Berish Berger v. Eli Weinstein

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 08-3851
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BERISH BERGER,
Appellant
v.
ELI WEINSTEIN; RAVINDER CHAWLA;
2040 MARKET ASSOCIATES, L.P.;
JFK BLVD ACQUISITION;
UBS REAL ESTATE SECURITIES, INC.;
MARK SAHAYA, a/k/a Mark Stephens, d/b/a Mark Stephens Co.;
PINE PROJECTS, LLC;
WORLD ACQUISITION PARTNERS CORPORATION
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 07-cv-00994)
District Judge: Berle M. Schiller
____________
Submitted Pursuant to Third Circuit LAR 34.1(a)
September 25, 2009
Before: BARRY, FISHER and JORDAN, Circuit Judges.
(Filed: October 9, 2009)
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OPINION OF THE COURT
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FISHER, Circuit Judge.
Berish Berger (“Berger”) appeals from the District Court’s order granting
summary judgment to defendants Eli Weinstein, Ravinder Chawla, 2040 Market
Associates, LP, JFK BLVD Acquisition Partners, L.P., Mark Sahara, Pine Projects, LLC,
and World Acquisition Partners Corporation (collectively, “Appellees”) on the grounds
that Berger lacks Article III standing to pursue his claims. See Berger v. Weinstein,
No. 07-994, 2008 WL 3183404 (E.D. Pa. August 6, 2008). We will affirm.
I.
We write exclusively for the parties, who are familiar with the factual context and
legal history of this case. Therefore, we will set forth only those facts necessary to our
analysis.
Berger’s claims revolve around five separate payments, totaling $36.5 million,
made to the Appellees to purchase properties in Center City, Philadelphia, known as the
River Cities property and 2040 Market Street. None of the payments was made by Berger
directly; instead each payment was made to Appellees by a corporation in some way
affiliated with Berger. The first payment of $12 million was made by Kilbride
Investments Limited (“Kilbride”), a Gibralter company owned by a discretionary trust
established by Berger’s father. The second payment of $9.5 million came from
Busystore, Limited (“Busystore”), a United Kingdom company whose directors are

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Hereafter the five entities making payments to Appellees (Kilbride, Busystore,1
Ardenlink, Bergfeld, and Towerstates) will be jointly referred to as “Payees”.
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Berger, his wife, and his son. The sole owner of Busystore is Astralmain Limited, which
Berger asserts is wholly owned by his family.
In January 2007, at Berger’s direction, Towerstates Limited (“Towerstates”)
transferred $4 million, Ardenlink Limited (“Ardenlink”) transferred $6 million, and
Bergfeld Co. Limited (“Bergfeld”) transferred $5 million to Pine Projects. Berger serves
on the Board of Directors of all three of these Payees. Ardenlink is a charitable1
corporation without shareholders, while Berger owns one percent of the stock in
Towerstates. Bergfeld is entirely owned by Tripform Limited, another company which
Berger asserts is entirely owned by his family.
Berger testified in his deposition that all of the $36.5 million paid to the Appellees
by the five different payee companies was money loaned to Berger that he is obligated to
repay. No documents were placed in the District Court’s record that could provide any
details regarding the terms of these loans, including when the loans were to be repaid and
what, if any, interest was to be paid. In his deposition, Berger was unable to describe the
terms of any loan agreement he had with the Payees.
Berger filed suit in March 2007 to recover damages based on the Appellees’
fraudulent misappropriation of the $36.5 million sent by the Payees. The District Court

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granted Berger a preliminary injunction to protect his interests in the River City and 2040
Market Street properties.
Appellees moved for summary judgment on a number of grounds. All Appellees
argued Berger’s lack of standing was one ground for granting summary judgment. On
August 6, 2008, the District Court granted the Appellees’ motions for summary judgment
based on Berger’s lack of standing. The District Court did not address any of the motions
for summary judgment on the merits because the standing issue was dispositive.
II.
The District Court exercised jurisdiction over this matter pursuant to 28 U.S.C.
§ 1332(a). We have appellate jurisdiction under 28 U.S.C. § 1291.
We review District Court orders granting summary judgment de novo. Alcoa v.
United States, 509 F.3d 173, 175 (3d Cir. 2007) (“We review the District Court’s grant of
summary judgment de novo, applying the same standard the District Court applied.”).
III.
To establish standing under Article III of the United States Constitution, plaintiffs
must demonstrate (1) an injury-in-fact; (2) a causal connection between the injury and the
defendant’s conduct; and (3) the injury is capable of being redressed by the courts. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). The District Court found that
Berger did not suffer an injury-in-fact and, thus, the Court did not reach the final two
prongs of the standing inquiry.

