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CROWN RECYCLING & WASTE SERVS. v. VILLAGE OF LYONS

September 26, 1996

CROWN RECYCLING AND WASTE SERVICES, INC., Plaintiff,
v.
VILLAGE OF LYONS and KENNETH GETTY, Defendants.



The opinion of the court was delivered by: DENLOW

 Plaintiff Crown Recycling and Waste Services, Inc. ("Crown") brings this action in two counts against the Village of Lyons and its Village President, Kenneth Getty (collectively "Defendants"). Count I is an action under 42 U.S.C. § 1983 alleging that Defendants violated Crown's constitutional rights by depriving it of its right to procedural due process when the Village notified Crown that it intended to terminate Crown's waste disposal and recycling contract effective November 15, 1996. Count II is a pendent state law breach of contract claim arising out of the same facts. Defendants have filed a motion to dismiss counts I and II pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Defendants assert that Crown has failed to state a claim under § 1983 because post-deprivation remedies are available to Crown which satisfy the requirements of procedural due process. Defendants further assert that if the § 1983 claim is dismissed, the pendent state claim should also be dismissed. For the reasons stated below, the Court hereby grants Defendants' motion to dismiss count I, with prejudice, for failure to state a claim under 42 U.S.C. § 1983 and count II, without prejudice to Crown's right to file a state court action.

 I. MOTION TO DISMISS STANDARD

 In ruling on this motion to dismiss under Fed.R.Civ.P. ("Rule") 12(b)(6), the Court accepts as true all well-pleaded facts and it draws all reasonable inferences in the light most favorable to the plaintiff. Sherwin Manor Nursing Home Ctr. Inc. v. McAuliffe, 37 F.3d 1216, 1219 (7th Cir. 1994); Dehainaut v. Pena, 32 F.3d 1066, 1070 (7th Cir. 1994). The issue on such a motion is not whether a plaintiff will ultimately prevail, but whether it is entitled to offer evidence to support its claim. Pickrel v. City of Springfield, 45 F.3d 1115, 1118 (7th Cir. 1995). Complaints are to be read liberally, and the court may grant the motion only "if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957); Thompson v. Boggs, 33 F.3d 847, 852 (7th Cir. 1994).

 II. BACKGROUND FACTS

 The following facts are taken from Crown's complaint. Crown is a full-service waste removal and recycling company headquartered in Elk Grove Village, Illinois. Crown currently provides waste removal and recycling services to more than two dozen municipalities in the Chicago area, including the Village of Lyons. Crown's parent corporation has been in the waste disposal industry since 1914.

 The Village of Lyons is located aproximately 14 miles southwest of Chicago. Crown has been providing recycling and waste removal services to the Village of Lyons since 1987. On November 15, 1994, the Village and Crown entered into a seven year agreement by which Crown was to continue to perform waste removal and recycling services through November 15, 2001. (A copy of the "Agreement" is attached as Exhibit A to the complaint.)

 The Agreement consists of 31 pages, plus a one-page attachment and appears to have been prepared through arms length negotiations. The Agreement grants Crown an exclusive privilege for the collection and disposal of residential solid waste, recyclable materials and yard waste from residential single-family and multi-family dwellings less than four (4) units. (Agreement, P A, p. 1).

 The Agreement contains a variety of provisions which touch upon the possibility of disputes arising and the mechanism for resolving them. In the General Specifications section of the Agreement, the parties state: "while the Village recognizes that any collection service involves minor customer operating problems the intent of this contract is to insure that any such operating problems are corrected as soon as possible." (P C.1., p.3). With respect to the issue of damages which Crown may cause to public or private property while performing its services, the Agreement states that "plantings shall be repaired or replaced as soon as possible in equivalent quality at the time of damage, and at no extra charge to the property owner. If [Crown] fails to do so within a reasonable period of time, the Village may, after the expiration of a period of forty-eight (48) hours after giving [Crown] notice in writing, proceed to repair or replace such property as may be necessary at the contractor's expense." (P C.12, pp. 7-8).

 Similarly, in the event Crown fails to observe the established schedule of service for more than two (2) consecutive working days, the Village reserves to itself the right to determine whether there has been sufficient cause to justify the lack of observance to the schedule, and upon notice and a failure to cure, the Village reserves the right to terminate the Agreement. (P C.14, pp. 8-9). In addition, with respect to unresolved service and rate disputes between Crown and city residents, the Village Manager is charged with the responsibility to mediate and arbitrate such disputes and to "render a decision that is final and binding on all parties concerned." (P C.22, p. 14).

 Furthermore, the Agreement contains the following provision entitled Arbitration:

 
" 15. Arbitration. Should any controversy arise between the Contractor and the Village over any of the rates, terms and specifications of this contract, or the performance of either party thereto of the covenants and agreements contained therein, then either party may request that said controversy be referred to a board of three (3) arbitrators, one appointed by the Contractor, one by the Village, and the third to be appointed by said two authorities in an effort to expedite arbitration. The parties agree that neither of them shall proceed to litigation of said controversy until an effort to settle same shall be attempted by arbitration, provided, however, that nothing in this paragraph shall be interpreted as limiting the rights of the parties hereto to apply to the courts for judicial relief after such arbitration has been carried out or attempted."

 (P C.15, p. 9).

 Finally, the Agreement reserves to the Village the right to terminate the Agreement prior to the expiration date for any of nine (9) separate reasons, including "If [Crown] persistently fails to perform the work in accordance with the contract (including, but not limited to, failure to supply sufficient skilled workers or suitable materials or equipment)" or "If [Crown] otherwise violated in any substantial way any provisions of the contract." (PP C.40(a)(6) and (a)(9), p.21). Unlike other provisions in the Agreement, there is no provision for notice and an opportunity to cure contained in paragraph C.40 of the Agreement.

 At the end of February 1996, the Village president resigned and Defendant Kenneth Getty ("Getty") was appointed to serve as interim Village president until the Village's next scheduled election in April, 1997. On May 29, 1996, without any prior warning, Getty directed the Village's attorneys to notify Crown that the Village was terminating Crown's Agreement effective November 15, 1996. (A copy of the Village's termination letter of May 29, 1996 is attached as Exhibit B to the Complaint). According to the Village's attorneys, the Village "had determined" that Crown "had persistently failed to perform the work in accordance with the terms of its Agreement with the Village. Therefore, the Village will exercise its right under Section 40 to terminate the Agreement on November 15, 1996 and seeks bids for such service from other providers." (Comp. Ex. B). On June 25, 1996 the Village Council voted to ratify Getty's decision to terminate the Agreement effective November 15, 1996. Crown contends that it has satisfactorily performed under the Agreement and that its termination was unjustified. ...


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