Schneider v. Dumbarton Developers, Inc.

• Decision Date: 23 July 1985
• Docket Number: Nos. 83-2075,s. 83-2075
• Citation: Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007 (D.C. Cir. 1985)
• Parties: Ferd SCHNEIDER v. DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a Clermont Partnership, et al., Clermont Tenants Association, Inc., a D.C. Non-Profit Corp., d/b/a Clermont Partnership, Appellant. Ferd SCHNEIDER v. DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a Clermont Partnership, et al., 2106 F Street Associates, Appellant. Ferd SCHNEIDER v. DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a Clermont Partnership and Clermont Corporation, a D.C. Corporation, Appellants, Clermont Tenants Association, Inc., a D.C. Non-Profit Corp., d/b/a Clermont Partnership, et al. Ferd SCHNEIDER, Appellant, v. DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a Clermont Partnership, et al. to 83-2078.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1007

767 F.2d 1007

247 U.S.App.D.C. 217

Ferd SCHNEIDER v.DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a

Clermont Partnership, et al.,

Clermont Tenants Association, Inc., a D.C. Non-Profit Corp.,

d/b/a Clermont Partnership, Appellant.

Ferd SCHNEIDER v.DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a

Clermont Partnership, et al.,

2106 F Street Associates, Appellant.

Ferd SCHNEIDER v.DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a

Clermont Partnership and Clermont Corporation, a

D.C. Corporation, Appellants,

Clermont Tenants Association, Inc., a D.C. Non-Profit Corp.,

d/b/a Clermont Partnership, et al.

Ferd SCHNEIDER, Appellant, v.DUMBARTON DEVELOPERS, INC., a D.C. Corporation, d/b/a

Clermont Partnership, et al.

Nos. 83-2075 to 83-2078.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 13, 1984.

Decided July 23, 1985.

Appeals from the United States District Court for the District of Columbia(D.C.Civil ActionNo. 82-02876).

Kate Abbott Martin, Washington, D.C., with whom David N. Webster and William R. Robertson, Washington, D.C., were on the brief for 2106 F Street Associates and Clermont Tenants Ass'n appellants in No. 83-2075and83-2076 and cross-appellees in No. 83-2077.

Reuben B. Robertson, III, Washington, D.C., for Dumbarton Developers, Inc., et al., appellant in No. 83-2077 and cross-appellees in Nos. 83-2075, 83-2076and83-2078.

Howard H. Stahl, Washington D.C., for Ferd T. Schneiderappellee in No. 83-2078 and cross-appellant in Nos. 83-2075, 83-2076and83-2077.Loren Kieve, Washington, D.C., also entered an appearance for Schneider.

Before MIKVA, GINSBURG and STARR, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

This appeal and cross appeal (as well as the related case District-Realty Title Insurance Corp. v. Ensmann, 767 F.2d 1018, also released today) arise from appelleeFerd Schneider's abortive attempt to sell the appellants the Clermont apartment building, located at 2106 F Street, N.W., in Washington.This court has jurisdiction on the basis of diversity of citizenship.See28 U.S.C. Sec. 1332(1982).

The legal questions raised are straightforward, but the facts are convoluted.The district court's findings consume almost twenty pages of small type.We repeat only the more salient findings here.

On February 10, 1981, Schneider agreed to sell his building to appellants, Clermont Tenants Association, Inc., ("CTA"), a District of Columbia nonprofit corporation and Dumbarton Developers, Inc.("Dumbarton"), a District of Columbia corporation, co-partners t/a Clermont Partnership, (collectively, the purchaser)(see Land Purchase Agreement, reprinted in Record Excerpts ("R.E.")at 319-36).Dumbarton apparently had been recruited by CTA as a developer partner; its role was to obtain the funds necessary to buy the property and make certain payments of cash and notes to CTA members.Under the terms of the Land Purchase Agreement, settlement was to have been completed 120 days following execution of the agreement.At the purchaser's request, however, settlement was postponed twice.Finally, Schneider announced that unless "full settlement [was] made on or before 3:00 P.M., May 17, 1982,"he would consider the Land Purchase Agreement terminated.On May 17, Schneider did all that the Agreement required of him, but the purchaser failed to make settlement.Schneider then brought suit seeking a declaratory judgment that the agreement was terminated.This suit was settled under an "Agreement of Settlement and Release," dated August 4, 1982("August 4 Settlement Agreement", reprinted in R.E.at 108-13).

