ALPHA v. DARTT, et al.

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IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DIVISION ONE FILED: 06/27/2013 RUTH A. WILLINGHAM, CLERK BY: sls ALPHA, LLC dba ALPHA TOWING; TANNER ENTERPRISES, LLC dba TOWING SERVICES, AUTOMOTIVE SERVICES, ) 1 CA-CV 12-0361 ) ) ) DEPARTMENT D ) Plaintiffs/Appellants, ) ) v. ) ) JEFF DARTT, Deputy Camp Verde ) O P I N I O N Marshal; EARL J. HUFF, Lieutenant ) Camp Verde Marshal; DAVID R. ) SMITH, Camp Verde Marshal; TOWN ) OF CAMP VERDE, ARIZONA, ) ) Defendants/Appellees. ) ) Appeal from the Superior Court in Yavapai County Cause No. V1300CV820090206 The Honorable Jennifer B. Campbell AFFIRMED ________________________________________________________________ Law Offices of Stephen H. Schwartz By Stephen H. Schwartz Attorney for Plaintiffs/Appellants Sedona Murphy Schmitt Hathaway & Wilson By Milton W. Hathaway, Jr. Andrew J. Becke Attorneys for Defendants/Appellees Prescott D O W N I E, Judge ¶1 The issue in this appeal is whether the appellant towing businesses have a property interest in remaining on a towing rotation list created and administered by a municipal police agency. Because there is no underlying legislative enactment, and the regulations governing the list are modifiable at the administrator s discretion, no constitutionally protected property interest exists, and we therefore affirm the grant of summary judgment to appellees Jeff Dartt, Deputy Camp Verde Marshal; Earl J. Huff, Lieutenant Camp Verde Marshal; David R. Smith, Camp Verde Marshal; and the Town of Camp Verde (collectively, Camp Verde or Town ). FACTS AND PROCEDURAL HISTORY ¶2 The Camp Verde Marshal s Office ( CVMO ) is responsible for having abandoned, damaged, or illegally parked vehicles within Town limits towed. 1 Towing In 1995, the CVMO created a document titled, Regulations Camp Verde Office. Marshal s The regulations explained at the outset: This manual standardizes the procedures and policies governing the tow truck operations servicing the Camp Verde Marshal s Office (CVMO). - General requirements for operators; - Towing practices; 1 The Town Marshal is the administrative head of the police department. Camp Verde Town Code ( Town Code ) § 3-2-4(B). 2 - Miscellaneous policies; and - A complaint review system for sanctions This manual applies only to CVMO rotation lists and does not apply or control any activities except for the administration of the rotation lists. The CVMO reserves the right to elect to replace a rotation list with contract towing at any time. The guidelines in this manual are subject to modification by the Marshal. Any changes to the manual shall be made in writing. ¶3 The CVMO established a list of towing companies that it would contact on a rotating basis for service calls. towing regulations permit any business meeting the The stated criteria to appear on the rotation list unless towing contracts are in effect. ¶4 Alpha L.L.C., dba Alpha Towing ( Alpha ) and Tanner Enterprises, L.L.C., dba Towing Services, Automotive Services ( Tanner ) are towing businesses with common ownership, though they are separate corporate entities. CVMO s tow rotation list in 2003. Tanner was placed on the Alpha was already on the list in 2004, when Tanner s principals acquired Alpha s assets. ¶5 The Camp Verde Town Council passed Resolution 96-337 ( Resolution ) in January 1996. pertinent part: 3 The Resolution reads, in WHEREAS, the Town of Camp Verde, a municipal corporation ( Town ), may pursuant to ARS 28-1007.E, enter into contractual agreements with any towing firm or firms for towing or storage services, or both, if such firms are duly licensed and approved by the Arizona Department of Transportation, and WHEREAS, the Town, rather than enter into competitive bidding and formal agreements has elected to establish Towing Regulations which allow all qualified firms to be called for towing operations as long as they show they are licensed, insured, have an established performance and safety record, as set forth in the Regulations, NOW THEREFORE THE MAYOR AND THE COMMON COUNCIL OF THE TOWN OF CAMP VERDE ADOPT THE TOWING REGULATIONS, CAMP VERDE MARSHAL S OFFICE, DATED DECEMBER 1, 1995. ¶6 In 2006, the CVMO amended the towing regulations to, inter alia, delete the detailed explanations of violations and sanctions that appeared in the 1995 version. of the regulations states that the CVMO The 2006 version will complaint of a violation on a case-by-case basis. the prior point-based system for take each Instead of specifically-enumerated violations, sanctions under the 2006 version are more generic and include a letter of concern up to and including removal from the tow list. The Town Council took no action regarding the 2006 version of the regulations. ¶7 Towing companies on the rotation