Mark Keshishian, Etc. v. Washington Square

• Decision Date: 24 April 1980
• Docket Number: No. 79-395.,79-395.
• Citation: 414 A.2d 834
• Court: D.C. Court of Appeals
• Parties: MARK KESHISHIAN & SONS, INC., et al., Appellants, v. WASHINGTON SQUARE, INC., Appellee.

414 A.2d 834

MARK KESHISHIAN & SONS, INC., et al., Appellants, v. WASHINGTON SQUARE, INC., Appellee.

No. 79-395.

District of Columbia Court of Appeals.

Argued October 24, 1979.

Decided April 24, 1980.

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Patrick M. Norton, Washington, D. C., with whom Peter J. Nickles, Washington, D. C., was on briefs, for appellants.

Richard T. Tomar, Washington, D. C., with whom Dimitri P. Mallios, Washington, D. C., was on brief, for appellee.

Before KELLY, GALLAGHER and PRYOR, Associate Judges.

KELLY, Associate Judge:

Appellants Mark Keshishian & Sons, Inc. (henceforth the Keshishians), the ex-owners and lessors of a piece of property in Southeast Washington, appeal a jury verdict of $300,000 compensatory damages and $50,000 punitive damages in favor of appellee Washington Square, Inc. (henceforth Washington Square), the lessee, for breach of a right of first refusal to purchase the Keshishian's property that Washington Square claimed had been incorporated into the lease.

The Keshishians argue that the trial court's instructions to the jury on liability and damages constituted reversible error and that there was insufficient evidence of special aggravating circumstances to sustain the punitive damages award. We affirm.

In the spring of 1974, John Ford and Denny Yakis (the principals of Washington Square, Inc.) began negotiations to lease an unimproved warehouse occupying the central, corner, lot of three lots owned by the Keshishians in Southeast Washington.¹ On July 10, at the Keshishians' request, Washington Square, planning to convert the empty building into a restaurant and night club, submitted a proposed lease agreement. The draft included a clause guaranteeing Washington Square a first option to purchase the property in the event it was offered for sale (henceforth a "purchase option").

The Keshishians rejected Washington Square's draft and, claiming that they wanted their own lawyers to prepare it, presented a lease without a purchase option clause.² Yakis and Ford testified that they objected to this,³ but signed because the Keshishians promised to give them a purchase option separately and said, "There is no sense in putting [the purchase option] into the lease. . . All we have to do is give you [a] letter . . . telling you that we give you the right of first refusal. . . ." (Yakis' testimony). Yakis testified that he waited until the letter granting them a purchase option arrived, on August 1,⁴ and then "started driving nails," spending the next fourteen months, "never less than fourteen hours a day, seven days a week,"⁵ plus over $273,000, renovating the warehouse.⁶

During the period of construction, according to Yakis and Ford, they lent their only copy of the lease and purchase option letter to the Keshishians, who claimed their attorney had lost his copy. When it was returned, they noticed that the original purchase option was gone, and a xeroxed paper was substituted. They attempted, but were unable, to get the original letter back, but apparently did not notice that the terms of the substituted cover letter were different.⁷

On September 20, 1975, the restaurant opened, apparently with great success. A few months later, Donald Culver, president of the 1776 Company (which owned three competing restaurants in the area), offered to purchase Washington Square's lease. Washington Square refused his offer.

In early 1976, Solomon Alex Stern, an experienced local restaurant broker, relayed a $400,000 offer from his customer, Ernie Green, to Washington Square. Stern testified that he considered $400,000 a fair price for the restaurant⁸ because it had "a fantastic lease, terrific lease;" "the rent was very — was more than reasonable rent;" "the business was very good;" and the improvements "cost almost three hundred thousand dollars and [the restaurant] was built from scratch."

On March 1, 1976, the Keshishians sold the lot Washington Square was leasing and the two adjoining lots to the 1776 Company. On May 12, they offered to renege on their deal with 1776 if Washington Square agreed to buy all three lots. Unable to afford more than the restaurant property, Washington Square refused.⁹

The 1776 Company negotiated a new lease, at a greatly increased rental — $20,000 a year, more than twice the prior cost — and, when Washington Square fell behind in payments, gave them notice to quit under clause 33. See supra note 2. After suing for possession, 1776 succeeded in evicting Washington Square,¹⁰ which then brought this action for breach of contract against the Keshishians.¹¹

