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Short v. Portsmouth Redevelopment and Housing Authority

United States District Court, E.D. Virginia, Norfolk Division

March 8, 2018

HARRY L. SHORT, Plaintiff,
v.
PORTSMOUTH REDEVELOPMENT AND HOUSING AUTHORITY, VERBENA M. ASKEW and THE VERBENA ASKEW LAW FIRM, P.C., Defendants.

          MAGISTRATE JUDGED REPORT AND RECOMMENDATION

          DOUGLAS E. MILLER UNITED STATES MAGISTRATE JUDGE

         In this employment dispute, Plaintiff Harry L. Short ("Short") filed suit against his former employer, Portsmouth Redevelopment and Housing Authority ("PRHA" or the "Authority"); its attorney, Verbena Askew ("Askew"); and her law firm. Short contests his termination as PRHA's Executive Director, and claims Askew defamed him in statements she made to reporters after his firing. He has alleged contract and defamation claims, as well as constitutional violations under 41 U.S.C. § 1983, claiming the Defendants deprived him of property and liberty interests related to his employment without providing due process. The Defendants have moved to dismiss the defamation and constitutional claims asserting immunity and sufficiency arguments under Federal Rule of Civil Procedure 12(b)(6). For the reasons stated in detail below, this Report recommends the court grant in part and deny in part the motion to dismiss.

         I. FACTS

         Short was Executive Director of the PRHA from 2009 until his termination on August 2, 2016.[1] Compl. ¶¶ 18-19 (ECF No. 1-1). His written Employment Agreement (the "Agreement") provided him with a rolling three-year renewable term of employment. In other words, unless PRHA terminated the Agreement, it would renew each year for a three-year term. Id., ¶ 9, and Ex. 1, ¶ 1. The three-year Agreement was renewed every year from 2 011 to 2016. Id. ¶ 10 .

         Under the Agreement, Short could be terminated without cause by providing written notice of the termination date and paying Severance Pay, which was defined under the Agreement as the amount of his salary due for the remaining term of the Agreement, but in no event less than two years' salary. id., Ex. 1, ¶¶ 11.3, 11.4 (ECF No. 1-1). The Authority could also terminate for cause, by providing written notice setting forth the reasons for the termination and the effective date. In the event of a termination for cause, the Authority did not have to pay Severance, only the compensation due to Short through the termination date. Id., ¶ 11.4(a) - (d) . In the event of a termination for cause, the Agreement does not provide any ability to contest the cause. It provides only that the Authority "shall not act in an arbitrary and capricious manner, " and that upon notice the Agreement "shall cease at once." Id.

         On August 2, 2016, PRHA terminated Short, by notifying him in writing that he breached paragraphs 2 and 3 of the Agreement, and that he willfully engaged in conduct "injurious to PRHA" in violation of ¶ 11.4 of his Employment Agreement. Paragraphs 2 and 3 of the Agreement generally provide that Short would serve as Executive Director as provided by the By-Laws and use his best efforts to perform his duties consistent with the Board's regulations and requirements of other jurisdictions overseeing the work of the Authority. Compl. ¶¶ 20, 23 (ECF No. 1-1) . The notice Short received did not specify how he had violated either paragraph 2 or 3 of the Agreement. Likewise, the notice did not disclose what conduct of Short was "demonstrably injurious to the PRHA." Compl., Ex. 3 (ECF No. 1-1). Short has alleged that at all times he performed his prior work competently, and did not engage in any conduct which was willfully injurious to PRHA. Compl. ¶¶ 22, 25, 28. In terminating him for cause the PRHA did not pay Severance Pay under the terms of the Agreement. Short's annual salary was approximately $176, 000.00. As a result, under the language of the Agreement, the minimum Severance Pay required if PRHA terminated him without cause was approximately $352, 000.00. Compl. ¶ 10, and Ex. 1 at ¶ 11.4. (ECF No. 1-1).

