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Casco Marina Development, L.L.C. v. District of Columbia Redevelopment Land Agency

October 23, 2003

CASCO MARINA DEVELOPMENT, L.L.C., APPELLANT,
v.
DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY, ET AL., APPELLEES.



Appeal from the Superior Court of the District of Columbia (CA-2128-01) (Hon. Gregory E. Mize, Trial Judge)

Before Ruiz and Glickman, Associate Judges, and Belson, Senior Judge.

The opinion of the court was delivered by: Belson, Senior Judge

Argued March 17, 2003

In this appeal, CASCO Marina Development, L.L.C. ("CASCO"), contends that the trial court erred in granting the motion of appellees, the District of Columbia Redevelopment Land Agency ( the "RLA") and RLA Board member Mr. Richard Levy, to dismiss CASCO's complaint on the ground that it failed to state a claim upon which relief may be granted, pursuant to Super. Ct. Civ. R. 12 (b)(6). We agree and reverse.

I.

This appeal arises out of CASCO's attempts to enter into an assignment agreement with MIF Realty Corp. ("MIF") whereby CASCO would become the tenant of a real estate parcel on the Washington Channel, which was at relevant times owned and leased by the RLA. The RLA was an agency of the District of Columbia, charged by statute with eliminating blight by administering the procurement, development, redevelopment, and maintenance of real property in the District in a manner that promotes public health, safety, morals, and welfare. D.C. Code § 5-801 et seq. (1981). *fn1 Pursuant to that authority, the RLA owned and leased out to MIF the subject parcel, Site E, Washington Channel Waterfront, known as the Gangplank Marina (" marina"). The instant action grew out of a June 1999 assignment agreement, whereby MIF, which is not a party to the underlying suit or this appeal, sought to assign its tenancy of the marina to CASCO. *fn2

Section 806 of MIF's lease agreement provided in relevant part that MIF "may, subject to the provisions of Section 1008 hereof, sell, assign or transfer any of its rights, title or interests in and to the [marina] . . . without the prior written consent of the [RLA] thereto . . . ." That section went on to provide, inter alia, that any assignee "shall expressly assume, by written instrument recorded in the Office of the Recorder of Deeds of the District, all of the covenants, agreements and obligations of [MIF] under this agreement . . . ." MIF was required to "furnish or cause to be furnished to the [RLA] for its approval a copy of the proposed aforesaid written instrument, and the RLA shall approve the same if it conforms to the provisions of the preceding sentence of this Section" (emphasis added). That provision was subject to § 807 of the lease, which read as follows: the RLA "(if [MIF] is not then in default in respect of any of its other obligations under this Agreement) shall promptly so certify . . . ." It did not address what is to be d one in the event of such default.

Section 1008 of the lease provided that, "[d]uring the period of the continuance of a default or failure by [MIF] to perform or observe any covenant pursuant to Sections . . . 601 or 606 hereof," even if the RLA had not given MIF the required notice of such default or failure, "[MIF] shall not be entitled to exercise the rights and privileges granted to it by Sections 801, 802, 803, and 1101 hereof." *fn3 In short, these three provisions taken together allowed MIF to transfer freely its interest in the marina, subject to the condition that MIF not be in default at the time of transfer. If MIF was not in default, then the RLA was bound to approve any agreement that conformed to the requirements of the lease and to produce certification of non-default.

Turning to the MIF-CASCO transaction, MIF's attempts to assign the lease to CASCO proceeded as follows. MIF entered into a contract to assign its interest in the marina to CASCO in June 1999. By its terms, the contract was terminable by either party if not closed upon by November 22 of the same year, and would terminate automatically if the RLA should conclusively deny or refuse its consent. On August 17, MIF submitted the required written agreement and requested approval of the assignment contract and of CASCO's financing and a non-default certificate from the RLA. In response, the RLA indicated that it desired more information regarding CASCO's plans, and it scheduled hearings for October 7 and 21, at which it discussed those plans and the contract.

According to CASCO's complaint, the RLA gave no indication at those meetings or in related correspondence that it considered MIF to be in default. In a letter dated November 5, however, an Assistant Corporation Counsel notified MIF that he had concluded that MIF was in default for failure to repair promptly the damage caused by a 1996 fire, and to dispose properly of insurance proceeds. A meeting of the RLA Board was then held on November 18, 1999, at which the RLA announced that MIF was in default and that it would issue a letter to that effect, but that it was willing to overlook the defaults if it could renegotiate the terms of the lease. At that meeting, Mr. Levy expressed the following view:

[A]ll we are attempting to do is to see that the City gets its fair share. In that regard, our counsel does firmly believe that this lease is in default. This gives us, we believe, the absolute[ly] appropriate opportunity to see that we make up for oversights of this Agency in the past and only to see that the City gets its fair share as articulated in the lease . . . . I am, in fact moving that we approve an assignment from MIF to CASCO with . . . the provision . . . that the lease [be] renegotiated within appropriate bounds . . . that rectify the oversight of the RLA in its right to have an appraisal and rent reflect the current value of the land and . . . .

MIF is in default on the lease and we are looking, quite honestly, at the leverage of getting what the City deserves out of this.

The RLA issued a notice of default on November 22, 1999. MIF contested the notice, arguing that it was not in default. Subsequently, MIF terminated the agreement with CASCO pursuant to its terms.

CASCO then filed the instant suit for tortious interference with contract, tortious interference with business advantage, and equitable estoppel, naming as defendants both the RLA and Mr. Levy. *fn4 The complaint contained five counts: one count of each tort against each defendant and the count for injunctive relief against only the RLA. It alleged that MIF was not in default, and that appellees asserted default solely in order to realize financial gain rather than for reasons related to performance under the contract. Appellees filed a motion to dismiss pursuant to Super. Ct. Civ. R. 12 (b)(6) or, in the alternative, for summary judgment pursuant to Super. Ct. C iv. R. 56 (c). Appellees argued to the trial court that they were entitled to judgment on the following bases: (1) appellees enjoyed immunity; (2) CASCO had failed to pursue in the Superior Court an appeal from the administrative ruling of the RLA; and (3) CASCO had failed to allege sufficient facts to warrant relief. *fn5 The trial court, relying on Goddard v. District of Columbia Redevelopment Land Agency, 109 U.S. App. D.C. 304, 287 F.2d 343 (1961) (delays in condemnation ...


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