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finding that claim of arbitrator misconduct by depriving plaintiff of opportunity to be heard "[rang] hollow" because plaintiff "never indicated what his response on the merits would have been."
Summary of this case from Weber v. Merrill Lynch Pierce Fenner Smith, Inc.Opinion
Civil Action No. 3:99-CV-2309-G
April 24, 2000
MEMORANDUM ORDER
Before the court is the motion of the plaintiffs, Charles and Lillie Young ("the Youngs"), to confirm an arbitration award, as well as the motion of the defendant Joseph Alagna ("Alagna") to vacate that same award. For the reasons discussed below, the Youngs' motion is granted, and Alagna's motion is denied.
Alagna has also filed a motion to strike, and the Youngs have filed a motion for sanctions and attorney's fees. Both motions are denied.
I. BACKGROUND
On September 5, 1997, the Youngs filed a statement of claim against various respondents, including Alagna, with the National Association of Securities Dealers Regulation Inc. ("NASDR"), an industry self-regulatory organization that administers investor and broker claims. Plaintiffs' Complaint to Confirm an NASDR Arbitration Award ("Complaint") at 4. NASDR's Code of Arbitration Procedure allows disputes, claims, or controversies between a customer and an NASD member and/or associated person to submit to arbitration by written agreement or upon the demand of the customer. NASDR Code of Arbitration § 10301(a), attached as Exhibit C to Complaint. Here, NASDR appointed an arbitration panel of three members to hear the Youngs' claims against Alagna, Lew Lieberbaum Company Inc. (Alagna's former employer), and others. Complaint at 5. Before the arbitration commenced, the Youngs and Alagna entered into a settlement agreement dismissing Alagna in return for his promise to cooperate with the Youngs' counsel and to provide in-person testimony at the arbitration hearing. Defendant Joseph Alagna's Motion to Vacate Arbitration Award ("Motion to Vacate") at 1; Facsimile from James R. Marlen, counsel for the Youngs, to NASDR, June 5, 1998, attached as Exhibit D to Affidavit of Norman B. Arnoff, Esq. ("Arnoff Affidavit"). Alagna, however, did not attend the arbitration hearing. Motion to Vacate at 1. After noting Alagna's absence for the record and arguing that his absence was a breach of the parties' settlement agreement, the Youngs asked the arbitration panel to reinstate their claims against him. Transcript of Tape 1 of NASDR Arbitration Hearing, April 12, 1999 ("Hearing Transcript 1"), at 15-19, attached as Exhibit A to the Affidavit of John E. Lawlor, Esq. ("Lawlor Affidavit"). Throughout the one-day hearing, the Youngs introduced evidence against Alagna, and the Youngs' attorney unsuccessfully attempted to speak to Alagna's attorney by telephone. Transcript of Tape 2 of NASDR Arbitration Hearing, April 12, 1999 ("Hearing Transcript 2"), at 31-32, attached as Exhibit B to the Lawlor Affidavit.On April 13, 1999, one day after the hearing, Alagna's counsel sent a letter to the Youngs' attorney by facsimile stating, "Joe Alagna can not physically attend but will give telephonic testimony." Facsimile from Norman B. Arnoff to James R. Marlen, April 13, 1999 (emphasis in original), attached as Exhibit H to Arnoff Affidavit. That letter also included a note from Alagna's physician, stating that Alagna had injured his back and was unable to travel any distance until further notice. Id. The next day, the Youngs' attorney sent a facsimile to Alagna's counsel, notifying him that Alagna had been added as a respondent, that the Youngs had proceeded against Alagna at the hearing on their original claims, and that Alagna could apply to reopen the hearing under NASDR rules. Letter from James R. Marlen to Norman B. Arnoff, April 14, 1999, attached as Exhibit 11 to Plaintiffs' Response in Opposition to Motion to Vacate Arbitration Award ("Plaintiffs' Response").
