MacHisa Design Services, Inc. v. Columbus City Board of Education

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 14a0301n.06

No. 13-4190

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

MACHISA DESIGN SERVICES, INC., and )

ANTHONY C. UDEAGBALA, )

FILED

) Apr 22, 2014

Plaintiffs-Appellants, ) DEBORAH S. HUNT, Clerk

)

v. )

) ON APPEAL FROM THE

COLUMBUS CITY BOARD OF EDUCATION, ) UNITED STATES DISTRICT

CAROLE J. OLSHAVSKY, GENE T. HARRIS, ) COURT FOR THE

CAROL L. PERKINS, OHIO SCHOOL ) SOUTHERN DISTRICT OF

FACILITIES COMMISSION, SMOOT ELFORD ) OHIO

RESOURCE INTERNATIONAL, URS DESIGN )

CORPORATION, GEORGE ACOCK, and JEFF )

CABOT, )

)

Defendants-Appellees. )

BEFORE: GILMAN, GIBBONS, and STRANCH, Circuit Judges.

JULIA SMITH GIBBONS, Circuit Judge. Plaintiffs-appellants are Machisa Design

Services, Inc., a professional design and architecture firm, and its sole shareholder, Anthony

Udeagbala, an African American male of Nigerian descent (collectively “Machisa”). Machisa

brought federal claims under 42 U.S.C. §§ 1981, 1983, and 1985, alleging that various

individuals and entities interfered with, and eventually caused to be terminated, its contract with

the School District of the City of Columbus (the “District”). The district court dismissed

Machisa’s federal claims on the pleadings. For the following reasons, we affirm.

I.

In early 2009, the District published a request for qualifications for an architect to design

a new school facility. Machisa was chosen after a competitive selection process and entered into

No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

a contract with the District in early 2010. Machisa alleged that racially discriminatory animus

motivated the appellees to frustrate Machisa’s performance of the contract and eventually caused

the Board to terminate the contract.

Machisa brought suit in the United States District Court for the Southern District of Ohio,

alleging violations of 42 U.S.C. §§ 1981, 1983, 1985, and a state-law claim for breach of

contract. Machisa named as defendants: Carole Olshavsky, the Senior Executive Director of

Facilities for the Columbus City Schools; the Board; Gene Harris, the Superintendent of the

Columbus City Schools; Carol Perkins, the Board president; Smoot Elford Resource

International (“S/E/R”), the construction manager under the contract; and George Acock and Jeff

Cabot, members of an advisory body created by the Board.1 Machisa alleged that Olshavsky was

the primary actor responsible for stymying its efforts to perform the contract. As proof of

discriminatory motive, Machisa alleged the following:

107. Olshavsky had prosecuted the project in the stated belief and conviction

that Udeagbala was “not the right person” for this project. On one occasion,

Olshavksy said to Udeagbala, “Your speech pattern is interesting. Other than

you, your wife and two kids, who else do you have around here.”

110. Upon information and belief, Olshavsky, Acock and Cabot have circulated

information suggesting that Machisa was unqualified for the contract and that

Machisa got the contract in the first place because Udeagbala, who owns Machisa,

is black.

111. Upon information and belief, Acock falsely stated to third parties that they

voted to hire Machisa because the district was trying to help a local black

architect when they hired Machisa.

142. Olshavsky does not have a good track record of working with African

American consultants and professionals.

1

Machisa also named the Ohio School Facilities Commission and URS Design

Corporation. The claims against those entities have been dismissed, and Machisa does not

appeal those orders.

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No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

Machisa amended its complaint, adding claims for defamation and interference with

contractual relations. After the defendants filed answers to Machisa’s amended complaint,

Machisa amended its complaint again. The defendants then moved for judgment on the

pleadings, which the district court granted as to the federal claims.2 Machisa timely appealed.

II.

A.

We review de novo the district court’s dismissal of a complaint pursuant to Rule 12(c) in

the same manner as we would review a motion under Rule 12(b)(6). Vickers v. Fairfield Med.

Ctr., 453 F.3d 757, 761 (6th Cir. 2006). We construe the complaint in the light most favorable to

the plaintiff, accept the complaint’s factual allegations as true, and determine whether the factual

allegations present a plausible claim. See id. To survive a Rule 12(c) motion, as with a Rule

12(b)(6) motion, the “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)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Fritz v. Charter Twp. of

Comstock, 592 F.3d 718, 722 (6th Cir. 2010). That is, a plaintiff must plead “factual content that

allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged. . . . Threadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678.

