REIMAN v. INTERNATIONAL HOSPITALITY GROUP, LTD., 90-CV-248

• Decision Date: 29 September 1992
• Docket Number: No. 90-CV-248,No. 90-CV-271,90-CV-248,90-CV-271
• Citation: 614 A.2d 925
• Parties: Richard REIMAN, d/b/a Reiman & Co., Appellant, v. INTERNATIONAL HOSPITALITY GROUP, LTD., et al., Appellees. Bromley SMITH, Jr., et al., Appellants, v. Richard REIMAN d/b/a Reiman & Co., Appellee.
• Court: D.C. Court of Appeals

614 A.2d 925

Richard REIMAN, d/b/a Reiman & Co., Appellant, v. INTERNATIONALHOSPITALITY GROUP, LTD., et al., Appellees.Bromley SMITH, Jr., et al., Appellants, v. Richard REIMAN d/b/a Reiman &Co., Appellee.

Nos. 90-CV-248, 90-CV-271.

District of Columbia Court of Appeals.

Argued February 11, 1991.

Decided September 29, 1992.

Appeal from the Superior Court of the District of Columbia, Eugene N. Hamilton, J.

Dwight D. Meier, with whom David B. Tatge and David S. Greene, Washington,D.C., were on the brief, for Richard Reiman d/b/a Reiman & Co.

Daniel S. Koch, Washington, D.C., with whom W. John McNally, III, Norwich, Vt., was on the brief, for Intern. Hospitality Group, Ltd., et al.

Daniel Schumack and Ben Cotten, Washington, D.C., filed a brief for Bromley Smith, Jr.

Before STEADMAN and WAGNER, Associate Judges, and KERN, Senior Judge.

STEADMAN, Associate Judge:

Appellant Richard Reiman, a real estate broker, seeks to recover a $250,000 brokerage fee in a long-running legal action begun in September 1983. The case is now before us for a second time. Following a prior appeal to this court and remand for a new trial, Reiman v. Int'l Hospitality Group, 558 A.2d 1128 (D.C. 1989) (Reiman I), the trial court in a bench trial granted judgment in favor of Reiman against International Hospitality Group, Ltd., a Maryland corporation, ("IHG"),¹ its wholly-owned subsidiary Somers Holdings, Inc., a District of Columbia corporation, ("Somers"), and Bromley Smith, individually. Smith's liability was based on the theory that he had held himself out as a general partner of 4400 Connecticut Avenue Associates ("CAA"), a District of Columbia limited partnership.²

Reiman appeals the refusal of the trial court to hold liable appellee Henry Lieberman on the theory that he too incurred liability as a partner of CAA due to the late filing of the certificate of limited partnership. The two corporate defendants and Smith cross-appeal, challenging the sufficiency of the evidence to support the trial court finding of anticipatory breach. We hold the evidence sufficient to support the judgment against the corporate defendants and Smith. However, we remand for further proceedings on the issue of Lieberman's liability.

I

Many of the pertinent facts, which we summarize here, were set forth in our prior opinion. 558 A.2d at 1129-31. In 1981, Reiman, a licensed D.C. real estate broker, entered into an agreement with Bruce Lyons, the managing partner of Connecticut Inn Partnership ("CIP"), which owned the Connecticut Inn Motel, to market the motel. Their understanding was that Reiman would receive a $200,000 commission at closing. Reiman thereupon began to market the motel and interested IHG in it. Lieberman was the president and Smith the senior vice-president of IHG.

On September 3, 1982, IHG and CIP executed a letter of intent³ to purchase the motel "on behalf of a partnership to be formed." On November 16, 1982, a formal, 20-page purchase agreement was entered into between CIP and "4400 Connecticut Avenue Associates, a District of Columbia limited partnership," which Bromley Smith signed as "General Partner" of CAA. Under that agreement, as supplemented, CAA⁴ agreed to pay Reiman a total commission of $250,000, including the $200,000 for which CIP was obligated.⁵

In fact, difficulties developed and the contemplated transaction never went through. CIP claimed that at a climactic meeting on January 17, 1983, the purchaser had "anticipatorily breached" the agreement. As a consequence, CIP put the motel back on the market on January 20. InNovember 1983, the motel was sold to another buyer.

Reiman brought suit for his commission in September 1983. The trial court in the first trial found for the defendants, on the ground that the commission agreements provided for payment only if the purchase was consummated. On appeal, we reversed, holding that Reiman might recover if he could show that the defendants⁶ made occurrence of the closing impossible through their own fault or misconduct.

On the retrial, the trial court found that the corporate defendants had anticipatorily breached the purchase agreement and therefore made it impossible to perform. Consequently, it entered judgment in favor of Reiman for the claimed commission.⁷ It subsequently also entered judgment against Smith as general partner of CAA, the signatory to the purchase agreement and to the other commission documents, but refused to hold Lieberman liable.⁸ From this judgment, Reiman and the defendants cross-appeal.

