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Jana-Rock Construction, Inc. v. City of Syracuse

November 5, 2007

JANA-ROCK CONSTRUCTION, INC., PLAINTIFF,
v.
CITY OF SYRACUSE, DEFENDANT.



The opinion of the court was delivered by: Scullin, Senior Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiff filed a complaint against Defendant City of Syracuse ("City") in New York State Supreme Court on August 6, 2004. Defendant then removed the case to this Court on September 20, 2005, because the complaint contained claims arising under the laws of the United States. See Petition for Removal at ¶¶ 2-3. Plaintiff claims that Defendant's failure to honor its low bid on a city construction contract (1) deprived it of a liberty interest without due process in violation of the New York and United States Constitutions, (2) deprived it of a property interest without due process in violation of the New York and United States Constitutions, and (3) defamed it under New York State tort law. See Amended Complaint at ¶¶ 68, 73-75. Currently before the Court is Defendant's motion to dismiss Plaintiff's action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

II. BACKGROUND

Plaintiff Jana-Rock Construction, Inc. ("Jana-Rock") entered into a contract with Defendant in 2001 to mill asphalt from and repave certain areas of city streets. See id. at ¶¶ 4-5. At the job's conclusion, Defendant refused to pay, claiming that Plaintiff's work was defective. See id. at ¶¶ 8-13. The parties disputed this fact, and Plaintiff apparently filed a law suit to recover portions of the unpaid contract. See id. at ¶ 14. While the suit was pending, in 2004, Defendant let bids for another milling and paving contract. See id. at ¶ 17. Plaintiff claims that Defendant held a pre-bid meeting at which Defendant told all bidders that it was aware of problems with past contractors and that every bidder was to start with a "clean slate." See id. At ¶¶ 26-27. Accordingly, Plaintiff alleges, Defendant informed it that it was to be treated as an "acceptable bidder." See id. at ¶¶ 29 & 32. Ultimately, Plaintiff was the lowest bidder on the 2004 contract; however, Defendant sent Plaintiff a letter, dated May 17, 2004, announcing that it did not consider Plaintiff to be responsible. See id. at ¶ 35. The letter offered a process for Plaintiff to challenge Defendant's determination that it was not a responsible bidder. See id. at ¶44. Plaintiff claims that it mailed a timely response to Defendant but that Defendant ignored it. See id. at ¶¶ 45-46.

After Plaintiff was deemed an irresponsible bidder, certain City employees communicated this fact to the Town of New Hartford, adding that "Jana-Rock is a bad contractor" and "must be watched at all times." See id. at ¶ 55. Defendant also instructed the firm to which it ultimately granted the 2004 contract not to use Plaintiff as a subcontractor. See id. at ¶¶ 57-59.

III. DISCUSSION

A. Rule 12(b)(6) Standard

To survive dismissal under Rule 12(b)(6), "the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient 'to raise a right to relief above the speculative level.'" ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, - U.S. -, 127 S.Ct. 1955, 1965, 167 L.Ed. 2d 929 (2007)) (footnote omitted). When resolving a Rule 12(b)(6) motion, the court must assume that the allegations in the complaint are true and draw all reasonable inferences in the plaintiff's favor. See Cooper v. Pate, 378 U.S. 546, 546 (1964) (citations omitted). Thus, a court's purpose in considering a motion to dismiss is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985) (citation omitted).

B. Plaintiff's Federal Due Process Claims

In its Amended Complaint, Plaintiff alleges that it was "deprived of liberty and property without due process in contravention of the Federal . . . Constitution[ ]." See Amended Complaint at ¶ 68. The Due Process Clause of the Fourteenth Amendment to the United States Constitution provides that no state shall "deprive any person of life, liberty, or property, without due process of law." U.S. Const. amend. XIV, § 1. To prevail on a procedural due process claim, a plaintiff must first show "that he possessed a protected liberty or property interest," and then show "that he was deprived of that interest without due process." Hynes v. Squillace, 143 F.3d 653, 658 (2d Cir. 1998) (citation omitted).

1. Existence of a Property Interest

"To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it." Bd. of Regents of State Coll. v. Roth, 408 U.S. 564, 577 (1972). As such, "a benefit is not a protected entitlement if government officials may grant or deny it in their discretion." Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) (citation omitted). Property interests are not created by the United States Constitution, but by independent sources of law. See Velez v. Levy, 401 F.3d 75, 85 (2d Cir. 2005) (quotation omitted). Often, state law or contract creates a property interest. See id. Therefore, resolution of the issue begins with an examination of the potential benefits that state law provides. See Town of Castle Rock, 545 U.S. at 757.

New York General Municipal Law § 103 states that "all contracts for public work . . . shall be awarded by the appropriate officer, board or agency of a political subdivision or of any district therein . . . to the lowest responsible bidder. . . ." N.Y. Gen. Mun. Law § 103. However, § 103 also provides that the "officer, board or agency may, in his or its discretion, reject all bids and readvertise for new bids. . . ." Id. The New York Court of Appeals has concluded from this discretionary language that "[n]either the low bidder nor any other bidder has a vested property interest in a public works contract." Conduit & Found. Corp. v. Metro. Transp. Auth., 66 N.Y.2d 144, 148-49 (1985) (citations omitted). Several courts in this Circuit have agreed with Conduit & Foundation, holding that a low bid under New York State law is not a property interest under the United States Constitution. See, e.g., ReSource N.E. of Long Island, Inc. v. Town of Babylon, 80 F. Supp. 2d 52, 58 ...


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