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Modiri v. 1342 Restaurantgroup

August 10, 2006


Appeal from the Superior Court of the District of Columbia (CA 5164-01) (Hon. Michael L. Rankin, Trial Judge).

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

Argued March 16, 2006

Before FARRELL, RUIZ, and FISHER, Associate Judges.

This case arises from breach of a lease of real property located at 1342 G Street, N.W. After conducting a non-jury trial, Judge Rankin entered judgment against appellant, a sublessee, for nearly half a million dollars in damages and fees. Appellant does not challenge the trial court's interpretation of the various leases or its calculation of damages. He contends, rather, that the court improperly applied the doctrine of collateral estoppel. Finding no legal error or abuse of discretion, we affirm.

I. Procedural Background

The property in question is owned by TomKat Limited Partnership, whose predecessor in interest leased it to Creative Hairdressers, Inc. Creative Hairdressers sublet the premises in their entirety to Benson J. Fischer, who assigned his interest to 1342 Restaurant Group, Inc., the appellee in this case. Appellee, in turn, sublet the first floor to a restaurant known as Katy's Kitchen and the second and third floors to Michael Modiri, the appellant.

Modiri's sublease specified that he was to use the premises for a therapeutic massage facility. According to appellant, he signed the lease at the request of his girlfriend, Ms. Lee, who did not have the necessary credit. Appellant claimed that he lived and worked in California, and that Ms. Lee ran the business, which the parties sometimes referred to as a tanning parlor -- Tan Q. Nevertheless, Ms. Lee's name does not appear on the lease, nor was there any evidence that appellant Modiri had sublet the premises to Ms. Lee.

On February 7, 2001, TomKat Limited sent Creative Hairdressers notice that it was in default of the master lease, alleging, in part, that Tan Q was being used for solicitation of prostitution. Soon thereafter, TomKat filed suit to terminate the lease of Creative Hairdressers. TomKat, Inc. v. Creative Hairdressers, Inc., No. LT-10689-01. On May 10, 2001, Judge Turner, sitting in the Landlord and Tenant Branch of the Superior Court, found that "the spa was a front for prostitution" and concluded that Creative Hairdressers was in default of the master lease. Shortly thereafter, Judge Turner granted possession of the entire premises to TomKat, evicting Creative Hairdressers, Benson Fischer, 1342 Restaurant Group, Katy's Kitchen, and appellant. We affirmed that judgment on appeal. Creative Hairdressers, Inc. v. TomKat, Inc., Nos. 01-CV-798, etc. (D.C. May 13, 2003).

Under its sublease with Creative Hairdressers, appellee 1342 Restaurant Group became legally responsible for the damages and fees owed by Creative Hairdressers to TomKat. Appellant Modiri's separate lease provided that he, in turn, was obligated to reimburse appellee for those damages and fees. Appellee thus brought the instant action against Modiri to recover those sums and also to assert its own claims for damages and attorneys' fees resulting from Modiri's breach of his sublease. After a bench trial, Judge Rankin entered judgment in favor of the appellee in the amount of $494,055.35,*fn1 plus the costs of maintaining the action. In so ruling, Judge Rankin held that Modiri was collaterally estopped from asserting that the property was not used for purposes of prostitution, as that issue had been decided when TomKat sued Creative Hairdressers in the Landlord and Tenant Branch of Superior Court. Relitigation of that question was barred by the doctrine of non-mutual offensive collateral estoppel.*fn2


A. Legal Principles and Standard of Review

The doctrine of collateral estoppel, also known as issue preclusion, renders conclusive in the same or a subsequent action determination of an issue of fact or law when (1) the issue is actually litigated and (2) determined by a valid, final judgment on the merits; (3) after a full and fair opportunity for litigation by the parties or their privies; (4) under circumstances where the determination was essential to the judgment, and not merely dictum.

Davis v. Davis, 663 A.2d 499, 501 (D.C. 1995) (quoting Washington Med. Ctr. v. Holle, 573 A.2d 1269, 1283 (D.C. 1990)). Whether the foundational requirements for applying this doctrine have been met presents a legal issue which we decide de novo. Davis, 663 A.2d at 501.

Collateral estoppel may be used offensively or defensively. "Offensive use of collateral estoppel occurs when a plaintiff seeks to foreclose a defendant from relitigating an issue the defendant has previously litigated unsuccessfully in another action against the same or a different party." United States v. Mendoza, 464 U.S. 154, 159 n.4 (1984). When one who was not a party to the original suit invokes collateral estoppel to prevent relitigation of an issue by a party to the original suit or his privy,*fn3 application of the doctrine is called "non-mutual." See Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313, 349-50 (1971) (overruling a prior decision requiring mutuality of parties in order to apply doctrines of res judicata and collateral estoppel). In some cases, such as this one, the doctrine is used both offensively and non-mutually -- "non-mutual offensive collateral estoppel." In this brand of estoppel, "a plaintiff seeks to estop a defendant from relitigating the issues which the defendant previously litigated and lost against another plaintiff." Ali Baba Co. v. Wilco, Inc., 482 A.2d 418, 421-22 (D.C. 1984). See also Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329-31 (1979) (approving the offensive use ...

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