
respect to a statute of limitations issue already briefed before and decided by the District
Court. Although “reconsideration is the appropriate means of bringing to the court’s
attention manifest errors of fact or law,” Max’s Seafood Café ex rel. Lou-Ann, Inc. v.
Quinteros, 176 F.3d 669, 678 (3d Cir. 1999), “[c]ourts often take a dim view of issues
raised for the first time in post-judgment motions” and “[g]enerally, this is a decision
4
The policy behind Younger is to prevent federal court interference with state actions
involving important state interests, in order to foster comity. It is unclear that the
Younger principles would even come into play here, as the state action concerned
whether the license was properly revoked, while the claims asserted in this federal action
appear to focus on the improper motives of the head of the Department and three private
insurance companies.
7
within the sound discretion of the district court,” Kiewit E. Co. v. L&R Const. Co., 44
F.3d 1194, 1204 (3d Cir. 1995). Wyatt offers no reason for us to find that the District
Court abused its discretion in finding the argument waived. See Pittston Co. Ultramar
Am. Ltd. v. Allianz Ins. Co., 124 F.3d 508, 519 (3d Cir. 1997) (citing Kiewit in refusing
to consider an argument first raised in a motion for reconsideration).
It is worth noting that it is unclear from Wyatt’s brief how the Rooker-Feldman
doctrine would provide him any relief from the statute of limitations problem. The
doctrine “prohibits District Courts from adjudicating actions in which the relief requested
requires determining whether [a] state court’s decision is wrong or voiding [a] state
court’s ruling.” Walker v. Horn, 385 F.3d 321, 329 (3d Cir. 2004) (quotation omitted). It
acts as a jurisdictional bar; it does not relate to statutes of limitations.
C. The Malicious Use of Process Claim
We note that it appears that the District Court erred in finding that Wyatt’s Fourth
Amendment malicious use of process claim, insofar as he stated such a claim,5 accrued at
the time Wyatt’s license was revoked. We have previously held “that a claim of
malicious use of process may state a Section 1983 claim if it includes the elements of that
common law tort as it has developed.” McArdle v. Tronetti, 961 F.2d 1083, 1088 (3d Cir.
5
Under the “Rights Violated” section of Wyatt’s complaint, he asserts that he “has a
federally guaranteed right under the 4th Amendment not to be maliciously and improperly
prosecuted.” Although, as stated, this appears to state a malicious prosecution claim,
which is usually made with respect to criminal charges, we will interpret the claim as a
malicious use of civil process claim.
8
1992). “[U]nder the Pennsylvania statute codifying this tort, a defendant may not be
found liable unless . . . [t]he proceedings have terminated in favor of the person against
whom they are brought.” Id. Because favorable termination is a necessary element of his
§ 1983 claim, Wyatt neither knew nor had reason to know of the injury that constituted
the basis of his action until such termination. Rose v. Bartle, 871 F.2d 331, 349 (3d Cir.
1989). Accordingly, that claim did not accrue under federal law until the Commonwealth
Court reversed the license revocation. Id. However, Wyatt does not allege this error in
his brief, and it could therefore be considered waived.
In any case, it is well understood that “[t]he first step in any such claim is to
identify the specific constitutional right allegedly infringed.” Albright v. Oliver, 510 U.S.
266, 271 (1994). Albright requires a violation of an explicit constitutional protection in
order to support a § 1983 claim. See id. at 275 (holding that substantive due process,
“with its scarce and open-ended guideposts,” cannot be used to support a § 1983 suit for
malicious prosecution (quotations omitted)).
Given that Wyatt would have to show violation of a textually rooted constitutional
right, his claim was correctly dismissed on its face. Wyatt alleges a Fourth Amendment
right to be free from malicious prosecution. However, this Court has read Albright as
rejecting such a broad right to be free from prosecution without probable cause, instead
requiring “a deprivation of liberty accompanying the prosecution” in order to use the
Fourth Amendment. Gallo v. City of Philadelphia, 161 F.3d 217, 222 (3d Cir. 1998).
9
Additionally, Wyatt’s alleged rights under the First Amendment “to do business and to
associate,” under the First and Fourteenth Amendments to “pursue his chosen
profession,” and under the Commerce Clause to “further his business ends” do not find
any support in the case law.6 Hence, the District Court correctly dismissed the malicious
use of process claim, as Wyatt fails to allege adequately a specific constitutional violation
to support a § 1983 claim.
Finally, Wyatt’s malicious use of process claim is likely facially deficient because
it does not appear that Keating actually instituted any “civil proceeding” against Wyatt.
The Western District of Pennsylvania considered this issue:
A proceeding is defined in Pennsylvania as “every declaration, petition or
other application which may be made to a court under law or usage or under
special statutory authority, but . . . not an action or an appeal.” Following
[the zoning officer’s] letter, it was the Plaintiffs who appealed to the Zoning
Board and then to the Court of Common Pleas. The tort of wrongful use of
legal proceedings arises “when a party institutes a lawsuit with a malicious
motive and lacking probable cause.” “The essence of the tort of wrongful
use of civil proceedings is the institution of a civil action for a malicious
purpose and without probable cause.” In this case, there is no allegation of
6
This Court has alluded to substantive due process being a sufficient hook for civil
malicious use of process claims. See Herr v. Pequea Township, 274 F.3d 109, 118 (3d
Cir. 2001). However, the substantive due process standard employed in Herr, looking to
whether the state actor acted with an “improper motive,” has been rejected as
irreconcilable with the “shocks the conscience” standard. UA Theatre Circuit v.
Township of Warrington, 316 F.3d 392, 400 (3d Cir. 2003). Substantive due process
does not appear to provide a constitutional right to be free from civil suits filed without
just cause. See Merkle v. Upper Dublin Sch. Dist., 211 F.3d 782, 792 (3d Cir. 2000)
(noting that this Court read Albright as allowing § 1983 malicious prosecution claims
“based on a constitutional provision other than the Fourth Amendment . . . so long as it
was not based on substantive due process”).
10
a civil proceeding, and therefore we do not and cannot infer that the City
Defendants initiated or continued a civil proceeding for a malicious
purpose. We therefore dismiss this claim against the City Defendants.
Pellegrino Food Prods. Co. v. City of Warren, 136 F. Supp. 2d 391, 406 (W.D. Pa. 2000)
(quoting 42 Pa. Cons. Stat. Ann. § 102 and Rosen v. Am. Bank of Rolla, 627 A.2d 190,
191 (Pa. Super. Ct. 1993), respectively). Similarly, here Keating initiated an investigatory
process within the Department resulting in the revocation of Wyatt’s license, and it was
Wyatt who appealed that decision to the court system. Thus, under the definition of
“proceedings,” it appears that Wyatt cannot state a claim. We have considered the
remainder of Wyatt’s arguments and conclude that they are without merit.
III.
For the reasons discussed above, we affirm the decisions of the District Court.
11