Eastbanc v. Georgetown Park Associates, No. 06-CV-1092.

• Decision Date: 17 January 2008
• Docket Number: No. 06-CV-1092.
• Citation: 940 A.2d 996
• Parties: EASTBANC, INC., Appellant, v. GEORGETOWN PARK ASSOCIATES II, L.P., et al., Appellees.
• Court: D.C. Court of Appeals

940 A.2d 996

EASTBANC, INC., Appellant, v. GEORGETOWN PARK ASSOCIATES II, L.P., et al., Appellees.

No. 06-CV-1092.

District of Columbia Court of Appeals.

Argued September 19, 2007.

Decided January 17, 2008.

Seth P. Waxman, with whom Paul R.Q. Wolfson, Andrew R. Varcoe, Jennifer Mueller, Peter J. McNulty, Catherine M.A. Carroll, Stephen Bogorad, Martin J. Jaron, Jr., and Leo G. Rydzewski were on the brief, Washington, for appellant.

S. Scott Morrison, with whom Nicole Lynn Kobrine and Michael J. Klyce, Jr., were on the brief, for appellees.

Before FARRELL, REID, and FISHER, Associate Judges.

FISHER, Associate Judge:

In 1998, real estate developers Georgetown Park Associates II and Herbert Miller (appellees) agreed to use a Right of First Offer, controlled by Mr. Miller, to help fellow developer EastBanc (appellant) acquire the Georgetown Park Mall. The parties made various efforts over the years, and they executed a new, temporary agreement in 2001, but EastBanc did not acquire the property. In 2006, Mr. Miller informed EastBanc that he intended to exercise the Right of First Offer for his own benefit. EastBanc sued, alleging breach of the 1998 agreement, but the Superior Court ruled that the statute of limitations barred the complaint. We hold that the signing of the 2001 agreement did not start the running of the limitations period. Accordingly, we reverse and remand for further proceedings.

I. Factual and Procedural Background

A. The Parties, the Property, and the ROFO

Anthony Lanier is president of EastBanc, Inc., a corporation that has been developing commercial real estate in Georgetown since 1996. Herbert S. Miller is the sole general partner of Georgetown Park Associates II Limited Partnership ("GPA II"). Acting' on behalf of EastBanc, Mr. Lanier decided that he wanted to buy the Georgetown Park Mall ("the Mall" or "the Property"), which was owned by Georgetown Park Associates ("GPA"). However, in an earlier transaction with GPA, Mr. Miller and GPA II had acquired a Right of First Offer ("ROFO") for the Mall. Similar in many ways to a right of first refusal, a ROFO affords the holder an opportunity to purchase property before it is sold to a third party. Thus, in order to acquire the Mall, Mr. Lanier had to contend with the ROFO, which GPA II owned.

B. The 1998 Letter Agreement and Its Aftermath

In April 1998, Mr. Miller and Mr. Lanier reached an oral agreement which was memorialized in a letter dated April 22, 1998 (the "1998 Letter Agreement"). Signed by both Mr. Miller and Mr. Lanier, the letter "confirm[ed]" the parties' agreement "concerning a joint venture to acquire and redevelop the Georgetown Park property." In this document, Mr. Miller reiterated his oral agreement with Mr. Lanier: "I would cooperate with you in exercising my voting rights with respect to the Right of First Offer in a manner that would, facilitate your acquiring ownership of the Georgetown Park property, including by assigning ... the Right of First Offer to you or as you direct." If Mr. Lanier acquired the Mall, whether or not by virtue of the ROFO, Mr. Miller, in return, "would be provided" a 7.5% "carried" interest¹ in "an entity formed for the single purpose of acquiring, redeveloping, owning and operating the property."

The 1998 Letter Agreement did not specify how the joint venture would be formed. Likewise, it did not fix a time for performance, or set a date when the agreement would expire. Beyond mentioning the option of assignment, the letter did not define precisely how Mr. Miller was to "cooperate" by exercising his voting rights in order to "facilitate" Mr. Lanier's acquisition of the Property.

EastBanc continued to develop the area surrounding the Mall, but it did not persuade GPA to sell the Mall itself. In mid November 1998, Mr. Miller wrote to Mr Lanier to "reiterate my intention to try to work with you to acquire this property." Mr. Miller stated in this letter that he had had discussions with GPA, informing them that "I would be working with you in your efforts to acquire the property since we both share an interest in a positive future for Georgetown." Mr. Miller said that he had told GPA that he would "have an open mind" concerning whether GPA should buy back the ROFO or "sell[ ] the property to us." Miller also urged that "[o]ne way or another I would like to realize a value of the right of first offer in the nearterm future."

C. The 2001 Agreement

EastBanc failed to acquire the Mall during the next two years and, starting in January 2001, Mr. Miller and Mr. Lanier considered modifying their approach. Mr. Miller proposed that he receive a cash payment instead of the 7.5% equity interest described in the 1998 Letter Agreement. The parties continued to negotiate along these lines throughout the spring and summer.

