FEIBUSH et al v. JOHNSON et al

Filing 44

MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE WENDY BEETLESTONE ON 1/9/18. 1/10/18 ENTERED AND COPIES E-MAILED.(ti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ORI C. FEIBUSH AND OCF HOLDINGS,
LLC,
Plaintiffs,

CIVIL ACTION

v.
NO. 17-3134
KENYATTA JOHNSON, PHILADELPHIA
LAND BANK AND CITY OF
PHILADELPHIA,
Defendants.
MEMORANDUM OPINION
Philadelphia developer, Ori Feibush, and OCF-Holdings, LLC (“Plaintiffs”) have sued
Philadelphia City Councilman Kenyatta Johnson for intentionally sabotaging the bid of a third
party affiliated with Plaintiffs to purchase certain public lands from the Philadelphia Land Bank.
Plaintiffs allege various constitutional claims under 42 U.S.C. § 1983 against Johnson, the City
of Philadelphia, and the Land Bank, as well as a state law claim for tortious interference against
Johnson in his individual capacity. All three defendants have moved, pursuant to Federal Rule
of Civil Procedure 12(b)(6), to dismiss the claims against them arguing, inter alia, that Plaintiffs
lack standing.1 For the reasons below, the Defendants’ motions will be granted.
I.

FACTS
In September of 2016, the Philadelphia Land Bank issued a Request for Proposals

(“RFP”) whereby developers were invited to submit bids to build homes on publicly owned
vacant lots in the Point Breeze neighborhood of Philadelphia. The RFP provided a detailed list
of specifications. The RFP also described a procedure to evaluate proposals:
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Although Defendants move to dismiss the Complaint under Fed. R. Civ. P. 12(b)(6), their arguments concerning
standing are best analyzed as a facial attack to jurisdiction under Fed. R. Civ. P. 12(b)(1). See Constitution Party of
Pennsylvania v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014). The distinction is merely technical because “a facial
attack calls for a district court to apply the same standard of review it would use in considering a motion to dismiss
under Rule 12(b)(6).” Id.

Initially review of the proposals will be to determine compliance with the
Proposal Submission Requirements. Only proposals that comply with these
requirements will be considered for evaluation. If no proposal meets these
requirements the Land Bank may allow all developers to supplement their
submission to conform to these requirements.
Feibush contends, however, that the Land Bank did not follow this procedure, when it considered
the bid of a company affiliated with him.
On October 16, 2016, OCF-Universal LP (“OCF Universal”), a nascent limited
partnership affiliated with Feibush, submitted a proposal responsive to the RFP. The Complaint
alleges that OCF-Holdings “was to be the general partner in OCF-Universal.” The Complaint
also alleges that Feibush was the sole member of OCF-Holdings and that “Plaintiffs intended to
partner with Universal Companies. . . .”2
Feibush alleges that OCF-Universal submitted the only proposal that met the criteria of
the RFP. In fact, an employee with the entity tasked with reviewing the proposals submitted in
the RFP allegedly told Feibush that OCF-Universal’s proposal was the only proposal to meet all
the RFP’s requirements, and it was the “objectively superior” proposal response. According to
the RFP’s stated procedure, Feibush contends that OCF-Universal should have received the bid.
Instead, the Land Bank extended the RFP process by 90 days, allowing the winning bidder to
revise its RFP so that the entity tasked with reviewing bids could allegedly “manufacture a basis
for awarding the RFP” to an entity besides OCF-Universal. According to the Complaint,
Johnson allegedly deliberately and intentionally sabotaged an award of the RFP to OCFUniversal because of Feibush’s involvement with the proposal.

2

Plaintiffs also state, in their opposition to Defendants’ Motions to Dismiss: (1) that they intended to file a
certificate of partnership on behalf of OCF-Universal with the Commonwealth of Pennsylvania; (2) that OCFUniversal was a special purpose limited partnership; and (3) that they did not file a certificate of limited partnership
because the special purpose behind OCF-Universal evaporated when it lost its bid. However, these facts are outside
of the four corners of the Complaint and therefore not properly considered in a motion to dismiss.

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II.

Legal Standard
“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)). In
analyzing a motion to dismiss legal conclusions are disregarded, well-pleaded factual allegations
are taken as true, and a determination is made whether those facts state a “plausible claim for
relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). When a defendant
makes a facial challenge to a party’s standing to assert claims, “the court must only consider the
allegations of the complaint and documents referenced therein and attached thereto, in the light
most favorable to the plaintiff.” Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347,
358 (3d Cir. 2014) (internal quotations omitted).
III.

Discussion
As a preliminary matter, Defendants argue that Plaintiffs lack standing to bring claims

arising out of OCF-Universal’s failed RFP proposal. Article III standing requires a plaintiff to
plead three elements: First, Plaintiffs must have suffered an “injury in fact,” defined as “an
invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992) (internal quotation marks and citations omitted). Second, Plaintiffs must show that there
is a “causal connection between the injury and the conduct complained of.” Id. That is, the
injury must be “fairly traceable” to the “challenged action of the defendant.” Id. Third,
Plaintiffs must show that it is “likely, as opposed to merely speculative, that the injury will be
redressed by a favorable decision.” Id. at 561 (internal quotation marks omitted).

