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Coburn v. Heggestad

February 27, 2003

EDAMARIE COBURN, ET AL., APPELLANTS,
v.
ROBERT E. HEGGESTAD, APPELLEE.



Appeal from the Superior Court of the District of Columbia (CA6092-00) (Hon. Cheryl M. Long, Trial Judge)

Before Schwelb, Farrell, and Reid, Associate Judges

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

Argued January 21, 2003

Edamarie Coburn appeals from an order of the trial court, entered on January 18, 2002, granting Robert E. Heggestad specific performance of a contract to purchase a home in northwest Washington. Ms. Coburn, a tenant at the house, contends that the trial court's decision contravened her "right of first refusal," which, according to Ms. Coburn, gave her and not Mr. Heggestad the right to purchase the property. See generally, D.C. Code § 45-1637 (1996). *fn1 The facts and applicable law are discussed in detail in a comprehensive and well-reasoned opinion by the trial judge, Honorable Cheryl M. Long. We adopt Judge Long's opinion, which is attached hereto and made a part hereof, and we add only a few brief observations.

Ms. Coburn directs the court's attention to D.C. Code § 45-1637, *fn2 which creates a 15-day period in which a tenant may exercise the right of first refusal. The statute provides in pertinent part that "all rights specified in this subchapter shall apply except the minimum negotiations period specified in [§] 45-1638(2) ..." (emphasis added). One of those rights, Ms. Coburn contends, is a right to extend or revive the 15-day period. A thorough review of the statutory scheme, however, reveals no such right. To be sure, the statute provides for the extension of a 60-day negotiation period, D.C. Code § 45-1638 (2), *fn3 a 90-day negotiation period, D.C. Code § 45-1639 (2), *fn4 a 120-day negotiation period, D.C. Code § 45-1640 (2), *fn5 a 60-day settlement period, D.C. Code § 45-1638 (3), *fn6 a 90-day settlement period, D.C. Code § 45-1639 (3), *fn7 and a 120-day settlement period, D.C. Code § 45-1640 (3). *fn8 None of these provisions, however, creates either a specific right to extend or revive the 15-day period for the right of first refusal or a right to extend time periods generally.

Moreover, D.C. Code § 45-1633, *fn9 which describes the rights of third parties, contemplates that only negotiation periods and settlement periods, not the right-of-first-refusal period, can be extended.

The time periods for negotiation of a contract of sale and for settlement under this subchapter are minimum periods, and the owner may afford the tenants a reasonable extension of such period, without liability under a third party contract. (Emphasis added.)

The entire statutory scheme thus unambiguously differentiates between those time periods which are extendable, such as the negotiation and settlement periods, and those, such as the right-of-first-refusal period, which are not. Ms. Coburn's position cannot be reconciled with the text of the Act.

Ms. Coburn also contends that she was excused from exercising her right of first refusal within the 15-day period because, first, the contract between Mr. Heggestad and the seller did not include Mr. Heggestad's printed name (though it did include his legally operative signature), and second, the contract omitted a letter referenced by a hand-written footnote in the contract. *fn10 On their face, these omissions were altogether peripheral; the contract contained all material terms. If Ms. Coburn had been sincerely concerned that either of these omissions affected the material terms of the contract, she would have had ample opportunity during the 15-day period to make appropriate inquiries. She did not. We are satisfied, as was the trial judge, that under these circumstances Ms. Coburn cannot, after the expiration of the 15-day period, challenge the validity of the contract or its sufficiency to start the running of that period.

For the foregoing reasons, and for the reasons stated in the trial judge's opinion, the judgment is hereby

AFFIRMED.

ATTACHMENT

MEMORANDUM ORDER

The purpose of the instant order is to set forth findings of fact and conclusions of law, following a non-jury trial before this Court. The litigation herein concerns a complaint for specific performance of a contract to purchase realty. Counterclaims were interposed, as well. The property in question is a house located at 1513 30th Street, N.W. in the District of Columbia.

