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June 23, 1982

Salvatore PETRONE
CITY OF READING, Rodney E. Steffy, Jane Doe and John Roe

The opinion of the court was delivered by: TROUTMAN


In early April, 1980, plaintiff, Salvatore Petrone, purchased an on-going pizza business in Reading, Berks County, Pennsylvania, with the apparent intention of opening a "Scotto's Pizza" franchise. Count I of the complaint alleges that shortly thereafter, plaintiff invested an unspecified sum of money and purchased building plans which contemplated minor cosmetic alterations; no structural ones were anticipated. Defendant, City of Reading (City) which normally reviews such plans within a seven-day period, unexpectedly and inexplicably delayed a full ten weeks before approving them. Plaintiff, upon expeditious completion of the alterations received approval from both the Bureau of Fire Protection and Building Inspection. The City, however, refused to issue an occupancy permit. Instead, it demanded that additional alterations be made-this notwithstanding the fact that such work was neither shown on, nor required by, the approved plans. Administrative and bureaucratic delays prevented plaintiff from opening the "Scotto's Pizza" franchise until December, 1980, a full eight months after he had acquired the property.

 During this same period, a competing pizza parlor commenced business operations in the building adjacent to plaintiff's. The City tacitly permitted the competitor to renovate its structure without the myriad licenses and inspection approvals which plaintiff obtained prior to commencing work. Continuing, the City also agreed to allow the competitor to conduct business without an occupancy permit. The effect of the City's discriminatory application of its ordinances placed plaintiff at a competitive disadvantage when he finally did open his doors.

 Plaintiff's complaint continues and asserts that upon commencing operations, the City informed him of his obligation to upgrade the top floors of the building before renting them out. This further placed plaintiff at a competitive disadvantage since his competitor had already rented out its remaining floors. Moreover, plaintiff had relied upon rentals from the upper floors, coupled with pizza sales, to maintain himself and his family.

 The City, reacting to plaintiff's complaint of code enforcement discrimination passed a resolution requiring the competitor to immediately bring his business up to code standards. After three months of failing to enforce its resolution, the City passed a second one which contained a timetable for scheduled code compliance by the competitor. The City failed to force compliance with this second resolution and plaintiff charges that his competitor is still permitted to operate even though it has failed to comply with code standards and presents substantial health hazards. Moreover, in contrasting the favorable treatment which the competitor received to the harsh treatment accorded him, plaintiff states that he has lost both his pizza franchise in Reading and one at a nearby mall.

 Plaintiff's difficulties with defendant's Police Chief Rodney Steffy (Steffy) and two unknown city agents, Jane Doe and John Roe, are chronicled in Count II of the complaint. It alleges that in 1981 police bureau employees approached plaintiff and requested that he sponsor their softball team. Plaintiff complied with the request because he believed that the use of his name by the police officers' team would heighten his already good reputation and provide favorable advertising. Steffy, upon learning of the team's sponsor and after possible discussion with the Doe and Roe defendants, informed police employees that they could not use plaintiff's name on their softball uniforms because of his, plaintiff's, links to organized crime. These false allegations made by Steffy in his individual capacity and as an agent for the City of Reading, were repeated to a local newspaper, printed by a national wire service and designed to injure plaintiff. The combined result of Steffy's statements and the discriminatory code enforcement resulted in plaintiff losing his business.

 Count III of the complaint asserts generally that the defamation and discriminatory code enforcement suffered by plaintiff were the object and result of a conspiracy in which all defendants participated.

 Finally, Count IV inveighs against the City and the Roe and Doe defendants and asserts that they conspired to ruin plaintiff's business and standing in the community by engaging in a pattern of discriminatory code enforcement. Plaintiff also charges that defendants failed to prevent the conspiratorial activities of other, unknown persons who also sought to destroy plaintiff's business reputation.

 Plaintiff's legal claims are based upon the Civil Rights Act of 1866, 42 U.S.C. §§ 1981, 1982, the Civil Rights Act of 1871, 42 U.S.C. § 1983 and 42 U.S.C. §§ 1985, 1986. The state claim of defamation is appended to plaintiff's federal claims for relief. We assume the veracity of these facts when deciding defendants' motion to dismiss. Walker Process Equipment Co. v. Food Machinery & Chemical Corp., 382 U.S. 172, 86 S. Ct. 347, 15 L. Ed. 2d 247 (1965).

 s 1981

 42 U.S.C. § 1981 guarantees that

(a)ll persons within the jurisdiction of the United States shall have the same right in every state and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

 Interpreting this section, the Supreme Court noted that the phrase "as enjoyed by white persons" was included in the act in order to emphasize the "racial character" of the protected rights. Georgia v. Rachel, 384 U.S. 780, 791, 86 S. Ct. 1783, 1789, 16 L. Ed. 2d 925 (1966). Generally, § 1981 does not support a claim based "solely upon national origin discrimination". Patel v. Holley House Motels, 483 F. Supp. 374, 382 (S.D.Ala.1979) (citing cases). Rather, in order to seek the protection which § 1981 provides, plaintiff must allege discrimination based upon his status as a non-white. Hence, some courts have extended § 1981 protections to Spanish surnamed individuals. See e.g., Ramirez v. Sloss, 615 F.2d 163, 167, n. 5 (5th Cir. 1980) where the court observed that § 1981 applies to discrimination based upon alienage. However, as the Fifth Circuit subsequently made clear, § 1981 does not "address discrimination based upon national origin". Rivera v. City of Wichita Falls, 665 F.2d 531, 534, n.4 (5th Cir. 1982). See also, Madrigal v. Certainteed Corp., 508 F. Supp. 310, 311 (W.D.Mo.1981). The rationale for the expansion of § 1981 to Hispanic plaintiffs is based upon application of traditional principles which limit § 1981 suits to non-whites, i.e., "because Hispanics are frequently identified as non-whites", they are protected by and may sue under § 1981. Id. (quotations omitted). In fact, Madrigal, upon which plaintiff relies, opines that absent ...

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