2004 | Cited 0 times | D. Massachusetts | December 10, 2004


This case arises out of a dispute between a developer and aTown Planning Board over the construction of public ways andimprovements for a new residential subdivision. The developer,Eric E. Pearson ("Pearson"), and the associated constructionfirm, Deer Run, Inc. ("Deer Run") allege 1) violations42 U.S.C. § 1983, 2) negligence and 3) violations of M.G.L. c. 93A againstten defendants including, inter alia, the Town of Rutland("Rutland"), members of Rutland's Planning Board in theirindividual and official capacities, Cullinan Engineering, Inc.("Cullinan"), Cullinan Engineer, Tom Hogan ("Hogan") and FirstMassachusetts Bank, N.A. Pearson brings this action pro se but the corporate co-plaintiff is represented bycounsel.

Pending before this Court is the motion to dismiss of thedefendant, First Massachusetts Bank, N.A. ("the Bank"), on thegrounds that, with respect to any claims raised against it, 1)the plaintiff has not pled a viable § 1983 claim, 2) thedismissal of the § 1983 claim mandates dismissal of the allegedcommon law claims and 3) a prior, parallel action is pending in astate court in New Hampshire.

The Town of Rutland and members of its Planning Board ("theMunicipal Defendants") move simultaneously to stay this matteruntil September 27, 2002 pursuant to an order of the CommonwealthCourt of Pennsylvania.

I. Legal Standard

A Court should not dismiss a complaint for failure to state aclaim under Fed.R.Civ.P. 12(b)(6) unless "it appears beyonddoubt that the plaintiff can prove no set of facts in support ofhis claim which would entitle him to relief." Roeder v. AlphaIndus., Inc., 814 F.2d 22, 25 (1st Cir. 1987), quotingConley v. Gibson, 355 U.S. 41, 45-46 (1957). A court'spurpose in reviewing a motion to dismiss is to gauge whether thecomplaint alleges facts adequate to support a cause of action.Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1stCir. 1998). In considering such a motion, the court must "draw all inferences reasonablyextractable from the pleaded facts in the manner most congenialto the plaintiff's theory." Id.

Federal courts traditionally have safeguarded the rights ofpro se litigants, examining pro se complaints under lessstringent standards. See e.g., Raineri v. United States233 F.3d 96, 97 (1st Cir. 2000); Haines v. Kerner, 404 U.S. 519,520-21 (1972) (per curiam). However, a plaintiff, even oneproceeding pro se, may not rely on "bald assertions,periphrastic circumlocutions, unsubstantiated conclusions, [and]outright vituperation." Berner v. Delahanty, 129 F.3d 20,(1st Cir. 1997) (internal citations omitted).

When ruling on a 12(b)(6) motion to dismiss for failure tostate a claim, the court may consider only the facts alleged inthe pleadings, documents attached as exhibits or incorporated byreference in the complaint and matters of which judicial noticemay be taken. Nollet v. Justices of the Trial Court of Mass.,83 F. Supp. 2d 204, 208 (D. Mass. 2000) aff'd, 248 F.3d 1127 (1stCir. 2000) (unpublished opinion); C. Wright & A. Miller, FederalPractice and Procedure Civil 2d § 1357, (noting that in thecontext of a Rule 12(b)(6) motion, while the court principallyevaluates the allegations in the complaint, a court may take intoaccount matters of public record, orders and exhibits attached to the complaint).

Here, the Bank has attached to its motion materials relevant toits New Hampshire action including the writ of summons, pleadingsand a request for admissions. Although this Court's analysisdraws upon the parties' uncontroverted statements about the NewHampshire action, it deems it prudent, with the exception of theBanks' petition for attachment, not to consider any of theremaining extrinsic evidence. Boateng v. InterAmerican Univ.,Inc., 210 F.3d 56 (1st Cir. 2000), cert. denied 531 U.S. 904(2000) (court may look to matters of public record, includingdocuments from prior state court adjudications); Citicorp NorthAmerica, Inc. v. Ogden Martin Sys. of Haverhill, Inc.,8 F.Supp.2d 72 (D.Mass 1998) (court may consider documents whoseauthenticity is not questioned). The full record in a separate,albeit related, action is unnecessary to the disposition of thissuit in its current posture.

