SJ Enterprises, LLC v. Dianne Quander

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 16-CV-1235
SJ ENTERPRISES, LLC, APPELLANT,
v.
DIANNE QUANDER, APPELLEE.
Appeal from the Superior Court of the
District of Columbia
(CAB-3221-16)
(Hon. Steven M. Wellner, Trial Judge)
(Argued March 29, 2018 Decided May 16, 2019)
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 for the court by Chief Judge BLACKBURNE-RIGSBY.
Opinion concurring in the judgment by Senior Judge FERREN, at page 18.
BLACKBURNE-RIGSBY, Chief Judge: In this appeal, we are asked to
determine whether the landlord, Dianne Quander, waived the deadline for the
2
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
1
A renewal option is an option within a lease agreement that assigns to the
tenant the right to extend the lease. Typically, renewal options have a deadline,
whereby the tenant must exercise the intent to renew the lease by providing
adequate notice to the landlord by a specified date or the waiver of the option to
extend the lease.
3
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
4
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
2
The e-mail was also sent to Sarosh Hussain. From the record it appears
that Sarosh is Soophia Hussain’s cousin. However, she does not have a direct role
in this case.
5
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
6
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,
3
Soophia Hussain works at the restaurant and has been the managing
partner of SJ Enterprises since October 2014. After Ms. Quander sent the
September 16, 2015 e-mail, Soophia Hussain (who was not copied on the e-mail)
testified that Julie Hussain described the e-mail to Soophia Hussain as a lease
renewal inquiry and if SJ Enterprises were to renew the lease, that it would result
in a rent increase from $4,200 to $4,326.
7
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
4
D.C. Code § 42-306(b) provides, in part, that:
[N]o estate of inheritance, or for life, or for a longer term
than 1 year, in any real property, corporeal or
incorporeal, in the District of Columbia, or any
declaration or limitation of uses in the same, for any of
the estates mentioned, shall be created or take effect,
except by deed signed and sealed by the grantor, lessor,
or declarant, in person or by power of attorney or by will.
(emphasis added).
5
Because we reverse the trial court’s decision that the parties entered a new
contract, we do not reach the issue of whether the statute of frauds applies.
8
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
9
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 practice for a supposed second lease agreement via
e-mail. See Davis v. Winfield, 664 A.2d 836, 838 (D.C. 1995).
The Renewal Option states:
6
Although our concurring colleague has expressed his view that waiver is
typically a question for the factfinder, we respectfully draw attention to the
well-established principle that “waiver is a question of law where the facts and
circumstances relating to the subject are . . . clearly established,” which in our
view, is the case here. Word v. Ham, 495 A.2d 748, 751 (D.C. 1985) (citing 28
AM. JUR. 2D Estoppel and Waiver § 174 (1966)) (internal quotation marks and
alterations omitted).
10
Tenant shall have the option, at its sole discretion, to
renew for two (2) additional periods, each consisting of
five (5) years. Tenant may extend its tenancy, provided
it is not in default, by giving Landlord not more than
twelve (12) months and not less than five (5) months
notice of such intention.
After the Renewal Option expired, Ms. Quander sent SJ Enterprises an e-mail
titled “reminder of lease increase and renewal,” which contained the phrases:
“remind you that your first five[-]year lease agreement” is ending soon, “[p]lease
confirm that you want to continue with the lease,” and there will be “an increase of
3% each year starting in December , 2015” (the month after the initial lease term
was set to end).
Typically, this court strictly construes renewal options and their deadlines.
They are often treated as either conditions precedent7 or categorized as “time is of
the essence”8 provisions which if not adhered to will render the renewal option
7
“A condition precedent may be defined as ‘an event, not certain to occur,
which must occur, unless its non-occurrence is excused, before performance under
a contract becomes due.’” Nortel Networks, Inc. v. Gold & Appel Transfer, S.A.,
298 F. Supp. 2d 81, 86 (D.D.C. 2004) (quoting RESTATEMENT (SECOND) OF
CONTRACTS § 224 (AM. LAW INST. 1981)).
8
A “time is of the essence” clause makes strict timeliness a requirement.
The clause may be included in a contract either explicitly or through “[a]ny words
which provide in unequivocal language that if the terms of the contract are not
(continued . . .)
