Herman v. Lackey

UNPUBLISHED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Affirmed by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.
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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
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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
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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).
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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.
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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.
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