Shields v. Gerhart

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-148


Carol Shields                                Supreme Court

     v.                                      On Appeal from
                                             Addison Superior Court
Rolland Gerhart, et al.
                                             March Term, 1989


Linda Levitt, J.

William A. Hunter, Ludlow, for plaintiff-appellee

Jeffrey L. Amestoy, Attorney General, and Ron Shems, Assistant Attorney
  General, Montpelier, for defendants-appellants


PRESENT:  Allen, C.J., Peck, Gibson, and Dooley, JJ.


     DOOLEY, J.   This is a civil rights action in which the plaintiff,
Carol Shields, alleges that defendants, the Vermont Department of Social and
Rehabilitation Services (SRS) and three employees of the department, revoked
her license to run a day-care center in retaliation for her activities in
opposing an SRS policy against the use of corporal punishment in licensed
day-care facilities.  This interlocutory appeal is brought from the opinion
and order of the trial court denying defendants' motion to dismiss.  We
affirm.
     Plaintiff was licensed to run a day-care facility in her home in 1978
in accordance with 33 V.S.A. {{ 2752(2), 2852(9).  Between 1978 and
September, 1981 when she applied for a new license because she was moving
her home and the facility, plaintiff and SRS disagreed over plaintiff's use
of physical discipline on children in her day-care facility.  In November of
1981, plaintiff was notified orally that a new license would not be granted
unless she ceased using corporal punishment.  At that time, SRS had in
effect regulation 124.40, which prohibited "cruel, severe, unusual or
unnecessary punishment" of children in licensed day-care facilities.  SRS
interpreted the legislation to prohibit corporal punishment.  Plaintiff was
a vociferous opponent of this SRS interpretation.  She argued against it in
the press and before the Legislature.
     In January of 1982, plaintiff formally applied for a new license for
the relocated facility and was denied in March.  Despite the denial, she
operated a day-care center without a license until she received notice of a
violation of SRS licensing requirements.  She again applied for a license
and was denied.  This time she appealed and was allowed to operate pending
the appeal.  She prevailed on appeal and was licensed through June, 1984.
     In April, 1984, plaintiff applied for a renewal of her license, and she
was visited by Durwood Collier and Frederick Satink, SRS employees and
defendants in this action.  During this visit, defendants noticed effluent
rising to the surface in plaintiff's yard, near where the children played.
Plaintiff told the inspectors of a problem with her septic system and that
arrangements had been made to correct the problem as soon as the ground was
dry enough.  Plaintiff's correction plan had been approved by the local
health official.
     At this point, the parties' factual versions differ substantially, and
the presence of differing facts before the court is itself a matter of
dispute between the parties.  Although we are reviewing a motion to dismiss,
defendant attached to the motion extensive factual material.  Plaintiff
responded to the motion, arguing in part that the factual material could not
be considered.  The court below denied summary judgment without giving
plaintiff an opportunity to respond to the factual material. FN1.  Although the
court described the motion as one for summary judgment, it did not attempt
to resolve the various factual disputes.  In view of this confused record,
we have taken the facts from plaintiff's complaint.  This version is denied
by defendants.  We have also reviewed the deposition and affidavits
submitted by defendants and do not believe that consideration of this
         material would affect the outcome of the narrow issues before this Court.
     At the inspection, the two SRS inspectors indicated that plaintiff's
license could be revoked because of the septic system failure, but that the
septic system problem would not be an impediment to plaintiff running a
registered family day-care home.  Thereafter, plaintiff applied to be a
registered day-care home and did not disclose the septic system problem on
the application.  Defendant Satink again visited plaintiff on May 18, 1984.
He stated that plaintiff would never be registered or licensed because she
had failed to disclose the septic system failure on the application; that
she could not receive a hearing on this denial, or, if she did, she could
not operate pending the hearing; and, that if she continued to pursue her
application, she would be required to put in a mound system at a cost of
$7,000 to $10,000.  He asked to enter plaintiff's home, and she refused.
     As a result of defendant Satink's visit, plaintiff mailed a letter to
SRS relinquishing her facility license as of May 25, 1984.  The letter was
mailed on May 21 or 22, 1984, and received on May 24, 1984.  On May 22,
1984, defendant Roland Gerhart, Director of the Division of Licensing and
Regulation of SRS, mailed to plaintiff a notice that her license was revoked
as of June 24, 1984, and her application to be registered was denied.  The
decision was based on four grounds including the septic system failure and
plaintiff's refusal to admit defendant Satink into her home on May 18th.
