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

December 13, 2011


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


Leroy Sterling filed this action against the Redevelopment Authority of the City of Philadelphia (the "RDA"), the Philadelphia Authority for Industrial Development ("PAID"), the City of Philadelphia (the "City"), and Crane Arts, LLC. I previously dismissed the City as a party to this action. Now pending are the motions filed by the RDA and PAID for summary judgment under Federal Rule of Civil Procedure 56, as well as their motion to exclude the report and testimony of Sterling's damages expert. For the reasons that follow, I will grant in part and deny in part the RDA's motion for summary judgment, and I will grant PAID's motion for summary judgment. I will also grant the motion to exclude the expert report and testimony.


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 RDA is a "public body and a body corporate and politic" that was created under Pennsylvania's Urban Redevelopment Law, 35 Pa. Stat. Ann. §§ 1701 et seq. See 35 Pa. Stat. Ann. § 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.

PAID is a public authority incorporated by the City under the Economic Development Financing Law, 73 Pa. Stat. Ann. §§ 371 et seq. (Def. PAID's Statement of Uncontested Material Facts ("PAID's Facts") ¶ 6.) PAID is managed by the Philadelphia Industrial Development Corporation (the "PIDC"), a "private, not-for-profit Pennsylvania corporation." (last visited Nov. 4, 2011).

In July 1996, in accordance with its power of eminent domain, the RDA condemned the property located at 1425--43 North American Street, in Philadelphia. (PAID's Facts ¶ 7; Def. PAID's Mot. for Summ. J. on Pl.'s Claims ("PAID's Mot. for Summ. J.") Ex. D.) On December 15, 2000, Sterling executed a land-reservation agreement in which the PIDC agreed to reserve the property for purchase by Sterling. (See PAID's Mot. for Summ. J. Ex. E.) In its letter describing the terms and conditions of the land reservation, the PIDC explained that the reservation was "subject to review and comment by the RDA," which was holding the property for PIDC and PAID, and was "subject to their Redevelopment Agreement." (Id. at 1.) The PIDC asserted that during the reservation period, Sterling was expected to "prepare a set of schematic plans, including a site plan, soil erosion and sedimentation plan, [and] a landscaping plan, [and] execute the RDA Redevelopment Agreement, and a financing commitment satisfactory to PIDC, if applicable." (Id.) The PIDC advised Sterling to "review the zoning of the site in order to make certain that you can legally use it for your intended purposes . . . and satisfy yourself as to the environmental condition of the site" because "[t]his property is being sold 'as is' and neither RDA, PIDC nor PAID will indemnify the buyer for any site conditions whatsoever." (Id.)

Sterling wanted to purchase the property to build a facility for his cement masonry business and to create and develop a training program for cement mason workers. (PAID's Facts ¶ 10; Def. RDA's Mot. for Summ. J. ("RDA's Mot. for Summ. J.") Ex. I, Dep. of Leroy Sterling (Oct. 19, 2010) ("Sterling Dep.") at 22:21--26:13.)

On August 22, 2002, the RDA entered into a redevelopment agreement with PAID, under which PAID was to develop the property. (RDA's Mot. for Summ. J. Ex. B ("Redevelopment Agreement").) The agreement provided that PAID, referred to in the agreement as the "Redeveloper," was to begin the development of the property within three months and was to complete the development, "to the satisfaction of the [RDA]," within eighteen months. (Id. ¶ 3.7.) The Redeveloper was responsible for securing and paying for any required permits, licenses, approvals, and variances, but the RDA agreed to assist the Redeveloper in securing them. (Id. ¶ 3.6.) The agreement granted the RDA a "right of re-entry"; in the event of default, including the Redeveloper's failure to complete the development of the property in the time specified in the agreement, the RDA could, after proper notice to the Redeveloper and the Redeveloper'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 the Redeveloper by such deed and revest title to the Premises or any appurtenant easement in the [RDA] absolutely." (Id. ¶ 5.5.)*fn2 The agreement also included a power of attorney in which the Redeveloper appointed the RDA as its "true and lawful attorney[ ] . . . to enter into and take possession of the Premises and appurtenant easements . . . and to grant, bargain and sell the same or any part thereof, . . . and to make, execute, acknowledge and deliver[] good and sufficient deeds and conveyances for the same." (Id. ¶ 5.7.)

