Dresser v. Sunderland Apartments Tenants Ass'n, No. 82-252.

• Docket Nº: No. 82-252.
• Citation: 465 A.2d 835
• Case Date: August 22, 1983
• Court: Court of Appeals of Columbia District

465 A.2d 835 Darrell A. DRESSER, Appellant,
v.
SUNDERLAND APARTMENTS TENANTS ASSOCIATION, INC., et al., Appellees. No. 82-252. District of Columbia Court of Appeals. Argued January 18, 1983. Decided August 22, 1983.

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Michael Nussbaum, Washington, D.C., for appellees.

James P. Davenport, Washington, D.C., with whom Richard S. Ewing, Roger E. Warin, and Elizabeth Fitch, Washington, D.C., were on brief, for appellees Leahy, Owens, Keller, Kass, Weissbard, Hendricks and First Condominium Realty Consultants, Inc. Jeffrey L. Squires, Washington, D.C., was on the brief, for appellee Lauren Condominium Unit Owners Assn.

Michael B. McGovern, Washington, D.C., also entered an appearance for appellee the Lauren.

Donald Cefaratti, Jr., Washington, D.C., also entered an appearance for appellee Sunderland Apartments Tenants Assn.

Thomas A. Mauro, Washington, D.C., with whom Thomas A. Rothwell, Washington, D.C., was on briefs, for appellant.

Before TERRY, Associate Judge, and REILLY, Chief Judge, Retired, and KELLY, Associate Judge, Retired.¹

PER CURIAM:

Appellant challenges the trial court's grant of appellees' motion for summary judgment on his claim for damages arising

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from the purchase, and attempted resale, of a condominium unit. We affirm.

I

In August 1979, the Sunderland Apartments Tenants Association (SATA), of which appellant was a member, purchased the Sunderland Apartments, located at 1320 Twentieth Street, N.W., Washington, D.C., with the purpose of converting the building to condominium ownership.² Elected to membership on the board of directors and as officers of SATA were appellant's fellow tenants Robert Leahy (President), John Gullett (Vice-President), Steven Keller (Second Vice-President), and William Owens (Treasurer). Attorney Benny Kass was retained as SATA's counsel.

To facilitate the conversion, SATA contracted with the First Condominium Realty Consultants (FCRC), as an outside consultant, to assist in preparing the documentation necessary to comply with statutory requirements;³ to secure necessary government approval and financing; and to sell the condominium units. Bruce Hendricks was president of FCRC and Samuel Weissbard served as counsel.

The public offering statement (POS) required by law,⁴ was prepared for use in the conversion by attorneys Kass and Weissbard, counsel for SATA and FCRC respectively. After acceptance by SATA's board of directors, the POS was executed by SATA, as the declarant,⁵ and was filed for

government approval. On December 18, 1979, the approval of the D.C. Department of Housing and Community Development was received.

The first sale of a unit of the newly created condominium was on January 8, 1980. Six days later, on January 14, appellant settled on his eighth floor unit. As a qualified member of SATA, he received a special insider purchase price of fifty-six thousand three hundred dollars ($56,300).

By early March 1980, appellant listed the unit for resale. Within several days, he received a written offer from Dr. William Thompson for the purchase price of one hundred thousand dollars ($100,000). Dr. Thompson, a psychiatrist, desired the apartment for use as his professional office. Uncertainty as to future restrictions on nonresidential use of units above the first floor ultimately led to the breakdown of negotiations between appellant and Dr. Thompson. Within the year, however, appellant succeeded in selling his condominium unit — this time to a residential user — for eighty-five thousand dollars ($85,000).

Appellant originally filed suit in April 1980, shortly after negotiations with Dr. Thompson ended in failure. The complaint sought certification as a class action, money damages from seven defendants,⁶ and an

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injunction against further sales of condominium units in the building. Six months later, on October 30, 1980, appellant moved to amend the complaint to add three additional defendants,⁷ and to realign the Lauren as a plaintiff. Then, in January 1981, without motion under Super.Ct.Civ.R. 15(a) for leave to file, appellant submitted a substitute amended complaint and a further request for preliminary injunctive relief.⁸

By order of February 26, 1981, the trial court allowed appellant to file the amended complaint of October 30,⁹ but denied his request to realign the Lauren as a plaintiff. It denied leave to file the substitute amended complaint of January 1981, and denied as moot the motion for a preliminary injunction based upon the allegations of that complaint. Then, on July 24, 1981, the court dismissed the amended complaint for failure to state a claim against appellees Hendricks, FCRC and Weissbard.¹⁰ In a subsequent order and opinion entered January 12, 1982, the court granted summary judgment for the remaining appellees (Kass, SATA, Leahy, Owens and Keller).¹¹

Appellant argues, principally, that in entering summary judgment for appellees, the trial court applied an erroneous measure of damages.¹² Ruling on appellees'

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motion, the trial court assumed that appellant had adequately established the liability of all appellees but found that there existed no genuine dispute as to the material element of damages. See Super.Ct.Civ.R. 56(c). Having purchased his unit for fifty-six thousand three hundred dollars ($56,300) and having sold it within a year for eighty-five thousand dollars ($85,000), appellant had suffered no out of pocket loss.

Exercising our function on appeal to determine whether any factual issues did exist, Bennett v. Kiggins, 377 A.2d 57, 59 (D.C.1977), cert. denied, 434 U.S. 1034, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978), and reviewing the record in the light most favorable to appellant, we conclude that the trial court did not err in entering summary judgment for appellees.

III

Underlying each count of appellant's amended complaint was the asserted misrepresentation of the POS relative to the prospective, qualified, non-residential use of condominium units.¹³ But as the trial court properly found in its well crafted opinion, despite the varied language with which the several counts were cloaked, the complaint presented in essence a claim of common law fraud.¹⁴

A prima facie case of fraud requires a showing of (1) a false representation, (2) in reference to a material fact, (3) made with knowledge of its falsity, (4) with the intent to deceive, and (5) action taken by appellant in reliance upon the representation, (6) which consequently resulted in provable damages. Bennett v. Kiggins, supra, 377 A.2d at 59; Isen v. Calvert Corp., 126 U.S.App.D.C. 349, 353, 379 F.2d 126, 129-30 (1967). To recover, appellant's proof of damages was crucial. See Jackson & Sharp Co. v. Fay, 20 App.D.C. 105, 112 (1902) (to maintain an action in deceit, a plaintiff must show "some appreciable damage"); accord Shear v. National Rifle Association of America, 196 U.S.App.D.C. 344, 352, 606 F.2d 1251, 1259 (1979) (reliance which proximately and directly results in damage to that person); Day v. Avery, 179 U.S.App.D.C. 63, 74, 548 F.2d 1018, 1029 (1976) (per curiam) ("a sine qua non of any recovery for misrepresentation is a showing of pecuniary loss proximately caused by reliance on the misrepresentation"), cert. denied, 431 U.S. 908, 97 S.Ct. 1706, 52 L.Ed.2d

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394 (1977).¹⁵ The nature of the required proof of damages, however, varied with appellant's conduct upon discovery of the fraud.

Where a party to an executed contract discovers a material misrepresentation made in the execution of the contract, that party may elect one of two mutually exclusive remedies. He may either affirm the contract and sue for damages, or repudiate the contract and recover that with which he or she has parted. Millard v. Lorain Investment Corp., 184 A.2d 630, 632 (D.C.1962); Kent Homes, Inc. v. Frankel, 128 A.2d 444, 445 (D.C.1957). The latter alternative, rescission, entitles the defrauded party to recover "special damages"...