The arbitration panel, on its own motion, scheduled a post-hearing telephonic conference before issuing its award. When Alagna and his attorney failed to participate, the conference was cancelled but later rescheduled. Plaintiffs' Response at 18. During this rescheduled post-hearing telephonic conference, held on August 9, 1999, Alagna presented evidence and argument to the arbitration panel indicating that he had been unable to travel to Dallas for the April 12 hearing due to a back injury. Transcript of Conference Call, August 9, 1999 ("Teleconference Transcript") at 4-9, attached as Exhibit C to Lawlor Affidavit. Alagna did not, however, address the merits of the Youngs' reinstated claims against him. See generally Teleconference Transcript. On September 22, 1999, the NASDR served a copy of the arbitration panel's decision upon the parties, awarding the Youngs $500,000 plus interest of ten percent annually against defendants Alagna and Anthony Ustica, who were found jointly and severally liable for the award. NASDR Award at 5, attached as Exhibit A to Complaint.
Anthony Ustica was named as a co-defendant in the Youngs' original complaint, but on October 29, 1999, Ustica filed a Chapter 7 bankruptcy petition. Plaintiffs' Charles and Lillie Young's Motion to Confirm an NASDR Arbitration Award at 1, n. 1. On February 11, 2000, this court issued an order noting that an automatic stay of claims against Ustica was in effect under Section 362 of the Bankruptcy Code. Accordingly, the claims against Ustica were administratively closed. Order of February 11, 2000 at 1.
On October 8, 1999, the Youngs filed a complaint in this court to confirm the NASDR award. See Complaint at 1. Alagna filed his original answer on November 5, 1999, which included — as affirmative defenses — grounds that would support vacatur of the award under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 10 (a). Defendant's Original Answer to Complaint ("Original Answer") at 3. The Youngs responded by filing, on November 10, 1999, a motion to confirm the NASDR award, arguing that because Alagna's answer did not include a separate motion to vacate, modify, or correct, any motion to vacate that he might subsequently file would be untimely. See Plaintiffs' Motion to Confirm an NASDR Arbitration Award ("Motion to Confirm") at 4-5. On November 30, 1999, Alagna filed a motion to vacate the arbitration award under the FAA, specifically alleging that the arbitration panel was guilty of misconduct, exceeded its power, and issued an award procured by undue means. Motion to Vacate at 2-4.
II. ANALYSIS A. Federal Arbitration Act
Vacatur of an arbitration award is governed by section 10 of the Federal Arbitration Act ("FAA"), which states in pertinent part:
[T]he United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration
(1) Where the award was procured by corruption, fraud, or undue means.
(2) Where there was evident partiality or corruption in the arbitrators, or either of them.
(3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
(4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made . . .9 U.S.C. § 10(a).
Arbitration awards under the FAA are reviewed by district courts under a standard of deference and will be vacated only where a party shows one of the "extraordinarily narrow" exceptions found in Section 10 above. See Antwine v. Prudential Bache Securities, Inc., 899 F.2d 410, 413 (5th Cir. 1990); Matter of Arbitration Between Trans Chemical Limited and China National Machinery Import and Export Corporation, 978 F. Supp. 266, 303 (S.D. Tex. 1997), aff'd, 161 F.3d 314 (5th Cir. 1998). "The statutory bases for overturning an arbitral tribunal are precisely and narrowly drawn to prohibit . . . complete de novo review of the substance of the award." Legion Insurance Company v. Insurance General Agency, Inc., 822 F.2d 541, 543 (5th Cir. 1987). The court's inquiry, therefore, is limited to whether the arbitration proceedings were "fundamentally unfair." Gulf Coast Industrial Workers Union v. Exxon Company, USA, 70 F.3d 847, 850 (5th Cir. 1995); Forsythe International, S.A. v. Gibbs Oil Company of Texas, 915 F.2d 1017, 1020 (5th Cir. 1990); Trans Chemical, 978 F. Supp. at 303. The party moving to vacate the arbitration award — in this case Alagna — has the burden of proof. See Trans Chemical, 978 F. Supp. at 303; also Wall Street Associates, L.P. v. Becker Paribas Incorporated, 27 F.3d 845, 848 (2nd Cir. 1994).
To determine whether the arbitration proceeding was "fundamentally unfair," this court will review Alagna's allegations that, according to him, support vacatur of the arbitration award under the FAA. First, however, the court must determine whether Alagna's failure to file a motion to vacate with his answer precludes consideration of his motion to vacate.
