Court Opinion

ID: 4023489
Source: CourtListenerOpinion
Date Created: 2016-08-11 14:03:38.681047+00
Date Added: 2024-06-11T14:50:09.811094
License: Public Domain

District of Columbia
                             Court of Appeals
Nos. 15-CV-448, 15-CV-486, 15-CV-630 & 15-CV-710                       AUG 11 2016
DAVID M. VAN LEEUWEN, et al.,
                          Appellants/Cross Appellees,

     v.                                                       CAB-4227-13

ERIC BLODNIKAR, et al.,
                                  Appellees/Cross Appellants.

              On Appeal from the Superior Court of the District of Columbia
                                    Civil Division

         BEFORE: THOMPSON and MCLEESE, Associate Judges; and BELSON, Senior
Judge.

                                    JUDGMENT

               This case came to be heard on the transcript of record and the briefs filed,
and was argued by counsel. On consideration whereof, and as set forth in the opinion
filed this date, it is now hereby

              ORDERED and ADJUDGED that the judgment of the Superior Court is
affirmed in part and vacated in part, and the case is remanded for further proceedings.

                                         For the Court:

Dated: August 11, 2016.

Opinion by Associate Judge Roy W. McLeese.
Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.
                                                                            8/11/16
             DISTRICT OF COLUMBIA COURT OF APPEALS

            Nos. 15-CV-448, 15-CV-486, 15-CV-630, & 15-CV-710

        DAVID M. VAN LEEUWEN, ET AL., APPELLANTS/CROSS-APPELLEES,

                                        V.

            ERIC BLODNIKAR, ET AL., APPELLEES/CROSS-APPELLANTS,

                                       and

                           SAM H. PAYLOR, APPELLEE.

                         Appeals from the Superior Court
                           of the District of Columbia
                                 (CAB-3502-13)

                        (Hon. Stuart G. Nash, Trial Judge)

(Argued March 10, 2016                                 Decided August 11, 2016)

     Carol S. Blumenthal for appellants/cross-appellees David M. van Leeuwen
and Meghan R. van Leeuwen.

      Lorenzo B. Cellini, with whom Jonathan K. Tycko was on the brief, for
appellees/cross-appellants Eric Blodnikar and Terra Blodnikar.

      John F. Pressley, Jr., for appellee Sam H. Paylor.

      Before THOMPSON and MCLEESE, Associate Judges, and BELSON, Senior
Judge.
                                          2

      MCLEESE, Associate Judge: After a bench trial, the trial court ruled that

appellees/cross-appellants Eric and Terra Blodnikar have an enforceable contract

to purchase a building owned by appellee Sam H. Paylor.              Appellants/cross-

appellees David M. and Meghan R. van Leeuwen challenge that ruling, arguing

that they rather than the Blodnikars have an enforceable contract to purchase the

building.   In their cross-appeal, the Blodnikars argue that the trial court

erroneously failed to award them attorney’s fees against Mr. Paylor. We affirm in

part, vacate in part, and remand the case for further proceedings.

                                          I.

      The following facts appear to be undisputed. Mr. Paylor owned a three-unit

apartment building subject to the Tenant Opportunity to Purchase Act of 1980

(TOPA), D.C. Code § 42-3404.01 et seq. (2012 Repl.). On February 12, 2013, Mr.

Paylor sent the building’s tenants an offer of sale, giving the tenants an opportunity

to purchase the building. The offer of sale stated a price of $480,000 and included

the following material term: “5% earnest money deposit with a contract, and the

balance at settlement.”

      On February 26, 2013, Mr. Paylor and the van Leeuwens -- who were not
                                          3

tenants of the building -- entered into a contract for the van Leeuwens to buy the

building for $538,000. The van Leeuwens deposited $25,000 in earnest money.

On March 1 and 2, 2013, all of the buildings’ tenants assigned Mr. Blodnikar their

rights under TOPA to purchase the building. See D.C. Code § 42-3404.06 (tenants

may assign rights under TOPA). On March 4, 2013, the Blodnikars sent a letter to

Mr. Paylor stating that the Blodnikars were accepting the February 12, 2013, offer

of sale. The Blodnikars did not include a deposit with their letter.

