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Malik Corp. v. Tenacity Group

December 11, 2008

MALIK CORPORATION, APPELLANT,
v.
TENACITY GROUP, LLC, ET AL., APPELLEES.



Appeal from the Superior Court of the District of Columbia, (CAB8715-04), (Hon. Mary A. Gooden Terrell, Trial Judge).

Per curiam.

Argued November 4, 2008

Before KRAMER and BLACKBURNE-RIGSBY, Associate Judges, and NEBEKER, Senior Judge.

Malik Corporation appeals an order granting specific performance of the sale of its apartment building to appellees Brumal Tenant's Association and Tenacity Group, LLC, under the Tenant Opportunity to Purchase Act ("TOPA"). In a non-jury trial, the trial court determined that the appellees substantially performed under the contract and were entitled to purchase the property and receive attorneys' fees and costs. We find no error and affirm.

I.

Malik Corporation ("Malik") owned an apartment building located at 2639 15th Street, N.W., Washington, D.C. ("the Property"). In February of 2004, Malik entered into a contract with a third party for sale of the Property. From this agreement arose Malik's duty to notify his tenants of their "opportunity to purchase" rights under TOPA, D.C. Code §§ 42-3404.01 et. seq. Malik subsequently notified the tenants that the Property's selling price was $2,155,000 and that if they formed a tenant organization, they would have a right of first refusal to match the third party contract. Upon receiving notice, the tenants formed the Brumal Tenant's Association ("the Association"), notified Malik and assigned their rights to Tenacity Group, LLC ("Tenacity"). Tenacity then informed Malik it would be exercising the Association's right to match the third party contract.

In reply, Malik sent a Short Form Commercial Real Estate Agreement ("the Contract") to Tenacity. The Contract specified an asking price of $2,155,000, and acknowledged that Malik would receive a five percent deposit check from Tenacity for $107,500. The Contract also stipulated that Tenacity had the right to name and employ a title insurance, settlement, or escrow company and that the seller's agent would receive the deposit. Tenacity named Tenacity Settlements as the settlement agent, executed the Contract and returned it to Malik's agent along with a deposit check made payable to Tenacity Settlements. When Mr. Malik received the Contract and the deposit check, he informed Tenacity that he no longer desired to sell the Property. In November of 2004, Tenacity filed a Complaint seeking specific performance and a non-jury trial commenced in October of 2006.

At trial, Tenacity offered the Contract and a copy of the deposit check into evidence. The trial court also received evidence regarding the original contract between Mr. Malik and the third party, Bogden Builders. The original Contract did not specify a selling price for the Property, but the trial court received evidence that Bogden delivered a copy of a deposit check to Mr. Malik for $92,000, payable to the buyer's agent, National Title. Mr. Malik testified that the deposit check was a five percent deposit from Bogden for the Property. Mr. Malik also testified that he listed the Property with a realtor for $1,850,000. The trial court found that Tenacity complied with the terms of the Contract when it sent a copy of its deposit check to Mr. Malik's agent. It also found that the actual purchase price of the Property was $1,840,000, by considering the amount of Bogden's deposit check and Malilk's testimony. Malik was directed to sell the Property to Tenacity for $1,840,000, and pay their attorneys' fees. Malik subsequently filed a Notice of Appeal and a Motion For Stay Pending Appeal. After the trial court denied his motion, Malik filed an Emergency Motion to Stay the Judgment Pending Appeal and Waiver of Bond, which this court denied. The court-ordered sale of the Property took place in August of 2007.

Malik appeals, claiming that the trial court erred when it (1) failed to interpret the Contract to require the deposit be paid to Malik's agent, (2) declined to find Tenacity in breach of the Contract for not making the deposit check payable to Malik's agent, (3) determined the actual price of the Property, (4) concluded that Tenacity had a statutory right under TOPA to purchase the Property, and (5) awarded Tenacity attorneys' fees. We perceive no error.

II.

We review non-jury trials under D.C. Code § 17-305 (a) (2001) and will not set aside the trial court's findings of fact unless they are clearly erroneous or without evidence to support them. The evidence presented to the trial court will be viewed in the light most favorable to the prevailing party. See Hinton v. Sealander Brokerage Co., 917 A.2d 95 (D.C. 2007). We review a trial court's conclusions of law de novo and will only set aside its judgment for errors of law. D.C. Code § 17-305 (a) (2001), and Bernstein v. Noble, 487 A.2d 231 (D.C. 1985). Accordingly, whether a contract is ambiguous is a question of law, which we review de novo, see Air Line Pilots Ass'n v. Twin City Fire Ins. Co., 803 A.2d 1001 (D.C. 2002); Trilon Plaza, Inc. v. Comptroller of State of New York, 788 A.2d 146 (D.C. 2001), as is whether a contract is enforceable, see Affordable Elegance Travel, Inc. v. Worldspan, L.P., 774 A.2d 320 (D.C. 2001). We review the trial court's award of attorneys' fees for abuse of discretion, with the caveat that the trial court's decision will only be set aside after a "very strong showing" of abuse of discretion. Accord Maybin v. Stewart, 885 A.2d 284, 288 (D.C. 2005); Wallasey Tenants Ass'n, Inc. v. Varner, 892 A.2d 1135 (D.C. 2006); cf. Pride Transport, Inc. v. Northeastern Pennsylvania Shippers Co-op Ass'n Inc., 832 A.2d 163 (D.C. 2003) (a decision to award costs is committed to the trial court's discretion, and upon review, it is not for the appellate court to substitute its discretion for that of the trial court).

The trial court concluded that the deposit was only required to be receivedby Malik's agent, not made payable to him. Paragraph nine of the Contract states, "It is understood that the purchaser has the right to name and employ a particular title insurance company, settlement, or escrow company, or title attorney, which may have been designated by purchaser as set forth in paragraph 4 above." In paragraph four, Tenacity inserted "Tenacity Settlements" in the space provided. Paragraph ten states, "Disposition of Deposit. The entire deposit, receipt of which is hereby acknowledged, shall be held by Seller's agent as a part of the purchase price to be paid in cash."

Malik urges us to consider paragraph one, which states, in part, "Seller's Agent... has received from Purchaser a deposit in the amount of ($107,500.00) by check (cash) to be applied as part of the Purchase Price of" the Property, along with paragraph ten's language directing that the deposit "shall be held by the Seller's agent" to mean that the deposit check is to be made payable to the Seller's agent. We disagree with Malik's interpretation of the plain language of the Contract.

"The first step in contract interpretation is determining what a reasonable person in the position of the parties would have thought the disputed language meant." 1010 Potomac Assocs. v. Grocery Mfrs., 485 A.2d 199, 205 (D.C. 1984). Malik contends that the words "shall be held by Seller's agent" amount to "shall be paid to Seller's agent" with respect to Tenacity's deposit. In discerning what a reasonable person in the position of the parties meant, we interpret the Contract as a whole, giving a "reasonable, lawful and effective meaning to all its terms." RESTATEMENT (SECOND) OF CONTRACTS ยงยง 202(2), 203(a) (1981). We cannot agree that a reasonable interpretation of paragraph ten means that the deposit shall be paid to the Seller's agent when read as a whole with paragraphs nine and four. Tenacity cannot be expected to name and employ an escrow company, for the purpose of holding the deposit in anticipation of closing, while simultaneously delivering those same deposit funds to the Seller's agent. This interpretation defeats the function of the escrow agent and renders paragraphs four and nine of the Contract unreasonable. For the purposes of this transaction, the escrow agent is functioning in a limited capacity as the Seller's agent in holding the deposit. "In the typical escrow ...


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