DIETRICH HILL, ET AL.
CITY OF MEMPHIS, ET AL.
Session October 22, 2014
Appeal from the Chancery Court for Shelby County No. CH120184 Kenny W. Armstrong, Judge.
August C. Winter, Brentwood, Tennessee, and J. Bennett Fox, Jr., Memphis, Tennessee, for the appellants, Dietrich Hill, Tokens Gifts, Inc. of Tennessee, and Tokens Gifts, Inc. of Oregon.
Allan J. Wade and Brandy S. Parrish, Memphis, Tennessee, for the appellee, City of Memphis
John Michael Ryail and Betsy McKinney, Memphis, Tennessee, for the appellee, Althea Atwater.
Andy D. Bennett, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and David R. Farmer, Sp. J., joined.
ANDY D. BENNETT, JUDGE
Factual and Procedural Background
Dietrich Hill is the owner and operator of Tokens Gifts, Inc. ("Tokens"), a business located in Memphis, Tennessee. The organized crime unit ("OCU") of the Memphis police department conducted an undercover investigation of Tokens for possible violation of Tenn. Code Ann. § 39-17-422, concerning the unlawful sale of inhalants. On February 4, 2011, Mr. Hill was arrested and charged with the criminal sale of inhalants. Based on information seized from the business concerning personal and business bank accounts (belonging to Mr. Hill and to Tokens Gifts, Inc. of Tennessee, and Tokens Gifts, Inc. of Oregon), these accounts were frozen and seized by the police department. Forfeiture proceedings were also initiated regarding the funds in these bank accounts.
Mr. Hill, Tokens Gifts, Inc. of Tennessee, and Tokens Gifts, Inc. of Oregon (hereinafter collectively "the plaintiffs") filed suit on February 6, 2012, against the City of Memphis, and Larry Godwin or Toney Armstrong, Lieutenant Ross, George Monger, Dee Nollner, and Steve Stamson, in their individual and official capacities. They alleged causes of action pursuant to 42 U.S.C. § 1983 and 42 U.S.C. § 1988.
On February 7, 2012, the plaintiffs filed a first amended complaint pursuant to 42 U.S.C. §§ 1983 and 1988 in which they added as defendants Lieutenant Eaton, Sergeant Althea Atwater, and Detective Timothy Goodwin in their individual and official capacities. The first amended complaint omitted as defendants George Monger, Dee Nollner, and Steve Stamson. All of the defendants named in the first amended complaint were eventually dismissed from the case with the exception of the City of Memphis and Sergeant Althea Atwater, the two defendants participating in this appeal. We will, therefore, limit our summary of the relevant case history accordingly. The specific allegations included in the second amended complaint will be set out as relevant below. On July 9, 2012, the city filed a motion to dismiss the first amended complaint pursuant to Tenn. R. Civ. P. 7.02, 12.02(b)(1), and 12.02(6).
On July 20, 2012, the Shelby County Criminal Court issued a decision in the forfeiture case filed by the State of Tennessee against Mr. Hill. The court granted in part and denied in part the state's forfeiture petition. With respect to the funds seized from the two banks, the court found that the state had failed to meet its burden of proof:
[N]o testimony was provided about dates and amounts of deposits, dates and amounts of withdrawals, or bank account numbers. Thus, without more, it is impossible to determine if the funds found in the bank accounts are proceeds of, or are traceable to, the illegal sales of nitrous oxide that occurred between December 30, 2010 and January 31, 2011. For these reasons, the State's request for forfeiture of these funds is denied.
The city's motion to dismiss, as well as a motion for summary judgment filed by the plaintiffs, was heard on April 16, 2013. The court's order reads, in pertinent part, as follows:
IT APPEARING to the Court that Plaintiff conceded that his claim under Eighth Amendment of the Constitution of the United States for excessive fines based on the forfeiture proceedings in the criminal court fails to state a claim and that his claims under the Fourteenth Amendment of the Constitution of the United States for selective prosecution and selective enforcement are barred by the doctrine of res judicata as a result of the criminal court's disposition of these claims in a final judgment.
Based on the arguments of counsel and memoranda of the parties, it appears to the Court, without addressing whether Plaintiff has properly pled any claims for unlawful seizure of property and unlawful detention of property,  that the existence of statutory post deprivation remedies for recovery of any property seized in connection with the forfeiture proceedings in the criminal court precludes any claims under the due process clause of the Fourteenth Amendment of the Constitution of the United States as a matter of law.
The court granted the city's motion to dismiss. The plaintiffs' motion for summary judgment was pretermitted as moot. The court further decreed that its order be entered as a final order pursuant to Tenn. R. Civ. P. 54.02 since it adjudicated all claims against the City of Memphis.
The plaintiffs filed a motion to alter or amend the court's judgment asserting, in part, that their first amended complaint stated Fourth and Fifth Amendment claims upon which relief could be granted. The court denied the plaintiffs' motion to alter or amend in an order entered on September 9, 2013. In that order, the court noted: "[T]he complaint and amended complaint failed to allege any Fourth or Fifth Amendment violation and . . . such unpled allegations cannot be raised for the first time in a motion to alter or amend judgment." The plaintiffs filed a notice of appeal on October 8, 2013.
Meanwhile, the case against Sergeant Atwater took its own path through the trial court. On September 6, 2013, Sergeant Atwater, individually, along with two other individual defendants, filed a motion to dismiss for failure to state a claim upon which relief could be granted. On September 13, 2013, the plaintiffs filed a motion to amend the first amended complaint with respect to Sergeant Atwater. (The plaintiffs announced their intent not to oppose the motion to dismiss as to the other two defendants.)
On November 19, 2013, the court held a hearing on the individual defendants' motion to dismiss and on the plaintiffs' motion to amend the first amended complaint. In its order entered on December 5, 2013, the court noted that the plaintiffs had stated that "they did not wish to prosecute any Eighth Amendment claims against Officer Atwater for excessive fines, or Fourteenth ...