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Dollar Loan Center of South Dakota, LLC v. Afdahl

United States District Court, D. South Dakota, Central Division

August 10, 2018

BRET AFDAHL, [1] Defendant.



         Plaintiff Dollar Loan Center of South Dakota, LLC (DLC) brought this suit under 42 U.S.C. § 1983 against Defendant Bret Afdahl (Afdahl), the director of the South Dakota Division of Banking (the Division), alleging Afdahl deprived DLC of procedural due process required under the Fourteenth Amendment when he revoked DLC's money lending licenses. Doc. 1. Afdahl moved to dismiss the action for failure to state a claim, Doc. 8, DLC moved for partial summary judgment, Doc. 11, and Afdahl filed a cross motion for summary judgment, Doc. 19. This Court issued an opinion and order granting DLC's motion for partial summary judgment in part and denying Afdahl's motion to dismiss and cross motion for summary judgment on May 29, 2018. Doc. 37. DLC subsequently filed a motion to reconsider the portion of this Court's May 29 opinion and order discussing the deprivation of DLC's protected property interest as lasting for a 15-day period (or "at least for 15 days"[2] as the Court twice put it) between the issuance of Afdahl's Cease and Desist and License Revocation Order (Order) on September 13, 2017, and the limited stay of that Order, issued on September 28, 2017, and subsequent notice of hearing given on October 3, 2017. Doc. 41. Afdahl then filed an interlocutory appeal of this Court's decision to the Eighth Circuit on the issues of absolute and qualified immunity, Doc. 44, and DLC filed a cross appeal on the same questions presented in its motion to reconsider, Doc. 48. The Eighth Circuit is currently holding the appeal and cross appeal briefing schedule in abeyance until this Court addresses DLC's motion to reconsider. For the reasons stated below, this Court denies DLC's motion to reconsider.

         I. Facts Relevant to this Motion

         This Court's May 29, 2018 opinion and order details the full factual background that gave rise to DLC's § 1983 claim. The facts presented here are those relevant to DLC's current motion to reconsider only.

         The Division conducted a target examination and a full scope examination of DLC in the summer of 2017, and Afdahl subsequently issued his Order on September 13, 2017. Doc. 10-1 at 7-12. The Order instructed DLC to "cease engaging in the business of money lending in South Dakota" and to notify all consumers who were issued loans after June 21, 2017, that the loans were void and uncollectible as to "any principal, fee, interest, or charge pursuant to SDCL 54-4-44." Doc.lO-latll. The Order further required DLC to surrender all of its South Dakota money lender licenses and return them to the Division. Doc. 10-1 at 11. The Order contained a "Findings of Fact" section, a "Conclusions of Law" section, and a notice that "any person aggrieved by this order" could within 30 days file a request for a hearing before the South Dakota Banking Commission. Doc. 10-1 at 8-12. The Division emailed representatives of DLC on September 15, 2017, emphasizing that DLC was no longer a licensed money lender in South Dakota, and again on September 18, 2017, requesting confirmation that DLC was complying with the Order. Doc. 1-7; Doc. 1-8.

         DLC served this current lawsuit on Afdahl on September 25, 2017. Doc. 5. Perhaps then realizing that he had been too hasty in his Order, Afdahl issued a limited stay of the Order on September 28, 2017, which provided that DLC could continue servicing all loans originated prior to November 16, 2016. Doc 10-1 at 14-15. DLC was also to provide certain information to the Division about the unpaid loans originated prior to November 16, 2016, basic identifying information about the loans and borrowers, and monthly reports to the Division showing all loan payments received during the preceding month. Doc. 10-1 at 14-15.

         On October 3, 2017, the Division served DLC with a notice of hearing to be held on October 17, 2017, in front of the Office of Hearing Examiners (OHE). Doc. 10-1 at 1-5: The Notice advised that the purpose of the hearing was "to determine whether Dollar Loan Center has violated the provisions of SDCL Chapter 54-4, and whether or not its money lending license[s] should be revoked and the terms and conditions as contained in the [Order] should be enforced." Doc. 10-1 at 1. Afdahl had statutory authority to issue a cease and desist order and this Court determined that the combined effect of the limited stay on September 28 and the October 3 notice of hearing was to transform the original Order into a cease and desist order. Doc. 37 at 36.

