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COVERT v. REDEVELOPMENT AUTH. OF HUNTINGDON

March 3, 1978

LLOYD KENNETH COVERT, JR., Plaintiff
v.
REDEVELOPMENT AUTHORITY OF THE COUNTY OF HUNTINGDON, et al., Defendants



The opinion of the court was delivered by: MUIR

 Lloyd Kenneth Covert, Jr. brought this action pursuant to 42 U.S.C. § 1983 and 28 U.S.C. § 1331 seeking declaratory relief, reinstatement to his job, compensatory and punitive damages, and attorney's fees and costs based upon the Defendants' alleged violation of his constitutional rights under the due process clause of the Fourteenth Amendment of the United States Constitution. In addition, Covert contends that the Defendants have violated the laws of the Commonwealth of Pennsylvania and requests damages because of such conduct. On November 9, 1977, Defendants submitted to the Court a motion to dismiss Covert's complaint for failure to state a claim upon which relief could be granted. On November 23, 1977, the Defendants filed a brief in support of that motion. On December 7, 1977, Covert submitted a brief in opposition to that motion. On that same date, Covert filed an amended complaint pursuant to F.R.Civ.P. 15(a). The filing of the amended complaint mooted the Defendants' motion to dismiss. The amended complaint sets forth the same causes of action as the original. On December 15, 1977, the Defendants filed a motion to dismiss the amended complaint for failure to state a claim upon which relief could be granted pursuant to F.R.Civ.P. 12(b)(6). On December 30, 1977, the Defendants submitted a brief in support of their motion. On January 16, 1978, Covert filed a responsive brief in opposition to Defendants' motion to dismiss. The last date for the filing of a reply brief by the Defendants was January 23, 1978.

 For the purposes of a motion to dismiss the Court must accept as true all well pleaded allegations contained in the complaint and must construe them in the light most favorable to Covert. Scheuer v. Rhodes, 416 U.S. 232, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Helstoski v. Goldstein, 552 F.2d 564 (3d Cir. 1977). Covert sets forth the following events in his amended complaint as the basis of his legal claims. The Redevelopment Authority of the County of Huntingdon (Redevelopment Authority) hired Covert as a permanent employee to work on the disaster urban renewal projects of Mt. Union, Smithfield, and Huntingdon. According to the amended complaint the employment was for the duration of the projects which was expected to be at least until October, 1978. Covert received several promotions from the date of his hiring on June 3, 1974 until he was finally designated chief of the bureau of services on July 1, 1976, at which position he served until he was terminated. On July 17, 1976, Covert allegedly believed that a certain house was subject to a demolition contract and was concerned about the safety of the items remaining in the house. On July 17, 1976 Covert allowed the removal by a third party of certain objects from the house for safekeeping. On July 19, 1976 Covert submitted a list of these items to Elwood Sager, an officer of the Redevelopment Authority. Unknown to Covert, the property which he had permitted to be removed was owned by the Redevelopment Authority. Sager on July 19, 1976 filed a complaint on behalf of the Redevelopment Authority with the Mt. Union Police Department against Covert charging him with theft by unlawful taking or disposition of property in the amount of $140.00. On July 20, 1977, the Redevelopment Authority voted to suspend Covert's employment with the Redevelopment Authority pending the completion of any and all investigations relative to the breaking into of the house. On July 22, 1976, Covert voluntarily returned the items to the Mt. Union Police Department. On that same date, Covert was arrested. On July 23, 1976, Richard C. Galway, at that time the executive director of the Redevelopment Authority, acting at the direction of the Redevelopment Authority, suspended Covert from the staff of the Authority pending completion of the investigations concerning Covert's conduct. Covert received notification of the suspension by letter on July 23, 1976. On September 13, 1976, Covert met with the solicitor and the members of the Redevelopment Authority. On September 21, 1976, the Redevelopment Authority voted unanimously to dismiss Covert who received notice of the action by letter dated September 22, 1976. According to his amended complaint at no time prior to his dismissal was he given any reasons for it, nor was he given any notice that his dismissal was being considered, nor was he given any notice that any particular grounds were being considered, nor was he given an opportunity for a hearing at which he could present evidence on his behalf or refute any charges which were being considered as the basis for his dismissal. On October 20, 1976, Covert was acquitted of the criminal charges which had been brought against him.