11
void. 8 CORBIN ON CONTRACTS § 40.4 at 533 (rev. ed. 1999). Specifically, where
a “primary contractual obligation” of a landlord’s renewal option “is subject to a
condition” that the tenant exercise that option within a specified period of time and
the tenant fails to do so, the landlord’s duty to renew “is discharged” because the
“condition can no longer be performed.” Id. (The landlord’s duty to renew the
lease for another term “was subject to a condition, a condition that now can never
be performed.”).
Nevertheless, a landlord can waive his or her own legal right to timely notice
of a renewal option and, in effect, resurrect the option belatedly, through words or
conduct. See Harris v. Gindes, 265 A.2d 598, 599 (D.C. 1970) (Notice of renewal
requiring that a tenant give notice to the landlord that it intends to renew the lease
term is “for the landlord’s benefit and could be waived by him.”). This is because
waiver “is an equitable principle designed to avoid a harsh result when the parties
have conducted themselves in such a way as to make that result unfair. It serves to
prevent a party from insisting on a right upon which he could have insisted earlier
but has [been] found to have surrendered.” Nortel Networks, 298 F. Supp. 2d at 88
(internal citation and quotation marks omitted); see also Boswell v. Panera Bread
(. . . continued)
fulfilled within a specified period of time, the contract is to be void[.]” Siegel v.
Banker, 486 A.2d 1163, 1165 (D.C. 1984) (internal citation omitted).
12
Co., 879 F.3d 296 (8th Cir. 2018). Moreover, a waiver need not be explicit, “but
may be inferred from conduct inconsistent with an intent to enforce that right.”
Nortel Networks, 298 F. Supp. 2d at 88 (internal citations omitted); see also
LanQuest Corp. v. McManus & Darden LLP, 796 F. Supp. 2d 98, 102-03 (D.D.C.
2011) (internal citations omitted) (Under District of Columbia law, “even where
there is a written contract, a party’s course of conduct can constitute a waiver of
specific contractual provisions and be relied upon by the parties as a modification
of any enforceable contract that exists between the parties.”).9
The facts credited by the trial court demonstrate that Ms. Quander waived
her right to timely notice of renewal through her words and conduct by reaching
out to SJ Enterprises with her September 16, 2015 e-mail after the renewal option
period had expired. Her use of the words “reminder,” “renewal,” “first,”
“continue,” and “each year,” evinced an intent to waive the option deadline found
9
See also DeSantis v. Randolph, 430 N.Y.S.2d 457, 458-60 (N.Y. App.
Div. 1980) (holding that after the renewal period has ended, “[o]nce an offer of
renewal has been made to a tenant, and especially after the acceptance of that offer
by the tenant, the landlord may not [escape liability] to defeat the tenant’s right to a
renewal lease”); Wolf v. Tastee Freez Corp. of Am., 109 N.W.2d 733, 735-38 (Neb.
1961) (The court held that the landlord could have waived “by conduct if not in
words,”—calling tenant, asking to initiate settlement negotiations, and assuring
tenant that he “would have until Spring to decide whether to extend the lease”—his
right to timely, written notice requirement as required by the lease.).
13
within the lease agreement. Specifically, Ms. Quander’s September 16, 2015
e-mail titled “reminder of lease increase and renewal” stated, in part:
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.
(Emphases added). SJ Enterprises replied: “Thanks, Dianne, for the reminder.
Will start next month.” The most obvious example of Ms. Quander’s intent to
waive the option provision and to renew the lease for an additional five-year term,
was her use of the term “renewal.” The trial judge specifically did not credit Ms.
Quander’s testimony that her use of the term “renewal” in the e-mail was just “a
bad choice of words” and was “not what [she] meant.” The trial judge found that
“[t]he language [she chose] is quite specific and it’s very different from saying it’s
a reminder of the lease termination and [SJ Enterprises’] holdover status. There
were many other ways to express what Ms. Quander now says she was trying to
express which is the lease is over [and y]ou’re in a holdover status[.]” If Ms.
Quander believed then what she testified to at trial, then her language, according to
the trial judge’s finding, would have reflected such an understanding; “her use of
the language seems unnatural . . . given what else she might have said at the time.”