B. Timeliness of Motion to Vacate
The FAA requires that "[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered." 9 U.S.C. § 12. Here, the award was delivered on September 22, 1999, and Alagna filed his motion to vacate the award on November 30, 1999 — well within the three-month deadline. The Youngs maintain, however, that once they filed their complaint to confirm the arbitration, which was served on Alagna on October 14, 1999, Alagna's deadline to move to vacate was shortened to the date his original answer was filed. Motion to Confirm at 4. Thus, the Youngs allege, Alagna waived his ability to contest the award. Id. at 5.
The Youngs' argument, however, is without support either in the language of the statute or in the relevant case law. Alagna clearly met the statute's requirement to give notice of a motion to vacate within three months after the award was delivered. In The Hartbridge, an early case applying the FAA, the Second Circuit found:
Upon a motion to confirm the party opposing confirmation may apparently object upon any ground which constitutes a sufficient cause under the [FAA] statute to vacate, modify, or correct, although no such formal motion has been made.In re North of England S.S. Co., Limited, 57 F.2d 672, 673 (2d Cir. 1932), cert. denied sub nom. Munson Steamship Line v. North of England Steamship Co., 288 U.S. 601 (1933). "[A] motion to confirm," the court observed, "puts the other party to his objections." Id.
Here, Alagna's original answer asserted objections in the form of several "affirmative defenses," citing specific provisions of the FAA and averring not only that the arbitrators were guilty of misconduct and exceeded their powers but also that the award was procured by fraud or undue means. Original Answer at 3. Furthermore, Alagna's answer stated that he "intends to file a motion to vacate the award." Id. Though this pleading was not styled a "motion to vacate," it did give notice to the court and to the Youngs that Alagna was challenging the award under specific provisions of the FAA. Alagna's later motion to vacate, timely filed on November 30, 1999, recites the same grounds for vacatur asserted in his original answer. Motion to Vacate at 1. Because acceptance of the Youngs' position would simply exalt form over substance without serving any discernible purpose, the court concludes that Alagna did not waive his right to object to the arbitration award. It will thus turn to a consideration of Alagna's specific objections, asserted both in his original answer and in his motion to vacate.
C. Alagna's Grounds for Vacatur 1. Arbitrator misconduct
First, Alagna claims that the arbitration panel committed misconduct by allowing the case against him to proceed without notice to him or his counsel. 9 U.S.C. § 10(a)(3). The Fifth Circuit has acknowledged that "[a]ll parties in an arbitration proceeding are entitled to notice and an opportunity to be heard." Totem Marine Tug Barge, Inc. v. North American Towing, Inc., 607 F.2d 649, 651 (5th Cir. 1979). This court concludes, however, that Alagna had notice and waived his opportunity to be heard.
Though the full settlement agreement between the Youngs and Alagna is not part of the record before this court, it is undisputed that the agreement required Alagna to cooperate with the Youngs' counsel and to provide in-person testimony at the arbitration hearing. See Motion to Vacate at 1; Plaintiffs' Response at 8. In addition, the agreement stated, in pertinent part, "Failure of Alagna to honor the agreements contained herein, will render this agreement null and void and the complaint will be reinstated as if it had never been withdrawn or dismissed." NASDR Award at 4; Plaintiffs' Response at 23; Hearing Transcript 1 at 12-13; Teleconference Transcript at 16, 49-50. This language unambiguously disclosed to Alagna the consequence that his absence from the arbitration hearing, regardless of the reason, would have. The arbitration panel did not commit misconduct by allowing reinstatement of the claims against Alagna, since this was a provision of the settlement agreement bargained for and accepted by the parties.
Alagna also alleges that he was never given an opportunity to be heard on the merits of the case. But NASDR's rules allow hearings to be reopened "by the arbitrators on their own motion or at the discretion of the arbitrators upon application of a party at any time before the award is rendered." NASDR Code of Arbitration § 10329, attached as Exhibit 10 to Plaintiffs' Response. Counsel for the Youngs brought this NASDR provision to the attention of Alagna's attorney in three separate letters, sent within as many weeks, after the April hearing. Letters from James R. Marlen to Norman B. Arnoff, April 14, April 22, and April 29, 1999, attached as Exhibit 11 to Plaintiffs' Response. There is no evidence in the record before this court showing that Alagna ever applied for such a reopening, even though the arbitration panel did not issue its award until five months after the April hearing. See discussion of this issue in the Teleconference Transcript at 3, 9-10, 27-29. Indeed, the arguments of Arnoff, Alagna's counsel, during the post-hearing conference indicate that he consciously chose not to request a reopening of the hearing. See Teleconference Transcript at 27-28, 33, 50-51.