In July 2001, Mr. Miller, Mr. Lanier, and EastBanc signed a new agreement (the "2001 Agreement") that changed the method for compensating Mr. Miller. EastBanc agreed to pay Mr. Miller a $3 million waiver fee if it acquired the Mall by May 31, 2002 ("the Outside Closing Date"). In exchange, Mr. Miller promised to exercise (or refrain from exercising) the ROFO to benefit EastBanc and Mr. Lanier, and "otherwise assist Lanier to facilitate the acquisition of the Property by Lanier, Eastbanc² or the Lanier Entity." The 2001 Agreement stated that it "modifie[d] only the benefit to which Miller will be entitled for fulfilling his obligations set forth in the [1998] Letter Agreement and in this Agreement by substituting the Waiver Fee" for, the previously promised equity interest. "The Parties agree[d] that the modification to the [1998] Letter Agreement set forth in this Agreement will terminate as of the Outside Closing Date."

The 2001 Agreement memorialized serious disagreements about what would happen if EastBanc was not able to close on the Mall by May 31, 2002. "Miller maintained] that the Letter Agreement has expired in accordance with its terms and is no longer of any force and effect." On the other hand, the "Lanier Parties maintain[ed] that the Letter Agreement remains in full force and effect and will remain in full force and effect after the Outside Closing Date." Apparently agreeing to disagree, the parties stated that they "do not desire by the terms of this Agreement to either extend or cut short the term of the Letter Agreement or prejudice in any manner the arguments of either party thereto."

Mr. Lanier considered some of these statements by Mr. Miller to be mere posturing to improve his leverage when negotiating for an amendment to the 1998 Letter Agreement.³ Despite continued efforts to acquire the Property before May 31, 2002, EastBanc and GPA II were not able to do so, and the 2001 Agreement expired according to its terms.

D. Events in 2006

Early in 2006, GPA decided to sell the Mall, and its broker sent a prospectus to potential buyers. EastBanc submitted an offer, but GPA rejected it, indicating that it had accepted another bid. At that point, EastBanc believed that the only way it could acquire the Property would be by calling upon GPA II to exercise its ROFO rights.

GPA II did not exercise its ROFO rights in favor of EastBanc, however. In a letter to Mr. Lanier dated March 1, 2006, Mr. Miller asserted that in 1998 and 2001, EastBanc and GPA II "discussed the possibility that GPA II would not exercise its ROFO in order to facilitate your making an offer to purchase [the Mall], but we did not reach a definitive agreement on terms." Mr. Miller advised that GPA II was "considering exercising the ROFO for [its] own account and benefit in order to purchase the Georgetown Park property." Mr. Miller concluded by asserting that "GPA II remains at liberty to exercise its ROFO rights for its own benefit."

EastBanc responded on March 17, 2006, asking for confirmation that GPA II would "honor its obligations to EastBanc" under the 1998 Letter Agreement and requesting that GPA II execute "an appropriate instrument" assigning its rights under the ROFO to EastBanc. GPA II did not do so by the date requested, and on March 23, 2006, EastBanc filed a complaint against GPA II and Mr. Miller, alleging breach of the 1998 Letter Agreement and requesting specific performance and declaratory relief.

E. Superior Court Proceedings

GPA II moved for summary judgment, which the Superior Court granted, determining that the controversy rested "solely on the legal construction of a chain of correspondence between Anthony Lanier and Herbert Miller ...."

GPA II asserted that the three-year statute of limitations barred EastBanc's claim because it accrued prior to March 23, 2003. The trial court agreed, considering "Eastbanc's claim to have arisen with the execution of the 2001 Agreement...." That agreement "unequivocally communicated [GPA II's] intent not to cooperate further with Eastbanc to acquire the Property after [May 31, 2002]."

EastBanc argued that the 2001 Agreement was at most a repudiation of the 1998 Letter Agreement, and that it could elect to treat the repudiation as a breach and sue immediately or it could await performance under the contract, which it chose to do. The court rejected this argument, reasoning that because the "1998 Agreement does not fix a time for performance, there exists no date for the court to determine when the performance was due, and hence when the claim accrued. Therefore, in the absence of any workable alternative, the court ruled] that Eastbanc's claim accrued when it signed the 2001 Agreement on July 20, 2001...." Thus, the trial court concluded, EastBanc's claim was time-barred. The court denied EastBanc's pending motion to amend the complaint.

EastBanc subsequently moved to alter or amend the judgment. Denying that motion, the court articulated slightly different reasoning: "By signing the 2001 Agreement, GPA II repudiated any obligations it may have had under the 1998 Agreement. Eastbanc also signed the 2001 Agreement, signifying that it...