Opinion ID: 2992012
Heading Depth: 1
Heading Rank: 4

Heading: TA’s Counterclaim, Cross-Claim, and TOPA

Text: Davis has appealed the trial court’s denial of its corresponding motion for summary judgment, to which TA has responded by presenting an alternative ground for granting TA’s own motion for summary judgment and thus denying Davis’s motion.
According to a TA litigation memorandum in the trial court (opposing summary judgment for Davis and supporting TA’s similar motion), the “genesis of this entire dispute stems from” TA’s assertion that the Seller “had violated TOPA.” 39 T St. Dev., LLC v. Dereje & Dereje, 581 F. Supp. 2d 26, 32 (D.D.C. 2008), aff’d, 586 F.3d 6 (D.C. Cir. 2009). 23 Implicitly, this memorandum was adverting to attorney Rome’s email of September 6, 2012, which claimed that the purchase price “far exceed[ed] the market value of the property,”40 and that the financing terms were “not reasonably acceptable.”41 It is important to understand, however, that in the trial court— whatever the intention of TA’s pleadings—TA never relied on TOPA violations for an affirmative “claim” against the Seller or Davis.42 Rather, TA cited them exclusively as a fallback to defeat the Davis motion for summary judgment in case 40 Davis, and initially TA, agreed to pay $7,650,000 for the property. After litigation commenced, TA argued in the alternative, in both the trial court and now on appeal, that the dramatic purchase price difference of $3,300,000 between the January 12, 2012, tenant contract and the November 2, 2012, “amendment” to that contract—newly pricing the purchase at $4,350,000—demonstrated that the initial offer was “not bona fide,” violating § 42-3404.02 (a) of TOPA. 41 In his September 6, 2012, email to Luchs, Rome complained that the tenant contract required that, “in order to purchase the property at a price approaching market value[,] . . . a buyer must agree to seller financing on particular terms.” These terms, said Rome, which apparently were tailored to the Seller’s own estate planning needs, were not “reasonably acceptable” to TA, as required by TOPA, D.C. Code § 42-3404.05 (a), (a-2). 42 TA’s counterclaim against the Seller and its cross-claim against Davis merely incorporate TA’s fourth and fifth defenses from its answer to the Seller’s complaint. And not even those defenses expressly mention TOPA. The fourth defense states that the third-party contract with Davis “represents an illegal attempt to deny []TA its lawful rights” and evidences the Seller’s “failure . . . to bargain in good faith,” making the contract “void ab initio.” The fifth defense says that the third-party contract “may not” be enforceable by virtue of “the doctrine of in pari delicto.” 24 the court rejected TA’s contract argument. The trial court’s order granting complete relief—upholding TA’s contract, as purportedly amended, without reaching any TOPA issue—makes it clear that no TOPA contention has been litigated with finality.43 In reversing the trial court’s ruling for TA on its contract argument, we have triggered TA’s TOPA argument for the first time on appeal. In the trial court litigation memorandum to which we have referred, TA suggested how the TOPA argument should play out if the trial court itself rejected TA’s contract argument, denied TA’s motion for summary judgment, and then—in the “alternative”— evaluated TA’s TOPA contentions vis-à-vis the Davis summary judgment motion. In that case, TA explained, the court would have to resolve questions of fact inherent in its TOPA contentions. Then, if these questions were “resolved in 43 The only evidence of record manifestly directed at a TOPA claim was a generalized declaration by Ms. Stephanie Mynkonos, TA’s Vice President, in which she asserted that “after discussion with numerous potential development partners and consultation with counsel, the TA reluctantly concluded that the terms of the required seller-financing were not reasonably acceptable.” 25 [TA’s] favor,” the “previous TOPA offer” by Davis “would be void” and the parties, again, would be at square one.44 TA now offers that argument for us to consider on appeal. Thus, TA does not assert a basis on this record for granting it summary judgment on the alleged TOPA violations. Rather, in event of reversal, TA asks this court “to remand for a determination of whether [the Seller’s] Offer was bona fide, as required by TOPA.” As explained below, we decline to do so. Although TA’s request for a remand is premised on the Seller’s alleged failure to make a bona fide offer of sale to TA, that request, more directly, is a challenge to Davis’s appeal from the trial court’s dismissal of its motion