         Rather than availing itself of the hearing to challenge the propriety of Afdahl's actions, DLC on October 5, 2017, requested to continue the hearing, though no specific date was proposed. Doc. 10-6 at 2. Around the same time, DLC's Chief Operations Officer, Edward Anderson, authored a letter to the Division, advising that DLC was remrning its lending licenses to the Division in accordance with Afdahl's Order. Doc. 43-1.[3] The Division received this letter and the licenses for DLC's main Sioux Falls location and Rapid City location on October 6, 2017. Doc. 52-1 at ¶¶ 22-23. DLC also had valid licenses for locations in Aberdeen, Watertown, and a satellite Sioux Falls branch, but had not reopened those locations at the time DLC returned its main Sioux Falls and Rapid City location licenses to the Division. Doc. 43 at ¶ 6. DLC did not return to the Division the valid licenses for the three non-operational branches. Doc. 43 at ¶ 6. The Division has retained possession of the licenses for DLC's main Sioux Falls location and Rapid City location since October 6, 2017. Doc. 52-1 at ¶ 25. All money lending licenses issued to DLC expired on December 31, 2017, and DLC has not filed any renewal applications. Doc. 52-1 at ¶30.

         On October 12, 2017, DLC filed an appeal of Afdahl's Order in the South Dakota Sixth Judicial Circuit Court, arguing that it constituted a final agency action. Doc. 10-2. That appeal was dismissed by the Sixth Judicial Circuit Court, Doc. 52-1 at ¶ 31, and DLC then appealed to the Supreme Court of South Dakota, which has not yet issued a ruling on that appeal, Doc. 52-1 at ¶32.

         In its May 29, 2018 opinion and order, this Court determined that Afdahl violated DLC's constitutionally guaranteed right to procedural due process when he revoked, through his Order, DLC's money lending licenses without providing DLC with a predeprivation hearing. Doc. 37 at 22-37. This Court granted summary judgment to DLC for the 15-day period between the issuance of Afdahl's Order on September 13, 2017, and the issuance of the stay of that Order on September 28, 2017. As explained in footnote 2 above, this Court elsewhere characterized the deprivation as being "for at least 15 days" leaving for trial whether the deprivation was only 15 days or perhaps 20 days (through to the notice of hearing).[4] In doing so, this Court noted that "[w]hen Afdahlvstayed his Order on September 28, 2017, and subsequently on October 3, 2017, gave notice of a hearing, he essentially transformed the Order into a cease and desist order, and [not knowing at the time what DLC subsequently has placed in the record] it appears that DLC remains in possession of its licenses at this time."[5] Doc. 37 at 36.

         II. Analysis A. Standard for a Motion to Reconsider

         DLC moves this Court to reconsider the determination it made regarding the duration of the deprivation of DLC's protected property interest. Doc. 41. Rule 54(b) of the Federal Rules of Civil Procedure instructs that "any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed.R.Civ.P. 54(b); see also Julianello v. K-V Pharm. Co.. 791 F.3d 915, 923 n.3 (8th Cir. 2015) (noting that Rule 54(b), rather than Rule 60(b), is the appropriate rule under which to consider a reconsideration motion when final judgment has not yet entered on any of plaintiff s claims).

         A district court's decision to reconsider a motion for summary judgment is reviewed under the abuse of discretion standard because "[t]he district court has the inherent power to reconsider and modify an interlocutory order any time prior to the entry of judgment." K.C. 1986 Ltd.'P'ship v.ReadeMfg., 472 F.3d 1009, 1017 (8th Cir. 2007) (quoting Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1070 (8th Cir. 1995)). Courts generally should not reopen issues decided in prior stages of the same litigation unless the court is "convinced that [its prior decision] is clearly erroneous and would work a manifest injustice." Agostini v. Felton, 521 U.S. 203, 236 (1997) (alteration in original) (quoting Arizona v. California. 460 U.S. 605, 618 n.8 (1983)).

         B. Claimed ...

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