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Leroy Sterling v. Redevelopment Authority of the City of Philadelphia et al

July 27, 2011

LEROY STERLING, PLAINTIFF,
v.
REDEVELOPMENT AUTHORITY OF THE CITY OF PHILADELPHIA ET AL., DEFENDANTS.



The opinion of the court was delivered by: Yohn, J.

MEMORANDUM

Leroy Sterling brings this action against the Redevelopment Authority of the City of Philadelphia, the Philadelphia Authority for Industrial Development, the City of Philadelphia, and Crane Arts, LLC. Currently pending is the City's motion to dismiss the claims against it under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, I will grant the City's motion.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY*fn1

This case arises from a dispute regarding property that was conveyed to Sterling as part of a plan for the development of the North Philadelphia Redevelopment Area.

The Redevelopment Authority of the City of Philadelphia (the "RDA") is a "public body and a body corporate and politic" that was created under Pennsylvania's Urban Redevelopment Law, 35 Pa. Stat. §§ 1701 et seq. See 35 Pa. Stat. § 1703(a). The RDA is authorized, among other things, to acquire property by purchase, gift, or eminent domain; to lease and sell property; and to plan and contract with private, corporate, or governmental redevelopers, for the purpose of the elimination of blighted areas and the redevelopment of such property. See id. § 1701; see also id. § 1709.

The Philadelphia Authority for Industrial Development ("PAID") is a public authority incorporated by the City of Philadelphia (the "City") pursuant to the Economic Development Financing Law, 73 Pa. Stat. §§ 371 et seq.

On August 22, 2002, the RDA entered into a redevelopment agreement with PAID, under which PAID was to develop property located at 1425--43 North American Street in Philadelphia. (Compl. ¶ 6--7.) The agreement provided that PAID was to begin the development of the property within three months and was to complete the development within eighteen months. (Compl. Ex. A ("Redevelopment Agreement") ¶ 3.7.) PAID was responsible for securing and paying for any required permits, licenses, approvals, and variances, but the RDA agreed to assist PAID in securing them. (Id. ¶ 3.6.) The agreement granted the RDA a "right of re-entry"; in the event of default, including PAID's failure to complete the development of the property in the time specified in the agreement, the RDA could, after proper notice to PAID and PAID's failure to cure the default in the specified time, "enter into the Premises or any appurtenant easement and, by this entry terminate the estate that had been conveyed by the [RDA] to [PAID] by such deed and revest title to the Premises or any appurtenant easement in the [RDA] absolutely." (Id. ¶ 5.5.)

The RDA conveyed the property located at 1425--43 North American Street to PAID by deed on September 10, 2002. (Compl. ¶ 8.)

Sterling alleges that he agreed with the RDA, PAID, and the City (collectively, the "municipal defendants") to develop the property as a yard for cement masonry work and to create and develop a training program for cement mason workers. (Id. ¶ 13.) According to Sterling, the municipal defendants promised that "they would procure contracts for masonry work for [him] to assist him in successfully operating his enterprise and his training program." (Id. ¶ 14.)

On September 10, 2002, PAID assigned its rights and obligations under the Redevelopment Agreement with the RDA to Sterling. (Id. ¶ 15.) "Induced by the promises of assistance and support" from the municipal defendants (id. ¶ 15), Sterling agreed, in an Amendatory Agreement with the RDA and PAID, to "assume and perform all of the terms and conditions[,] obligations and requirements contained in the Redevelopment Agreement between the PIDC*fn2 and the [RDA]" (Id. Ex. C ("Amendatory Agreement") ¶ 2). On the same date, PAID conveyed the property by deed to Sterling for $10,821. (Id. ¶ 17.)

Sterling asserts that he "expended a considerable sum of money in attempting to comply with the development schedule, including funds for architects, engineers, and maintenance of the site," but that the municipal defendants' failure to cooperate with him prevented him from completing the development within the eighteen-month time period specified in the Redevelopment Agreement. (Id. ¶¶ 23--24.)

Sterling alleges, "on information and belief," that sometime in 2006, about three to four years after he entered into the Amendatory Agreement with the RDA and PAID, the municipal defendants had discussions with other prospective owners who were interested in the property. (Id.. ¶ 25.) During the summer of 2006, the president of defendant Crane Arts, LLC, allegedly told Sterling that he wanted the property and that he knew Vincent Dougherty, an employee in the City's Department of Commerce who was "charged with the development of the area of which the Premises were a part, and who was involved in the process of monitoring [Sterling's] completion of [the] construction schedule." (Id. ¶ 26.) Sterling asserts that "[a]t various times in 2006, employees of [the municipal defendants], including but not limited to Vincent Dougherty, began pressuring [him] to complete the work on the Premises, employing extraordinary means including but not limited to calling [him] at his residence, to exert pressure." (Id. ¶ 27.)

According to Sterling, sometime in 2006 the municipal defendants, "after mutual consultation," agreed to issue a notice of default to Sterling. (Id. ¶ 28.) And on November 2, 2007, more than five years after Sterling entered into the Amendatory Agreement with the RDA and PAID, the RDA deeded the property back to itself under its right of re-entry,*fn3 "on the pretext," Sterling alleges, that he "had not performed the duties under the agreements in a timely manner." (Id. ¶ 29.) Sterling alleges that the RDA took his title to the property "[w]ithout legal authority, without notice to [him], or any opportunity for a hearing" and "with the approval and complicity" of the municipal defendants. (Id.) Sterling alleges that the municipal defendants did not reimburse him for his purchase price of the property or compensate him for the expenditures he made in attempting to complete the development of the property. (Id. ¶ 31.)

On September 22, 2009, almost two years after the property was deeded back to the RDA, the RDA conveyed the property to defendant ...


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