         Approximately a week after Short's firing, Askew, in her capacity as attorney for PRHA, was interviewed by reporters concerning an ongoing investigation related to the Greater Portsmouth Development Corp. Compl. ¶ 3 0 (ECF No. 1-1). Although Askew's statements are not quoted in detail, the Complaint alleges that she told reporters for The Virginian Pilot newspaper and WAVY TV that a "criminal investigation" was underway involving Short and former PRHA Deputy Director Kathy Warren related to "how Greater Portsmouth Development Corporation 'handled business deals'." Compl. ¶¶ 30, 36 (ECF No. 1-1) . Short alleges these statements were untrue, and that Askew knew they were untrue "and/or made them with reckless disregard for their truth or falsity." Compl. ¶¶ 33, 3 8 (ECF No. 1-1) .

         The article and news stories resulting from Askew's interview, which were attached to the Complaint as exhibits, quoted anonymous sources who stated that the HUD Inspector General was "looking into the City's housing Authority, " and that the investigation related to the Board's decision to award a contract for legal services to a law firm which had not previously done work for PRHA. Compl., Ex. 4 (ECF No. 1-1). The newspaper article also reported Short's firing which had occurred earlier. The television report focused more on the Greater Portsmouth Development Corporation. It mentions a criminal investigation and attributes to Askew the statement that the investigation "does not involve the Board but rather Mr. Short and his former deputy, " who had resigned earlier in the summer.

         Based on the foregoing facts, Short filed suit against PRHA, Askew and her law firm asserting claims for breach of contract and defamation, as well as constitutional claims under 42 U.S.C. § 1983. Askew and her law firm have moved to dismiss the entire Complaint against them, arguing that the claimed statements made by Askew were not defamatory, and citing deficiencies in Short's allegations of New York Times malice in light of Short's status as a public official. Askew also argues that the § 1983 claims against her fail because she was not a state actor at the time the statements were made. For its part, PRHA does not seek dismissal of Short's contract claim, but argues that his allegations are insufficient to assert constitutional violations. The Authority argues that his contract provides the sole remedy and that the Agreement's provisions permitting termination without cause establish that he had no property interest in continued employment, and thus no claim for deprivation of that property interest under 42 U.S.C. § 1983. The Authority also asserts defenses to its liability for defamation, challenging both the substance of the defamatory statements and allegations that the Authority could be liable for Askew's statements under respondeat superior. After reviewing the Complaint, the parties' briefs and oral argument, this Report concludes that Askew's Motion to Dismiss should be granted, as Short has not pled sufficient facts to sustain any of his claims against her or her firm. The Authority's Motion to Dismiss should be granted in part and denied in part, as Short has plausibly alleged violations of due process related to his termination but has not adequately pled any basis for the Authority to be liable for Askew's alleged defamation.

         II. STANDARD OF REVIEW

         "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A pleading fails to meet this standard and is subject to dismissal under Rule 12(b)(6) when it does not "contain sufficient factual matter, accepted as true, to 'state a claim 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)). A claim has facial plausibility when the plaintiff pleads factual content "that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Factual allegations must be enough to raise a right to relief above the speculative level" and beyond the level that is merely conceivable. Twombly, 550 U.S. at 555. Legal conclusions and " [t]hreadbare recitals of the elements of a cause of action" do not state a claim. Iqbal, 556 U.S. at 678.

         The United States Supreme Court has described the motion to dismiss analysis in two parts. First, the court must accept the allegations of fact as true. Id. However, a court is not required "to accept as true a legal conclusion couched as a factual allegation, " Papasan v. Allain, 478 U.S. 265, 286 (1986), or a legal conclusion unsupported by factual allegations. Iqbal, 556 U.S. at 678-79. After reviewing the allegations, the court must then consider whether they are sufficient to state a plausible claim for relief. This is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. A Rule 12(b)(6) motion, then, should be granted if, "after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief." Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).

         III. ANALYSIS

         A. Short has not plausibly alleged a defamation claim against Askew or the Askew firm, and Counts 3 and 4 should be dismissed.

         The parties disagree about the elements of a defamation claim necessary to survive a motion to dismiss. Askew argues that the specific defamatory statements must be pled in haec yerba, and that Short's failure to do so is fatal to both defamation counts. She also argues that Short is a public official, and thus, her allegedly defamatory statements must have been made with New York Times malice. Short disputes both these points, arguing that the ordinary federal pleading standard applies to defamation claims, and that he is no ...


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