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Koenigs L.L.C. v. City of Savannah

United States District Court, W.D. Tennessee, Eastern Division

February 1, 2018

KOENIGS, L.L.C., Plaintiff,
CITY OF SAVANNAH, TENNESSEE, GARRY WELCH, individually, and in his official capacity, RICKY BRATTON, individually, CURTIS MANSFIELD, JR., individually, and JOHN ALBERTSON, III, individually, Defendants.



         All are entitled to the due process of law. But what protections, precisely, are owed? That is ultimately the question presented to the Court today. And while it is also a question that has been presented to many courts before, this Court is unable to resolve the question as applied to this plaintiff so early in the proceedings. Presently before the Court are the Motions to Dismiss (ECFs No. 17, 18, & 27) of Defendants Garry Welch (“Welch”), the City of Savannah (“the City”) (collectively “City Defendants”), Ricky Bratton (“Bratton”), Curtis Mansfield, Jr. (“Mansfield”), and John Albertson III (“Albertson”) (collectively “State Defendants”). Plaintiff Koenigs, L.L.C., filed suit after its removal from the State of Tennessee's and the City's towing lists for post-accident cleanup, bringing claims under a number of constitutional provisions including the First, Fifth, and Fourteenth Amendments. All Defendants have moved to dismiss these claims, arguing that Plaintiff has relied on mere conclusions and restatements of the elements and therefore failed to allege sufficient facts to support any of its claims. For reasons set forth below, City Defendants' Motion is DENIED as moot, State Defendants' first Motion is DENIED as moot, and State Defendants' second Motion is GRANTED IN PART AND DENIED IN PART. Plaintiff's “arbitrary and capricious” claims, substantive due process claims, and procedural due process claims survive, while all of Plaintiff's remaining claims against State Defendants are DISMISSED.

         I. BACKGROUND

         A. Procedural Posture

         Plaintiff filed its initial Complaint (ECF No. 1) on June 9, 2017. City Defendants filed their Motion to Dismiss (ECF No. 17) on July 29, 2017. And State Defendants filed their first Motion to Dismiss (ECF No. 18) on August 22, 2017. But Plaintiff then moved the Court for leave to amend its Complaint (ECF No. 21). The Court denied Plaintiff's Motion, however, and noted in its August 29, 2017 Order (ECF No. 23) that, because Plaintiff had just been served with a Rule 12(b) motion and had not amended its Complaint previously, Plaintiff was therefore permitted to amend its pleading as a matter of right under Federal Rule of Civil Procedure 15(a)(1). Plaintiff accordingly filed its Amended Complaint (ECF No. 24) that same day. On August 31, 2017, City Defendants filed a document styled as a Reply to Plaintiff's Amended Complaint (ECF No. 25), requesting that the Court construe the Amended Complaint as merely a response to Defendants' Motions because its amendments were in fact responsive to Defendants' initial Motions. Plaintiff then filed a Response (ECF No. 26) that addressed the points made in City Defendants' Reply. On September 12, 2017, State Defendants filed a Second Motion to Dismiss (ECF No. 27). And Plaintiff filed a Response (ECF No. 29) thereto on September 20, 2017.

         B. Allegations of the Amended Complaint

         The following allegations set forth in Plaintiff's Amended Complaint are presumed to be true unless otherwise specified. See Am. Compl., Aug. 29, 2017, ECF No. 24; infra Part II. Plaintiff is a limited liability company organized under the laws of the State of Tennessee and a wrecker service.[1] The City is a municipality duly organized and existing under the laws of the State of Tennessee. Welch was, for the period relevant to this matter, the City Manager of the City. Bratton is a lieutenant employed by the Tennessee Department of Safety and Homeland Security (the “Department”). Mansfield is a captain employed by the Department. Albertson is a lieutenant colonel employed by the Department.

         On behalf of the State, the Department maintains a rotating schedule towing list for the purpose of utilizing private towing companies' services for wrecks occurring within their jurisdiction. A wrecker service's participation on the State's rotation list is governed by the rules and regulations adopted by the State and compiled in a manual issued to all interested wrecker services. Annual inspections are conducted to ensure compliance. Indeed, if a wrecker service meets or complies with the State's rules and regulations, according to Plaintiff, that wrecker service must be included on the state's rotation list. Further, the State's towing manual provides for specific procedures that must be followed before a wrecker service can be removed from the rotation. The manual provides that wrecker services have the right to a hearing and appeal regarding any decision to remove or suspend them from the towing list. Plaintiff asserts that any suspension, removal, or other interruption of a wrecker service's inclusion on the list causes that wrecker service to sustain significant financial losses.

