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REDWOOD CTR. L.P. v. RIGGS NATL. BANK

May 8, 1990

REDWOOD CENTER LIMITED PARTNERSHIP and DENNIS LEAPLEY, Plaintiffs,
v.
THE RIGGS NATIONAL BANK OF WASHINGTON, D.C., Defendant



The opinion of the court was delivered by: HARRIS

 This matter is before the Court on plaintiffs' motion for a two-part preliminary injunction (1) requiring defendant to fund the construction of the Redwood Center, and (2) prohibiting Riggs from commencing foreclosure proceedings against the Redwood Center Limited Partnership's ("Partnership") interest in the Redwood Center, or legal action against plaintiff Leapley or his wife under certain guaranty agreements. For the reasons set forth below, plaintiff's motion must be denied.

 Background

 The plaintiff Partnership is a limited partnership, formed on March 30, 1988, for the purpose of acquiring and renovating Redwood Center, real property located in Baltimore, Maryland. Plaintiff Leapley is the sole general partner of the Partnership, as well as sole owner of The Leapley Company, a real estate general contractor, and the Lecoin Group, Inc., which acquires, renovates, and leases commercial real estate.

 Prior to the formation of the Partnership, the Lecoin Group, with Brady Armstrong as its President, obtained financing from defendant, The Riggs National Bank of Washington, D.C. ("Riggs"), for two projects. First, in April 1984, Riggs extended a $ 450,000 construction loan to Lecoin for the development of a project known as 1724 Kalorama Road, Washington, D.C. Then, in November 1985, Riggs provided $ 2.4 million in acquisition and construction financing for a commercial office building in Baltimore, Maryland, known as Federal Hill Place. Both lending transactions were negotiated by Armstrong and James Trimble, a Senior Vice President and real estate lending officer at Riggs.

 Because Armstrong and Lecoin had developed a good working relationship with Trimble at Riggs, Armstrong contacted Trimble in 1987, and again in 1988, when he decided that Lecoin should undertake to acquire and renovate the Redwood Center. *fn1" Trimble expressed an interest in the project on behalf of Riggs. On April 6, 1988, the Partnership signed a contract with Seaman's for the purchase of Redwood Center. On April 12, 1988, Armstrong sent Trimble a letter, reminding him of the Redwood Center project and providing him with information about plans for its acquisition and construction. Again, Trimble expressed a positive interest in the project. Armstrong sent another informational letter to Trimble on May 13, 1988, in which he noted that three architectural concepts for the development were being evaluated. In July 1988, the Architectural Review Board of Charles Center Inner Harbor Management determined that the value of the project could be increased if plaintiffs purchased the alley separating the two buildings comprising Redwood Center and connected them at the street level. Both Trimble and Armstrong agreed, and thus Lecoin began working toward this development concept.

 On August 10, 1988, Lecoin applied for an acquisition/construction loan in the amount of $ 13.6 million, in preparation for its August 26, 1988, date for settlement on the purchase of the property. However, that figure was based on appraisals for the original development scheme, which involved bridging the alley, rather than closing it entirely. Furthermore, despite providing figures for the original concept, the letter continued to refer to changing the development concept to the one involving closing the alley, and it was apparent that the latter was the one plaintiffs preferred. When it became obvious that the alley closing could not be negotiated before the August 26 settlement date, Leapley requested another extension from Seaman's. *fn2" Seaman's, anxious to close the deal on the property, inquired as to Riggs' position on the financing. On August 16, 1988, Trimble sent a letter to Edward Polito, a senior real estate officer at Seaman's, in which he reassured him that Riggs was "working with [Leapley and Armstrong] to finance this project." Apparently unconvinced and needing a firmer commitment from Riggs, Seaman's denied the extension.

 As long as the alley closing was uncertain, Trimble believed that he was unable to submit a construction loan proposal to the bank's Loan Committee for approval. However, he expected that he would be able to submit the proposal and recommend loan approval within 60 to 90 days, the time that Armstrong expected it would take for city approval of the alley closing. In order to avoid collapse of the entire project, Trimble did submit the acquisition loan application to the Loan Committee with his recommendation for approval. Reassured, Seaman's agreed to extend the settlement date to November 28, 1988. On October 3, 1988, Trimble informed Armstrong that the Loan Committee had approved the acquisition loan of $ 3.8 million, and on November 28, 1988, the Partnership purchased Redwood Center. *fn3"

 It was not until July 7, 1989, several months beyond what the parties had expected, that Armstrong sent Trimble the Partnership's application for the construction loan, informing him that the alley had been closed and construction could begin. *fn4" Trimble held a meeting on July 11, 1989, at which time he requested additional information about the project and about Leapley himself. On July 27, 1989, Trimble informed Leapley that Riggs would not make the construction loan, and that there was no point in taking the application to the Loan Committee because it had no chance of success. *fn5" Subsequent appeals to Riggs were unsuccessful, and the Partnership diligently sought alternative financing, also unsuccessfully. The acquisition loan fell due on November 28, 1989, but the Partnership was unable to repay it, having originally expected to repay it in the normal course from permanent financing placed on the property once construction was completed. The Partnership now fears foreclosure.

 Plaintiffs filed this lawsuit on March 22, 1990, and the Court granted an expedited discovery schedule. A hearing on the motion for preliminary injunction was held on April 27, 1990.

 Discussion

 In ruling on a motion for a preliminary injunction, the Court must consider four factors: (1) whether plaintiffs have made a strong showing that they are likely to prevail on the merits, (2) whether plaintiffs have shown that, absent such relief, irreparable injury will result, (3) whether issuance of the injunction will harm the interests of the other parties, and (4) whether the public interest supports the grant of relief. Washington Metropolitan Area Transit Comm'n v. Holiday Tours, 182 U.S. App. D.C. 220, 559 F.2d 841, 842 (D.C. Cir. 1977); Virginia Petroleum Jobbers Association v. FTC, 104 U.S. App. D.C. 106, 259 F.2d 921, 925 (D.C. Cir. 1958). Furthermore, "the power to issue a preliminary injunction, especially a mandatory one, should be 'sparingly exercised.'" Dorfmann v. Boozer, 134 U.S. App. D.C. 272, 414 F.2d 1168, 1173 (D.C. Cir. 1969); see also Wetzel v. Edwards, 635 F.2d 283, 286 (4th Cir. 1980).

 Plaintiffs have not made a strong showing that they had an enforceable loan agreement with defendant, and thus that they are likely to prevail on the merits. For an enforceable contract to exist in the District of Columbia, there must be both agreement as to all material terms and the intention of the parties to be bound. Georgetown Entertainment Corp. v. District of Columbia, 496 A.2d 587, 590 (D.C. 1985) (citing Edmund J. Flynn Co. v. LaVay, 431 A.2d 543, 546-47 (D.C. 1981)). Furthermore, in a breach of contract action, the burden is on the plaintiff to prove all elements of the action. Browzin v. Catholic University of America, 174 U.S. App. D.C. 60, 527 F.2d 843, 849 (D.C. Cir. 1975); Banze v. American International Exports, Inc., 454 A.2d 816, 817 (D.C. 1983).

 Plaintiffs argue that at all times during negotiations on the Redwood Center project, the parties understood that plaintiffs were seeking one loan for the acquisition and construction of Redwood Center. They contend that the loan was bifurcated, at Trimble's suggestion, only to accommodate the seller's desired settlement date, but that there was no question in the minds of the parties that the construction funding, merely the second part of a two-part loan, would follow once the plaintiffs secured the alley closing. They claim that they surely would not have obligated themselves to Riggs on the purchase price ...


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