      On March 10, 2013, Mr. Paylor sent the tenants a second offer of sale, this

time with a price of $538,000. Mr. Paylor attached the contract with the van

Leeuwens. In response, the Blodnikars sent letters to Mr. Paylor stating that they

had already accepted the first offer of sale and that Mr. Paylor therefore could not

lawfully sell the property to the van Leeuwens.

      On March 31, 2013, one of the tenants was evicted. On April 8, 2013, Mr.

Paylor leased the vacant apartment to the van Leeuwens. Later in April 2013, Mr.

Paylor sent a third offer of sale to the tenants, again at a price of $538,000 and

again attaching the contract between Mr. Paylor and the van Leeuwens.

      The van Leeuwens filed a complaint seeking, among other things, a
                                          4

declaration that their contract with Mr. Paylor was valid. The Blodnikars filed a

cross-complaint seeking a declaration that they had validly accepted the first offer

of sale. Among other things, the Blodnikars also sought an award of attorney’s

fees against Mr. Paylor and the van Leeuwens.

      The van Leeuwens and Blodnikars filed cross-motions for partial summary

judgment. The trial court denied both motions, but ruled as a matter of law that the

Blodnikars’ March 4 letter was an acceptance of Mr. Paylor’s first offer of sale and

that the Blodnikars were not obliged to deposit earnest money at the time of

acceptance. After a bench trial, the trial court ruled that the Blodnikars had a valid

contract to buy the building. The trial court therefore directed Mr. Paylor to sell

the building to the Blodnikars. The trial court denied the Blodnikars’ request for

an award of attorney’s fees, finding among other things that Mr. Paylor acted in

good faith.

                                         II.

      The van Leeuwens first argue that no valid contract ever formed between

Mr. Paylor and the Blodnikars. Specifically, the van Leeuwens argue that, under

the terms of the first offer of sale, the Blodnikars were required to submit a 5%
                                           5

earnest-money deposit as a condition of accepting the offer of sale. According to

the van Leeuwens, the Blodnikars’ failure to submit the deposit means that the

Blodnikars never accepted the offer and instead only indicated an intent to

negotiate a contract in the future. No party argues that the offer of sale was

ambiguous and that the proper interpretation of the offer of sale should have been

submitted to the jury. The van Leeuwens and Blodnikars instead each advance

their own interpretations of the terms of first offer of sale, and they agree that we

review the trial court’s interpretation of the offer of sale de novo. Accepting the

issue as the parties have framed it, we uphold the trial court’s ruling.

      Under TOPA, a tenant (or, as here, the assignee of a tenant) can create a

binding contract by accepting the material terms of an owner’s offer of sale. 1836

S St. Tenants’ Ass’n v. Estate of Battle, 965 A.2d 832, 838-46 (D.C. 2009). After

such an acceptance, the parties may negotiate over non-material terms, prepare a

final contract, and proceed to settlement. Id. at 839-41. The principal issue in this

case is whether the Blodnikars accepted the material terms of the first offer of sale.

The van Leeuwens rely on the language in the first offer of sale requiring a “5%

earnest money deposit with a contract, and the balance at settlement.” Considered

in isolation, that language is unclear as to precisely when the deposit must be

made. The language does not expressly require that the deposit be paid at the
                                          6

moment of acceptance. In addition, as previously noted, TOPA gives rise to the

possibility that there will be two different versions of a contract: an initial version

formed by the tenant’s acceptance of the material terms of an offer of sale, and a

fuller written version created after the parties have agreed on all of the terms of a

contract. Id. at 838-44; cf. D.C. Code § 42-3404.10 (2)(A) (“Upon receipt of a

letter of intent from a tenant . . . the owner shall afford the tenants a reasonable

period to negotiate a contract of sale . . . .”). The offer of sale does not explicitly

indicate whether earnest money must be paid at time of acceptance or instead at the

time the contract is finalized.