14
The trial judge further found that Ms. Quander’s use of the term “first five
[-]year lease” also implies that the e-mail was an attempt by Ms. Quander to enter
into a second five-year lease term with SJ Enterprises pursuant to the Renewal
Option. (Emphasis added). In addition, Ms. Quander’s request that SJ Enterprises
confirm that it intends to “continue with the lease” and Ms. Quander’s notification
that the rent would increase “each year” are also strong indications of Ms.
Quander’s intent to waive the Renewal Option. (Emphases added). Using the term
“continue” in this context indicates Ms. Quander’s intent to remain under the status
quo of and continue with the original lease. As the trial judge noted, Ms.
Quander’s behavior of working with SJ Enterprises to resolve issues continued
with the September 16th e-mail “where she’s putting it on the table . . . here are the
terms for moving forward.” Ms. Quander’s use of the terms “first,” “each year,”
and “continue” are strong indications of her intent to renew the lease and continue
the tenancy over an extended period of time. Further, Ms. Quander’s use of the
term “reminder” is also compelling as she is calling to SJ Enterprises’ attention
that this lease renewal has not yet been resolved and needs to be. Taken together,
Ms. Quander’s action of contacting SJ Enterprises after the option period had
expired, with an e-mail offering to “renew” and to “continue with the lease”
demonstrates Ms. Quander’s intent to waive the option deadline. See DeSantis,
15
430 N.Y.S.2d at 458. In this context, SJ Enterprises’ reliance on Ms. Quander’s e-
mail was reasonable.
The trial judge also emphasized that Ms. Quander’s general attitude was
forward-looking. A review of the second portion of Ms. Quander’s September 16,
2015 e-mail underscores this point:
Also be aware that my insurance on the building has
increased because of issues in the restaurant that need to
be taken care of. I think the building manager Ken Ross
has made your management aware of these issues. You
will have to pay the additional increase of $540 if the
problems are not addressed as soon as possible.
There is also a tax issue that needs to be discussed bbut
[sic] can wait until I return.
Hope all is well. If you have any questions, please let me
know.
(Emphases added). Had Ms. Quander intended for the tenancy to conclude or
continue in a short term holdover tenancy, there would be no need to address a
future insurance increase and “tax issues,” which are contingent on SJ Enterprises
occupying the premises for the foreseeable future.
In addition, the trial court found it compelling that Ms. Quander failed to
take any steps after the renewal period ended to find a new tenant. Had Ms.
16
Quander actually felt “concerned about keeping the property rented,” as she
testified to feeling, “one would have expected her to take some additional steps
consistent with that.” The tone of the e-mails and Ms. Quander’s accompanying
behavior are “more consistent with a landlord who’d settled on a tenant that was
going to be there for a while.” Therefore, Ms. Quander’s behavior constituted a
waiver of timely notice of the renewal option and it was reasonable for SJ
Enterprises to rely on such behavior. 10
10
Our concurring colleague primarily points out that Ms. Quander could not
have intended to waive the option deadline based on the trial judge’s observation
that Ms. Quander did not know that there was a deadline operating. However, in
our view, Ms. Quander intended to offer SJ Enterprises the option to renew the
lease. The record supports our conclusion that Ms. Quander did in fact intend her
actions. “[E]ach party has the burden to read and understand the terms of a
contract before [] she affixes [] her signature to it.” McCleve Props., LLC v. D.
Ray Hult Family Ltd. P’ship, 307 P.3d 652, 655 (Utah Ct. App. 2013) (citation
omitted). Therefore, “parties are charged with knowledge of the terms of the
contracts they enter into,” and as a consequence, “parties are not permitted to show
that they did not know a contract’s terms, and in the absence of fraud or mistake
they will be bound by all its provisions, even if they have not read the agreement
and do not know its contents.” Id. (citations, quotation marks, and brackets
omitted). The trial court found that Ms. Quander was a sophisticated party and
therefore, “probably understood [the renewal option] at the time [the parties]
entered into the agreement.” So even though the trial court also observed that Ms.
Quander did not know that there had been a deadline operating, she is bound by the
terms of the contract, and likewise could waive provisions of the contract that were
contained therein and for her benefit.
