Opinion ID: 2271977
Heading Depth: 2
Heading Rank: 1

Heading: Award of Damages Due to Delay

Text: Johnston argues that the trial court had no authority to assess damages against him in the context of a partition action, and that, in any event, the court had no basis in the record to find either that he dragged his feet in selling the property or that the property's market value declined by over $400,000 from the time he undertook to sell the property himself (in March 2007), to the date when the property was actually sold (in April 2008). Hundley sought partition of the property pursuant to D.C.Code § 16-2901 (2001) (providing that [t]he Superior Court . . . may decree a partition of lands, tenements, or hereditaments on the complaint of a tenant in common . . . or of a joint tenant). D.C.Code § 16-2901(a). When a property can not be divided without loss or injury to the parties interested, the court may decree a sale thereof and a division of the money arising from the sale among the parties, according to their respective rights. Id. As Johnston argues, by its terms section 16-2901 does not authorize the court to award damages ( i.e., monies in excess of the money arising from the sale). However, partition is subject to equitable considerations, Carter v. Carter, 516 A.2d 917, 920 (D.C.1986) (quoting Cobb v. Gilmer, 365 F.2d 931, 933 (D.C.Cir.1966)) (internal punctuation and quotation marks omitted), and, as in any civil action, the trial court may exercise its inherent equitable powers. See Hessey v. Burden, 615 A.2d 562, 571 (D.C.1992) (noting that [t]he judicial policy of preventing duplicitous litigation has been cited by this court as a reason for the exercise of general equitable jurisdiction). At the same time, invocation of the mantra of `equitable considerations' does not bestow complete license upon a trial court to grant. . . partition according to its views of the respective situations of the cotenants. Carter, 516 A.2d at 920. Johnston has not persuaded us that, in the circumstances presented, the trial court could not use its equitable powers to award damages to Hundley upon a finding, supported by competent evidence, that Johnston's conduct caused Hundley to realize lower sales proceeds than he would have realized upon a diligent sales effort by Johnston. [3] The trial court granted Johnston's request to retain sole possession of the house and to assume sole control over its marketing i.e., to sell the house his wayover Hundley's repeated objections. To allay Hundley's concerns that Johnston might not market the house expeditiously, the court warned that if Mr. Johnston drags his feet, that's in the Court's view, a factor to be considered for the split. Johnston did not argue at the time that such a result would be ultra vires; and later, his counsel argued only that the court should hear expert testimony about fair market values and hold him accountable for failing to sell the property at a greater profit only if his actions exhibited bad faith. Therefore, even if we were to assume arguendo that the court exceeded its authority under the partition statute in making an assessment of damages, we could conclude that Johnston either invited the error when he insisted on selling the property on his own in the face of the court's admonitions, or waived any argument that the court had no authority to award damages for delay. As we shall explain, however, we need not resolve definitively the issue of the trial court's authority to award damages in a partition action because we conclude that, in this case, the evidence did not provide a sufficient basis for the damages award. Although the court made findings, supported by the record, attributing to Johnston delays in the sale of the property, the record does not provide substantiation of the court's finding regarding the property's baseline fair market value ( i.e., its value at, or within a reasonable period after April 6, 2007, when Johnston took on the responsibility to sell). Turning to the underpinnings of the damages award, we are unable to conclude, as Johnston urges us, that the trial court clearly erred in finding that Johnston dragged his feet in selling the property. [4] The court found, inter alia, that Johnston and his housemate made it difficult to show the property because they were present in the house during the realtors' open houses, which the court observed was contrary to usual custom. Further, the court found that a stop-work order issued by the District of Columbia Department of Consumer and Regulatory Affairs (DCRA) was prominently displayed in the front of the property during the open houses, supporting an inference that Johnston's efforts to market the property were half-hearted at best, and were really a form of lip service at worst. Additionally, the court found that Johnston initially listed the house on the internet for $3.99 milliona price far in excess of the price at which it was eventually listed by realtors and the price at which it eventually soldand presented no affirmative evidence. . . of any further marketing efforts. The court noted that the house was officially off the market from January 15, 2008 through February 12, 2008[,] because Johnston allowed the listing agreement to lapse. The court also suggested that Johnston's minimal sales efforts could be explained in part by the facts that Johnston had far greater financial resources than Hundley, so that the burden of delay in the sale of this house did not fall equally upon the parties[;] that Johnston was able to reap[] many of the benefits stemming from his application for a temporary/civil protection order because he lived in the house with custom crafted `improvements[;]' and because Johnston had