As noted previously, the arbitration panel, on its own motion, made two efforts following the April hearing to provide Alagna an opportunity to be heard. Plaintiffs' Response at 16. Alagna and his counsel failed to participate in the first scheduled teleconference, however, and it was subsequently cancelled. Plaintiffs' Response at 18. But both participated in the second teleconference. Teleconference Transcript at 2-9, 23- 25, 27-29, 32-44, 46-51, 54-56. The discussion focused primarily on the circumstances surrounding Alagna's absence from the hearing, and Alagna failed to address any substantive issues concerning the Youngs' claims. See generally Teleconference Transcript. At one point during the post-hearing teleconference, the arbitration panel's chairman told Alagna's attorney that "it's really up to you to put on whatever you want to put on and we are giving you this opportunity." Teleconference Transcript at 40. Under these circumstances, Alagna's present claim, that the arbitrators were guilty of misconduct by depriving him of an opportunity to be heard on the merits, rings hollow. See Schmidt v. Finberg, 942 F.2d 1571, 1573-74 (11th Cir. 1991) (court rejected the broker's argument that the arbitrators had committed misconduct by denying a continuance which deprived it of crucial testimony, in part because "Painewebber did not express a single word to indicate what testimony Finberg would give that would be material to the issues raised in the claim."); Grinnell Housing Development Fund Corp. v. Local 32B-32J, Service Employees International Union, AFL-CIO, 767 F. Supp. 63, 67 (S.D.N.Y. 1991) (court was ummpressed with contention that arbitrator was guilty of misconduct where "[p]etitioner argues that it was denied the opportunity to rebut the testimony of a superintendent regarding the duties of the superintendent and the handyman but does not set forth with any specificity what evidence, if any, it would have presented . . ."). Just as in those cases, Alagna has never indicated what his response on the merits would have been, had he chosen to present one to the arbitrators.
Accordingly, the court concludes that Alagna, as a party to the settlement agreement, had adequate notice that he could be reinstated as a respondent if he failed to comply with his obligations under that agreement. Furthermore, Alagna failed to take advantage of the opportunity to present evidence on the merits afforded him by the post-hearing conference and thus waived his right to be heard on the merits of the claims.
2. Exceeded Powers
Alagna's second claim is that the arbitrators exceeded their powers by making a mistake of fact that prevented a mutual, final, and definite award from being made. 9 U.S.C. § 10 (a)(4). Specifically, Alagna alleges that the arbitration panel was neither fully apprised of his back injury nor of his failure to understand that he could be reinstated as a respondent at the April hearing and that, as a result, the panel erroneously found Alagna liable when he was no longer a party to the action. Motion to Vacate at 3.
Even if it is assumed, arguendo, that the arbitration panel was not fully apprised of these allegations at the April hearing, its decision was not issued until five months after that hearing. During those five months, Alagna was twice given the opportunity to participate in a teleconference and to submit documents to NASDR for review by the panel. Alagna points to no mistake of fact within the award itself, nor can he demonstrate with adequate certainty that the arbitrators strongly relied, in making its decision, upon any mistake of fact alleged by Alagna. See Valentine Sugars, Inc. v. Donau Corporation, Inc., 981 F.2d 210, 214 (5th Cir.) (a court "must affirm the arbitrators' award if [the non-contesting party] can provide any rational explanation for the award inconsistent with [the contesting party's] theory" of material mistakes of fact), cert. denied, 509 U.S. 923 (1993). Here, the Youngs assert that before making its award, the arbitration panel (1) was fully apprised of Alagna's back injury at both the April hearing and the August teleconference and through numerous party submissions; (2) examined the settlement agreement and relevant case law to determine that he could be reinstated as a respondent at the April hearing, especially since such recourse was bargained for by Alagna and the Youngs; and (3) found Alagna liable after reinstating him because the panel heard credible evidence pointing to such liability, but no evidence disputing it. Plaintiffs' Response at 21-24. This court finds the Youngs' theory of the arbitrators' award to be rational and thus there was no mistake of fact that prevented a mutual, final, and definite award from being made.
