NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ________________
No. 12-2046 & 12-2236 ________________
D & D ASSOCIATES, INC. a New Jersey Corporation
Appellant (12-2046)
v.
BOARD OF EDUCATION OF NORTH PLAINFIELD; THE VITETTA GROUP, INC., n/k/a/ Vitetta; BOVIS LEND LEASE INC; ROBERT C. EPSTEIN
Robert C. Epstein, Appellant (12-2236)
________________
Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 3-03-cv-01026) District Judge: Honorable Mary L. Cooper ________________
Submitted Under Third Circuit LAR 34.1(a) November 19, 2013
Before: AMBRO, and SMITH, Circuit Judges and O’CONNOR,* Associate Justice (Ret.)
(Opinion filed: January 8, 2014)
* Honorable Sandra Day O’Connor, Associate Justice (Ret.) for the Supreme Court of the United States, sitting by designation. ________________
OPINION ________________
AMBRO, Circuit Judge
Plaintiff D&D Associates, Inc. (“D&D”), a New Jersey contractor, entered into a
variety of contracts for school renovation with defendant North Plainfield Board of
Education (the “Board”). After relations soured, D&D sued the Board and the Board’s
attorney, Roger Epstein (“Epstein”), as well as the construction management company
and architect the Board hired. D&D’s claims covered a variety of contractual, tort, and
civil rights claims. The District Court dismissed all counts of the complaint or granted
summary judgment in favor of defendants. D&D appeals as to some counts of the
complaint; Epstein cross-appeals as to two. On all issues properly before us, we affirm
the District Court.
I. Background
In 2001, the Board awarded construction contracts to D&D for the renovation and
expansion of five schools. To fulfill its contractual bonding requirements, D&D obtained
bonds from American Motorists Insurance Company (“the Surety”). The Surety and
D&D entered into a General Indemnity Agreement (“GIA”). It contained a provision
stating that, in the event of a default, D&D would “assign, transfer, and set over to
Surety, all of their rights under all Bonded Contract(s), including . . . all claims and
causes of actions against any parties to the Bonded Contract[.]” The Board entered into
2 contracts for the project with an architecture firm, Vitteta Group, Inc. (“Vittetta”), and a
construction management firm, Bovis Lend Lease, Inc. (“Bovis”).
Relations among the parties quickly broke down and, after repeatedly informing
D&D of issues relating to the construction, Epstein, on behalf of the Board, sent the
Surety a letter stating that D&D was in default in February 2002, but withdrew the notice
a month later. Despite the withdrawal, between March and July 2003 the Board, after
providing notice, terminated D&D from all contracts and demanded that the Surety fulfill
the contractor’s remaining obligations. The Board and the Surety entered into takeover
agreements to facilitate the completion of all responsibilities.
During this time, the Surety began to decline D&D’s requests for further large-
scale bonding. From 2000 to 2003, D&D applied for prequalification, a New Jersey
classification allowing a contractor to bid on school facilities projects. This application
was approved each year until 2003, when D&D submitted an incomplete application that
was deemed withdrawn. D&D asserts that because it had lost bonding capacity, it would
not have been eligible for prequalification even with a complete application. It filed for
Chapter 11 bankruptcy in August 2003, and its reorganization plan was approved in
January 2005.
In March 2003, D&D filed its initial complaint in this action, charging the Board,
Vitteta, Bovis, and Epstein with a variety of civil rights and tort claims. An amended
complaint added additional claims. Between 2003 and 2012, the case went through
extensive litigation at the District Court. This culminated in a March 2012 opinion that
granted summary judgment for the Board on all remaining counts and for Epstein on
3 Count Two (stigma-plus reputational harm). The same order denied both Epstein’s
motion for summary judgment on Count Ten (tortious interference) and Count Eleven
(defamation) and D&D’s motion for summary judgment on various counts. Having
disposed of all federal law claims, the District Court declined to exercise supplemental
jurisdiction over Counts Ten and Eleven, both state law claims, and dismissed those
counts against Epstein, Bovis, and Vitteta without prejudice. D&D appeals the grants of
summary judgment in favor of the Board on several counts and in favor of Epstein on
Count Two. Epstein cross-appeals the denial of his motion for summary judgment on
Counts Ten and Eleven.
