MacEdonia Church v. Lancaster Hotel Ltd. Partnership
2008 WL 2468746, 560 F. Supp. 2d 175, 2008 U.S. Dist. LEXIS 47311 (2008)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An intended third-party beneficiary of a proposed contract can assert rights under 42 U.S.C. § 1981 for racial discrimination in the denial of a contractual relationship, even if the contract was not formally executed and their specific identity was unknown to the promisor, so long as the benefit to the third party was clearly contemplated by the contracting parties.
Facts:
- Macedonia Church sought to reserve rooms at the Lancaster Host Resort and Conference Center for a church-sponsored weekend retreat for its members, referred to as the 'Plaintiff Class.'
- Merle Rumble, acting as a representative for Macedonia Church, negotiated with the Lancaster Host for room reservations.
- The Lancaster Host mailed two proposals for room reservations to Macedonia Church for the benefit of the Plaintiff Class.
- Macedonia Church was ready, willing, and able to provide a deposit and enter into an agreement with the Lancaster Host, assuming financial responsibility and full payment for the reservations.
- The Lancaster Host failed to furnish Macedonia Church with its customary form requesting a list of names of the group members intending to stay.
- The Lancaster Host eventually failed to provide the promised rooms for the weekend of July 9-10, 2004, claiming there were not enough rooms available.
- The mission of Macedonia Church included fostering the spiritual welfare of its members, addressing racial injustice, and furthering fellowship and congregational vitality.
- The individual plaintiffs intended to lodge at the Lancaster Host at the agreed-upon rate negotiated by Macedonia Church.
Procedural Posture:
- Plaintiffs, including Macedonia Church and individual members, filed a complaint against the defendants, Lancaster Host Resort and Conference Center.
- Plaintiffs later filed a first amended complaint.
- Defendants moved to dismiss the first amended complaint as to all plaintiffs, except for four individual plaintiffs who had visited the Lancaster Host, on the grounds that they lacked standing.
- The court granted in part and denied in part the defendants' motion to dismiss, specifically denying the motion with respect to the individual plaintiffs who did not visit the Lancaster Host.
- At a status conference, the court directed the plaintiffs to submit a proposed amended complaint to clarify allegations regarding injuries and factual support.
- Defendants renewed their motion to dismiss the plaintiffs’ complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, arguing the individual plaintiffs lacked standing.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an individual plaintiff have standing under 42 U.S.C. § 1981 to sue for racial discrimination in the denial of a proposed contractual relationship if they were an intended third-party beneficiary of that proposed contract, even if they were not a direct party to the contract, the contract was not executed, and their specific identity was unknown to the defendants?
Opinions:
Majority - Alvin W. Thompson
Yes, an individual plaintiff has standing under 42 U.S.C. § 1981 to sue for racial discrimination in the denial of a proposed contractual relationship if they were an intended third-party beneficiary of that proposed contract, even if they were not a direct party to the contract, the contract was not executed, and their specific identity was unknown to the defendants. The court acknowledged that Macedonia Church, not the individual plaintiffs, was the direct party to the proposed contract. However, relying on the Supreme Court's Domino's Pizza, Inc. v. McDonald decision, which left open the possibility of third-party beneficiary standing under § 1981, and the Second Circuit's Olzman v. Lake Hills Swim Club, Inc., which recognized such standing, the court applied Connecticut contract law. Connecticut law determines third-party beneficiary status based on whether "the intent of the parties to the contract was that the promisor should assume a direct obligation to the third party." The court found that the plaintiffs sufficiently alleged that Macedonia Church intended to contract with Lancaster Host "for the benefit of the Plaintiff Class," meaning the Host would have a direct obligation to provide accommodations to the individual members. The court rejected the defendants' arguments that an executed contract was required, noting § 1981 protects the right "to make" contracts, not just enforce existing ones. It also rejected the argument that unknown identities precluded third-party beneficiary status, distinguishing it from merely "foreseeable" or "incidental" beneficiaries, because the individual plaintiffs were the intended recipients of the lodging, and the defendants' failure to provide a form for names was the reason their identities were unknown. The court distinguished Hampton and Mack where benefits were incidental, contrasting them with Denny and Miales where the third parties were clearly the direct intended recipients of the contracted-for benefit.
Analysis:
This case clarifies the scope of standing under 42 U.S.C. § 1981, specifically confirming that third-party intended beneficiaries can bring claims for racial discrimination in contract formation. It emphasizes that a formally executed contract is not a prerequisite for a § 1981 claim, aligning with the statute's protection of the "right to make" contracts. The ruling provides an important framework for distinguishing between intended and incidental beneficiaries, especially in group reservation scenarios, by focusing on the core purpose of the proposed contract and the direct benefits contemplated for the third parties. This decision broadens the potential pool of plaintiffs in discrimination cases involving contractual relationships, making it harder for businesses to evade liability by structuring transactions indirectly when discriminatory intent is present.
