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12/11/92 PETER J. LYNN v. JAMES A. LYNN

December 11, 1992

PETER J. LYNN, APPELLANT
v.
JAMES A. LYNN, ET AL, APPELLEES



Appeal from the Superior Court of the District of Columbia; (Hon. Rufus King, Motions Judge)

Before Rogers, Chief Judge, and Schwelb and Wagner, Associate Judges. Opinion for the court by Associate Judge Wagner. Dissenting opinion by Associate Judge Schwelb.

The opinion of the court was delivered by: Wagner

WAGNER, Associate Judge: This appeal arises out of an action for sale of real property in lieu of partition and for an accounting pursuant to D.C. Code § 16-2901 (1989). Appellant contends that he was denied procedural due process in the proceedings in the trial court which resulted in the sale of two properties and an order approving the sale of a third. Appellant also argues that the trial court erred in rejecting his offer to purchase a third property which he made at the hearing held pursuant to an order nisi and in confirming a published offer for it. *fn1 Some of appellant's claims of procedural irregularities were raised in a prior appeal which was dismissed by this court because appellant failed to comply with the court's order to designate the record on appeal. *fn2 Additionally, appellant did not note an appeal from some of the other orders which he seeks to challenge in this appeal. Under the circumstances, we do not reach many of the issues raised by appellant in his brief. As to the issue properly before the court, we hold that the trial court erred in confirming the sale for one of the properties in view of the offer made by appellant. Therefore, we remand the case to the trial court for further proceedings consistent with this opinion.

I

Procedural Background

The procedural history of this case is somewhat complicated, but it must be recounted in some detail for an understanding of our Disposition of the case. On April 25, 1988, appellees, James and Jeffrey Lynn, a father and son, filed a complaint for the sale in lieu of partition of real property and for an accounting against appellant, Peter Lynn, who is also the son of James Lynn. *fn3 Although represented by counsel, appellant filed an answer pro se on August 8, 1988, and on August 16, 1988, his attorney filed a motion for leave to withdraw. *fn4 In the answer, appellant alleged that the appellees had invested in his real estate business and had promised, but failed to reimburse him, for expenses associated with the business. Appellees filed a motion for partial summary judgment on August 26, 1988 seeking, inter alia, a sale in lieu of partition of three properties in which they claimed an ownership interest as tenants in common with appellant. Appellant filed a motion to dismiss the complaint, claiming that the case had been dismissed previously and not reinstated. *fn5 By order dated October 31, 1988, Judge Ronald Wertheim denied appellant's motion to dismiss, granted appellant's attorney leave to withdraw, and granted appellant an extension of time to and including November 18, 1988 to file an opposition to the motion for partial summary judgment.

Appellant did not file an opposition to the motion for partial summary judgment, and judge Harriett Taylor entered an order on November 22, 1988 granting the motion as unopposed. *fn6 The order for partial summary judgment specified the extent of each party's interest in each of the three properties, ordered the properties to be appraised by three appraisers and appointed a trustee to sell it at private sale pursuant to Super. Ct. Civ. 308 (c). *fn7 The order also authorized the trustee to list the property for sale with a real estate broker, to manage it and collect rents, and to pay expenses subject to an accounting. No hearing was held before entry of the order for partial summary judgment. *fn8 Appellant noted his first appeal from that order on December 29, 1988. *fn9 This court dismissed the appeal on July 17, 1989 because of appellant's failure to designate the record in compliance with a prior order of the court. *fn10

Pursuant to the order of partial summary judgment, three separate hearings were held to confirm contracts submitted and published in accordance with Rule 308 (c). On September 14, 1989, an order was entered finally ratifying the sale of 115 D Street, S.E., Unit G-3, and on May 30, 1989 after a hearing, the court confirmed the sale of Unit G-4 in the same building. No appeal was taken from these orders.

On November 14, 1989, a hearing was held before Judge William Gardner on the trustee's motion for entry of an order nisi to sell the Independence Avenue property. Prior to that time, appellant had submitted to the trustee a written contract containing a higher offer to purchase the property, which he requested the trustee to publish." After a hearing, the court entered the order nisi providing for publication of the original offerors' contract. Following publication of the terms of that contract, a hearing was held before Judge Rufus King on November 27, 1989 to consider any increased offers. See Super. Ct. Civ. R. 308 (c)(4). Appellant offered to purchase the property at an amount which would net in excess of 10% above the published contract offer, the amount of the bid required to upset the published offer. See id. Appellant testified at an evidentiary hearing during the Nisi proceedings, and the court determined that appellant's offer was not a bona fide one as required by the rule. See id. Therefore, on November 27, 1989, Judge King entered an order finally ratifying the sale of 1216 Independence Avenue, S.E. to the original offerors. *fn12 Appellant noted an appeal from that order on December 26, 1989.