II. Jurisdiction & Standard of Review
The District Court had jurisdiction over D&D’s federal law claims under 28
U.S.C. § 1331 and supplemental jurisdiction over D&D’s state law claims under 28
U.S.C. § 1367. We have jurisdiction over the appeal under 28 U.S.C. § 1291. We review
summary judgment orders de novo, applying the same test as the district court, which
states that “[s]ummary judgment is appropriate when the moving party is entitled to
judgment as a matter of law and there is no genuine dispute of material fact.” Hampton v.
Borough of Tinton Falls Police Dep’t, 98 F.3d 107, 112 (3d Cir. 1996). Where we have
jurisdiction to do so, we exercise plenary review over a denial of a motion for summary
judgment. See Giuffre v. Bissell, 31 F.3d 1241, 1251 (3d Cir. 1994).
4 III. Analysis
A. Count One: Property Seizure
In the first count of the amended complaint, D&D argues it was denied due
process through the unlawful seizure of its property. The District Court granted summary
judgment for both the Board and Epstein on this count in 2007. Although portions of
D&D’s opening brief appear to relate to this count, it has not been properly preserved on
appeal.
D&D’s opening brief does not request that this count be reinstated or at any point
identify Count One specifically as being erroneously dismissed. Where the brief to us
refers to property seizure, those arguments are entangled with contentions on other
counts. In addition, the citation seemingly intended to indicate the property-seizure claim
in the statement of issues corresponds to a section of the District Court’s 2007 opinion
concerning other claims, not Count One, meaning that the portion of the judgment
appealed from is never identified. D&D’s vague efforts are insufficient to place the issue
before us, and we make no decision on the merits of this claim.
B. Count Two: Stigma Plus
The second count of the amended complaint charges various defendants of making
false statements that deprived D&D of its liberty interest in prequalification. The
contractor argues that the District Court erred in dismissing this count against the Board
and not reinstating this count against Epstein.1
1 In a previous order, the District Court granted summary judgment for Epstein on Count Two. 5 Civil rights claims under 42 U.S.C. § 1983 based on reputational harms are known
as “stigma-plus” claims. See Hill v. Borough of Kutztown, 455 F.3d 225, 236 (3d Cir.
2006). In order to make out such a claim, “a plaintiff must show a stigma to his
reputation plus deprivation of some additional right or interest.” Id. (emphasis in
original). In other words, reputation damage is not actionable unless “it occurs in the
course of or is accompanied by a change or extinguishment of a right or status guaranteed
by state law or the Constitution.” Clark v. Twp. of Falls, 890 F.2d 611, 619 (3d Cir.
1989). While stigma-plus analysis is most common in public employment cases, see, e.g.,
Ersek v. Twp. of Springfield, 102 F.3d 79 (3d Cir. 1996), it can also be used in other
contexts, see Baraka v. McGreevey, 481 F.3d 187, 208-10 (3d Cir. 2007).
To establish stigma, the relevant statements by the defendant must be both made
publicly and false. Hill, 455 F.3d at 236. Here, D&D asserts that the Board and Epstein
falsely claimed it was in default when no formal default proceedings had occurred.
Because of the disagreement among the parties as to whether D&D was actually in
default, the District Court correctly concluded that “there is at least a factual dispute
between the parties” over whether the relevant statements were false. This dispute is
sufficient for D&D to avoid summary judgment on the stigma prong of its stigma-plus
claim.
The second, or “plus,” requirement refers to the additional deprivation needed to
transform a stigmatizing statement into a § 1983 claim. D&D suggests that the loss of its
status as a prequalified contractor satisfies this requirement. The District Court concluded
that prequalification is not an interest protected by due process, a conclusion that is at
6 least somewhat in tension with precedent. See Berlanti v. Bodman, 780 F.2d 296, 300 (3d
Cir. 1985) (noting that New Jersey recognizes “a property interest in not being arbitrarily
debarred” from public contracts that triggers “some procedural protection under the due
process clause”).