     Plaintiff sued on May 19, 1987, and commenced the action by serving the
Deputy Attorney General pursuant to V.R.C.P. 4(d)(2).  Service was accepted
with a notation that acceptance was for defendants in their official
capacity only.  The complaint alleged that defendants had violated
plaintiff's rights under the United States Constitution (FN2) and sought relief
under the Civil Rights Act, 42 U.S.C. { 1983 (1982), for damages caused by
these violations.  The complaint further alleged that defendants had
violated her rights under the Vermont Constitution (FN3) and sought damages for
these violations.  In essence, plaintiff's position is that defendants
revoked her day-care facility license in retaliation for her opposition to
the corporal punishment policy and that they used fraud and deception to
induce her to abandon her license and forego her appeal rights.
     Defendants answered the complaint and filed their motion to dismiss on
three grounds: (1) plaintiff's Civil Rights Act claims are time-barred
because they were not brought within the three year period allowed by 12
V.S.A. { 512(4); (2) her claims under the Vermont Constitution are time-
barred for the same reason; and (3) defendants are immune from liability in
this suit.  Defendants attached to the motion the deposition of plaintiff,
along with various exhibits, and a number of affidavits.  Plaintiff
responded, in part, by seeking to amend the complaint to name defendants "in
their individual capacities."  The trial court granted the motion to amend 
(FN4) and denied the motion to dismiss, treating it as a motion for summary
judgment.  Defendants raise here the same grounds for dismissal that they
urged in the trial court, adding that the trial court misallocated the
burden of proof on the immunity question. (FN5) 
     The first issue deals with the statute of limitations for the Civil
Rights Act claims.  Defendants allege that the causes of action accrued on
May 18, 1984, or earlier, and since the applicable limitation period is
three years and plaintiff filed the complaint on May 19, 1987, the action
must be dismissed.  The trial court agreed that the applicable limitation
period is three years but held that the cause of action did not accrue until
June 24, 1984, when plaintiff was required to close her day-care center.
     In Wilson v. Garcia, 471 U.S. 261, 276 (1985), the Supreme Court held
that the state statute of limitations for personal injury tort actions
applied to civil rights actions under 42 U.S.C. { 1983.  In Vermont, that
limitation period is three years.  See 12 V.S.A. { 512(4).  Although the
applicable limitation period is a matter of state law, the question of when
a cause of action accrues for purposes of applying the limitation period is
one of federal law.  See 2 J. Cook & J. Sobieski, Civil Rights Actions {
4.02 at 4-22.14 (1989).  The federal rule is that a cause of action accrues
when the plaintiff knew or should have known of the injury that serves as
the basis for the action.  See, e.g., Keating v. Carey, 706 F.2d 377, 382
(2d Cir. 1983).
     We agree with defendants that the trial court's selection of the date
on which plaintiff's license expired, as the date for accrual of plaintiff's
action, is not consistent with the federal accrual rule.  In Delaware State
College v. Ricks, 449 U.S. 250 (1980), the Supreme Court examined when a
cause of action accrued under Title VII of the Civil Rights Act of 1964 for
purposes of the requirement that an aggrieved person notify the EEOC of his
or her claim within 180 days of its accrual.  The plaintiff alleged that he
had been denied tenure as a college professor because of his race.  The
plaintiff was notified of the official tenure decision in June of 1984,
although the decision in response to plaintiff's administrative appeal did
not occur until September, 1984 and plaintiff received a terminal contract
allowing him to work until June of 1985.  The Court held that the cause of
action accrued when the tenure decision was made and communicated to
plaintiff and not when the appeal was decided or when plaintiff's employment
ended.  As to the claim that accrual occurred on the termination of
employment, the Court quoted a federal court of appeals decision to the
effect that the action accrued when the discrimination occurred and not when
its effect became most painful.  Id. at 258 (quoting Abramson v. University
of Hawaii, 594 F.2d 202, 209 (9th Cir. 1979)).
     Ricks was followed in Chardon v. Fernandez, 454 U.S. 6 (1981) (per
curiam), another { 1983 case involving a claim for employment
discrimination.  Again the Court held that the action accrued when the
plaintiffs were officially notified of dismissal and not when the employment
terminated.  Id. at 8.
     The time when plaintiff's license expired is comparable to the time
when the plaintiffs' employment terminated in Ricks and Chardon.  Plaintiff
knew of her injury before her license actually expired.  Her cause of
action therefore accrued prior to June of 1984.
     While we agree that the cause of action accrued prior to June of 1984,
we cannot agree that it occurred on May 18, 1984, the day on which defend-
ants rely.  The argument for this date is that it represents the last in-
person contact between SRS employees and plaintiff and that plaintiff
indicated in her deposition that, based on the representations of defendant
Satink, she decided on May 18th to give up her license although she did not