II. Factual Background

On a motion to dismiss, the facts are presumed as alleged inthe plaintiffs' pleadings. Monahan v. Dorchester CounselingCtr., 961 F.2d 987, 988 (1st Cir. 1992).

The present case involves the ill-starred construction of aresidential complex in Rutland, Massachusetts by Pearson, throughan associated construction company, Deer Run. Pearson, a New Hampshire resident, is the principal of Deer Run,a Massachusetts corporation headquartered in Worcester,Massachusetts.

The members of Rutland's Planning Board, Michael Sullivan("Sullivan"), Norman W. Anderson ("Anderson"), Harry C. Johnson("Johnson"), Brian Stidsen ("Stidsen"), Charles Richard Williams("Williams") and Carl Christiansen ("Christiansen"), wereresponsible for overseeing the application for and subsequentdevelopment of the ways and municipal services for new buildingprojects in the Town and were involved in the eventsprecipitating this dispute.

On August 13, 1996, the Planning Board granted finalsubdivision approval ("the Approval") for a 45-lot, single familysubdivision on Pleasantdale Road. Pursuant to M.G.L. c.41, § 81U, Deer Run, the Bank and Rutland entered into a tri-partiteagreement ("the Bond") in order to guarantee the completion ofthe road and other public improvements at the subdivision. DeerRun executed a note and mortgage in favor of the Bank to fund theBond and Pearson personally guaranteed the loan.

To oversee the project, Rutland hired Cullinan Engineering, aMassachusetts corporation with its principal place of business inAuburn, Massachusetts. Cullinan was to serve as the Town'sengineer to inspect Deer Run's construction of public improvements and to report to the PlanningBoard Deer Run's progress. Cullinan's employee, Thomas Hogan("Hogan"), acted as Cullinan's representative to the PlanningBoard.

Although the pleadings do little to illuminate the sequence ofevents, Deer Run apparently began construction of the roads andother public improvements sometime thereafter, and, pursuant to §81U, requested that the Planning Board disburse funds upon thecompletion of phases of the required roadway construction. DeerRun alleges that it finished a portion of the required publicimprovements for the Pleasantdale Road project and, in order torecover its capital outlay, provided to the Planning Boardevidence of the costs of completion of the remaining work.

Deer Run's work conformed with 1) Rutland's standards for itsown road and public improvement projects, 2) the standardsapplicable to similarly situated developers and builders, 3) theconditions stated on the Planning Board's final approval of thePleasantdale Project and 4) the promulgated rules and regulationsof the Planning Board. At some point, Hogan (and through him,Cullinan) approved the improvement work done by Deer Run on thepublic ways.

As the Pleasantdale Road subdivision neared completion,however, Hogan re-inspected the subdivision and reported to the Board that it was unsatisfactory. Notwithstanding Deer Run'scompliance with the litany of relevant standards, the PlanningBoard refused to reduce the Bond to reflect the completed workpursuant to § 81U. The Planning Board applied more rigorousstandards to the Pleasantdale Road project than to similardevelopments and required Deer Run to re-do much of its earlierwork.

Deer Run consequently expended additional time and funds tooverhaul the project in order to obtain the requisite Certificateof Occupancy to sell the units. It was unable to complete theroad and other improvements within the time frame established inthe Bond.

The relationship between the Planning Board and Deer Runreached an impasse. On August 22, 2000, the Planning Board setthe process in motion to "call" Deer Run's Bond. The PlanningBoard did not extend to Deer Run the statutorily mandated noticebut rather conducted a meeting, the precise purpose of which isunclear from the pleadings. In lieu of calling the Bond, thePlanning Board entered into an agreement with the Bank assigningto it the responsibility of completing the public improvementsfor the Pleasantdale Road project under the tutelage of theBank's engineer, "Buddy" Vaughn ("Vaughn"). That same day, DeerRun again requested that Rutland reduce the amount of the Bond toreflect its completed work.

At that time, Deer Run had written estimates and contracts forfinishing the road and improvements for $93,870. Deer Runpresented those estimates and contracts to the Planning Board andrepresented that the work to be done complied with the relevantrules and regulations. The Planning Board required Cullinan inthe person of Hogan to review the project. At the direction ofthe Planning Board, he applied stricter standards to thedevelopment than those set forth in the Planning Board's Approvalor imposed on other builders in similar projects. Ultimately, thePlanning Board required Deer Run to construct improvements notrequired in the Approval.