We need not determine whether a protected interest in prequalification exists
because the connection between the alleged stigma and the loss of prequalification is too
remote for stigma-plus liability against either the Board or Epstein. By D&D’s own
argument, the alleged reputational attacks affected prequalification only indirectly, by
causing the Surety to decline further bonding. Even if those indirect effects were
sufficient, the Surety’s decisions were attributable to other factors, including liens from
D&D’s subcontractors, the size of D&D’s assets, and concerns about D&D’s ability to
handle existing projects.
Moreover, in 2003, the only year D&D applied for and did not receive
prequalification, its application was missing necessary signatures, notarizations,
affidavits, and financial records. It did not respond to requests to cure these deficiencies
and, as a result, the application was deemed withdrawn. D&D has not applied for
prequalification since 2003. The contractor’s own actions in failing to apply properly for
prequalification therefore intervened between the actions of the defendants and
prequalification not being renewed. Such an attenuated connection is too strained to
support a stigma-plus claim. See WMX Techs., Inc. v. Miller, 80 F.3d 1315, 1320 (9th Cir.
1996) (“[T]he ‘stigma-plus’ test requires that the defamation be accompanied by an
injury directly caused by the Government, rather than an injury caused by the act of some
7 third party.”). Hence the loss of prequalification here is insufficient to raise a genuine
question of material fact regarding the stigma-plus claim, and the District Court did not
err in granting summary judgment on this count.
C. Counts Three & Four: First Amendment Retaliation
D&D argues the District Court erred in granting summary judgment for the Board
on the contractor’s § 1983 claims of retaliation for exercising its First Amendment rights.
The amended complaint includes two such claims: Count Three charges that the
defendants issued default letters in retaliation for D&D’s response to delays in the project
schedule; Count Four alleges that D&D’s contracts with the Board were terminated in
retaliation for this lawsuit.2
To prevail on a First Amendment retaliation claim under § 1983, “a plaintiff must
prove ‘(1) that he engaged in constitutionally-protected activity; (2) that the government
responded with retaliation; and (3) that the protected activity caused the retaliation.’”
Miller v. Mitchell, 598 F.3d 139, 147 (3d Cir. 2010) (quoting Eichenlaub v. Twp. of
Indiana, 385 F.3d 274, 282 (3d Cir. 2004)). Where the speaker is a government
employee, that person “must show that he or she spoke as a citizen on a matter of public
concern.” Borough of Duryea, Pa., v. Guarnieri, 131 S. Ct. 2488, 2493 (2011) (emphasis
added). This test, “adjusted to weigh the government’s interests as contractor rather than
2 In its appellate brief, D&D alleges the Board suppressed a newspaper article and retaliated against D&D for “protesting the Board’s unlawful attempt to proceed without building permits.” Because these arguments were apparently not raised before the District Court, they are waived and not before us. See United States v. Lockett, 406 F.3d 207, 212 (3d Cir. 2005) (“It is well settled that arguments asserted for the first time on appeal are deemed to be waived and consequently are not susceptible to review in this Court absent exceptional circumstances.”). 8 as employer,” applies to government contractors like D&D. Board of Cnty. Comm’rs v.
Umbehr, 518 U.S. 668, 673 (1996).
Count Three fails on the first prong because the speech in question was in D&D’s
capacity as a contractor, not a citizen, and therefore not constitutionally protected. D&D
claims it was retaliated against for refusing to “make false statements for public
distribution that the Projects were on schedule” and for actually making “statements that
defendants themselves had caused delays; for D&D’s requests for extensions of time and
other compensation; and for D&D’s attempt to meet with other prime contractors affected
by defendant’s improper actions to form a coordinated attempt to seek scheduling
adjustments and other redresses.” The District Court concluded that this speech was on a
matter of public concern, but was made (or not made) in D&D’s employee capacity and
not protected by the First Amendment. On appeal, D&D does not challenge the
conclusion that the relevant speech was in its capacity as an employee. Because there is
no underlying constitutionally protected speech, it is unnecessary to reach the other steps.
Therefore, the District Court did not err in granting summary judgment for the Board on
Count Three.
Count Four, charging that the Board retaliated against D&D for initiating this
litigation, has not been properly preserved for appeal. As discussed above with regard to
Count One, appellants are deemed to have abandoned a claim on appeal unless, in their
opening brief, they identify that claim in the statement of issues and present arguments in
support of their position on that claim. See Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.