for judgment on the pleadings or for summary judgment on its cross-claim against TA. That motion for judgment by Davis presupposes the validity of its third-party contract (essentially incorporated into the Seller’s offer to TA) and accordingly challenges TA’s TOPA contentions against the Seller (reflected in TA’s cross44 The TA memorandum went further to suggest that once the initial thirdparty offer had been declared void, the Seller “would be required to issue a new offer,” and “TA would be required to accept that offer and settle under the terms of the” original tenant contract, “as amended by the Contract Amendment” of November 2, 2012, leaving Davis with “no claim.” We take no position on such speculation. 26 claim against Davis).45 Procedurally, TA’s TOPA contentions do not reach this court easily. As explained earlier, the scope of the trial court’s grant of summary judgment for TA, with its corresponding dismissal of Davis’s cross-claim against TA, was limited by the court’s conclusion that TA’s tenant contract, as amended, was entitled to priority over Davis’s third-party contract. In light of our rejection of those rulings, therefore, the question becomes, as TA itself acknowledges, whether TA’s “alternative” TOPA allegations and proffers—which the trial court did not address—have created genuine issues of material fact that foreclose summary judgment for Davis despite our ruling in its favor on TA’s contract argument. Given TA’s cryptic “notice” pleading,46 it is not entirely clear that the TOPA contentions asserted here are reflected in TA’s answer and cross-claim against 45 As indicated earlier, both TA and Davis filed counterclaims against the Seller, in addition to cross-claims against each other. The Seller, however, took no position on this appeal. Nonetheless, TA’s TOPA contentions implicate the Seller as well as Davis and thus implicitly question the trial court’s denial of TA’s counterclaim. For the sake of convenience, however, we focus exclusively on the Davis cross-claim, as our disposition of it resolves any lingering issue concerning the counterclaim against the Seller. 46 See supra note 42. 27 Davis (or counterclaim against the Seller).47 Nor are we entirely sure, absent protective cross-appeals,48 that TA has preserved its TOPA challenges against the Seller and Davis. We shall assume, however, the filing of all essential pleadings and address the merits. We do so despite the fact that the trial court, in denying summary judgment for Davis under TA’s contract theory, did not go further to rule on the merits of TA’s TOPA contentions. Ordinarily, we would remand for the trial court to resolve the matter in the first instance, but we reject that course. Our review of summary judgment is de novo, and as TA claims no basis for augmenting the record at this point (discovery having been closed), the trial court could add 47 See Potomac Dev. Corp. v. District of Columbia, 28 A.3d 531, 544 (D.C. 2011) (adopting the “plausibility” pleading standard articulated by the Supreme Court in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), and in Ashcroft v. Iqbal, 556 U.S. 662 (2009)); see also Grimes v. District of Columbia, 89 A.3d 107, 112 (D.C. 2014) (internal quotation marks omitted) (noting that to survive a motion to dismiss or a motion for judgment on the pleadings, the “complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face”). 48 See Hartman v. Duffey, 19 F.3d 1459, 1465 (D.C. Cir. 1994) (although “[a] party who receives all that he sought generally is not aggrieved by the judgment affording the relief and cannot appeal from it,” that party may file a “purely protective . . . cross appeal” in order to “insure that any errors against his interests are reviewed so that if the main appeal results in modification of the judgment his grievances will be determined as well”). 28 nothing to which we might owe deference in conducting our own review; judicial economy would be thwarted by redundant review of this record on the TOPA contentions, assuming, as we do, that the losing party after a trial court remand would bring still another appeal of this matter. We, therefore, turn to TA’s insistence that there are genuine issues of material fact inherent in the record as to whether the Seller (allegedly implicating Davis) violated TOPA when it presented the tenants in July of 2011 with the thirdparty contract allegedly showing (1) a price far in excess of the property’s fair market value and (2) seller-financing terms that were not “reasonably acceptable.”49 TA argues that these claims are “inherently questions of fact” and cannot be resolved by this court. We are not persuaded.
