Opinion
Civil Action No. 03-6862.
November 15, 2004
MEMORANDUM AND ORDER
A disappointed contractor asks this court for relief in a contract dispute with a Delaware County agency. Miniscalco Corporation (Miniscalco) charges Delaware County Regional Water Quality Control Authority (DELCORA) with a violation of its civil rights under 42 U.S.C. § 1983, breach of contract, interference with existing and prospective contracts, defamation/trade libel, fraud, misrepresentation and common law conspiracy. Miniscalco invoked the jurisdiction of this court pursuant to 28 U.S.C. § 1331 and § 1343, to resolve a federal question. DELCORA moved to dismiss for lack of jurisdiction under Fed.R.Civ.P 12(b)(1) and (6), alleging Miniscalco failed to state a claim under 42 U.S.C. § 1983 and that the remaining counts are violations of state law over which this court does not have jurisdiction. After careful review of the pleadings, this court grants Defendant's Motion to Dismiss
BACKGROUND
On June 30, 2000, DELCORA awarded Miniscalco a contract to complete work on the "Central Pump Station Diversion" project. Disputes erupted over the project design and project specifications and relations between the parties broke down. Miniscalco claims that after these disputes, DELCORA breached the contract by withholding payment for completed work, violating Pennsylvania's Procurement Code 62 Pa.C.S.A. § 3941. Miniscalco also alleges DELCORA contacted Miniscalco's subcontractors and blamed Miniscalco for the design defects, damaging Miniscalco's standing and ability to do business in the industry and depriving it of a liberty interest under the due process clause of the Constitution. DELCORA, in response, claims Miniscalco's claims fall short of establishing a claim under the Due Process Clause of the Constitution.
"The standard for surviving a Rule 12(b)(1) motion is lower than that for a Rule 12(b)(6) motion. In a Rule 12(b)(6) motion, the court evaluates the merits of the claims by accepting all allegations in the complaint as true, viewing them in the light most favorable to the plaintiffs, and determining whether they state a claim as a matter of law." Gould Elecs., Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000) ( citations omitted). In reviewing a Rule 12(b)(1) motion that poses a facial challenge to the court's subject matter jurisdiction, the court must only consider the allegations of the complaint and documents referenced therein, in the light most favorable to the plaintiff. Id. at 176. "A claim may be dismissed under Rule 12(b)(1) only if it clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or is wholly insubstantial and frivolous." Id. at 178 ( citations omitted).
DISCUSSION
To determine whether a party was denied due process, the court must first determine whether the asserted interests are protected by the fourteenth amendment. If the interests are protected, the court must decide what procedures are due. Unger v. National Residents Matching Program, 928 F.2d 1392, 1395 (3d Cir. 1991).
Miniscalco argues that when DELCORA contacted Miniscalco's subcontractors and attempted to place the blame on Miniscalco for the project's deficiencies, it damaged Miniscalco's standing and associations in the community, depriving it of a liberty interest under the Due Process Clause. In support of its position, Miniscalco cites Fox Fuel v. Delaware County Schools Joint Purchasing Board, 856 F.Supp. 945 (E.D. Pa 1994). In Fox Fuel, the county terminated its supplier's exclusive fuel supply contract and placed the supplier on a blacklist of entities unable to engage in public contracting. The county's action prohibited the supplier from doing future business with public entities in the county.
Miniscalco has not alleged the kind of deprivation of liberty recognized in Fox Fuel. In Fox Fuel, the contractor was blacklisted and thus precluded from bidding on all public contracts, an action certain to deprive Fox Fuel of future business. In this case, DELCORA did not prevent Miniscalco from bidding on any future public projects. Miniscalco remains free to bid on any contracts it chooses in the county.
Miniscalco alleges that because DELCORA attempted to blame Miniscalco for the problems with the project, Miniscalco suffered damage to its reputation and lost standing in the industry. Injury to reputation alone is not within the ambit of a protected liberty interest. Kelly v. Borough of Sayreville, 107 F.3d 1073, 1077-78 (3d Cir. 1997). "Indeed, even financial injury due solely to government defamation does not constitute a claim for deprivation of a constitutional liberty interest. [T]he crucial question is whether the plaintiff has alleged the alteration or extinguishment of some additional interest." Id. ( citations omitted). A claim of injury to reputation is a state law defamation claim and cannot constitute a claim for violation of federal constitutional rights. Id. Miniscalco has not averred sufficient facts to prove the existence of a liberty interest under the Due Process Clause. Accordingly, DELCORA's Motion to Dismiss under Rule 12(b)(6) is granted. DELCORA's Motion to Dismiss under Rule 12(b)(1) is dismissed as moot. Accordingly, we enter the following:
ORDER
And now this 15th day of November, 2004, it is hereby ORDERED that Defendant's Motion to Dismiss is GRANTED.