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Stambaugh's Air Service, Inc. v. Susquehanna Area Regional Airport Authority

March 16, 2006

STAMBAUGH'S AIR SERVICE, INC., PLAINTIFF
v.
SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, ET AL., DEFENDANTS



The opinion of the court was delivered by: Yvette Kane United States District Judge

MEMORANDUM AND ORDER

Before this Court are Plaintiff's Complaint (Doc. No. 1), Magistrate Judge Smyser's Report and Recommendation (Doc. No. 21), Plaintiff's Objections thereto (Doc. No. 25), Defendants' Reply Brief (Doc. No. 27), Plaintiff's Reply Brief (Doc. No. 28), and Defendants' Supplemental Brief (Doc. No. 63). For the reasons that follow, the Court will adopt the findings and recommendations of the Magistrate Court and remand this case to Magistrate Judge Smyser for further proceedings.

I. Factual and Procedural Background*fn1

For more than twenty-five years, Plaintiff Stambaugh's Air Service, Inc. operated as a fixed base operator ("FBO") business at the Harrisburg International Airport ("HIA"), performing fueling, maintenance, and cargo handling services for airplanes. Defendants own and manage HIA.*fn2 In a Complaint filed April 10, 2000, Plaintiff alleges that Defendants used harassment and intimidation to force Plaintiff to leave HIA, and unlawfully refused to offer any lease to Plaintiff that would allow it to continue to provide FBO service at HIA. In its Complaint, Plaintiff asserts the following claims: violation of its "rights to due process pursuant to 42 U.S.C. § 1983" (Count I); violation of its "rights to due process guaranteed by Article I, Section 1, of the Pennsylvania Constitution" (Count II); violation of its "rights to equal protection pursuant to 42 U.S.C. § 1983" (Count III); violation of its "rights to equal protection guaranteed by Article I, Sections 1 and 26, and Article III, Section 32, of the Pennsylvania Constitution" (Count IV); conspiracy (Count V); violation of the Municipal Authorities Act of 1945, 53 Pa.C.S. § 5601 et seq. (Count VI); and tortious interference with existing contractual relationships (Count VII). (Doc. No. 1.) On May 19, 2000, Defendants filed a motion to dismiss the Complaint. (Doc. No. 6.)

After full briefing on the motion, Magistrate Judge Smyser issued a report, recommending that this Court grant Defendants' motion regarding Counts I, II, IV, V, and VI as to all Defendants and Count VII as to Defendant Susquehanna Area Regional Airport Authority ("SARAA"), but deny the motion in all other respects. The parties filed briefs in response to the Magistrate's Report and Recommendation. However, the case was subsequently stayed due to Plaintiff's bankruptcy proceedings until August 31, 2005. In its Order lifting the stay, this Court allowed the parties to file supplemental briefs regarding the Magistrate Judge's Report and Recommendation. On September 30, 2005, Defendants filed a supplemental brief. Plaintiff did not to submit any additional briefing.

II. Discussion

Pursuant to 28 U.S.C. § 636(b)(1)(C), "[a] judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." Id. A motion to dismiss tests the legal sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). When considering a motion to dismiss, the court accepts as true all factual allegations contained in the complaint and views them in the light most favorable to the plaintiff. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002). The plaintiff is required to "set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that those elements exist." Kost, 1 F.3d at 183 (citations omitted). A court should grant a motion to dismiss only if it appears the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 273 (3d Cir. 1985) (citations omitted).

A. Substantive Due Process (Count I)

Finding that Plaintiff "[did] not assert a procedural due process right and [did] not assert that there was a state-created property interest that was taken without due process of law[,]" the Magistrate Judge examined the claims as a "violation of substantive due process rights in the act of excluding the plaintiff as a potential bidder." (Doc. No. 21 at 5.) Relying on Independent Enterprise Inc. v. Pittsburgh Water and Sewer Authority, 103 F.3d 1165 (3d Cir. 1997), the Magistrate Court found that the right: to be the HIA FBO operator is not a fundamental right such as the property interests that may in some contexts arise from the ownership of land . . . . It is a contractual right. . . . Stambaugh's did not have a right as a matter of substantive due process to continue to have the HIA FBO contract or to have its bid considered in any particular manner. (Id. at 8.) The Magistrate Judge also found that Plaintiff failed to allege a constitutionally protected liberty interest, rejecting Plaintiff's argument that "the taking of its business interests at HIA is tantamount to the state's taking of a professional license by wrongfully withholding or revoking certification." (Id. at 9.) Accordingly, the Magistrate Judge recommended that the Court dismiss Plaintiff's substantive due process claim. (Id. at 10.)

Plaintiff objects to the Magistrate Court's characterization of its claim. Plaintiff argues that its "claim arises from its interest in not being arbitrarily denied permission to be an FBO operator anywhere at HIA, even from the space which it has leased." (Doc. No. 25 at 4.) Plaintiff analogizes its claim to cases where the state or municipality failed to grant permission to a property owner or lessor for an intended land use. (Id. at 6.) Plaintiff also contends that this Court should analogize Defendants' action to that of a licensing authority's wrongful denial of certification, as "defendants, by unlawfully excluding [Plaintiff] from a public airport, have excluded [Plaintiff] from the market for FBO services." (Doc. No. 11.) Plaintiff further argues that "[t]he Magistrate Judge failed to recognize, that in the market in which Stambaugh's operates and which SARAA controls, defendants by their actions, in effect, have denied Stambaugh's the opportunity to operate as an FBO at all." (Doc. No. 25 at 10.)

