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T Street Development, LLC v. Dereje & Dereje

October 7, 2008

T STREET DEVELOPMENT, LLC, PLAINTIFF,
v.
DEREJE & DEREJE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Gladys Kessler United States District Judge

MEMORANDUM OPINION

The present case arises out of a dispute between the parties over the sale of real property located at 635-637 T Street, N.W., and 634-636 Florida Avenue, N.W., in Washington, D.C. ("the T Street Property"). Plaintiff seeks specific performance of the contract it alleges was entered into; Defendants seek dismissal of the case.

On September 9 and 10, 2008, a bench trial was held and each party presented two witnesses. Based on the testimony presented by those witnesses, the exhibits admitted into evidence, and the parties' representations of what facts were not in dispute, the Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. Plaintiff, T Street Development, LLC ("T Street LLC"), is a limited liability company, which was established under the laws of the District of Columbia on February 15, 2005. It is, at this time, a validly registered limited liability company in the District of Columbia. Defendant, Dereje & Dereje ("D&D"), is a general partnership organized under the laws of the District of Columbia.

Its only general partners are Defendant Dereje Dergie,*fn1 who is a resident of North Carolina, and Dereje Yadeta, who is a resident of Maryland. Both general partners have also been sued individually.

2. The Defendants are owners of record of real property and improvements located at 635-637 T Street, N.W. and 634-636 Florida Avenue, N.W. in Washington, D.C. ("the T Street Property").

3. On October 28, 2004, D&D entered into a written contract ("the October Contract") to sell the T Street property to T Street Corporation ("T Corp.") or its assigns. The contract was signed by Thomas A. Hart, Jr. ("Hart") and executed on behalf of T Corp. At no time relevant to this lawsuit has T Corp. been a District of Columbia corporation. At no time did Hart ever attempt to establish an entity known as T Corp. in the District of Columbia. Nor has the term "T Corp." ever been registered with the Department of Consumer Affairs of the District of Columbia as a fictitious trade name.*fn2 4. The purchase price specified in the October Contract was $925,000. The October Contract called for closing to occur on or before the later of (a) December 22, 2004 or (b) within seven days of the expiration of the tenants' statutory rights to purchase the property. The contract required a deposit of $50,000 which was tendered in due course by the purchaser.

5. Hart is an adult resident of the District of Columbia. He is an experienced District of Columbia attorney, a real estate investor, and developer. He has been a partner in several major law firms in the District of Columbia and has held himself out to the public as being an expert in real estate law, as well as other unrelated areas, such as telecommunications.

6. On numerous occasions from late October 2004 through April 22, 2005, Hart utilized the unregistered fictitious trade name of T Corp. in proposed, as well as actual, contracts to acquire the T Street property, in correspondence relating to the T Street property with real estate brokers and the North American Title Company, and in attempting on April 22, 2005 to assign its contract rights to purchase the T Street property to T Street LLC.

7. All negotiations for purchase of the T Street property were carried out by Hart and Jon Wilson ("Wilson"). Wilson was a licensed real estate broker in the District of Columbia who worked with Demers Real Estate Company. All communications about the purchase of the T Street property went through Wilson to his principal, D&D. In fact, Hart never met the individual Defendants during any phase of the contract negotiations. Wilson testified clearly and credibly that he had no independent authority to commit the individual Defendants to any contractual provision as the negotiations proceeded. In each and every instance, he was required to, and did, convey Hart's proposal to the individual Defendants for their acceptance, rejection, or counterproposals.

8. All of the parties found it impossible to meet the original closing deadline set forth in the October Contract. Hart needed more time to obtain the necessary financing. The individual Defendants needed more time to give the existing tenants the requisite notice and time to exercise their rights to purchase the T Street property under District of Columbia law.*fn3 For that reason, on December 17, 2004, the parties executed a second contract for the sale of the T Street property ("the December Contract"). Once again, Hart, acting solely on behalf of T Corp., signed a contract for the purchase of the T Street property. That contract was ratified by the individual Defendants on December 22, 2004. It contained a "time is of the essence" provision as to the settlement date. Under the December Contract, closing was to occur before the later of January 28, 2005, or within seven days of the expiration of the tenants' rights to purchase the T Street property. Each of the tenants was given notice of their right to purchase on or about December 7, 2004. The deadline for the tenants' exercise of their right to purchase the property had passed by the end of December, 2004.

9. A representative of North American Title Company told Wilson, before January 28, 2005, that there would be no closing on that date and that he should contact Hart. The parties did not attempt to reach any agreement, prior to January 28, 2005, regarding an extension of the settlement date specified in the December Contract.

10. No settlement was held on January 28, 2005 because Hart, sometimes acting on behalf of T Corp. and sometimes acting on behalf of the not yet created T Street LLC, was unable to obtain the necessary financing. By January 21, 2005, Hart knew he could not go to closing on January 28, 2005, because of the financing ...


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