Holland v. Hannan, 82-508.

CourtCourt of Appeals of Columbia District
Citation456 A.2d 807
Docket NumberNo. 82-508.,82-508.
PartiesRobert M. HOLLAND, et al., Appellants, v. William T. HANNAN, et al., Appellees.
Decision Date20 January 1983

Ralph N. Albright, Jr., Washington, D.C., with whom Avis E. Black, Washington, D.C., and F. Scott Kellman, Pittsburgh, Pa., were on the brief, for appellants Robert M. Holland and Thomas W. Holland.

Benjamin W. Dulany, Washington, D.C., for appellant Robert D. Weaver.

Terence P. Boyle, Washington, D.C., with whom Michael J. Conlon and Brenda A. Jacobs, Washington, D.C., were on the brief, for appellees.

Before NEBEKER, MACK and BELSON, Associate Judges.

BELSON, Associate Judge:

This is an appeal by Robert M. Holland, Thomas W. Holland, and Robert D. Weaver ("landlords")1 from an order of the trial court granting the motion of Norbrick Realty Company, William T. Hannan, et al. ("tenants")2 for summary judgment and denying landlords' cross-motion for summary judgment. See Super.Ct.Civ.R. 56(c). In a comprehensive opinion, the trial court construed Paragraph XVII, the "buy out" provision, of the 99-year ground lease between landlords and tenants. Paragraph XVII provided that once either tenants or landlords "determined to sell" their interest in the leasehold or the land, respectively, they were required to inform the other party of their determination and allow the other party to purchase the sellers' respective interest within sixty days at a market value arrived at by appraisal. In ruling in favor of tenants, the trial court held that, as a matter of law, tenants had not "determined to sell" their leasehold interest until they entered a firm contract of sale on specific terms and conditions with the Vogel-Kaufman-Feldman Joint Venture ("Vogel-Kaufman") on September 17, 1980, and had not done so previously when they agreed to a series of nonexclusive listing agreements for the sale of their interest with various real estate brokers beginning in August 1979. The court held that tenants had complied with the terms of Paragraph XVII when they offered the landlords the opportunity to purchase their interest at its appraised value as of September 17, 1980, and that landlords' refusal to purchase tenants' interest at that appraised value within sixty days terminated landlords' right to purchase tenants' interest under the "buy out" provision.

In contesting the trial court's decision, landlords contend that a firm contract of sale on specific terms and conditions is only one of several ways in which a determination to sell within the meaning of the "buy out" provision can be manifested objectively; that tenants' listing agreements, correspondence, and conduct beginning August 1979, were objective manifestations of tenants' determination to sell their leasehold interest; that the trial court erred as a matter of law when it granted tenants summary judgment in light of the substantial factual issues and disputes concerning the point in time when tenants "determined to sell" their interest; that the trial court improperly resolved genuinely disputed issues of fact and drew "all possible inferences" from the evidence against the landlords, and that the trial court either misconstrued or overlooked relevant case law in arriving at its decision.

We agree with the trial court's definition of "determine to sell" as an "unequivocal decision to transfer rights in property to another for consideration." However, we are not in full agreement with the trial court's conclusion that the exclusive means of objectively manifesting such determination is "either by offering the property to another on specific terms and conditions or by agreement to accept the offer of another to purchase on specific terms and conditions." We observe that express statements, agreements, or other conduct by either tenants or landlords, short of a firm contract with a third party, may also amount to an "unequivocal" manifestation of a determination to sell. Nevertheless, based upon our review of this record, we agree with the trial court that as a matter of law tenants' listing agreements and other conduct did not amount to an "unequivocal" decision to sell their leasehold interest. We conclude that the trial court did not err in granting appellees summary judgment under Super.Ct.Civ.R. 56(c). Accordingly, we affirm.

