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holding that company's suspicions of wrongdoing started the clock running, and that the claims accrued at the time the company knew it was injured, not when it finally had enough "hard and fast evidence" to support its claims.
Summary of this case from Pethtel v. Washington County Sheriff's OfficeOpinion
Case No. 2:01-CV-22.
April 23, 2002
ORDER
For the reasons stated in the Opinion filed this date,
IT IS HEREBY ORDERED that Defendants' Motion for Judgments on the Pleadings (docket no. 41) is granted. Accordingly, Plaintiffs claims are dismissed with prejudice.
This case is closed.
OPINION
This is an action brought by Plaintiff, Krygoski Construction Company ("Krygoski"), against Defendants, three retired officers of the U.S. Army Corps of Engineers (the "Corps"), pursuant to the doctrine enunciated inBivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999 (1971). Krygoski alleges that Defendants violated its rights under the First and Fifth Amendments by conspiring to award a government demolition contract to another bidder in retaliation for Krygoski's public complaints against the Corps. Now before the Court is Defendants' motion for judgment on the pleadings.
Facts
The legal disputes between Krygoski and the Corps date back to 1985 and arise out of the demolition of an abandoned U.S. Air Force airfield and missile site (the "Site") near Raco, Michigan. The United States wanted to return the Site, located in the Hiawatha National Forest, to forest land with openings for the wildlife abundant in the area. In August 1985, the Corps solicited bids for the demolition and removal of the airfield, missile silos, and other buildings located at the Site. Defendant Johnson was the contracting officer for the Corps, and Defendants Lawson and Pearce were Corps engineers responsible for the demolition project at the Site. Krygoski submitted the lowest bid at $414,696 and was awarded the contract. A predemolition survey revealed the presence of previously undiscovered asbestos in some of the buildings at the Site, and Krygoski determined that the removal cost would be much higher than expected. Krygoski submitted an estimate of an additional $320,000 for the removal of the hazardous waste, which Defendant Johnson and the Corps considered a cardinal change in the terms of the contract. According to its policy, the Corps terminated the contract with Krygoski on September 5, 1986.
A detailed recitation of the background facts of this case is given in Krygoski Construction Co. v. United States, 94 F.3d 1537, 1538-40 (Fed. Cir. 1996).
After the cancellation of the contract, Krygoski publicly complained about the allegedly improper termination of the contract and expressed its concerns regarding the environmental hazards at the Site. Krygoski contacted the media and various environmental and government officials, including United States Senator Carl Levin, Representative Robert Davis, and several state congressmen, in order to voice its concerns. Krygoski also unsuccessfully attempted to acquire a court-ordered injunction against the awarding of the project to a different contractor.
The Corps resolicited bids for the demolition and removal project in 1987. The contract was awarded to Anderson Excavating and Wrecking Company ("Anderson"), which submitted the lowest bid of $443,200. Krygoski was the sixth lowest bidder, with a bid of $1,200,000. The Corps ultimately certified the demolition project as complete on November 21, 1988, for a total cost of $542,861.60.
In 1989, Krygoski brought a breach of contract action against the Corps in the Court of Federal Claims. The trial court found in favor of Krygoski and awarded it $1,456,851.10 in damages, but the Court of Appeals for the Federal Circuit reversed and limited Krygoski's damage award to cost of performance prior to termination, performance profits, and termination cost. Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1545 (Fed. Cir. 1996).
Krygoski filed its complaint in this action on February 2, 2001, alleging that Defendants violated its rights under the First and Fifth Amendments by treating it in a disparate manner to other similarly situated contractors and by retaliating against Krygoski's public complaints regarding the contract termination and environmental concerns at the Site. Krygoski asserts that James Traynor ("Traynor"), a former employee of Anderson who worked at the Site in 1988, has informed Krygoski that Anderson buried hazardous waste at the Site with the consent and approval of Defendants. According to Krygoski, it has confirmed that pipes, concrete, plastics, and building materials were buried at the Site, and it presumes that hazardous materials including asbestos, were also buried there. Krygoski asserts that Defendants conspired with Anderson to have Anderson submit the lowest bid and win the contract with the express intent not to remove the hazardous wastes at the Site. Krygoski asserts that this information, received in the spring of 2000, forms the basis of its claims against Defendants.