list at the time of the 2006 revisions received letters advising them of the changes 4 and enclosing copies of the amended regulations. Businesses desiring to remain on the rotation list were required to submit new applications, which Alpha and Tanner did. ¶8 the In September 2007, Alpha received correspondence from CVMO advising of a citizen s complaint, which the CVMO characterized as very poor customer service and [bordering on] criminal violations. The letter noted that Alpha had been warned for the same behavior and concluded: [D]ue to these ongoing complaints and for violation of the towing regulations, your company will be removed from our towing list indefinitely. This removal also affects the parent company Automotive Services. ¶9 After their removal from the rotation list, Tanner and Alpha (hereafter, collectively referred to as Tanner ) filed the instant litigation. They alleged that the Town had violated their constitutional due process and equal protection rights. 2 ¶10 Tanner and the Town both moved for partial summary judgment. denied The superior Tanner s. The court parties granted thereafter dismissal of Tanner s remaining claims. We have ( A.R.S. ) 2 jurisdiction section pursuant the to 12-2101(A)(1). motion stipulated to and the Tanner timely appealed. Arizona We Town s Revised review the Statutes grant of Tanner also asserted other claims against the Town, but they are not at issue in this appeal. 5 summary judgment de novo. See Emmett McLoughlin Realty, Inc. v. Pima County, 212 Ariz. 351, 353, ¶ 2, 132 P.3d 290, 292 (App. 2006) (citation omitted). DISCUSSION ¶11 threshold In analyzing inquiry is Tanner s whether property interest exists. due a process claims, constitutionally the protected See Shelby Sch. v. Ariz. State Bd. of Educ., 192 Ariz. 156, 168, ¶ 55, 962 P.2d 230, 242 (App. 1998) ( Due process protection vests only when a person has a property interest that is protectible. ). To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. expectation of it. entitlement to it. He must have more than a unilateral He must, instead, have a legitimate claim of Bd. of Regents of State Coll. v. Roth, 408 U.S. 564, 577 (1972); see also Shelby Sch., 192 Ariz. at 168, ¶ 55, 962 P.2d at 242 ( Property rights do not arise from simple wants and desires; they must be based on legitimate claims of entitlement. ). ¶12 Protected property interests are not created by the Constitution, but are understandings that stem state law. defined from an by existing independent Roth, 408 U.S. at 577. rules source such or as Such interests attain constitutional status by virtue of the fact that they have been 6 initially recognized and protected Davis, 424 U.S. 693, 710 (1976). by state law. Paul v. A cause of action arises when, as a result of the state action complained of, a right or status previously recognized by state law was distinctly altered or extinguished. ¶13 The Id. at 711. superior constitutionally court protected ruled property towing regulations or the Resolution. within the definition of a that Tanner interest We agree. municipal derived from the no 1995 The former fit regulation as a rule prescribed by a municipality . . . for the conduct of third persons dealing with it. 5 McQuillin, The Law of Municipal Corporations § 15.8 (3d ed. 2004); see also Fort Bend County Wrecker Ass n v. Wright, 39 S.W.3d 421, 426 (Tex. App. 2001) ( By definition, a departmental policy designed to refer business to a particular set of tow companies is not a law, regulation, law. ). or a provision having the force and effect of The regulations, by their terms, are those of the CVMO and are designed for third party towing businesses servicing that office. The rotation list is referred to as the CVMO s list in the regulations. 3 3 Tanner relies heavily on one federal district court opinion finding a protected property interest arising from towing regulations adopted by the Tennessee Commissioner of Safety. See Gregg v. Lawson, 732 F. Supp. 849 (E.D. Tenn. 7 ¶14 It is also significant that the Town Council acted by resolution rather than by ordinance. There is a definite distinction between an ordinance and a resolution of a governing body of a municipality. Mitchell v. City of Parshall, 108 N.W.2d 12, 14 (N.D. 1961); see also McQuillin § 15.8 ( [A]n ordinance differs fundamentally from a resolution or other form of expression or action of a municipal legislative body . . . . ). As the North Dakota Supreme Court explained in Mitchell: The term resolution as applied to the act of an official body such as a city council . . . ordinarily denotes something less solemn or formal than the term ordinance, and, generally speaking, is simply an expression of the opinion or mind of the official body concerning some particular item of business or matter of administration coming within its official cognizance. . . . . A resolution is not a law or an ordinance, but merely the form in which a legislative body expresses a determination or directs a particular action. An ordinance prescribes a permanent rule for conduct of government, while a resolution is of a special or temporary character. 