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Mamo v. Skvirsky

November 20, 2008

TESFAYE MAMO, APPELLANT,
v.
ALAN AND ANEXORA SKVIRSKY AND SAMUEL TEKLU, APPELLEES.



Appeal from the Superior Court of the District of Columbia (CA 8227-05) (Hon. Melvin R. Wright, Trial Judge).

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

Argued May 1, 2007

Before REID and GLICKMAN, Associate Judges, and PRYOR, Senior Judge.

This is an appeal from an award of summary judgment in a dispute over a commercial tenant's right to purchase his landlord's building. The dispute centers on the meaning of a provision in the lease entitling the tenant to "match" third-party offers for the building. The question is whether the provision grants the tenant what is known as a "right of first refusal," requiring the landlord to sell to the tenant if the landlord accepts an offer submitted by another party and the tenant then matches it. In rendering judgment for the landlord as a matter of law, the trial court concluded otherwise and ruled that the lease provision unambiguously allows the landlord to reject the tenant's matching offer if the other party enhances his competing bid.

We disagree with the trial court. In our view, the lease provision is ambiguous and reasonably may be construed as granting the tenant a right of first refusal. Consequently, in the absence of extrinsic evidence eliminating the ambiguity, the parties' dispute over the meaning of the provision is not amenable to resolution by summary judgment. The judgment for the landlord must be vacated.

I.

The object of contention in this appeal is a three-story Adams Morgan row house formerly owned by appellees Alan and Anexora Skvirsky. In December 2003, the Skvirskys leased basement space in the row house to appellant Tesfaye Mamo for his retail music store, "EthioSound." The Skvirskys previously had leased the upper floors of the building to another commercial tenant, known as Technical Assistance & Training Corporation or "TATC." Paragraph 23 of each lease granted the "Tenant" (i.e., Mamo or TATC) certain rights in the event the "Landlord" (i.e., the Skvirskys) decided to sell the building or received an offer from a third party to purchase the building. Those rights are described in the paragraph's heading as a "right to negotiate purchase" and a "right to match purchase offer." Under that heading, Paragraph 23 states in pertinent part as follows:

Should Landlord decide to sell the building, Landlord shall give Tenant written notice to that effect, and Tenant shall have thirty (30) days to reach agreement with Landlord as to the terms for Tenant to purchase the building. Should Landlord receive an offer from another party to purchase the building, Tenant shall have five (5) days to match that offer, but no less than thirty (30) days from Landlord's initial notice to Tenant of its intent to sell the building.

The eventuality covered by Paragraph 23 came to pass some eighteen months later. Appellee Samuel Teklu contacted the Skvirskys and expressed interest in buying their building. On July 6, 2005, the Skvirskys and Teklu reached an agreement and executed a contract of sale. Teklu agreed to pay $1.15 million and to make an earnest money deposit of $50,000. It appears that the Skvirskys initially overlooked their obligations to their tenants under Paragraph 23. After examining the leases, Teklu brought that paragraph to the Skvirskys' attention, and the parties amended their contract on July 19 to state that the sale to Teklu was "subject" to Mamo's and TATC's "rights to purchase the property." At about the same time, the Skvirskys notified Mamo and TATC of their intent to sell the building. Mamo declared his interest in buying it himself, while TATC disclaimed any interest. Accordingly, on August 1, the Skvirskys furnished Mamo a purported copy of their July 6 contract with Teklu (without including the July 19 amendment). For whatever reason, however, the document given to Mamo misstated the agreed-upon purchase price as $1.2 million.*fn1

On August 9, Mamo tendered a competing contract to the Skvirskys for their signatures, along with the required $50,000 deposit. Mamo's contract matched the terms of the Skvirskys' July 6 contract with Teklu, except that Mamo committed to pay $1.2 million instead of $1.15 million.

The Skvirskys refused to sign the contract Mamo delivered to them on August 9. Instead, they informed Mamo the following day that they had executed two amendments of their agreement with Teklu. The amendments, dated August 8 and 10, increased Teklu's purchase price to $1.25 million and his required deposit to $150,000. These changes were followed by a further amendment on August 11 increasing the deposit to $400,000. On August 24, the Skvirskys formally notified Mamo that he would have to match the terms of the amended contract, which supposedly represented Teklu's "final offer," in order to acquire the Adams Morgan property. Mamo declined to do so, maintaining that Paragraph 23 of his lease obligated the Skvirskys to sell him the building on the terms he had met on August 9.

Faced with Mamo's and Teklu's conflicting demands to buy their building, the Skvirskys presented Teklu with an ultimatum: either terminate his contract or indemnify them against Mamo's claims. Rather than agree to that choice, Teklu sued the Skvirskys in Superior Court, alleging anticipatory breach of contract and seeking specific performance. Mamo was permitted to intervene in the action with his own complaint against the Skvirskys, in which he asked the court to enforce his rights under Paragraph 23 of his lease by ordering the Skvirskys to sell their building to him on the terms of his matching August 9 contract. In due course, the parties to the resulting three-way action filed motions to dismiss or for summary judgment.

After hearing the parties' arguments, the trial court granted summary judgment to the Skvirskys on Mamo's complaint. The court ruled that Paragraph 23 unambiguously allowed the Skvirskys to entertain Teklu's improved offers so long as they gave Mamo the chance to meet them (which they did). Because Mamo "failed to match any of the new and materially different terms of Teklu's amended offers," the court concluded, he had no right to compel the Skvirskys to sell to him.

Immediately following the entry of judgment against Mamo, the Skvirskys and Teklu voluntarily dismissed their complaints against each other and closed on the sale of the building. Mamo's motions to set aside or stay execution of the judgment against ...


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