Standard
The Court has considered matters outside the pleadings and will treat Defendants' motion as one for summary judgment Fed.R.Civ.P. 12(c). Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party are entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. Material facts are facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). A dispute is genuine if a reasonable jury could return judgment for the nonmoving party. Id. The Court must draw all inferences in a light most favorable to the nonmoving party, but may grant summary judgment when "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." Agristor Financial Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir. 1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)).
Analysis
Defendants argue that they are entitled to judgment on the pleadings for two reasons. First, Defendants contend that Krygoski's claims are barred by the statute of limitations because they accrued in 1987 when the Corps terminated its contract and ultimately awarded the demolition project to Anderson. Second, Defendants assert that even if Krygoski's claims are timely, they are entitled to qualified immunity as government officials.
The Sixth Circuit has held that state law provides the applicable statute of limitations for claims under Bivens and that those actions should be governed by the same statute of limitations applicable to 1983 actions. Kurinsky v. United States, 33 F.3d 594, 599 (6th Cir. 1994). In Michigan, the statute of limitations for § 1983 actions is three years, the same period as general tort claims. Conlin v. Blanchard, 890 F.2d 811, 815 (6th Cir. 1989); M.C.L. § 600.5805(9). Therefore, the applicable period of limitation for Krygoski's claims is three years.
While state law provides the appropriate statute of limitations, federal law governs the question of when that limitation period begins to run. Ruff v. Runyon, 258 F.3d 498, 500 (6th Cir. 2001) (citing Wilson v. Garcia, 471 U.S. 261, 268-71, 105 S.Ct. 1938, 1942-44 (1985)). According to longstanding Sixth Circuit law, this three-year period "commences to run when the plaintiff knows or has reason to know of the injury which is the basis of his action." Sevier v. Turner, 742 F.2d 262, 273 (6th Cir. 1984). "A plaintiff has reason to know of his injury when he should have discovered it through the exercise of reasonable diligence." Id. Stated another way, the Court must `look to what event should have alerted the typical lay person to protect his or her rights.'" Hughes v. Vanderbilt Univ., 215 F.3d 543, 548 (6th Cir. 2000) (citing Dixon v. Anderson, 928 F.2d 212, 215 (6th Cir. 1991)). Thus, the focus is on "`the harm incurred, rather than the plaintiffs knowledge of the underlying facts which gave rise to the harm.'" Ruff, 258 F.3d at 501 (citation omitted).
Pursuant to these authorities, Krygoski's claims are barred by the three-year statute of limitations because its claim accrued in 1987 when the Corps terminated its contract with Krygoski and eventually awarded it to Anderson or, at the very latest on November 21, 1988, when the project was certified as complete. In its Amended Complaint, Krygoski alleges that Defendant violated its Fifth Amendment rights by denying it due process and by treating it in a disparate manner in retaliation for public complaints about the Corps' conduct and environment concerns at the Site. (Am. Compl. ¶¶ 60-62.) Krygoski also claims that the Defendants violated its First Amendment rights by retaliating against it in response to its public criticism regarding the project contract and environmental concerns. (Id. ¶¶ 70-73.) These claims accrued at the time Krygoski knew it was injured, not at the time it had evidence to support its claims. Friedman v. Estate of Presser, 929 F.2d 1151, 1159-60 (6th Cir. 1991). Krygoski's claim for a due process violation accrued, that is, it had reason to know of the injury that formed the basis of its cause of action, when its property rights were deprived. See Shannon v. Recording Indus. Ass'n of Am., 661 F. Supp. 205, 211 (S.D. Ohio 1987) (stating that the injury in a Fifth Amendment claim for deprivation of property without due process occurs at the time of the unlawful seizure of the property). Krygoski was allegedly deprived of its property in 1987 when the Corps terminated the demolition contract and eventually awarded it to Anderson. Likewise, Krygoski's claim of disparate treatment accrued at the time it was treated differently than other similarly situated contractors. See Dixon, 928 F.2d at 217-18 (holding that the statute of limitations began to run on the plaintiffs equal protection claim against directors of a state retirement system when they were allegedly treated in a disparate manner by being excluded from the system). Krygoski's claim for a Fifth Amendment violation accrued when its right of free speech was chilled by Defendants' conduct. These injuries occurred, at the latest, in 1987 when Krygoski lost its contract, its public criticisms went unheeded, and the contract was awarded to Anderson. These events were enough to alert Krygoski to protect its rights.
