Opinion ID: 2422541
Heading Depth: 2
Heading Rank: 2

Heading: Case Law prior to Waterside

Text: Whether a particular transaction constitutes a sale within the meaning of TOPA has been the subject of much litigation. Our pre- Waterside case law on the subject was aptly summarized in our recent opinion in that case: We have held that a property transaction must involve an `absolute transfer' or amount to the passing of `general and absolute title,' in order to qualify as a sale under subjection (a) [(citing Twin Towers, 894 A.2d at 1119 (quoting West End Tenants, 640 A.2d at 727-28))]. We have established that the transfer of a special interest falling short of complete ownership does not qualify as a sale [citing Twin Towers and West End Tenants ]. Accordingly, in West End we held that a long-term lease with an option to buy was not a sale. And in Twin Towers, we concluded that a transfer of 95% interest in conjunction with a tenancy in common agreement was not a sale because it did not effect an absolute transfer. Importantly, in Wallasey we also held that a single-party conveyance to a limited liability company wholly-owned by the grantor for no purpose other than to legitimately limit [the owner's] liability was not a sale [882 A.2d at 1141]. Thus, Wallasey stands for the proposition that, even when a conveyance takes the appearance of a sale, this court will not find a sale to have occurred if the transaction (1) does not involve arms-length bargaining with a third-party, and (2) changes only the form and not the substance of the ownership. Subsequently, in Gomez [ v. Independence Mgmt. of Delaware, Inc., 967 A.2d 1276, 1283 (D.C.2009)] we held that a transfer of absolute title from one wholly-owned company to a wholly-owned subsidiary could be a sale where the transaction also involved arms-length bargaining resulting in an agreement to sell 99% of the stock of the subsidiary company to a third party in return for consideration of value. In doing so, we distinguished Wallasey because the entire transaction [meaning the transfer of absolute title from one subsidiary to another, followed by the sale of the transferee's stock] was contemplated by, and carried out in accordance with, the Stock Sale Agreement. But, in Alcazar [ Tenants' Ass'n v. Smith Prop. Holdings L.P., 981 A.2d 1202 (D.C. 2009)] a case with similar facts, we came to the opposite conclusion because we found dispositive the lack of an overarching agreement pursuant to which the parties undertook to complete the complex transactions that resulted in the transfer of ownership. [ Id. at 1207 n. 3] Waterside, 2 A.3d at 1088-89.