I

In light of the nature of appellants' contentions, we set out the undisputed facts in some detail. On December 21, 1959, Mary A.W. Holland and Robert D. Weaver, the owners of certain unimproved real estate at 2215 to 2233 Wisconsin Avenue in Georgetown, entered into a 99-year ground lease agreement with the corporate predecessor in interest of the present tenants, Norbrick Realty Company. This lease was substantially amended by the parties on December 31, 1963. Under Paragraph XVII of the 1963 Amended Lease now in effect, the parties gave each other reciprocal, conditional "buy out" rights.3 Under that paragraph once either landlords or tenants determined to sell their interest in the leasehold or the land, respectively, they were required to notify the other party of that determination. Under Paragraph III of the Amended Lease, the party so notified could then opt to begin the appraisal process by appointing an appraiser and giving notice of that appointment to the party which had "determined to sell," which would, in turn, have twenty days to appoint a second appraiser. The two appraisers would then have twenty days in which to appoint a third appraiser. The three appraisers would then perform an appraisal which would determine the fair market value of the property. Once the appraisal was done, the party beginning the appraisal process would have the right for sixty days to execute a contract at the appraised fair market value and make a deposit of ten percent of the appraisal price. If the party failed to exercise its preemptive right, the selling party had one year to sell its interest free of any obligation to the other party, and at any price.

In 1964, tenants erected a five-story commercial office building, the Georgetown Building, on the unimproved land. On December 22, 1964, tenants, by agreement, formed a joint venture to own and operate the Georgetown Building.4 Although over the years, the tenant partners, especially Richard Norair, had often mentioned the possibility of selling the Georgetown Building, it was not until 1978 that disputes over the management of the building led tenants to consider seriously the sale of the building.5

On July 20, 1979, Norair granted Coldwell Banker & Co., a real estate broker, a nonexclusive listing for the Georgetown Building. The listing agreement stated that tenants "will sell" the Georgetown Building for "6.3 million, all cash to existing first mortgage." Mr. Kyle, the Coldwell Banker agent, notified Norair by mail on August 7, 1979, that he had a quantifying prospect. Upon learning this, William Hannan wrote to both Norair and Kyle on August 13, that Norair had not been authorized by the partners to list the building.

In response, Norair wrote Hannan on the next day stating that Hannan had been absent from a prior partnership meeting "where tenant-partners Goldstein and Dobricky had agreed that a sale in the amount equal to $1 million net for each partner would be acceptable." Norair's letter continued:

I feel that it is essential that we have a meeting on this matter, which has been scheduled for August 20, 4 p.m., at the Georgetown Building, to determine once and for all the position we are going to take vis-a-vis keeping the Georgetown Building or selling it and at what price.

On the same day, Norair wrote Kyle that:

[T]he partners do desire to sell the Georgetown Building, but until certain offers now pending can be screened and finalized we do not desire to have the Georgetown Building put on the open market at a price less than $7.5 million.

At the meeting on August 20, the partners agreed to list the building with Coldwell Banker and to set their asking price at $6.75 million. On August 21, Norair wrote Kyle the following:

At a recent partnership meeting of Norbrick Realty, it was concluded that the Georgetown Building would be offered for sale at a price of $6,750,000 with a limited sale commission of 2½ percent on the gross amount.

Further, the partnership stated that only serious offers should be brought to them and upon determination of the seriousness of the intent of the offer, detailed information would be made available to the broker for subsequent review by the prospective purchaser.

In a letter of August 22, 1979, Norair granted another nonexclusive listing to broker Michael Zarpas of B.F. Saul Company on the same terms as in the Coldwell Banker listing. In September 1979, William T. Hannan, Jr. of Danac Associates (and the son of appellee Hannan) was also granted a nonexclusive listing. This listing agreement stated that the tenant partnership "desires . . . to offer . . . the property for sale to a bona fide purchaser." In the remainder of 1979 and the early months of 1980, the tenant partners entered into similar nonexclusive listing agreements with several other real estate brokers.

Tenants received at least three offers to purchase the Georgetown Building from August 1979 to June 1980.6 They were rejected for various reasons, including failure to meet the partners' criterion of a net $1 million profit for each partner. However, in July 1980, tenants received two contracts for sale which they all considered "realistic" or "reasonable." Vogel-Kaufman offered $6.1 million and Burleith Realty Company offered $6.215 million. Obviously receptive to the Vogel-Kaufman offer, Norair and Goldstein on September 4, 1980 sent a letter to Hannan and Dobricky, threatening to dissolve the partnership if Hannan and Dobricky did not sign Vogel-Kaufman's proposed contract. In relevant part, the letter states:

Over six months ago the four...

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