Opinion ID: 1967796
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Heading: The 1998 Letter Agreement Was a Contract

Text: EastBanc argues that the 1998 Letter Agreement constitutes an enforceable contract between the parties while GPA II insists it was merely an unenforceable agreement to agree. The determination whether an enforceable contract exists, when based on the contract documents, is a question of law. . . .' Kramer Associates v. Ikam, Ltd., 888 A.2d 247, 251 (D.C.2005) (citing Rosenthal v. National Produce Co., 573 A.2d 365, 369 n. 9 (D.C. 1990)). Thus, although the Superior Court did not reach this question, we may address it on appeal. We choose to do so because it is a logical preliminary step before addressing breach of contract claims and because the parties have fully briefed and argued the issue. EastBanc has the burden of establishing that a contract exists. See Jack Baker, Inc. v. Office Space Development Corp., 664 A.2d 1236, 1238 (D.C.1995) ([T]he party asserting the existence of a contract has the burden of proof on that issue.). For a contract to be enforceable, there must be `(1) an agreement to all material terms, and (2) intention of the parties to be bound.' Duffy v. Duffy, 881 A.2d 630, 634 (D.C.2005) (quoting Jack Baker, 664 A.2d at 1238). In addition, mutuality of obligation must exist. Order of AHEPA v. Travel Consultants, Inc., 367 A.2d 119, 125 (D.C.1976). A contract must be sufficiently definite as to its material terms (which include, e.g., subject matter, price, payment terms, quantity, quality, and duration) that the promises and performance to be rendered by each party are reasonably certain. Rosenthal, 573 A.2d at 370 (citing J.D. CALAMARI & J.M. PERILLO, THE LAW OF CONTRACTS, § 2-13, at 43-44 & n. 17 (2d ed.1977)). However, [a]ll the terms contemplated by the agreement need not be fixed with complete and perfect certainty for a contract to [be enforceable].' Rosenthal, 573 A.2d at 370 (quoting V'Soske v. Barwick, 404 F.2d 495, 500 (2d Cir.1968)). All agreements have some degree of indefiniteness and some degree of uncertainty. Id. A contract is enforceable if it is sufficiently definite so that the parties can be reasonably certain as to how they are to perform. Duffy, 881 A.2d at 638. Moreover, the terms of the contract [must be] clear enough for the court to determine whether a breach has occurred and to identify an appropriate remedy. . . . Affordable Elegance Travel, Inc. v. Worldspan, L.P., 774 A.2d 320, 327 (D.C.2001).
When he wrote the letter which became the 1998 Letter Agreement, Mr. Miller stated that his purpose was to confirm the agreement the parties had reached a day earlier. The body of the letter stated several obligations that each party agreed to assume. At the end, Miller requested: If this letter accurately expresses our agreement, I would appreciate your signing and returning the enclosed copy of this letter. Lanier countersigned the letter under the acknowledgment [s]een and agreed. This document demonstrates the intent of the parties to be bound.
