Brown v. Union Station Venture Corp. No. P-5

727 A.2d 878, 1999 D.C. App. LEXIS 82, 1999 WL 190485
CourtDistrict of Columbia Court of Appeals
DecidedApril 8, 1999
Docket97-CV-1691, 97-CV-1692
StatusPublished
Cited by5 cases

This text of 727 A.2d 878 (Brown v. Union Station Venture Corp. No. P-5) 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
Brown v. Union Station Venture Corp. No. P-5, 727 A.2d 878, 1999 D.C. App. LEXIS 82, 1999 WL 190485 (D.C. 1999).

Opinions

PRYOR, Senior Judge:

This consolidated appeal follows a bench trial interpreting a Partnership Agreement and Guaranty between appellants and the appellee. Appellants in No. 97-CV-1691, collectively referred to as the “Guarantors,” allege trial court error interpreting then-guaranty agreement with appellee and awarding attorney’s fees in addition to damages. Appellants in No. 97-CV-1692, collectively referred to as “JBG,” “JBG Partnership,” or “Partnership,” allege trial court error interpreting their partnership agreement with appellee and awarding attorneys fees beyond the agreement’s contracted maximum liability of $10 million. We affirm the court’s interpretation of the guaranty and partnership agreement, with the exception of the award of attorneys fees against JBG, which we vacate.

I.

Appellants and the appellee, Union Station Venture Corporation No. P-5, entered a joint venture agreement to develop the former Woodward & Lothrop warehouse near Union Station (the “Venture”). Union Station Venture Corporation, hereinafter “OHIO,” is a District of Columbia corporation owned by the pension fund for Ohio State’s mox-e than 300,000 public employees. On June 9, 1989, the parties memorialized the terms of their venture in a Partnership Agreement (the “Agreement”). Among other things, the Agreement provided that OHIO was to contribute $65 million, receive a sixty percent interest in the Venture, and earn a ten percent monthly return on its investment. The JBG Partnership invested $10, secured a $750,000 managing contract, and obtained a forty percent interest in the Venture. The Agreement further provided that in certain circumstances, JBG would be hable to OHIO for losses it incurred, up to a maximum of [880]*880$10 million. A separate guaranty agreement (the “Guaranty”) was also executed holding JBG’s individual investors, the Guarantors, personally accountable for certain JBG obligations.

In 1998, after a change in the District’s real estate market, JBG stopped paying OHIO’S ten percent monthly return. Additionally, OHIO’S “Capital Account,” which kept track of its Venture finances, revealed a deficit approaching $30 million. In light of these unfavorable factors, on May 12, 1993, OHIO elected to terminate the Venture pursuant to ¶21 of the Agreement — the interpretation of which is now at the center of this appeal.

Paragraph 21 contains a buy/sell provision which, once executed, dissolves the Venture. Under its terms, an offering party sets a “venture price” that when applied to a formula set forth in the Agreement, yields two figures; the “offeror’s net venture price” and the “offeree’s net venture price.” These figures, as determined by the Agreement’s formula, represent the amount the buying party must pay for the seller’s interest in the Venture. The non-offering party then has ninety days to elect to either buy the offeror’s Venture interest (for the offeror’s net venture price), or sell its own (for the offeree’s net venture price). If no election is made within the ninety-day period, the right to select reverts to the offeror. Paragraph 21(D) also states, in part, that: “[JBG] understands and agrees that, under certain circumstances, the Net Venture Price applicable to [JBG] may be less than zero (0) and require a reimbursement from [JBG], as seller, to OHIO, as buyer.”

As the offering party, OHIO’S May 12, 1993 notice to JBG set $40.9 million as the venture price. The parties agree that as the buyer, JBG owed OHIO the offeror’s net venture price plus, pursuant to the above quoted language in ¶ 21(D), approximately $8 .5 million to replenish the deficit in OHIO’S Capital Account.1 The parties further agree that as the seller, JBG’s net venture price for its interest in the Venture was zero ($0.). A disagreement arose, however, over whether JBG, as the seller, was still liable under the above quoted language of ¶ 21(D) for the $8.5 million reimbursement of OHIO’S Capital Account. Ninety days after OHIO’S May 12th notice, JBG made no election to buy or sell. OHIO, therefore, elected to purchase JBG’s interest and set October 12, 1993 as the closing date. At closing, JBG transferred its Venture interest to OHIO, but refused to pay the $8.5 million reimbursement. According to JBG, its “reimbursement” obligation as a seller under ¶ 21(D) was “oblique and indefinite” and, therefore, it had no duty to replenish OHIO’S Capital Account. Litigation ensued.

A seven-day bench trial commenced in Superior Court; voluminous documentary evidence and witness testimony were admitted, and extensive post-trial briefs were submitted by the parties. At issue was not only the correct interpretation of JBG’s reimbursement obligation as the seller, but also whether the Guarantors were liable under the Guaranty agreement for JBG’s reimbursement liability, if any. On March 11, 1997, a twenty-one page Memorandum, Opinion and Order was issued by the court. The court concluded that JBG, as the seller, was liable under ¶ 21(D) for the reimbursement, and that the Guarantors were personally liable under the Guaranty as well. Accordingly, the court awarded OHIO $8,513,006 .94 in damages. See note 1, supra. Following additional briefing by the parties, on June 18, 1997, the court awarded OHIO an additional $1,928,066.40 in attorney’s fees under ¶ 30(D) of the Agreement and Section 2(h) of the Guaranty. JBG and the Guarantors appealed.

On appeal, JBG contends the trial court incorrectly interpreted ¶ 21(D) of the Agreement as creating an enforceable obligation to reimburse OHIO’S Capital Account where it was the seller in a buy/sell. JBG also argues the award of attorney’s fees above and beyond its maximum $10 million in contractual liability was erroneous. Similarly, the Guarantors contest the trial court’s imposition of liability for JBG’s reimbursement under the [881]*881Guaranty, as well as the award of attorney’s fees.

II.

Interpreting the Agreement

Where a contract’s language is “clear and definite,” we adhere to the “objective law” of contracts, Minmar Builders, Inc. v. Beltway Excavators, Inc., 246 A.2d 784, 786 (D.C.1968), and interpret the contract as a matter of law. 1901 Wyoming Ave. Coop. Ass’n v. Lee, 345 A.2d 456, 461 n. 8 (D.C. 1975).

Conversely, an “objective interpretation” of an ambiguous contract may require evidence of the parties’ intent regarding the meaning of term(s), thus presenting a question of fact. Howard Univ. v. Best, 484 A.2d 958, 966-67 (D.C.1984) (citations omitted). This factual determination takes into account how a “reasonable person” in the parties’ position would interpret the ambiguous language. Id. at 967 n. 2 (citations omitted). The court may consider extrinsic evidence (either explicitly or implicitly) in its analysis. Waverly Taylor, Inc. v. Polinger, 583 A.2d 179, 182 (D.C.1990) (citation omitted).

On appeal, we review de novo the question of whether a contract is ambiguous. Sacks v. Rothberg, 569 A.2d 150, 155 (D.C.1990) (citing Dodek v. CF 16 Corp.,

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Brown v. Union Station Venture Corp. No. P-5
727 A.2d 878 (District of Columbia Court of Appeals, 1999)

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Bluebook (online)
727 A.2d 878, 1999 D.C. App. LEXIS 82, 1999 WL 190485, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-union-station-venture-corp-no-p-5-dc-1999.