      The Blodnikars point to several provisions in the offer of sale that tend to

indicate that the deposit was to be made at the time the contract was finalized, not

at the time of acceptance. Specifically, several provisions of the first offer of sale

state that tenants could respond by a “written statement accepting the owner’s offer

to sell.” The absence from these provisions of any reference to payment of earnest

money tends to imply that contemporaneous deposit of earnest money was not a

condition of acceptance. Similarly, the first offer of sale explicitly contemplates a

process of post-acceptance negotiation to finalize a ratified contract.           The

subsequent reference to payment of a deposit “with a contract” is thus more

naturally read as referring to the ratified contract mentioned in the preceding
                                           7

paragraphs of the offer of sale. In sum, we agree that the first offer of sale, read as

a whole, is better understood to require payment of the deposit at the time a contact

is ratified, not at the time of initial acceptance. We therefore uphold the trial

court’s ruling that the Blodnikars validly accepted the first offer of sale.

                                          III.

      The van Leeuwens advance an alternative argument:                (1) even if the

Blodnikars validly accepted the first offer of sale, the van Leeuwens became

tenants before the building was actually sold; (2) the van Leeuwens therefore had

the right under TOPA to submit a competing offer to purchase; and (3) Mr. Paylor

was free under TOPA to accept the van Leeuwens’ offer over the Blodnikars’

offer. The trial court rejected that argument, stating that, once the first offer of sale

was accepted and a valid contract to sell the building had formed, the van

Leeuwens could not become tenants, obtain TOPA rights, and prevent the sale

pursuant to the earlier contract. We find the matter to be more complicated than

the trial court’s ruling suggests. We therefore vacate the judgment and remand for

further consideration of the van Leeuwens’ alternative argument.

      In some circumstances, TOPA does permit a subsequent competing offer by
                                         8

one tenant to pose an obstacle to the completion of a sale to another tenant who

had previously accepted an offer of sale.       Specifically, under the provisions

applicable to two-to-four-unit buildings, even if an individual tenant accepts an

offer of sale, thereby creating a potentially binding contract, the owner and that

tenant are not necessarily in a position to go forward immediately with a sale of the

building. See D.C. Code § 42-3404.10; 1836 S St., 965 A.2d at 841. Rather, if

another tenant timely submits an expression of interest, the owner must afford each

tenant who did so a period of at least ninety days to negotiate over the sale of the

building. D.C. Code § 42-3404.10 (2)(A); 1836 S St., 965 A.2d at 841. At the end

of that period, the owner is not required to honor an acceptance that was submitted

first and instead may choose a competing bid that the owner prefers. D.C. Code

§ 42-3404.10 (2)(C); 1836 S St., 965 A.2d at 841.

      If section 42-3404.10 applies in the present circumstances, then Mr. Paylor

arguably was free to enter into a contract with the van Leeuwens for the purchase

of the building at the higher price. The trial court appeared to imply that tenants

whose tenancy begins after an offer of sale has been accepted have no rights under

section 42-3404.10.    We disagree with that broad conclusion.        For example,

consider the following situation: (1) an owner sends tenants a notice of intent to

sell a four-unit building; (2) fifteen days later, one tenant timely accepts the
                                          9

material terms of the offer of sale; (3) the next day, a new tenant signs a lease, and

(4) the new tenant then immediately submits a timely statement of interest in

purchasing the building. Nothing in the text of section 42-3404.10 suggests that

the new tenant in that situation has no rights under TOPA. Moreover, a general

provision of TOPA points in the opposite direction. See D.C. Code § 42-3404.06

(exercise of TOPA rights “may occur at any time in the process provided by the

subchapter”).

      This case raises a number of additional complications not presented in the

situation just posited. For example, the Blodnikars argue that their acceptance was

a joint response of all tenants, rather than an individual response, and that Mr.

