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Fort Lincoln Civic Association, Inc. v. Fort Lincoln New Town Corp.

March 20, 2008


Appeal from the Superior Court of the District of Columbia (CAB7132-02) (Hon. Herbert B. Dixon, Jr., Trial Judge).

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

Argued January 24, 2007

Before REID and THOMPSON, Associate Judges, and STEADMAN, Senior Judge.

Appellants, Fort Lincoln Civic Association, Inc. ("the Civic Association") and Nora Faison, Lillie Mae Griffin, Carol Hood-Mainor, and Harry D. Morgan (collectively "appellants"), appeal the trial court's dismissal of their breach of contract and non-breach of contract claims against appellees, Fort Lincoln New Town Corporation, Inc. ("New Town"), Fort Lincoln Realty Corp., Inc. ("the Realty Corp."), Michele V. Hagans, and Barbara A. Jones (collectively "appellees"). The trial court dismissed appellants' breach of contract claims against appellees after concluding that appellants were incidental beneficiaries of a contract entered into by a District of Columbia government agency, then known as the Redevelopment Land Agency ("the RLA") and New Town. Subsequently, the trial court dismissed appellants' remaining claims after granting appellees' motion for summary judgment. The trial court concluded that the appellants' non-contract claims were not separate and distinct claims from their breach of contract claim, and that appellants did not provide sufficient evidence to establish that any specific duties were owed to them by appellees.

We hold that the trial court properly dismissed the appellants' breach of contract claims because the Civic Association and its members are only incidental beneficiaries of the Land Disposition Agreement ("LDA"). We also conclude that the trial court properly granted summary judgment in favor of appellees on appellants' tort and equitable claims. Thus, we affirm the judgment of the trial court with respect to all of these claims. However, we conclude that summary judgment in favor of appellees on appellants' statutory claims was improper, and hence, we remand the statutory claims to the trial court for further proceedings.


The record reveals that on June 13, 1975, Fort Lincoln New Town Corporation ("New Town"), the "Redeveloper," and an agency of the District of Columbia, then known as the Redevelopment Land Agency ("the RLA"),*fn1 entered into a contract, the Land Disposition Agreement ("the LDA" or "the Agreement"). Under the LDA, the RLA "agree[d] to sell and/or to lease as lessor, and the Redeveloper [] agree[d] to purchase and or to lease as lessee," certain "Private Development Property,"*fn2 located in the "Fort Lincoln Urban Renewal Area," in the Northeast quadrant of the District of Columbia. The Urban Renewal Plan for the Fort Lincoln Urban Renewal Area ("the Urban Renewal Plan") called for "the creation of an attractive and racially, socially, economically, and functionally inclusive community of approximately 16,000 persons."*fn3 The stated "general development objectives" focused on a "multifunctional Town Center"; community facilities; secondary and higher education institutions; public parks and recreational facilities; and housing, including "construction of approximately 4,600 Dwelling Units with a wide variety of housing types, densities and bedroom sizes for Low Income, Moderate Income, and Middle Income families and individuals, including the elderly."*fn4 The LDA, § 1 (j), defined "Dwelling Unit" as "one or more habitable rooms forming a single household unit with kitchen and bathroom facilities exclusively for the use of, and under the control of, the occupants thereof."

Article III, § 3.1 of the LDA contained restrictions on the use of the Private Development Property. Section 3.2 set forth various covenants binding on successors in interest to New Town, and placed enforcement rights and remedies in the RLA, the District of Columbia, "any successor in interest to the Private Development Property," and the United States. Section 3.3 of Article III specified that the RLA and the United States were deemed the beneficiaries of the agreements and covenants provided for in § 3.1, "both for and in their own right and also for the purpose of protecting the interests of the community and the other parties, public or private, in whose favor or for whose benefit such agreements and covenants have been provided." Section 3.3 further lodged the right to bring judicial enforcement action in the RLA and the United States.*fn5 Section 3.4 stated that "[e]xcept as otherwise expressly provided in this Agreement (including but not limited to, provisions in favor of the United States in Section 3.3), no person other than a party to the Agreement or a successor or assign, shall have any right to enforce the terms of the Agreement against a party, its successors or assigns."

