Legal Case Summary

. They had a full back position to that, but they don't say it was immaterial. They argued it in the alternative, and in a footnote, page 21, footnote 16 of their opposition brief, they argued based on the term sheet. I'd also say the record shows they made the arguments that there was an agreement without referencing the term sheet. They were reticent because they treated it as a confidential document. They shouldn't have been, but nonetheless, the term sheet was there. The trial court looked at it and considered it, and the term sheet is important. It is part of the claim that was made below. There was a claim below that the rent was not yet due and that there was no breach of the lease. And while I will certainly concede on appeal, the argument's focus is different. It's simply a different focus of argument. The claim was there below, and it was an alternative one. It wasn't waived under cases like LeBron or Yee, or this court's decisions in Koch and Woodruff. It's an important document

. And in that document, the landlord withdrew its prior defaults. The party's committed to terminating the escrow agreement and causing $525,000 go to the landlord. That happened. They set a new date for the payment of the bulk of the rent, which was to be 90 days after the Second Amendment was signed. And they committed themselves to further negotiate. It said, quote, the timetable for development will be revised and documented in amendments to the development agreement. That's where they stood. They worked on that, but come May of 2013, they failed to complete that process. Now, May of 2013, three years after the signing of this lease, with 96 years left to go, the market had improved. The landlord demanded a rent payment that wasn't up, that the tenant was not obligated to make under the lease and then purported to determine the lease. Reviewing the facts in the light most favorable of the tenant, which we must do, because this was below on a summary judgment motion, there was no rent due on May 30th. That's provided for under the term sheet, which is a binding agreement. Second, even if you conclude that rent was due on May 30th, because you ignore the term sheet, you're left with a world that had the original agreements between the parties

. And the obligation was to make that second rent payment into escrow to deal with the environmental remediation that was necessary. Landlord didn't demand a payment be made into the escrow. Landlord demanded a payment be made to it. Moreover, your brief says that the developer tried to contact the university about creating a new escrow and didn't hear back, but a recollection is that isn't much documented. But, again, more on summary judgment. And there's an affidavit in the record below that indicates that the tenant reached out to the landlord to negotiate with regard to an escrow and that the university refused to do so. And on summary judgment, that has to be credited. You can have a trial to determine the effect of all those things, but at this stage of the proceeding, that has to be credited. Thirdly, with regards to whether there was a breach under the terms of an agreement, the agreement has a two-step process for notice. The first step is the landlord must give notice that rent is due. If ten days pass without payment, then there's a quote, event of defaults. An event of defaults standing along the- On summary judgment, you focused entirely on an arrangement for exactly this two-stage process that everyone seems to now agree is inapplicable. Councillor Schroeder

. It's true that the portion that the provisions that people now agree are applicable also set up a two-stage process only ten days rather than twenty days. But you didn't brief that at all before the district court. Well, you're on a council below, and to be clear, it was not my law firm, but council below focused on a different section of the lease. That's true. The argument they did- And a different document. They said that the development agreement was pulled into the lease in effect. And that's not an argument we're pursuing here. Again, the key is the claim, though. The claim was the rent was not due. And again, under a line of cases, LeBron, that I touched on before, the issue is what was the claim. You can make alternative arguments. You can make different arguments in the appellate court. LeBron, for example, the question was whether Amtrak was a government entity- that was the issue before the Supreme Court- in the Court of Appeals, they had argued it was a somewhat similar entity to a government entity

. So the issue is the claim. And the claim is there, and it's preserved. The arguments, Your Honor, are different. I understand that. Now, finally, there's the question of forfeiture. Under DC law, which governs here, forfeiture is a harsh and disfavored remedy. The mere fact that the lease permits termination is not dispositive, even though these are commercial parties, that is not dispositive. And cases such as entrepreneurial limited versus Gesuna in the DC say that. Instead, for forfeiture to be available, there must be a number of factors. There must be a breach of a clearly defined obligation. There must be no alternative remedy. The landlord must feel fairly, and there must be no prejudice to the landlord. Excuse me, there must be prejudice to the landlord

. Here, none of those exist. So the grant of forfeiture by the district court was error. Gunn v Brown, to which the landlord has no answer, is dispositive. What that case basically says is where the landlord is asked for rent. That is the alternative remedy as a matter of law. You can't ask for rent and also seek termination. It's a 1950 DC Court of Appeals, then municipal Court of Appeals case, and it is dispositive. It's just worth what that alternative remedy is. In part, the trial, of course, seem to be mistaken in thinking about these as commercial entities in that changing the analysis. It doesn't. This whole body of law is developed in cases involving commercial entities. Translux is a parking lot. Shapiro, a commercial property, entrepreneur, the issue is about a business

