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12/05/90 WAVERLY TAYLOR v. ARNOLD POLINGER

December 5, 1990

WAVERLY TAYLOR, INC., APPELLANT/CROSS-APPELLEE
v.
ARNOLD POLINGER, ET AL., APPELLEES/CROSS-APPELLANTS



Appeals from the Superior Court of the District of Columbia; Hon. Truman A. Morrison III, Trial Judge

Rogers, Chief Judge, Steadman, Associate Judge, and Pryor, Senior Judge.

The opinion of the court was delivered by: Steadman

This case involves a protracted dispute which arose following a sale of development real property. The seller failed to seek the consent of the purchaser before applying for a special exception on adjacent property owned by the seller. The trial court found this failure to be a breach of the contract of sale. The cross-appeals before us challenge, inter alia, the correctness of this finding, the calculation of damages, and an award of attorney's fees. We affirm the finding of breach of contract. We remand for a corrected award of damages and for further consideration of the question of attorney's fees.

I. The Facts

In early 1979, Arnold Polinger and coventurers, as purchasers, entered into negotiations with Waverly Taylor, Inc. ("Taylor") *fn1 for the purchase of a parcel of property owned by Taylor overlooking the Georgetown Reservoir and Potomac River. Polinger sought to exploit the view from the parcel (the "upper lots") by developing single-family homes. Taylor also owned property adjacent to the parcel in which Polinger was interested. The adjacent property (the "lower lots") was at a lower elevation and was separated from the upper lots by an embankment. In March of 1979, Taylor and Polinger entered into a contract of sale for the upper lots. Among the provisions of the contract was Paragraph 16 (emphasis added), which stated:

Seller represents and warrants to Purchasers that except as shown on the plan attached and on the D.C. land records Seller has not made and will not make any commitments or representations to the applicable governmental authorities, or any adjoining or surrounding property owners, which would in any manner be binding upon Purchasers or interfere with Purchasers' ability to develop and improve the property as contemplated by Purchasers, without first obtaining Purchasers' written consent, provided that this paragraph shall not be interpreted to restrict Seller's right to sell or otherwise transfer any other property owned by the Seller.

The italicized sections were handwritten additions made by Taylor and initialed by both parties. The remaining portion was itself added to the original form of the contract by Polinger. The contract of sale was not a preprinted form contract but the testimony is conflicting as to which party prepared it originally. The closing took place in late October 1979 and Polinger signed a three-year promissory note for $250,000.00 secured by a deed of trust. *fn2 Polinger did not record the deed from Taylor to the upper lots until November 2, 1979.

Meanwhile, Taylor had also entered into negotiations for the sale of the lower lots and on April 25, 1979 executed a contract of sale with Management and Development Associates, Inc. ("MDA"). In Paragraph 12 of that contract, MDA agreed to prepare a development plan for the lower lots. Because it was likely that MDA would have to obtain a zoning change to develop the lower lots as it wanted, Taylor agreed to cooperate with MDA and "to sign all applications and other documents reasonably required in connection with [MDA's] development plan . . . including any necessary application to the Board of Zoning Adjustment." In this connection, Taylor provided MDA with an authorization letter, stating: "You are hereby authorized to file an application with the Board of Zoning Adjustment and otherwise to act on my [Taylor's] behalf in the above-referenced matter." On November 1, 1979, MDA applied to the Board of Zoning Adjustment ("BZA" or "Board") for a special exception to develop the land. The Board held a hearing on December 19, 1979 and approved MDA's development plan on April 7, 1980. Because Polinger did not record the deed until the day after the November 1 filing, Polinger was not a "record" owner of adjacent property on that day and did not, as provided for by BZA rules, receive notice that a hearing was to take place. The Board sent notice to Taylor, as record owner of the upper lots, but Taylor did not convey notice to Polinger. The result of the Board's approval was that MDA eventually built several 40-foot high townhouses that obstructed the views from the upper lots.

On October 18, 1982, Polinger sued Taylor for breach of contract, alleging, inter alia, that Taylor's authorization to MDA to approach the BZA for a zoning exception was in violation of Paragraph 16 of the contract of sale. On March 23, 1983, Taylor filed an answer and counterclaim for principal and interest due on the promissory note, which Taylor alleged Polinger had not paid since July 23, 1982. Taylor alleged that the amount of principal due as of July 23, 1982 was $129,687.50.

Following a bench trial, the trial court concluded that Taylor had breached Paragraph 16 of the contract of sale. It concluded that Taylor had made a "representation[ ] to [ ] applicable governmental authorities" in the form of MDA's application to the BZA, authorized by Taylor, and that the application "interfered with [Polinger's] ability to develop and improve the property as contemplated by ." The court rejected Taylor's proposed interpretation of the last clause of Paragraph 16 -- namely, that Taylor was not required to seek Polinger's consent when withholding of that consent would have been impermissible. The court interpreted Paragraph 16 in such a way as to give effect to both the obtain-consent and no-restriction-on-Seller's-right-to-sell provisions. The court concluded that, even assuming Polinger would not have been free under the last clause to withhold its consent to Taylor's or MDA's filing of an application with the BZA, requiring Taylor to seek to obtain that consent would not necessarily have been for naught since it would have put Polinger on notice of the proceeding and enabled Polinger to oppose the application. The court awarded Polinger damages of $150,000.00, an amount stipulated by the parties prior to trial. In addition, the court awarded $173,934.03 to Taylor on its counterclaim for the principal balance due on the promissory note plus accrued interest from the date of Polinger's default. Finally, the court awarded Taylor $7,953.75 in attorney's fees incurred in connection with its prosecution of the counterclaim.

II. The Breach of Contract

Taylor first challenges the trial court's determination that Taylor breached Paragraph 16 of the contract of sale. In reviewing a trial court's determination as to the meaning of a contractual provision, we must ask first whether the meaning of the provision is plain on its face or whether it is ambiguous. Sacks v. Rothberg, 569 A.2d 150, 154 (D.C. 1990). If the contract provision is ambiguous, i.e., "reasonably susceptible of different constructions or interpretations," 1901 Wyoming Avenue Coop. Ass'n v. Lee, 345 A.2d 456, 461 n.7 (D.C. 1975), our review is limited. In such a case, the trial court will essentially have been acting as a finder of fact, Dodek v. CF 16 Corp., 537 A.2d 1086, 1092 (D.C. 1988), and we will reverse only if the trial court's determination is "plainly wrong or without evidence to support it." D.C. Code § 17-305(a) (1989). Where a contract is ambiguous, the trial court may, explicitly or implicitly, consider extrinsic evidence such as "the circumstances before and contemporaneous with the making" of the contract, "all usages -- habitual and customary practices -- which either party knows or has reason to know," the "circumstances surrounding the transaction" and "the course of conduct of the parties under the contract." 1901 Wyoming Avenue Coop. Ass'n, supra, 345 A.2d at 461-62.

Here, contrary to Taylor's first contention, the meaning of Paragraph 16 is not plain. *fn3 The obtain-consent requirement could, as Taylor argues, be seen as applicable only when the purchaser could rightly withhold consent. On the other hand, it could be read, as Polinger urged and as the trial court read it, to require the seller to seek consent, even where the purchaser could not rightly withhold consent.

The trial court heard evidence on three consecutive days, much of which it solicited, concerning the entire background and series of events involved in the dealings between the parties, including evidence about the formation of the contract. Included was the testimony of ...


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