 First, the Defendants contend that the amended complaint fails to state a claim upon which relief can be granted because Covert had no property interest in his continued employment under state law and thus was not protected by the due process clause of the Fourteenth Amendment. Plaintiff maintains that determining whether he had a property interest in his employment pursuant to state law does not constitute the controlling test and relies on the statement in Board of Regents v. Roth, 408 U.S. 564, 577, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972) that the Fourteenth Amendment does not create property interests but that they stem from independent sources such as state law. According to Covert this shows that state law is just one means of establishing a property interest. The Court rejects this view in the context of public employment. In Bishop v. Wood, 426 U.S. 341, 344, 48 L. Ed. 2d 684, 96 S. Ct. 2074 (1976), the United States Supreme Court stated that a property interest in public employment for the purposes of due process could be created by ordinance or by implied contract but in either case the sufficiency of the claim of entitlement must be decided by reference to state law. In Rosenthal v. Rizzo, 555 F.2d 390, 392 (3d Cir. 1977), the United States Court of Appeals for the Third Circuit held that a public employee's claim of a property interest in a job must be decided by reference to state law. The cases that Plaintiff cites in support of his proposition that a property interest for due process purposes can be created without reference to pertinent state law cannot be followed by this Court because they conflict with the ruling of the United States Court of Appeals for the Third Circuit in Rosenthal v. Rizzo, 555 F.2d 390, 392 (3d Cir. 1977) and with the holding of the United States Supreme Court in Bishop v. Wood, 426 U.S. 341, 48 L. Ed. 2d 684, 96 S. Ct. 2074 (1976). But see Stapp v. Avoyelles Parish School Board, 545 F.2d 527 (5th Cir. 1977); Gosney v. Sonora Independent School District, 430 F. Supp. 53 (N.D. Tex. 1977).

 This Court must determine whether Covert had a property interest in his continued employment with the Redevelopment Authority pursuant to the law of the Commonwealth of Pennsylvania. In Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960), the Supreme Court of Pennsylvania held that a public agency in the absence of a specific grant from the legislature lacked the ability to enter into a binding employment contract with an employee. The Court stated that an appointed public employee in the absence of an express legislative grant takes his job subject to the possibility of subsequent removal by the employing authority and is essentially an employee at will. Id. at 154. See Mitchell v. Chester Housing Authority, 389 Pa. 314, 132 A.2d 873 (1957); Accord Mahoney v. Philadelphia Housing Authority, 13 Pa. Cmwlth. 243, 320 A.2d 459 (1974), cert. denied, 419 U.S. 1122, 42 L. Ed. 2d 822, 95 S. Ct. 806 (1975). The United States Court of Appeals for the Third Circuit concluded in Rosenthal v. Rizzo, 555 F.2d 390, 392 (3d Cir. 1977), that under Pennsylvania law public employees have no contractual right to dismissals only for cause unless the legislature has expressly provided tenure for a given class of employees. The statute allowing for the establishment of the Redevelopment Authority of Huntingdon County, Act of May 24, 1945, P.L. 991 § 1, 35 P.S. §§ 1701 et seq. does not provide for any entitlement to dismissal only for cause. Any expectations created by the Redevelopment Authority or its officers that employment with the Huntingdon Redevelopment Authority could be terminated only for cause and after a hearing are contrary to state law and cannot form a property interest pursuant to the due process clause of the Fourteenth Amendment of the United States Constitution. Covert's contention that the statute establishing redevelopment authorities differs significantly from the statute creating the parking authorities interpreted by the Pennsylvania Supreme Court in Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960) lacks merit. Any divergence between the two statutes concerning the powers of the respective authorities is not substantial and has no bearing on the power of an authority to create an expectation of continued employment in the absence of an express legislative grant.

 Covert challenges the continued validity of the Pennsylvania Supreme Court's decision in Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960). The United States Court of Appeals for the Third Circuit in Rosenthal v. Rizzo, 555 F.2d 390, 392 (3d Cir. 1977) has accepted as the law of Pennsylvania that public employees have no entitlement to dismissals only for cause unless the legislature has expressly provided tenure for a given class of employees. This Court is bound to follow that decision. That case involved the termination of an employee of the Redevelopment Authority of Philadelphia. Even if there were no controlling case law from the United States Court of Appeals for this Circuit concerning this issue, the Court would still follow the Pennsylvania Supreme Court's decision in Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960). Covert's challenges to Scott are unpersuasive. The Court will deal with them seriatim.