. Again, with the issue, with respect to the issue of the willfulness of the breach, the question is whether the rights were clearly defined. Here, they were clearly not. We had a term sheet. We had questions about whether the amount was payable into Esco or not. We had questions about the notice provision, which even the trial court admitted was murky, and the counsel for landlord below, I believe the word they used was not careful for murky. At the end of the day, also, there was no prejudice to the landlord. The landlord has received a judgment for the rent. The rent covers not only past time, but future time. There's not another rent payment due for it. It's very complicated, under the least, but in essence, for another year. I see my time is running short, unless you have any other questions to make this time. I'd like to reserve the balance of my time. Thank you

. May I please the court, Timothy McCormick for Howard University. Your honors, before you today seeking the affirmance of this summary judgment, we are bound by the record below. And that record, which was undisputed, is that notwithstanding the document, first that this project began in 2008, notwithstanding the development agreement in the ground, please, was standing probably what counsel would have preferred. Beginning on March 31, 2011, these parties began modifying their agreement inconsistently with the loan documents. They did not require a written agreement to make changes to the transaction. That begins with the Howard University letter on March 31, 2011, extending the date for the second installment of rent, 1,475,000. It was already overdue at that point by the terms of the ground leases. The ground leases that payment was due on March 15, the university agreed to extend that deadline December 8, 2011. For better or worse, the parties continued this practice throughout 2011 and into 2012. On April 6, 2012, they entered into the term sheet the letter agreement, which was an agreement at most, an agreement to agree. Counsel of the day talks about the bulk of the rent being due 90 days after amendment agreements which were never drafted were signed. They were drafted. Well, Your Honor, a version was drafted

. There were prior drafts before that. In fact, the redressor contemporaneous with the termination of the escrow agreement, which the developer had refused to sign. But fundamentally, if we're going to go back, we really have only two choices. Either we accept that these parties poorly made of changes, which is the position that was taken below because in the verified complaint the developer states under oath rent was due May 30, of 2013. Or we looked to the documents and those documents were going to be bound by that term sheet as counsel would urge today, it required $100,000 to be paid 10 days after April 6, 2012. That was never invoked as an event of default. Well, as an event of default was a failure to pay the second installment of rent, which would be both of those two installments. I will acknowledge we acted consistently with what was the agreement of the parties, what the undisputed evidence below before Judge Hall showed was the agreement of parties, which was that the university allowed that first installment to be wrapped back into the entire payment that the parties agreed in February, sorry, February, of 2013 that that pay moved you made by May 30, 2013. You have the email from Mr. Siegel. You have the letter to Mr. Siegel acknowledging after the District of Columbia Preservation League came in that there was a payment due in beginning to make proposals for alternatives to a payment directed to the university. We have a comment as that

. Mr. Siegel's letter, Your Honor. April 1. The latest April 1, yes Your Honor. There is a, there is, in the record, Mr. Troll is at the David States in a March 14, Puzzles first made this reference again in April 1, 2013, email from Mr. Siegel. So this is an email image. He says the only monetary amount, over pursuant to paragraph 11 of the second amendment is the initial amount of these payments that roughly related to the amount. Honor, before May 30, a state of previously would cannot agree that the university was as well to collect that amount should be terminated for non-payment, particularly now that there is no money for us trying to be too historic preservation of the patient. That is a yes. And according to this, I stated in my March 70 email, respectively, these changes are not an abortion plan. Yes. So is it your position that this reflects a complete agreement or is this not? Does this letter? It is my position, Your Honor, that for better or worse, orally the parties agreed on February 1, and the telephone call from Mr. Schmok and Mr. Siegel, that the payment you made on May 30. When nobody had anticipated was that six days later, the District Columbia Preservation League was going to step in and for the first time see historic designation for the old bond-bred building. The letter about April 1, is it really an email I think it's really an email. Yes, Your Honor. The message to the email message of April 1, certainly seems to be something occurring in immediate race where the parties are still in the industry. Well, Your Honor, from the university's perspective, no, we had an agreement on February 1. I think that that letter and its tone, what? That was the oral agreement. There was an oral agreement. I think that tone reflects the history of this. The university has repeatedly reached agreements with this developer only to have him have it back away, seek amendments. The university has been given concessions

