Brannock Associates, Inc. v. Capitol 801 Corp.

• Decision Date: 25 November 1992
• Docket Number: Civ. A. No. 91-1863.
• Citation: 807 F. Supp. 127
• Court: U.S. District Court — District of Columbia
• Parties: BRANNOCK ASSOCIATES, INC., Plaintiff, v. CAPITOL 801 CORPORATION and Finard & Company, Inc., Defendants.

807 F. Supp. 127

BRANNOCK ASSOCIATES, INC., Plaintiff, v. CAPITOL 801 CORPORATION and Finard & Company, Inc., Defendants.

Civ. A. No. 91-1863.

United States District Court, District of Columbia.

November 25, 1992.

Douglas M. Bregman, Walter Lee, Bethesda, MD, for plaintiff.

Joseph Rosenberg, Rockville, MD, for defendant Finard.

Judah Lifschitz, Randal W. Wax, Washington, DC, for defendant Capitol 801.

MEMORANDUM OPINION

JOHN H. PRATT, District Judge.

In this case¹, we are presented with yet another set of leasing disputes surrounding the commercial lease agreements between Brannock Associates, Inc. ("Brannock"), Finard & Co., Inc. ("Finard"), and Capitol 801 Corporation ("Capitol"). While this diversity action primarily concerns the leasing commission allegedly owed to Brannock by defendants, we also take this opportunity to review defendants' claims for indemnification and Capitol's Motion for Rule 11 Sanctions.

Before the Court are plaintiff Brannock's Motions for Summary Judgment on its claims against Finard and Capitol and Motion for Summary Judgment on Finard's counterclaim; defendant Finard's Motions for Summary Judgment against Brannock as to Brannock's claim and Finard's counterclaim; and defendant Capitol's Motion for Summary Judgment against Brannock on Brannock's claim and against Finard on its counterclaim, Motion for Summary Judgment as to Finard's cross-claim, and Motion for Rule 11 Sanctions against Finard.

I. Background

The current set of disputes arises from a contract to purchase and lease units at 801 North Capitol Street in Northeast Washington, D.C. On November 24, 1986, defendant Finard, which owned the rights to purchase the building, assigned those rights to Capitol under an "Assignment Agreement." Finard retained the right to receive additional compensation of $1,000,000 from Capitol, held in trust, if it procured two commercial leases for Capitol under the terms of that agreement.² Under the Assignment Agreement, the parties agreed to obtain the services of H.L. Rust Company t/a Jackson-Cross Company ("Jackson-Cross") and Eagle Realty and Business International ("Eagle Realty") in procuring the commercial leases. Under Section 8.2 of the Agreement³, Finard also agreed to bear the costs of any leasing commissions for brokers used in obtaining any leases which did not comply with the terms of the Agreement outlined in Article 3.

After signing the Assignment Agreement, Finard retained the services of real estate broker Percy A. Brown at Jackson-Cross to procure the leases. In March 1987, Brown left Jackson-Cross and became Vice-President of Brannock. By agreement with Finard and Capitol, Brannock obtained the deal to procure leases for 801 North Capitol. On July 6, 1988, Brannock delivered to Capitol a fully executed five year lease with the District of Columbia government at 801 North Capitol providing for a total of $9,353,507.00 in fixed rent to be paid over the five year term.

Following the execution of the lease, Brannock submitted to Finard and Capitol a request for the standard leasing commission of 2.5% of the gross lease value of $9,353,507.00, totalling $233,838.00. Finard subsequently filed a claim against Capitol with this Court, seeking to obtain delivery of the $1,000,000 promissory note for obtaining the 5-year lease with the D.C. government and to hold Capitol liable for the leasing commission claimed by Brannock. In Finard & Co., Inc. v. Capitol 801 Corp., 749 F.Supp. 15 (D.D.C.1990) ("Finard I"), we held that Finard was not entitled to the $1,000,000 because it had failed to deliver a lease complying with the terms of the Assignment Agreement.⁴ We further held that, under Section 8.2 of the Assignment Agreement, Finard was liable for all leasing commissions owed to Brannock for procuring a lease which failed to comply with Article 3. Id. at 20.

The Court of Appeals substantially affirmed the decision in a Memorandum Opinion, holding that Finard could not collect on the $1,000,000 promissory note. See Finard & Co., Inc. v. Capitol 801 Corp., No. 91-7106, 976 F.2d 1444 (Table), 1992 WL 266115 (D.C.Cir. Sept. 23, 1992) ("Finard II"). With respect to Brannock's commission, the Court of Appeals held that Finard would be liable for any commissions found to be owed, but held that liability to Brannock itself was not before the court since Brannock was not a party to the action. Id., 1992 WL 266115 at *2.

