Walz v. Town of Smithtown

Citations: 46 F.3d 162; 1995 WL 30894Docket: No. 1996, Docket 94-7268

Court: Court of Appeals for the Second Circuit; January 23, 1995; Federal Appellate Court

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The Town of Smithtown and its Superintendent of Highways, James Dowling, are appealing a jury verdict that awarded damages for violating the substantive due process rights of Robert Walz, Lana Sue Walz, and Robert Walz, Jr. The Walzes were denied access to public water when Dowling refused to issue a permit for the Suffolk County Water Authority to excavate Ketcham Avenue to connect their home to the water system. Dowling's refusal was aimed at coercing the Walzes into conveying a portion of their land to the town. The Walzes, who had been relying on a well for water, experienced problems that necessitated their request for public water service on January 9, 1992. After following the necessary procedures, including paying a fee and obtaining verbal authorization for the excavation permit, Dowling signed the permit but later instructed the clerk to void it. During a subsequent conversation, Dowling conditioned water service on the Walzes deeding a fifteen-foot strip of their property to the town. After the Walzes refused to comply, Dowling took no further action for four weeks while on vacation. Upon his return, he sought legal assistance to obtain the land from the Walzes. The Walzes subsequently initiated an Article 78 proceeding in the New York Supreme Court to compel Dowling to issue the required permit for their water connection. The court affirmed the jury's decision in favor of the Walzes.

Defendants argued the case was moot following the issuance of an excavation permit on March 6, which included unusual conditions: installation of a concrete curb, a $900 jacking fee, a $1,100 road patching fee, and a $3,678 cash bond. Justice William L. Underwood deemed the curbing requirement unreasonable and ordered a revised permit. On April 6, a new permit was issued, omitting the curbing requirement and reducing the cash bond, prompting the Walzes to file a contempt motion against Dowling, claiming inconsistency with Underwood's order. Before the motion's hearing, Dowling issued another permit on April 24 at the standard fee, and the Walzes connected to public water on April 28. They then initiated a Section 1983 action for damages, asserting a violation of their due process rights. The jury found Dowling had knowingly deprived the Walzes of water to compel property transfer to Smithtown, awarding $102,000 in compensatory damages and $9,500 in punitive damages against Dowling. The district court also awarded $48,276 in attorney’s fees. On appeal, Smithtown and Dowling contested the existence of a constitutionally protected property interest, the nature of due process protections, Dowling's qualified immunity, the jury's emotional distress awards, and the attorney's fee calculation. The district court recognized a fundamental right to water supply as protected under due process, a novel ruling, noting the absence of constitutional violations by local governments not supplying water. The court indicated that a deprivation of water supply might support an Equal Protection claim, but this was not raised by the Walzes. Ultimately, the court concluded that the jury's focus on Dowling's actions regarding the excavation permit was sufficient, regardless of the water supply argument, as a legal property interest in the permit was established.

The Walzes possess a property right in an excavation permit, making the issue of water supply rights unnecessary to address. When evaluating claims of due process violations related to governmental permit denials, a property interest analysis is applied, rooted in the Supreme Court case Board of Regents v. Roth. This analysis examines whether the applicant has a clear entitlement to the permit being sought. Relevant case law shows that a legitimate claim of entitlement exists if, without a due process violation, there is a certainty or strong likelihood that the permit would have been granted. Importantly, the analysis focuses on the discretion of the issuing authority; if the authority's discretion is limited, entitlement may arise. The standards for granting excavation permits are outlined in the Smithtown Code, which mandates that applications must be filed correctly and provides conditions under which permits are issued. The Superintendent of Highways has restricted discretion to deny permits; thus, as long as applications meet the specified requirements, permits must be granted. Consequently, any denial based on non-compliance with these requirements does not constitute a discretionary refusal. The conclusion is that the Walzes had a property right to receive an excavation permit from Dowling, as the conditions for issuance were met.

