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Executive Sandwich Shoppe, Inc. v. Carr Realty Corp.

April 13, 2000

EXECUTIVE SANDWICH SHOPPE, INC., APPELLANT,
V.
CARR REALTY CORPORATION, ET AL., APPELLEES.



Before Schwelb, Ruiz, and Washington, Associate Judges.

The opinion of the court was delivered by: Ruiz, Associate Judge

Appeal from the Superior Court of the District of Columbia

(Hon. Rufus G. King, III, Trial Judge)

(Argued January 20, 2000 Decided April 13, 2000)

This appeal raises the question whether standing under the District of Columbia Human Rights Act (DCHRA), see D.C. Code §§ 1-2501 to 1-2557 (1999), is limited to the intended target of discrimination. We hold that it is not, and that a party injured as a result of such discrimination has standing to sue under the DCHRA. The case arose out of a dispute between a landlord and tenant in connection with two proposed assignments of a retail lease for premises located at 1747 Pennsylvania Avenue, N.W., in Washington, D.C. Appellant, Executive Sandwich Shoppe, Inc. (ESS), *fn1 filed suit in the District of Columbia Superior Court on February 12, 1996, seeking to recover (a) in Counts I and II, for breach of its lease agreement with appellees; *fn2 (b) in Counts III and IV, under the DCHRA for harm resulting from racial discrimination against persons of Korean descent who were proposed as assignees of the lease; and (c) in Count V, for civil conspiracy to injure ESS in its business. *fn3 On March 21, 1996, appellees simultaneously filed a motion to dismiss, which argued that ESS lacked standing to pursue its DCHRA claims, and their answer to the complaint, which asserted, inter alia, a statute of limitations defense. Appellees also counterclaimed to recover unpaid rent and related charges accruing after ESS vacated the leased premises. The trial court dismissed Counts III and IV (the discrimination-based claims) pursuant to Superior Court Rule 12 (b)(6) for failure to state a claim, on the ground that ESS lacked third-party standing under the DCHRA, and Count V (the civil conspiracy claim) for failure to allege a tort independent of the alleged violation of the DCHRA to support a civil conspiracy claim. Counts I and II, for breach of the lease regarding proposed assignments to Jung Soon Chung and Tu Pyo Hong, respectively, proceeded to trial before the trial court pursuant to a jury waiver in the lease. The trial court ruled against ESS on these counts and awarded judgment for appellees on their counterclaim for unpaid rent and related charges. ESS timely appealed. We disagree with the trial court's dismissal of ESS's DCHRA claims for lack of standing and remand for consideration of those claims, as well as ESS's civil conspiracy claim consistent with this opinion. We affirm the remaining issues on appeal.

I. Facts

ESS and the landlord entered a ten-year lease executed March 16, 1987, under which ESS occupied 1747 Pennsylvania Avenue, N.W., in the District of Columbia, and operated a sandwich shop from June 1987, until March 1996. The shop offered table service in one part and carry-out service in another part of the shop. ESS operated successfully and acceptably to the landlord until 1992, at which time the downtown retail market suffered a slowdown and the profitability of the restaurant suffered. ESS requested and was granted an addendum to the lease which reduced the rent slightly. In late 1992, ESS was put on the market through Thomas Papadopoulos, a business broker.

The lease contained the following provision regarding assignment:

12. Assignment and Subletting

A. Lessee may not sublet the Demised Premises. Lessee may not assign, sell or otherwise transfer the Lease without the prior written consent of Lessor, which consent may not be unreasonably withheld, delayed or conditioned, provided the assignee, purchaser or transferor has as much or more experience in the restaurant business as Lessee and has a financial statement that is equal to or better than the financial statement of Lessee. Any transfer of this Lease from Lessee by merger, consolidation, liquidation or otherwise by operation of law, including, but not limited to, an assignment for the benefit of creditors, shall be included in the term "assignment" for purposes of this lease.

The lease also contained the following relevant provisions:

1. Use

Lessee will use and occupy the demised Premises solely for (1) the purpose of operating a sit-down sandwich shop with carry-out service, for the retail sale of food and beverages, and shall serve on- premises food with china and flatware.

49. Approval of Lessee's Decor

It is the intent of the Lessor to maintain throughout the term of this lease, a high quality of decor throughout the Building.

Lessee shall not change the design, including decorations, graphics or furnishings of the Demised Premises without having first obtained the written consent of Lessor as required by the provisions hereof.

A. Proposed Assignment to Jung Soon Chung

On February 2, 1993, Jung Soon Chung signed a contract to purchase ESS at the price of $450,000 with the seller's guarantee of business in the amount of $22,000 in a two-week period and settlement to occur within thirty days. A letter from Mrs. Chung's counsel, Dimitri Mallios, dated February 4, 1993, requested assignment of the lease and an extension of the lease term to a full ten years. Included with the letter was an unaudited financial report and personal financial statement for Mrs. Chung. As a condition of acceptance, the landlord insisted on cancellation of the addendum to the lease which had reduced the rent payable by ESS during the remaining course of the lease term. On February 16, Mr. Mallios wrote to inform William Joseph H. Smith, attorney for ESS, that the request for assignment of the lease to Mrs. Chung had been denied. Thereupon, Mr. Smith, in a February 18 letter, acting on behalf of ESS, made an unequivocal demand for completion of the assignment at the rent set in the rent-reduction addendum and expressed the view that withholding consent based on that condition constituted an unreasonable withholding of consent under the terms of the lease.

On March 2, 1993, appellee Asadoorian, the retail lease agent for the landlord, met with ESS. This meeting resulted in Asadoorian's March 3 memorandum to appellee Goodwin in which he acknowledged that the landlord's position that the addendum should be nullified was untenable under the lease, and added: "Our basis for non-approval should be on the merits of the assignee and their experience in running the type of operation that [ESS] is." In a March 4 letter to Mr. Mallios, Asadoorian requested that Mrs. Chung submit supplemental financial information. On March 16, Mrs. Chung's counsel wrote to counsel for ESS to withdraw Mrs. Chung's offer and in a March 23 letter to Asadoorian expressed his impression that the "transaction was dead," but nevertheless enclosed the financial information requested by Asadoorian in his March 4 letter. On March 31, appellee Goodwin wrote to Mr. Smith expressing concerns about the financial materials furnished by the Chungs. *fn4 Goodwin identified a discrepancy between the small amount of interest income reported on their 1992 federal ...


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