actually do so until a few days later.
     We do not believe that plaintiff yet knew of her injury on May 18th.
While most of her allegations are based on representations of defendant
Satink, he is referred to in the documents as a "sanitarian" and there is no
indication that he had the power to act with respect to plaintiff's license
or her pending applications.  At best, his actions and representations could
induce others to act with respect to plaintiff's license.  The official
action occurred days later in the letter signed by defendant Gerhart.
Indeed the only reference to defendant Gerhart in the complaint is with
respect to the notification letter, and it is undisputed that the letter was
mailed and received after May 18, 1984.
     Nor does plaintiff's decision to give up her license in the future
accrue the cause of action when she did not formally do so until days later.
We are reluctant to determine an accrual date based upon intent to do an act
when the act is not yet done.  Not only would such a rule be difficult, if
not impossible, to administer, but it ignores the reality that plaintiff
could change her intent at any time until she takes action.  See Lendo v.
Garrett County Bd. of Educ., 820 F.2d 1365, 1367 (4th Cir. 1987) (accrual
date should not be based on hindsight reconstruction of cause and effect of
particular actions leading up to denial of tenure).  Thus, we do not believe
plaintiff's injury occurred until she actually withdrew her applications and
closed her center.  Although there is some dispute about that date, it can
be no earlier than May 20, 1984, the date on her letter.(FN6)
     There remains only to be considered defendants' argument that some of
plaintiff's claims are time-barred because they are based on events that
occurred prior to May of 1984 as set forth in the complaint.  We do not read
the complaint the same way as defendants do.  While there are detailed
recitations of factual events that occurred prior to May of 1984, they
appear to be part of plaintiff's evidence in support of her theory that
defendants took action against her in retaliation for successful opposition
to the corporal punishment policy.  The injury for all her claims appears to
be the loss of her license in 1984. (FN7) As we discussed above, claims with
respect to that injury are not time-barred.
     The second issue is posed as a choice between the six-year limitation
period of 12 V.S.A. { 511 or the three-year limitation period of 12 V.S.A.
{ 512(4) for plaintiff's claims based on the Vermont Constitution.
Plaintiff, supported by the trial court, argues for the six-year period, and
defendant argues for the three year-period.  The choice presented is false
because plaintiff's action is not time-barred whichever statute applies.
     Before addressing the choice, however, it is important to emphasize
that defendants concede, for purposes of this appeal, that plaintiff can
bring a damage action premised solely on a violation of the Vermont
Constitution.  Although the United States Supreme Court has ruled that
plaintiffs can ground a private damage action against a federal official
solely on a violation of certain provisions of the United States
Constitution, Bivens v. Six Unknown Named Federal Narcotics Agents, 403 U.S. 388, 389 (1971), we have never addressed the question with respect to the
Vermont Constitution and do not do so today.
     If we follow defendant's argument and apply 12 V.S.A. { 512(4) on the
theory that the federal rule of Wilson v. Garcia should be applied to
actions under the Vermont Constitution, we will apply the statutory proviso
"that the cause of action shall be deemed to accrue as of the date of the
discovery of the injury."  12 V.S.A. { 512(4).  This rule of accrual is
essentially the same as the federal rule applied in actions under 42 U.S.C.
{ 1983.  Accordingly, for the reasons stated above with respect to
plaintiff's { 1983 claims, her claims under the Vermont Constitution are not
time-barred.
     The third issue involves defendants' claim to an immunity defense.
This claim and its resolution involve difficult and complex issues which are
recognized only partially in the briefing and in the opinion below.  For
this reason, it is necessary to go back to defendants' initial motion in the
trial court.
     Although defendants characterized their defense as sovereign immunity,
they argued that the state was not a person under the Civil Rights Act, 42
U.S.C. { 1983, and that a suit against the defendants Gerhart, Satink and
Collier in their official capacity was the equivalent of a suit against the
state.  The trial court avoided the force of defendants' argument by holding
that the state liability exception statute, 12 V.S.A. { 5602(1) (amended as
12 V.S.A. { 5601(e)(1)), did not apply to the case before it because the
defendants did not prove they acted while exercising due care.  At the same
time, as noted above, the trial court allowed the individual defendants to
be sued in their individual capacities, and the defendants have not appealed
this ruling, at least at this time.  The ruling of the trial court on the
state liability exception statute has caused the parties to argue whether
the trial court's interpretation of the statute was correct and whether the
defendants had the burden of proof on the question.  While the arguments
posed by the parties respond to the trial court decision, they do not