         The City maintains a separate rotating towing list for the purpose of utilizing private towing companies' services for wrecks occurring within its jurisdiction. The City maintains “Recovery, Towing[, ] and Storage Standards, ” which dictate the requirements for a towing company to be included on its list. The City's Standards require wrecker services to expend substantial funds to ensure compliance in exchange for the expectation that said services will be called upon on a regular basis. Among other requirements, the City's Standards require that a wrecker service meet the State's requirements in order to remain on the City's list.

         As stated above, Plaintiff is engaged in the business of towing and recovery services. Plaintiff was listed on the State's list for the district surrounding Jackson, Tennessee, and on the City's list for several years by the summer of 2016. Plaintiff maintains that it met the standards required by the State and the City. On June 9, 2016, a tractor trailer vehicle owned by TNJ Trucking Company (“TNJ”) crashed on Pyburn Road in Hardin County, Tennessee. Plaintiff arrived at the scene at the request of State officials due to its inclusion on the rotation list for the Jackson district. Plaintiff performed towing and recovery services. Plaintiff continued to clean up the scene of the accident for a two-day period and sustained significant damage to its equipment. Not only had the tractor trailer been disabled, but the trailer's cargo had spread across the accident scene and posed a danger to the health, safety, and welfare of the individuals residing or working the area. Subsequently, Plaintiff sent TNJ an invoice for $44, 553.75-an amount that Plaintiff states is reasonable and customary for the work performed. TNJ, through its insurer, paid the invoice as well as a small, additional amount for storage fees on June 22, 2016. TNJ or its insurer, however, then complained that they had been overcharged. TNJ asked Bratton to look into the matter, despite Bratton's lack of knowledge as to the services performed by Plaintiff.

         In or around July 2016, Bratton communicated false information about Plaintiff to Welch. Then, through an August 26, 2016 letter, City Defendants removed Plaintiff from the City's towing list. City Defendants did not contact Plaintiff regarding its removal from the towing list or even the circumstances surrounding the services performed for TNJ. According to Plaintiff, Bratton did prepare an investigative report that was not only incomplete but also contained false information. Plaintiff maintains that Bratton knew that his report was incomplete and contained false information at the time of his investigation. Mansfield issued a determination on January 23, 2017, to remove Plaintiff from the State's towing list based solely on the opinion of Bratton. Plaintiff was then notified of a pre-removal hearing held on February 7, 2017. But at the hearing, Plaintiff was not allowed to discover any information concerning the underlying facts serving as the basis for its exclusion from the rotation list or any other information. No one representing TNJ, its insurer, or the owners of the cargo it was transporting at the time of the accident, was present for the hearing. Mansfield issued his final determination on February 21, 2017, which permanently removed Plaintiff from the State's list. Plaintiff maintains that Mansfield, in making his final determination, (1) ignored Plaintiff's position along with any documents Plaintiff was allowed to present; (2) denied Plaintiff's request to discover the underlying facts and circumstances that surrounded the complaint of overcharging; and (3) accepted the faulty report of Bratton. Finally, on April 4, 2017, Albertson upheld the final determination without any additional inquiry.


         A defendant may move to dismiss a claim for “failure to state a claim upon which relief can be granted” under Federal Rule of Civil Procedure 12(b)(6). When considering a Rule 12(b)(6) motion, the Court must treat all of the well-pleaded allegations of the Complaint as true, construing those allegations in the light most favorable to the non-moving party. Saylor v. Parker Seal Co., 975 F.2d 252, 254 (6th Cir. 1992); see also Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (“[I]t is well established that, in passing on a motion to dismiss, . . . the allegations of the complaint should be construed favorably to the pleader.”). Legal conclusions and unwarranted factual inferences, however, need not be accepted as true. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987) (citing Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976); Davis H. Elliot Co. v. Caribbean Utilities Co., 513 F.2d 1176, 1182 (6th Cir. 1975); Blackburn v. Fisk Univ., 443 F.2d 121, 124 (6th Cir. 1971)). “To avoid dismissal under Rule 12(b)(6), a complaint must contain either direct or inferential allegations with respect to all the material elements of the claim.” Wittstock v. Mark A. Van Sile, Inc., 330 F.3d 899, 902 (6th Cir. 2003) (citing Tahfs v. Proctor, 316 F.3d 584, 590 (6th Cir. 2003)). Under Federal Rule of Civil Procedure 8, a complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although this standard does not require “'detailed factual allegations, ' it does require more than ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.'” Reilly v. Vadlamudi, 680 F.3d 617, 622 (6th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). In order to survive a motion to dismiss, the plaintiff must allege facts that, if accepted as true, are sufficient “to raise a right to relief above the speculative level” and to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 555, 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

