Wax 'n Works v. City of St. Paul

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 99-1152
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Wax 'n Works, *
*
Appellant, *
*
v. * Appeal from the United States
* District Court for the District
City of St. Paul, * of Minnesota.
*
Appellee. *
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Submitted: October 18, 1999
Filed: May 26, 2000
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Before McMILLIAN, HANSEN, and MORRIS SHEPPARD ARNOLD, Circuit
Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
Wax 'n Works appeals an order of the district court1 that denied attorney's fees
after the court dismissed, for failure to state a claim, both counts in a lawsuit brought
by Wax 'n Works. We affirm.
1
The Honorable Franklin L. Noel, Chief Magistrate Judge for the District of
Minnesota, acting by consent of the parties. See 28 U.S.C. § 636(c); see also Fed. R.
Civ. P. 73.
I.
In mid-1977, the city of St. Paul, Minnesota, exercised its power of eminent
domain, see Minn. Stat. Ann. §§ 117.011-117.57, with respect to the property where
Wax 'n Works, a car detailing business, was located. Wax 'n Works moved to another
location two weeks later and subsequently submitted an application, and then an
amended application six weeks later, for "relocation assistance, services, payments and
benefits," see Minn. Stat. Ann. § 117.52.1. That statute incorporates by reference, for
acquisitions (such as the one in this case) that involve no federal funding, the provisions
of 42 U.S.C. §§ 4601-4655 and 49 C.F.R. §§ 24.1-24.306 and applies those provisions
at the state level.
Wax 'n Works received no response from the city and construed that failure to
respond as the city's "determination," see 49 C.F.R. § 24.203(a)(5), § 24.207(g), with
respect to the eligibility of Wax 'n Works for monetary benefits and relocation services,
see 42 U.S.C. § 4622(a), § 4622(c), § 4625(b), § 4625(c), see also 49 C.F.R. § 24.201.
Two months after its initial application, therefore, considering itself to be an "aggrieved
person" whose "application for assistance" the city had "failed to properly consider,"
Wax 'n Works requested an appeal, see 49 C.F.R. § 24.10(b), of the city's
"determination," see 49 C.F.R. § 24.203(a)(5), § 24.207(g). During the succeeding two
months, Wax 'n Works repeatedly requested an appeal and eventually submitted a
second amended application for "relocation assistance, services, payments and
benefits," see Minn. Stat. Ann. § 117.52.1. Finally, approximately five months after
its initial application and approximately three months after its first request for an
appeal, Wax 'n Works sued the city, asking for compensatory damages, punitive
damages, and other "just and equitable relief" (presumably an injunction ordering the
city to grant an appeal to Wax 'n Works).
In the first count of its complaint, Wax 'n Works contended that the city had
failed to provide, or even offer, the monetary benefits and relocation services to which
Wax 'n Works was entitled under Minnesota law, see 42 U.S.C. § 4622(a), § 4622(c)
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(money); § 4625(b), § 4625(c) (services); see also 49 C.F.R. § 24.201,
§ 24.205(c)(2)(i) (in general); § 24.203(a)(1), § 24.207(a), § 24.207(b), § 24.207(c),
§ 24.303(a), § 24.303(c), § 24.303(e), § 24.304(a), § 24.306(a), § 24.306(e) (money);
§ 24.203(a)(2), § 24.205(a)(3), § 24.205(a)(4), § 24.205(c)(1), § 24.205(c)(2)(iii),
§ 24.205(c)(2)(iv), § 24.205(c)(2)(v), § 24.303(b)(1) (services). Wax 'n Works
asserted in addition that the city had failed to provide "expeditious" consideration of
the application that Wax 'n Works made for monetary benefits and relocation services,
see 49 C.F.R. § 24.207(b), see also 49 C.F.R. § 24.207(g). Finally, Wax 'n Works
maintained that the city had failed to provide the appeal to which Wax 'n Works was
entitled under Minnesota law, see 49 C.F.R. § 24.10(a), § 24.10(b). These failures,
Wax 'n Works stated, were violations of Minnesota law for which relief was available
under 42 U.S.C. § 1983.
