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Lakeview Renovations, Inc. v. City and County of Denver

United States District Court, D. Colorado

February 22, 2016

CITY AND COUNTY OF DENVER, a municipal corporation, and SHEILA DIDUCH, Defendants.


          KATHLEEN M. TAFOYA, Magistrate Judge.

         This case comes before the court on Defendants' "Motion to Dismiss Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(1) and (6) and to Compel Compliance with Contractual Dispute Resolution Procedure." (Doc. No. 24 ["Mot."], filed July 21, 2015.) Plaintiff has filed a response (Doc. No. 36 ["Resp."], filed August 28, 2015), to which Defendants have replied. (Doc. No. 41 ["Reply"], filed September 11, 2015.)


         Plaintiff is a commercial janitorial and cleaning services company, commonly referred to as NAPS. (Doc. No. 23 ["Am. Comp."] at 2.) Plaintiff is operated by a Korean individual and a high percentage of its employees are also Korean. ( Id. ) As Defendants in this action, Plaintiff has named the City and County of Denver (the "City") and Sheila Diduch, who served as a Prevailing Wage Investigator for the Office of the Auditor. Though not formally named as a defendant, Clay Vigoda was, at all times relevant to this lawsuit, employed by the City as the Director of Government, Community Affairs and Prevailing Wage and was also Defendant Diduch's supervisor.

         Plaintiff held a contract for its services with the City beginning in 2010 until 2015 when its contract was not renewed. (Am. Comp. at 3, 10.) The contract incorporated a prevailing wage requirement adopted by the City that specifies a base hourly rate and a rate for multiple "fringe benefits" applicable to various positions, including a custodian. Defendant Diduch began her employment as a Prevailing Wage Investigator in early 2010 and was assigned to Plaintiff. (Am. Comp. at 4.)

         Plaintiff contends that from the beginning of her assignment, Defendant Diduch subjected it to discriminatory treatment by refusing to timely pay multiple invoices for Plaintiff. (Am. Comp. at 4-5.) As an example, Plaintiff alleges that in 2012, Defendant Diduch withheld payment for 161 invoices, totaling hundreds of thousands of dollars. ( Id. ) Plaintiff further alleges that Defendant Diduch required Plaintiff to improperly reimburse its employees, misclassify employees and improperly compensate employees during breaks, all of which resulted in overpayments totaling over $800, 000.00. (Am. Comp. at 3-6).

         Plaintiff contends that Defendant Diduch's conduct and actions toward Plaintiff were based on discriminatory racial animus. Plaintiff alleges that in May 2012, Defendant Diduch stated to one of Plaintiff's employees that it was a "bad company" and that "she was working on taking this company of out of the city." (Am. Comp. at 5.) Plaintiff also asserts that in June 2012, Defendant Diduch went to one of the City locations where Plaintiff's janitors were working and stated, "I hate Koreans." (Am. Comp. at 5.)

         On several occasions, Plaintiff requested that Mr. Vigoda review Defendant Diduch's decisions regarding payment of their invoices and Mr. Vigoda refused, responding that he supported Defendant Diduch's payment determinations and that she made the final determination. (Am. Comp. at 6.) In January 2013, Plaintiff informed Mr. Vigoda of Defendant Diduch's discriminatory statements and requested Mr. Vigoda assign a different investigator to Plaintiff. ( Id. ) Mr. Vigoda ignored Plaintiff's request. ( Id. ) Thereafter, Defendant Diduch began communicating and meeting with Rafael Gongon, a representative for the Service Employees International Union ("SEIU"), the union representing Plaintiff's employees. (Am. Comp. at 6.)

         In May 2013, Plaintiff submitted a detailed memorandum to the Auditor from Plaintiff's counsel showing that Defendant Diduch's requirement that it pay a higher fringe benefit rate to its employees was inaccurate and unsupported by law. (Am. Comp. at 6.) The Auditor acknowledged the error. ( Id. ) At that point, Plaintiff was able to begin paying the correct fringe benefit rate. ( Id. )

         On September 10, 2013, Mr. Vigoda and Defendant Diduch drafted a letter including false information about Plaintiff for the City's Auditor and presented it to Adrienne Benavidez, the City's Manager of General Services, copying each member of the Denver City Council and the Mayor. (Am. Comp. at 7.) Plaintiff contends that in the letter, Mr. Vigoda and Defendant Diduch misrepresented several of Plaintiff's actions, as well as accusing Plaintiff of bad faith and being morally corrupt. ( Id. )