The agreement provided that "[n]one of the provisions in this Agreement shall be deemed or are intended to be merged by reason of any subsequent deed, and any subsequent deed which shall be recorded shall not be deemed to affect or impair the provisions, obligations and covenants of this Agreement." (Id. ¶ 6.4.)

The RDA conveyed the property located at 1425--43 North American Street to PAID by deed on September 10, 2002. (See RDA's Mot. for Summ. J. Ex. D.) The deed and a "Memorandum of Redevelopment Agreement" were recorded on September 18, 2002. (See id. Exs. C and D; PAID's Facts ¶ 20.)

On September 10, 2002, PAID assigned its rights and obligations under the Redevelopment Agreement with the RDA to Sterling. (PAID's Facts ¶¶ 21--23.) 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*fn3 and the [RDA]." (RDA's Mot. for Summ. J. Ex. E ("Amendatory Agreement") ¶ 2.) On the same date, PAID conveyed the property by deed to Sterling for $10,821. (PAID's Facts ¶¶ 21--22; PAID's Mot. for Summ. J. Ex. K.)

Sometime after closing, the City asked the PIDC to pay for a survey that Sterling needed in order to consolidate the individual lots that made up the property and begin development. (PAID's Facts ¶ 29.) Sterling's architect, Kenneth Brinkley, who was responsible for getting proper approvals to develop the property (PAID's Facts ¶ 26), told the City that he received the funds for the survey on June 30, 2003. (Def. RDA's Reply to Pl.'s Mem. of Law in Opp'n to Mot. for Summ. J. ("RDA's Reply Br.") Ex. S (letter from Kenneth Gordon Brinkley to Vincent Dougherty (July 3, 2003)).) And on September 15, 2003, he reportedly told the City that the survey had been completed. (Id. Ex. S (e-mail from Denis Murphy to Vincent Dougherty (Sept. 15, 2003, 3:48 p.m.)).) Nonetheless, as of January 31, 2005, Sterling had not developed the property, as evidenced by a letter of that date to Brinkley from Denis Murphy, who worked for the City's Empowerment Zone and held the title of American Street business organizer, in which Murphy thanked Brinkley for his "prompt attention to the problem of high weeds that [the City] reported in September" and asked whether Sterling "still intend[ed] to develop the site and what the timeline [was] for beginning construction."*fn4 (Id. Ex. T.)

Seven months later, in a letter to Sterling dated August 12, 2005, Vincent Dougherty, an assistant director of the City's Commerce Department and "the City's point person for economic development in the American Street Corridor" (RDA's Reply Br. Ex. JJ), expressed his concern about the redevelopment project, asserting that "[i]t is my understanding that you are in default of [the Redevelopment Agreement]." (PAID's Mot. for Summ. J. Ex. O at 1.) Dougherty noted that he had "seen no movement by [Sterling] towards fulfilling [his] contractual and verbal commitments regarding the development of this site." (Id. at 1.) According to Dougherty's letter, not only had Sterling failed to maintain the site and allowed the property to become "overgrown," but Sterling had also failed to pay real-estate taxes since his purchase of the property in 2002. (Id. at 2.)

On April 25, 2006, approximately three and a half years after Sterling entered into the Amendatory Agreement with the RDA and PAID, the RDA sent a notice of default to Sterling informing him that he was in default of several provisions of the Redevelopment Agreement. (See RDA's Mot. for Summ. J. Ex. F.) According to the notice, Sterling had failed to submit final plans for the redevelopment project in accordance with paragraph 3.2 of the Redevelopment Agreement; had failed to begin construction within three months after settlement and to complete construction within eighteen months of settlement, as required by paragraph 3.7 of the agreement; had failed to redevelop and "prosecute work vigorously" as required by paragraph 5.1(5) of the agreement; had failed to "furnish and supply a sufficiency of property, materials and workmen required to prosecute the work to completion" in accordance with paragraph 5.1(6) of the agreement; and had failed "to keep, perform or comply with the terms, provisions and covenants" of the agreement in accordance with paragraph 5.1(11). (Id. at 2.) Citing paragraph 5.2 of the Redevelopment Agreement, the RDA demanded that Sterling "proceed immediately to cure or remedy these defaults within 60 days,"*fn5 and advised him that if he failed to do so, the RDA would "pursue all available remedies under the Redevelopment Agreement and Amendatory Agreement, including without limitation, the right to terminate and cancel the Redevelopment Agreement and to re-enter the Property and revest title to the Property to the [RDA]." (Id.)

