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6921 Georgia Avenue, N.W., Ltd. Partnership v. Universal Community Development

August 7, 2008

6921 GEORGIA AVENUE, N.W., LTD. PARTNERSHIP, APPELLANT.
v.
UNIVERSAL COMMUNITY DEVELOPMENT, LLC, APPELLEE.



Appeal from the Superior Court of the District of Columbia (CAR8873-05) (Hon. Melvin R. Wright, Trial Judge).

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

Argued May 13, 2008

Before RUIZ, Associate Judge, PRYOR, Senior Judge, and FARRELL,*fn1 Associate Judge, Retired.

This appeal stems from the trial court's denial of appellant 6921 Georgia Avenue, N.W., Ltd. Partnership's ("Partnership") request for attorneys' fees to be paid by appellee Universal Community Development, LLC ("Universal"). We conclude the trial court did not abuse its discretion in denying Partnership's request for attorneys' fees generally, and affirm the trial court's decision as to this question. However, we also find the trial court failed to duly consider whether Partnership was entitled to attorneys' fees under D.C. Code § 42-1207 (2001) in relation to Universal's filing of lis pendens and remand so that the trial court may enter a finding on this issue.

I.

This matter originated with Universal's claim against Partnership for specific performance to "compel a good faith bargaining by Partnership," relating to the sale of an apartment building owned by Partnership located in the District of Columbia. In their complaint, Universal alleged they had a right to purchase this building as an assignee of the building's tenant association's right to purchase under the Tenant Opportunity to Purchase Act, D.C. Code §§ 42-3404.01 et seq. (2001). On July 6, 2005, Universal submitted to Partnership a contract proposal which matched the purchase price offered by a third party purchaser of the apartment building. In this proposal, Universal represented they had paid a $20,000 deposit to Washington Legal Group, Universal's counsel at the time. In response, Partnership requested Universal to increase the deposit amount to $35,000 and place the deposit with a licensed title company. Following further communications between the parties, Universal submitted a revised contract proposal on October 7, 2005, which provided that a deposit in the amount of $35,000 would be made to Cosmopolitan Real Estate Settlement Inc. ("Cosmopolitan") "within 5 days of a ratified contract." On October 25 or 26, 2005, after additional communication, Universal submitted a revised contract, stating that Cosmopolitan was in receipt of a $35,000 check to serve as a deposit from Universal. At no time during these communications did Universal provide Partnership with a copy of the deposit check or other proof of payment to Cosmopolitan.

When Partnership ultimately rejected Universal's proposal to purchase the building, Universal filed suit for specific performance as well as a notice of lis pendens pursuant to D.C. Code § 42-1207. Partnership then filed counterclaims for declaratory relief and for damages and attorneys' fees resulting from abuse of process and slander of title.

Over the course of the litigation, Universal repeatedly failed to respond fully to Partnership's discovery requests, including Partnership's request for proof that Universal had deposited $35,000 with a licensed title company. At the conclusion of the discovery period, Partnership moved for summary judgment, arguing in part, that Universal had failed to offer any evidence that the necessary deposit of $35,000 had in fact been made. In turn, Universal filed a motion in opposition, informing the court that it had placed a deposit of $35,000 in escrow with Cosmopolitan. However, Universal failed to produce evidentiary proof of the deposit.

On January 8, 2007, the trial court granted summary judgment in favor of Partnership.

In its oral ruling on the motion, the judge noted that Universal had failed to present prima facie evidence that the required deposit had been made and concluded there was no genuine issue of material fact to be submitted to a finder of fact on this question. Prior to the court's ruling on attorneys' fees, Universal moved to vacate the summary judgment order. Included in Universal's motion to vacate was a receipt for deposit in the amount of $35,000 paid to Cosmopolitan and dated October 27, 2005. The trial court orally denied this motion, commenting that it was "curious" that Universal had failed to previously produce the receipt of deposit and that the receipt now produced was unaccompanied by any sworn attestations of its veracity. In addition to denying Universal's motion to vacate, the trial judge granted attorneys' fees to Partnership to be paid as a consequence of Universal's counsel's failure to appear at a scheduled deposition. Orally, and in a subsequent written order, the trial judge denied the motion for attorneys' fees generally, and also for fees related to the lis pendens filing. As to the former, the court stated orally that "although . . . the level of handling [of this case] could be severely criticized, the court does not find that there is bad faith based upon the totality of the facts and circumstances." The judge denied the request for fees as to lis pendens without prejudice. This appeal followed.

II.

A.

The responsibility for paying attorneys' fees stemming from litigation, in virtually every jurisdiction, is guided by the settled general principle that each party will pay its respective fees for legal services. However, this American Rule is subject to exception premised upon statutory authority, contractual agreement, or certain narrowly defined common law exceptions. Synanon Foundation, Inc. v. Berstein, 517 A.2d 28, 35 (D.C. 1986). This jurisdiction recognizes what is often called the bad faith exception to the general rule. Id. at 37. Under this exception, a party may recover attorneys' fees from an opposing party by demonstrating that the party acted in bad faith either by filing a frivolous action, or by litigating a properly filed action in a frivolous manner. Jung v. Jung, 844 A.2d 1099, 1108 (D.C. 2004). "'An action is brought in bad faith when the claim is entirely without color and has been asserted wantonly, for purposes of harassment or delay, or for other improper reasons.'" Synanon, 517 A.2d at 40 (quoting Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1088 (2d Cir. 1977)). In litigating a colorable claim, a party's bad faith "may manifest itself through procedural maneuvers lacking justification or for an improper purpose, such as harassment or delay." Jung, 844 A.2d at 1108 (internal citation and quotation marks omitted). "Attorneys' fees for bad faith litigation are [] proper only in the presence of extraordinary circumstances or when dominating reasons of ...


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