Should any “material factual issues” remain with respect to TA’s claims, 49 D.C. Code § 42-3404.05 (a), (a-2). 29 then a remand for further proceedings would be necessary,50 but summary judgment may not be “avoided merely by demonstrating a disputed factual issue.”51 “Rather, the opposing party must show that the fact is material and ‘that there is sufficient evidence supporting the claimed factual dispute to require a jury or judge to resolve the parties’ differing versions of the truth at trial.’” 52 We conclude that TA has failed to produce evidence sufficient to satisfy that test. We first address TA’s claim that the purchase price for the property in the initial tenant contract (derived from the third-party contract) manifested the Seller’s failure to bargain in good faith in violation of TOPA. Under TOPA, a property owner’s “failure . . . to offer the tenant a price . . . at least as favorable as that offered to a third party[,] . . . without a reasonable justification for doing so,” constitutes bad faith.53 Ordinarily, a “claim of bad faith bargaining . . . presents an 50 West End Tenants Ass’n v. George Washington Univ., 640 A.2d 718, 725 (D.C. 1994) (citations omitted). 51 Id. (citation omitted). 52 Id. (quoting Nader v. de Toledano, 408 A.2d 31, 42 (D.C. 1979)). 53 D.C. Code § 42-3404.05 (a)(1), (2). 30 issue of mental state somewhat akin to disputes in which intent is at issue”;54 and, given the often subjective nature of determining one’s mental state,55 “summary judgment should be granted sparingly” on that ground.56 The record before us, however, does not “sufficiently put[] into controversy the issue of [the Seller’s] good faith to preclude summary judgment.”57 The Seller and Davis agreed to a sale price of $7,650,000 for the property. Consistent with TOPA,58 the Seller then presented an identical copy of the thirdparty contract to TA. TA proceeded to make hand-written alterations, striking provisions that were unacceptable to it—but not the price.59 Thus, in January 54 Green v. Gibson, 613 A.2d 361, 364 (D.C. 1992). 55 See Owens v. United States, 90 A.3d 1118, 1122 (D.C. 2014) (citation omitted) (noting that in the criminal context, the requisite mental state to support a conviction for receiving stolen property is a “subjective one,” and that the “task of discerning a defendant’s knowledge . . . usually requires a jury to rely on reasonable inferences rather than direct proof”). 56 Id. (quoting Richardson v. District of Columbia, 522 A.2d 1295, 1299 (D.C. 1987) (Terry, J., concurring)). 57 Green, 613 A.2d at 364-65. 58 See supra note 53 and accompanying text. 59 See supra note 5. 31 2012, TA and the Seller came to an agreement on all material terms, including the purchase price of $7,650,000. TA then proceeded to wait for a period of eight months before it first alleged that the Seller had violated TOPA because “[t]he purchase price . . . far exceeds the market value of the property, and constitutes a failure to bargain in good faith.” We assume (without deciding) that TOPA would not preclude a tenants association from negotiating a reduction in the initial purchase price, based on data which the seller agreed would justify a lower price. TA, however, has never disclosed when it first perceived an unfair price or the circumstances that revealed it. Moreover, TA’s argument here appears to be premised not on discovery of a flawed price later on, but on an excessive price from the beginning. TA merely argues that the dramatic purchase price difference of $3,300,000 between the January 12, 2012, tenant contract and the November 2, 2012, “amendment” to that agreement inherently demonstrates that the Seller’s initial offer was not bona fide. But TA has not pointed to any judicial authority to support its argument that TOPA required the Seller, under the circumstances, to sell the property to TA at a lower price than Davis had already agreed to pay—a result that would force the Seller to accept less than it otherwise would have received in the open market. The plain 32 language of TOPA mandates that the owner of property for sale offer it to the tenants at a price and on terms “as favorable” as its offer to a third party.60 Nothing more, and nothing less. Here, the Seller has done so; the exact terms of the third-party purchaser contract were presented to TA, price included. Absent evidence to the contrary, therefore, the Seller’s identical price for TA, consistent with TOPA, is prima facie evidence of good faith. It is conceivable, of course, apropos of TA’s argument, that an owner could conspire with a third party to set a price in excess of the property’s fair market value, and couple it with seller-financing requirements likely impossible for the tenants to match, as ways of assuring that the third party could almost certainly escape a tenant effort to assert TOPA rights. But neither TA’s pleadings nor the record itself proffers any evidence to support such nefarious behavior here—not even indirect evidence indicative of the real estate market for such properties in the area of the District that might have put the initial price in question.61 Although TA 60 D.C. Code § 42-3404.05 (a)(1). 61 See Vessels v. District of Columbia, 531 A.2d 1016, 1019 n.9 (D.C. 1987) (citation omitted) (“The mere existence of some alleged factual dispute between the parties” is not sufficient to avoid summary judgment, which must be granted unless there is a “genuine issue of material fact.”). 33 alleged that “[t]he totality of the contract is indicative of an intent on behalf of the Seller . . . to circumvent the rights of the TA under TOPA,” this assertion is not supported by evidence of record,62 and thus fails to create a “genuine issue of material fact.”
