Trial Court Erred in Ruling that Theory of Damages for Claim Under Condominium Act Was Impermissibly Speculative

Oct 17th, 2012 | By Douglas C. Melcher | Category: Case Notes

On October 4, 2012, the District of Columbia Court of Appeals decided Campbell v. Fort Lincoln New Town Corp., No. 11-CV-179 (D.C. Oct. 4, 2012) in which it considered whether the trial court in that case improperly precluded the plaintiff-appellants from presenting evidence on their theory of damages for a claim arising under the District of Columbia Condominium Act, D.C. Code § 42-1901.01 et seq. (2010 Repl.) (“Condominium Act”), and, as a preliminary matter, whether it had jurisdiction to consider the merits of this evidentiary issue. Campbell, No. 11-CV-179, slip op. at 10-20.

This case arose from an agreement entered into by the defendant-appellees and an agency of the District of Columbia. Id. at 2-4. The agreement allegedly required the defendant-appellees, as a condition of being permitted to develop a residential community in Washington, D.C., to create and fund a non-profit community organization responsible for providing services to the residential community. Id. The developer proceeded with developing the residential community but allegedly never performed its obligation under the agreement to create and fund the community organization. Id.

The plaintiff-appellants, including a civic association representing condominium owners in the residential community, subsequently brought suit against the defendant-appellees alleging claims arising from the defendant-appellees’ alleged breach of the agreement. Id. at 4-5. As relevant here, the claims included breach of contract and related common law claims. Id. They also included a claim for violation of the Condominium Act for failing to disclose material information to condominium purchasers in the residential community, i.e., the existence of the defendant-appellees’ obligation to create and fund a community organization. Id. The trial court dismissed the plaintiff-appellants’ claims and the Court of Appeals affirmed in part and reversed in part; specifically, the Court of Appeals (1) affirmed the dismissal of the breach of contract and related common law claims on the grounds that the plaintiff-appellants lacked standing to bring those claims since they were not parties to the agreement or direct beneficiaries of the agreement; and (2) reversed the trial court’s dismissal of the plaintiff-appellants’ claim under the Condominium Act because the claim was adequately pled and plaintiff-appellants had standing to bring the claim. Id. at 5-6.

On remand, the case proceeded to trial on the claim under the Condominium Act. Id. at 7. The plaintiff-appellants sought to present evidence on their theory of damages which was that if the defendant-appellees had complied with the Condominium Act and thus disclosed their obligation to create and fund a community organization, the plaintiff-appellants could have lobbied the District to take action to enforce the agreement and that such lobbying would have resulted in enforcement of the agreement thereby benefiting the residents of the residential community. Id. at 7-8. The trial court ruled that this theory of damages was precluded by the Court of Appeals’ prior decision because it was premised on an alleged breach of the agreement. Id. at 8-9. Additionally, it ruled that this theory of damages was impermissibly speculative. Id. Having no other theory of damages, the plaintiff-appellants requested a voluntary dismissal for the purpose of seeking immediate review by the Court of Appeals. Id. at 9.

On appeal, the Court of Appeals considered, as a preliminary matter, whether it had jurisdiction to decide the merits of the trial court’s evidentiary ruling. Id. at 10-12. The defendant-appellees argued that the Court of Appeals did not have jurisdiction because the plaintiff-appellants requested a voluntary dismissal. Id. The Court of Appeals recognized that “‘[t]he general rule is that a party who requested or consented to a particular ruling is estopped from appealing that ruling.’” Id. at 10 (brackets omitted; quoting Solers, Inc. v. Doe, 977 A.2d 941, 949 n.6 (D.C. 2009)). It further recognized, however, that “there is an exception to this rule”; specifically, it stated that “[w]hen a plaintiff seeks a voluntary dismissal in response to a trial court ruling that effectively dismantles the plaintiff’s case, ‘we do not consider the dismissal to be voluntary, and the plaintiff is not estopped from pursuing the appeal.’” Id. (brackets omitted; quoting Solers, 977 A.2d at 949 n.6). The Court of Appeals concluded that the instant appeal fit within this exception and, accordingly, rejected the defendant-appellee’s jurisdictional argument. Id. at 10-12.

With respect to the evidentiary ruling, the Court of Appeals addressed each of the trial court’s rationales separately. Id. at 12-20. First, the Court of Appeals rejected the trial court’s conclusion that the Court of Appeals’ prior decision precluded the plaintiff-appellants’ theory of damages. Id. at 13-17. It explained that although it ruled that the plaintiff-appellants lacked standing to bring a breach of contract action or related common law claims, they did not lack standing to bring a claim under the Condominium Act regardless of whether their theory of damages was based in part on the allegation that the defendant-appellees breached the agreement. Id.

Second, the Court of Appeals rejected, as premature, the trial court’s conclusion that the plaintiff-appellants’ theory of damages was impermissibly speculative. Id. at 17. The Court of Appeals explained the applicable law as follows: “A plaintiff must ‘establish both the fact of damages and the amount of damages with reasonable certainty.’” Id. (quoting Hawthorne v. Canavan, 756 A.2d 397, 401 (D.C. 2000)). “The proof need not be mathematically precise, however; what is required is ‘some evidence which allows the trier of fact to make a reasoned judgment’ rather than an award based on ‘speculation or guesswork.’” Id. at 17-18 (quoting NCRIC, Inc. v. Columbia Hosp. for Women Med. Ctr., 957 A.2d 890, 902 (D.C. 2008)).

Applying the foregoing principles, the Court of Appeals stated that, “absent evidence to the contrary, a jury reasonably could find that District officials more likely than not would have responded favorably to the complaint of a large group of District home owners (many of them voters) that a major real estate developer had breached its contract with the District to their community’s detriment.” Id. at 19. It further stated that it would be all the more reasonable to infer that the District would be motivated to enforce the agreement if it was the party that sought the provision requiring the defendant-appellees to create and fund the community organization. Id. It also stated that evidence that the plaintiff-appellants were savvy and well-connected politically and had had prior success lobbying the District on other issues further suggested that the plaintiff-appellants might be able to present sufficient evidence for a jury to award damages without impermissibly speculating. Id. Finally, it stated that “the record in its current posture provides no reason to suppose that [the defendant-appellees] could have fended off a lawsuit by the District to compel specific performance of the [agreement] (or for alternative relief of equivalent value to the residents of [the residential community]).” Id. at 19-20.

Accordingly, the Court of Appeals reversed the trial court’s evidentiary ruling and remanded the case for further proceedings consistent with its opinion. Id. at 20-21. To retrieve an electronic copy of the Court of Appeals’ opinion from its website, click here.

About the Author: Douglas C. Melcher is a licensed attorney and an active member of the District of Columbia Bar with more than a decade of experience practicing law in the District of Columbia. Mr. Melcher may be contacted by e-mail at dmelcher@DCLaw.net or by telephone at (202) 521-0603. To learn more about Mr. Melcher, click here.

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