II

We first address the defendants' argument that the trial court erroneously found that an anticipatory breach of the contract to purchase the motel occurred at the January 17 meeting with CIP. They proceed from the correct premise that "[f]or a repudiation of a contract by one party to be sufficient to give the other party the right to recover for breach, the repudiating party must have communicated, by word or conduct, unequivocally and positively its intention not to perform." Order of AHEPA v. Travel Consultants, Inc., 367 A.2d 119, 125 (D.C. 1976), cert. dismissed, 434 U.S. 802, 98 S.Ct. 30, 54 L.Ed.2d 60 (1977). See also Ingber v. Ross, 479 A.2d 1256, 1262-63 (D.C. 1984); Burke v. Thomas J. Fisher & Co., 127 F. Supp. 1 (D.D.C. 1953), aff'd, 95 U.S.App.D.C. 85, 219 F.2d 767 (1955); 4 CORBIN ON CONTRACTS § 973 (1951). They then contend in substance that Lyons had invited them to propose changes in the deal and that at the January 17 meeting they had offered modifications to the contract which did not communicate "unequivocally" their intention to not perform.

The trial court made extensive oral findings on the issue of breach. It noted that when executing the purchase agreement, the purchasers "were very well aware of the financial situation of the Connecticut Inn," and took steps "to cover themselves in the event of problems arising," anticipated or unanticipated. It also found that the settlement date was extended by mutual agreement to January 17, at which time a new payment schedule and closing date would be discussed as indicated by the letter of January 13 sent to CIP by the purchasers' attorney. The court specifically rejected the defendants' argument that Lyons had invited the purchasers to propose new conditions precedent or alter the purchase price.

The court further found that at the meeting on January 17, Conrad Cafritz, representing the buyers, in effect presented an all-or-nothing, "take-it-or-leave-it" markedly modified proposal to CIP. Inter alia, the purchase price was to be effectively reduced by $350,000 and a lease with the University of the District of Columbia was to be a condition precedent to their purchaseof the motel. It was "more in the statement of a mandate: This is the new deal; only if the deal goes down this way can it conclude." Looking also at other documents presented into evidence prepared around the time of the crucial meeting, the court stated: "[W]hat I conclude happened at the January 17 meeting . . . was an entirely new deal. It repudiated the old contract. They were not going to go forward on that basis."

Anticipatory repudiation is not something to be lightly inferred in the rugged give-and-take of the marketplace. However, the trial court here after a lengthy trial made careful and thorough findings of fact. Such findings are binding upon an appellate court unless clearly erroneous or without support in the record. D.C.Code § 17-305(a) (1989); see Hershon v. Hellman Co., 565 A.2d 282, 284 (D.C. 1989). We perceive no basis for reversal on this ground here.

III

The remaining issue is whether Lieberman is individually liable. This issue arises because when the purchase agreement was executed on November 16, 1982, no formal steps had been taken to create CAA as a limited partnership under the then-operative District of Columbia version of the Uniform Limited Partnership Act ("ULPA"), D.C.Code § 41-201 et seq. (1986).⁹ The relevant provision read:

§ 41-202. Procedure for formation; filing and recordation of certificate.

(a) Two or more persons desiring to form a limited partnership shall:

(1) Sign and swear to a certificate, which shall state: [14 requirements listed]

(2) File for record the certificate in the Office of the Recorder of Deeds of the District of Columbia.

(b) A limited partnership is formed if there has been substantial compliance in good faith with the requirements of subsection (a) of this section.

On December 1, 1982, a limited partnership certificate for CAA was signed, pursuant to § 41-202(a)(1), showing Somers Holdings, Inc., a wholly-owned subsidiary of IHG, as general partner and Smith, Lieberman and Richard Bromley, another IHG executive, as limited partners. However, this limited partnership certificate was not filed with the Recorder of Deeds until January 19, 1983, two days after the anticipatory breach. Inter alia, the certificate provided: "The term of the partnership shall commence on the date of the filing of this Certificate of Limited Partnership. . . ."

The trial court found no basis for holding Lieberman individually liable. It took as its starting point the proposition that the "relevant time for establishing the existence and identity of the purported general partnership for purposes of liability is the day of the execution of the contract." From this premise it first noted that on November 16, not even a certificate of partnership had been executed, a prerequisite to the creation of an effective limited partnership under D.C.Code § 41-202(a); "thus, it follows that general partnership liability could not attach [as a matter of law] for failure to take the second step [recordation of the certificate]." Second, examining the question whether Lieberman and Smith intended in fact to form a general partnership, the court concluded from the evidence that on November 16, "Lieberman and Smith intended to form a limited partnership, not a general partnership." Accordingl...