Berman v. Watergate West, Inc.

391 A.2d 1351, 1978 D.C. App. LEXIS 309
CourtDistrict of Columbia Court of Appeals
DecidedSeptember 6, 1978
Docket11145
StatusPublished
Cited by47 cases

This text of 391 A.2d 1351 (Berman v. Watergate West, Inc.) is published on Counsel Stack Legal Research, covering District of Columbia Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Berman v. Watergate West, Inc., 391 A.2d 1351, 1978 D.C. App. LEXIS 309 (D.C. 1978).

Opinions

MACK, Associate Judge:

Appellant is a tenant-shareholder in the Watergate West housing cooperative. Ap-pellees are Riverview Realty Corporation [“Riverview”], which is the company that [1352]*1352marketed the cooperative apartments to the public, and Watergate West, Inc. [“Watergate West”], which is the cooperative itself. The suit was filed in 1971 for damages flowing from the breach of express and implied warranties. The complaint alleges that from the time appellant moved into the cooperative in 1969, her apartment was defective in many respects.

In 1976, a jury trial commenced. At the close of appellant’s case, before either Watergate West or Riverview had presented their defenses, the trial court directed a verdict for both appellees, ruling that appellant had failed to show any contractual obligation on the part of Riverview, and had failed to prove damages. In addition, the trial court ordered that appellant pay appellees’ costs of action. In order to avoid further expense, appellant filed the instant appeal pro se.

From one point of view this is a simple case. It involves a mass-produced product which allegedly reached the ultimate consumer in a defective state and caused property damage. In such circumstances, the law is clear that the consumer has a cause of action against all who participated in placing the product into the stream of commerce. The case, however, has not proved simple. Confusion arose partly because of the way in which the particular product was marketed (through a cooperative) and partly because of the use of one mischievously ambiguous word (warranty). In reversing, we do not pretend to deal with every issue which could be raised on the basis of the facts here. We wish only to clarify that the remedies of the injured consumer in such a situation do “not . . . depend upon the intricacies of the law of sales.” Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 64, 27 Cal.Rptr. 697, 701, 377 P.2d 897, 901, (1962) (en banc).

I.

BACKGROUND

A developer of mass-produced housing has a number of choices as to how to market his completed product. One way in which that product can be marketed is as a cooperative. Where this is done, the developer does not sell the individual housing units directly to the ultimate consumer. Rather, the developer sells the whole building to a corporation [the “cooperative”] of which the ultimate consumer is a stockholder, and from which that consumer then rents an individual unit. The marketing of the Watergate West housing cooperative proceeded as follows.

In 1964, Watergate Improvements Associates [“WIA”], a limited partnership, was formed to sponsor a housing project. A subsidiary of WIA, Watergate Construction Corporation, was formed to build the cooperative. Another subsidiary of WIA, River-view Realty Corporation, acted as sales agent.

On August 24, 1967, before construction of the building began, Watergate West, the cooperative, was. chartered. From that date until June 1969, when an independent board of directors was elected, WIA controlled Watergate West.

On August 25, 1967, a prospectus was issued describing the project. The front page of the prospectus states in bold letters:

WATERGATE WEST INC.
PRESENTED BY:
RIVERVIEW REALTY CORPORATION
Plan of Cooperative Organization and Subscription and Deposit Agreement.

The closing page of this document states:

DATED THIS 25TH DAY OF AUGUST, 1967.
WATERGATE IMPROVEMENT
ASSOCIATES (a limited partnership)
SPONSOR.

Persons wishing to buy an interest in the planned cooperative signed the subscription and deposit agreement referred to in the prospectus. The agreement is, on its face, between the subscribing member and the cooperative, Watergate West. Appellant signed such an agreement on September 19, 1967.

In 1969, after the cooperative was constructed, the subscribing members signed a [1353]*1353Cooperative Apartment Proprietary Lease and Occupancy Agreement which gave them the right to occupy their apartments for 99 years in exchange for the payment of a monthly assessment. Like the stock subscription agreement, the lease is, on its face, between the subscribing member and the cooperative, Watergate West.

Appellant’s lease agreement is dated January 14, 1969. On January 14, 1969, however, Watergate West did not own the building. As a result, appellant also signed a subsidiary agreement with Riverview whereby she agreed to remit monthly rent payments to Riverview if she should occupy her apartment before the cooperative acquired title to the building. Appellant moved into her apartment on January 28, 1969. The cooperative acquired title to the building on May 1, 1969.

II.

THE PROCEEDINGS IN THE TRIAL COURT

As noted above, the complaint in this case alleges breach of express and implied warranties. More particularly, the complaint alleges that appellees breached these warranties by delivering to appellant an apartment containing numerous defective appliances; that these appliances included a defective air conditioning system; that this air conditioning system caused damage to the parquet floors, the wall, and the wool rug and pad in her bedroom; and “that said breaches of warranty have continued from the date of said agreement, January 14, 1969 to the present . . . [and] have rendered said apartment at least 50% uninhabitable from January 1969 until the present.”

Watergate West responded to this complaint as follows:

That on January 14, 1969, when the plaintiff first occupied her apartment . she occupied it as a tenant, and at that point all the defects alleged by her to exist, did exist. At that time she dealt exclusively with Riverview Realty Corporation, which was the agent for the promoters of the project. That Watergate West, Inc. did not become the owner of the building . . . until May 1, 1969, long after all of these defects had been noted and objected to.

Riverview answered the complaint by denying the existence of any express or implied warranties. In addition, Riverview filed a motion for summary judgment, supported by an affidavit and memorandum, alleging that Riverview could not be held liable on the contracts between appellant and Watergate West because “Riverview Realty Corporation acted as agent for Watergate West, Inc. in negotiating with the plaintiff and other purchasers of cooperative apartments in said building, and the fact of its agency and the identity of its principal were disclosed to the plaintiff.”

Appellee Watergate West, but not appellant, filed a memorandum in opposition to Riverview’s motion. In that memorandum, Watergate West contended that Riverview “[had not acted] as agents for Watergate West but [had acted] for themselves and the other promoters.” Watergate West then went on to argue that appellant did have a valid cause of action against River-view, because “at the time the building was conveyed [to Watergate West] it was defective in many respects, including the items alleged by the plaintiff herein.”

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Bluebook (online)
391 A.2d 1351, 1978 D.C. App. LEXIS 309, Counsel Stack Legal Research, https://law.counselstack.com/opinion/berman-v-watergate-west-inc-dc-1978.