17
III. Conclusion
For the foregoing reasons, we are satisfied that Ms. Quander’s conduct and
language waived the timely notice requirement. The waiver allowed SJ
Enterprises to exercise its option to renew the lease for a second five-year term.
Vacated and remanded.
FERREN, Senior Judge, concurring in the judgment. This case presents the
question whether (1) the parties — landlord Quander and tenant SJ Enterprises —
extended their lease for five years, pursuant to its original terms, by virtue of the
landlord’s waiving the time limit on the tenant’s expired option to renew; or, if not,
(2) whether the parties nonetheless achieved the same result by entering into a new
lease by email, incorporating the same terms and longevity as the lease option,
which was unaffected by the one-year limitation otherwise imposed by the “statute
of frauds.”1 The opinion for the court interprets the transaction as a “renewal”
based on “waiver.” From that interpretation I respectfully dissent. Like the trial
court, I understand the situation to have resulted in a “new lease.” Unlike the trial
court, however, I conclude that the “admission” exception to the statute of frauds
erases the one-year limitation here. As a result, like my colleagues, I would
reverse and remand for entry of judgment for the tenant, sustaining the claim of SJ
Enterprises for the contractual right to another five-year lease of the premises from
landlord Quander.
1
D.C. Code § 42-306(b) (2012 Repl.) (“[N]o estate . . . for a longer term
than 1 year, in any real property, . . . shall be created or take effect, except by a
deed signed and sealed by the grantor. . . .”).
19
I.
As to outcome, the approach that justifies the additional five years makes no
difference. Conceptually, however, there is distinction worth elaborating. Since at
least 1936, binding case law2 has defined waiver in this context as an “intentional
relinquishment of a known right.” 3 Although “[i]ntent to waive a known right . . .
may be inferred from conduct inconsistent with an intent to enforce that right,” 4 the
question of waiver ultimately “turns on the intent of the party ostensibly waiving
the right, a state of mind which must be culled from the specific facts and
circumstances surrounding the purported relinquishment.” 5 Therefore, “[w]hether
waiver has occurred is typically a question for the trier of fact.”6
2
See M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C. 1971) (“[N]o division of this
court will overrule a prior decision of this court or refuse to follow a decision of
the United States Court of Appeals rendered prior to February 1, 1971[.]”).
3
C.I.T. Corp. v. Carl, 85 F.2d 809, 811 (D.C. Cir. 1936) (citation omitted);
accord Nortel Networks, Inc. v. Gold & Appel Transfer, S.A., 298 F. Supp. 2d 81,
88 (D.D.C. 2004) (“Waiver is an intentional relinquishment or abandonment of a
known right or privilege.”) (internal quotation marks and citation omitted).
4
Nortel Networks, 298 F. Supp. 2d at 88.
5
Id. (quoting Britamco Underwriters, Inc. v. Nishi, Papagjika & Assoc.,
Inc., 20 F. Supp. 2d 73, 77 (D.D.C. 1998)).
6
Id. (citing Safer v. Perper, 569 F.2d 87, 99 (D.C. Cir. 1977); Nat’l
Shopmen Pension Fund v. Burtman Iron Works, Inc., 148 F. Supp. 2d 60, 65
(continued . . .)
20
The trial court found that on September 16, 2015 — two and one-half
months after the “renewal option” had expired — Ms. Quander emailed SJ
Enterprises with the “reminder of lease increase and renewal.” At that time, said
the court, she “did not know how the option worked,” so she was not “in a position
to be extending the deadline.” In fact, “she didn’t know that there had been a
deadline operating.” The court further found that the Hussain family, which
owned SJ Enterprises, may have known about the option provision when they
“entered into the agreement,” but by the time they received Ms. Quander’s email,
the Hussains “didn’t even know that there was” an option provision; they
“assumed that [renewal] was sort of an automatic thing.” These factual findings
are supported by the record and are not clearly erroneous. 7 From these factual
(. . . continued)
(D.D.C. 2001); Britamco Underwriters, Inc., 20 F. Supp. 2d at 77; Radiation
Systems, Inc., v. Amplicon, Inc., 882 F. Supp. 1101, 1105 (D.D.C. 1996)). I agree
with my colleagues that, in some cases, “whether undisputed or clearly established
facts constitute waiver may, like countless other factual issues posed in litigation,
be a question appropriate for summary resolution.” Nortel Networks, 208 F. Supp.
