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QUADROZZI CONCRETE CORP. v. CITY OF NEW YORK

September 30, 2004.

QUADROZZI CONCRETE CORP., Plaintiff,
v.
CITY OF NEW YORK, NEW YORK CITY DEPARTMENT OF ENVIRONMENTAL PROTECTION, RUDOLPH W. GIULIANI, RANDY MASTRO, JOEL A. MIELE, SR., STUART M. ERDFARB and MICHAEL BEST, Defendants.



The opinion of the court was delivered by: LORETTA PRESKA, District Judge

OPINION AND ORDER

Plaintiff Quadrozzi Concrete Corp. ("Plaintiff" or "Quadrozzi") commenced this action by filing a complaint (the "Complaint") pursuant to 42 U.S.C. §§ 1983 and 1988, and Article 1, Section 11 of the New York State Constitution. Plaintiff seeks to recover compensatory and punitive damages from defendants the City of New York (the "City"), the New York City Department of Environmental Protection ("DEP"),*fn1 Rudolph W. Guiliani ("Giuliani"), Randy Mastro ("Mastro"), Joel A. Miele, Sr. ("Miele"), Stuart M. Erdfarb ("Erdfarb"), and Michael Best ("Best") (collectively, the "Defendants") for their alleged deprivation of Plaintiff's constitutional right to equal protection of the laws arising from the alleged de facto debarment of Quadrozzi since as early as 1994. Plaintiff also seeks to enjoin the Defendants from considering certain factors, including litigation history, criminal indictment and conviction and noncompliance with a subpoena, in the future when reviewing any Quadrozzi bid or request to supply concrete to a City contractor.

By notice of motion dated August 1, 2003, Defendants move to dismiss the Complaint pursuant to Fed.R. Civ. P. 12(b) (6) based upon the grounds that Plaintiff's claims are, inter alia, barred by res judicata and/or collateral estoppel.

  I. Legal Standards

  In deciding a motion to dismiss under Rule 12(b) (6), a complaint must be viewed in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 237 (1974); Yoder v. Orthomolecular Nutrition Inst., Inc., 751 F.2d 555, 562 (2d Cir. 1985). All well-pleaded factual allegations of a complaint must be accepted as true. City of Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 493 (1986); Mireee v. DeKalb County, 433 U.S. 25, 27 n. 2 (1977) (referring to "well-pleaded allegations"); Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993). "The complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (quoting Cortec Indus., Inc. v. Sum Holding L.P., 94 F.2d 42, 47 (2d Cir. 1991)). In order to avoid dismissal, a plaintiff must do more than plea mere "conclusory allegations or legal conclusions masquerading as factual conclusions." Gephardt v. Allspect, Inc., 96 F. Supp. 2d 331, 333 (S.D.N.Y. 2000) (quoting 2 James Wm. Moore, Moore's Federal Practice P 12.34[a] [b] (3d ed. 1997)). Dismissal is proper only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); accord Cohen v. Koenig, 25 F.3d 1168 (2d Cir. 1994).

  II. Background

  Except where noted, the following facts are drawn from the Complaint, documents incorporated in it by reference or integral to the Complaint, and matters of public record. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002) (court may consider documents incorporated by reference or integral to the complaint without converting the motion into one for summary judgment); Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 75 (2d Cir. 1998) (court may consider matters of public record).

  Founded by John Quadrozzi, Quadrozzi is a concrete company in the City of New York. (Compl. ¶ 21.) The DEP is the largest purchaser of concrete among the many City agencies, routinely used Quadrozzi for jobs. (Compl. ¶ 23.) In 1983, Guiliani was appointed United States Attorney for the Southern District of New York. (Compl. ¶ 26.) In this role, Guiliani obtained a series of indictments in cases against numerous members of various New York City crime families. (Compl. ¶¶ 30-35.) Mastro was appointed an Assistant United States Attorney for the Southern District of New York in 1984 and served as a key assistant to Guiliani in pursuit of these indictments. (Compl. ¶¶ 37-38.) In 1990, Guiliani was elected Mayor of the City of New York and in 1994, appointed Mastro as his Chief of Staff. (Compl. ¶ 36.) On or about June 11, 1992, John Quadrozzi was indicted for conspiracy to make illegal payments to union officials and in 1993, Mr. Quadrozzi pleaded guilty to charges of contempt for violating the consent order in which Mr. Quadrozzi had promised to refrain from associating with members of organized crime and conspiracy to violate the federal labor laws. (Compl. ¶¶ 45, 51.) The indictment received widespread publicity, which Plaintiff alleges "acutely embarrassed Guiliani and Mastro . . . [, who] believed John Quadrozzi had betrayed them, and decided to punish Mr. Quadrozzi by making sure his companies never received another major City contract." (Compl. ¶¶ 52, 54.) As a result of the guilty plea, the United States Department of Housing and Urban Development debarred Plaintiff from acting as a supplier to the agency, and the United States Environmental Protection Agency suspended Plaintiff from acting as a supplier to that agency. (Compl. ¶ 53.) Plaintiff alleges that Guiliani and Mastro devised a scheme to prevent Plaintiff from obtaining City contracts by directing the Office of Construction to issue a directive to various city agencies to discontinue using Quadrozzi. (Compl. ¶¶ 56-57.) This debarment continued even after the federal debarment and suspension of Plaintiff were lifted in 1998. (Compl. ¶ 61.)

