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Magdalene Campbell & Fort Lincoln Civic Association, Inc v. Fort Lincoln New Town Corporation

October 4, 2012

MAGDALENE CAMPBELL & FORT LINCOLN CIVIC ASSOCIATION, INC., APPELLANTS,
v.
FORT LINCOLN NEW TOWN CORPORATION, INC., ET AL., APPELLEES.



Appeal from the Superior Court of the District of Columbia (CAB-7132-02) (Hon. Natalia Combs Greene, Trial Judge)

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

Argued March 14, 2012

Before GLICKMAN and EASTERLY, Associate Judges, and FARRELL, Senior Judge.

Magdalene Campbell and the Fort Lincoln Civic Association (collectively, "the Civic Association" or "appellants"), appeal from the trial court's dismissal of their suit against appellees, Fort Lincoln New Town Corporation, Inc., Fort Lincoln Realty Corporation, Inc., and Michele V. Hagans (collectively, "New Town" or "appellees"), under the District of Columbia Condominium Act ("Condominium Act").*fn1 Appellants contend that the trial court erred in ruling that their proffered theory of damages is foreclosed by our decision in an earlier phase of this litigation*fn2 and is, in any event, unduly speculative. We agree with appellants that their damages claim is not precluded by Fort Lincoln I, and in light of their proffer, we conclude that the trial court's rejection of it as too speculative was at best premature. Accordingly, we reverse and remand for further proceedings.

I. Factual Background

A. The Land Disposition Agreement and Fort Lincoln I

This case returns to us following our remand in Fort Lincoln I. Our opinion in that prior appeal described the factual background of the litigation in detail,*fn3 so we shall focus here only on those facts pertinent to the claims now before us. On June 13, 1975, New Town entered into a Land Disposition Agreement ("LDA") with the District of Columbia Redevelopment Land Agency, pursuant to which New Town was granted the rights to develop a 360-acre parcel of land in the Fort Lincoln area of Northeast Washington, D.C.*fn4 The LDA envisioned the creation of a diverse community for some 16,000 residents that would include a Town Center, community and recreation facilities, and mixed-income housing.*fn5 To that end, the provision of the LDA at issue in this case, Article VII (entitled "Equal Employment Opportunity, Social and Economic Programs"), required New Town to: (1) create and fund a nonprofit corporation that would provide services to the Fort Lincoln community and would eventually be controlled by its residents; (2) contribute $250,000 in cash, staff services, or facilities to the Non-Profit Corporation; (3) convey at least 25% of the ownership of a newly created real estate company to the Non-Profit Corporation; and (4) pay the Non-Profit Corporation a fixed percentage of the gross commissions and fees earned by any third-party real estate company under contract to New Town from the sale, rental, leasing or management of property in Fort Lincoln.*fn6

Appellants claim that, as part of the Fort Lincoln project, New Town sold 388 condominium units in transactions subject to the District of Columbia Condominium Act.*fn7 In connection with those transactions, the Condominium Act required New Town to furnish public offering statements disclosing "to prospective purchasers all unusual and material circumstances or features affecting the condominium."*fn8 It is undisputed that New Town's public offering statements did not disclose the LDA or the obligations imposed in Article VII.

Eventually, the condominium purchasers learned of the LDA and discovered that New Town had not fulfilled its Article VII commitments. On the purchasers' behalf, the Civic Association brought suit against appellees for breach of contract, breach of fiduciary duty, and other common law causes of action predicated on New Town's breach of Article VII, and for disclosure-related violations of the Condominium Act and the District of Columbia Consumer Protection Procedures Act ("CPPA").*fn9 The trial court dismissed the complaint in its entirety for failure to state a claim. In Fort Lincoln I, we affirmed the dismissal of the common law claims but remanded the case for further proceedings with respect to the statutory claims.

We upheld the dismissal of the breach of contract claim on the ground that appellants had no contractual right to enforce the LDA -- they were neither parties to it nor its intended beneficiaries,*fn10 and the language of the LDA did not otherwise grant them any legal rights. We upheld the dismissal of appellants' other common law claims because they were not "separate and distinct" claims but merely "impermissible recharacterization[s] of the breach of contract claim."*fn11 As such, they suffered from the same basic flaw as the contract claim -- they presupposed appellants' contractual right to enforce the LDA, a right that did not exist.

However, we did not affirm the dismissal of appellants' Condominium Act claim. We did not view the Condominium Act claim as a mere recharacterization of the breach of contract claim because it had a non-contractual basis -- namely, the condominium purchasers' statutory right to be informed of "all unusual and material circumstances or features affecting the condominium."*fn12 Appellants, we held, were "entitled to present to a jury" their claim that the undisclosed information about the LDA was unusual or material under the Condominium Act.*fn13 If they could prove that claim, we added, "liability attaches and [appellants then] must prove [their] damages."*fn14 Although New Town argued that appellants' theory of damages was impermissibly speculative and based not on New Town's failure to disclose the LDA but rather its purported breach of the LDA, we left those contentions for the trial court to resolve on remand.*fn15

B. Proceedings on Remand

Following the remand, the parties proceeded to trial on appellants' Condominium Act claim. In his opening statement, the Civic Association's counsel referred to the non-disclosure of the LDA to the condominium purchasers and New Town's failure to fulfill its contractual commitments. New Town's counsel objected, arguing that the Civic Association was "attempt[ing] to confuse the [j]ury that some[]how this is a breach of contract case." The trial court sustained New Town's objection. It did so again when the first witness was on the stand and the Civic Association's counsel sought to inquire about the LDA. A lengthy bench conference ensued, in which the parties argued the admissibility of evidence concerning New Town's breach of the LDA to prove the condominium purchasers' damages.

Appellants' counsel explained that if New Town had disclosed the LDA to the condominium purchasers in its offering statements, they would have been able to request the District of Columbia government to enforce New Town's obligations under Article VII. The likelihood that the District government would have responded favorably to such a request would be shown, counsel proffered, by evidence that (1) Article VII was added to the LDA at the District's behest, implying the District had an interest in seeing it effectuated; (2) the condominium purchasers formed a politically astute and effective interest group whose members included lawyers, urban planners, and employees of the Mayor's Office and the City Council; and (3) the Fort Lincoln community had negotiated successfully with the District government for the acceptance of residents' proposals on past occasions. Under this theory, as we understand it, the ...


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