2d at 88 (citing Word v. Ham, 495 A.2d 748, 751 (D.C. 1985)). However, I do not
view this case — which went to a bench trial — as one in which “the facts are not
in dispute or are beyond dispute” or in which “only one inference can reasonably
be drawn from the evidence.” 28 Am. Jur. 2d Estoppel and Waiver § 174 (cited in
Word, 495 A.2d at 751).
7
See D.C. Code § 17-305 (2012 Repl.).
21
findings, the trial court concluded that Ms. Quander did not intentionally waive,
and the Hussains did not intentionally exercise, the option to renew the lease.
I recognize that this issue is not quite as simple as the trial court’s analysis
may imply. There may be cases in which one is deemed to “know” a legal right
which has been forgotten, or in which one is deemed to have “intentionally”
waived a right without making a conscious mental decision. 8 But where, as here,
the allegedly waived right is entirely forgotten by both parties, and thus neither
party could have anticipated a waiver, it seems to me more than a little surreal to
conclude that landlord Quander “intentionally” abandoned or relinquished a
“known” right, and that the tenant — although unaware of the option — somehow
exercised it. The most that can be said for Ms. Quander on this record is that, if
she had known about the option deadline, she likely would have waived it. But
such speculation, even if reasonable, stretches the concept of “intentionally”
waiving a “known” right to an outer limit approaching a severe legal fiction.
8
Cf. Harris v. Gindes, 265 A.2d 598, 599 (D.C. 1970) (stating that a
landlord’s intent to waive a notice deadline could be inferred from its acceptance
of increased rent not otherwise required by the lease).
22
In sum, there is no getting around the trial court’s findings — not clearly
erroneous — that Ms. Quander was entirely ignorant of the option deadline, and
thus entirely free from any conscious intent to waive that deadline.9 Nor is there
any basis for believing that SJ Enterprises, entirely unaware of the option, made
any effort to exercise it. I am troubled by a legal analysis that turns on deeming
each party to have done something that each was unaware of, especially when the
trial court’s alternative analysis leads the way to the same result my colleagues
achieve.
This is not a case in which tenant SJ Enterprises will be prejudiced if Ms.
Quander’s supposed waiver is rejected. The trial court’s analysis, at least in part,
demonstrates a more realistic understanding of the situation. The record supports
the trial court’s finding that the parties intended to continue their landlord-tenant
relationship for five years, despite Ms. Quander’s testimony (found incredible) that
she had sought to retain SJ Enterprises only as a month-to-month tenant. Given
this manifest intent, and the barriers to finding a “waiver” of the option deadline by
Ms. Quander, the trial court appropriately concluded that Ms. Quander’s
September 16, 2015 email is “more properly deemed” to be “a new offer with the
9
See C.I.T. Corp., 85 F.2d at 811 (concluding that a party did not waive a
right of which it was “unaware”).
23
same terms that the option would have included.” The trial court further
determined that the tenant expressed an intent to accept this offer by responding,
“Thanks, Diane, for the reminder. Will start next month.” The tenant confirmed
its understanding that the lease had been “renewed” by continuing to act as if the
lease remained in full force on more than a monthly basis.
An enforceable contract requires “both an agreement as to all the material
terms and an objective manifestation of the parties’ intent to be bound [by the
agreement].” 10 In determining whether these requirements have been satisfied,
“the intentions of parties to a contract must be determined not only from the terms
of the written agreement but also from the actions of the parties in relation
thereto.”11 Here, it is clear from the landlord’s September 16, 2015 email, which
expressly offered to “renew[]” and “continue with the lease,” that the “material
terms” of the parties’ agreement were the same as those contained in their original
written lease. And the tenant’s response to the landlord’s email, coupled with the
parties’ subsequent conduct, indicates the parties’ intent to be bound by their
10
Strauss v. NewMarket Glob. Consulting Grp., LLC, 5 A.3d 1027, 1033
(D.C. 2010).
11
Davis v. Winfield, 664 A.2d 836, 838 (D.C. 1995) (quoting Bergman v.