. So is it your position that this reflects a complete agreement or is this not? Does this letter? It is my position, Your Honor, that for better or worse, orally the parties agreed on February 1, and the telephone call from Mr. Schmok and Mr. Siegel, that the payment you made on May 30. When nobody had anticipated was that six days later, the District Columbia Preservation League was going to step in and for the first time see historic designation for the old bond-bred building. The letter about April 1, is it really an email I think it's really an email. Yes, Your Honor. The message to the email message of April 1, certainly seems to be something occurring in immediate race where the parties are still in the industry. Well, Your Honor, from the university's perspective, no, we had an agreement on February 1. I think that that letter and its tone, what? That was the oral agreement. There was an oral agreement. I think that tone reflects the history of this. The university has repeatedly reached agreements with this developer only to have him have it back away, seek amendments. The university has been given concessions. You know, the record below is. Both parties were brought silent by the historic preservation of the population, right? I don't know if brought silent is a word. I think both were surprised. But ultimately, it was the responsibility to develop it to resolve that issue. I mean, there was certainly methods by which to resolve it. But by 2013, this project had been extended for six years. What was the university's response to this hit by the line email list? Was that we were not unwilling? There's not a written response, no. So you did some other work. You didn't come back and say, well, sorry, we have an agreement. I thought it was about how the negotiations were going to be. What was the main oral agreement on February? April, I'm sorry, you're on April 16th, the university writes back and reiterates the rent as to May 30th, 2013. Where's that? That is, I know it is in the Torella affidavit, Your Honor, and I just do not have the citation to the. It's reproduced in here

. You know, the record below is. Both parties were brought silent by the historic preservation of the population, right? I don't know if brought silent is a word. I think both were surprised. But ultimately, it was the responsibility to develop it to resolve that issue. I mean, there was certainly methods by which to resolve it. But by 2013, this project had been extended for six years. What was the university's response to this hit by the line email list? Was that we were not unwilling? There's not a written response, no. So you did some other work. You didn't come back and say, well, sorry, we have an agreement. I thought it was about how the negotiations were going to be. What was the main oral agreement on February? April, I'm sorry, you're on April 16th, the university writes back and reiterates the rent as to May 30th, 2013. Where's that? That is, I know it is in the Torella affidavit, Your Honor, and I just do not have the citation to the. It's reproduced in here. Yes, it is your honor. And the J. Donnell, again, I'm sorry. Would be April the 16th, Your Honor. On May the 23rd, the developer, you know, states its position very clearly that it will not make any more monetary payments to the university until such time as historic preservation issues are resolved. That seemed to be acceptable. To? Was that not acceptable to the university? That was not acceptable to the university. It's real estate had been tied up since 2008. It was entitled to the payment of the developer needed additional time. In fact, the deadline under the documents, because the parties had never reached agreement as to any amendments, the deadline for the completion of all construction commercial and residential was June 5th, 2013. So the developer's position, by May 23rd, is that simply I'm not going to pay. I'm just refusing to pay. That the developer's position below its foreign statement is verified in plain, because I read it was due May 30th of 2013

. Yes, it is your honor. And the J. Donnell, again, I'm sorry. Would be April the 16th, Your Honor. On May the 23rd, the developer, you know, states its position very clearly that it will not make any more monetary payments to the university until such time as historic preservation issues are resolved. That seemed to be acceptable. To? Was that not acceptable to the university? That was not acceptable to the university. It's real estate had been tied up since 2008. It was entitled to the payment of the developer needed additional time. In fact, the deadline under the documents, because the parties had never reached agreement as to any amendments, the deadline for the completion of all construction commercial and residential was June 5th, 2013. So the developer's position, by May 23rd, is that simply I'm not going to pay. I'm just refusing to pay. That the developer's position below its foreign statement is verified in plain, because I read it was due May 30th of 2013. There's no question it wasn't paid. As to the issues of notice, there might be more persuasive had the developer ever performed. It never paid the university the million, $1 million, $75,000. Its agreement with its title company was one sided only the developer could instruct the title company to release the money. There was no provision for releasing it to the university. And in fact, subsequently after Judge Hollen or Judgement, the developer directed the title company to return the funds to it, it passed it on to an affiliate. And so we again have an empty vessel in the form of the developer. Finally, as to the issue of forfeiture, there's no, the university will be prejudiced. The development agreement is undisputed, has expired by its own terms as of June of 2013. Not a shovelful adeert has been termed, the developer has done nothing to develop its property. And to give them, they want at this point an open ended lease in which they never have to pay rent. And until such time as the parties come to terms, unannuated agreement, since their last agreement has expired, that it's extremely prejudiced of the university, this comes closer to the Lomada case. And the Smith-Bee Warren builders, where the developer failed to proceed

