336 F. Supp. 3d 790
E.D. Mich.2018Background
- Nationwide Recovery operated a Detroit towing service and held DPD Tow Permit #16-047 (renewed May 2016, expiring May 31, 2021) and was on the City’s police-authorized towing list since 2011.
- Detroit’s Board of Police Commissioners (BPC) adopted towing rules establishing application, selection, permit issuance, and hearing procedures; permits were issued for five-year terms and provided for hearings before termination except where immediate termination was permitted for alleged fraud or criminal conduct (with a hearing “as soon as practicable”).
- On July 19, 2017, Detroit police seized Nationwide’s permit and removed it from the towing list without prior notice or hearing; the City later declared all towing permits void ab initio in an August 9, 2017 memorandum.
- Nationwide sued under 42 U.S.C. § 1983 claiming a procedural due process violation (no pre-deprivation hearing) and moved for partial summary judgment; the City argued the permit was an invalid contract and issued without authority and filed counterclaims (later withdrawn).
- The court found the permit not to be a contract, concluded state and local law did not bar issuance, and held Nationwide possessed a protectable property interest in the permit/list but was denied the process (hearing) due under the City’s own rules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nationwide had a constitutionally protected property interest in the towing permit/list | Permit and placement on list created a legitimate claim of entitlement under BPC rules; permit had fixed term and renewal practice | Permit was a contract (or otherwise invalid) and not a protectable property interest | Held: Nationwide had a property interest in the permit and list (not a mere unilateral expectation) |
| Whether permit was a contract | N/A (argued property interest under rules, not a contract) | Permit was a contract governed by mutual rules/understandings; City attacks lawfulness of issuance | Held: Permit is not a contract (no consideration; license/permit paradigm applies) |
| Whether state or local law invalidated the permits | BPC authority and City Code authorize towing rules and permit issuance; rules provide procedural protections | City Charter and state statutes (e.g., procurement/finance provisions) preclude BPC authority; permits void ab initio | Held: Permits not contrary to City Charter or state law; City failed to show statutory invalidity |
| What process was due before deprivation | At minimum a hearing as provided in towing rules (pre-termination hearing except narrowly where immediate termination permitted) | Immediate termination allowed for fraud/criminal conduct; actions justified by alleged misconduct | Held: Procedural protections in towing rules required a hearing; Nationwide was deprived without required process (no pre- or timely post-deprivation hearing) |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden shifting)
- Bd. of Regents v. Roth, 408 U.S. 564 (property interests created by state rules/understandings)
- Bell v. Burson, 402 U.S. 535 (due process requires prior hearing when protected interests implicated)
- Mathews v. Eldridge, 424 U.S. 319 (factors to determine what process is due)
- Town of Castle Rock v. Gonzales, 545 U.S. 748 (governmental benefits granted at discretion are not property interests)
- Bundo v. Walled Lake, 395 Mich. 679 (Michigan case recognizing property interest in license upon renewal practice)
- Midwest Teen Ctrs., Inc. v. Roseville, 36 Mich. App. 627 (Mich. Ct. App. decision on license revocation and due process)