 First, Covert contends that the United States Supreme Court's decision in Elrod v. Burns, 427 U.S. 347, 49 L. Ed. 2d 547, 96 S. Ct. 2673 (1976) that public employees cannot be terminated because of their political affiliation unless they occupy policymaking positions undermines the rationale of the Pennsylvania State Supreme Court in Scott. Scott did not deal with a situation where an employee was terminated because of his political party. Even if it did, the Pennsylvania Supreme Court in Scott set forth a broad rule that public employees should be able to be terminated at will because of the need to promote efficient public administration. Nothing in Elrod v. Burns, supra, prevents the Pennsylvania Supreme Court from adopting such an approach. That case only applies to termination based on an employee's political affiliation because such action would violate the employee's First Amendment rights. Covert did not contend in his complaint or in his brief that he was fired from his position because of his political activities. Covert presents no First Amendment claims in his complaint. His argument that Elrod v. Burns has applicability beyond the First Amendment context lacks any basis. The cases he cites in support of that proposition do not even discuss it. In Brown v. United States Civil Service Commission, 553 F.2d 531 (7th Cir. 1977), the Court dealt with the applicability of the Hatch Act, 5 U.S.C. § 502(a)(3). No mention is made of whether Elrod v. Burns pertains to the situation where a public employee is terminated other than for his political affiliation or exercise of First Amendment rights. Even if Elrod v. Burns is read to hold that all hirings and firings of public employees based on patronage violate the First Amendment, it does not affect this case. Covert makes no contention that he was terminated because of political patronage. In Division 241 Amalgamated Transit Union (AFL-CIO) v. Suscy, 538 F.2d 1264 (7th Cir. 1976), the Court refers in passing to Elrod v. Burns. The discussion of that case in its entirety is as follows: "Where the employee argues he is being deprived of a right specifically protected by the Constitution . . . limitations on the First Amendment rights of a public employee must be justified by a compelling state interest." Id. at 1266. This statement in no way substantiates Covert's contention. In Davids v. Akers, 549 F.2d 120 (9th Cir. 1977) the Court was presented with a First Amendment claim. Covert presents no First Amendment argument.

 Second, Covert maintains that Scott should be applied only to policymaking positions because Scott himself held such a post. There is no indication in the Scott opinion that such a limited view was intended by the Court. The federal district courts in this Circuit have applied Scott to non-policymaking employees. Banks v. Redevelopment Authority of City of Philadelphia, 416 F. Supp. 72 (E.D. Pa. 1976); Patterson v. City of Chester, 389 F. Supp. 1093 (E.D. Pa. 1975); Farr v. Chesney, 437 F. Supp. 521 (M.D. Pa. 1977).

 Third, Covert contends that the Public Employee Relations Act, Act of July 23, 1970, P.L. 563, No. 195 art. II, § 201, 43 P.S. §§ 1101.201 et seq., undermines the holding in Scott v. Philadelphia Parking Authority because it provides for the right of all public employees to bargain collectively and enter into employment contracts. The Court finds this argument unpersuasive. Covert is not a member of any group which had bargained collectively with the Redevelopment Authority and as a result had entered into an employment contract. This Act only applies to collective bargaining. There is no indication that the legislature intended to change the previous law of Pennsylvania as it applies to public employees who are not included within collective bargaining agreements.

 Fourth, Covert contends that the Redevelopment Authority should be estopped from denying the applicability of the validity of their own regulations which state the following causes for dismissal: gross misconduct, incompetence, physical disability, non-observance of regulations, or any actions which would place the Authority in a disreputable light. The regulations also require that a permanent employee who is being dismissed shall be notified 14 days in advance of his termination, that justification for the action shall be supported by a written report, and that the employee shall have the right to have his case reviewed. In Ervin v. City of Pittsburgh, 339 Pa. 241, 14 A.2d 297 (1940), the Pennsylvania Supreme Court stated that a municipal corporation could not be bound for an act of its agents in excess of its corporate powers in violation of state law. Granting a right to continuing employment is an act in excess of the powers of the Redevelopment Authority. Although the Redevelopment Authority is only one of several Defendants in this case, the Court believes that to prevent the other Defendants from challenging the validity of the Redevelopment Authority's regulations would have the effect of holding a municipal corporation responsible for the unlawful acts of its agents. If the agents or employees of the Redevelopment Authority have acted in violation of the Constitution, the Redevelopment Authority will bear the burden of any equitable relief ordered by the Court. Covert has cited no Pennsylvania case and this Court has not been able to find any Pennsylvania case where estoppel has been applied to a municipal corporation. See Banks v. Redevelopment Authority of City of Philadelphia, 416 F. Supp. 72, 74 (E.D. Pa. 1976).