1989). There is no indication that the Tennessee Commissioner had the authority to modify the regulations at issue in that case. But to the extent the decision stands for the proposition that the regulations, standing alone, gave rise to a constitutionally protected property interest without further state action, we disagree and instead adopt the view of the majority of jurisdictions addressing the issue, as discussed infra in ¶¶ 17 and 18. 8 108 N.W.2d at 14. ¶15 and The Town Code itself distinguishes between resolutions ordinances, setting heightened requirements for the latter. 2-4-4. procedural and substantive See Town Code § 2-4-1 through For example, § 2-4-4, entitled, Requirements for an Ordinance, states: Each ordinance shall have one subject only, the nature of which is clearly expressed in the title. Whenever possible, each ordinance shall be introduced as an amendment to this code or to an existing ordinance and, in such case, the title of the sections to be amended shall be included in the ordinance. Nothing in the record, including the agenda for and minutes from the Town Council meeting at which the Resolution was passed, reflects compliance with the standards for an ordinance or an intent to amend the Town Code. Moreover, if the towing regulations carried the force of law, the CVMO would have no ability to modify them - a result inconsistent with the Town Council s approval of the regulations express grant of that authority to the CVMO. ¶16 The resolution, label or given an ordinance ) action is not (e.g., regulation, dispositive. We must instead examine the character and effect of the municipality s action to ascertain its true legal status. 9 In the case at bar, the Resolution permanent rule. did not amend the Town Code or establish a Rather, it adopted current operational policies for the CVMO that were subject to modification at the CVMO s discretion. See, e.g., Namur v. Habitat Co., 691 N.E.2d 782, 786 (Ill. App. 1998) ( an ordinance is a legislative act and is the equivalent of a municipal statute ); Black s Law Dictionary (6th ed. 1097) (defining ordinance as a local law of a municipal corporation, duly enacted by the proper authorities, prescribing general, uniform and permanent rules of conduct ); cf. Piecknick v. Pennsylvania, 36 F.3d 1250, 1259 (3d Cir. 1994) (detailed police guidelines were regulations without force of law, and plaintiff could not point to any other governing state law or regulation that creates a federally protected property interest guaranteeing it the right to provide towing services ). The Resolution was not a legislative act with the force of law. 4 ¶17 Cases that have recognized a property interest in towing rotation lists involve underlying legislative enactments. See, e.g., 1231-32 Abercrombie (10th Cir. v. 1990) City of (relying Catoosa, on 896 Oklahoma F.2d 1228, statutory requirement that cities call local wreckers on an equal basis 4 Based on our conclusion about the legal stature of the Resolution, we need not address the Town s contention that any property interest must be firmly grounded in state, not municipal, law. 10 as nearly as possible ); Pritchett v. Alford, 973 F.2d 307, 310 (4th Cir. department 1992) (finding regulations property interest based on highway promulgated pursuant to state statute that required tow rotation lists to be administered fairly and in a manner designed to ensure that all wrecker services on the list have an equal opportunity to the towing business arising from the state rotation list ). administrative No comparable regulation Arizona exists statute regarding or the establishment, administration, or maintenance of towing rotation lists. ¶18 Our conclusion that Tanner has no protected property interest is supported by decisions from other jurisdictions. In Morley's Auto Body, Inc. v. Hunter, 70 F.3d 1209 (11th Cir. 1995), the Eleventh Circuit surveyed appellate cases involving wrecker rotation policies and concluded: Where a court has found a property interest in remaining on a rotation list, the plaintiff has alleged a claim of entitlement supported or created by a formal and settled source such as a state statute or regulatory scheme. Absent such an entitlement grounded in state law, courts have not found a protected property interest in remaining on a wrecker rotation list. Id. at 1215; see also Pete s Towing Co. v. City of Tampa, 648 F. Supp. 2d 1276, 1288 (M.D. Fla. 2009) (despite detailed police regulations for tow rotation system, plaintiff lacked