Gradetech, Inc. v. City of San Jose, 19-cv-06157-NC

Decision Date16 September 2021
Docket Number19-cv-06157-NC
CourtU.S. District Court — Northern District of California
PartiesGRADETECH, INC., and SAM RIVINIUS, Plaintiffs, v. CITY OF SAN JOSE, and others, Defendants.



After three motions to dismiss and a Ninth Circuit appeal, this safety-first First Amendment case is once again before the Court on a motion to dismiss for failure to state a claim. The Court must now evaluate: (1) whether the third amended complaint (TAC) sufficiently alleges that Gradetech expressed a bona fide concern about public safety per the Ninth Circuit's directive, and (2) whether the Court has jurisdiction to issue the requested writ of mandamus. After reviewing the TAC and briefing, the Court finds that Plaintiffs fail to lay a solid foundation for their claims. Accordingly, the Court GRANTS Defendants' motion to dismiss.

Lake Cunningham Bike Park Project

According to the TAC, on March 28, 2016, Gradetech, a California licensed contractor, entered into a contract with the City to construct the Lake Cunningham Bike Park. ECF 75 at ¶¶ 22, 5, 16. Gradetech's bid for the project, and the amount the City agreed to pay for the work, was based on the original plans submitted to the City by Verde Design and Hilride Progression Development Group, LLC. Id. at ¶¶ 22, 18. On May 23, 2016, Gradetech broke ground on the Project. Id. at ¶ 23. Around August 2016, the City and Hilride began modifying aspects of the original plans, namely enlarging the dirt jumps, without providing updated plans to Gradetech. Id. at ¶¶ 24, 25. On September 1, 2016, Gradetech submitted a Notice of Potential Claim for the “significant changes” in grading and resulting cost increases and delays to Defendant Chris Mastrodicasa, the City's Associate Landscape Developer. Id. at ¶ 28, 9. The City “ignored” Gradetech's concerns. Id. at ¶ 28. On December 16, 2016, Gradetech warned the City that Hilride was again increasing the size of the jumps. Id. at ¶ 29. On December 23, 2016, Gradetech notified the City that the final project was seriously deviating from the original plans. Id. at ¶ 30.

On September 20, 2017, Gradetech sent another letter to the City regarding the significant changes to the original design and expressing safety concerns about the lack of a fence around the Park and the need for adequate maintenance. Id. at ¶ 31. The City responded by “rebuff[ing] Gradetech's concerns as being self-serving.” Id. at ¶ 32. Gradetech sent another warning on November 15, 2017, suggesting that the City should consider its heightened exposure and loss of immunity in light of the previously identified safety risks. Id. Mastrodicasa and the City “took no action to investigate” the increased dirt jump heights and did not enclose the Park with a fence. Id. at ¶ 33. The Park was completed in 2017. Id. at ¶ 35.

On November 15, 2017, Gradetech submitted a claim letter and Daily Extra Work Report for the costs incurred due to the changes to the original plan for the Park, totaling approximately $1, 850, 000. Id. at ¶ 34. The City later discovered that Gradetech's Daily Extra Work Report from the Park “was not consistent with its certified payroll records.” Id. at ¶ 44. On March 21, 2018, Gradetech sued the City in state court for breach of contract based on the City's failure to “compensate [Gradetech] as required by the contract for the Project.” Id. at ¶ 36. //


On January 30, 2019, the City sought bids for the 2019 Minor Streets Projects. Id. at ¶ 38. With its project proposal, the City included a contractor scoring sheet and a note reserving the City's right to “rely on any information about the contract, independent of the Submittal Scoring Sheet, to determine that a contractor is not qualified.” Id. at ¶ 39. On February 27, 2019, Gradetech submitted a bid for the project. Id. at ¶ 42.

