                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 99-2064
                                   ___________

Leland Stauch; Audrey Stauch;          *
Matthew Stauch,                        *
                                       *
            Plaintiffs/Appellees,      *
                                       * Appeal from the United States
       v.                              * District Court for the
                                       * District of Minnesota.
City of Columbia Heights;              *
                                       *
            Defendants/Appellants,     *
                                       *
Patrick Hentges; Charles Kewatt;       *
Lowell Demars; Evelyn Nygaard;         *
Gary Gorman; Matthew Field,            *
                                       *
            Defendants.                *
                                  ___________

                             Submitted: February 14, 2000

                                 Filed: May 8, 2000
                                  ___________

Before BEAM and JOHN R. GIBSON, Circuit Judges, and PRATT,1 District Judge.
                            ___________

BEAM, Circuit Judge.



      1
        The Honorable Robert W. Pratt, United States District Judge for the Southern
District of Iowa, sitting by designation.
      The City of Columbia Heights, Minnesota (the City) appeals the district court's2
denial of its motion for judgment as a matter of law or in the alternative for a new trial
following an adverse jury verdict. We affirm.


I.    BACKGROUND


      Leland and Audrey Stauch and their son, Matthew Stauch (the Stauches) owned
and operated thirty-eight rental units in Columbia Heights. In 1992, twelve of these
units failed to pass an inspection performed by the City. The City allowed the Stauches
additional time to bring the units into compliance. Meanwhile, in November 1992, the
Stauches received renewal forms for the rental licenses on their units for the 1993 year.
The Stauches completed and returned these forms, along with the required fees. In
May 1993, the City again inspected the Stauches' property and determined that none
of the units passed inspection. Those units that had also failed the 1992 inspection
were posted with notices stating that they were unlicensed. The tenants living in those
units were told to vacate. In July 1993, similar action was taken with the remaining
units. The City's official position was that a property must pass inspection before a
rental license could be renewed.3




      2
      The Honorable John R. Tunheim, United States District Judge for the District
of Minnesota.
      3
        In 1994, the City purchased many of these units from the Stauches. The
Stauches allege that the City's actions left them no choice but to sell their units to the
City at a price below their fair market value.

                                           -2-
      The City then charged Leland and Audrey Stauch with the misdemeanor of
operating rental units without a license in violation of the City of Columbia Heights
Code of Ordinances (the Code). They were convicted. The Minnesota Court of
Appeals later overturned the convictions finding that the Stauches had complied with
the Code. See State v. Stauch, No. C8-94-189, 1994 WL 454747 (Minn. Ct. App.
Aug. 23, 1994). The court rejected the City's argument that a property must pass
inspection before a rental license could be renewed. It found that the language in
Chapter 5A of the Code dealing with licensing procedures for rental properties clearly
required that, although a property must pass inspection before it could be initially
licensed, license renewal was automatic upon a showing of three conditions: (1) return
of the renewal form; (2) payment of the registration fee; (3) and inspection of the unit
within the previous two years. Id. at *1. The court specifically noted that the Code did
not state that a failed inspection invalidates license renewal.4 Id. at *2.




      4
          The relevant section of the Code, entitled "License Renewal," provides:

       Renewal of the license as required annually by this Code may be made
      by filling out the required renewal form furnished by the Building Official
      to the owner, operator or agent of a rental dwelling and by mailing the
      form together with the required registration fee to the building official.
      Such renewal or registration may be made only . . . where there has been
      an inspection within the last two years.

Columbia Heights, Minn., Code of Ordinances, ordinance 1176, ch. 5A, art. IV, § 7,
5A.407(1).



                                           -3-
      The Stauches then filed this section 1983 suit alleging that the City and
individual city officials (defendants) had violated their due process rights by failing to
provide notice and opportunity for a hearing before posting their properties as
unlicensed and requiring their tenants to vacate. The Stauches also asserted an equal
protection claim against defendants claiming that the discriminatory treatment was due
in part to the fact that they rented to a high percentage of minorities. The district court
granted summary judgment on the due process claims against the individual city
officials on the basis of qualified immunity. The action was then tried to a jury. The
jury found in favor of the defendants on the equal protection claim but found in favor
of the Stauches on the due process claim, and awarded $120,000 in damages. The
district court denied the City's post-trial motions for judgment as a matter of law or in
the alternative for a new trial. The City appeals.


