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JOHN GIL CONST., INC. v. RIVERSO

April 6, 2000

JOHN GIL CONSTRUCTION, INC., PLAINTIFF,
V.
MILO RIVERSO, AN INDIVIDUAL, THE NEW YORK CITY SCHOOL CONSTRUCTION AUTHORITY, NEW YORK CITY OFF-TRACK BETTING CORPORATION, THE DEPARTMENT OF INVESTIGATION FOR THE CITY OF NEW YORK AND JOHN DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: Scheindlin, District Judge.

  OPINION AND ORDER

Plaintiff John Gil Construction, Inc. ("JGC") brings this action, pursuant to 42 U.S.C. § 1983, against defendants Milo Riverso, The New York City School Construction Authority (the "SCA"), New York City Off-Track Betting Corporation ("OTB") and The Department of Investigation for the City of New York ("DOI").*fn1 Plaintiff alleges that defendants violated its constitutional rights to due process and equal protection of the laws in connection with (i) a criminal investigation of plaintiff by OTB and DOI; and (ii) the SCA's suspension of plaintiff's prequalified bidder status pending favorable disposition of the OTB/DOI investigation. Plaintiff also asserts supplemental state law claims for breach of contract and tortious interference with contractual relationships.

On August 2, 1999, plaintiff moved this Court for a temporary restraining order and a preliminary injunction compelling the SCA, among other things, to revoke its suspension of plaintiff's prequalified bidder status. By opinion dated September 23, 1999, I denied plaintiff's request for preliminary relief. See John Gil Const., Inc. v. Riverso, 72 F. Supp.2d 242 (S.D.N.Y. 1999).

Defendants now move, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss plaintiff's third amended complaint for failure to state a claim upon which relief may be granted. For the reasons that follow, defendants' motion is granted in its entirety.

I. Applicable Legal Standard

Dismissal of a complaint for failure to state a claim pursuant to Rule 12(b)(6) is proper only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Harris v. City of N Y, 186 F.3d 243, 247 (2d Cir. 1999). "The task of the court in ruling on a Rule 12(b)(6) motion is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998) (internal quotations omitted). Thus, to properly rule on such a motion, the court must accept as true all material facts alleged in the complaint and draw all reasonable inferences in the nonmovant's favor. See Harris, 186 F.3d at 247. Nevertheless, "[a] complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6)." De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996) (internal quotations omitted).

In deciding a Rule 12(b)(6) motion, the district court must generally limit itself to facts stated in the complaint, documents attached to the complaint as exhibits or documents incorporated in the complaint by reference. See Dangler v. New York City Off Track Betting Corp., 193 F.3d 130, 138 (2d Cir. 1999). However, the Court may also consider matters of public record, see Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 75 (2d Cir. 1998), cert. denied, 525 U.S. 1103, 119 S.Ct. 868, 142 L.Ed.2d 770 (1999), as well as "documents either in plaintiff['s] possession or of which plaintiff[] had knowledge and relied on in bringing suit", Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993). See also Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991) (finding that on motion to dismiss, district courts may consider documents of which plaintiff had actual notice and which were integral to its claim even though those documents were not referred to or incorporated in the complaint).

II. Background

A. Factual Background

Plaintiff JGC is a New York construction company that derives its revenue from government building contracts. Complaint ¶ 4. Defendant the SCA is a public benefit corporation with broad powers to oversee the construction and rehabilitation of New York City's public schools. Id. ¶ 47.*fn3 The SCA has statutory authority to prescreen and prequalify contractors who wish to bid for school construction contracts. Id. ¶ 49 (citing PAL § 1734). The SCA also has authority to revoke a contractor's prequalified bidder status in the event that contractor becomes the subject of a criminal investigation. Id. ¶¶ 50, 105.*fn4