According to D.C. Code § 42-3404.05 (a-2), “[t]he owner may not require the tenant to pay the purchase price in installments unless the owner provides deferred purchase money financing on terms reasonably acceptable to the tenant.” Under the tenant contract, however, reflecting the third-party contract, TA was not “required” to pay by installment; TA had two options: paying the purchase price up front, in cash, or over time, in installments financed by the Seller. According to attorney Rome’s email of September 6, 2012, to the Seller’s attorney, Richard Luchs, TA appears to have eventually elected the seller-financed, installment alternative. 62 In its Answer to Davis’s cross-claim, TA asserted as a defense that the third-party contract “represent[ed] an illegal attempt to deny [TA] its lawful rights, is evidence of the failure of [the Seller] to bargain in good faith at that time, is void ab initio, and unenforceable.” TA, however, failed to proffer evidence to support these allegations. 34 Rome’s September 6 email then notes a “requirement in the [tenant] contract that in order to purchase the property at a price approaching market value, i.e[.] 4.25 M,63 a buyer must agree to seller financing on particular terms,” and alleges in the language of TOPA that the tenant contract “requires terms not ‘reasonably acceptable’ to the TA.” This argument, however, ignores the fact that TA accepted the terms of the third-party contract that provided for two financing options. Contrary to Rome’s allegation, the tenant contract did not “require the tenant to pay the purchase price in installments” (emphasis added). Davis, however, does not argue that the word “require,” as such, is enough to nix TA’s challenge to the seller-financing provision, and without further briefing we would not venture an opinion as to whether, under a two-option contract, a tenants’ association would automatically be foreclosed under TOPA from 63 This inclusion of a $4.25 million purchase price (or market value) in alleging a TOPA financing violation is perplexing. The email at the time acknowledged that the purchase price in the tenant contract was $7.65 million. Did Rome intend to suggest that the terms of seller-financing would not be “reasonably acceptable” to TA whatever the purchase price turned out to be? 35 challenging the reasonableness of the installment alternative.64 We find it sufficient to say that, in proffering its reasons why the seller-financing terms are not “reasonably acceptable,” TA falls short. In support of its argument, TA lodged in the record a declaration filed by Ms. Stephanie Mynkonos, TA’s Vice President, in which she asserted that after “discussions with numerous potential development partners and consultation with counsel, the TA reluctantly concluded that the terms of the required sellerfinancing were not reasonably acceptable . . . .”65 Beyond this generalized grievance, however, TA has not specified which elements of the financing requirements were not “reasonably acceptable,” including the rationale in support of that contention. Nor did Rome explain how, if at all, the seller-financing terms 64 Attorney Rome appears to be interpreting D.C. Code § 42-3404.05 (a-2) to say that if TA elects an installment purchase, the “owner may not require the tenant [association] to pay the purchase price in installments unless the owner provides deferred purchase money financing on terms reasonably acceptable to the tenant.” That understanding may seem strained, although it is not conclusively flawed, if only because it would be the unusual owner-seller—one not likely to have received special legislative attention—who would require seller-financing without permitting an all-cash, up-front payment. 65 See supra note 43. 36 would materially vary depending on the final purchase price.66 Rome’s September 6, 2012, email to attorney Luchs complained that the seller-financing terms were tailored to the Seller’s own estate planning needs, but TA never articulated why those financing stipulations were not “reasonably acceptable.”67 TA has never pointed out the terms it found objectionable, or how the Seller failed to address TA’s concerns, let alone proffered evidence—through discovery or otherwise—of alleged overreaching. These deficiencies compel a conclusion that TA’s allegation of unacceptable financing terms is conclusory, and thus lacks the specificity necessary to withstand Davis’s motion for summary judgment. 66 See supra note 63. 67 In his email, Rome voiced concern about the structure of the transaction: “When we have discussed [seller-financing], you have repeatedly told me that the Seller has structured the transaction in this manner for ‘estate planning’ purposes. For purposes of settlement and compromise, I have taken that at face value, and have offered to discuss the Seller’s needs in good faith and to attempt to arrive at an accommodation that would achieve the same purpose. I understand the Seller has flatly refused. That offer remains open at any time, but the refusal to negotiate is indicative of the Seller's true intent.” This concern, however, was not explained in the record. 37
The Seller presented TA with an exact copy of the third-party contract signed by Davis. TA then made amendments, by hand, while agreeing to all material terms, price and financing included. The parties signed the tenant contract. TA and the Seller operated under this agreement for a period of eight months while TA attempted to find a partner to finance the purchase. Then, only four days before settlement, TA undertook an about-face and declared the purchase price excessive and the seller-financing terms not “reasonably acceptable.” Absent more specific factual allegations with proffered evidence in support, we cannot conclude that the record before us “sufficiently puts into controversy” whether the Seller’s offered price and terms of financing violated TOPA.68