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01/15/93 NEW PLACES v. COMMUNICATIONS WORKERS

January 15, 1993

NEW PLACES, INC., APPELLANT
v.
COMMUNICATIONS WORKERS OF AMERICA, INC., APPELLEE



Appeal from the Superior Court of the District of Columbia; (Hon. Herbert B. Dixon, Jr., Trial Judge)

Before Rogers, Chief Judge, and Farrell and King, Associate Judges.

The opinion of the court was delivered by: Farrell

FARRELL, Associate Judge: This is an appeal from the grant of summary judgment in favor of appellee-landlord in its suit for possession of commercial real estate and a money judgment for rent due. We affirm in part and reverse in part, concluding that there are disputed issues of material fact relating to whether appellant, the tenant, was charged for a pro rata share of real estate taxes and operating expenses attributable to property not covered by the lease.

I.

The parties entered into an agreement in January 1985 whereby appellant, New Places, Inc., rented office space from appellee, Communication Workers of America (CWA). As pertinent here, the agreement provided (in section 1) that CWA was leasing to New Places "the space described as Suite #407; 1,588 square feet (hereinafter referred to as the 'demised premises' or 'premises'), as shown on the attached drawing, in the building at 1925 K Street, N.W.," for a period of ten years "at the total term basic rental" of $341,420.00. *fn1 An addendum made the rent "payable in advance . . . in equal monthly installments" of $2,382.00 during the first five years of the lease, and $3,308.33 during the second five-year term. Section 2 obligated New Places to pay

each month, as additional rental to the basic monthly rental[,] . . . one-twelfth (1/12th) of lessee's proportionate share of any increase in lessor's cost of operating and maintaining said building for the fiscal year of lessor ending each preceding [December 31] over the cost of operating and maintaining said building for the base year . . . . lessee's proportionate share, for purposes of this Section 2, is hereby stipulated to be One and 24/hundredths percent (1.24%).

Similarly, New Places agreed to pay CWA, "as further additional rent, lessee's aforesaid proportionate share of any increase in annual real estate taxes and assessments . . . levied or payable during the term hereof on or for lessor's land and/or improvements thereon, that are over and above said Impositions for the 'Base Tax Year' . . . ."

In May 1991, CWA filed an amended complaint for possession of the premises alleging that New Places had failed to pay rent amounting to $28,331.64 between December 1 and June 1, 1989. In its answer and counterclaim, New Places denied the debt and alleged that CWA had wrongfully charged and received monies from New Places "by way of fraudulent transactions with misrepresentations to the Defendant." Specifically, New Places alleged that, although the lease agreement provided for the rental of 1,588 square feet, New Places had since discovered (through its own measurements and those of an architect) that the actual space was 1,344 square feet, a difference of 244 square feet of which CWA knew or should have known in leasing the premises. New Places also alleged that, contrary to the lease requirement that it pay real estate taxes proportionate to its rental space at 1925 K Street, CWA had since petitioned the District of Columbia to combine the K Street lot with "another building" located at 1015 20th Street for tax purposes and thereafter had begun charging New Places for real estate taxes attributable to both properties. The counterclaim appeared to allege similar over-charges for operating expenses covering both properties.

The parties conducted discovery, including the deposition of Henry Chapman, Vice-President of the Commercial Brokerage Division of Shannon & Luchs, the realtor which had drafted the lease agreement in question. Although Chapman was not "entirely sure" he had been involved in drafting this lease, the parties pressed him as to the meaning of the 1,588 square feet set forth in the lease, specifically whether the rent was computed on a "dollars . . . per square foot basis." He acknowledged that it was. He explained further, however, that square feet normally meant "rentable" square feet, which includes "an add-on factor for core [or 'common area space'] as defined by the Association of Realtors," as distinct from "usable square feet includes space in between walls" of the offices leased. Chapman had been with Shannon & Luchs for seven years, and never in that time had he "done a lease that has a square footage number that's a usable number. It's always the rentable number that's put in leases . . . ." Peter Larson who (with John Quinn) had represented CWA in negotiating this lease, had confirmed to Chapman that space in the 1925 K Street building "always been leased on a rentable basis." Although Chapman could not tell from the lease itself "how much of the space . . . included in this 1588 [square feet] would be space outside of Suite 407," he explained that normally the total square footage would be a combination of the "core factor" and the usable square feet.

Following discovery, New Places moved for partial summary judgment on the basis of affidavits of individuals (Quinn and Ronald Krouse) who had negotiated the lease in question for CWA; of Michael Van Zant, president of New Places; and of an architect who had measured the interior space of Suite 407 in 1991 and found the "usable area" to consist of 1,344 square feet. Quinn and Krouse acknowledged in their affidavits that the lease had been negotiated on a "dollar per square foot basis," specifically 518 per square foot for the first five years and $25 per square foot for the second five years. Neither affiant, however, stated anything with respect to whether the 1,588 square feet included a "core" or "common area" factor in addition to interior space of the suite. Only Van Zant addressed this issue in his affidavit, stating only that "there was no Discussion during any of the negotiations or at the time of signing the lease that any of the square footage space was for any area outside of suite 407."

CWA in turn moved for summary judgment arguing, with respect to the 1,586 square feet, that New Places had failed to prove fraud or misrepresentation as a matter of law in view of Chapman's testimony explaining that the 1,588 square feet included a core or common area factor in addition to the interior square footage. With respect to the claim of over-charges for taxes and operating costs, CWA argued that 1925 K Street and 1015 20th Street comprised a single building, the Mercury Building, a fact verifiable by exterior observation, *fn2 confirmed by a written proposal submitted by New Places' agent prior to execution of the lease describing the premises to be leased as "Suite 407, the Mercury Building," and further shown by the 1.24% additional rent New Places was paying as a percentage of the total square footage of the Mercury Building.

The trial Judge denied New Places' motion for summary judgment and granted CWA's motion, entering judgment for possession in CWA's favor and for a total of $49,955.22 in rent due and owing through November 30, 1991.

II.

The parties agree on appeal that if New Places were able to prove to a jury that it paid either basic rent *fn3 or additional rent (a pro rata share of real estate taxes or carrying expenses) on property not covered by the terms of the lease, then it would be entitled to an off-set in that amount against the rent due and unpaid. New Places does not otherwise dispute the judgment awarding CWA possession of the premises. The issue therefore is whether summary judgment was properly awarded CWA with respect to both claims of over-payment in New Places' ...


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