In August 1995, JGC applied and was selected to be an SCA prequalified bidder. Id. ¶ 43. In June 1996, JGC was awarded a contract by another city agency, defendant OTB. Id. ¶ 21. Two years later, in September 1998, OTB and JGC became involved in a billing dispute over payment for services rendered. Id. ¶¶ 35-36. In October 1998, OTB notified JGC that JGC was being investigated by the Inspector General for OTB and defendant DOI. Id. ¶ 38. Although JGC claims that it has never received any information from OTB or DOI regarding the substance of the allegations against it, see id. ¶¶ 1, 164, those allegations apparently involve billing irregularities stemming from JGC's 1996 contract with OTB, see 3/30/99 letter from Kenneth D. Litwack, plaintiff's attorney, to SCA, Ex. 12 to 7/30/99 Affidavit of John Gil ("Gil Aff.").*fn5

In a letter dated February 2, 1999, the SCA gave JGC notice that because the company was under criminal investigation by OTB and DOI, the SCA could, pursuant to its rules, suspend JGC from working for the SCA until there was a favorable disposition of the investigation. Complaint ¶ 51. The letter offered JGC an opportunity to meet with SCA officials to dispute that it was the subject of a criminal investigation by OTB and DOI or to bring mitigating circumstances to the SCA's attention. See 2/2/99 letter from the SCA to John Gil, Ex. 10 to Gil Aff. JGC met with SCA authorities on March 5. Complaint ¶ 52. At the meeting, JGC asked the SCA to postpone any decision regarding JGC's prequalified status, so that JGC could meet with OTB officials. Id. Although the SCA agreed to postpone its decision for several weeks, JGC failed to provide the authority with any additional information regarding the OTB/DOI investigation. See 3/29/99 letter from SCA to Litwack, Ex. 11 to Gil Aff. On June 1, the SCA sent JGC a letter suspending the company from working for the SCA and removing the company from the list of prequalified SCA bidders. Complaint ¶ 59.

B. Procedural Background

On August 2, 1999, JGC commenced the instant action and sought a temporary restraining order and a preliminary injunction compelling the SCA to revoke (i) its suspension of plaintiff's prequalified bidder status; (ii) its suspension of plaintiff's right to work on SCA projects; and (iii) its award to others of two contracts upon which plaintiff alleged it was the lowest bidder.*fn6 While its motion for preliminary relief was pending, plaintiff filed an amended complaint dated August 24 and a second amended complaint dated September 14.

On September 23, I denied plaintiff's motion for preliminary relief. On November 15, plaintiff filed a third amended complaint. Defendants moved to dismiss the third amended complaint on December 17.*fn7

C. Allegations of the Complaint

For purposes of this motion, I construe plaintiff's Complaint as asserting the following six claims for relief.*fn8 Claim one alleges that by suspending JGC's prequalified bidder status, the SCA and Riverso deprived JGC of property and liberty interests in violation of the Due Process Clauses of the United States Constitution and the New York State Constitution.*fn9 Claim two alleges that the actions of the SCA and Riverso also constitute a violation of the federal Equal Protection Clause, because the SCA and Riverso failed to suspend other contractors who were the subjects of pending criminal investigations. Plaintiff asserts that such alleged selective suspension was racially motivated.*fn10

Claim three alleges that section 9600.3(d)(2) of the Guidelines is unconstitutional because it violates both procedural and substantive due process.

Claim four alleges that by conducting a criminal investigation of plaintiff for more than a year, and by failing to inform plaintiff of the nature of the charges against it, OTB and DOI deprived plaintiff of property and liberty interests in violation of the Due Process Clauses of the United States Constitution and the New York State Constitution. Claim five alleges that the actions of OTB and DOI also constitute a violation of the federal Equal Protection Clause because other similarly situated OTB contractors were not targeted for criminal investigation by OTB and DOI.

Claim six includes supplemental state law claims against all defendants for breach of contract and tortious interference with contractual relationships. Pursuant to these six claims, plaintiff seeks more than $200 million in compensatory and punitive damages. Plaintiff also ...


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