Teleprompter of Erie, Inc. v. City of Erie

• Decision Date: 13 July 1983
• Docket Number: Civ. A. No. 81-17 ERIE.
• Citation: 567 F. Supp. 1277
• Parties: TELEPROMPTER OF ERIE, INC., a corporation v. The CITY OF ERIE, a municipal corporation, and its elected officials, officers and agents, the Council of the City of Erie, a legislative body, Larry D. Meredith, President of the Council of the City of Erie in his representative capacity and as an individual, Erie Telecommunications, Inc., a corporation, and Greater Erie Economic Development Corporation, a corporation.
• Court: U.S. District Court — Eastern District of Pennsylvania

567 F. Supp. 1277

TELEPROMPTER OF ERIE, INC., a corporation v. The CITY OF ERIE, a municipal corporation, and its elected officials, officers and agents, the Council of the City of Erie, a legislative body, Larry D. Meredith, President of the Council of the City of Erie in his representative capacity and as an individual, Erie Telecommunications, Inc., a corporation, and Greater Erie Economic Development Corporation, a corporation.

Civ. A. No. 81-17 ERIE.

United States District Court, W.D. Pennsylvania.

July 13, 1983.

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William Burke, Erie, Pa., Gregory Harvey, Michael R. Lastowski, Philadelphia, Pa., for plaintiff.

Harold Schmidt, Pittsburgh, Pa., John Quinn, Jr., Erie, Pa., for defendant ETI.

J. David Ungerman, Stephen H. Hutzelman, Erie, Pa., for defendant Larry Meredith.

Thomas Ridge, Erie, Pa., for defendant GEEDC.

John R. Wingerter, Erie, Pa., for defendant City of Erie.

OPINION

WEBER, District Judge.

This lawsuit arises out of the award of a cable television franchise in Erie, Pennsylvania. The plaintiff Teleprompter of Erie is a Pennsylvania corporation that unsuccessfully competed for the cable franchise and thereafter brought this action against the City of Erie, the City Council of the City of Erie, City Council President Larry Meredith, The Greater Erie Economic Development Corporation, and the successful bidder, Erie Telecommunications, Inc. (hereinafter "ETI"). The Erie City Council (hereinafter "Council") manifested its intention to procure a cable communication system destined to return substantial revenue to the city coffer by passing the Erie Cable Communications Franchise Agreement Ordinance on May 7, 1980.¹ The franchise was ultimately awarded on October 29, 1980. It is the process employed in making the award, as well as more particularized allegations of impropriety, that gives rise to this civil rights action. The defendants have moved for summary judgment with respect to all counts of plaintiff's complaint. The plaintiff has filed a cross-motion for partial summary judgment.

I. Factual Background

Pursuant to the Cable Franchise Ordinance, the City Clerk of the City of Erie issued to interested parties a Request for Proposals for the purpose of soliciting bids for the design and installation of a cable television system. The City of Erie opened the registered applicants' sealed envelopes on June 16, and in August 1980 public hearings were held at which each of six applicants made a formal and public presentation of their proposals. The City Council adopted a resolution on August 13, 1980, which set the date of August 25, 1980, as the deadline beyond which no further information from applicants would be accepted.

On September 10, 1980, Erie Comcast was selected as the successful bidder for the cable television franchise and negotiations with Comcast commenced thereafter. An inconsistency between statements which had been made by Comcast in its application for an Urban Development Action Grant and statements made by Comcast representatives relating to the financial ability of the company to construct a cable television system prompted Council to discontinue its negotiations with Comcast. Although the City Council was empowered to reject all remaining applications theretofore accepted, it did not do so. On October 8, Council, by resolution selected ETI as the successful applicant with whom it would negotiate.

On October 15, 1980, because of some confusion with the balloting procedure used previously, Council rescinded the resolution that selected ETI as the successful applicant. On October 22, 1980, ETI and the plaintiff Teleprompter were selected as successful bidders. On October 28, meetings were held between the City Council and representatives of both Teleprompter and ETI. On October 29, 1980, the City Council by a 4-3 vote selected ETI as the successful bidder and awarded it the cable television franchise. A cable franchise agreement was eventually executed between the City of Erie and ETI on November 11, 1980.

A distinct, collateral, yet related set of facts relevant to this lawsuit took place over the course of the City Council's consideration of the proposed bids. In July of 1980, Messrs. Rush, Wiley, and Roy, Officers and Directors of the Greater Erie Community Action Corporation (hereinafter "GECAC") met with Erie Mayor Louis Tullio to discuss the potential for a testimonial in honor of City Council President, Larry Meredith.² Councilman Meredith later joined the four men at the meeting and consented to the idea of a testimonial. The affair was subsequently held at the home of Mayor Tullio on October 29, 1980.