B.

Machisa argues that the district court erred in dismissing with prejudice its § 1981 claim

against S/E/R on the ground that Machisa failed to plead any facts from which a reasonable

2

After dismissing the federal claims, the district court declined to exercise supplemental

jurisdiction over the state-law claims. Machisa does not appeal this aspect of the district court’s

order.

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No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

inference could be drawn that S/E/R engaged in intentional racial discrimination.3 To establish a

claim for race discrimination under § 1981, a plaintiff must plead, inter alia, that the defendant

intended to discriminate against him or her on the basis of race. See Amini v. Oberlin Coll.,

440 F.3d 350, 358 (6th Cir. 2006). As the district court observed, the entirety of the allegations

of racial discrimination by S/E/R were as follows:

129. As the construction manager under the contract between Machisa and the

School District Board, Smoot Elford had a duty to the parties to the aforesaid

contract to ensure that the project was carried out in accordance with the contract.

130. Smoot Elford also had a duty to inform or advi[s]e the parties to the

contract whenever they departed from the terms of the contract or failed to

comply therewith in the discharge of their obligations to each other under the

contract.

131. At no time during the duration of the contract did Smoot Elford ever

inform Machisa that Machisa was in violation of the terms of the contract or had

failed to discharge its obligations under the contract to the School District Board.

132. By its conduct, Smoot Elford aided and abetted Olshavsky and the School

District Board in their capricious modification or alteration of agreed upon design

and other matters to the damage of Machisa and Udeagbala.

133. Upon information and belief, at no time did Smoot Elford ever inform

Olshavsky that Olshavsky had no right to unilaterally change or alter the

obligations which the parties owed to each other, especially after Machisa had

complied with an earlier alteration or modification ordered by Olshavsky on a

particular matter.

134. By its conduct and the manner in which it carried out its duty as

construction manager of the project under the aforesaid contract, Smoot Elford

caused plaintiffs to sustain loss and damage.

143. Defendants intentionally discriminated against plaintiffs on the basis of

Udeagbala’s race by constantly and capriciously interfering with plaintiffs’

performance of the contract between Machisa and the School District Board,

resulting in the constant modifications and ultimate termination of said contract

by the School District Board.

3

Machisa does not appeal the dismissal of its § 1981 claim as to the other defendants.

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No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

Like the district court, we conclude that the complaint contains no factual matter

supporting a plausible inference of intentional race-based discrimination. Machisa requests in

the alternative that it be given an opportunity to amend its complaint, although it has already

filed two amended complaints. In its reply brief, Machisa states what it would plead if given the

opportunity to amend. The additional proposed allegations do not articulate facts which support

an inference of race-based discrimination; amendment is therefore futile. See Riverview Health

Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505, 520 (6th Cir. 2010). We affirm the district court’s

dismissal with prejudice of Machisa’s § 1981 claim against S/E/R.

C.

Machisa argues that the district court erred in dismissing its due process and equal

protection claims brought under § 1983.

1.

Machisa asserts only a procedural due process claim.4 To prevail on a procedural due

process claim, Machisa must establish that it possessed a constitutionally protected interest, that

it was deprived of that interest, and that the state did not afford it adequate procedural rights prior

to depriving it of that interest. See, e.g., Taylor Acquisitions, L.L.C. v. City of Taylor, 313 F.

App’x 826, 830 (6th Cir. 2009). On appeal, Machisa asserts that it was deprived of two

constitutionally protected interests: a property interest in the contract and a liberty interest in its

own reputation.

With respect to Machisa’s alleged property interest in the contract, not every deprivation

of a constitutionally protected interest is actionable in a procedural due process suit. Id. at 831–

32. A plaintiff may not bring a § 1983 action “when the deprivation is a simple breach of

4

Machisa abandoned any substantive due process claim by raising it only in its reply

brief.

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No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

contract and there is adequate state breach of contract action available as a remedy.” Ramsey v.

Bd. of Educ. of Whitley Cnty., 844 F.2d 1268, 1273 (6th Cir. 1988). The deprivation of

Machisa’s alleged property interest is not remediable in federal court in the first instance. 5

Machisa’s due process claim on the basis of its alleged liberty interest in its reputation

also fails. Even assuming Machisa had a constitutionally protected interest in its reputation,6 the

actionable deprivation was the failure to provide it with a name-clearing hearing. Quinn v.

Shirey, 293 F.3d 315, 320 (6th Cir. 2002). Before asserting a liberty-interest claim, a plaintiff

must show that he or she “requested a name-clearing hearing and was denied that hearing.” Id.

at 322. Machisa neither pled nor argued that it requested a name-clearing hearing.