II.   DISCUSSION


      We review the district court's denial of a motion for judgment as a matter of law
de novo using the same standards as the district court. See Smith v. World Ins. Co.,
38 F.3d 1456, 1460 (8th Cir. 1994). The denial of a motion for judgment as a matter
of law may be reversed only when the evidence viewed in the light most favorable to
the nonmoving party points one way and is susceptible of no reasonable inferences
supporting the position of the nonmoving party. See Angarita v. St. Louis County, 981
F.2d 1537, 1544 (8th Cir. 1992). A review of the denial of a motion for new trial is
even more limited in that it is within the sound discretion of the trial court and will be
reversed only upon a showing that the trial court abused its discretion. See id.



                                           -4-
      In a section 1983 suit against a municipality, we must determine two separate
issues: "(1) whether plaintiff's harm was caused by a constitutional violation, and (2)
if so, whether the city is responsible for that violation." Collins v. City of Harker
Heights, 503 U.S. 115, 120 (1992). We examine each issue in turn.


      A.      The Constitutional Violation


      The Stauches assert that the City violated their procedural due process rights as
guaranteed by the Fourteenth Amendment because it failed to follow Code
requirements requiring notice and an opportunity to be heard before determining that
the units were unlicensed and posting them as such. The possession of a protected life,
liberty, or property interest is a condition precedent to invoking the government's
obligation to provide due process of law. See Movers Warehouse Inc. v. City of Little
Canada, 71 F.3d 716, 718 (8th Cir. 1995). Thus, we must first determine whether the
Stauches possessed a protectible property interest in the renewal of their rental licenses
sufficient to trigger federal due process guarantees.


      Property interests are not created by the Constitution but rather stem from an
independent source such as state law. See id. The property interest claimed by the
Stauches derives from the licensing scheme set forth in the Code. See id. at 718 n.3
(municipal ordinance can be a form of state law creating a protected property interest).
To establish a property interest in the renewal of a license, the Stauches must show
more than a unilateral expectation of it. See id. at 718. They must possess a legitimate
claim of entitlement to it. See id. One manner in which state law can create a property



                                           -5-
interest is by establishing procedural requirements that impose substantive limitations
on the exercise of official discretion. See id. at 719.


      The City argues that the Stauches possessed no such property interest because
they were not entitled to license renewal under the Code if their units did not pass
inspection. The district court, based on the Minnesota Court of Appeals' interpretation
of the license renewal requirements, rejected this reading of the Code. It instructed the
jury that the Stauches had a protected property interest if: (1) they completed an
application form; (2) paid the registration fee; and (3) the property had been inspected
within the previous two years. 5




      5
        As a threshold matter, the City asserts that the district court improperly applied
collateral estoppel by relying on the Minnesota Court of Appeals decision in instructing
the jury on this issue. The district court rejected this argument stating in its post-trial
order:

      The Court's instruction did not assume any facts found by the jury or
      construed by the Minnesota Court of Appeals in the Stauch's criminal
      matter to be proved. Furthermore, the Court did not apply the Minnesota
      Court of Appeals' legal conclusion that the Stauchs' duplexes were
      licensed when the City of Columbia Heights posted them. Rather, the
      Court found the opinion of the Minnesota Court of Appeals to be
      persuasive authority from a state court regarding an issue of state law
      interpretation, and applied the precedent established therein.

Addendum to Appellant's Brief at 4. We agree with the district court's assessment of
the matter.


                                           -6-
      We have examined the relevant provisions of the Code, and find no error in the
district court's interpretation of the Code's requirements for rental license renewal.6
Furthermore, we find that the licensing scheme which limits the City's discretion to
deny renewal, creates a protected property interest. An applicant seeking renewal of
a rental license in Columbia Heights need only meet three objective criteria to qualify.
See supra note 4. There is no indication in the Code that upon satisfaction with these
criteria, the City may still use its discretion to deny renewal. See, e.g., Movers
Warehouse, 71 F.3d at 719 (finding no property interest when ordinance regulating
renewal of bingo hall license granted city unfettered discretion to withhold approval of
application for license renewal); Littlefield v. City of Afton, 785 F.2d 596, 601 (8th Cir.
1986) (discussing when an applicant's interests in a license which is denied rises to a
constitutionally protected interest), overruled on other grounds, Chesterfield Dev. Corp.
v. City of Chesterfield, 963 F.2d 1102, 1104 n.2 (8th Cir. 1992).