. There's no question it wasn't paid. As to the issues of notice, there might be more persuasive had the developer ever performed. It never paid the university the million, $1 million, $75,000. Its agreement with its title company was one sided only the developer could instruct the title company to release the money. There was no provision for releasing it to the university. And in fact, subsequently after Judge Hollen or Judgement, the developer directed the title company to return the funds to it, it passed it on to an affiliate. And so we again have an empty vessel in the form of the developer. Finally, as to the issue of forfeiture, there's no, the university will be prejudiced. The development agreement is undisputed, has expired by its own terms as of June of 2013. Not a shovelful adeert has been termed, the developer has done nothing to develop its property. And to give them, they want at this point an open ended lease in which they never have to pay rent. And until such time as the parties come to terms, unannuated agreement, since their last agreement has expired, that it's extremely prejudiced of the university, this comes closer to the Lomada case. And the Smith-Bee Warren builders, where the developer failed to proceed. Does the university think that it appropriately followed the procedures for termination here? Yes, it does, Your Honor. The agreement provides that there will be a 10-day notice and no further notice to the tenant. The second 10-day notice is to protect the leasehold mortgagee, which would have been the party that would have had to build anything. And had they financed that, how to write, would have had a mortgage on the improvements, ending mortgage on the lease, and they were the parties intended to title that second 10-day notice, so that if the developer failed to add, they could step in and perform under the lease, which they had had a right to do under the loan documents, except no leasehold mortgagee existed. There's no requirement that there be subsequent, that there be serial notices to develop. The first notice told them they were in default, second notice told them we intended to turn it. Any other questions? Thank you. Your Honor, we would ask that the support of firm Judge Hals grant of summary judge. I'm sorry, just, I mean, I'm here, page 105, if they joined appendix. Prior to exercising any rights to terminate, landlord shall provide tenant and each leasehold mortgagee with a written notice. You're saying that doesn't apply to the tenant? Page 105 of the joint appendix. Yes, we're. You're in the 105 where it talks about the second 10-day notice period

. Does the university think that it appropriately followed the procedures for termination here? Yes, it does, Your Honor. The agreement provides that there will be a 10-day notice and no further notice to the tenant. The second 10-day notice is to protect the leasehold mortgagee, which would have been the party that would have had to build anything. And had they financed that, how to write, would have had a mortgage on the improvements, ending mortgage on the lease, and they were the parties intended to title that second 10-day notice, so that if the developer failed to add, they could step in and perform under the lease, which they had had a right to do under the loan documents, except no leasehold mortgagee existed. There's no requirement that there be subsequent, that there be serial notices to develop. The first notice told them they were in default, second notice told them we intended to turn it. Any other questions? Thank you. Your Honor, we would ask that the support of firm Judge Hals grant of summary judge. I'm sorry, just, I mean, I'm here, page 105, if they joined appendix. Prior to exercising any rights to terminate, landlord shall provide tenant and each leasehold mortgagee with a written notice. You're saying that doesn't apply to the tenant? Page 105 of the joint appendix. Yes, we're. You're in the 105 where it talks about the second 10-day notice period. That doesn't notice it's just the leasehold mortgagee. That's where that is protected. If we look at some, I mean, it says that, but it also says tenant, just before each leasehold mortgagee, where it is tenant. But it also, the lease also provides that upon expiration of such a 10-day period, the tenant fold has not been carried. The landlord shall have the right in its sole option thereafter to elect to terminate the lease in all of the rights of tenant, enter to the premises and in such case. That assumes the notice has been given, right? That assumes that the first notice has been given or the combined notice. There's nothing that says that that second notice has to be serial as to anyone other than the leasehold mortgagee. The original notice that went, so this is a notice of your default, this is a notice of tenant. This provision conflicts two different notices to terminate, one to the tenant and one to the, which can be coupled with the, and in the case of the leasehold mortgagee, who will have lent, had there been a developed millions of dollars to build the improvements, and will want to protect that interest on that mortgage, and it needs the rights in the ground lease. They are entitled to serial notice. There has been a default, and we intend to terminate, and it hasn't been cured within the first 10 days. And we intend to terminate, and there are provisions in the, in the ground lease and in the development agreement that would allow that party, that bank to step in then, and begin making the lease payments on the ground lease to preserve its collateral, which is actually going to be the mixed use building. Except there was never a mortgagee, there was never any money borrowed, and there is no building

