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Williams v. District of Columbia

June 22, 2006


Appeal from the Superior Court of the District of Columbia (CA5079-99) (Hon. A. Franklin Burgess, Jr., Trial Judge).

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

Argued December 7, 2005

Before SCHWELB and FARRELL, Associate Judges, and NEBEKER, Senior Judge.

Opinion for the court by Senior Judge NEBEKER.

Concurring opinion by Associate Judge SCHWELB at p. 10. Separate statement of Senior Judge NEBEKER at p. 15.


The Consumers United Insurance Company ("CUIC") appeals the Superior Court's decision to grant appellee District of Columbia's motion for summary judgment.

CUIC argues that the District of Columbia defrauded CUIC when the parties entered into an agreement in which the District's agents lacked the authority to bind the District. We detect no error, and therefore, affirm.


In 1985, CUIC entered into a "Tri-Party Agreement" ("the Agreement") with the District of Columbia's Department of Housing and Community Development ("DHCD") and the Trust for Public Land ("TPL") in order to carry out what the parties called the Parkside Project. The Agreement provided that TPL would purchase a parcel of land in Northeast Washington to prepare for sale to a developer. CUIC would loan TPL the funds to buy the property. Paragraph 3(e) of the Agreement contained a provision whereby, upon CUIC's demand, but no sooner than 18 months after the Agreement was signed, the District was required to purchase the CUIC Note and the CUIC Deed of Trust ("the Note and Deed"), and retake title to the property.*fn1 To this end, ¶ 5(c) of the Notwithstanding any other provision of this Paragraph 3, CUIC may (i) upon the expiration of eighteen (18) months from the effective date of this Agreement (and regardless of whether or not a final development plan has been approved as provided in subparagraph 2(e) of this Agreement) and (ii) at any time mutually agreed by CUIC and DHCD, require the purchase by DHCD of the CUIC Note and the CUIC Deed of Trust for an amount equal to the total amount then secured by the CUIC Deed of Trust less any amount advanced by CUIC pursuant to subparagraph 2(d) of this Agreement (for development planning purposes). DHCD agrees that it will purchase such CUIC Note and CUIC Deed of Trust for such amount within thirty (30) days of its receipt of written notice from CUIC that CUIC is requiring such purchase. Immediately upon DHCD's purchase of Agreement ("the express warranty") explicitly provided that DHCD had set aside funds for the project, that it had the authority to enter such an agreement, and that performance of the Agreement would not violate any laws.*fn2 DHCD also represented to CUIC separately that it had the authority to enter into the Agreement, that the Agreement was legal and enforceable, and that its performance would not violate any law. Madeleine Petty, who at the time was director of DHCD, made specific, written representations to CUIC that the District had committed sufficient funds to perform its obligations under the Agreement. In 1989, David Dennison (who had by then assumed directorship of DHCD) executed an addendum to the Agreement, ratifying the Agreement's original provisions.

In July 1996, CUIC expressed its desire to invoke ¶ 3(e). Only then did DHCD convey its belief that ¶ 3(e) was unenforceable, and that the funds had never, in fact, been set aside in the DHCD annual appropriations in 1985 or ensuing annual appropriations to purchase the Note and Deed.*fn3 However, CUIC did not attempt to formally exercise its rights under ¶ 3(e) until February 1999, at which time DHCD refused, claiming that the Agreement was unenforceable.

In July 1999, Donna Williams, as receiver for CUIC, filed a complaint in Superior Court against the District. The complaint contained fourteen counts, including fraud. The District moved to dismiss, on the grounds that CUIC did not comply with the provisions of D.C. Code § 12-309, requiring that tort claimants wishing to sue the District send a letter to the Mayor within six months of the injury, setting forth certain information. The trial court denied the motion.

Both parties then made motions for summary judgment. The trial court found that the provisions in question violated 31 U.S.C. ยง 1341 (2003) (often referred to as the Anti-Deficiency Act), and were therefore void ab initio. The court further rejected CUIC's claim of fraud, concluding in light of settled law that, under the circumstances, CUIC could not reasonably rely on promises by District officials. "Nothing," the court added, "prevented CUIC from demanding evidence of an appropriation covering the [District's contractual commitment] ...

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