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Twin Towers Plaza Tenants Association, Inc. v. Capitol Park Associates

March 23, 2006

TWIN TOWERS PLAZA TENANTS ASSOCIATION, INC., APPELLANT/CROSS-APPELLEE,
v.
CAPITOL PARK ASSOCIATES, L.P., ET AL., APPELLEES/CROSS-APPELLANTS.



Appeals from the Superior Court of the District of Columbia (CA-3376-03) (Hon. Melvin R. Wright, Trial Judge).

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

Argued November 16, 2005

Before WASHINGTON, Chief Judge, and FARRELL and FISHER, Associate Judges.

These cross-appeals require us to apply the D.C. Rental Housing Conversion and Sale Act, D.C. Code § 42-3404.02 et seq., colloquially known as the Sale Act. Under that legislation, before the owner may sell a housing accommodation, it must give the tenant (or tenants) notice and an opportunity to purchase the accommodation at a price and on terms which represent a bona fide offer of sale. D.C. Code § 42-3404.02. However, not every significant transfer of interests meets the statutory definition of a "sale." Applying our decision in West End Tenants Ass'n v. George Washington Univ., 640 A.2d 718 (D.C. 1994), we hold that the transaction at issue here did not constitute a sale. We also hold that the tenants in this case do not have an independent cause of action under the Consumer Protection Procedures Act, D.C. Code § 28-3901 et seq. ("the CPPA").*fn1

I. The Factual and Procedural Background

This dispute relates to two apartment buildings located within the District of Columbia: the Capitol Park Twin Towers, a 320-unit building located at 101/103 G Street, S.W., and the Capitol Park Plaza, a 328-unit building located at 201 I Street, S.W. Appellant Twin Towers Plaza Tenants Association, Inc. ("Tenants Association") sued appellees, Capitol Park Associates Limited Partnership and Capitol Park Apartments Limited Partnership (collectively "Owners"), alleging violations of both the Sale Act and the CPPA. This litigation was precipitated by an October 2002 transaction by which the Owners entered into a tenancy in common arrangement. In this "95/5 transaction," Capitol Park Associates (the transferring owner) deeded a 95% interest in the two buildings to Capitol Park Apartments (the receiving owner). The Owners simultaneously entered into a tenancy in common agreement which allocated nearly complete management control over the two buildings to the 95% owner.

In March 2003, tenants at both buildings learned about the October 2002 transaction and some of them formed the Tenants Association for the purpose of attempting to block or unwind the 95/5 transaction. The Tenants Association filed a civil suit in the Superior Court in April 2003. Its complaint requested orders (1) rescinding the 95/5 transaction; (2) declaring that the transaction was null and void; and (3) requiring that the buildings be offered for sale to the Tenants Association and that the Owners negotiate in good faith. As this matter proceeded before the trial court, the Owners admitted, as they did in argument before us, that the 95/5 transaction was crafted to avoid the Sale Act's requirement that the individual tenants of a housing accommodation be given notice and an opportunity to purchase the buildings. See D.C. Code §§ 42-3404.02 and 42-3404.03. The Owners argued that this transaction was not covered by the Sale Act because it was not a "sale" as we previously have defined that term.

In West End Tenants Ass'n we interpreted the terms "sell" and "sale" as they are used in the Sale Act:

There appears to be an almost universal consensus that, in the context of real property transactions, the word "sale" signifies an absolute transfer of property. BLACKS LAW DICTIONARY 1337 (6th ed. 1990) defines sale, inter alia, as A contract whereby property is transferred from one person to another for a consideration of value, implying the passing of the general and absolute title, as distinguished from a special interest falling short of complete ownership.

640 A.2d at 727-28 (some emphasis added). Relying on this definition, the Owners argued that a 95% interest in the buildings fell "short of complete ownership" and that the transfer of that interest in connection with the tenancy in common agreement was not an "absolute transfer" of title. The transaction therefore was not a "sale" which triggered any obligation on their part to notify the tenants or to make them an offer. The Owners eventually moved for summary judgment on this ground. The trial court denied that motion, but ruled separately that the claims of the Tenants Association under the CPPA were precluded because the Sale Act provided exclusive remedies for violations of its disclosure provision. The trial court later granted the Owners' motion to dismiss the Tenants Association's suit for lack of standing.

The Tenants Association filed a notice of appeal from the trial court's dismissal of its case for lack of standing and from the trial court's grant of summary judgment to the Owners on the CPPA claim. The Owners then cross-appealed the trial court's ruling that the 95/5 transaction was a "sale" within the meaning of the Sale Act.

II. The Issue of Standing

The trial court held that appellant did not qualify as a "tenant organization" because it had failed to demonstrate that it represented the majority of individual tenants in the two buildings and had not registered with the Mayor. See D.C. Code § 42-3401.03 (18)(defining "tenant organization") and § 42-3404.11 (establishing registration requirement). We cannot find this analysis of the facts to be clearly erroneous.*fn2

The court also declined to allow appellant to amend its complaint to substitute individual tenants as plaintiffs, concluding that our decision in West End Tenants Ass'n ...


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