Berger v. Weinstein

Citation: 348 F. App'x 751Docket: No. 08-3851

Court: Court of Appeals for the Third Circuit; October 9, 2009; Federal Appellate Court

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Berish Berger appeals a District Court decision granting summary judgment to defendants Eli Weinstein and others (collectively, Appellees), based on Berger's lack of Article III standing. Berger's claims involve $36.5 million in payments made to the Appellees for properties in Philadelphia, which were not directly made by him but through affiliated corporations. The payments included $12 million from Kilbride Investments Limited, $9.5 million from Busystore, Limited, and various amounts from three other companies directed by Berger. Berger asserts these funds were loans he is obligated to repay, yet no documentation of the loan terms was provided, nor could he detail any loan agreements during his deposition. He filed suit in March 2007, alleging fraudulent misappropriation of the funds, and the District Court initially granted a preliminary injunction for his interests in the properties. However, the Appellees moved for summary judgment, citing Berger's lack of standing, which the District Court found to be dispositive, leading to the dismissal of the case without addressing other merits. The appellate court reviews the standing issue under the three criteria established by Lujan v. Defenders of Wildlife, ultimately affirming that Berger did not demonstrate an injury-in-fact.

An injury-in-fact for establishing Article III standing must be concrete, particularized, and actual or imminent, rather than conjectural. Berger claims standing based on his testimony that $36.5 million paid to various Appellees was loaned to him by family-associated businesses, asserting that his obligation to repay constitutes an injury. He contends the payments could be viewed as loans, gifts, or investments, but maintains that they were loans. The Appellees counter that the lack of loan documents undermines Berger's claim of an obligation to repay, suggesting he cannot establish an injury from the alleged loss of funds.

Evidence indicates that the payments were not classified as loans by at least three of the Payees in their financial statements, and one Payee, Towerstates, noted uncertainty regarding the recoverability of the funds, implying no personal liability for Berger. Additionally, Berger's own testimony reveals a lack of knowledge about repayment terms, interest, or even if he would be required to repay the funds, as the money was paid directly to the Appellees and not received by him. Thus, the court agreed with the District Court's finding that the transactions were not loans.

Even if these payments were considered loans, the District Court concluded that Berger's standing was not established because he could not prove that repayment was "certainly impending." His uncertainty about when or if the Payees would demand repayment led to the conclusion that his alleged debt was too remote to constitute an injury in fact, thereby failing to meet the requirements for Article III standing.

C. Berger argues that if the $36.5 million was not a loan, it must be classified as a gift or other income from the Payees, asserting that the loss from its alleged misappropriation would then be his alone. However, no evidence supports the claim that these payments were gifts, leading to the conclusion that they were not gifts or other income to Berger. The Appellees maintain that the payments were direct investments from family businesses, a view supported by substantial evidence, including the absence of loan agreements and documentation. Berger claims standing to sue due to his roles as a shareholder, director, and family member, citing a precedent that allows shareholders in closely held corporations to assert claims. However, the legal precedent indicates that shareholders cannot sue for personal injuries stemming from corporate injuries, regardless of the corporation's size. Berger's argument for standing based on potential liability to the companies he is affiliated with is dismissed, as he has not been sued by any of those entities or their representatives. The court establishes that a claim for contribution does not exist until liability is established against the party seeking it. As such, any potential injury Berger fears from future lawsuits is deemed hypothetical and insufficient for Article III standing. Furthermore, the court confirms that Berger lacks standing to assert claims on behalf of Kilbride, as he has no formal ties to that entity.

Berger lacks Article III standing to assert claims on behalf of the Payees, as he has not demonstrated sufficient actual injury. Although he argues he has suffered a minimal injury, this does not address the issue of whether he is the real party in interest, which need not be considered due to the standing deficiency. The court affirms the District Court's order. The five entities making payments to the Appellees are collectively referred to as Payees. The District Court did not evaluate James Levy's statement regarding the funds loaned from Kilbride to Berger, possibly because it was received on the same day the summary judgment was issued. Appellees argue that Levy's statement may be inadmissible or lacking credibility, and since Berger did not seek reconsideration based on this new evidence, it was not included in the District Court's record and cannot be utilized on appeal. The court does not comment on the potential merits of any future claims by Berger for contribution or indemnification. Additionally, the assignments from the Payees do not confer standing under Article III, which must be established at the time the lawsuit is initiated.