Argued
March 29, 2018
Appeal
from the Superior Court of the District of Columbia
(CAB-3221-16) (Hon. Steven M. Wellner, Trial Judge)
Stephen O. Hessler for appellant.
Aaron
Sokolow, with whom Morris R. Battino and Vivianette
Velázquez were on the brief, for appellee.
Before
Blackburne-Rigsby, Chief Judge, and Glickman, Associate
Judge, and Ferren, Senior Judge.
OPINION
Blackburne-Rigsby Chief Judge.
In this
appeal, we are asked to determine whether the landlord,
Dianne Quander, waived the deadline for the tenant, SJ
Enterprises', lease renewal option, by her actions and
communications with the tenant after the renewal option
deadline had already passed.[1]
In the
present case, after the lease renewal option deadline had
passed but before the original contract term expired, Ms.
Quander e-mailed SJ Enterprises. The subject line of the
e-mail stated: "reminder of lease increase and
renewal." In the body of the e-mail, Ms. Quander wrote
the following:
I just wanted to remind you that your first five[-]year lease
agreement comes to an end on November 30, 2015. Please
confirm that you want to continue with the lease. There is an
increase of 3% each year starting in December, 2015 [sic] and
the rent will be $4326 a month.
At
trial, Ms. Quander claimed that the e-mail was an inquiry as
to whether SJ Enterprises would be remaining at the property
after the initial lease term ended, in a holdover tenancy,
which she could terminate upon thirty-days' notice. SJ
Enterprises, however, testified that it believed that the
e-mail constituted an offer to renew the lease for an
additional five-year term, which it accepted by responding to
the e-mail: "Thanks, Dianne, for the reminder. Will
start next month."
The
trial judge found in favor of SJ Enterprises on an
alternative legal theory, that the parties' e-mail
exchange constituted a new five-year lease agreement, but the
trial judge limited the new lease to one year because it
violated the statute of frauds, D.C. Code § 42-306(b)
(2012 Repl.). However, we conclude that Ms. Quander's
e-mail constituted a clear and unequivocal waiver of her
right to timely notice of SJ Enterprises' option to renew
for an additional five-year term, which the tenant accepted
and exercised by her e-mail response. We therefore reverse
and vacate the trial court's decision and remand for the
trial court to enter judgment in favor of SJ Enterprises.
I.
Factual and Procedural Background
In
August 2012, SJ Enterprises opened its business, "North
Indian/Pakistani bar/restaurant known as 'Cusbah, South
Asian Spice Bar'" at the subject property located
1128 H Street Northeast, Washington, D.C.
("Property"). The lease's initial term was for
five years, but SJ Enterprises had a Renewal Option under
paragraph five of the agreement to renew the lease for up to
two additional five-year terms, so long as SJ Enterprises
gave Ms. Quander "not more than twelve (12) and not less
than five (5) months' notice of" its intent to
exercise the option to extend the lease agreement. The
initial lease term was set to expire on November 30, 2015,
and SJ Enterprises needed to notify Ms. Quander "of such
intention" to exercise the Renewal Option between
December 2014 and July 2015. SJ Enterprises did not timely
exercise its option.
However,
on September 16, 2015, the landlord, Ms. Quander, of her own
accord sent SJ Enterprises' co-owner Julie
Hussain[2] an e-mail entitled "reminder of lease
increase and renewal." (Emphasis added). On
November 2, 2015, Julie Hussain responded to Ms.
Quander's e-mail: "Thanks, Dianne, for the reminder.
Will start next month."
Consistent
with this e-mail exchange, SJ Enterprises remained in the
Property after the initial lease term expired on November 30,
2015, and began paying the increased rent in December 2015.
However, on March 16, 2016, Ms. Quander issued SJ Enterprises
a Notice to Vacate by April 30, 2016. SJ Enterprises did not
vacate the Property on April 30, 2016, and filed a suit for
breach of contract in Superior Court. Ms. Quander
counter-sued for a non-redeemable judgment of possession.