Whether Alagna should have been reinstated as a respondent at the April hearing due to his failure to appear was a principal issue in the post-hearing conference. See Facsimile from Susan M. Kozacik to Norman B. Arnoff, July 21, 1999 ("The panel would like to conduct another telephone hearing on the above captioned matter. The panel will address the failure to appear of Mr. Alagna."), attached as Exhibit 12 to Plaintiffs' Response.
During the teleconference, Alagna's counsel first argued that substantial compliance by his client, in the form of telephonic or affidavit testimony, should have sufficed to satisfy Alagna's obligations under the settlement agreement, Teleconference Transcript at 5, 24-25, 29, and thus there was no breach of that agreement. Id. at 6-7. Counsel for the Youngs, not surprisingly, disagreed. Id. at 12-23, 31. As summarized by Alagna's counsel,
The only issue that should be before this panel at this particular point in time is whether there was a breadth [sic] of the settlement agreement [by virtue of Alagna's failure to appear at the April hearing to give testimony in person]. Whether Alagna feigned excuses because he didn't want to fly down to Dallas or whether the medical reasons were legitimate.Id. at r33.
Counsel for the Youngs concurred in this framing of the issue:
Let me address what the issues are. The issues are this, 1) and it's pretty singular, did Joseph Alagna breach his settlement agreement with client, I [re]presented, with the claimant.Id. at 13-14.
These points were also argued by counsel in written submissions to the panel. Compare Facsimile from Norman B. Arnoff to Susan M. Kozacik, April 15, 1999, attached as Exhibit J to Arnoff Affidavit, and Facsimiles from Norman B. Arnoff to James R. Marlen, Esq. (April 27, 1999) and Susan M. Kozacik (June 8, 1999; June 10, 1999; June 15, 1999; June 28, 1999; and July 26, 1999), attached as Exhibit K to Arnoff Affidavit, with Facsimile from James R. Marlen to NASDR, September 8, 1999, attached as Exhibit N to Second Affidavit of John E. Lawlor, Esq.
After considering all of these arguments and the evidence, the panel by its award apparently resolved this issue in favor of the Youngs.
3. Undue means
Finally, Alagna alleges that the arbitration panel was not made aware of his back injury and of his offer to testify by telephone, and that by failing to consider these allegations, the panel issued an award against Alagna that was procured by "undue means." 9 U.S.C. § 10(a)(1); Motion to Vacate at 4. "But where the panel hears the allegation . . . and then rests its decision on grounds clearly independent of issues connected to the [allegation], the statutory basis for vacatur is absent." Forsythe, 915 F.2d at 1022. Here, the arbitration panel, before making its award, scheduled two post-hearing teleconferences to address, among other things, Alagna's explanation of his failure to appear at the April hearing. Facsimiles from NASDR to Norman B. Arnoff, June 21 and July 21, 1999, attached as Exhibits 15 and 18 to Plaintiffs' Response. There is no evidence in the award or the entire record that the arbitration panel found Alagna liable merely because he failed to attend the April hearing. In fact, the arbitration award clearly states that the panel considered pleadings, evidence and testimony presented at the hearing, and post-hearing submissions in reaching its decision. NASDR Award at 5. Alagna simply failed to present any case, despite several opportunities to do so.
III. CONCLUSION
For the reasons discussed above, Alagna's objections to the arbitration award fail to demonstrate proper statutory grounds for vacatur under the FAA, 9 U.S.C. § 10(a)(3), (4), (1). Accordingly, Alagna's motion to vacate is DENIED. And under the FAA, if any party to the arbitration proceeding applies for an order confirming the award, "the court must grant such an order unless the award is vacated, modified, or corrected. . . ." 9 U.S.C. § 9. Alagna having failed to show grounds for vacating the award, and the Youngs having moved for confirmation, the award is accordingly CONFIRMED.
SO ORDERED.