1993) (“[C]asual mention of an issue in a brief is cursory treatment insufficient to
9 preserve the issue on appeal.”). Here, D&D requested in its conclusion that this count be
reinstated against the Board but made no arguments regarding retaliation for initiating
litigation anywhere in the brief. Nor, for that matter, did D&D specifically refer to
retaliation for litigation in its statement of the issues. While D&D’s reply brief contains
some specific references to this claim, mention in a reply brief does not remedy the
absence of issues in the initial appellate brief. See Hoxworth v. Blinder, Robinson & Co.,
903 F.2d 186, 204-05 n. 29 (3d Cir. 1990) (“As a general matter, the courts of appeals
will not consider arguments raised on appeal for the first time in a reply brief.”). This
argument is abandoned, and we need not address it here.
D. Count Eight: Breach of Contract
Count Eight of the complaint alleged contractual breaches by the Board. The
District Court granted summary judgment to the Board on the ground that the claim had
been assigned to the Surety. On appeal, D&D argues that the grant of summary judgment
was inappropriate for several reasons, but does not challenge the District Court’s general
reasoning.
First, D&D charges that the District Court improperly ignored relevant state law,
specifically a series of cases under the New Jersey Trust Fund Act (“NJTFA”), N.J. Stat.
Ann. § 2A:44-148. This line of argument is precluded. In granting summary judgment on
Count Seven, the District Court specifically concluded that the NJTFA does not apply in
this case because, under New Jersey law, no trust had been created. Because D&D has
not appealed the District Court’s ruling on Count Seven, res judicata precludes this
10 argument. See Laborers’ Int’l Union of N. Am. v. Foster Wheeler Energy Corp., 26 F.3d
375, 396 n. 24 (3d. Cir. 1994).
Second, D&D argues that the District Court’s grant of summary judgment violated
Federal Rule of Civil Procedure 17(a)(3) because it did not allow time for the real party in
interest to “ratify, join, or be substituted into the action.” Fed. R. Civ. P. 17(a)(3).
Because this claim appears not to have been raised at the District Court, it is waived and
not properly before us. See United States v. Lockett, 406 F.3d 207, 212 (3d Cir. 2005).
Third, D&D argues that United States v. Aetna Casualty & Surety Co., 338 U.S.
366 (1949), controls here and requires the conclusion that D&D was entitled to pursue
the breach of contract claim in its own name. Aetna is inapplicable because it concerns an
entirely dissimilar fact pattern. In that case, the Supreme Court held that where an insurer
has only partially paid a claim and is therefore a partial subrogee to the insured, both the
insured and the insurer may bring actions in their own names for the portions of the claim
they respectively hold. See id. at 380-81. Here the District Court concluded that D&D’s
rights were wholly, not partially, assigned to the Surety. D&D has not argued, nor even
clearly suggested, that the ruling was in error for concluding that the contractual rights
were wholly assigned. Aetna and cases following it thus provide no reason to question the
District Court’s conclusion.
Fourth, D&D argues that its confirmed Reorganization Plan foreclosed the District
Court’s conclusion that the Surety is the real party in interest. As the District Court
specifically noted, this argument was raised for the first time in D&D’s motion to alter
judgment, which was interpreted as a motion for reconsideration. Thus, despite the fact
11 that the Reorganization Plan was filed in 2004 and the Board first sought summary
judgment because the Surety was the real party in interest in 2006, D&D did not raise this
argument until 2012.
The Reorganization Plan argument is effectively an appeal of the denial of the
motion for reconsideration. This motion can only be granted if the party seeking to alter
the judgment can show “(1) an intervening change in the controlling law; (2) the
availability of new evidence that was not available when the court granted the motion for
summary judgment; or (3) the need to correct a clear error of law or fact or to prevent
manifest injustice.” Max’s Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669,
677 (3d Cir. 1999). As the District Court concluded, there was neither an intervening
change in law nor new evidence, meaning only a “clear error of law or fact” or the
prevention of “manifest injustice” could justify granting the motion. Neither occurred
here. D&D cannot use a motion for reconsideration to avoid the consequences of failing,
without providing any explanation, to raise this argument in the six years this issue has
been under litigation. See United States v. Dupree, 617 F.3d 724, 732 (3d Cir. 2010)
(“Such motions are granted for ‘compelling reasons,’ such as a change in the law which
reveals that an earlier ruling was erroneous, not for addressing arguments that a party
should have raised earlier.” (internal quotation marks omitted) (quoting Solis v. Current
Dev. Corp., 557 F.3d 772, 780 (7th Cir. 2009))).
