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Resnick v. City of Troy

United States District Court, M.D. Alabama, Northern Division

May 13, 2019

GERALD A. RESNICK, Plaintiff
v.
CITY OF TROY, et al., Defendants

          MEMORANDUM OPINION AND ORDER

          EMILY C. MARKS, CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         The Plaintiff, Gerald Resnick (“Resnick”), filed this action against the City of Troy, Alabama (“the City”), its Mayor and its City Council alleging that the City breached its contract with Resnick. Resnick claims that he entered into a contract with the City to find an electrical power provider for the City, but the City breached the terms of the contract by entering into an agreement with the electricity provider without paying Resnick his promised commission. Resnick also alleges the City, Mayor and City Council's actions deprived him of due process, and he asserts a § 1983 violation premised on the Fourteenth Amendment. (Doc. 1). Resnick alleged diversity jurisdiction pursuant to 28 U.S.C. § 1332 and federal question jurisdiction pursuant to 28 U.S.C. § 1331 stemming from his claims brought pursuant to 42 U.S.C. § 1983 against the City, Mayor, and City Council members.[1] He alleged supplemental jurisdiction under 28 U.S.C. § 1367(a) of the state law breach of contract claim and a declaratory judgment claim under “federal and Alabama law.” (Doc. 1 at 14).

         The Defendants filed a motion to dismiss (doc. 8) asserting that this Court lacks subject matter jurisdiction for two reasons. First, they allege that diversity jurisdiction is lacking because Resnick failed to join a necessary, non-diverse party, Jeff Miller, as a plaintiff. Next, they assert that the only claim that involves a federal question -- the § 1983 claim alleging a violation of procedural due process -- fails as a matter of law. The Plaintiff filed a response to the motion to dismiss (doc. 19) and a motion to amend the complaint (doc. 20). The proposed amended complaint adds the necessary party, Jeff Miller, as a named plaintiff, which destroys diversity of citizenship, but Resnick seeks to add a claim under the Defend Trades Secrets Act, 18 U.S.C. § 1836, et seq. (“DTSA”) which further bolsters the Court's federal question jurisdiction. In reply, the Defendants oppose the Plaintiff's proposed amended complaint, and filed a renewed motion to dismiss (doc. 24) asserting that the proposed amended complaint does not cure the jurisdictional defects, and adding the DTSA claim is futile because the claim fails on the merits. In the alternative, the Defendants argue that the amended complaint is due to be dismissed for the reasons raised in their original motion to dismiss (doc. 24).

         For the reasons explained below, the Court concludes that the Plaintiff's motion to amend (doc. 20) is due to be granted, the Defendants' original motion to dismiss (doc. 8) is due to be denied as moot, and the Defendants' second motion to dismiss (doc. 24) is due to be granted.

         II. BACKGROUND

         As alleged in the amended complaint, [2] Gerald Resnick and Jeff Miller (“the Plaintiffs”) entered into an agreement with the City of Troy, Alabama in 2012 to help the City locate an electrical power provider. According to an agreement signed by the Plaintiffs and the Mayor, the City promised to pay to the Plaintiffs a two percent commission on any contract that the City entered into as a result of the Plaintiffs' efforts. This agreement included “Non-Circumvention” and “NonDisclosure” provisions in which the City promised to not use the Plaintiffs' confidential information to enter into an agreement for electrical power without paying the Plaintiffs the promised two percent commission. (Doc. 20-1 at 22-23). The agreement specifically notes that “the information regarding sources are exclusive and valuable contacts” of the Plaintiffs and that the City would not enter “any direct negotiations or contracts with sources introduced by [the Plaintiffs] without full disclosure to [the Plaintiffs].” (Doc. 20-1 at 23).

         Notwithstanding this agreement, the Plaintiffs allege that the City, through its City Council members, utilized information and efforts of the Plaintiffs to enter into a contract with an electrical power provider without paying the Plaintiffs their commission. According to the Plaintiffs, the City “cooked up a sham request for proposal” to circumvent the parties' written agreement, and as a result, violated the Plaintiffs' procedural due process rights to deprive them of their valuable trade secrets and deprive them of their income stream. (Doc. 20-1 at 11).

