476 F.3d 231 (4th Cir. 2007), 06-1187, Washington Metropolitan Area Transit Authority v. Potomac Investment Properties, Inc.

Docket Nº:06-1187.
Citation:476 F.3d 231
Party Name:WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Plaintiff-Appellee, v. POTOMAC INVESTMENT PROPERTIES, INCORPORATED, Defendant-Appellant.
Case Date:February 01, 2007
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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476 F.3d 231 (4th Cir. 2007)

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Plaintiff-Appellee,

v.

POTOMAC INVESTMENT PROPERTIES, INCORPORATED, Defendant-Appellant.

No. 06-1187.

United States Court of Appeals, Fourth Circuit.

February 1, 2007

Argued: October 24, 2006

Appeal from the United States District Court for the District of Maryland, at Greenbelt. Peter J. Messitte, District Judge. 8:04-cv-01381-PJM.

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COUNSEL

ARGUED:

James Bradford McCullough, Lerch, Early & Brewer, Chartered, Bethesda, MD, for Appellant.

Joseph John Zimmerman, Washington Metropolitan Area Transit Authority, Office of General Counsel, Washington, D.C., for Appellee.

ON BRIEF:

Stanley J. Reed, Lerch, Early & Brewer, Chartered, Bethesda, MD, for Appellant.

Carol B. O'Keeffe, General Counsel, Edward J. Maginnis, Associate General Counsel, Washington Metropolitan Area Transit Authority, Office of General Counsel, Washington, D.C., for Appellee.

Before WIDENER, KING, and SHEDD, Circuit Judges.

Affirmed by published opinion. Judge Widener wrote the opinion, in which Judge King and Judge Shedd concurred.

OPINION

WIDENER, Circuit Judge:

This is a contract case. Plaintiff WMATA sued the defendant Potomac Investment Properties in the district court for the District of Maryland asking for a declaratory judgment that the contract between the parties has been fully performed and is no longer in force, an order to quiet title in the disputed parcel of land, and in the alternative for a rescission of the contract. The district court granted summary judgment to the plaintiff, and the defendant appealed. We have jurisdiction under 28 U.S.C. § 1291.

I.

Washington Metropolitan Area Transit Authority is an agency and instrumentality of the States of Maryland and Virginia and the District of Columbia. The agency was created by interstate compact, approved by Congress, and codified in Md.Code Ann. Transp. § 10-207. The compact confers jurisdiction over lawsuits to which WMATA is a party on United States District Courts. Md.Code Ann. Transp. § 10-207, Art. 81. WMATA is a plaintiff-appellee in the present action.

Potomac Investment Properties (Potomac or Potomac Investment) is a developer. Over the course of years, Potomac Investment and WMATA variously contracted with respect to some of WMATA's property adjacent to WMATA's Grosvenor-Strathmore station in Montgomery County, Maryland. One of the agreements between the parties with respect to

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the part of the property involved in this litigation was a Right of First Refusal Agreement. The First Refusal Agreement gave preferential purchasing, leasing, and development rights to Potomac Investment. The relevant parts of the agreement follow:

1.2 Election to Purchase Lease or Develop. For a period of ninety (90) days following date of Notice ("the Notice Period"), Purchaser [Potomac Investment] shall have the exclusive option to purchase, lease or develop the Subject Interest specified in the Notice and Purchaser shall respond to WMATA pursuant to the terms stated in the Notice. If Purchaser elects to purchase, lease or develop the Subject Interest, it must so notify WMATA in writing (the "Exercise Notice") within said Notice Period. If Purchaser fails to send an Exercise Notice within said 90-day period it shall be deemed to have elected not to purchase, lease or develop the Subject Interest. If Purchaser sends an Exercise Notice in accordance with this Section 1.2, WMATA and Purchaser shall promptly negotiate a Letter of Intent and thereafter execute a Sales Agreement, Lease Agreement or Development Agreement with respect to the North Parcel [the Subject Property] pursuant to the terms set forth in the Notice. If the parties, acting in good faith, do not reach agreement on the terms of a Sales Agreement, Lease Agreement or Development Agreement within six months from the execution date of the Letter of Intent, this Right of First Refusal shall become null and void.

1.3 Sale, Lease or Right to Develop to Third Party. If Purchaser fails to exercise its right to purchase, lease or develop the subject Interest in accordance with the terms of this Agreement, or if Purchaser exercises its right to purchase, lease or develop but subsequently fails to purchase, lease or develop (via a development agreement) the Subject Interest within the time specified, then WMATA shall have the right, for nine (9) months after the expiration of the Notice Period, to obtain a bona fide, binding contract for that sale, lease or development of such Subject Interest to the third party on terms and conditions consistent with the Notice which are no less favorable to WMATA than those stated in the Notice....

1.4 Reinstatement of Right of First Refusal. In the event WMATA fails within...

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