For all these reasons, the District Court did not err in granting summary judgment
for the defendants on Count Eight, nor did it err in denying the motion for
reconsideration.
12 E. Counts Ten and Eleven: Tortious Interference and Defamation
Epstein cross-appeals on Count Ten, which charged him and other defendants with
tortious interference with D&D’s business, and Count Eleven, which alleged that he and
other defendants defamed D&D. The District Court declined to exercise supplemental
jurisdiction over these state law claims and dismissed them without prejudice as to
Epstein, Bovis, and Vitteta. Epstein contends that the District Court erred in doing so
because both claims are barred by the New Jersey absolute litigation privilege for
attorneys and the Board’s immunity ought to have been extended to him.
“[F]ederal appellate courts have jurisdiction to hear appeals only from ‘final
decisions’ of the district courts. Accordingly, we normally do not entertain appeals from
a district court order denying a motion for summary judgment because such orders do not
put an end to the litigation.” Rivas v. City of Passaic, 365 F.3d 181, 191 (3d Cir. 2004)
(citation omitted). Epstein’s appeal is particularly unusual because these counts have
been dismissed against him and D&D has not appealed their dismissal. He apparently
seeks, through this cross-appeal, to preclude the bringing of these claims against him in
state court through a grant of summary judgment in his favor.
Epstein argues that, because a dismissal without prejudice where the case cannot
be reinstated in federal court is equivalent to a dismissal with prejudice, the decision is
final and denial of summary judgment is reviewable. See Morton Int’l, Inc. v. A.E. Staley
Mfg. Co., 460 F.3d 470, 477 (3d Cir. 2006) (“[A] case dismissed without prejudice that
cannot be reinstituted is in the same position as a case dismissed with prejudice in that
both classes of cases have reached finality.”). This principle, however, is drawn from
13 cases assessing the finality of dismissals without prejudice as they relate to the finality of
orders on other issues, not interlocutory orders on the same issue. See, e.g., Tiernan v.
Devoe, 923 F.2d 1024, 1031 (3d Cir. 1991).
While the dismissals without prejudice of Counts Ten and Eleven are final, that
does not render the decision to deny summary judgment directly reviewable. Reviewing
the denial of summary judgment would impermissibly end run the District Court’s
discretionary decision declining supplemental jurisdiction. By statute, a “district court[]
may decline to exercise supplemental jurisdiction over a claim” when it “has dismissed
all claims over which it has original jurisdiction,” precisely as occurred here. 28 U.S.C. §
1367(c). Moreover, by Epstein’s own arguments, deciding these claims would require
determining the effect of New Jersey’s absolute litigation privilege, which shields
attorneys and parties from defamation liability based on statements made in judicial or
quasi-judicial proceedings. See, e.g., Hawkins v. Harris, 661 A.2d 284, 289 (N.J. 1995).
The application of this privilege represents a significant and complex state law question
that suggests an additional reason based on statute to decline supplemental jurisdiction.
See 28 U.S.C. § 1367(c) (“The district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if . . . the claim raises a novel or complex
issue of State law[.]”).We review the decision not to exercise supplemental jurisdiction
only for abuse of discretion. See Elkadrawy v. Vanguard Grp., Inc., 584 F.3d 169, 172
(3d Cir. 2009). The District Court therefore did not abuse its discretion in declining to
exercise supplemental jurisdiction over these claims.
14 * * * * *
In short, the District Court did not err in granting summary judgment on any count
properly before us on appeal, nor did it abuse its discretion in dismissing without
prejudice the remaining state law counts.3 We affirm its judgments.
3 Because they are now moot, we deny Epstein’s motion to supplement the appendix and D&D’s motion to combine its briefs. 15