Although Vaughn was aware that the Planning Board required DeerRun to perform work not called for in the Approval, he, as theBank's representative, acquiesced in the Planning Board'srequests. The defendants, in fact, did not afford the plaintiffsthe opportunity to participate in the selection of contractors.Rather, the Board remained ostensibly indifferent, if nothostile, to the plaintiffs. In particular, the defendant,Sullivan made disparaging remarks about the plaintiffs, leadingto a spate of unfavorable publicity about Deer Run in the localpress. Because of Deer Run's blemished reputation, contractorswere reluctant to work with the plaintiffs, further delaying completion of thedevelopment.

Under the direction of the Planning Board, the cost to completethe project exceeded $280,000 which was beyond the capability ofDeer Run to finance. The Bank called Pearson's guaranty and filedsuit in New Hampshire state court in January, 2001 (SuperiorCourt, Southern Dist. 01-0023). Seven months later, theplaintiffs brought suit in this Court alleging a § 1983 violationand two state law claims.

III. Discussion

A. Abstention

In 1824, Chief Justice John Marshall observed that a "courtwill not take jurisdiction if it should not: but it is equallytrue, that it must take jurisdiction, if it should." Cohens v.Virginia, 6 Wheat. 264, 404 (1821). Since then it has become ageneral rule that a federal court may not depart from its"virtually unflagging obligation" to exercise jurisdiction whenauthorized to do so by Congress. Colorado River ConservationDistrict v. United States, 424 U.S. 800, 821 (1976)("Colorado River").

Mindful of that duty, a federal court may not dismiss or stay acase solely based upon the existence of a concurrent state suitimplicating the same or similar issues. Abstention refers tojudge-made doctrine, or more properly doctrines, describing categories of cases in which a federal court willtypically dismiss or stay a federal suit due to the presence of aconcurrent state proceeding. Colorado River,424 U.S. at 813-16; see 17A C. Wright, A. Miller E. Cooper FederalPractice and Procedure § 4241 (1988).1 Considerations ofcomity and judicial economy usually motivate a federal court'sabdication of its jurisdiction to a state court. It is a bed-rockprinciple, however, that "[a]bstention from the exercise offederal jurisdiction is the exception, not the rule." ColoradoRiver, 424 U.S. at 813.

1. The New Hampshire Action and Colorado River

Here, the preliminary question is whether this Court shoulddecline to exercise jurisdiction over certain claims against theBank based upon abstention principles. Although the Bank did notformally raise the abstention issue, it seeks a dismissal of theplaintiffs' state law claims based upon case law from the 1930s.This Court has, in any event, authority to raise an abstentionissue sua sponte. Pustell v. Lynn Pub. Schs., 18 F.3d 50,51 n. 1 (1st Cir. 1994); Neptune v. McCarthy,706 F.Supp. 958, 961 (D.Mass. 1989). Typically, a district court exercises wide discretion whendetermining if the "exceptional circumstances" are present thatwarrant abstention after Colorado River and its progeny.Although no one factor is determinative, six considerations frameits analysis: (1) whether either court has assumed jurisdiction over a res; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether federal law or state law controls; and (6) whether the state forum will adequately protect the interests of the parties.Currie v. Group Ins. Com'n, 290 F.3d 1, 10 (1st Cir. 2002)(quoting Rivera-Puig v. Garcia-Rosario, 983 F.2d 311, 320-21(1st Cir. 1992)); Moses H. Cone Memorial Hosp. v. MercuryConstruction Corp., 460 U.S. 1, 23-27 (1983).

The Colorado River factors are "to be applied in a pragmatic,flexible manner with a view to the realities of the case athand." Moses H. Cone, 460 U.S. at 21. Although not dispositive,the presence of a federal question in the litigation weighsagainst abstention under Colorado River. Id. at 23-24.

The first two factors are of no moment in the instant dispute.Here, even if the state court attached Pearson's real property inNew Hampshire, this Court and the state court are notconcurrently determining rights in property over which the statecourt has already assumed jurisdiction. To be sure, the statecourt has jurisdiction over unrelated property in New Hampshire to secure any judgment there. Thisaction does not, however, relate to the ownership of that NewHampshire property but rather concerns whether, inter alia,the defendants' actions violated the plaintiffs' constitutionalrights. Forehand v. First Alabama Bank of Dothan,727 F.2d 1033, 1036 (11th Cir. 1984).