Property rights in governmental permits are examined in the context of substantive and procedural due process. The Walzes do not dispute New York's procedural safeguards for obtaining an excavation permit, having utilized an Article 78 proceeding. Instead, they assert a substantive due process right against arbitrary denial of the permit. Appellants contend that the Walzes' due process rights are limited to procedural guarantees. Although the Supreme Court has not directly addressed this issue, circuit precedents dictate that substantive due process can protect state-created property rights. In Brady v. Town of Colchester, the court recognized the distinction between procedural and substantive due process and remanded to assess whether a permit denial was arbitrary or irrational, reinforcing the relevance of substantive due process. 

The Walzes, as landowners, possess rights against being coerced into conveying land for utility services, as highlighted in Dolan v. City of Tigard, which states that a lack of connection between permit conditions and legitimate state interests can amount to extortion. 

Regarding qualified immunity, the district court's determination that Dowling did not qualify for this protection is upheld. Qualified immunity shields officials from liability when performing discretionary functions. However, Dowling's actions in conditioning a permit on land conveyance were deemed non-discretionary and thus not protected. He could not have reasonably believed he had the authority to deny the permit in an extortionate manner. The absence of legal backing for his demands negates any claim to qualified immunity, aligning with precedents which establish that this defense is unavailable for ministerial tasks.

Appellants argued that the district court incorrectly permitted the jury to award compensatory damages for emotional distress and pain and suffering in a Section 1983 case. Established case law supports awarding such damages, as seen in *Miner v. City of Glens Falls* and *Ragin v. Harry Macklowe Real Estate Co.* The Walzes provided testimony of emotional distress, with Mrs. Walz expressing shock over a conversation with Dowling and Mr. Walz describing physical reactions to Dowling’s threats. The jury was justified in awarding damages for their emotional distress and the discomfort from extended lack of water. Appellants claimed the jury's awards were excessive, but the determination of damages is primarily for the jury. The appellate review standard assesses whether the amounts shock the judicial conscience. The jury awarded $40,800 each to Robert and Lana Sue Walz and $20,400 to Robert Walz, Jr., which were deemed reasonable, especially given precedents of larger awards for similar distress. The punitive damages of $9,500 were also considered appropriate.

Additionally, appellants contested the attorney’s fees awarded under the Civil Rights Attorney’s Fees Award Act. The court reviews such awards for abuse of discretion, giving deference to the district court's decisions. The fee of $48,276 was found to be reasonable in both hourly rates and hours worked, with proper documentation supporting the request. The court excluded fees for work related to the Water Authority, which was not found liable. Appellants argued that the lack of an evidentiary hearing for the fee award violated their due process rights; however, substantial awards are often granted without such hearings, and no new information would likely alter the outcome. The decisions of the district court were affirmed. 

The jury's findings included affirming that Dowling knew the plaintiffs lacked a water supply and that he voided a permit to intentionally deprive them of water, with both questions answered affirmatively.

If the plaintiffs did not prove that James Dowling voided the January 17, 1992 permit with an improper motive, the verdict favors the defendants for that period. Conversely, if the plaintiffs proved that Dowling acted with improper motive, the verdict favors the plaintiffs. Similar questions follow for the March 6, 1992 permit, with findings of Dowling's knowledge regarding the plaintiffs’ lack of water supply, the conditions placed on the permit, and whether those conditions were intended to prevent water connection. A favorable finding for the plaintiffs leads to a verdict against the defendants for that period, while a negative finding results in a verdict for the defendants. The same procedure applies to the April 6, 1992 permit. It is noted that the appellants do not contest Smithtown's potential liability under Section 1983, implicitly conceding that if Dowling is liable, so is Smithtown. Although the Suffolk County Water Authority applied for the permit, the Walzes are recognized as the party-in-interest under New York law, granting them standing to pursue damages for Dowling's failure to issue the permit to the Water Authority.