February 18, 2016
from the Superior Court of the District of Columbia Civil
Division (CAR-6869-14) (Hon. Stuart G. Nash, Trial Judge)
Richard W. Luchs, with whom William C. Casano was on the
brief, for appellant.
Matthew A. Eisenstein, with whom Blake A. Biles and Paige
Sharpe, Arnold & Porter LLP; Julie H. Becker, Legal Aid
Society of the District of Columbia; and Grishma Pradhan and
Zenobia Lai, Asian Pacific American Legal Resource Center,
were on the brief, for appellee.
A. Racine, Attorney General for the District of Columbia,
Todd S. Kim, Solicitor General, Loren L. AliKhan, Deputy
Solicitor General, and Richard S. Love, Senior Assistant
Attorney General, were on the brief for the District of
Columbia as amicus curiae in support of appellee.
Washington, Chief Judge, and Blackburne-Rigsby, Associate
Judge, and Belson, Senior Judge.
case came to be heard on the transcript of record and the
briefs filed, and was argued by counsel. On consideration
whereof, and as set forth in the opinion filed this date, it
is now hereby
and ADJUDGED that the trial court's grant of summary
judgment is affirmed.
A. Belson Senior Judge
One Phase One Associates, L.L.P. ("Parcel One")
appeals the trial court's grant of summary judgment in
favor of the plaintiff/ appellee Museum Square Tenants
Association, Inc. ("the Association"). Parcel One
argues the trial court erred in its determination that (1)
the Association had standing under the Tenant Opportunity to
Purchase Act ("TOPA") to bring suit challenging
Parcel One's offer of sale, see D.C. Code
§§ 42-3404.01, -3404.11 (1) (2012 Repl), and (2)
its offer of sale to the Association was not bona fide under
TOPA, see D.C. Code § 42-3404.02 (2012 Repl).
We affirm the trial court's grant of summary judgment as
we conclude that the Association had standing to sue under
TOPA and that Parcel One's offer of sale to the
Association was not "bona fide" as required under
Square is an apartment building located at 401 K Street,
N.W., in Washington, D.C. (the "401 K Street
Property"). It contains over 300 residential rental
units. The owner of the building, Parcel One,
seeks to demolish the building and build a mix of apartments,
condominiums, and commercial space. Parcel One offered to
sell the complex to the tenants for $250 million, "as
is, " cash payment, with a five percent down payment,
and balance due at closing. Parcel One arrived at that offer
price after an in-house development team analyzed its
construction plans and determined that it would yield 450
apartments and 350 condominiums with a net future value of
$250 million after subtracting construction and
development costs. After the offer was made, an independent
appraisal company, CBRE, commissioned by Parcel One,
appraised the plan and placed the future value of the
property at $3 million higher than the offer; this was the
only appraisal commissioned by either party.
receiving Parcel One's offer, the tenants formed Museum
Square Tenants Association, Inc., under D.C. Code §
42-3404.11, to deal with the offer. The Association brought
an action in Superior Court asserting that the offer extended
by Parcel One was not a bona fide offer as it did not
"reflect a rational, fair, and objective value of the
[p]roperty." The Association sought a declaratory
judgment that the offer was not bona fide and an injunction
to prevent Parcel One from requiring residents to vacate
involuntarily. In its answer, Parcel One countered that the
Association did not adhere to the formation requirements of
D.C. Code § 42-3404.11, and consequently lacked standing
to bring a suit, and that the $250 million offer of sale was
a bona fide offer which met the requirements of TOPA.
Association subsequently filed a motion for summary judgment.
As to standing, the trial judge ruled that the Association
had standing and that any error in draftsmanship or formation
of the Association did not affect its standing. As to whether
Parcel One provided a bona fide offer of sale, there was
considerable discussion by the parties and the trial judge at
oral argument and in the motions regarding the proper
interpretation of 1618 Twenty-First St. Tenants'
Ass'n v. Phillips Collection, 829 A.2d 201 (D.C.
2003) [hereinafter Phillips].
One argued that Phillips held that market value or
appraised value were not dispositive as to whether an offer
was bona fide, but that TOPA required only a good faith,
honest offer. In the alternative, Parcel One argued that
whether the offer was bona fide was a material issue of fact
which "defeats [the Association's] motion for
summary judgment." The Association argued that as a
matter of law Parcel One's offer of sale was not a bona
fide offer, and that Phillips was a case in which
the property had a unique value to the owner that justified a
deviation from the market value, and consequently
Phillips - as the trial judge later put it -
"carve[d] out an exception to the general rule."
written order granting summary judgment, the trial judge
agreed with the Association, stating it would be
"impossible for this [c]ourt to imagine any criteria for
ascertaining whether an offer has 'some reasonable basis,
' other than by comparing the offer to the market value
of the property." According to the trial judge, unless
the property has "special circumstances, " the
"default position" for determining a bona fide
offer is based on current market value. Because Parcel
One's offer was based on the future value of the property
after construction and because the property did not have a
unique value to the owner, the trial judge determined that
Parcel One was unable to seek refuge in the
"exception" in Phillips. Moreover, the
trial judge observed that "even if all the assumptions
included in that [future] valuation are deemed accurate and
reasonable, the valuation fails to discount the resulting
figure to a present market value." The ...