         III. ANALYSIS

         A. Effect of the Amended Complaint

         City Defendants assert that the Court should treat the Amended Complaint as a response to their Motion to Dismiss. Garry Welch's and the City's Reply to Koenigs's Resp. Opp'g the Mot. to Dismiss, at 1-2, Aug. 31, 2017, ECF No. 25 [hereinafter “City Defs.' Reply”]). Generally, the filing of an amended complaint supersedes any previous complaint. Parry v. Mohawk Motors of Mich., Inc., 236 F.3d 299, 306-07 (6th Cir. 2000) (citing In re Atlas Van Lines, Inc., 209 F.3d 1064, 1067 (8th Cir. 2000); Massey v. Helman, 196 F.3d 727, 735 (7th Cir. 1999)). City Defendants argue, however, that the Amended Complaint should be considered a Response to their Motion because it is responsive to the deficiencies highlighted in their Motion. City Defs.' Reply, at 1 (citing Little v. Corrections Corp. of Am., Inc., 2001 WL 1910056, at *1 (W.D. Tenn. Oct. 31, 2001) (Vescovo, M.J.)). City Defendants' point is not completely illogical, and another member of this Court has reasoned similarly. See ECIMOS, LLC v. Carrier Corp., 2016 U.S. Dist. LEXIS 59191, at *4 n.1 (W.D. Tenn. May 4, 2016) (“Plaintiff's Amended Complaint . . . does not modify any legal theory or factual basis for Plaintiff's claims. . . . [and] had no effect on the arguments raised in the Motion to Dismiss. Accordingly, the Court finds that the Motion to Dismiss is not moot . . . .”). But the Court intends to stick to normal procedure as supported by the Sixth Circuit's case law. When Plaintiff filed its Amended Complaint, its original Complaint was rendered a nullity. The Amended Complaint has controlled this case from the moment of the Amended Complaint's filing. As a result, all motions that seek dismissal of the original Complaint are now moot. Accordingly, both City Defendants' Motion to Dismiss and State Defendants' first Motion to Dismiss are DENIED as moot. If City Defendants wish to file a new Motion to Dismiss, they have fourteen (14) days from the entry of this Order to do so.

         B. Plaintiff's Causes of Action Against State Defendants

         In its Amended Complaint, Plaintiff brings the following claims against State Defendants: (1) deprivation of its property in violation of the Fifth and Fourteenth Amendments; (2) violation of its due process rights as guaranteed by the Fifth and Fourteenth Amendments; (3) violation of its right to equal protection under the law as afforded by the Fifth and Fourteenth Amendments; (4) arbitrary and capricious treatment in violation of the United States Constitution; (5) violation of rights as guaranteed by the First and Fourteenth Amendments; (6) infringement of the right to legitimately conduct a business under the United States Constitution; and (7) infringement and denial of the right to contract in violation of the United States Constitution. Am. Compl., ¶ 31, ECF No. 24. State Defendants acknowledge in their Memorandum that they are only moving for partial dismissal of the Amended Complaint. Mem. of Law in Supp. of Defs.' Mot. to Dismiss, at 2, Sept. 12, 2017, ECF No. 28 [hereinafter “State Defs.' Supp'g Mem.”]. As such, they argue for the dismissal of the following claims by Plaintiff: (1) First Amendment claims, (2) Fifth Amendment claims, (3) Fourteenth Amendment equal protection claims, (4) Fourteenth Amendment procedural due process claims, and (5) Contract Clause claims. By its own argument, Plaintiff folds its claim involving the infringement of its right to legitimately conduct a business under its Fourteenth Amendment Due Process Clause claim. ...

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