HENRISE v. HORVATH, (N.D.Tex. 2000)
James T. Henrise, Plaintiff, v. John D. Horvath, et al., Defendants. Civil Action No. 3:97-CV-2472-L United States District Court, Northern District of Texas, Dallas Division April 21, 2000
MEMORANDUM OPINION AND ORDER
SAM A. LINDSAY, United States District Judge.
Before the court is Defendant City of DeSoto's Motion and Brief to Dismiss, filed January 15, 1998, and Plaintiff Henrise's Response to Defendant DeSoto's Motion to Dismiss, filed February 4, 1998. After careful consideration of the motion and response, the court, at this time, denies Defendant's motion without prejudice to it being re-urged after Plaintiff has repleaded in accordance with this order.
I. Factual and Procedural Background
Plaintiff James Henrise ("Plaintiff" or "Henrise") initiated this litigation against Defendant City of DeSoto ("DeSoto" or "Defendant") and four individuals on October 7, 1997, pursuant to 42 U.S.C. § 1983. Henrise filed his First Amended Complaint on October 30, 1997. Plaintiff contends that as a result of the acts and omissions of all Defendants, he has been retaliated against in violation of the First and Fourteenth Amendments to the United States Constitution. DeSoto filed a motion to dismiss Plaintiff's First Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.
DeSoto contends that the allegations against it in Plaintiff's First Amended Complaint ("Complaint") are broad and conclusory allegations and are therefore insufficient to withstand a motion to dismiss. In essence, DeSoto contends that Plaintiff's Complaint is deficient because it does not put DeSoto on fair notice as to the claim involved or why Plaintiff is entitled to relief. For this reason, DeSoto contends that the allegations set forth in Plaintiff's Complaint fail to state a claim upon which relief can be granted.
Plaintiff contends that his Complaint satisfies the requirements of Fed.R.Civ.P. 8(a)(2) in that it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Plaintiff requests the court to deny the motion to dismiss or, in the alternative, allow him an opportunity to amend his Complaint.
II. Rule 12(b)(6) Standard
A motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6) "is viewed with disfavor and is rarely granted." Lowrey v. Texas AM University System, 117 F.3d 242, 247 (5th Cir. 1997). A district court cannot dismiss a complaint, or any part of it, for failure to state a claim upon which relief can be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In ruling on such a motion, the court cannot look beyond the pleadings. Id. The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid cause of action when it is viewed in the light most favorable to the plaintiff and with every doubt resolved in favor of the plaintiff. Lowrey, 117 F.3d at 247. A plaintiff, however, must plead specific facts, not mere conclusory allegations, to avoid dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992).
III. Analysis
To resolve the issue presented by this motion, the court first cites the relevant authority under which a local government can be held liable pursuant to 42 U.S.C. § 1983. A governmental entity can be sued and subjected to monetary damages and injunctive relief under 42 U.S.C. § 1983 only if its official policy or custom causes a person to be deprived of a federally protected right. Board of the County Commissioners of Bryan County v. Brown, 520 U.S. 397, 403 (1997); Monell v. New York City Department of Social Services, 436 U.S. 658, 694 (1978). A governmental entity cannot be liable for civil rights violations under a theory of respondeat superior or vicarious liability. Id. See also Baskin v. Parker, 602 F.2d 1205, 1208 (5th Cir. 1979).
In light of Rule 8 and Leatherman v. Tarrant County Intelligence Coordination Unit, 507 U.S. 163, 168 (1993), Plaintiff is correct, insofar as the argument goes, that DeSoto is entitled only to "a short and plain statement that the pleader is entitled to relief." Plaintiff, however, jumps off the train before it reaches the depot. The "short and plain statement" must contain facts "that will give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests." Leatherman, 507 U.S. at 168 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Requiring a plaintiff to identify the specific policy or custom and allege that the policy or custom adopted by the municipality or policymaking official was the "moving force" behind the constitutional violation is in no way inconsistent with notice pleading or the mandate of Leatherman. Such requirement actually complements Rule 8 in that it puts a defendant on notice of the grounds on which a plaintiffs claim rests. In other words, the allegations of a complaint must not be conclusory; otherwise, a defendant is not placed on notice of the grounds for the claim. Conclusory allegations cannot survive a motion to dismiss. See Guidry, 954 F.2d at 281.
