Buying Standing? Buyer Beware.

The doctrine of standing to sue — the status that allows a plaintiff to bring a lawsuit in the first instance — is as elusive as it is fundamental.  Courts will dismiss an action unless the plaintiff can show that it has standing.  As the United States Supreme Court has explained, the doctrine of standing ensures that the courts hear only those cases or controversies where the plaintiffs have “alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination….”  Baker v. Carr, 369 U.S. 186, 204 (1962).

Generally, an injury resulting from business competition is insufficient to confer standing.  Let’s assume, however, that a business learns of a competitor who is poised to begin construction of a building in the community.  Having status as the owner of an abutting property would lend the business the requisite standing to raise land use concerns in litigation ostensibly brought for that purpose.  In response to the threatened competition, the business therefore goes out and buys an undeveloped, dirt-cheap property, directly adjacent to the competitor’s property.  Alleging its status as an abutting landowner, the business then brings suit for injunctive and related relief against the competitor.

In a recent case, Eastern States Real Estate Management, LLC v. Prem Management, LLC, Berkshire Superior Court Civil Action No. 2013-151A, this actually occurred.  An overzealous opponent seeking to forestall competition acquired property to establish standing in later litigation, but instead of establishing a stake in the outcome of the controversy, the opponent merely sharpened a stake that was turned against it in the form of an order for the payment of its adversary’s fees and costs.

Specifically, a hotel business got wind of a competing hotel development.  To position itself as a litigating thorn in the side of the proposed hotel, it bought an adjacent, vacant parcel of land, of little value and with no material prospects of development.  It then brought a multi-count complaint against the competing hotel alleging violation of easement rights, trespass, and nuisance, with the expressed purpose of protecting an easement but with the more obvious goal of nipping a competing hotel in the bud.  The ploy backfired.

In ruling on the defendant’s motion for summary judgment, the court found that the plaintiff had purchased undeveloped raw land with no known prior commercial use except as the home of a billboard.  The plaintiff claimed to have been “kicking around” the prospect of constructing a small office building on the parcel, but had developed no specific plans.  The plaintiff also conceded that it had no plans for performing regrading work necessary for safe vehicular travel on the parcel.

The plaintiff purchased the property knowing of the proposed competitive development of the abutting property.  The plaintiff’s purported concerns about the safety of those traveling to and from its property in the indefinite future therefore rang hollow to the court, which found that the entire controversy had been concocted to derail the competing hotel development.  As a result, the plaintiff’s “conduct in filing this suit was aimed at achieving a goal other than adjudication of its rights.”

The plaintiff’s fabrication of standing and its failure to show a legitimate controversy led to the dismissal of the action, followed swiftly thereafter by the assessment of attorneys’ fees and costs.  The whole anti-competitive scheme collapsed, because the plaintiff simply didn’t have a leg to stand on.