2.

“[R]acially discriminatory intent or purpose is required to show a violation of the Equal

Protection Clause.” Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 265

(1977). Machisa’s allegations of racially discriminatory intent are as follows:

107. Olshavsky had prosecuted the project in the stated belief and conviction

that Udeagbala was “not the right person” for this project. On one occasion,

Olshavksy said to Udeagbala, “Your speech pattern is interesting. Other than

you, your wife and two kids, who else do you have around here.”

110. Upon information and belief, Olshavsky, Acock and Cabot have circulated

information suggesting that Machisa was unqualified for the contract and that

5

Machisa argues that Udeagbala cannot assert a breach-of-contract claim and therefore he

is not precluded from bringing a procedural due process claim. But because he was not a party

to the contract, he had no property interest in the contract and therefore cannot bring a procedural

due process claim on this basis at all.

6

“An injury to a person’s reputation, good name, honor, or integrity constitutes the

deprivation of a liberty interest when the injury occurs in connection with an employee’s

termination.” Ludwig v. Bd. of Trs. of Ferris State Univ., 123 F.3d 404, 410 (6th Cir. 1997).

Thus, the first element Machisa must show to establish that it was deprived of a liberty interest is

that the “stigmatizing statements [were] made in conjunction with [Machisa’s] termination from

employment.” Id. Machisa, hired by the city to perform on a discrete contract, does not explain

how it was a city employee. Nevertheless, because Machisa’s claim clearly fails for the reason

detailed above, we will assume that it had a cognizable liberty interest.

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No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

Machisa got the contract in the first place because Udeagbala, who owns Machisa,

is black.

111. Upon information and belief, Acock falsely stated to third parties that they

voted to hire Machisa because the district was trying to help a local black

architect when they hired Machisa.

142. Olshavsky does not have a good track record of working with African

American consultants and professionals.

These allegations fail to state a plausible claim that the Board terminated the contract for

racially discriminatory reasons. With respect to Olshavsky, an isolated comment about

Udeagbala’s speech and a bare assertion, supported by no factual allegations, that Olshavsky

does not have a good track record working with African Americans does not support the

inference that Olshavky’s dissatisfaction with Machisa was racially motivated. Indeed, the only

plausible inference from Machisa’s complaint is that Olshavsky’s dislike of Machisa was

professional. The complaint asserts:

125. Olshavsky’s issues with Udeagbala and Machisa may have started in or

about 2001, when Olshavsky and Udeagbala interviewed for a Downtown High

School Project. This was before Olshavsky became executive director of facilities

for the School District Board. Both Udeagbala and Olshavsky led two different

design teams. Udeagbala’s team won the project over Olshavsky’s team.

Because Machisa failed to allege sufficient evidence of Olshavsky’s discriminatory intent, a

claim that Olshavsky terminated the contract or influenced the Board’s decision to terminate the

contract is unavailing, see Staub v. Proctor Hosp., 131 S. Ct. 1186, 1194 (2011) (acknowledging

cat’s paw theory of liability). Nor can Machisa prevail on a similar theory against Acock or

Cabot. See id. Machisa failed to allege factual matter supporting an inference that Acock or

Cabot influenced the Board’s decision to terminate the contract for race-based reasons.

Machisa’s complaint is devoid of any allegations of race-based animus as to any of the other

defendants.

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No. 13-4190, Machisa Design Servs. v. Columbus City Bd. of Educ.

3.

Machisa argues that it stated a § 1983 claim against S/E/R, proceeding under the theory

that S/E/R was a state actor because it acted in concert with the Board. Were we to conclude that

S/E/R was a state actor, the § 1981 claim against it would fail for that reason. See McCormick v.

Miami Univ., 693 F.3d 654, 660 (6th Cir. 2012). Moreover, Machisa’s procedural due process

claim against S/E/R would fail for the reasons articulated above. Machisa’s equal protection

claim also would fail because its complaint contains no factual matter supporting a plausible

inference of intentional race-based discrimination on the part of S/E/R, even assuming S/E/R

somehow caused the contract to be terminated.

D.

Because the complaint fails to set forth any constitutional claims, Machisa’s conspiracy

claim under § 1985(3) also fails. See Umani v. Mich. Dep’t of Corr., 432 F. App’x 453, 462 (6th

Cir. 2011).

III.

For the foregoing reasons, the judgment of the district court is affirmed.

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