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An injury-in-fact must be concrete and particularized, and “actual or imminent, not
conjectural or hypothetical.” Id. at 560 (internal quotations omitted). As we have
explained, Article III standing assures that disputes are resolved “in a concrete factual
context conducive to a realistic appreciation of the consequences of judicial action.” Pa.
Prison Soc. v. Cortes, 508 F.3d 156, 161 (3d Cir. 2007) (quoting Bender v. Williamsport
Area Sch. Dist., 475 U.S. 534, 542-43 (1986)).
Berger asserts that he has standing because his “uncontroverted” testimony
establishes that the $36.5 million in payments made to the various Appellees was loaned
to him by businesses associated with his family. Berger asserts that because he has an
obligation to pay back those loans, he has suffered an injury-in-fact in the
misappropriation of the money by the Appellees. Berger asserts that there are three ways
the payments could be characterized: (1) as loans to Berger; (2) gifts or other income to
Berger; or (3) direct investments by the Payees. Berger argues that the payments were
loans. He further argues that regardless of how the payments are characterized, he still has
standing under Article III.
The Appellees argue that the absence of any loan documents or terms demonstrates
that Berger does not have to pay back the money loaned to him by the Payees, and
therefore he cannot establish an injury based on the loss of the $36.5 million.

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A.
The payments made by the Payees were not loans to Berger. At least one of the
five Payees, Towerstates, stated in its independent audit statement that there was
“fundamental uncertainty” regarding the funds and that should those funds prove
unrecoverable, Towerstates “would have a loss for the year.” As the District Court noted,
this would be an odd statement to make if a person like Berger who believes his assets are
worth over $100 million is personally liable for repayment of a loan. See Berger, 2008
WL 3183404, at *4. Three of the Payees, Ardenlink, Towerstates, and Bergfeld, did not
account for the transfers as loans in their year end financial statements. Finally, a
memorandum sent by accountant Mark Hepplewhite to Berger states that each of the three
companies was treating the funds as an advance to Pipe Projects made on behalf of
Busystore Limited. None of the companies was treating the funds as a loan to be repaid
by Berger.
In addition to the absence of any documents either between the Payees and Berger
or within the Payee’s internal structure showing that the transactions were loans, Berger’s
own testimony demonstrates that the payments were not loans. Berger testified that he
did not know when the money must be repaid, whether there was interest, or even how he
would find out if there was interest. Id. Additionally, none of the alleged loan money
was ever in Berger’s possession, rather it was paid directly to the Appellees by the
Payees. The only evidence in the record that suggests that the payments are loans is

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The District Court did not address in its opinion the statement of James Levy who2
had represented Kilbride in its $12 million transaction with Berger. Levy stated his belief
that the funds were loaned from Kilbride to Berger. It is possible, as Weinstein and Pine
Projects note in their briefs, that the District Court released its summary judgment order
before it received Levy’s statement given that the statement was delivered on the same
day as the summary judgment order. Appellees raise a number of reasons why the Levy
statement would be inadmissible or not credible in a trial proceeding. We note that
Berger did not move for reconsideration in light of the new evidence, and therefore
Levy’s statement was not properly part of the record in the District Court. Accordingly,
we will not rely on Levy’s statement on appeal. See Harsco Corp. v. Zlotnicki, 779 F.2d
906, 909 (3d Cir. 1985).
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Berger’s own testimony that he owed money to the Payees. We agree with the District2
Court that the record before it established that the transactions between the five Payees
and Berger were not loans.
B.
The District Court held that even if the payments from Payees to Appellees were
loans to Berger, he still would not have standing because he has not shown the repayment
of the loans is “certainly impending.” Whitmore v. Arkansas, 495 U.S. 149, 158 (1990).
Berger does not know when, or even if, the Payees will demand payment on the alleged
loans they made to him and he does not know the terms of such repayment. We agree
with the District Court that “Plaintiff’s alleged debt is ‘too remote temporally’ for the
Court to conclude that Plaintiff has shown an injury in fact.” Berger, 2008 WL 3183404,
at *5 (citing McConnell v. Fed. Election Comm’n, 540 U.S. 93, 226 (2003)). As a result,
even if the $36.5 million were a loan from Payees to Berger, Berger still has not
established Article III standing.