         III. MOTION TO AMEND

         The Court first turns to the Plaintiffs' motion to amend the complaint (doc. 20). The amended complaint adds Jeff Miller as a necessary plaintiff which destroys diversity jurisdiction. Invoking the Court's federal question jurisdiction, the Plaintiffs reassert their Fourteenth Amendment due process claim brought pursuant to § 1983, and they include a claim pursuant to the DTSA, 18 U.S.C. § 1836, et seq. They reallege Resnick's breach of contract and declaratory judgment claims.[3] The Defendants oppose the motion to amend on the basis of futility, arguing that the trade secrets claim fails as a matter of law because the alleged violations took place before the Act's effective date. Thus, the Defendants argue that neither the trade secrets claim nor the § 1983 procedural due process claim is sufficient to invoke the Court's jurisdiction.

         Pursuant to Federal Rule of Civil Procedure 15(a), the court “should freely give leave [to amend a pleading] when justice so requires.” “Generally, ‘[w]here a more carefully drafted complaint might state a claim, a plaintiff must be given at least one chance to amend the complaint before the district court dismisses the action with prejudice.'” Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001) (quoting Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir. 1991)). A “substantial ground” is required to deny leave, such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.” Reese v. Herbert, 527 F.3d 1253, 1263 (11th Cir. 2008) (quoting Burger King Corp. v. Weaver, 169 F.3d 1310, 1319 (11th Cir. 1999)). The Court concludes that pursuant to Fed.R.Civ.P. 15(a), the Plaintiffs should be permitted to amend the complaint to assert a claim under the DTSA. Thus, the Plaintiffs' motion to amend the complaint (doc. 20) is due to be granted.

         IV. MOTION TO DISMISS

         The Court now turns to the Defendants' motions to dismiss (docs. 8 & 24). In their initial motion to dismiss, the Defendants alleged that the court lacked subject-matter jurisdiction because (1) Resnick's § 1983 claim was meritless, and (2) Resnick failed to join Jeff Miller, a necessary and non-diverse party who would defeat diversity jurisdiction. The amended complaint premises jurisdiction on the Court's federal question jurisdiction, abandoning diversity jurisdiction.[4]

         The Defendants maintain, however, that the Plaintiffs' due process claim pursuant to § 1983 claim is meritless, and the Defendants argue that any claim under the DTSA must fail because the statute did not become effective until May 11, 2016, and any action by the Defendants occurred before the statute was effective. Thus, the Defendants argues the Plaintiffs' DTSA claim also fails as a matter of law. Finally, the Defendants assert that they are entitled to legislative and/or qualified immunity.

         A. Standard of Review

         When evaluating a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the court must take the facts alleged in the complaint as true and construe them in the light most favorable to the plaintiff. Resnick v. AvMed, Inc., 693 F.3d 1317, 1321- 22 (11th Cir. 2012). The Court must also accept well-pled facts as true, but the Court is not required to accept a plaintiff's legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009) (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions”).

         A complaint may be dismissed if the facts as pled do not state a claim for relief that is plausible on its face. See Iqbal, 556 U.S. at 679 (explaining “only a complaint that states a plausible claim for relief survives a motion to dismiss”); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 561-62 (2007) (retiring the prior “unless it appears beyond doubt that the plaintiff can prove no set of facts” standard). “[F]acial plausibility” exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). In evaluating the sufficiency of a plaintiff's pleadings, the Court must indulge reasonable inferences in the plaintiff's favor, “but we are not required to draw plaintiff's inference.” Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242, 1248 (11th Cir. 2005). Similarly, “unwarranted deductions of fact” in a complaint are not admitted as true for the purpose of testing the sufficiency of plaintiff's allegations. Id. See also Iqbal, 556 U.S. at 681 (stating conclusory allegations are “not entitled to be assumed true”).

         In Twombly, the Supreme Court emphasized that a complaint “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 550 U.S. at 555. Factual allegations in a complaint need not be detailed but “must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. (internal citations and emphasis omitted). In Iqbal, the Supreme Court reiterated that although Fed.R.Civ.P. 8 does not require detailed factual allegations, it does demand “more than an unadorned, ...


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