Article VII concerned "Equal Employment Opportunit[ies], Social and Economic Programs," and contained prohibitions on discrimination (§ 7.2), as well as a requirement that the Redeveloper "provide opportunities for minority firms as contractors, subcontractors and suppliers" (§§ 7.4 and 7.5). Section 7.5 (b) called for the creation of a real estate company, 25% of whose ownership would rest in a non-profit corporation";*fn6 and § 7.5 (c) imposed obligations on the Redeveloper relating to investment in the Town Center.*fn7 Section 7.8 pertained to "Community Organization," and subsection (a) required the Redeveloper within three months of the execution of the LDA to create a non-profit corporation "which will attempt to secure funds from foundations and from governmental entities and to perform selected community services for the Project during the period of the Plan. . . ."*fn8 Section 7.7 obligated the Redeveloper to "provide [an] opportunity for investment by members of the District of Columbia community, particularly minority group members, in the Redeveloper," in part, by "mak[ing] available for purchase by members of the local community such number of shares . . . as shall constitute 15% of the authorized common stock of the Redeveloper immediately after the issuance thereof . . . ."

At the time the LDA was executed, New Town was owned and operated by Theodore R. Hagans, an African American businessman. New Town was incorporated by Mr. Hagans on March 17, 1975, to develop the Fort Lincoln Urban Renewal Area. The Realty Corp. was incorporated by Mr. Hagans on August 18, 1975, to manage the sale, rental, management, and maintenance of improvements owned and held for sale or lease by New Town. Mr. Hagans died in a plane crash, in 1984. Appellee, Michele Hagans, is the daughter of Mr. Hagans and has been the President and Treasurer of New Town and the Realty Corp. since April 1984. Appellee, Barbara Jones, inherited 33.33% of the stock in New Town and the same amount of the stock in the Realty Corp. Prior to the end of the probate of Mr. Hagans' estate, Ms. Jones sold her prospective right to the stock of the Realty Corp. to Ms. Hagans. Hence, majority control of New Town and the Realty Corporation always has been in the hands of minority investors.

On August 8, 2002, the Civic Association and Ms. Faison,*fn9 filed a complaint against New Town, the Realty Corp., Ms. Hagans, and Ms. Jones for breach of contract, breach of trust, conversion/misappropriation, breach of fiduciary duty/fraud-non-disclosure, and violations of the District of Columbia Consumer Protection Procedures Act ("the CPPA") and the District of Columbia Condominium Act ("the Condominium Act"). In the alternative, the Civic Association pleaded negligence and unjust enrichment, and asked the court to impose a constructive trust. On March 13, 2003, Lillie Mae Griffin, Carol HoodMainor, and Harry D. Morgan*fn10 filed a class action complaint against appellees alleging the same conduct and identical claims. On August 28, 2003, the trial court consolidated the cases.

In an order dated February 17, 2004, the Honorable Michael L. Rankin granted, in part, defendants' motion to dismiss the consolidated complaint, pursuant to Super. Ct. Civ. Rule 12 (b)(6). After hearing oral arguments on the issue and reviewing supplemental briefs filed by the parties regarding the test for determining whether a third-party claimant may enforce a government contract, Judge Rankin concluded that "plaintiffs are incidental beneficiaries of the LDA," and thus, are precluded from enforcing the government contract. In addition, Judge Rankin determined that plaintiffs "are specifically precluded by operation of section 3.4 of the LDA from bringing a contract action to enforce the terms of the LDA." The judge declined, however, to dismiss appellees' non-contract claims, stating that "where a plaintiff alleges a distinct claim, she may proceed on that claim even though another claim arising from the conduct is barred."

Subsequently, following discovery and the filing of dispositive motions, the Honorable Herbert B. Dixon, Jr., in essence, reaffirmed Judge Rankin's dismissal of the plaintiffs' breach of contract claim. In addition, he dismissed the plaintiffs' remaining claims on July 29, 2005, granting the motion of New Town, the Realty Corp., and Ms. Hagans for judgment on the pleadings (treated as a motion for summary judgment), and the motion of Ms. Jones for summary judgment. The judge concluded that "plaintiffs' claims are mere re-characterizations of the previously dismissed breach of contract claim, and that plaintiffs lack standing to pursue the remaining common law and statutory claims alleged in the complaint." Judge Dixon explained that "Judge Rankin did not rule on the issue of whether plaintiffs' non-contract claims were simply a re-characterization of plaintiffs' breach of contract allegations." The judge found that "plaintiffs have failed to demonstrate that their multiple claims are independent of the dismissed breach of contract claim." In addition, Judge Dixon determined that plaintiffs did not offer sufficient evidence to support their statutory claims and failed to establish that defendants owed them any duties outside of the contract.