Two different persons claim that they are entitled to purchase the house. One of them is the plaintiff and the other person is defendant Ted Gossett, as assignee of defendant Edamarie Coburn. Coburn was a tenant in the house, at the time that the plaintiff executed a contract of sale with the owners. Coburn contends that she is somehow still entitled to purchase the house pursuant to a competing contract that was accepted by the sellers after the expiration of Coburn's statutory period for asserting her "right of first refusal." It is evident that Coburn's assignment to Gossett is conditioned on her success in the instant litigation. *fn11

The question of plaintiff's entitlement to specific performance turns on how the Court will interpret and apply certain provisions of the Rental Housing Conversion and Sale Act of 1980, in light of the operative facts. Most of the salient facts are not disputed.

Defendants have included Counterclaims along with their respective Answers. All five defendants seek a judgment declaring that the Coburn contract is enforceable. Based upon the following analysis of the facts and law, this Court is convinced that the plaintiff has established his right to specific performance and the entry of judgment in his favor. For this reason, the Counterclaims must fail.

The District of Columbia Code provides a well-established system through which a tenant may exercise rights to purchase the rental property when it is offered for sale. The statutory scheme is a precise timetable under which the tenant must exercise such rights. For purposes of placing the instant case in perspective, it is appropriate to recapitulate the relevant deadlines that a tenant must meet, as well as the corresponding requirements imposed on the landlord/seller.

The Court notes that subsequent to the filing of the instant lawsuit, the Council of the District of Columbia re-codified much of the Rental Housing Conversion and Sale Act of 1980. Until now, the Act was codified at D.C. Code §45-1601 et seq. For simplicity, this Court will cite in text the original Code sections and subsections from Title 45, now found in Title 42 of the 2001 Replacement Volume of the Code. The corresponding updated Code citations appear in footnotes.

Statutory Purchase Rights of a Tenant.

First, when a rental property is offered for sale, the landlord must communicate to the tenant an "offer of sale." During the 30-day period then commencing, if the tenant desires to purchase the property, the tenant must provide the owner with a "clear expression of interest" in writing. D.C. Code §45-1638. *fn12

Second, for 60 days following the expiration of the initial 30-day "offer of sale" response period, the tenant may negotiate with the landlord, and the landlord cannot sell the property to anyone else while this time period is running. D.C. Code §45-1638. *fn13 This period of negotiation may be extended. The law specifically provides that "the owner shall afford the tenant a reasonable period to negotiate a contract of sale, and shall not require less than 60 days, not including the 30 days provided by paragraph (1) of this section." D.C. Code §45-1638. *fn14

A landlord is specifically shielded from liability to the third party in granting any extensions of time to the tenant for negotiation purposes. The Code states, "The right of a third party to purchase an accommodation is conditional upon exercise of tenant rights under this subchapter. The time periods for negotiation of a contract of sale and for settlement under this subchapter are minimum periods, and the owners may afford the tenants a reasonable extension of such period, without liability under a third party contract." D.C. Code §45-1633. *fn15

Third, whether or not the tenant is already negotiating with the landlord, if the landlord obtains a contract of sale from anyone other than the tenant, the Code provides that the tenant must be allowed 15 days in which to exercise what is known as the "right of first refusal." D.C. Code §45-1637. *fn16 The landlord must provide the tenant with a written Notice of this third-party contract, to start the running of this 15-day period. The tenant is entitled to receive a copy of "a valid sale contract to purchase by a third party." Id. If the tenant does not respond with a matching contract within the 15-day period, the existing contract is automatically deemed to be the "primary" contract and the landlord is then free to sell the property to the third party. Lealand Tenants Ass'n, Inc. v. Johnson, 572 A.2d 431, 434 (D.C. 1990). The Act manifestly does not contain any provision for extensions of time of the 15-day period covering "right of first refusal."

All of the rights summarized above are enforceable by a tenant. The Code does not provide any other rights that are enforceable by the tenant. Moreover, the statute does not provide for extensions of any of the deadlines, either unilaterally by either party or by consent, except as to negotiation and settlement with the tenant.

Undisputed Material Facts.

It is useful to set forth the undisputed facts of record, as they fall within two key episodes: (1) the actions of the parties during the statutory period providing rights to the tenant; and (2) the actions of the parties ...


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