The respective obligations of the parties were clear enough that each could be reasonably certain how it was to perform. See Duffy, 881 A.2d at 638. Mr. Miller promised to cooperate with EastBanc by exercising [his] voting rights with respect to the Right of First Offer in a manner that would facilitate [Mr. Lanier's] acquiring ownership of the Georgetown Park property. . . . The Agreement did not delimit how Mr. Miller would exercise those voting rights, but it stated that one option would be to assign the ROFO to EastBanc. In return, EastBanc was to provide Mr. Miller a 7.5% carried interest in an entity formed for the single purpose of acquiring, redeveloping, owning and operating the property. When read in context, these terms are sufficiently clear to determine whether a breach occurred. GPA II nevertheless asserts that the 1998 Letter Agreement is merely an agreement to agree during later negotiations, and that GPA II's mere abstract promise to `cooperate is insufficiently definite. We disagree. The enforceability of the agreement comes from the definitive character of the obligation to perform, not a precise description of the ways in which the obligation might be fulfilled. See Hackney v. Morelite Construction, 418 A.2d 1062, 1068-69 (D.C.1980) ([T]he mere fact that a contract, definite in material respects, contains some terms which are subject to further negotiation . . . will not bar a decree for specific performance.'  (quoting Ammerman v. City Stores Co., 129 U.S.App. D.C. 325, 330, 394 F.2d 950, 955 (1968))); RESTATEMENT (SECOND) OF CONTRACTS, § 34 (1981) (The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.). Mr. Miller's promise is not simply an agreement to agree at a later date; rather, it is a concrete and express promise to help EastBanc acquire the Mall through exercise of the ROFO. GPA II also argues that the letterwhich refers one time to a joint venturecannot be a binding agreement because it does not sufficiently flesh out the structure of that joint venture. This argument overlooks the desire for flexibility in the 1098 Letter Agreement. As the Court of Appeals of New York has explained: The difficulty is that the concept of definiteness cannot be reduced to a precise, universal measurement. The standard is necessarily flexible, varying for example with the subject of the agreement, its complexity, the purpose for which the contract was made, the circumstances under which it was made, and the relation of the parties. Cobble Hill Nursing Home, Inc. v. Henry & Warren Corp., 74 N.Y.2d 475, 548 N.Y.S.2d 920, 548 N.E.2d 203, 206 (1989) (noting that a price term is not necessarily indefinite because the agreement . . . leaves fixing the amount for the future) (internal citations omitted); see also Kenai v. Ferguson, 732 P.2d 184, 187 (Alaska 1987) (holding contract enforceable although parties could not reach agreement on amount of future payments, where rent was subject to renegotiation every five years, but fifty-five-year term of the lease was the essence of the contract). This was an emerging situation and details would be worked out if EastBanc acquired the Mall. The specifics of any future joint venture were not central to the agreement to cooperate in acquiring the Property.
For a contract to be enforceable, each party must undertake to do something [the] party otherwise is under no legal obligation to do, or to refrain from doing something [the] party has a legal right to do. . . . Order of AHEPA, 367 A.2d at 125. An exchange of promises provides sufficient consideration, evidencing mutual obligation. See Rinck v. Association of Reserve City Bankers, 676 A.2d 12, 16 (D.C.1996). In the 1998 Letter Agreement, GPA II promised to exercise the ROFO in a manner that would facilitate EastBanc's acquisition of the Mall. In return, EastBanc promised to provide GPA II with a 7.5% carried interest in some future entity that would control the newly acquired Mall. Each party undertook to do something it would otherwise have no legal obligation to do. GPA II argues that there was no mutuality of obligation because nothing in the agreement obligated EastBanc to make any effort to acquire the Property. This argument fails to account for the primary obligation undertaken by EastBanc to give Mr. Miller a percentage interest in an entity formed for the single purpose of acquiring, redeveloping, owning and operating the property. This court has recognized that joint adventurers have special duties and obligations to each other within the scope of the enterprise and with respect to the subject matter of the joint venture. Sind v. Pollin, 356 A.2d 653, 655 (D.C.1976). The duty imposed is essentially one of good faith, [and] fair and open dealing. . . . Id. (quoting Libby v. L.J. Corp., 101 U.S.App. D.C. 87, 90, 247 F.2d 78, 81 (1957)). Under these circumstances, the duty of good faith and fair dealing required EastBanc to make reasonable, good faith efforts to purchase the Property. Indeed, it cannot fairly be doubted that EastBanc assumed this obligation. The primary impetus for the 1998 Letter Agreement was EastBanc's keen interest in acquiring the Mall. In sum, we conclude that the parties expressed an intent to be bound, agreed to all material terms, and assumed mutual obligations sufficient to create an enforceable contract. We do not foreclose further litigation about whether the parties intended their contract to include a reasonable time limit that expired before March of 2006. See In re McCagg, 450 A.2d 414, 416-17 (D.C.1982).