The court believes that language from two Fifth Circuit cases decided after Leatherman are illustrative and controlling: Spiller v. City of Texas City, Police Dept., 130 F.3d 162 (5th Cir. 1997), and Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521 (5th Cir. 1996). In Spiller, the court stated:
In order to hold a municipality or a local government unit liable under Section 1983 for the misconduct of one of its employees, a plaintiff must initially allege that an official policy or custom 'was a cause in fact of the deprivation of rights inflicted.' Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 525 (5th Cir. 1994). To satisfy the cause in fact requirement, a plaintiff must allege that 'the custom or policy served as the moving force behind the [constitutional] violation' at issue, Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 533 (5th Cir. 1996), or that her injuries resulted from the execution of the official policy or custom, Fraire v. Arlington, 957 F.2d 1268, 1277 (5th Cir. 1992). The description of a policy or custom and its relationship to the underlying constitutional violation, moreover, cannot be conclusory; it must contain specific facts.Spiller, 130 F.3d at 1278. Embodying this same principle and requirement with respect to pleading a cause of action regarding municipal policy or custom, but stated somewhat differently, the court in Meadowbriar stated:
To support a claim based upon the existence of an official custom or policy, the Plaintiff must plead facts which show that: 1) a policy or custom existed; 2) the governmental policy makers actually or constructively knew of its existence; 3) a constitutional violation occurred; and 4) the custom or policy served as the moving force behind the violation. (citation omitted)Meadowbriar, 81 F.3d at 532-33.
The court has reviewed Plaintiff's Complaint in detail and finds that it does not contain these basic and fundamental allegations to put DeSoto on notice as to the bases for its claims regarding municipal policy or custom.
With respect to references to a policy or custom of DeSoto, Plaintiff's Complaint contains the following:
5. At all times relevant hereto, Defendant John D. Horvath (hereinafter 'Horvath') was the Chief of Police for the DeSoto Police Department. In that capacity, Horvath acted under the color of the law and established policy for the internal operations of the DeSoto Police Department, including police personnel decisions. If Horvath was not the 'official' policymaker, by custom the DeSoto Chief of Police is deemed the defacto policymaker. Horvath is sued in his individual capacity.
* * *
24. The City of DeSoto, by custom, permits the Chief of Police to be the final policymaker with respect to internal police matters, including personnel actions taken by the Chief or his subordinates against officers such as Henrise. This is evidenced by the City's failure to act on Henrise's complaints lodged against Horvath and the other individual Defendants. The actions taken against Henrise and the treatment of Henrise by Horvath and/or subsequent police chiefs therefore represents the official policy of DeSoto.
* * *
28. Pursuant to the First and Fourteenth Amendments, and procedurally pursuant to 42 U.S.C. § 1983, Plaintiff sues the City of DeSoto for the actions of its policymaker, and for knowingly permitting the individual Defendants to retaliate against, threaten, punish, and intimidate Plaintiff. The City was on actual notice of this conduct, and failed to prevent it from occurring and recurring.
See Plaintiffs First Amended Complaint at ¶¶ 5, 24, 28.
Plaintiffs Complaint does not meet the basic requirements for pleading municipal liability under Section 1983 as set forth in Spiller and Meadowbriar. The court concludes that the allegations in Plaintiff's Complaint are conclusory, including the reference to Defendant Horvath as a policymaker, and as such fail to state a claim upon which relief can be granted.
Plaintiff states that he has not pleaded "his best case with respect to DeSoto." Plaintiffs Response at p. 4. Plaintiff will get his chance to do so because, rather than dismiss his Complaint, the court will permit Plaintiff to amend his Complaint in accordance with this order. In this regard, Plaintiff is strongly admonished to ride his best pony in the race, as he will not get another chance to race against DeSoto.
IV. Conclusion
DeSoto's Motion to Dismiss is denied without prejudice. Plaintiff shall amend within 20 days of the date of this order. If Plaintiff fails to amend as set forth herein, his Complaint will be dismissed against the City of DeSoto. If Plaintiff amends his Complaint, DeSoto may re-urge its motion to dismiss if it believes that Plaintiff's Second Amended Complaint fails to state a claim upon which relief can be granted.