         Before Plaintiff could respond to the letter submitted to Ms. Benavidez, or an investigation could occur, the Auditor sent a copy of the letter to the Denver Post. ( Id. ) On September 18, 2013, based on encouragement from Defendant Diduch, the SEIU picketed in front of the Wellington Webb building. (Am. Comp. at 7.) On September 19, 2013, the Denver Post published an article based on the Auditor's letter. ( Id. ) On that same day, Plaintiff's representatives met with Mr. Vigoda and Denis Berckefeld, Director of Communications of the Office of the Auditor, to inform them of Defendant Diduch's discriminatory conduct, to dispute the false accusations in the Auditor's letter and provide them with sworn statements from two employees who heard Defendant Diduch make the statement, "I hate Koreans." ( Id. ) Within two hours of this meeting, Defendant Diduch contacted Mr. Gongon via email and in reference to SEIU's picketing, stated, "Good job yesterday! Now I need your help. [Plaintiff] is playing dirty, so I am going to need to produce tons of documentation, including some statements from your workers." ( Id. )

         On October 4, 2013, Ms. Benavidez reported that she had thoroughly investigated the allegations within the Auditor's letter and concluded Plaintiff had not breached its contract. ( Id. ) Plaintiff contends that Mr. Vigoda never investigated its allegations regarding Defendant Diduch's discriminatory conduct, nor did he inform the City Attorney of the same until several months later. (Am. Comp. at 9.) Plaintiff further alleges that in retaliation for Plaintiff's report of Defendant Diduch's discriminatory conduct, Mr. Vigoda continuously attempted to present negative information to the Auditor and Denver City Council pertaining to Plaintiff in order to prevent a future contract between the City and Plaintiff. ( Id. ) On October 21, 2014, Mr. Vigoda stated in an email regarding the Denver City Council, "It seems pretty clear they will never agree to NAPS being chosen as the preferred bidder. So I think they are out no matter what!" ( Id. )

         Plaintiff has submitted numerous requests and a formal invoice to the City seeking reimbursement for the overpayments that occurred at Defendant Diduch's direction. (Am. Comp. at 10.) However, the City has refused to reimburse Plaintiff for the same. ( Id. ) Additionally, Plaintiff participated in the bid process for a new contract with the City in 2015 but its contract was not renewed. ( Id. )

         By this action, Plaintiff asserts claims under 42 U.S.C. §§ 1981, 1983 against Defendant Diduch and the City based on racial discrimination and retaliation. (Am. Comp. at 10-15.) Additionally, Plaintiff asserts a breach of contract claim against the City based on Defendant Diduch's requirement that Plaintiff pay the incorrect fringe benefit amount and failing to timely pay Plaintiff, as well as the City's failure to pay and/or reimburse Plaintiff for the correct fringe benefit amount. (Am. Comp. at 15.)


         1. Failure to State a Claim Upon Which Relief Can Be Granted

         Federal Rule of Civil Procedure 12(b)(6) provides that a defendant may move to dismiss a claim for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). "The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (citations and quotation marks omitted).

         "A court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff." Hall v. Bellmon, 935 F.2d 1106, 1198 (10th Cir. 1991). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pleaded facts which allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The Iqbal evaluation requires two prongs of analysis. First, the court identifies "the allegations in the complaint that are not entitled to the assumption of truth, " that is, those allegations which are legal conclusion, bare assertions, or merely conclusory. Id. at 679-81. Second, the Court considers the factual allegations "to determine if they plausibly suggest an entitlement to relief." Id. at 681. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 679.

         Notwithstanding, the court need not accept conclusory allegations without supporting factual averments. Southern Disposal, Inc., v. Texas Waste, 161 F.3d 1259, 1262 (10th Cir. 1998). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. Moreover, "[a] pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.' Nor does the complaint suffice if it tenders naked assertion[s]' devoid of further factual enhancement.'" Id. (citation omitted). "Where a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (citation omitted).

         In evaluating a Rule 12(b)(6) motion to dismiss, courts may consider not only the complaint itself, but also attached exhibits and documents incorporated into the complaint by reference. Smith v. United States,561 F.3d 1090, 1098 (10th Cir. 2009) (citations omitted). "[T]he district court may consider documents referred to in the complaint if the documents are central to the plaintiff's claim ...

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