 Fifth, Covert also maintains that he has a property interest in the pre-termination procedures established by the Redevelopment Authority and cites Skehan v. Board of Trustees of Bloomsburg State College, 431 F. Supp. 1379 (M.D. Pa. 1977) to support this proposition. In Skehan this Court found that pursuant to Pennsylvania law Skehan had a property interest in certain procedures. The Defendants in that case did not raise the applicability of Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960). Because of Scott, the Court concludes that Covert has no property interest pursuant to Pennsylvania law in any procedures created by the Redevelopment Authority.

 Sixth, Covert contends that he had a due process right pursuant to the Fourteenth Amendment of the United States Constitution to the procedures established by the Redevelopment Authority for the termination of employees, even if he had no property interest in such procedures pursuant to state law. Covert cites Sherman v. Yakahi, 549 F.2d 1287, 1292 (9th Cir. 1977) for this proposition. In Sherman, the Court held that a probationary employee had a right to procedures for the termination of employees where the regulations of the state Civil Service Commission so provided, because where the rights of individuals are at issue it is essential that agencies follow their own procedures. In that case, the applicable regulations were not in contravention of state law. The regulations of the Redevelopment Authority in this case relating to the procedures to be followed before an employee can be terminated violate state law because the Redevelopment Authority had no power to promulgate them. In Sherman, the Court essentially found that the Plaintiff had a property interest in state regulations. Such is not the case as regards Covert.

 Seventh, Covert contends that the Redevelopment Authority employed him as a relocation specialist for work on particular projects and that there was no expectation on his part that he would remain as an employee of the Redevelopment Authority subsequent to the termination and completion of these particular projects. Consequently, Covert maintains that he comes within an exception to the rule that a public agency cannot enter into a binding employment contract or be required to follow certain procedures before it can fire its employees absent express legislative authorization. In Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960), the Supreme Court of Pennsylvania specifically stated that that decision did not concern contracts for work on particular and specific projects being carried out by a public body which might necessitate the temporary services of some specialist. See Beloff v. Margiotti, 328 Pa. 432, 197 A. 223 (1938). In Farr v. Chesney, 437 F. Supp. 521, 529 (M.D. Pa. 1977), this Court held that a governmental body could enter into a binding contract with a sex therapist who was working for that body on a part-time basis for a limited period of time on specific projects. In his complaint Covert contends that he was a permanent employee. The Court has some doubt that an individual who was working on a full-time basis for a two-year period for a public authority can be classified as a specialist working on a particular project. But it cannot conclude that Covert will be unable to establish that he fits within this exception. More information concerning the scope and nature of his employment is required. Consequently, Covert has set forth a property interest pursuant to the law of the Commonwealth of Pennsylvania. In the light of the foregoing, the Defendants' motion to dismiss Covert's complaint because he has not set forth a property interest pursuant to state law will be denied.

 The Defendants also contend that the amended complaint fails to state a claim upon which relief can be granted concerning the deprivation of any liberty interest of the Plaintiff that would require the procedural protections of the due process clause of the Fourteenth Amendment because the amended complaint contains no allegation that the Defendants have created and disseminated a false and defamatory impression about Covert in connection with his termination or even that there was any public disclosure of the reasons for Covert's discharge. In Bishop v. Wood, 426 U.S. 341, 48 L. Ed. 2d 684, 96 S. Ct. 2074 (1976), the Supreme Court held that Bishop's liberty interests were not implicated by his termination because the reasons for discontinuing him, although potentially damaging to his professional reputation, were never made public. Bagby v. Beal, 439 F. Supp. 1257, 1260 (M.D. Pa. 1977); Ross v. Pennsylvania State University, et al., 445 F. Supp. 147 (M.D. Pa. 1978). Covert contends in para. 38 of his amended complaint that the Defendant Richard C. Galway, then executive director of the Redevelopment Authority, on July 23, 1976 told the news media that Covert had not been given permission to enter the property from which he allegedly took certain items. This statement, according to the complaint, was published in the Harrisburg Patriot newspaper. Paragraph 39 of Covert's complaint contends that this ...


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