The Contract Claims

Appellants primarily contend, in essence, that the trial court improperly dismissed their breach of contract claim since they are intended third party beneficiaries who have the right to enforce the terms of the LDA. They claim intended beneficiary status because they are "residents of Fort Lincoln" (and minority residents), and because "the express provisions in Article VII [of the LDA] evince a clear intent by the parties to benefit plaintiffs and other residents of Fort Lincoln." They maintain that appellees failed to implement several provisions of the LDA designed to benefit them. They assert, for example, that New Town (a) "failed to offer members of the local minority community the opportunity to purchase 15 percent of the common stock of New Town [], in violation of Section 7.7 (a) [of the LDA]"; (b) "failed to create a Non-Profit Corporation which would perform community services for the Fort Lincoln area during the redevelopment project, in violation of Section 7.8 (a) [of the LDA]"; and (c) "failed to 'provide an opportunity to minority group members to acquire at least 25% of the ownership interest in the free standing retail and personal service shopping space in the Town Center,' in violation of Section 7.5 (c) [of the LDA]." Furthermore, they argue that § 3.4 of the LDA is limited to the provisions of Article III, and is not applicable to Article VII. Appellants assert that "[t]he circumstances surrounding the formation of the LDA further demonstrate that [they] are intended beneficiaries of the contract." They point to a statement by Mr. Hagans, "the soon-to-be President of New Town[]," indicating that "[a]ll members of the Board of [New Town] have a copy of the [LDA]," and that they were "familiar with the provisions of the document, particularly Article VII, which relates to the responsibility of the developer to provide opportunities for the minority community to benefit from the development of Fort Lincoln." They also cite a statement by the then executive director of the RLA concerning the creation of "a non-profit Community Corporation" which would be "controlled . . . by Fort Lincoln residents," within two years of the completion of the Project."

Appellees argue that "[t]he express language" of § 3.4 of the LDA does not grant to a third party "the right to bring suit to enforce any of the terms of the LDA[,]" a "government contract." They insist that "[a]ny rights or benefits conferred upon [appellants] in the LDA do not include the right to sue to enforce any of the terms of the LDA." Moreover, they maintain, "the LDA lacks any legislative history, or any appellate construction that can be read as conferring upon [appellants] any right to enforce the terms of the LDA." Contrary to appellants' argument, appellees contend that § 3.4 is not limited to the Article III provisions of the LDA because "Section 3.4 expressly applies to the Agreement and not to some subsections of the Agreement." Furthermore, appellees assert that appellants are only incidental beneficiaries" of the LDA.

We review denials of motions for judgment as a matter of law de novo. See Cook v. Edgewood Mgmt. Corp., 825 A.2d 939, 945 (D.C. 2003). "Judgment as a matter of law may be granted only if, viewing the evidence in the light most favorable to the opposing party, there is 'no legally sufficient evidentiary basis for a reasonable jury to find' for the non-moving party." Id. (citing Railan v. Katyal, 766 A.2d 998, 1006 (D.C. 2001) (quoting Super. Ct. Civ. R. 50)). "In our review, we 'must take care to avoid weighing the evidence, passing on the credibility of witnesses or substituting [our] judgment for that of the [trial court] or jury."' Id. (citing Alliegro v. ACandS Inc., 691 A.2d 102, 105 (D.C.1997) (citations and internal quotation marks omitted)). "A plaintiff cannot 'stave off the entry of summary judgment' through '[m]ere conclusory allegations.'" Maupin v. Haylock, 931 A.2d 1039, 1042 (D.C. 2007) (quoting Musa v. Continental Ins. Co., 644 A.2d 999, 1002 (D.C. 1994) (other citation omitted)). Furthermore, "[t]he moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact, after which the burden shifts to the non-moving party to designate specific facts showing that there is a genuine issue for trial. LaPrade v. Rosinsky, 882 A.2d 192, 196 (D.C. 2005) (citations omitted). "To carry this burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Id.(citation and internal quotation marks omitted).

"Since the proper interpretation of a contract is a legal question, 'this court exercises de novo review.'" Unfoldment, Inc. v. District of Columbia Contract Appeals Bd., 909 A.2d 204, 209 (D.C. 2006) (quoting Independence Mgmt. Co. v. Anderson & Summers, LLC, 874 A.2d 862, 867 (D.C. 2005)). "In construing a contract, the court must determine what a reasonable person in the position of the parties would have thought the disputed language meant." Id.(citation and internal quotation marks omitted). "'Where the language in question is unambiguous, its interpretation is a question of law for the court.'" Id. "'A court must honor the intentions of the parties as reflected in the settled usage ...

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