In the second count of its complaint, Wax 'n Works reiterated its contentions
with respect to the city's failures to act. Wax 'n Works then asserted that the collective
effect of those failures was so serious as to amount to a deprivation of property without
due process of law, in violation of the fourteenth amendment to the Constitution. We
construe this assertion as a procedural due process claim.
Three weeks after Wax 'n Works sued, the city paid about two-thirds of the
money for which Wax 'n Works had applied; the city also scheduled an appeal for Wax
'n Works with respect to the rejection of the remaining one-third of the money and of
the relocation services for which Wax 'n Works had applied. The city then moved to
dismiss the lawsuit for failure to state a claim, see Fed. R. Civ. P. 12(b)(6), arguing,
first, that 42 U.S.C. § 1983 does not provide relief for violations of state law and,
second, with respect to the procedural due process claim, that Wax 'n Works had failed
to exhaust the remedies available under Minnesota law.
The district court accepted the arguments of the city and dismissed both counts
of the suit without prejudice. Wax 'n Works does not appeal that dismissal order.
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Wax 'n Works then moved for attorney's fees, contending that its lawsuit served as a
catalyst for the city's actions in paying part of the money applied for and in scheduling
an appeal, and therefore that Wax 'n Works was a prevailing party entitled to attorney's
fees. The district court denied the motion for attorney's fees, and Wax 'n Works
appeals that denial.
II.
The first count of the complaint contended that 42 U.S.C. § 1983 was a basis for
relief with respect to the city's alleged violations of the Minnesota statute. It is well
settled, however, that § 1983 may be an avenue for relief only when a plaintiff asserts
that violations of federal rights have occurred. See, e.g., Pace v. City of Des Moines,
201 F.3d 1050, 1055 (8th Cir. 2000); see also Baker v. McCollan, 443 U.S. 137, 146
(1979). On that ground, the district court dismissed the first count of the complaint for
failure to state a claim.
The second count of the complaint, the procedural due process claim, does
implicate federal rights, because its basis is the fourteenth amendment to the
Constitution. Structurally, however, we treat that claim as one for which § 1983 may
provide relief, since the claim may not be brought directly under the fourteenth
amendment. See, e.g., Jett v. Dallas Independent School District, 491 U.S. 701, 735
(1989).
Under federal law, a litigant asserting a deprivation of procedural due process
must exhaust state remedies before such an allegation states a claim under § 1983. See,
e.g., Flint Electric Membership Corp. v. Whitworth, 68 F.3d 1309, 1313 (11th Cir.
1995) (per curiam), modified, 77 F.3d 1321 (11th Cir. 1996) (per curiam); Perez-Ruiz
v. Crespo-Guillen, 25 F.3d 40, 43 (1st Cir. 1994); New Burnham Prairie Homes, Inc.
v. Village of Burnham, 910 F.2d 1474, 1480 (7th Cir. 1990); and Brady v. Town of
Colchester, 863 F.2d 205, 211 (2d Cir. 1998). Minnesota law does provide several
avenues to challenge a city's "determination," see 49 C.F.R. § 24.203(a)(5),
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§ 24.207(g), with respect to eligibility, see 42 U.S.C. § 4622, § 4625, see also
49 C.F.R. § 24.201, § 24.205(c)(2)(i), for monetary benefits and relocation services,
see 49 C.F.R. § 24.10(b).
The initial source of relief for the city's unfavorable "determination" is what the
federal regulations denominate an appeal to the relevant administrative agency, see
49 C.F.R. § 24.10(a), § 24.10(b). In the context of a state statute that adopts the
federal regulations, however, the city is the agency in question. Because of this
anomaly, the parties evidently agreed to treat as an administrative agency appeal a
proceeding with a single hearing officer who was not involved in the city's original
decision to pay only two-thirds of the money and to deny the relocation services for
which Wax 'n Works had applied. See 49 C.F.R. § 24.10(h); see also In re Application
for Relocation Benefits of Wax 'n Works v. City of St. Paul, 1999 WL 185174, at *2
(Minn. Ct. App. April 6, 1999).