Approximately eighteen months later, on November 2, 2007, the RDA, exercising its power of attorney and right of re-entry, executed a deed transferring the property back to itself.*fn6 (PAID's Facts ¶ 34.) The RDA notified Sterling in writing, via certified mail, on February 18, 2008, that it had exercised its power of attorney and deeded the property back to itself; Sterling received the notice on February 21, 2008. (See RDA's Mot. for Summ. J. Ex. H.)

On September 22, 2009, the RDA conveyed the property to defendant Crane Arts for $70,000. (See PAID's Mot. for Summ. J. Ex. S.)

Sterling filed this action in the Court of Common Pleas for Philadelphia County on April 15, 2010, and on May 20, 2010, the City, with the consent of all the defendants, removed the action to this court. Sterling asserts four counts. In count I, brought under 42 U.S.C. § 1983, Sterling alleges that the RDA, PAID, and the City violated the due-process clause of the Fourteenth Amendment by depriving him of his property without due process of law. In count II, Sterling asserts breach-of-contract claims against those three defendants. Sterling alleges that the RDA breached the Redevelopment Agreement by failing to render assistance to Sterling as required under the agreement.*fn7 Sterling alleges that PAID breached an implied contract to assist him in obtaining City contracts.*fn8 And Sterling alleges that the City breached an implied contract in which the City agreed to assist and support the development of the property. In count III, Sterling asserts a claim of conversion against the RDA. And finally, in count IV, Sterling asserts a claim for equitable ejectment against Crane Arts.

After the parties had the opportunity to conduct limited discovery, the City filed a motion to dismiss the claims against it for failure to state a claim under Rule 12(b)(6). I granted that motion and dismissed the City as a party to this action in a memorandum and order dated July 27, 2011.

The RDA and PAID have now moved for summary judgment as to the claims against them. They have also filed a motion to exclude the report and testimony of Sterling's damages expert.


A motion for summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). To defeat a motion for summary judgment, the nonmoving party must show more than "[t]he mere existence of a scintilla of evidence" for elements on which it bears the burden of production, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), and may not "rely merely upon bare assertions, conclusory allegations or suspicions," Fireman's Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). When evaluating a motion for summary judgment, the court "is not to weigh the evidence or make credibility determinations." Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.


Sterling asserts claims against the RDA and PAID under section 1983 as well as under state law for breach of contract and conversion.

A. Section 1983 (Count I)

To state a section 1983 claim, a plaintiff must demonstrate that the defendant, acting under color of state law, deprived him of a right secured by the Constitution or the laws of the United States. Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006). There is no dispute that the RDA and PAID were acting under color of state law. The issue here is whether they violated Sterling's constitutional rights.

Sterling claims that the RDA's execution of the deed transferring the property back to itself (and certain related actions by the RDA and PAID) violated his rights to due process under the Fourteenth Amendment.

The RDA and PAID argue that Sterling's due-process claims are barred by the statute of limitations and that, in any event, his claims must fail on the merits as a matter of law.*fn9

1. The Timeliness of Sterling's Claims

Sterling's due-process claims, like all section 1983 claims, are subject to the state statute of limitations for personal-injury actions, see Wallace v. Kato, 549 U.S. 384, 387 (2007), which in Pennsylvania is two years, see Sameric Corp. of Del., Inc. v. City of Philadelphia, 142 F.3d 582, 599 (3d Cir. 1998); see also 42 Pa. Cons. Stat. Ann. § 5524.*fn10 The accrual date of a section 1983 claim, on the other hand, "is a question of federal law that is not resolved by reference to state law." Wallace, 549 U.S. at 388. "A section 1983 cause of action accrues when the plaintiff knew or should have known of the injury upon which its action is based." Sameric, 142 F.3d at 599. "The cause of action accrues even though the full extent of the injury is not then known or predictable." Wallace, 549 U.S. at 391.

Here, Sterling's due-process claims stem from the RDA's execution of the deed transferring the property back to itself. The RDA executed the "reverter" deed on November 2, 2007, and Sterling received notice on February 21, 2008, that the RDA had deeded the property back to itself. The two-year statute of limitations governing Sterling's claims thus began to run-at the latest-on February 21, 2008. Because Sterling did not file this action until ...

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