Under the August 4 Settlement Agreement, purchaser agreed to "consummate settlement of the Agreement on or before October 4, 1982, time being of the essence."Apart from seven exceptions not pertinent to this appeal, the time for settlement could not be further extended for "any reason whatsoever."The agreement further provided:

[I]n the event it fails to consummate settlement as aforesaid, the deposit in the amount of Fifty Thousand Dollars ... shall be forfeited to Schneider as liquidated damages, the Agreement will thereupon be terminated and of no further force or effect, and the parties relieved of all further liability or obligation thereunder.Clermont, Dumbarton, and Corporation agree that in the event settlement is not consummated in accordance with the terms of Paragraph 1, they shall thereupon have waived and relinquished any and all interest in or rights to purchase the property.

Thus, the purchaser was given two months--from August 4, 1982, until October 4--to consummate settlement.Schneider was ready, willing, and able to make settlement at all times during that period, but the purchasers designated the very last day, October 4, 1982, as the earliest date at which they would be ready to make settlement.

Unbeknownst to Schneider, Dumbarton had entered into a financing arrangement with West German investor Rudolf Ensmann for the purchase and development of the property.Since early September 1982, moreover, Ensmann's attorneys had been attempting--without success--to persuade Dumbarton to let Ensmann take title to the property at the closing.Having failed to persuade Dumbarton, Ensmann's attorneys had begun pressing CTA to exercise its contractual option to buy out Dumbarton's share of the partnership.As of daybreak on October 4, however, no agreement had been reached.

The events of October 4, 1982, and the days immediately following are a tangled web of mix-ups, mistakes, and miscalculations.

On the morning of October 4, Ensmann's attorneys finally concluded an "Agreement for Assignment and Disbursement" with CTA under which CTA was to assign all of the Clermont Partnership's right, title, and interest in the apartment building to Ensmann and do everything in its power to ensure that Ensmann perfected title to the property.Schneider was not told of this agreement.At about noon, 2106 F Street Associates("2106") was created as a limited partnership 99% owned by Ensmann.Schneider was not told about this development either.

Schneider and his attorney arrived at the title company at about 2:00 P.M. and had completed their part of the transaction by about 2:20 P.M.At that time, one of Dumbarton's attorneys informed Schneider that it "might be necessary" to change the name of the grantee on the deed.Schneider's lawyer replied that his client had no objection provided he"gets his money."The possible new grantee was not named, and Schneider was still not informed of the agreement which had been concluded that morning.

Schneider asked the settlement officer for his payment, but was told it was not yet available.Schneider asked "when will I get my money" and was told to call the title company on Wednesday, October 6.Having fulfilled all his obligations under the Land Purchase Agreement and the August 4 Settlement Agreement, Schneider left the title company's offices at about 2:30 P.M.At about 4:00 P.M., Schneider's attorney phoned the title company and was informed that the purchaser had not completed settlement.He was still not informed, however, of the assignment or of the creation of 2106.

Between 4:00 and 5:00 P.M., CTA delivered to Dumbarton a document that purported to exercise CTA's option to buy out Dumbarton's interest in the Clermont Partnership.Dumbarton immediately informed CTA that Dumbarton was not in default as to any of its obligations, considered the purported exercise of the option invalid, and would contest it.

At about 6:00 P.M., lawyers for CTA and for 2106 delivered escrow instructions and three checks totalling $1,405,000 to the title company.Dumbarton had never authorized or joined in the escrow instructions.The instructions were defective in a number of other respects as well.

Schneider's attorney called the title company's offices at about 6:30 P.M. and was again told nothing except that settlement had not been completed.

At about 8:30 P.M., new escrow instructions were delivered to the title company, this time by CTA, 2106 and Dumbarton.The title company was unable to comply with the mandate of the instructions because they contained several preconditions which could not be satisfied.Specifically, the instructions required certain payments to Dumbarton, CTA, and others, for which the sums then deposited with the title company were insufficient.The instructions also required delivery to the title company of certain documents--CTA's assignment of its interests to 2106 and Ensmann's release of a lawsuit against Dumbarton--which either had not been delivered or had not been fully executed.

At about 10:00 A.M. on October 5, 1982, Schneider's lawyer called the title company and learned that settlement had still not been made.At 11:00 A.M., representatives of Dumbarton, CTA, and 2106(Ensmann) arrived at the title company, delivered more money, and began drawing up still more instructions.At 2:00 P.M., Schneider's attorney called again.After learning that settlement was still not complete because the title company could not comply with the latest escrow instructions, Schneider decided to terminate the Land Purchase Agreement.Schneider and his lawyer appeared at the title company at about 2:50 P.M. and, upon being informed by the settlement officer that no substantial progress has been made, tendered a letter terminating the agreement and claiming the $50,000 deposit as liquidated damages.Schneider's attorney instructed the title company to return all documents submitted in connection with the settlement.

After Ensmann's attorneys learned that Schneider had terminated the agreement, they drafted yet another set of escrow instructions and directed that the title company issue a check for the adjusted purchase price to Schneider.

On the morning of October 6, Schneider's attorney received from the title company, not the documents whose return...