II

The Nisi Hearing

The published offer for the Independence Avenue property was for a total purchase price of $212,000. The original offerors paid a cash deposit of $5,000, and their contract provided for an additional $5,600 to be paid at settlement to complete the down payment. Their contract was contingent upon the purchasers securing a commitment for financing the $201,400 balance within forty-five calendar days of ratification of the contract, and the purchasers agreed to make application and file documents for processing the loan within seven days. The offerors attached to their contract a letter from Mortgage Investment Corporation indicating that they had made an application for a loan for the transaction and that they appeared to qualify based on the information which they submitted. The letter also indicated that it was not a loan commitment and that approval of the loan was subject to verification, additional documentation, a credit report and appraisal.

At the hearing scheduled to consider the original offerors' contract and to entertain higher offers pursuant to the order nisi, appellant offered $233,211 for the property. Appellant initially offered to make a down payment of $63,200, of which a deposit of $5,000 would be a part, with the balance to be obtained through financing of $110,000 and a credit given for his 50% ownership interest in the property at $60,000. However, appellant stated repeatedly that if his request for a credit for his interest were cause for denial of his bid, he would raise his offer by a higher cash payment. *fn13 Appellant also provided a statement from a lending institution indicating that he had made an application for a loan and that he qualified for a loan commitment of $110,000 based on the financial information he had provided. Like the statement provided by the original offerors, appellant's potential lender's statement also reflected that it was not a loan commitment and that it was subject to a satisfactory appraisal and credit report. At the hearing, the court asked for bids in excess of $233,200, but there were no higher offers made. Counsel for appellee, James Lynn, informed the court that appellant would not be able to obtain financing for the purchase based on representations appellant made in a pleading filed earlier concerning his financial condition. The court attempted unsuccessfully to ascertain the amount appellant might derive from his 50% interest in the property. *fn14 Appellees' counsel represented that if appellant could prove that he could come up with the cash, he would have no objection to the sale to appellant.

Appellant first represented, and subsequently testified, that he had been self-employed since 1977 and that he was a member in good standing of the Maryland Bar, doing some consulting and conducting a small real estate business. Appellant offered to bear the cost of any delay if his offer to purchase were not completed, including posting a bond. Thereafter, appellant was called as a witness in his own behalf.

In response to questioning by the court, appellant testified that he had cash on deposit in two banks totaling between $113,000 and $123,000. He reported a capital gain of $70,000 for 1988. Appellant testified that he had real estate tax losses of roughly $10,000 for 1988. When the court inquired of appellant if he had received any W-2 or 1099 tax forms, he responded that he had not. For the three months preceding the hearing, appellant testified that his income, not considering the properties in dispute, was $4,000. Appellant also indicated that for tax purposes he expected to show tax losses as a result of this law suit, depreciation and returns on other real estate. Although appellant testified he had consulting work in the last sixty days, he said he had had no such work in the last thirty days. However, appellant offered to provide a creditor's financial statement under oath to demonstrate that he had sufficient cash backing for the contract. He testified that he owned other real estate and that the lender was willing to finance the purchase, apparently on that basis. He also testified that it would be standard practice for a financing company to provide the loan with such a large down payment on what appellant thought was significantly undervalued property. *fn15 The net earned income which appellant reported of $48,000 to $50,000 for 1988 was for a sale of his residence. He also said that he had several "small credit cards." Appellant was reluctant to disclose further information about his consulting clients and financial circumstances to appellees at the hearing.

The motions Judge found that since appellant had no W-2's or 1099's, he had "no formal employee or contract income, contract of employment income." The court observed that appellant's gross income for 1988 was referable to the proceeds of sale of real estate. The court considered appellant's $10,000 loss reported in 1988, his unquantified, anticipated real estate losses for the preceding three months, and appellant's report of only "slight consulting" business in the last sixty days. Based on these findings, the court concluded as follows:

It is the Court's general recollection that the service a $110,000 mortgage would require at least $1200 a month mortgage payment, and probably somewhat more in terms of the -- insurance requirements. And a -- this would require a regular gross income of something on the order of 3500 to $4,000 per month, and there just is simply no indication of anything like that in this case. So I have to conclude that the offer at a higher price is not a bona fide one and should not displace the offer which appears -- which is subject to the order nisi which appears on its face -- accepted.

III

First, appellant argues that the trial court erred in ordering a private sale of the real property involved in this action without first holding a hearing as required by Super. Ct. Civ. R. 308 (c)(1). The order for private sale of the property was a provision of the court's order granting partial summary judgment in favor of appellees. That order was entered without a hearing. *fn16 Appellant previously filed a timely appeal from the order granting partial summary judgment (appeal no. 88-1628). This court dismissed the appeal because of appellant's failure to comply with an order to designate the record. We conclude that dismissal of the appeal made final the order for partial summary judgment and barred further litigation challenging the validity of the order. See In re Parsons, 328 A.2d 383, 385 (D.C. 1974), cert. denied, 423 U.S. 803 (1975); see also United States v. Heasley, 283 F.2d 422, 427 (8th Cir. 1960).

Appellant makes the argument that dismissal of the earlier appeal has no issue preclusion effect for two reasons: (1) the prior order was not appealable and, (2) the prior appeal was dismissed on procedural grounds. If the order were not appealable as appellant contends, then this court lacked jurisdiction to consider the prior appeal, and the case would be in the same posture after dismissal as it would have ...


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