Paylor therefore could not lawfully disregard their acceptance in favor of the van

Leeuwens’ later response. See D.C. Code § 42-3404.10 (1) (owner’s obligation to

consider later statement of interest by individual tenant applies “if the tenants

acting jointly have failed to submit a written statement of interest”).         Other

possible questions include (1) whether the Blodnikars’ acceptance was submitted

promptly enough to qualify as a joint response, D.C. Code § 42-3404.10 (1) (joint

response must be submitted within fifteen days); (2) whether the van Leeuwens’

later individual response was timely under section 42-3404.10 (1) (in absence of

timely joint response, individual response may be submitted within seven
                                           10

additional days); and (3) if either the Blodnikars’ acceptance or the van Leeuwens’

later response was not timely under these provisions, what that would mean for the

proper analysis of their respective rights, if any, under TOPA. The Blodnikars

further argue that section 42-3404.10 is inapplicable because the van Leeuwens

were not bona fide tenants and therefore could not exercise rights under TOPA.

      The trial court has not yet addressed these questions and the parties have not

fully briefed them. We therefore remand the case to the trial court to address those

issues in the first instance. See, e.g., Folks v. District of Columbia, 93 A.3d 681,

686 (D.C. 2014) (“The trial court did not definitively resolve that issue. We

exercise our discretion to leave that issue for resolution by the trial court in the first

instance.”).

                                           IV.

      The Blodnikars argue in the cross-appeal that the trial court erred by denying

their request for attorney’s fees against Mr. Paylor. (The Blodnikars do not appear

to challenge the denial of their request for an award of attorney’s fees against the

van Leeuwens.) We affirm the trial court’s ruling.
                                          11

      The Blodnikars first argue that the trial court acted precipitously, by

deciding the attorney’s fee issue at the close of trial rather than waiting for the

Blodnikars to file a motion under Rule 54 (d) of the Superior Court Rules of Civil

Procedure. The Blodnikars did not raise that objection when the trial court ruled

on the request for attorney’s fees at the close of the trial. They remained silent

even when the trial court expressly asked the parties whether they had any further

requests of the trial court.    Moreover, although the Blodnikars filed a post-

judgment motion seeking revisions in the judgment, they did not -- in that motion

or in any other way -- raise in the trial court the contention that the trial court was

required to await the filing of a post-judgment motion before ruling on the request

for attorney’s fees. Under the circumstances, we do not view the Blodnikars as

having properly preserved this procedural objection in the trial court. Cf., e.g.,

District of Columbia Hous. Auth. v. District of Columbia Office of Human Rights,

881 A.2d 600, 613-14 (D.C. 2005) (“When [petitioner] was before the [agency], it

was content to have the case decided summarily. As [petitioner] did not request a

hearing or object to the [agency’s] decision to render a summary determination

. . . , and as [petitioner] failed even to seek reopening of the case when it moved for

reconsideration, [petitioner] forfeited its claim that a hearing was necessary.

Acquiescence is waiver, and nothing in this case justifies a deviation from that

general rule.”).
                                         12

      Second, the Blodnikars challenge the trial court’s ruling that Mr. Paylor

acted in good faith. In the trial court, however, the Blodnikars expressly stated that

they were not contending that Mr. Paylor acted in bad faith. The Blodnikars may

not take a contrary position in this court. Brown v. United States, 864 A.2d 996,

1001 (D.C. 2005) (parties “may not take one position at trial and a contradictory

position on appeal”) (internal quotation marks omitted).

      Finally, the Blodnikars argue for the first time in their reply brief that a

prevailing party in a TOPA action should presumptively be awarded attorney’s

fees, even in the absence of bad faith on the part of the losing party. We do not

ordinarily address arguments raised for the first time in a reply brief. E.g., Howell

v. District of Columbia Zoning Comm’n, 97 A.3d 579, 584 n.6 (D.C. 2014). We

adhere to that policy here.

      The judgment of the Superior Court is therefore affirmed in part and vacated

in part, and the case is remanded for further proceedings.

                                              So ordered.