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VARTAN v. NIX

January 29, 1997

JOHN O. VARTAN
v.
ROBERT N.C. NIX, JR.



The opinion of the court was delivered by: BARTLE

 Bartle, J.

 January 29, 1997

 Plaintiff John O. Vartan ("Vartan") has sued defendant Robert N.C. Nix, Jr., the former Chief Justice of the Supreme Court of Pennsylvania ("Chief Justice Nix"). Plaintiff claims that the defendant, when he was Chief Justice, directly intervened to cause the termination of an agreement between plaintiff and the Commonwealth of Pennsylvania, acting through the Administrative Office of the Pennsylvania Courts. Under that agreement plaintiff was to construct and then to lease to the Commonwealth for 29 years a new courthouse in Harrisburg for the Commonwealth Court. No claim for breach of contract is alleged. Instead, plaintiff has asserted claims under 42 U.S.C. § 1983. *fn1" According to the complaint, the defendant, as a result of his "arbitrary, capricious, and irrational actions," violated plaintiff's procedural and substantive due process rights under the Fourteenth Amendment to the Constitution.

 Pending before the court is the motion of the defendant under Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint for failure to state a claim upon which relief can be granted. He also argues that the case is barred by the statute of limitations. *fn2" Finally, defendant seeks to strike certain paragraphs of the complaint as containing scandalous material pursuant to Rule 12(f).

 A motion to dismiss for failure to state a claim should only be granted if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations" contained in the complaint. Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984). All allegations in plaintiff's complaint are accepted as true, and we must draw any reasonable inferences from such allegations in plaintiff's favor. Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1391 (3d Cir. 1994). On a motion to dismiss, the court may consider not only the complaint but also "matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Id. at 1384 n.2; accord Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993), cert. denied, 510 U.S. 1042, 126 L. Ed. 2d 655, 114 S. Ct. 687 (1994).

 The first issue before this court is whether plaintiff has stated a viable claim for denial of procedural due process. Plaintiff argues that he was entitled to a pretermination hearing before his contract with the Commonwealth could be terminated. Since plaintiff alleges that no such hearing was afforded, he maintains his constitutional right to procedural due process has been infringed.

 To resolve the procedural due process claim, we must decide whether the property interest asserted is constitutionally protected. Reich v. Beharry, 883 F.2d 239, 242 (3d Cir. 1989). A contract or mutually explicit understanding with a public entity may be subject to such protection. Perry v. Sindermann, 408 U.S. 593, 599-602, 33 L. Ed. 2d 570, 92 S. Ct. 2694 (1972). However, only certain such property interests fall under the constitutional umbrella. If it were otherwise, we would face the daunting prospect of the "wholesale federalization of state public contract law." Reich, 883 F.2d at 242.

 Public contracts involving "extreme dependence" such as welfare benefits or "permanence" such as tenured employment and social security benefits, have a protected status under the Fourteenth Amendment. Unger v. National Residents Matching Program, 928 F.2d 1392, 1399-1400 (3d Cir. 1991); see also Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39, 84 L. Ed. 2d 494, 105 S. Ct. 1487 (1985). Cases, including several in this Circuit, also contain language that a protected property right includes a public contract which may be terminated only "for cause." See Loudermill, 470 U.S. at 538-39; Unger, 928 F.2d at 1399; Reich, 883 F.2d at 242-43.

 Plaintiff argues that his contract could be terminated solely for cause and therefore he was entitled to a pretermination hearing. We will assume without deciding that plaintiff's characterization of his lengthy and complex contract with the Commonwealth is correct. *fn3" Even so, the cases do not support plaintiff's position. Recognizing "the severity of depriving a person of the means of livelihood," the United States Supreme Court in Loudermill did hold that a public employee, who was subject to discharge only for cause, was entitled to pretermination process, at least under the circumstances presented. Id. at 543. However, the Court emphasized the special nature of the employment relationship. Id. at 542-43. The Third Circuit's decision in Unger involved a contract between a physician and Temple University which discontinued a graduate program in which she was enrolled. Unger, 928 F.2d at 1393-94, 1399. Because the physician's contract involved neither "extreme dependence," nor permanence, and was terminable at will, her complaint failed to state a claim for procedural due process. Id. at 1399. Reich concerned an agreement for a lawyer's services which was terminable at will. That was only one of several factors the court considered in deciding that no protected property interest existed. Reich, 883 F.2d at 242-43. In none of these cases was found the type of contract presented here. We do not read Loudermill, or the Third Circuit's decisions such as Unger and Reich, as holding that commercial contracts terminable only for cause automatically implicate the Fourteenth Amendment. *fn4" Vartan's position would be a giant leap that we are not prepared to take. We disagree with plaintiff that a right to procedural due process exists simply because the public entity may not abrogate the contract at will.

 To determine whether plaintiff is entitled to a predeprivation hearing under § 1983, we must instead look to the Supreme Court's test as set forth by the Court of Appeals in Reich :

 
in order to determine whether predeprivation process was required, we must apply the familiar tripartite test set out in Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976). Under that test, we must weigh the importance of the interest of which the plaintiff is being deprived, the extent, if any, to which the particular procedure contended for will reduce the risk of an erroneous deprivation, and the burden that would be imposed upon the government if that predeprivation process were required.

 Reich, 883 F.2d at 242.

 Under the first part of the Matthews tripartite test, we note that Vartan merely seeks monetary damages arising out of Chief Justice Nix's conduct in causing a breach of a contract. There is no allegation of irreparable harm. We acknowledge that the contract is not of a routine nature and involves a substantial sum of money. It calls for the construction of a courthouse for a Pennsylvania appellate court, with the subsequent lease of the building to the Commonwealth for 29 years. Nonetheless, as important as this matter may be to the plaintiff, the dispute simply concerns an entrepreneurial venture that apparently unravelled. In kind and degree, it is quite unlike the situation presented in the often cited case of ...


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