Brannock meantime filed the present action against Finard and Capitol to obtain $233,838.00 in leasing commissions. That issue is now ripe for review, along with defendants' Motions for Summary Judgment on other claims.

II. Discussion

Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). The burden is on the non-moving party to present evidence that a genuine issue exists "such that a reasonable jury could return a verdict for a non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In viewing the evidence, the court must draw all inferences in the light most favorable to the non-moving party. Id. at 255, 106 S.Ct. at 2513.

A. Leasing Commissions Claimed By Brannock

Brannock has moved for summary judgment against both Finard and Capitol, alleging that defendants are liable to Brannock for $233,838.00 in leasing commissions. Brannock asserts that Capitol is liable on the theories of quantum meruit and unjust enrichment.⁵ Brannock also moves for summary judgment on its claims against Finard on the theories of breach of contract and unjust enrichment. Both defendants have filed Motions for Summary Judgment in opposition to Brannock's claims.

1. Liability of Capitol

With respect to Capitol, it is necessary to note at the outset that Finard II prevents our holding Capitol liable for any part of the payment of Brannock's claim for leasing commissions. In its Memorandum Opinion, the Court of Appeals held that, pursuant to Section 8.2 of the Assignment Agreement, "if Capitol 801 Corporation is subsequently held to owe leasing commissions to any party in connection with leases Finard & Company, Inc., procured, or attempted to procure, for Capitol ......, Finard & Company, Inc., shall pay any and all such leasing commissions." Finard II, 1992 WL 266115 at *2. Therefore, even if Capitol were found to owe Brannock for part or all of the commission, Finard would be obligated to pay Capitol's debt.

The sole issue for our consideration with respect to Capitol, then, is whether Capitol has accrued any debt to Brannock, which Finard is obligated to pay. Brannock asserts that Capitol is, in fact, liable for the full amount of the commission under the theories of quantum meruit and unjust enrichment because Capitol enjoyed the full value of Brannock's services in procuring the lease with the D.C. government. Since the standard commission is 2.5% of the total of the fixed rents payable under the lease ($9,353,507.00), Brannock claims that Capitol should be held liable for the full $233,838.00. See Brannock's Motion at 30.

In ordering compensation under a theory of quantum meruit or unjust enrichment, the court must find that the following criteria are met:

(1) valuable services must be rendered by the plaintiff;

(2) for the person sought to be charged;

(3) which services were accepted by the person sought to be charged, and enjoyed by him or her; and

(4) under such circumstances has reasonably notified the person sought to be charged that the plaintiff, in performing such services, expected to be paid.

TVL Associates v. A & M Constr. Corp., 474 A.2d 156, 159 (D.C.App.1984). We fail to find that Brannock has satisfied all of the above criteria with regard to Capitol.

To begin with, we find that Brannock "rendered services" for Finard rather than Capitol. Under the terms of the Assignment Agreement, Finard had the option to gain further compensation by obtaining leases in 801 North Capitol. See note 1 supra. In pursuit of the lease with the D.C. government, Finard procured the services of real estate broker Percy A. Brown. While negotiating with the D.C. government, Brown was therefore in a position of acting as Finard's agent, not Capitol's.

Brannock contends, however, that after Brown moved to Brannock, Capitol also authorized Brannock's services as Capitol's agent. See Brannock's Motion at 28. Brannock refers to a letter sent by Capitol's agent, Oliver J. Munday of Jones Lang Wootten USA, on March 18, 1987, in which Munday told Percy Brown to proceed with the lease negotiations with the D.C. government. Id.

We refuse to find, however, that this letter authorized Brannock to proceed as an agent for Capitol. The letter followed a discussion between Capitol and Finard on March 10, 1987 concerning the possibility of Finard's procuring a non-complying lease. As we stated in Finard I, Munday's letter was sent to "instruct Finard's broker to proceed with negotiations for the leases." See 749 F.Supp. at 19 (emphasis added). Finard itself has acknowledged that Brannock "performed services at the behest of Finard, not Capitol." Finard's Statement of Remaining Issues at 5 (emphasis supplied). Accordingly, we find that the first two requirements of the TVL test are not met.⁶

Furthermore, Brannock has not satisfied the fourth part of the TVL test because it failed to put Capitol on notice that it expected payment from Capitol for its services. As had been agreed upon by Capitol and Finard, the Assignment Agreement governed payment of brokerage fees. Since Capitol was presented with a noncomplying lease (i.e., one failing to meet the terms of Article 3), Capitol reasonably believed that Finard was liable for the fees owed Brannock in accordance with Section 8.2 of the Agreement. Brannock has shown no evidence that another arrangement superceded that established in the Assignment Agreement.

B...