. That doesn't notice it's just the leasehold mortgagee. That's where that is protected. If we look at some, I mean, it says that, but it also says tenant, just before each leasehold mortgagee, where it is tenant. But it also, the lease also provides that upon expiration of such a 10-day period, the tenant fold has not been carried. The landlord shall have the right in its sole option thereafter to elect to terminate the lease in all of the rights of tenant, enter to the premises and in such case. That assumes the notice has been given, right? That assumes that the first notice has been given or the combined notice. There's nothing that says that that second notice has to be serial as to anyone other than the leasehold mortgagee. The original notice that went, so this is a notice of your default, this is a notice of tenant. This provision conflicts two different notices to terminate, one to the tenant and one to the, which can be coupled with the, and in the case of the leasehold mortgagee, who will have lent, had there been a developed millions of dollars to build the improvements, and will want to protect that interest on that mortgage, and it needs the rights in the ground lease. They are entitled to serial notice. There has been a default, and we intend to terminate, and it hasn't been cured within the first 10 days. And we intend to terminate, and there are provisions in the, in the ground lease and in the development agreement that would allow that party, that bank to step in then, and begin making the lease payments on the ground lease to preserve its collateral, which is actually going to be the mixed use building. Except there was never a mortgagee, there was never any money borrowed, and there is no building. Any other questions? Thank you. Thank you. All right. Mr. Smirzynski, you had one minute remaining, and we'll give you another minute, so two minutes. I appreciate it. Let me start with the question of the event of the fault, which is where we just ended. The agreement provides that you don't have an event of the fault until there's been a failure to pay for 10 days after notice. Then only then can you give a notice that there has been an event of the fault, and that applies both to the tenant and any leasehold mortgagee, and it provides that upon the expiration of such 10-day period, referring to the immediately anesthetized second notice, then, and only then, is there the right to terminate. The university, as it tells the story, suggests that the extensions were only a result of its gift spiet. They weren't. There were disputes about delays. The record is replete with them, and on summary judgment, the tenant's record has to be read in the light most favorable to the tenant

. Any other questions? Thank you. Thank you. All right. Mr. Smirzynski, you had one minute remaining, and we'll give you another minute, so two minutes. I appreciate it. Let me start with the question of the event of the fault, which is where we just ended. The agreement provides that you don't have an event of the fault until there's been a failure to pay for 10 days after notice. Then only then can you give a notice that there has been an event of the fault, and that applies both to the tenant and any leasehold mortgagee, and it provides that upon the expiration of such 10-day period, referring to the immediately anesthetized second notice, then, and only then, is there the right to terminate. The university, as it tells the story, suggests that the extensions were only a result of its gift spiet. They weren't. There were disputes about delays. The record is replete with them, and on summary judgment, the tenant's record has to be read in the light most favorable to the tenant. These agreements to extend the dates were a result of negotiation to resolve prior delays caused by the university. With respect to the term sheet, we hear the phrase agreement to the returner for an around, but this agreement is at least as mutual in terms of trading obligations as the one in East Bank, the DC quarter of the Peales decision in East Bank. The parties signed this. The parties acted on the basis of it. The faults were withdrawn. A amounts were released from escrow. There was still more work to be done, but there was partial performance of that agreement, and there was a mutualality of obligation. It's a valid binding agreement. With respect to the question of rent being due on May 30th, as we discussed in our reply brief, if it paid a six to nine, those references were entirely in connection with the execution of the second amendment. It didn't happen, so there was no amount owed on May 30th. The complaint does not admit that. Finally, with regard to this February 1 phone call, it's disputed. We're on some regent

. These agreements to extend the dates were a result of negotiation to resolve prior delays caused by the university. With respect to the term sheet, we hear the phrase agreement to the returner for an around, but this agreement is at least as mutual in terms of trading obligations as the one in East Bank, the DC quarter of the Peales decision in East Bank. The parties signed this. The parties acted on the basis of it. The faults were withdrawn. A amounts were released from escrow. There was still more work to be done, but there was partial performance of that agreement, and there was a mutualality of obligation. It's a valid binding agreement. With respect to the question of rent being due on May 30th, as we discussed in our reply brief, if it paid a six to nine, those references were entirely in connection with the execution of the second amendment. It didn't happen, so there was no amount owed on May 30th. The complaint does not admit that. Finally, with regard to this February 1 phone call, it's disputed. We're on some regent. That can't be credited, and as we see, the parties continue to act after that. I'm sorry to go see it. Do we have the developer's account of that phone call? Your Honor, it's within the Siegel-Afd-Avid, which appears at 4.35 as the record. And it's paragraph 22 at page 442 of the joint appendent. And Mr. Siegel states under oath, there was no discussion of item number two. Mr. Schmozzy, no pertaining to payment of the $1.475 million. So that's absolutely a disputed fact, and on some regent, the tenants version of those affairs must be credited. Unless there are any other questions from the bench, I see my time is up. Thank you

. All right. Thank you