property 11 interest because rules were not codified in a state statute or regulation ). ¶19 We also concur with the superior court s observation that, even action, if Tanner interest. the Resolution would constituted nevertheless lack a sufficient protected state property The towing regulations were modifiable at the CVMO s discretion, and the rotation list could be abandoned entirely in favor of contract towing. The term property in the context of does a due process inquiry not refer to concessions or privileges that a state controls and may bestow or withhold at will. Shelby Sch., 192 Ariz. at 168, ¶ 55, 962 P.2d at 242; see also Doyle v. City of Medford, 606 F.3d 667, 672 (9th Cir. 2010) ( A regulation granting broad discretion to a decision-maker does not create a property interest. ). ¶20 By adopting the Resolution, the Town Council granted the CVMO the authority to modify the towing regulations and to replace the rotation list with contract towing at any time. See, e.g., A.R.S. § 9-223(G) ( The marshal shall be ex officio street commissioner, and as such shall perform such service and duty as may be imposed upon him by resolution or ordinance of the board. ) (emphasis added). modify the 1995 towing The CVMO thus had the power to regulations. Tanner applied for inclusion on the rotation list after the 2006 regulations were 12 issued and was subject to those regulations at the time of its removal. it had We therefore need not address Tanner s assertion that a mutually explicit understanding it would not be removed from the rotation list unless procedures set forth in the 1995 regulations were followed. ¶21 did Contrary not decision. to improperly Tanner s rely on contention, A.R.S. § the 9-834 superior in court reaching its The court discussed § 9-834 to illustrate how this case is distinguishable from Wedges/Ledges of California, Inc. v. City of Phoenix, 24 F.3d 56 (9th Cir. 1994). involved gaming licenses subject to both Wedges/Ledges state statutory requirements and a city ordinance, leading the Ninth Circuit to the unsurprising conclusion that the plaintiffs possessed a cognizable property interest in their existing licenses and in obtaining licenses for new games. ¶22 24 F.3d at 62-64. Tanner, on the other hand, was not stripped of any government-issued license. Compare Webb v. State ex rel. Ariz. Bd. of Med. Exam rs, 202 Ariz. 555, 558, ¶ 8, 48 P.3d 505, 508 (App. 2002) (recognizing property interest in State-issued medical license), and Johnson v. Mofford, 181 Ariz. 301, 303, 890 P.2d 76, 78 (App. 1995) (State employee who, by statute, could only be discharged for cause, was vested with a property right in his employment that could not be taken without due 13 process ), with Paczosa v. Cartwright Elem. Sch. Dist. No. 83, 222 Ariz. 73, 80, (because Arizona property interest ¶¶ law protections exist). 33-37, does in 213 not continued P.3d give 222, school 229 (App. 2009) administrators employment, no due a process Moreover, removing Tanner from the rotation list did not prevent it from continuing to operate as a towing business. See, e.g., Bernard v. United Twp. High Sch. Dist. No. 30, 5 F.3d 1090, 1092 (7th Cir. 1993) ( It is the liberty to pursue a calling or occupation, and not the right to a specific job, that is secured by the Fourteenth Amendment. ). ¶23 Tanner had nothing more than a unilateral expectation or hope it would remain on the Town s towing rotation list and that such a list would continue in existence. U.S. at 577. See Roth, 408 Because Tanner lacked a constitutionally protected interest, both its procedural and substantive due process claims were properly dismissed. See Aegis of Ariz., L.L.C. v. Town of Marana, 206 Ariz. 557, 568, ¶ 44, 81 P.3d 1016, 1027 (App. 2003) (threshold process requirement claims is the for procedural plaintiff s and showing substantive of property interest protected by the Constitution ). 14 a liberty due or CONCLUSION 5 ¶24 For the reasons stated, we affirm the judgment of the superior court. We deny Tanner s request for attorneys fees because it is not the prevailing party. /s/ MARGARET H. DOWNIE, Judge CONCURRING: /s/ ANDREW W. GOULD, Presiding Judge /s/ PATRICIA A. OROZCO, Judge 5 Tanner makes no independent argument regarding its equal protection claim, so we do not address it. See Schabel v. Deer Valley Unified Sch. Dist. No. 97, 186 Ariz. 161, 167, 920 P.2d 41, 47 (App. 1996) (issues not clearly raised and argued in a party s appellate brief are waived); MT Builders, L.L.C. v. Fisher Roofing, Inc., 219 Ariz. 297, 304 n.7, ¶ 19, 197 P.3d 758, 765 n.7 (App. 2008) (arguments not developed on appeal are waived). Moreover, Tanner conceded in the superior court that if it lacked a cognizable property interest, all of [its] claims fail. 15

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