Krygoski argues that its constitutional claims against Defendants did not accrue until the spring of 2000 when Traynor confirmed that Anderson had not properly disposed of the asbestos from the Site. According to Krygoski, it did not know of its injury until that time, and therefore its claims are timely. The Court disagrees. Assuming that pipes, concrete, and other building materials were found at the Site in 2000 and that this discovery makes Krygoski more informed of its alleged injuries, it remains certain that Krygoski first had reason to protect its rights in 1987. According to the authorities cited above, when determining when a cause of action accrues for statutes of limitation purposes, the Court must focus on when the plaintiff knew or should have known of its injury, not when it had enough evidence to support its claims. By Krygoski's own admissions, it "had suspicions that the hazardous waste had not been disposed of properly" at the Site since Anderson's bid was extraordinarily low in light of the estimated costs for removing the asbestos. (Pl.'s Br. Resp. at 3.) The fact that it did not confirm those suspicions with hard and factual evidence until 2000 does not mean that it did not know or should not have known of its injury until that time. See Friedman, 929 F.2d at 1159 (holding that the plaintiff, wrongfully convicted of embezzlement, knew or should have known of his injury from due process violations when he read newspaper articles about his entrapment and he had suspicions concerning exculpatory evidence. Krygoski knew in 1987 that it may have been treated in a disparate manner, that its due process rights may have been violated, and that its right to free speech may have been chilled. At the latest, any injury to Krygoski occurred in 1988, when Anderson buried the hazardous waste at the Site, thereby being treated differently from how Krygoski was treated on the same project.
The only other potential relief Krygoski may find from this outcome is in the doctrine of fraudulent concealment which would toll the running of the period of limitation if Defendants had wrongfully concealed Krygoski's cause of action. The fraudulent concealment, Krygoski must plead and show "(1) wrongful concealment of their actions by the defendants; (2) failure of the plaintiff to discover the operative facts that are the basis of his cause of action within the limitations period; and (3) plaintiffs due diligence until discovery of the facts." Hill v. United States Dep't of Labor, 65 F.3d 1331, 1335 (6th Cir. 1995) (citations omitted).
Krygoski does not explicitly raise this argument, but in its brief, Krygoski states that "[d]ue to Defendants' thorough deception, [Krygoski] had no way of discovering the injury." (Pl.'s Br. Resp. at 5.) Krygoski also states that it "had been denied access to the site, and Defendants consistently refuted, and continue to refute, the allegation that they had done anything improper at the Raco site." (Id.)
Krygoski has not established fraudulent concealment of its claims. One, Krygoski has failed to specifically plead Defendants' fraud and its own due diligence with particularity as required in Fed.R.Civ.P. 9 (b). See Friedman, 929 F.2d at 1159 (noting in fraudulent concealment case that the plaintiffs' complaint was deficient because they failed to plead due diligence). Two, Krygoski has admitted that it was suspicious of the Anderson contract and Anderson's deficient performance as early as 1987. That Krygoski did not file this action or attempt to discover the operative facts of its injury is a lack of due diligence. See id. at 1160 ("`Any fact that should excite [the plaintiffs] suspicion is the same as actual knowledge of his entire claim.'") (quoting Dayco Corp. v. Goodyear Tire Rubber Co., 523 F.2d 389, 394 (6th Cir. 1975)). Here, Anderson's bid was remarkably low given the estimated cost of removing the asbestos. This fact, coupled with Defendants' allegedly deficient treatment of Krygoski's complaints, gave Krygoski sufficient knowledge of its injuries and possible claims.
Rule 9(b) requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity."
Finally, the Court notes that dismissing Krygoski's claims is consistent with the policies behind statutes of limitations which include penalizing plaintiffs who are not industrious in pursuing their claims, providing security against stale claim relieving defendants of the fear of litigation, and avoiding the general inconveniences that result from a long delay. Nielson v. Barnett, 440 Mich. 1, 8-9, 485 N.W.2d 666, 669 (1992).
Conclusion
For the foregoing reasons, the Court will dismiss Krygoski's claims as untimely. Defendants' motion for judgment on the pleadings will be granted.
Since the Court has concluded that Krygoski's claims are barred by the statute of limitations, it need not address whether Defendants are entitled to qualified immunity.
An Order consistent with this Opinion will be entered.