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Artec Construction and Development Corp. v. New York City Department of Housing Preservation

United States District Court, S.D. New York

February 27, 2017



          KATHERINE POLK FAILLA, District Judge

         Plaintiff Artec Construction and Development Corp. sues Defendants New York City Department of Housing Preservation and Development (“HPD”) and New York City Department of Investigation (“DOI”), pursuant to 42 U.S.C. § 1983, for Defendants' alleged violations of the Equal Protection Clause of the Fourteenth Amendment. Defendants move to dismiss the Amended Complaint (the “FAC”) under Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiff has failed plausibly to plead a constitutional violation or municipal liability for any such violation. For the reasons set forth in this Opinion, Defendants' motion to dismiss is denied without prejudice to refile in light of Plaintiff's proposed amendment to the FAC.


         A. Factual Background

         Plaintiff, a New Jersey corporation, is a general contractor that builds affordable housing in New York City. (FAC ¶ 1). Plaintiff accomplishes this through contracts that are negotiated with private developers but administered by HPD, an administrative agency of the City of New York (the “City”). (Id. at ¶¶ 1, 4). DOI, another City administrative agency, is tasked in this context with investigating potential violations of certain wage laws (the “Prevailing Wage Laws”) applicable to general- and sub-contractors on HPD-administered construction projects (“HPD-related projects”). (Id. at ¶¶ 1, 5).

         Plaintiff was the general contractor on four HPD-related projects (the “Projects”). (FAC ¶ 8). In or about May 2011, Plaintiff claims, a prominent trade union “commenced an aggressive public information campaign against [Plaintiff] alleging that [Plaintiff] and its subcontractors failed to pay the area standard wages to their employees and violated the Prevailing Wage Laws.” (Id. at ¶ 10). The campaign communicated its message “to government officials, power players and others involved in the New York City affordable housing industry.” (Id. at ¶ 11). It also targeted HPD, accusing the agency through various mediums of “failing to … withhold contract payments as required by the law, failing to closely monitor [Plaintiff] and its subcontractors to [e]nsure compliance with the Prevailing Wage Laws, and essentially falling down on the job.” (Id. at ¶ 12). For example, the union took out a newspaper advertisement that labeled Plaintiff a “bad” contractor and bore headlines such as “HPD is Building a Web of Bad Contractors” and “HPD: Why Are You Perpetuating These Irresponsible Contractors?” (Id. at ¶ 13).

         Plaintiff alleges that as a result of being implicated in Plaintiff's bad conduct, HPD “had an axe to grind with [Plaintiff].” (FAC ¶ 15). “Almost immediately after the [union] began its campaign, Doug Apple, the then-Deputy Commissioner of HPD, without asking any questions or providing any information, notified … [Plaintiff's] owner, that [Plaintiff] could not take on any further HPD-related projects.” (Id.). Defendants also began investigating Plaintiff and its subcontractors on the Projects for Prevailing Wage Law violations. (Id. at ¶ 16).

         In or about March 2013, DOI presented Plaintiff with Defendants' findings that Plaintiff and its subcontractors had committed substantial violations of the Prevailing Wage Laws and that Plaintiff, as the general contractor for the Projects, was liable for millions of dollars' worth of back wages (the “DOI Wage Figure”). (FAC ¶ 18). DOI never presented Plaintiff with specific allegations or evidence, and never commenced an administrative proceeding against Plaintiff. (Id. at ¶¶ 19-20). Instead, “Defendants simply withheld substantial sums of money due to [Plaintiff] in connection with its work on the Projects, placed [Plaintiff] on Enhanced Review status, and refused to allow [Plaintiff] to work on any further HPD-related projects.” (Id. at ¶ 21).

         Between 2011 and 2015, Plaintiff reached out to Defendants in order to obtain substantiation for the DOI Wage Figure and to explore ways that Plaintiff could resume working on HPD-related projects, but Defendants rebuffed Plaintiff's efforts. (FAC ¶¶ 22-23). HPD indicated that DOI approval was necessary before Plaintiff could work on future HPD-related projects. (Id. at ¶ 24). DOI, in turn, told Plaintiff that if it “ever wanted to perform work on City-related construction projects again, ” Plaintiff had to agree to:

(i) pay the [DOI Wage Figures] in full with no questions asked,
(ii) subject [Plaintiff's owner] to a “Queen for a Day” proffer session with DOI and the New York City District Attorney's Office and answer any and all questions posed by DOI regarding [Plaintiff's] business operations and knowledge of any alleged wrongdoing in the industry whether related or unrelated to [Plaintiff], and
(iii) commit to an ongoing and indeterminate relationship of cooperation with DOI to assist DOI with any of its present and/or future investigations in the construction industry, including, but not limited to, the requirement that [Plaintiff's owner] become a DOI informant, wear a wire at DOI's command, attend meetings with DOI whenever DOI so demanded, and otherwise agree to be at DOI's beck and call.

(Id. at ¶ 25). Having refused to accede to all of these “bullying and extortionist” conditions, Plaintiff “is to this day barred from performing work on City-related construction projects.” (Id. at ¶¶ 25-26).

         B. Procedural Background

         Plaintiff filed this action in the Supreme Court of New York, New York County, on November 9, 2015, and Defendants removed it to this Court on December 4, 2015. (Dkt. #1). Following a January 15, 2016 pre-motion conference, Plaintiff filed the FAC. (Dkt. #14, 16). On April 5 and 6, 2016, Defendants filed a motion to dismiss the FAC, a supporting brief, and various attachments. (Dkt. #22, 24). On May 6, 2016, Plaintiff filed an opposition brief and various attachments ...

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