The complaint, filed on January 22, 1981, was originally presented in four counts. Plaintiff alleges that the City of Erie and the City Council awarded the cable communications system contract in a discriminatory, arbitrary, and unlawful manner in violation of its constitutional rights to due process and equal protection of the laws as guaranteed by the Fourteenth Amendment (Count I). Plaintiff charges that ETI, GEEDC, and Meredith deliberately conspired in a scheme of bribery to award the cable contract to ETI in further violation of plaintiff's constitutional rights (Count II). The district court dismissed alleged violations of RICO (18 U.S.C. § 1961 et seq.) (Count III) by reason of plaintiff's failure to allege a series of unlawful acts needed to sustain a cause of action under the "pattern of racketeering activity" requirements of RICO. Teleprompter of Erie, Inc. v. City of Erie, 537 F.Supp. 6, 12-13 (W.D.Pa.1981). Finally, plaintiff alleges various pendant state claims. (Count IV).

On February 25, 1982, the defendant ETI filed its motion seeking summary judgment as to the remaining Counts I, II, and IV of plaintiff's complaint. Defendant's motion has been adopted by the remaining defendants. Defendants, the City of Erie, the City Council of the City of Erie, and GEEDC filed similar motions on February 26 and March 11, 1980. The defendant Larry Meredith, in his motion for summary judgment filed on March 17, 1982, specifically references the motion filed on behalf of ETI and adopts the arguments contained therein as his own.

Accordingly, we will more fully address the challenges to plaintiff's complaint raised by the defendant ETI. In addition to its claim for summary judgment, defendant ETI asserts two affirmative defenses, and a blanket challenge to the substantive basis of plaintiff's summary judgment claims on the basis of the court's order of December 24, 1981, by which certain Requests for Admission were granted.

Certain of defendants' earlier challenges have reappeared and apply to both Counts I and II. The defendants intimate that plaintiff has failed to demonstrate a sufficient entitlement or expectation of entitlement to give it a property right under the due process clause of the United States Constitution. We find this argument a hybrid of sorts which blends a previously resolved question of the requisite property interest considered by the prior opinion of the district court and the standing issue raised here for the first time. We will resolve these converging issues in due course.

On March 8, 1982, this court ordered plaintiff to file a consolidated response to defendants' motion. The plaintiff filed various responses on April 5, 1982, along with its cross-motion for partial summary judgment.

The issues have been fully briefed by the parties and are ripe for the court's consideration. The inquiry begins with a review of the affirmative defenses since our ruling on these could obviate the need to proceed with an analysis of all or part of the substantive claims.

II.

(1) The Defense of Estoppel.

It has been said that one who is silent when he ought to speak will not be heard to speak when he ought to be silent. Morgan v. Chicago & A.R. Co., 96 U.S. 716, 720, 24 L.Ed. 743 (1877).

Defendants challenge plaintiff's claims under Count I and Count IV, those counts alleging the illegality of the selection process utilized by the City in awarding its CATV franchise, on the grounds that plaintiff must now be estopped from challenging a process to which it had been a willing participant.

The defendants adhere to the doctrine of quasi-estoppel which is regarded as a species of equitable estoppel. The purpose of the doctrine is to forbid one to speak against his own "act, representations, or commitments to the injury of one to whom they were directed and who reasonably relied thereon." 28 Am.Jur.2d Estoppel and Waiver § 27 (1966). To claim the benefit of the bar it must be demonstrated that the party to be estopped 1) by word or deed, concealed or misrepresented material facts; 2) with an intent that such conduct be acted upon; and 3) that such conduct was engaged in with actual or constructive knowledge of the real facts. The estoppel defense may be sustained where a party, with sufficient notice and means of knowledge, remains inactive, acquiesces, or otherwise abstains from impeaching a contract or challenging a transaction. 28 Am.Jur.2d § 57. Again, there can be no acquiescence where there is no knowledge, the acquiescence must have been with actual or constructive knowledge of the facts.

We consider first whether in the context of this case, the alleged prior inconsistent position taken by plaintiff was with full knowledge of the material facts. Our essential inquiry is what plaintiff knew and when it knew it.

Council passed a series of resolutions on May 7, 14, and 28, 1980, to facilitate the submission of bids by prospective applicants. The selection of Comcast as the successful bidder was made on September 10, 1980. Thereafter, Council began negotiations and it was discovered that certain inconsistencies existed in the statements made by Comcast's representatives. Plaintiff had no notice of any impropriety in the selection process up to this point in time since the selection and...