Furthermore, there is no credible allegation that the NewHampshire forum is more convenient. It is undisputed that 1) thedefendants all reside or are incorporated in Massachusetts, 2)Deer Run is a Massachusetts corporation, 3) the entire disputedtransaction occurred in Massachusetts and 4) Massachusetts lawgoverns the promissory note. Massachusetts is likely to be themore convenient forum.

The risk of duplicative or piecemeal litigation is present tosome degree here. Both actions derive from the same series ofevents, although not all the defendants in this matter areparties to the New Hampshire suit. The plaintiffs' claims hereare not identical to the Bank's claims in New Hampshire in whatthe parties agree is essentially a collection action. Althoughthe defendants in either case could assert counterclaims thatwould render the cases substantially similar, they have not yetdone so. Furthermore, the presence of additional parties in thisaction militates against abstention, particularly when, as here,the federal suit is not "vexatious or reactive." Moses H. Cone460 U.S. at 18 n. 20; Gonzalez v. Cruz, 926 F.2d 1, 4 (1st Cir.1991).

Moreover, there is no risk of inconsistent or contradictoryjudgments here because judgment on the overlapping claims (if anyarise) may be res judicata with respect to the relevantclaims in the remaining case. Id.; see Cruz v. Melecio,204 F.3d 14, 24 (1st Cir. 2000). Assuming arguendo that theBank prevails in its bill collection action and the plaintiffsprevail on their § 1983, negligence and Chapter 93A claims beforethis Court, there will be no inconsistency, e.g., even if theBank is found negligent by a jury, it may nonetheless be entitledto recover what it is owed by Deer Run and/or Pearson.

Although the state complaint preceded the federal complaint,timing is not conclusive lest abstention be deemed to depend upona race to the courthouse. Woodford v. Community Action Agencyof Greene County, Inc., 239 F.3d 517 (2d Cir. 2001). Drawingupon that intuition, the Supreme Court has explained that theissue of timing does not depend upon the filing date, but ratherthe relative development of both suits. Moses H. Cone,460 U.S. at 21; Currie, 290 F.3d at 10. There is no credible allegationhere that the New Hampshire action is farther advanced than theinstant case. With respect to the final two Colorado River factors, thearguments for abstention are no stronger. Although there is noallegation that the New Hampshire state forum will inadequatelyprotect the parties' interests, the plaintiffs' Chapter 93A claimis a creature of Massachusetts statutory law.

In sum, the concurrent proceedings in New Hampshire do notpresent exceptional circumstances. Duplication and inefficiency,without more, are insufficient grounds on which to justifyabstention. Rojas-Hernandez v. Puerto Rico Electric PowerAuthority, 925 F.2d 492 (1st Cir. 1991). It bears emphasis,moreover, that "Congress has deliberately afforded the section1983 plaintiff an alternative forum", Duke v. James,713 F.2d 1506, 1510 (11th Cir. 1983), and this Court's obligation toexercise jurisdiction is only enhanced when faced with an issueof federal constitutional dimension. Neptune,706 F.Supp. at 964.

2. Municipal Defendants' Request for a Stay

There is yet another jurisdictional wrinkle that gives thisCourt pause before it continues to analyze the issues. TheMunicipal Defendants have moved to stay this case pursuant to anorder of the Commonwealth Court of Pennsylvania ("thePennsylvania Court"). On April 1, 2002, the Pennsylvania Courtallowed the petition of the Insurance Commissioner of the Commonwealth of Pennsylvania for Rehabilitation of LegionInsurance Company ("Legion") and ordered that all court actionspending against any insured of Legion be stayed for 90days.2 The Municipal Defendants are insured by Legion. OnJune 28, 2002, the Pennsylvania Court extended that stay for anadditional 90 days until September 27, 2002 and the Municipaldefendants, accordingly, renewed their unopposed motion to stay.

In moving for a stay, the Municipal Defendants provide nosubstantive legal or factual basis for their request. Notably,they fail to elaborate on core factual points in their pleadings.They provide neither a description of the nature or scope of thesubject Legion policy nor a discussion of the potential impact ofthe pending dispute, if any, on the Rehabilitation proceedings inPennsylvania. Finally, the defendants make no assertion thatLegion has a duty to defend them in this litigation.