address the issues actually before the court as presented by defendants'
motion.  In short, the case became misdirected down a blind alley which we
do not find useful to enter. (FN8)
     We start by splitting the case between the { 1983 claims and the
Vermont Constitution claims for purposes of the immunity question.  As noted
below, we do not address whether defendants have an immunity defense to the
Vermont Constitution claims.
     As defendants argued in their motion, { 1983 applies only to actions
against persons.  In Will v. Michigan Dep't of State Police, 109 S. Ct. 2304, 2308-09 (1989), the United States Supreme Court ruled that a state or
a state agency is not a person for purposes of { 1983.  The Court went on to
hold that a state official sued for damages in his or her official capacity
is also not a person for purposes of { 1983.  Id. at 2311.  The effect of
Will on the case at hand is obvious.  The { 1983 claims against SRS must be
dismissed because SRS is not a person.  The { 1983 claims against defendants
Gerhart, Satink and Collier must be dismissed to the extent they were sued
in their official capacity.  Prior to the amendment to the complaint, there
was a question of the capacity in which these defendants were sued.  After
the amendment, it was clear that the named defendants were sued both as
individuals and as officials.  To the extent they were sued in their
official capacities, the motion to dismiss should have been granted.  As to
the { 1983 claims against them in their individual capacities, they are
persons under { 1983, and we turn to the sovereign immunity question.
     The trial court assumed that sovereign immunity is a defense to a {
1983 action brought in state court.  This proposition can no longer be
maintained after the United States Supreme Court's unanimous decision in
Howlett v. Rose, 110 S. Ct. 2430 (1990).  The petitioner in Howlett was a
high school student who brought a { 1983 suit in state court for damages
against school officials who allegedly searched his car and suspended him
from school in violation of his constitutional rights.  The defendants moved
to dismiss, asserting that the { 1983 claim was barred by sovereign
immunity.  Id. at 2434.  The Court held that the Supremacy Clause does not
permit a state law defense of sovereign immunity in a { 1983 action brought
in state court where a sovereign immunity defense would not be available had
the action been brought in a federal forum.  Id. at 2443-44.  "[A]s to
persons that Congress subjected to liability, individual States may not
exempt such persons from federal liability by relying on their own common
law heritage."  Id. at 2447.
     In any event, even under state law, the individual defendants acting in
their personal capacities may not benefit from sovereign immunity.  In
Libercent v. Aldrich, 149 Vt. 76, 84, 539 A.2d 981, 985 (1987), this Court
held that the state liability and exception statutes have no applicability
to claims made against state employees: "Because the terms of {{ 5601 and
5602 refer only to liability of the state, these statutes have no
application to claims brought against state officers and employees."  The
holding of Libercent was explained in Levinsky v. Diamond, 151 Vt. 178, 183,
559 A.2d 1073, 1078 (1989) as follows:  "We reiterate that the defense of
sovereign immunity is available in Vermont only as to the state itself" (FN9)
See also Curran v. Marcille, 152 Vt. ___, ___, 565 A.2d 1362, 1363 (1989).
     This leaves sovereign immunity as a possible defense only to the
Vermont Constitution claims.  As noted above, we decline to address this
issue although it may eventually appear in the case.  Defendants never
mentioned the Vermont Constitution claims in asserting that they were
protected by sovereign immunity, and the trial court never considered the
application of sovereign immunity to claims under the Vermont Constitution.
The certified questions do not mention the issue.
     We are also influenced by the fact that we have never addressed the
question of whether damage actions can be premised directly on violations of
the Vermont Constitution.  Other states are split on the issue with respect
to their constitutions.  See Gay Law Students Ass'n v. Pacific Tel. & Tel.,
24 Cal. 3d 458, 474-75, 595 P.2d 592, 602, 156 Cal. Rptr. 14, 24 (1979);
Figueroa v. State, 61 Haw. 369, 381-82, 604 P.2d 1198, 1205 (1979); Smith v.
Department of Public Health, 428 Mich. 540, 612-36, 410 N.W.2d 749, 781-792
(1987).  See generally Friesen, Recovering Damages for State Bill of Rights
Claims, 63 Tex. L. Rev. 1269, 1276-280 (1985).  We are reluctant to decide
whether a particular defense exists before deciding whether plaintiff has
valid claims.  We also note that the question of whether sovereign immunity
should be a defense to such claims is itself complex.  See Wolcher,
Sovereign Immunity and the Supremacy Clause: Damages Against States in Their
Own Courts for Constitutional Violations, 69 Calif. L. Rev. 189 (1981).
     The decision of the trial court that plaintiff's claims are not barred
by the statute of limitations is affirmed.  The decision of the trial court
denying the motion for summary judgment based on sovereign immunity is
affirmed except that the { 1983 claims against defendant, Vermont Department
of Social and Rehabilitation Services, are dismissed and the { 1983 claims
against the remaining defendants in their official capacities are dismissed.