  In August 2001, Plaintiff filed an Article 78 petition in the Supreme Court, Queens County, Index No. 22100/01. In its petition, Plaintiff sough a judgment, inter alia, (i) annulling the determination of respondent DEP dated April 24, 2001 which disapproved Quadrozzi as a concrete supplier to a prime contractor, Silverite Construction Corp. (the "Newton Creek denial"); (ii) for "declaratory relief to end the unlawful debarment that has been imposed against Quadrozzi . . ., in blatant violation of the applicable statutes and regulations governing the bidding process and in contemptuous disregard of Quadrozzi's constitutional rights"; and (iii) enjoining respondents from considering prior civil litigation, criminal indictment and conviction of Quadrozzi's principal and noncompliance with a subpoena in making any future determinations when considering a bid by Quadrozzi or a request to supply concrete to a successful bidder.

  In response to Quadrozzi's petition, the respondents*fn2 filed a Verified Answer, a supporting affidavit and Memorandum of Law arguing that DEP had a contractual right to approve or disapprove subcontractors and suppliers and the City's Procurement Policy Board Rules ("PPB Rules")*fn3 cited by Quadrozzi were inapplicable in the case.

  By a decision dated July 2, 2003 (the "Opinion"), Justice Peter J. O'Donoghue of the Supreme Court of New York, Queens County, denied Quadrozzi's Article 78 petition, as well as Quadrozzi's request for declaratory and injunctive relief. Judge O'Donoghue found that Quadrozzi, as a prospective supplier of concrete to the prime contractor, did not fall within the regulations cited by Quadrozzi and that DEP was not required to follow those regulations. (Opinion at 8-10.) Judge O'Donoghue held that Quadrozzi's de facto debarrment claim concerning 1994, 1997 and 1999 determinations was time-barred by the four-month statute of limitations applicable to Article 78 proceedings, (Opinion at 10), and that Plaintiff's challenge to the Newton Creek denial was meritless because DEP's rejection of Quadrozzi had a rational basis in the law and the record, (Opinion at 13-14.)

  Although Plaintiff's equal protection claim was based upon information available to Quadrozzi at the time it commenced the Article 78 proceeding, it did not assert that claim in the petition, but rather waited until it served its Memorandum of Law in reply to the City's answering papers. Quadrozzi's counsel admitted that he made an intentional tactical decision to refrain from raising the equal protection claim in the first instance because he wanted to know how the court would rule on his motion for discovery. (Declaration of Elaine Windholz, dated August 1, 2003 ("Windholz Decl."), Ex. F.) Justice O'Donoghue declined to rule on the equal protection claim because it was outside the scope of the petition and denied Quadrozzi's motion for leave to conduct discovery because no compelling need had been demonstrated. (Windholz Decl., Ex. G.) The Opinion was affirmed by the Appellate Division in a decision dated March 22, 2004. In the Matter of Quadrozzi Concrete Corp. v. Miele, 774 N.Y.S.2d 755 (2d Dep't 2004).

  In the instant action, Plaintiff alleges three claims: (1) that the PPB Rules create an irrational classification in violation the Equal Protection Clause as applied to Plaintiff because Plaintiff, as a subcontractor, has been subject to a de facto lifetime debarment while the PPB Rules limit the debarment of persons contracting directly with the City or its agencies to a maximum of five years (Compl. ¶¶ 92-99); (2) that the Defendants' "indefinite and apparently permanent blacklisting" of Plaintiff is in violation of the Equal Protection Clause because Plaintiff has been treated as a "Class of One" (Compl. ¶¶ ...


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