      Thus, we find that the Stauches had a protected property interest in the renewal
of their rental licenses. Next, we consider whether they were afforded due process in
connection with the City's deprivation of that interest. See Zinermon v. Burch, 494

      6
        We reject the City's assertion that the Stauches had no reasonable expectation
of license renewal because the record establishes that they were aware of the City's
interpretation of the Code. We also reject the City's claim that the Minnesota district
court's decision (overturned by the Minnesota Court of Appeals) shows that the
Stauches had no reasonable expectation of license renewal. Finally, we also reject the
City's argument that the district court erred in allowing the Stauches to admit only a
portion of Chapter 5 of the Code as evidence because it lacked sufficient foundation
and was prejudicial. The City contends that the remainder of Chapter 5 indicates that
a property had to pass inspection before license renewal. Nothing prevented the City
from offering the rest of Chapter 5 itself.


                                           -7-
U.S. 113, 125 (1990) ("the deprivation by state action of a constitutionally protected
interest . . . is not in itself unconstitutional; what is unconstitutional is the deprivation
of such an interest without due process of law") (emphasis in original).


       An essential principle of due process is that a deprivation of life, liberty, or
property be preceded by notice and opportunity for hearing that is appropriate to the
nature of the case. See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542
(1985). See also Logan v. Zimmerman Brush Co., 455 U.S. 422, 434 (1982) ("To put
it as plainly as possible, the State may not finally destroy a property interest without
first giving the putative owner an opportunity to present his claim of entitlement.").
The right to notice and an opportunity to be heard "'must be granted at a meaningful
time and in a meaningful manner.'" Fuentes v. Shevin, 407 U.S. 67, 80 (1972) (quoting
Armstrong v. Manzo, 380 U.S. 545, 552 (1965)).


       The Stauches assert that they were denied notice and opportunity for a hearing
by the City even though the Code required it. First, they point to the fact that the Code
provides for notice and a public hearing on any proposed license revocation or
suspension. We find the City's actions cannot be characterized as a "revocation" or
"suspension" of the licenses because those terms imply "the withdrawal of an existing
entitlement." Mover's Warehouse, 71 F.3d at 719. Here, the City's actions can better
be characterized as a refusal to reissue or extend the life of an existing license rather
than a withdrawal.7 Although the Stauches may not have been entitled to the


       7
       The Code also distinguishes between revocation/suspension and renewal, as
the provision entitled "Suspension or Revocation" provides in relevant part:


                                            -8-
revocation and suspension procedures in the Code, we nonetheless think that the City
was required to provide the Stauches with some form of notice and opportunity for a
hearing before determining they were no longer licensed.


          At trial, the City argued that adequate process was provided in the form of
compliance orders which informed the Stauches of building violations detected during
inspections and their duty to correct them. According to the City, these compliance
orders, as required by the Code, also informed the Stauches of their right to appeal.8


      A license issued or renewed under this section may be revoked or suspended
      upon a finding of noncompliance with the provisions of this Chapter.

Columbia Heights, Minn., Code of Ordinances, ordinance 1176, ch. 5A, art. IV, § 8,
5A.408(1).
      8
          The Code provision dealing with compliance orders provides in relevant part:

      Whenever the Building Official determines that any dwelling, dwelling
      unit or the premises surrounding any of these fails to meet the provisions
      of this Ordinance, he/she may issue a Compliance Order setting forth the
      violations of the Ordinance and ordering the owner, occupant, operator
      or agent to correct such violations. The compliance order shall:

               (a)    Be in writing;
               (b)    Describe the location and nature of the violations of
                      this Code;
               (c)    Establish a reasonable time not greater than six
                      months for the correction of such violation and advise
                      the person to whom the notice is directed of the right
                      to appeal.

Columbia Heights, Minn., Code of Ordinances, ordinance 1176, ch. 5A, art. III, § 3,


                                            -9-
Furthermore, the City argues that the Stauches: (1) were orally advised of such a right;
(2) were familiar with the appeals process and that, in fact, Leland Stauch had attended
the appeals of other landlords; and (3) had met informally with the City Manager,
Patrick Hentges, regarding the compliance orders. In short, the City argues that the
Stauches knew of their opportunity to appeal the compliance orders but chose not to
do so.


         The Stauches concede that the Code's procedure for appealing compliance orders
provides adequate due process, but they claim the City did not follow the Code in their
case. Specifically, the Stauches' argument at trial was that although they knew they
could appeal the repairs required by the compliance orders, they were not aware nor
informed, that failure to appeal the orders would result in a determination that the units
were also unlicensed.