Parker, 216 A.2d 581, 583 (D.C. 1966)) (alteration adopted).
24
agreement: (1) The tenant remained on the property after the original lease had
expired; (2) the tenant paid the increased rent requested in the landlord’s email and
required by the lease; (3) the landlord added, without objection, that the tenant
might be required to pay an additional annual insurance premium, which was not
pro-rated on a month-to-month basis; (4) the tenant paid “public space rental fees”
for sidewalk tables (to be passed on to the District government) through 2017; (5)
the tenant did not search for a new property after the original lease had expired;
and (6) the landlord did not take steps to re-let the property after that expiration
until more than five months later when Ms. Quander decided to challenge the
lease. 12 In sum, I agree with the trial court’s conclusion that the parties entered
into an enforceable new lease, separate from the lease option (of which they were
unaware).
12
As confirmed by their conduct, the parties’ email exchange did not
express “a mere agreement to agree,” United House of Prayer for All People v.
Therrien Waddell, Inc., 112 A.3d 330, 339 (D.C. 2015) (citation omitted), or
“contemplate[] the preparation and execution of additional documentation,” id. at
342 (citation omitted), but instead was intended by the parties to modify their
contractual rights and obligations going forward, see Dryer v. Bilaal, 983 A.2d
349, 357 (D.C. 2009) (concluding that the parties intended to be bound by an email
exchange); Duffy v. Duffy, 881 A.2d 630, 637 (D.C. 2005) (“[A]ppellant’s actions
demonstrated his intent to be bound[.]”).
25
II.
I part ways with the trial court when it comes to the statute of frauds. 13 “The
District of Columbia requires estates in real property for more than one year to be
created by an instrument under seal.”14 Because the parties’ agreement was not
created by an instrument under seal, it falls within the statute of frauds. But that
statute was not devised to reduce to one year every contract that falls short of the
statute’s formal requirements; it was “intended to guard against the perils of
perjury and error in the spoken word, and to protect defendants against unfounded
and fraudulent claims.” 15 These concerns, however, do not apply when a party
admits to having said or written the words attributed to that party. We have
therefore held that a party waives the statute of frauds defense if the party admits
or stipulates to facts that establish the elements of a valid contract. 16
13
See supra note 1.
14
Tauber v. District of Columbia, 511 A.2d 23, 27 (D.C. 1986); D.C. Code
§ 42-306(b) (2012 Repl.).
15
Hackney v. Morelite Const., 418 A.2d 1062, 1065-66 (D.C. 1980)
(quoting 3 Williston on Contracts § 448 at 344 (3d ed. 1960)).
16
Id. at 1067-69 (holding that appellee waived the defense where he
stipulated to facts which “establish[ed] the elements of a valid option contract”
(continued . . .)
26
Landlord Quander testified that she had drafted and sent the September 16,
2015 email to the tenant, and received the tenant’s November 2, 2015 reply. In
doing so, she testified to facts sufficient to establish the existence of a valid
contract (while resisting that legal conclusion), and the parties’ agreement was
accordingly taken outside of the statute of frauds.
For these reasons, I conclude that the trial court erred by failing to give the
parties’ intent to enter into a new lease for a five-year term full effect, and that the
order on appeal must be vacated and the case remanded.
(. . . continued)
despite his assertion that “there was no meeting of the minds as to . . . an essential
term of the contract”); see also Anchorage-Hynning & Co. v. Moringiello, 697
F.2d 356, 362 (D.C. Cir. 1983) (interpreting Hackney to stand for the proposition
that a party “waives the protection of the statute of frauds, and hence is barred
from asserting it defensively, by admitting . . . either the making of the contract or
facts sufficient to establish its existence”) (emphasis added); Lewis v. Hughes, 346
A.2d 231, 256-57 (Md. 1975) (“We come then to the basic issue in this case, which
is whether the Statute of Frauds is satisfied . . . when the party denying the
existence of the contract and relying on the Statute takes the stand and, without
admitting explicitly that a contract was made, testifies to facts which as a matter of
law establish that a contract was formed. . . . [N]umerous cases . . . seem to say that
in such a situation the requirements of the Statute have been fulfilled.”); 10
Williston on Contracts § 27:10, n.22 (4th ed. 2011) (collecting cases).