On May 6, 2019, the City sent a Notice of Disqualification alerting Gradetech that it was disqualified from the project's contractor pool because “it submitted materially incorrect documentation of compensation in the 7187 - Lake Cunningham Bike Park contract.” Id. at ¶ 45. Gradetech sent a request for a hearing to Defendant David French, a member of the City's Public Works Department. Id. at ¶¶ 45, 9. On June 21, 2019, the City held the hearing in front of Defendant Matt Loesch, the City's Assistant Director of Public Works. Id. at ¶ 48, 12. And on July 1, 2019, Defendant Jim Ortbal, the City's Deputy Manager, sent a letter to Gradetech affirming the disqualification, again citing the “contradictory, certified payroll records submitted by Gradetech.” Id. at ¶ 50, 48.

A. Procedural Background

On September 27, 2019, Plaintiffs sued Defendants under 42 U.S.C. § 1983 for First Amendment retaliation and petitioned for a writ of mandamus. ECF 1. Defendants moved to dismiss the complaint arguing that it failed to state a claim. ECF 11. Plaintiffs responded by filing a first amended complaint (FAC). ECF 15. In addition to the retaliation claim and petition for a writ of mandamus, the FAC included two new § 1983 claims for deprivation of liberty and property. Id. On December 24, 2019, Defendants moved to dismiss the FAC for failure to state a claim. ECF 17. The Court denied the motion as to the retaliation and deprivation of property claims and granted the motion as to the deprivation of liberty claim with leave to amend after finding Defendants' qualified immunity defense lacking. ECF 40. On April 28, 2020, Defendants appealed the Court's denial of their qualified immunity defense to the First Amendment retaliation and deprivation of property claims in the FAC to the Ninth Circuit. ECF 42.

On April 24, 2020, Plaintiffs filed a second amended complaint (SAC) again alleging First Amendment retaliation, deprivation of liberty and property, and petitioning for a writ of mandamus. ECF 41. Once more, Defendants moved to dismiss the SAC for failure to state a claim. ECF 44. On July 10, 2020, the Court granted the motion to dismiss the SAC for failure to cure the deficiencies identified in the Court's previous order, thereby leaving only the two claims on appeal and the petition for writ of mandamus. ECF 59. Following the Court's order, Defendants filed a motion to stay the proceedings pending the resolution of the Ninth Circuit appeal, which the Court granted. ECF 60; ECF 67. Soon after, Plaintiffs filed a motion to certify the Defendants' appeal as frivolous, which the Court denied. ECF 61; ECF 67.

On April 16, 2021, the Ninth Circuit reversed the Court's denial of qualified immunity on the retaliation and deprivation of property claims in the FAC. ECF 71. The Ninth Circuit determined that the FAC does not plausibly plead a claim of retaliation because the “barebones allegations alone” are not enough to determine whether Gradetech voiced a “bona fide concern about public safety.” Id. at 3. The Ninth Circuit instructed this Court to dismiss the retaliation claim with leave to amend. Id. at 4. The Ninth Circuit also determined that Gradetech did not identify any cases holding that violation of an alleged contractual interest violates a substantive due process right to property. Id. at 4-5. Thus, Defendants were entitled to qualified immunity on this claim. Id. at 5. The Ninth Circuit did not instruct the Court to grant leave to amend finding that amendment would be futile “given the lack of clearly established law.” Id.

After the case was remanded, Plaintiffs filed a third amended complaint (TAC). ECF 75. On July 30, 2021, Defendants filed the instant motion to dismiss the TAC for failure to state a claim for First Amendment retaliation and for lack of jurisdiction over the petition for a writ of mandamus. ECF 78. On September 8, 2021, the Court held a hearing on the motion. ECF 88. All parties have consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c). ECF 7; ECF 10; ECF 23.

A. Rule 12(b)(6)

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “To survive a motion to dismiss, a 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)). When reviewing a 12(b)(6) motion, a court “must accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the non-moving party.” Retail Prop. Trust v. United Bd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). A court, however, need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. If a court grants a motion to dismiss, leave to amend should be granted unless the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).

B. Rule 12(b)(1)

Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Federal Rule of Civil Procedure 12(b)(1) allows a defendant to move to dismiss a claim for lack of subject-matter jurisdiction. “It goes without saying that those who seek to invoke the jurisdiction of the federal courts must satisfy the threshold requirements imposed by Article III of the...

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