It is axiomatic that a state court cannot enjoin or abridgefederal litigation. General Atomic Co. v. Felter, 434 U.S. 12 (1977) (per curiam). The proscriptions set forth in aRehabilitation order of the Pennsylvania Court do not mandatethat this Court grant the stay. Fragoso v. Lopez,991 F.2d 878, 882 (1st Cir. 1993) (noting that a state court liquidationorder was not binding).

This Court may, nonetheless, stay this action if it deems itappropriate. Certain bedrock principles guide that determination.In the first instance, principles of comity counsel this Court togive "full faith and credit" to the Order. 28 U.S.C. § 1738;Royal and Sunalliance Ins. Co. of America v. Settlement Healthand Med. Servs., Inc., 2000 WL 679788 (S.D.N.Y.) ("Royal").Similarly, the Burford abstention doctrine instructs "federalcourts to stay their hand lest they provoke needless conflictwith the administration by a state of its own affairs." HartfordCas. Ins. Co. v. Borg-Warner Corp., 913 F.2d 419 (7th Cir.1990) (quoting Kelly Servs., Inc. v. Johnson, 542 F.2d 31, 32(7th Cir. 1976)); Burford v. Sun Oil Co., 319 U.S. 315(1943).

Mindful of that broad mandate, courts usually analyze thepropriety of abstention where there is a concurrent stateinsurance rehabilitation or liquidation proceeding under theprinciples set forth in Burford and its progeny. See, e.g.,id.; Grimes v. Crown Life Ins. Co., 857 F.2d 699, 704-05(10th Cir. 1988), cert. denied, 489 U.S. 1096 (1989);Melahn v. Pennock Ins., Inc., 965 F.2d 1497 (8th Cir. 1992).

Although Burford abstention is amorphous in theory, theSupreme Court has instructed federal courts "sitting in equity"that interference with orders or proceedings of stateadministrative agencies is inappropriate where: timely and adequate state-court review is available [and]: . . . (1) when there are "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.New Orleans Pub. Serv. Inc. v. City Council of New Orleans,491 U.S. 350, 360-64 (1989) ("NOPSI") (quoting Colorado River,424 U.S. at 814) (internal quotation marks omitted).

In light of this teaching, the First Circuit Court of Appealshas observed that Burford abstention applies only where"deference to a state's administrative processes for thedetermination of complex, policy-laden, state-law issues wouldserve a significant local interest . . .". Fragoso,991 F.2d at 882.

Insurance is a state law issue. Under the McCarran-FergusonAct, Congress has conferred upon the states the primaryresponsibility for regulating the insurance industry. Consistentwith that mandate, Pennsylvania has adopted a statutory scheme togovern the rehabilitation of insolvent insurers in order toprotect the interests of insureds, creditors and the public. 40 P.S. §§ 221.1 et. seq.

Notwithstanding the complex regulations that the Pennsylvanialegislature has promulgated to regulate insolvent insurancecompanies, the relevance of Burford to this particular case isdubious. As the First Circuit has made plain, Burfordabstention applies to state administrative agencies. It isunclear whether the rehabilitation scheme here establishes astate administrative agency of the kind contemplated inBurford. Fragoso, 991 F.2d at 883 (considering Puerto Rico'sLiquidation Act).

Based upon the record before this Court, a decision to proceedwill not interfere with any state issues or state proceedings.The record does not indicate whether the Rehabilitator commenceda specialized proceeding in the first instance. Property & Cas.Insur., Ltd. v. Central Nat'l Insur. Co., 936 F.2d 319, 323(7th Cir. 1991). The maintenance of this action against theMunicipal Defendants (i.e., the insured) prejudices no creditornor does it interfere with the administration of theRehabilitation process.

To be sure, the Order purports to stay this proceeding for only90 days and a temporary stay is less burdensome than anindefinite one. There are, however, costs that inhere in thedelay of any action. Evidence and witnesses become stale. This Order is the second of its kind that this Court has receivedand it is unclear how many more will be issued as therehabilitation process continues. See Royal Sun, 2000 WL679788 at *2 (discussing the potentially negative impact of astay on the non-moving defendants in the suit).