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Plaintiffs have failed to demonstrate that they meet the first requirement of standing – “an
invasion of a legally protected interest” – because Plaintiffs did not submit a bid for the RFP. In
general, a non-bidder cannot assert claims based on the denial of another person’s bid. See, e.g.
Do Little Corp., 2002 WL 32345947 at *4 (E.D. Pa. 2002) (“[T]he only plaintiff that has
suffered ‘an invasion of a legally protected interest’ is Do Little, the corporate entity who bid on
the Runway Road property.”). As the Fifth Circuit explained in Jayco Sys., Inc. v. Savis Bus.
Machs. Corp., a non-bidder cannot challenge an award to a different entity because in those
instances the non-bidder “simply seeks . . . to recover for someone else’s injury.” 777 F.2d 306,
316 (5th Cir. 1985). Article III standing requires Plaintiffs to bring an action for their own
injury, and not someone else’s. See Lujan, 504 U.S. at 561-62 (“[I]n order to establish standing .
. . the plaintiff [must be] himself an object of the action (or forgone action) at issue.”).
According to the Complaint, OCF-Universal is the only party that submitted a bid for the Land
Bank’s RFP. Neither OCF Holdings nor Feibush, the two Plaintiffs in this matter, submitted a
bid. Therefore, Plaintiffs, as non-bidders, have no standing to assert claims on behalf of OCFUniversal. Tellingly, Plaintiffs do not cite a single case finding that a non-bidder has standing to
assert claims on another party’s behalf.3
Plaintiffs argue that they nevertheless have standing under Federal Rule of Civil
Procedure 17(a). The Rule permits a “party authorized by statute” to prosecute an action on
3

The Supreme Court has recognized one exception to the rule that a non-bidder may not challenge an award of a bid
to another entity, but it is inapplicable here. “When the government erects a barrier that makes it more difficult for
members of one group to obtain a benefit that it is for members of another group, a member of the former group
seeking to challenge the barrier need not allege that he would have obtained the benefit but for the barrier in order to
establish standing.” Ne. Florida Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, Fla., 508
U.S. 656, 666 (1993). Thus, in the context of a practice that prevents a class of individuals from winning a public
contract, “the ‘injury in fact’ is the inability to compete on an equal footing in the bidding process, not the loss of a
contract.’” Id. However, this line of jurisprudence is limited to situations alleging a policy of discrimination against
a class of individuals. As in Regents of Univ. of Cal. v. Bakke, 438 U.S. 265 (1978), the case upon which Northeast
Florida relies, this theory permits members of the disfavored class to challenge a discriminatory policy. This is not
the case here because Plaintiffs have not alleged a policy of discrimination against a class of individuals; nor have
they alleged standing as members of a disfavored class.

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behalf of a “real party in interest” where the real party has standing. Fed. R. Civ. P. 17(a)(1)(G).
Plaintiffs contend that OCF Holdings is authorized to bring this lawsuit on behalf of OCFUniversal under the Pennsylvania Uniform Partnership Act. The Pennsylvania Uniform
Partnership Act provides that “[e]ach partner is an agent of the partnership for the purposes of its
business” and “[a]n act of a partner . . . binds the partnership.” 15 Pa. C.S.A. § 8431.
There are two problems with this argument. First, Plaintiffs did not adequately plead that
OCF Holdings is a partner of OCF-Universal. Instead, the allegations in the complaint explain
that OCF Holdings “was to be the general partner in OCF-Universal.” (emphasis added). There
are no allegations that OCF Holdings “is” a partner of OCF-Universal. Instead, Plaintiffs argue
that, by operation of law, OCF Holdings is a partner of OCF-Universal because an entity that has
not achieved limited partnership status is deemed a de facto general partnership under
Pennsylvania law. See Ruth v. Crane, 392 F. Supp. 724, 733-34 (E.D. Pa. 1975).4 However, the
Complaint’s sole allegation – that Plaintiffs “intended to partner with Universal” – does not
establish that OCF Holdings is the de facto partner of OCF-Universal because, unlike the party in
Ruth, Plaintiffs have not alleged any facts such as a contract between OCF Holdings and OCFUniversal to establish a limited or general partnership. Plaintiffs have not even alleged an intent
to file a certificate of partnership with the Commonwealth. Second, even if such allegations
were to be made, Pennsylvania’s Uniform Partnership law does not permit actions by a partner
on behalf of a partnership. “[T]he notion that a partner qua partner could be a third-party
beneficiary of a contract entered into by the partnership seems antithetical to the very premise of
partnership law: General partners surrender their rights (and capital) to the partnership, reserving
only their right to act against other partners for breach of agreement in how the partnership is to
4

Rule 17(a) permits suit by a party “authorized by statute.” Plaintiffs argument, which relies on common law, does
not cite any statute authorizing an action by a non-existent entity.

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operate.” Bramlett v. Vertical Res., Inc., 95 F. App’x 395, 397 (3d Cir. 2003). As the court
observed in Bramlett, Plaintiffs argument would mean that “any partner would be able to
unilaterally maintain what is essentially a derivative action . . . [but] Pennsylvania law does not
provide for such an action.” Id. at 398.
Plaintiffs have requested leave to amend to add OCF-Universal as a party plaintiff.
Federal Rule of Civil Procedure 17(a)(3) provides that “[t]he court may not dismiss an action for
failure to prosecute in the name of the real party in interest until, after an objection, a reasonable
time has been allowed for the real party in interest to ratify, join, or be substituted into the
action.” Fed. R. Civ. P. 17(a)(3). Therefore, Plaintiffs shall have leave to amend to add OCFUniversal, which would be the real party in interest if it exists as an entity, within 30 days of
entry of this Order.5
A separate order follows.
BY THE COURT:
/S/Wendy Beetlestone, J.
_______________________________
WENDY BEETLESTONE, J.

January 9, 2018

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Councilman Johnson’s qualified immunity defense and the arguments that go to the merits of Plaintiffs’ claims
cannot be considered here because the Court lacks jurisdiction in the absence of standing. See Lujan, 504 U.S. at
561. “Without jurisdiction, the court cannot proceed at all in any cause. Jurisdiction is the power to declare the law,
and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the
cause.” Ex Parte McCardle, 7 Wall. 506, 514, 19 L.Ed. 264 (1868).

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