At a
bench trial on the issue of possession of the Property, the
trial judge heard testimony from three witnesses: Landlord,
Dianne Quander, and SJ Enterprises co-owners Julie and
Soophia Hussain. Ms. Quander testified that the intent behind
her September 16, 2015, e-mail was to inquire from SJ
Enterprises whether it would be vacating the Property at the
end of the initial lease term or if SJ Enterprises intended
to remain at the Property on a month-to-month basis as a
holdover tenant. However, Ms. Quander's e-mail never used
the phrase "month-to-month" or any terminology to
suggest that by remaining, SJ Enterprises would be treated as
a holdover tenant.
Julie
Hussain testified that her understanding of the September 16,
2015, e-mail from Ms. Quander was that Ms. Quander
"wanted [Julie Hussain] to respond . . . [with whether
SJ Enterprises] wanted to continue with the lease . . . [f]or
the next five years;" and if SJ Enterprises was to
continue the lease, that the rent would increase. Julie
Hussain believed that because she paid the increased rent in
December, she was complying with Ms. Quander's e-mail,
agreeing to extend the lease for a second five-year lease
term. Soophia Hussain[3] testified consistent with Julie
Hussain's testimony, that it was her understanding that
they were renewing the lease based on the e-mail exchange and
that the rent increase would begin in December 2015.
The
trial judge credited Julie and Soophia Hussain's
testimony and did not credit Ms. Quander's testimony
because he found that her testimony contradicted the plain
language of her e-mail. The trial judge held, as a matter of
law, that SJ Enterprises did not timely exercise the Renewal
Option, that Ms. Quander's e-mail was an offer to enter
into a new lease agreement, and SJ Enterprises' response
was "a meeting of the minds," which created a new
five-year lease agreement.
In
coming to his conclusion, the trial judge discussed his
belief "that the landlord, by that e-mail of September
16, 2015, either extended the period to exercise the
option or else made a new offer with the same terms that the
option would have included." (Emphasis added). In
favoring the latter over the former, he noted that although
the parties were "equally sophisticated" and
"probably understood [the renewal option] at the time
they entered into the agreement," after a few years had
passed, they no longer understood how the option worked.
Therefore, because Ms. Quander "did not know how the
option worked" "she was [not] in a position to be
extending the deadline."
On
subsequent motion by the parties, the trial court amended its
judgment, holding that the new agreement did not satisfy the
statute of frauds, D.C. Code § 42-306(b), [4] and limited the
lease term to one year. This appeal followed.[5]
II.
Analysis
We are
not persuaded by the trial court's conclusion that the
parties intended to enter a new contract. We conclude that
the trial judge erred as a matter of law, in concluding that
the parties entered a new lease. See Strauss v. NewMarket
Glob. Consulting Grp., LLC, 5 A.3d 1027, 1032 (D.C.
2010) (The determination of whether an enforceable contract
exists is a question of law, which we review de
novo.) (citation omitted).
Traditional
notions of contract formation tell us that "for an
enforceable contract to exist, there must be both (1)
agreement as to all the material terms, and (2) intention of
the parties to be bound." Kramer Assocs., Inc. v.
Ikam, Ltd., 888 A.2d 247, 251 (D.C. 2005) (internal
citations, quotation marks, and brackets omitted). While we
may assume the parties agreed to the same terms in their
original written lease, we are unable to find evidence of the
parties' "meeting of the minds" or "mutual
assent" to be bound to a new contract. Id. at
252 (citations omitted). The landlord sent an e-mail that
resembled an offer to extend or otherwise to continue with
the lease. The trial court viewed the tenant's response
as "I accept your offer to renew the lease term."
While we accept the trial judge's factual findings as to
what the parties did and said prior to extending the lease
agreement, we do not agree with the ultimate conclusion that
an enforceable contract was formed by the parties' e-mail
exchange and instead conclude that the landlord waived the
option deadline.[6]
As the
trial judge noted, the tone of the e-mail exchange between
the parties was forward-looking and included the phrases,
"reminder of lease increase and renewal,"
"first five-year" term, and "continue with the
lease." This tone leads us to conclude that the parties
intended to extend the current lease agreement as opposed to
beginning a new lease. Further, the parties originally
executed a written and signed lease agreement, which
contradicts the conclusion that the parties abandoned that
lease ...