         Although, the question of whether the procedural safeguards provided for in the
Code are adequate to satisfy due process is a question of law for the court to determine,
whether the City indeed provided the Stauches with such procedure is a question of
fact for the jury. See Midnight Sessions, Ltd. v. City of Philadelphia, 945 F.2d 667,
682 (3d Cir. 1991). The district court instructed the jury "as a matter of law" that the
Stauches were provided an opportunity for a hearing "if the City either notified the
plaintiff of the right to a hearing under City ordinance, or the plaintiff actually knew
that he or she had the right to such a hearing and the plaintiff nonetheless failed to
request a hearing." Trial Transcript, Vol. 12 at 1978. Clearly, the jury chose to credit

5A.303(1).


                                           -10-
the Stauches' testimony on this point. In light of the evidence presented at trial, we are
unable to find that the facts, viewed in the light most favorable to the Stauches, are
susceptible of no reasonable inference supporting the Stauches' position.


       Thus, we find the Stauches were deprived of a protected property interest in the
renewal of their rental licenses without due process. Having determined that the
Stauches suffered a constitutional violation, we next examine whether the City can be
held liable for that violation.


       B.     The City's Liability


       A municipality "is not vicariously liable under § 1983 for the constitutional torts
of its agents: It is only liable when it can be fairly said that the city itself is the
wrongdoer." Collins, 503 U.S. at 122. To impose liability on the City, the Stauches
must prove that a municipal custom or policy caused their injury. See Angarita, 981
F.2d at 1546.


        The City argues that the Stauches cannot prove that a municipal policy or
custom caused their injury. Specifically, it asserts that the Stauches' allegation that city
officials failed to follow the procedures set forth in the Code for license renewal is
tantamount to saying that the officials acted contrary to City policy. We disagree. The
City argued at trial and in its brief on appeal that the Stauches could not claim a
protected property interest in license renewal because they knew that the City's practice
was to require property to pass inspection prior to renewal. See Appellant's Brief at



                                           -11-
30. The City cannot simultaneously argue that it required a property to pass inspection
prior to license renewal but yet characterize the actions of its officials in implementing
this requirement as being "contrary to City policy."


        Nor can we accept the City's argument that its actions did not constitute
municipal policy because they were based upon advice obtained from a private
attorney. Specifically, the City argues that the posting of the Stauches' property came
at the recommendation of a private attorney based upon his interpretation of the Code,
and that such an individual is not an appropriate policy-maker for purposes of imputing
section 1983 liability to the City. We reject the City's attempts to paint the attorney as
the responsible party in this situation. The City does not assert that the attorney
directed the posting of the Stauches' units or even had the authority to do so but simply
that he provided the "legal analysis for the city to make a sound decision." Appellant's
Brief at 23. We do not think section 1983 liability can be so easily circumvented.


       The City also argues that the district court erred in refusing to instruct the jury
that a finding of "reckless disregard" or "deliberate indifference" was required to
impose liability on the City for a procedural due process violation. When reviewing a
district court's jury instructions, we reverse only for an abuse of discretion. See
Thomlison v. City of Omaha, 63 F.3d 786, 790-91 (8th Cir. 1995). "'In considering the
failure of a district court to give a requested instruction, the omission is error only if the
requested instruction is correct, not adequately covered by the charge given, and
involves a point so important that failure to give the instruction seriously impaired the
party's ability to present an effective case."' Id. (quoting Wood v. President & Trustees



                                            -12-
of Spring Hill College, 978 F.2d 1214, 1221 (11th Cir. 1992)). We have reviewed the
jury instructions as well as the cases cited by the City and find no reversible error.


      Finally, the City argues the Stauches have no cognizable procedural due process
claim because adequate post-deprivation remedies were available under state law. The
existence of state post-deprivation remedies has been deemed to satisfy procedural due
process in situations where the alleged constitutional deprivation was caused by
random and unauthorized action. See Hudson v. Palmer, 468 U.S. 517, 532-33 (1984);
Zinermon, 494 U.S. at 128-29. The present action does not fall within that paradigm
of cases. The actions taken by the City were neither random nor unauthorized and it
was certainly feasible for the City to have provided the Stauches with an opportunity
to appeal the determination that their units were unlicensed.


      III. CONCLUSION


      For the foregoing reasons, the decision of the district court is affirmed.


      A true copy.


             Attest:


                 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                          -13-