Most of the appellants' arguments for reversal stem from the trial court's allegedly erroneous instructions, or from its failure or refusal to submit certain instructions to the jury. We consider only those errors that were properly raised at trial, via specific objections, made prior to the jury's retirement, stating distinctly the grounds for objection. Super.Ct.Civ.R. 51. Those errors raised for the first time on appeal are not grounds for reversal unless "it is apparent from the face of the record that a `miscarriage of justice' has occurred." Weisman v. Middleton, D.C.App., 390 A.2d 996, 1000 (1978) (citations omitted).¹²

I

Although appellants argue that the trial court should have instructed the jury to disregard the purchase option unless "clear and convincing" evidence both of its contents and of its existence was presented, to overcome the presumptions of both the parol evidence rule and the Statute of Frauds, there was neither a proffer of, nor an objection to the absence of, such an instruction. Therefore, we can only review this alleged error if the Weisman exception is applicable.¹³

The parol evidence rule, contrary to appellants' implication, does not bar the introduction of parol evidence that a written agreement, such as the lease, was not intended to be a complete statement of the agreement between the parties at the time it was signed. "In this jurisdiction . . . it is well settled that a written contract may be conditioned on an oral agreement that the contract shall not become binding until some condition precedent resting in parol [evidence] shall have been performed." Luther Williams, Jr., Inc. v. Johnson, D.C.App., 229 A.2d 163, 164 (1967) (citing Burke v. Dulaney, 153 U.S. 228, 14 S.Ct. 816, 38 L.Ed. 698 (1894) (parol evidence that parties did not intend home improvement contract to become binding until financing obtained is admissible "when the contract is silent on the matter, the testimony does not contradict nor is it inconsistent with the writing, and if under the circumstances it may properly be inferred that the parties did not intend the writing to be a complete statement of their transaction." Id. at 165 (citing Seitz v. Brewers' Refrigerating Mach. Co., 141 U.S. 510, 12 S.Ct. 46, 35 L.Ed. 837 (1891)).¹⁴

The chief complication in this case is that a reality purchase option is unenforceable under the Statute of Frauds unless it has been reduced to writing and signed by the party being charged. D.C.Code 1973, § 28-3502. See Feltman v. Sarbov, D.C. App., 366 A.2d 137, 140 (1976); Restatement of Contracts § 216 (1932); 3 Williston on Contracts § 527 (1960). However, parol evidence is admissible to prove both the contents and the existence of a writing which satisfied the Statute of Frauds when executed, but was subsequently lost or destroyed.¹⁵ See 2 Corbin on Contracts § 529 (1950). This parol evidence must also be clear and convincing.

There was no contention at trial that the purchase option was oral.¹⁶ Washington Square consistently claimed that the option was reduced to writing, and then lost or destroyed by the Keshishians. Nor was there any question, once there was a finding that it was reduced to writing, that the purchase option could be read into the lease contract: "[T]he nearly universal rule is that a complete contract binding under the Statute of Frauds may be gathered from letters, writings and telegrams between the parties relating to the subject matter of the contract when [they are] so connected with each other that they may be fairly said to constitute one paper . . . ." Ochs v. Weil, 79 U.S.App.D.C. 84, 86, 142 F.2d 758, 760 (1944).

We cannot conclude on this record that the trial court's unobjected to failure to give a "clear and convincing" evidence instruction amounts to such a "miscarriage of justice" that it warrants reversal of the jury's finding. Even if an instruction is requested, "the refusal to grant [it] is not grounds for reversal when the charge as given, although in a more general form, fully informs the jury as to the law." Wingfield v. Peoples Drug Store, Inc., D.C. App., 379 A.2d 685, 689 (1977) (quoting Evans v. Capital Transit Co., D.C.Mun.App., 39 A.2d 869, 871 (1944)). Since there was ample evidence to submit the questions of the purchase option's existence and contents to the jury, and there was neither a specific objection nor an alternate proffer by appellants, the jury's finding of liability must stand undisturbed.

II

Appellants also object to the trial court's instructions on the measure of compensatory damages, claiming that the standard of recovery for breach of the realty purchase option is not the fair market value of the entire lease but, rather, the difference between the price set in the option and the actual sales price. This would be the correct standard were this action merely for breach of an independent, discrete, separately bargained for, purchase option. It is not. The Keshishians' breach of the option resulted in breach of the entire lease, of which the purchase option was an inseparable and indispensable part. Therefore, compensatory damages may be measured, as the trial court did here, by the fair market value of the plaintiff's interest in the leased premises, including the value of the lease, which the trial court properly defined as "the price in cash or its equivalent that the...