Mother Goose Nursery Schools, Inc. v. Sendak

770 F.2d 668
Court of Appeals for the Seventh Circuit·Decided August 14, 1985·No. Nos. 84-2318, 84-2921·Published·Cited by 34 cases

Opinion

BAUER, Circuit Judge.

Mother Goose Nursery Schools, Inc. (Mother Goose), an Indiana Not-for-Profit Corporation sued the then Attorney General of Indiana, Theodore L. Sendak,1 under 42 U.S.C. § 1983 seeking damages for Sendak’s refusal to approve a proposed contract for child care services between Mother Goose and the Indiana State Department of Public Welfare. The district court granted the plaintiff’s motion for summary judgment on December 16, 1980. Mother Goose Nursery Schools, Inc. v. Sendak, 502 F.Supp. 1319 (N.D.Ind.1980). The Court found Sendak personally liable for violating Mother Goose’s constitutional rights but deferred a decision on damages so that the court could take evidence on that issue. On June 29, 1984, the district court issued the final judgment awarding Mother Goose $28,248.75. Mother Goose Nursery Schools, Inc. v. Sendak, 591 F.Supp. 897 (N.D.Ind.1984). On July 31, 1984, Mother Goose filed its motion for fees and costs with the district court. On October 23, 1984, the court awarded Mother Goose $13,352.00 for attorney fees and $401.39 for costs.2 We reverse the judgments of the district court on the grounds that the Attorney General in this case is absolutely immune from liability for damages under Section 1983.

I

Mother Goose has been licensed as a day care nursery in Indiana since 1954. Beginning in November 1975, Mother Goose entered into three yearly contracts with the Indiana Department of Public Welfare for the provision of day care services and transportation to children of parents participating in the Aid to Families with Dependent Children program. 42 U.S.C. ch. 7, subch. IV, pt. A. The last of these contracts expired on June 30, 1978. At this time another proposed contract between plaintiff and the Indiana State Department of Public Welfare for the period from July 1, 1978, to June 30, 1979, was submitted to Sendak, as the Indiana Attorney General, for approval.

This dispute arose when Sendak refused to approve the 1978 contract between Mother Goose and the Department. On September 26, 1978, Sendak wrote a letter to the Governor of Indiana in which he stated that he refused to approve the contract because Anthony Cifaldi, President, Administrator, and a director of Mother Goose, had twice been convicted of making false statements on his income tax returns. Mother Goose filed suit in the district court on November 21, 1978, under 42 U.S.C. § 1983, alleging that Sendak’s refusal to approve the contract was without sufficient legal reason and thereby deprived him of his property without due process of law.

Several Indiana statutes and regulations are directly at issue in this case. First and most critically, “[a]ll contracts and leases [670] [to which the State is party] shall be approved as to form and legality by the attorney general,” Ind.Code 4-18-2-14, and “[n]o contract with a state agency is legally binding until such approval has been secured.” Citizen Energy Coalition of Indiana, Inc. v. Sendak, 459 F.Supp. 248, 256 (S.D.Ind.1978), aff'd, 594 F.2d 1158 (7th Cir.1979). At the time of the Attorney General’s rejection of the Mother Goose contract, the Department of Public Welfare had issued a regulation pursuant to its rule-making authority, Ind.Code 12-1-2-3, which provided in part that

(a) Each member of the staff [of an approved provider] shall be a competent and reliable person of good moral character and reputation who is mentally, physically and emotionally able to assume assigned responsibility for group care of children, or for the operation and maintenance of the child-care institution.

Ind.Admin.Code (17-3-2-12)-B8 (currently codified at 470 Ind.Admin.Code 3-4-11 (1984)).

The district court, on Mother Goose’s motion for summary judgment, ruled that the Attorney General knowingly acted “beyond the scope of his statutory authority and outside of the law in not accepting the contract [in that] ‘[h]e has a mandatory duty to approve all contracts which are lawful as to form and content.’ ” 502 F.Supp. at 1323. The court reasoned that the Attorney General had admitted in his deposition that he could find no facial defect in the contract, and that his only consideration in disapproving the contract was Cifaldi’s prior tax conviction, which Sendak considered rendered Cifaldi lacking good moral character under Section (17 — 3 — 2—12)— B8 of the Administrative Code. Id. at 1321. The district court held that the Attorney General’s knowledge that he was acting outside the scope of his duties removed any claim to qualified immunity that he may have had under Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982), and awarded Mother Goose compensatory damages of $28,-248.75. 591 F.Supp. at 909. The district court also held that the action against the Attorney General was not barred by the Eleventh Amendment.

On appeal, Sendak claims that the district court committed four errors when it found him personally liable to Mother Goose: (1) that the district court erred in imposing personal liability on Sendak for allegedly misinterpreting his authority as Attorney General under an unconstrued state statute; (2) that the court erred in rejecting his defense of immunity; (3) that the Attorney General was entitled to immunity under the Eleventh Amendment; and (4) that the Mother Goose’s claim was not actionable under 42 U.S.C. § 1983.

II

Sendak’s first and third arguments raise essentially the same claim that Sendak, acting in his official capacity as the Attorney General of Indiana, cannot be held personally liable for his actions and that consequently this action is barred by the Eleventh Amendment to the United States Constitution. The Eleventh Amendment provides: “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” However much these fairly simple words remain the subject of continuing debate, see, e.g., Atascadero State Hospital v. Scanlon, — U.S.-, 105 S.Ct. 3142, 87 L.Ed.2d 171 (1985), one construction of the amendment is clear: “the Eleventh Amendment provides no shield for a state official confronted by a claim that he had deprived another of a federal right under the color of state law.” Schueur v. Rhodes, 416 U.S. 232, 237, 94 S.Ct. 1683, 1687, 40 L.Ed.2d 90 (1974). Sendak, therefore, can be held personally liable for his actions as Attorney General, provided that no other bar to liability exists.

III

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Mother Goose Nursery Schools, Inc. v. Sendak, 770 F.2d 668 (7th Cir. 1985).

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