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C.
Berger next argues that if the $36.5 million was not loaned then it was a gift or
other income provided to him by the Payees. Under this theory, Berger received the gift
when each Payee made its payment to the Appellees and therefore when it was allegedly
misappropriated, the loss incurred to Berger and not to the Payees. Berger states “if
Berger never had to repay the funds, then the fact that the funds lost in the fraud were
solely Berger’s is even clearer.” (Berger Bl. Br. at 21.) No testimony or evidence was
presented suggesting that the $36.5 million payments were gifts from the Payees, and
there is thus no basis for concluding that the payments were gifts or other income to
Berger. Accordingly, we find that the payments were not gifts or other income to Berger.
D.
Appellees contend that the payments were direct investments made by the family
businesses. This position is supported by the great weight of the evidence, including the
lack of any loan terms between Berger and the family businesses, the Hepplewhite
memorandum, and the failure of Payees to account for the payments as loans.
Berger argues that even if the payments are direct investments, he nonetheless has
standing “based on his status as a shareholder, director, family member and the one
person directly deceived by the defendants’ fraudulent misrepresentations.” (Berger Bl.
Br. at 25.) Berger is a 1% owner and Board Member of Towerstates, a Board Member of

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Bergfeld, Aredenlinke, and Busystore, and a potential beneficiary of the trust that owns
Kilbride.
Berger contends that his derivative injury as an owner/director of Towerstates is
enough to confer Article III standing. For this proposition, Berger cites Whelan v. Abell,
953 F.2d 663, 671-72 (D.C. Cir. 1992), a case which held that a shareholder had Article
III standing to assert a corporation’s claims when the corporation was small and closely
held.
Our precedent does not draw such a distinction between a shareholder of large
corporations and a shareholder of small closely held corporations for the purpose of
standing. To the contrary, we have held “that a shareholder (even a shareholder in a
closely-held corporation) may not sue for personal injuries that result directly from
injuries to the corporation.” In re Kaplan, 143 F.3d 807, 811-12 (3d Cir. 1998). More
recently we have held that “individual shareholders do not have standing to assert directly
state-law claims alleging harm to a corporation.” LaSala v. Bordier et Cie, 519 F.3d 121,
131 (3d Cir. 2008).
Berger asserts that he must have standing to sue on behalf of Ardenlink, Bergfeld,
Busystore, and Towerstates because he is on the Board of Directors of each and as the
driving force behind the investments in Appellees’ real estate ventures he could be
subject to liability in suits filed by the companies or their shareholders. Berger has not
been sued by Ardenlink, Bergfeld, Busystore, or Towerstates, nor has he been sued by

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We imply nothing about whether a future suit by Berger for contribution or3
indemnification would be well-founded in law or fact.
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any officer, director, or shareholder affiliated with the companies. Berger is in essence
seeking a type of advance indemnity or contribution against a future lawsuit. We have
held that “a cause of action for contribution does not arise until the party seeking
contribution has paid, or had a judgment rendered against him or her for, more than his or
her fair share of a common liability.” Sea-Land Service, Inc. v. United States, 874 F.2d
169, 171 (3d Cir. 1989). Until Berger actually has a judgment rendered against him based
on his liability to the Payees or their shareholders resulting from his role in influencing
the payments to the Appellees, he cannot seek contribution or indemnity. Any injury to3
Berger that may result from a potential future lawsuit is hypothetical and cannot confer
Article III standing.
Likewise, Berger does not have standing to bring a claim on behalf of Kilbride.
The District Court found that “Berger has no relationship at all with Kilbride.” Berger,
2008 WL 3183404, at *2. Berger certainly is not an owner, director, shareholder, or
officer of Kilbride. There is no basis for finding that Berger has standing to assert
Kilbride’s claims.
In sum, Berger does not have Article III standing to bring claims on behalf of any
of the Payees.

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The assignments Berger received from Payees do nothing to establish standing4
under Article III because standing must be established as of the time the lawsuit is
brought. See Davis v. FEC, __ U.S. __, 128 S. Ct. 2759, 2769 (2008).
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Finally, Berger contends that he has established “an identifiable trifle” of actual
injury, and that any additional concerns regarding his right to recover go to whether he is
the real party in interest. We need not reach the argument of whether Berger is a real
party in interest because he has not established Article III standing.4
IV.
For the foregoing reasons, we will affirm the order of the District Court.

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