Plaintiff's attempt to analogize the denial of its FBO contract to land-use cases is misguided. Contrary to the cases Plaintiff cites, Defendants' alleged actions in the case at bar do not amount to a governmental entity placing use limitations on private land. According to the allegations made in the Complaint, Plaintiff's inability to continue to provide FBO services at HIA stems directly from Defendants' decision not to renew their lease with Plaintiff. (Doc. No. 1 at 4-5.) Plaintiff's "right" to perform FBO services at HIA arises entirely from its former contractual relationship with Defendants to provide such services, and is therefore merely a contractual right. No constitutionally protected property interests exist in a government contract unless the contract confers a protected status or contains a provision that the state entity can terminate the contract only for cause. Linan-Faye Constr. Co., Inc. v. Housing Auth. of the City of Camden, 49 F.3d 915, 932 (3d Cir. 1995) (citing Unger v. National Residents Matching Program, 928 F.2d 1392, 1399 (3d Cir. 1991); see also Reich v. Beharry, 883 F.2d 239, 242 (3d Cir. 1989) ("Many . . . courts have observed that if every breach of contract by someone acting under color of state law constituted a deprivation of property for procedural due process purposes, the federal courts would be called upon to pass judgment on the procedural fairness of the processing of a myriad of contract claims against public entities. We agree that such a wholesale federalization of state public contract law seems far afield from the great purposes of the due process clause"). Neither Defendants' refusal to renew Plaintiff's former lease nor Defendants' refusal to lease Plaintiff the former AMP hanger rise to the quality of property rights worthy of substantive due process protection. See Independent Enterprise Inc., 103 F. 3d at 1179 ("substantive due process claim grounded in an arbitrary exercise of governmental authority may be maintained only where the plaintiff has been deprived of a 'particular quality of property interest'); see e.g. Queen City Aviation, Inc. v. Allentown, 1992 U.S. Dist. LEXIS 9042 (E.D. Pa. 1992) (city officials decision to grant an exclusive lease to another bidder did not amount to a substantive due process violation).

Moreover, Plaintiff's contractual right to provide FBO services to airplanes at HIA does not amount to a constitutionally-protected liberty interest. "[D]ischarge from governmental employment will not by itself constitute a deprivation of liberty." Bb. of Regents v. Roth, 408 U.S. 564, 575 (1972). As the Magistrate Judge correctly noted, "[t]he state when acting in a governmental capacity of regulating persons' eligibility and suitability to practice their trade or profession gives rise to an application of due process principles and expectations whereas the state's contractual interactions with service providers do not." (Doc. No. 21 at 10.) In declining to renew Plaintiff's contract or lease, Defendants precluded Plaintiff from providing FBO services at HIAA, but it did not impair Plaintiff's ability to provide such services at any other airport in the Commonwealth. The difficult market realities allegedly inherent in the FBO industry and the economic significance of Plaintiff's loss of the service contract do not convert a mere contract claim into a deprivation of liberty. See Linan-Faye Constr. Co., 49 F.3d at 932 ("[a]lthough the consequential damages of an alleged breach may be severe, this fact alone cannot convert a contract claim into a deprivation of liberty") (citing S & D Maintenance Co. v. Goldin, 844 F.2d 962 (2d Cir. 1988)). Plaintiff fails to establish a claim of constitutional magnitude. Accordingly, Plaintiff's due process claim will be dismissed (Count I).

B. Private Right of Action for Damages Under the Pennsylvania Constitution (Counts II and IV)

The Magistrate Judge recommends dismissal of Plaintiff's claims under the Pennsylvania Constitution "on the basis that a violation of the Pennsylvania constitution does not give rise to a cause of action seeking monetary damages as a remedy." (Doc. No. 21 at 15.) As the Pennsylvania Supreme Court has not yet settled the issue of whether a plaintiff may seek monetary damages for state constitutional violations, this Court will decline to exercise supplemental jurisdiction over Plaintiff's state constitutional claims pursuant to 28 U.S.C. § 1367(c)(1).*fn3 Section 1367(c)(1) states, "the district courts may decline to exercise supplemental jurisdiction over a claim . . . if the claim raises a novel or complex issue of State law." 28 U.S.C. § 1367(c)(1). Numerous district courts have recognized that the issue of whether an action for monetary damages for violations of the Pennsylvania constitution is a "novel or complex issue of State law" and accordingly, have declined to exercise supplemental jurisdiction. See Mitchell v. Street, No. 04-3213, 2005 U.S. Dist. LEXIS 17156 at *16-18 (E.D. Pa. August 16, 2005) (dismissing state constitutional claims without prejudice in light of the unclear status of the law); Millar v. Windsor Twp., No. 04-CV-2529, 2005 U.S. Dist. LEXIS 17433 at *12 (M.D. Pa. June 24, 2005) (stating that there is a "dearth of case law on the issue" and declining to exercise jurisdiction over the state constitutional claims because deference to the state appellate courts is appropriate); see also Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts, Inc., 140 F.3d 478, 487 (3d Cir. 1998) ...


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