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Fourth Growth, LLC v. Wright

Court of Appeals of The District of Columbia

May 3, 2018

Fourth Growth, LLC, Appellant,
Angela Wright, et al., Appellees.

          Argued March 29, 2018

          Appeal from the Superior Court of the District of Columbia (CAB-1463-15) Hon. John M. Campbell, Trial Judge

          Ashley E. Wiggins, with whom Bruce M. James was on the brief, for appellant.

          LaVonne Torrence Berner, with whom Andrew P. McGuire was on the brief, for appellees. Lydia A. Wade entered appearance on behalf of appellee.

          Before Blackburne-Rigsby, Chief Judge, and Glickman, Associate Judge, and Ferren, Senior Judge.


         Appellant, Fourth Growth, LLC, appeals a Superior Court order dismissing with prejudice its complaint alleging that appellees, Angela Wright and K2NC, LLC ("K2NC"), violated the District's Tenant Opportunity to Purchase Act ("TOPA")[1] when Wright sold a single-family row house located at 2031 2nd Street, N.E. ("the property") to K2NC before giving the tenant, James Sadler, an opportunity to purchase the property. Upon learning of the sale, Sadler assigned his TOPA rights to Fourth Growth, which then notified Wright and K2NC of its intent to exercise its right of purchase. In a March 21, 2017, order, the trial court ruled that Fourth Growth's complaint failed to state a cause of action because Wright had "complied fully with TOPA, " and in any event that Sadler's TOPA rights had expired before he purportedly assigned them to Fourth Growth. We affirm.

         I. Facts and Proceedings

         Before December 2014, Wright owned the property, and Sadler was her tenant. On December 2, 2014, Wright entered into a contract to sell the property to K2NC for $300, 000. A Tenant Addendum was attached to the contract disclosing that Sadler was still residing at the property, that there was "no lease, " and that "buyer will evict tenant." Ten days later, on December 12, 2014, Wright conveyed title to K2NC via deed, which was recorded on December 19, 2014. That same day, Wright signed a statutory "offer of sale" to Sadler, pursuant to TOPA § 42-3404.02 (a), which provides:

Before the owner of a housing accommodation may sell the housing accommodation [to a third party] . . ., the owner shall give the tenant an opportunity to purchase the housing accommodation at a price and terms that represent a bona fide offer of sale.[2]

         The offer of sale was hand-delivered to Sadler on December 20, along with a copy of Wright's contract of sale to K2NC, both of which, as required by TOPA, [3] were filed with Department of Housing and Community Development ("DHCD") on December 31, 2014.

         In order to preserve his TOPA right to purchase the property, Sadler had "30 days, " beginning after both he and DHCD had received the offer of sale, to provide "a written statement of interest" to both Wright and DHCD.[4] Upon doing so, Sadler would be entitled to a "reasonable period to negotiate a contract of sale"[5]with Wright (or her assignee)[6] - a period of not less than sixty days, "not including the 30 days" provided for expressing interest in the property.[7] Finally, "[i]n addition to any and all other rights specified, " Sadler had a "right of first refusal during the 15 days after" receiving from the owner a copy of "a valid sales contract to purchase by a third party" - a period that would "begin to run at the end of the negotiation period[, ]" if "the contract is received" during that period.[8]

         Time passed without word from Sadler. On February 19, 2015, Sadler assigned his TOPA rights to appellant Fourth Growth. A day later, on February 20 - 51 days after Wright had filed the contract of sale with DHCD - Fourth Growth notified Wright and K2NC that it intended to exercise its right of purchase.[9] The matter generated a dispute that would not settle.

         On March 6, 2015, Fourth Growth filed a complaint against Wright and K2NC (amended on May 22, 2015) asking the Superior Court to: (1) enter a judgment nullifying the deed of the property to K2NC;[10] (2) rule that Wright had violated TOPA when she conveyed the property to K2NC without first providing Sadler with his opportunity to purchase under TOPA; and (3) order Wright to comply with the terms of TOPA before seeking to convey the property to K2NC. On June 2, 2015, Wright filed a motion for judgment on the pleadings, and on June 3, 2015, K2NC submitted a motion to dismiss. Thereafter, a long series of replies, responses, and submissions of supplemental memoranda ensued among the parties until November 19, 2015, when Fourth Growth filed a motion for partial summary judgment.

         On November 20, 2015, during a scheduling conference, the trial court said that it would grant the motion to dismiss and memorialize the decision in writing. For reasons unknown, the order was not entered until March 21, 2017. In its order, the trial court ruled that the complaint failed to state a cause of action because Wright had complied fully with TOPA, and it further ruled (without elaboration) that Sadler's "rights expired, " meaning that Fourth Growth had "no rights at all" to justify a lawsuit. The trial court also observed that the Wright-K2NC contract had recognized and preserved Sadler's TOPA rights, and that "regardless of where title formally resided, Mr. Sadler was being offered the chance to buy the property before K2NC's ownership interest could be recognized." In discussing his ruling, the trial court noted:

The plaintiff's argument rests entirely on a single word, ["before, "] not otherwise referred to, of a statute that sets out a comprehensive framework for protecting tenants' rights when the property they live in is up for sale. The sentence where it is found is the first sentence of the statute, discounting the short title. It is, in effect, a statement of general purpose that is then elaborated in thousands of words over TOPA's many substantive sections and subsections. It does not purport to establish an actual enforceable timeline - those are found in the later sections. In its context, the phrase "before an owner . . . may sell" means the same as "no sale is final unless, " or "any sale is contingent upon." [Emphasis added]

         On April 21, 2017, Fourth Growth timely filed this appeal.[11]

         II. Issues

         1. When an owner contracts to sell residential rental property with notice of an existing lease, and then conveys the deed to the purchaser before offering the property for sale to the tenant as required by TOPA, may the owner cure that failure by giving the tenant an opportunity to purchase the property, subject only to a voidable deed, after the conveyance has been recorded?

         2. If so, did Fourth Growth, as the tenant Sadler's assignee, meet all statutory deadlines required to exercise its TOPA right to purchase?

         3. If Fourth Growth failed to meet the required statutory deadlines, is it nonetheless entitled to equitable relief - voidance of the deed coupled with the right to purchase the property - in light of Wright's conveying the property to a third-party purchaser, K2NC, before giving Sadler the required offer of sale?

         III. Standard of Review

         We review de novo an order granting a Rule 12 (b)(6) motion to dismiss for failure to state a claim and a Rule 12 (c) motion for judgment on the pleadings.[12]To satisfy the Rule 8 (a) pleading requirement, we have relied on Supreme Court authority to say that the complaint must present "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'"[13] More specifically, a "claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."[14] Facial plausibility, however, "do[es] not require heightened fact pleading of specifics, "[15] but "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."[16]

         IV. Analysis

         A. Was the Deed Void ...

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