Opinion ID: 1891487
Heading Depth: 2
Heading Rank: 2

Heading: Simon's Appeal

Text: Unlike USFN, Simon was a party to the litigation with the tenants and in the subsequent proceedings to enforce the settlement agreement. The tenants asked the trial court to hold Simon liable for the obligations imposed by the settlement on the landlord under either of two theories. On the one hand, they argued that as a matter of contract interpretation, the term landlord in the settlement agreement encompassed Simon as well as DDUA. Alternatively, the tenants argued that Simon was liable because he was the alter ego of DDUA. In holding this an appropriate case for piercing the corporate veil, the trial court embraced the alter ego theory and did not reach the contract interpretation claim. On appeal, Simon argues that the finding that he was the alter ego of DDUA cannot stand because it had no evidentiary support. Simon further argues that he was not a party to, and therefore was not bound by, the settlement agreement. More precisely, Simon contends that he is not responsible for the obligations imposed by the settlement agreement on the landlord. [6] Circle Associates, however, has changed its position. It declines to defend the alter ego rationale on which the trial court exclusively relied. [7] Circle Associates instead asks this court to affirm the monetary judgments against Simon solely on the contract interpretation ground that the trial court never addressed. We find that we must remand for further proceedings. Since it is the ruling of the trial court that we review, we do not rely merely on Circle Associates' concession. Nevertheless, we cannot affirm the ruling that Simon is liable as the alter ego of DDUA. Generally speaking, an individual will not be liable personally for the debts of a corporate entity unless it is proved by affirmative evidence that there is (1) unity of ownership and interest, and (2) use of the corporate form to perpetrate fraud or wrong. Bingham v. Goldberg, Marchesano, Kohlman, Inc., 637 A.2d 81, 93 (D.C. 1994) (quoting Vuitch v. Furr, 482 A.2d 811, 815 (D.C.1984)). [8] The parties agree that the trial court did not base its ruling on such evidence. Rather, the court relied on its earlier comment during the hearing on the tenants' first motion to enforce the settlement agreement that in terms of corporate structure and decisions, you Mr. Simon, are Dupont Down Under Associates and, if there were ever a case for piercing the corporate veil, this is it. [9] But Simon concededly disputed that comment, and the court never held an evidentiary hearing on the issue. [10] Thus the tenants never proved by affirmative evidence either unity of interest on the part of Simon and DDUA or misuse by Simon of the corporate form, nor did they prove that considerations of justice and equity would justify piercing the corporate veil. See supra, note 8. Absent the requisite evidentiary foundation, we cannot affirm the entry of monetary judgments against Simon based on an alter ego theory. We turn to the question which the trial court did not purport to resolve, whether the settlement agreement by its express terms renders Simon liable for DDUA's monetary obligations to the tenants. The problem we confront is that the participants in the settlement hearing before Judge King used the term landlord without defining it on the record, and they now disagree over what they meant by it. Circle Associates argues that the tenants intended the term landlord to encompass Simon as well as DDUA, pointing out that the participants in the hearing before Judge King often used the words he, him or defendants  words apparently denoting Simon  when they referred to the landlord. But Simon argues that he and his counsel used the term landlord to mean only DDUA, exactly as landlord was defined in the tenants' complaint. Simon denies that he ever intended to be bound personally for the monetary obligations of the landlord under the settlement agreement. Generally, settlement agreements are determined according to principles of contract law. Sims v. Westminster Investing Corp., 648 A.2d 940, 942 (D.C.1994). A valid and enforceable contract requires both (1) agreement as to all material terms, and (2) intention of the parties to be bound. Id. (citations omitted) (quoting Georgetown Entertainment Corp. v. District of Columbia, 496 A.2d 587, 590 (D.C.1985)). There must thus be an honest and fair meeting of the minds as to all issues in a contract. See Estate of Taylor v. Lilienfield, 744 A.2d 1032, 1035 (D.C.2000). More precisely put, the parties to a putative contract must intend the words and acts which constitute their manifestation of assent. See Hart v. Vermont Investment Ltd. Partnership, 667 A.2d 578, 582-83 (D.C.1995). We adhere to the objective law of contracts, meaning that the language of the agreement as it is written governs the obligations of the parties unless that language is unclear or there is fraud, duress, or mutual mistake. See Capital City Mortgage Corp. v. Habana Village Art and Folklore, Inc., 747 A.2d 564, 567 (D.C.2000); Hart, 667 A.2d at 582. This precept does not resolve the issues before us, however, because the contract language is unclear, and, in effect, Simon claims that there was a mutual mistake as to contract fundamentals. As we read the transcript of the settlement hearing, the term landlord is ambiguous, i.e., it is susceptible of more than one reasonable interpretation, [11] and it is a fair question of fact whether the parties did reach an agreement as to who would be bound by the payment terms of the settlement agreement. If the parties did not agree about that material issue, then they had no agreement at all. The question of whether the parties did agree at all on who would be bound is analytically distinct from but intertwined with the question of whether the parties intended the ambiguous term landlord as used in the settlement agreement to include Simon as well as DDUA. If the parties did agree on the answer to this second question, then they did have an agreement, and the issue becomes what they agreed, i.e., whether and to what extent Simon is obligated as the landlord under their agreement. This question of construing an ambiguous term in a contract is a question of fact, to be answered by resort to extrinsic evidence, which may include the circumstances before and contemporaneous with the making of the contract, all usages  habitual and customary practices  which either party knows or has reason to know, the circumstances surrounding the transaction and the course of conduct of the parties under the contract. 1901 Wyoming Ave. Coop. Ass'n v. Lee, 345 A.2d 456, 461-62 (D.C.1975). Although in general, [w]here the facts admit of more than one interpretation, the appellate court must defer to the trial court's judgment, Bingham, 637 A.2d at 89 (quoting Davis v. United States, 564 A.2d 31, 35 (D.C.1989)), here the trial court did not make the necessary factual determinations. Thus we cannot affirm the order against Simon based on his contractual liability under the settlement agreement. As there was never a valid trial court determination either that Simon was the alter ego of DDUA or that the parties agreed that the term landlord in the settlement agreement included Simon personally, we must vacate the monetary judgments entered against Simon. To summarize, we vacate the September 17, 1997, order of the trial court as to both USFN and Simon. On remand, if Circle Associates pursues its motions to enforce the settlement agreement against Simon and USFN, the issues before the trial court may include whether the settlement agreement was a valid and enforceable contract; if so, whether Simon was personally obligated as the landlord in accordance with the terms of the settlement agreement; whether Simon is liable as the alter ego of DDUA; and whether USFN is liable under an alter ego theory. So ordered.