In the context of the state's adoption of the federal regulations, the hearing officer
is required to "make a written determination on the appeal ... and ... advise the
[applicant for monetary benefits and relocation services] of [the] right to seek judicial
review." See 49 C.F.R. § 24.10(g); see also In re Application, 1999 WL 185174,
at *2. Under the Minnesota statute, therefore, the source of relief subsequent to the
administrative agency appeal is review by a court. The Minnesota courts have held that
judicial review of an administrative agency decision is available through a writ of
certiorari from a state appellate court. See Naegele v. Minneapolis Community
Development Agency, 551 N.W.2d 235, 236-37 (Minn. Ct. App. 1996).
It is undisputed that when Wax 'n Works filed its complaint, when the city
moved to dismiss the lawsuit, and, indeed, when the district court did so, Wax 'n Works
had not requested judicial review by a state appellate court and thus had not exhausted
the state remedies available. Exhaustion of state remedies is necessary before any
federal procedural due process allegations state a claim under § 1983. See, e.g., Flint
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Electric Membership Corp., 68 F.3d at 1313; Perez-Ruiz, 25 F.3d at 43; New Burnham
Prairie Homes, Inc., 910 F.2d at 1480; and Brady, 863 F.2d at 211. On that ground,
the district court dismissed the second count of the complaint for failure to state a
claim. This dismissal could more properly have been made pursuant to Fed. R. Civ. P.
12(b)(1) because the case is not ripe for adjudication. See, e.g., Taylor Investment,
Ltd. v. Upper Darby Township, 983 F.2d 1285, 1290 (3d Cir. 1993), and St. Clair v.
City of Chico, 880 F.2d 199, 201, 204 (9th Cir. 1989), cert. denied, 493 U.S. 993
(1989); see also 5A Charles Alan Wright and Arthur R. Miller, Federal Practice and
Procedure: Civil 2d § 1350, at 195 (1990); 13A Charles Alan Wright, Arthur R.
Miller, and Edward H. Cooper, Federal Practice and Procedure: Jurisdiction 2d
§ 3532.1, at 93 (1999 supplement); and Taylor Investment, Ltd., 983 F.2d at 1293,
1293 n.14. Wax 'n Works did not appeal the district court's order of dismissal,
however, and we think that the matter of fees remains unaffected by the error in any
case.
III.
We turn at this point, then, to the question of whether Wax 'n Works may be
considered a prevailing party for purposes of attorney's fees in this case. As noted
above, within three weeks after Wax 'n Works filed its lawsuit, the city paid some of
the relocation money that Wax 'n Works sought; contemporaneously, the city scheduled
an appeal for Wax 'n Works. Because of the temporal proximity of the city's actions
to the filing of the lawsuit, Wax 'n Works maintains that the lawsuit was a catalyst for
the city's actions. In such circumstances, Wax 'n Works contends, it is considered a
prevailing party and may recover its attorney's fees. Wax 'n Works is correct in its
summary of the law, see Little Rock School District v. Pulaski County Special School
District No. 1, 17 F.3d 260, 262 (8th Cir. 1994), see also United Handicapped
Federation v. Andre, 622 F.2d 342, 346-47 (8th Cir. 1980), but mistaken with respect
to the applicability of those principles in our case.
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In the usual case, of course, there can be no question that a party that fails to
state a claim cannot be a prevailing party. See, e.g., Comiskey v. JFTJ Corp., 989 F.2d
1007, 1010-11 (8th Cir. 1993). Although we have not discovered a case with the exact
configuration that ours has, we think that in principle a party that fails to state a claim
cannot recover attorney's fees even if the litigation was a cause in fact of a settlement
of the underlying grievance or caused a defendant to alter its conduct in some material
way. That is because the purpose of 42 U.S.C. § 1988 is to encourage and reward the
vindication of federal statutory and constitutional rights. If no such rights are involved,
or if no such rights are ripe for adjudication at the time the plaintiff files a complaint,
an award of attorney's fees at best would be a windfall and at worst would encourage
litigation that is frivolous or belongs exclusively to a non-federal forum. We decline
to encourage such conduct. That being so, we find no abuse of discretion, see
Consolidated Beef Industries, Inc. v. New York Life Insurance Co., 949 F.2d 960, 966
(8th Cir. 1991), cert. denied, 503 U.S. 985 (1992), in the district court's denial of
attorney's fees to Wax 'n Works.
IV.
For the reasons stated, we affirm the order of the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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