Ace Partners, LLC v. Town of East Hartford, 883 F.3d 190

Background

ACE Partners (TC’s Pawn) held one-year pawnbroker and precious metals licenses for an East Hartford store; renewals were sought in July 2008–2009.
In spring 2009 undercover state investigators engaged with ACE employees; two employees were arrested in June 2009 for attempted receipt of stolen property and items were seized; a third employee was later arrested.
East Hartford Police Chief Sirois denied renewal of ACE’s precious metals license on August 7, 2009, citing “recent occurrences”; ACE received the letter one day before the license expired and was denied a meeting to contest the decision before the expiration.
ACE sued under 42 U.S.C. § 1983 alleging substantive and procedural due process violations; the district court granted summary judgment to ACE on its procedural due process claim as to the precious metals license (finding a property interest) and awarded damages and attorney’s fees.
The Second Circuit reviewed whether Conn. Gen. Stat. § 21-100(a) creates a constitutionally protected property interest in license renewal and whether the fees award stands if the merits ruling is reversed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Conn. Gen. Stat. § 21-100(a) creates a protected property interest in renewal of a precious metals license	ACE: statutory scheme (esp. felon bar) and practice create an entitlement to renewal; denial deprived ACE of procedural due process	Town: § 21-100(a) allows police chiefs to specify “any requirements” for licensure and thus grants broad discretion to deny or condition issuance/renewal	Held: No protected property interest — § 21-100(a) affords broad, virtually unfettered discretion to set requirements, so renewal was not virtually assured
Whether license renewal is treated like revocation (thus giving a continuing property interest)	ACE: renewal denial is functionally equivalent to revocation and should be protected by procedural due process	Town: Connecticut law treats a license’s property interest as lasting only for the license term; renewal is not equivalent to revocation	Held: Renewal is not equivalent to revocation under Connecticut law; any property interest ends at license expiration
Whether the 1981 felon-bar amendment limits chief’s discretion to require other conditions	ACE: the felon bar indicates the legislature intended non-felons to be entitled to licenses	Town: Felon bar merely forbids issuing licenses to felons but does not eliminate discretion regarding non-felons	Held: Felon bar limits issuance to felons but does not eliminate broad discretion over non-felon applicants
Whether ACE remains a "prevailing party" for § 1988 fees after reversal	ACE: district court’s fees order is appealable and should stand independently	Town: Reversal of the merits ruling removes the predicate "prevailing party" status and requires vacating fees	Held: Fees reversed — because ACE cannot be a prevailing party after merits reversal, the § 1988 award is vacated

Key Cases Cited

Spinelli v. City of New York, 579 F.3d 160 (2d Cir. 2009) (plaintiff must show deprivation of a protected property interest for procedural due process claim)
Barrows v. Burwell, 777 F.3d 106 (2d Cir. 2015) (state law defines protected entitlements for due process purposes)
Board of Regents v. Roth, 408 U.S. 564 (U.S. 1972) (property interest requires a legitimate claim of entitlement created by state law)
Harlen Assocs. v. Inc. Vill. of Mineola, 273 F.3d 494 (2d Cir. 2001) (license property interest depends on whether issuing authority lacks discretion to deny)
Villager Pond, Inc. v. Town of Darien, 56 F.3d 375 (2d Cir. 1995) (approval is a protected interest only when issuance is virtually assured)
Ballas v. Woodin, 231 A.2d 273 (Conn. 1967) (determination of "suitable person" requires judgment and reasoned discretion)
Sole v. Wyner, 551 U.S. 74 (U.S. 2007) (a prevailing party designation can be negated if the merits are reversed)