control over the rents and the money that he liquidated from the joint account. There is evidence in the record to support most, if not all, of these findings. It is true, as Johnston argues, that the record also contains suggestions (if not evidence) that Johnston's marketing of the property was stymied somewhat by the need to complete improvements on the house, and acknowledgments by both sides that a period of months would have been required to sell the property even with the most diligent effort. [5] But we cannot say that the trial court erroneously exercised its discretion in finding that the delay was principally attributable to Johnston's less-than-diligent sales efforts. See Bedell v. Inver Housing, Inc., 506 A.2d 202, 205 (D.C.1986) (In reviewing findings of fact, the question before this court is not whether we would have made the findings the trial court did, but whether on the entire evidence we are left with the definite and firm conviction that a mistake has been committed.) (citation, internal quotation marks, and alterations omitted). We agree with Johnston, however, that the record contains insufficient evidence to support the court's finding that the baseline fair market value of the property was $3 million, $450,000 more than the eventual sales price of the house. The court began to craft its formula for assessing damages at the March 19, 2008 hearing. Judge Turner focused on the value from the . . . refinancing[,] that took place in November or December 2006, and Hundley's assertionone he had made previously, always without reference to any evidence of recordthat the refinancing loan would have been 80% percent of the house's appraised value. When the court asserted that it could use that figure because it's based on reason, Johnston's counsel objected that the figure was based on reason but not in evidence. [6] He also reminded the court that no appraisal had been introduced into evidence. As Johnston argues (and argued before the trial court), there was no testimony or other evidence confirming that the lender performed an appraisal or showing that the refinancing loan was based on 80% of appraised value; [7] there were only the statements of Hundley's counsel, which were not evidence. [8] See In re Estate of Bonham, 817 A.2d 192, 195 n. 5 (D.C.2003) (reiterating that statements of counsel are not evidence, and reversing trial court's order against one party that was premised only on a factual assertion by counsel for a different party). No real estate expert testified, even though Johnston's counsel urged that the damages award the court was considering would require expert testimony from the real estate market. [9] Notwithstanding the lack of testimony or other evidence about the actual loan-to-value ratio used in the refinancing and the lack of expert or even lay testimony fixing the property's value at $3 million, the court found in its August 4, 2008 order that a $3 million baseline value for the property was supported by the 80% of value loan for 2.35 million used in the December 2006 refinancing. [10] This finding, based as it was on the bald assertions by Hundley's counsel, was especially inappropriate in light of the earlier assertions by Hundley's counsel during the proceedings on May 14, 2007 (about as early, we surmise, as anyone could have expected the property to sell), that [o]ur sources say [the property is] worth $2.5 to $2.8 [million] depending on the willingness of the buyer. The other rationale that the court cited for its finding about the decline in market value of the property was a proffer by Johnston's counsel that Johnston would have testified . . . that he held an open house for realtors at which he requested the realtors to give them their best good faith estimate as to what a listing price should be and what a sale price would be and all of those were in the $3 million range$3 plus million. . . . [11] However, neither Johnston nor anyone else testified about any such estimates, and the record reveals nothing about when the estimates were given or what assumptions (as to timing, improvements to the property, etc.) they reflected. Moreover, there appears to be no dispute that, working through realtors, the parties eventually listed the property at $2.9 million in September 2007, but were unable to procure a buyer at the realtors' recommended price. [12] A fortiori, the proffer as to hearsay declarations by nameless realtors who presumably were competing for Johnston's business in giving their estimates of an appropriate listing price was not probative as to the fair market value of the property. An appellate court should uphold a damages award unless it lacks support from any competent credible evidence. Mashack v. Superior Mgmt. Servs., Inc., 806 A.2d 1239, 1242 (D.C.2002); see also Barnes v. Sherman, 758 A.2d 936, 943 (D.C.2000) (reversing property distribution award where trial court made no finding that valuation reasonably reflected an accurate market value). Here, there was no significant probative evidence in the record and little more than speculation to support the trial court's finding that the baseline fair market value of the property was $3,000,000. Lowrey v. Glassman, 908 A.2d 30, 37 (D.C.2006) (citation and internal quotation marks omitted). We conclude that none of the bases on which the court relied to find the baseline fair market value of the property was sufficient to enable plaintiff Hundley to meet his burden [13] of establishing that the sales proceeds to be divided were anything other than the net profit (roughly $40,000) actually realized upon the sale and closing in April 2008, and that the trial court erred in awarding $200,000 to Hundley as his 50% share of the lost profit. [14]