In the interim, the Municipal defendants may have to bearsome litigation expenses for which Legion would have beenresponsible if its financial state had been sound. The MunicipalDefendants make no credible allegation, however, that those costswill render them unable to defend this action. Whatever theoutcome of the rehabilitation proceeding, it will have nosubstantive impact on this case because the Municipal Defendants'liability is unaffected by Legion's solvency or lack thereof.Royal Sun, 2000 WL 679788 at *2.

Assuming arguendo that Burford abstention has somerelevance, it has no application to this case. The plaintiffs arenot suing their insurance carrier for money damages or equitablerelief but are, rather, suing the carrier's insured. Any judgmentreceived by the plaintiffs will not interfere with theRehabilitator's control of Legion's assets. Fragoso,991 F.2d at 884-85; cf. Hartford Casualty Ins. Co., 913 F.2d at 427; LacD'Amiante du Quebec, LTEE v. American Home Assurance Co.,864 F.2d 1033, 1044 (3d Cir. 1988). Moreover, the risk that this action will disrupt a local proceeding or,more generally, frustrate Pennsylvania's regulatory framework iswithout support. Indeed, the First Circuit Court of Appeals hasexpressed doubt that "federal court decisionmaking of the kindthat exists alongside state insurance liquidation proceedings sosignificantly disrupts state regulatory frameworks to call forabstention." Fragoso, 991 F.2d at 884.

In sum, the Municipal Defendants provide no support, in therecord or in law, for their request. Considering thecircumstances of this case, this Court will decline theinvitation to stay.

B. Section 1983: Under Color of State Law

Section 1983 affords a remedy for deprivations of rightsestablished by the Constitution or the laws of the United Stateswhen the offending action is made "under color of any statute,regulation, custom, or usage of any state. . . ."42 U.S.C. § 1983.3 As with the state action requirement under the Fourteenth Amendment, the under-color-of-state law element of §1983 "excludes from its reach merely private conduct, no matterhow discriminatory or wrongful." American Mfrs. Mut. Ins. Co.v. Sullivan, 526 U.S. 40 (1999) (quoting Blum v. Yaretsky,457 U.S. 991 (1982)). The "color-of-law" provision requires that"the conduct allegedly causing the deprivation of a federal rightbe fairly attributable to the State". Lugar v. Edmondson OilCo., Inc., 457 U.S. 922, 937 (1982) (emphasis added).

Whether an action can be fairly attributed to the state is "amatter of normative judgment, and the criteria lack rigidsimplicity." Brentwood Academy v. Tennessee Secondary Sch.Athletic Ass'n, 531 U.S. 288 (2001). Courts must consider thetotality of circumstances as no one factor is determinative.

Although the state action requirement belies simplecategorization, several factors come to the fore when assessingwhether private conduct can be fairly attributed to the State soas to establish § 1983 liability. The Supreme Court has held, forexample, that the challenged activity may constitute state actionwhere "the State has exercised coercive power or has providedsuch significant encouragement, either overt or covert, that the choice must in law be deemed tobe that of the State." American Mfrs. Mut. Ins. Co. v.Sullivan, 526 U.S. 40, 50 (1999) (quoting Blum v. Yaretsky,457 U.S. 991, 1002 (1982) (internal quotation marks omitted)).However, the State's acquiescence to, or mere approval of, theconduct of a private entity is insufficient to demonstrate stateaction. Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 164(1978); Jackson v. Metropolitan Edison Co., 419 U.S. 345, 357(1974).

A private entity may also be deemed a state actor where theState has delegated to it a public function or that entity is a"willful participant in joint activity with the State or itsagents." Lugar, 457 U.S. at 941. Courts have also found stateaction where a private entity was "overborne by the pervasiveentwinement of public institutions and public officials in itscomposition and workings . . ." Id. at 298; accord Tomaiolov. Mallinoff, 281 F.3d 1, 9 (1st Cir. 2002).

The Bank asserts that the plaintiffs allege no viable § 1983claim against it because, as a purely private actor, it cannotact under color of state law. To be sure, banks are subject toextensive government regulation but the presence of a regulatoryscheme does not compel a finding of state action. Fletcher v.Rhode Island Hospital First National Bank, 496 F.2d 927 (1stCir. 1974) cert. denied, 419 U.S. 1001 (1974); Tunca v. Lutheran General Hospital, 844 F.2d 411, 413 (7thCir. 1988). Moreover, even assuming the plaintiffs' rendition ofevents is true, the Bank contends that, similar to a generalcontractor, it did no more than complete the public ways andimprovements as directed by the Town in a perfunctory manner.