                                        FOR THE COURT:


                                        ___________________________________
                                        Associate Justice




FN1.   Plaintiff argues that the trial court was in error in allowing the
motion to dismiss to be turned into a motion for summary judgment without
allowing her the "reasonable opportunity to present all material made
pertinent to such a motion" required by V.R.C.P. 12(c).  Thus, she argues
that if the trial court is not affirmed, she should have the opportunity on
remand to present such material.  Since we affirm the trial court, we do not
need to consider this argument.

FN2.    Plaintiff alleged that defendants' actions violated her rights to
due process and equal protection of the laws under the Fourteenth Amendment,
and her rights to free speech and to petition her government under the First
Amendment.

FN3.   She alleged that defendants had violated her property rights under
Chapter I, Article 1 of the Vermont Constitution and her right to free
speech under Chapter I, Art. 13.

FN4.    In granting the motion to amend, the court rejected defendants'
claim that they could not be sued in their individual capacities by
amendment when they had been served only in their official capacities.
Defendants have not appealed the court's ruling on the motion to amend and
it is not before us.

FN5.    The questions certified to this Court are:

(1) Did the court err in holding that the plaintiff's
cause of action accrued on June 24, 1984, rather than on
May 18, 1984?

(2) Did the court err in holding that 12 V.S.A. { 511
applies to all actions brought under the Vermont
Constitution?

(3) Did the court err in holding that 12 V.S.A. {
5602(1) applies only where the state employee has
exercised due care?

(4) Did the court err in holding that the defendant,
State of Vermont, bears the burden on summary judgment
of establishing its entitlement to sovereign immunity?

FN6.   The letter is dated May 20, 1984.  The complaint indicates it was
posted on May 22, 1984 although plaintiff indicated in her deposition that
it was posted on May 21, 1984.

FN7.    In order to argue for a different interpretation of the complaint,
defendants note that defendant Gerhart's letter of May 21, 1984, revoking
plaintiff's license and denying her applications, specified that plaintiff
had a right to a hearing.  Thus, defendants argue that plaintiff's due
process claim cannot arise from that letter and must arise from some
earlier action.  Defendants' point goes to the strength of plaintiff's due
process claim on the merits and not to when it accrued.  There is no
indication that plaintiff is claiming damage from some earlier denial of a
right to a hearing.

FN8.    In redirecting the issues in this case, we have gone outside the
certified questions.  As we stated in State v. Dreibelbis, 147 Vt. 98, 99-
100, 511 A.2d 307, 308 (1986), the certified questions are for the aid of
this Court and we are not limited to the trial judge's view of the case.  We
will not hesitate to reach issues outside the certified questions where they
are fairly raised by the order appealed from.  Id. at 100, 511 A.2d  at 308.

FN9.      Levinsky discusses in detail the related defense of official
immunity which is available in civil rights actions.  See 151 Vt. at 192-95,
559 A.2d  at 1083-85.  Defendants have not raised official immunity in their
motion to dismiss or in this interlocutory appeal.  Accordingly, we do not
treat that defense.