The plaintiffs, in turn, contend that the Bank's actions fallsquarely within the reach of § 1983. Their theory assumes twodifferent guises. Similar to an entwinement theory, theplaintiffs imply that the Planning Board delegated to the Bankits responsibility to oversee the development and theconstruction of the public ways and improvements on thePleasantdale Road subdivision in the manner prescribed by thePlanning Board which intermingled state action with privateaction. Likewise, appealing to a joint action theory, theplaintiffs allege that the Planning Board and the Bank jointlyengaged in actions contrary to plaintiffs' interest.

Specifically, the plaintiffs assert that the Bank, acting asthe Town's agent and general contractor 1) imposed standards onthe Pleasantdale Road project that the Bank was aware exceededthose set forth in the Approval, 2) finished the roadways andother public improvements at the Pleasantdale Road project and 3)jointly participated with the Town in the illegal taking underthe Bond. The plaintiffs place particular reliance upon the fact that the Bank was allegedlyaware in some instances that its actions were illegal or contraryto the terms of the Approval.

The necessarily fact-bound inquiry suggests that the plaintiffshave alleged a viable case for state action here. Lugar,457 U.S. at 939. Although this Court renders no judgment on therelative merit of the plaintiffs' claims, there is a credibleallegation that the Bank was a willful participant in jointactivity with the State or its agents. Viewing the plaintiff'sallegations as a whole, the Bank's engagement in the completionof the public ways and improvements on Pleasantdale Road suggestsan indicia of state action.

The Bank's role as a general contractor does not constitutestate action "by reason of . . . [its] significant or even totalengagement in performing public contracts." Rendell-Baker v.Kohn, 457 U.S. 830, 841 (1982). Here, the plaintiffs allegethat the Bank did more than perform a mere service for thegovernment, and that it actively and knowingly took part in thealleged denial of due process rights.

To that end, the plaintiffs' pleadings indicate that there wasa "meeting of the minds" between the Bank and the Planning Boardsufficient to place it within the sphere of state action.Wagenmann v. Adams, 829 F.2d 196, 209, 209-11 (1st Cir. 1987). To be sure, it is not clear, what involvementthe Bank had, if any, in the Planning Board's meetings, theselection of contractors or in the enforcement of standards forroad construction in the first instance. Such factual questionsunderscore the inappropriateness of deciding this issue on amotion to dismiss.

C. Pendent State Law Claims and Supplemental Jurisdiction

Because this Court will not dismiss the plaintiffs' § 1983claim, there is no reason to consider defendants' request that itdecline to exercise supplemental jurisdiction over theplaintiffs' state law claims. 28 U.S.C. § 1367.


For the foregoing reasons, the motion to dismiss of thedefendant, First Massachusetts Bank, N.A. (Docket No. 5) and themotion to stay proceedings of the defendants Town of Rutland,Michael Sullivan, Norman W. Anderson, Harry C. Johnson, Jr.,Brian Stidsen, Charles R. Williams and Carl Christiansen (DocketNo. 16) are DENIED.

So ordered.

1. Although not considered in this memorandum, the otherabstention doctrines include 1) a case that may be resolved on aquestion of state law so as to avoid a federal constitutionalquestion and 2) a federal case that may interfere or otherwiseimpede state criminal proceedings. see 17A C. Wright, A. MillerE. Cooper Federal Practice and Procedure § 4241 (1988).

2. The Order provides in relevant part that: All court actions, arbitrations and mediations currently or hereafter pending against an insured of Legion in the Commonwealth of Pennsylvania or elsewhere are stayed for (90) days from the effective date of this Order or such additional time as the Rehabilitator may request.

3. The plaintiffs' Section 1983 claim is ill-defined, statingin relevant part: the actions of the defendants constituted irrational and wholly arbitrary discrimination . . . with the intent to deny the plaintiffs the right to due process and equal protection of the law afforded them under the Fifth and Fourteenth Amendments . . .the Bank does not, however, challenge the plaintiffs' Section1983 claim for failure to allege sufficiently a deprivation of aconstitutional right. For the purpose of this motion, thepleadings indicate that the plaintiffs allege, among otherthings, a deprivation of their property rights through theimposition of unduly rigorous standards with respect to itsdevelopment project.

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