ROSITA JUUL v. LYNETTE RAWLINGS

District of Columbia
Court of Appeals
No. 14-CV-339
FEB 16 2017
ROSITA JUUL,
Appellant,
v. CAR-5752-12
LYNETTE RAWLINGS,
Appellee.
On Appeal from the Superior Court of the District of Columbia
Civil Division
BEFORE: WASHINGTON, Chief Judge; FISHER, Associate Judge; and NEBEKER,
Senior Judge.
JUDGMENT
This case came to be heard on the transcript of record and the briefs filed,
and was argued by counsel. On consideration whereof, and as set forth in the opinion
filed this date, it is now hereby
ORDERED and ADJUDGED that the trial court’s judgment is affirmed.
For the Court:
Dated: February 16, 2017.
Opinion by Chief Judge Eric T. Washington.
Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.
DISTRICT OF COLUMBIA COURT OF APPEALS
No. 14-CV-339 2/16/17
ROSITA JUUL, APPELLANT,
V.
LYNETTE RAWLINGS, APPELLEE.
Appeal from the Superior Court
of the District of Columbia
(CAR-5752-12)
(Hon. Thomas J. Motley, Trial Judge)
(Argued September 15, 2015 Decided February16, 2017)
Kenneth C. Crickman, with whom Robert C. Cooper was on the brief, for
appellant.
John H. Brillian for appellee.
Before WASHINGTON, Chief Judge, FISHER, Associate Judge, and NEBEKER,
Senior Judge.
WASHINGTON, Chief Judge: Appellant Rosita Juul (“Ms. Juul” or
“Appellant”) appeals from the trial court’s order to enforce a settlement agreement
between appellant’s son, Soren Juul (“Mr. Juul”), and appellee Lynette Rawlings
(“Ms. Rawlings”). The settlement agreement effectuated the transfer of property
owned by Ms. Rawlings and Mr. Juul to Ms. Rawlings’ mother. Subsequently, the
2
tenants residing on the property assigned their rights to purchase the property
under the Tenants Opportunity to Purchase Act (“TOPA” or the “Act”) to
appellant, who now asserts those rights on appeal. On March 12, 2014, the trial
judge entered an order enforcing the settlement agreement, finding that the transfer
of the property to Ms. Rawlings’ mother was not a “sale” under TOPA because it
was made pursuant to a “court-approved settlement” agreement and thus did not
trigger the tenants’ TOPA rights. Ms. Juul contends that the trial court erred in
reaching that conclusion because the trial court never knew the terms of the
settlement agreement, and therefore the settlement agreement could not have been
“court-approved.” While we agree that the settlement reached in this case was not
a “court-approved settlement” at the time of the dismissal, the trial court’s
subsequent order enforcing the settlement agreement cured the underlying
deficiencies from the original proceeding thus making this transfer of property in
this case not a “sale” under TOPA . Consequently, we affirm.
I.
On July 14, 2005, Mr. Juul gave his then-girlfriend, Ms. Rawlings, a fifty
percent interest in his home by way of quitclaim deed after receiving a notice of
foreclosure from his lender that the property was scheduled to be sold at public
3
auction. Thereafter, Ms. Rawlings obtained a loan to stop the foreclosure sale and
to renovate the property. Mr. Juul and Ms. Rawlings resided together in the home
for two years but in November 2007, their relationship ended, and Ms. Rawlings
moved out. Mr. Juul continued to live in the home along with some tenants from
whom he collected rent. After Ms. Rawlings moved out of the home, she and Mr.
Juul entered into an agreement that Mr. Juul would make incremental payments to
purchase the property back from Ms. Rawlings over time. By January 2012,
however, Mr. Juul completely stopped making payments and Ms. Rawlings filed
suit against him seeking a partition sale of the property and damages relating to the
loans she acquired to complete renovations on the property.
On August 19, 2013, Ms. Rawlings and Mr. Juul entered into a settlement
agreement, which required them to list the property with a professional realtor.
The realtor contacted the tenants on the property to notify them of their right to
purchase the property under the Tenants Opportunity to Purchase Act (TOPA).1
No contract had been executed between Mr. Juul and Ms. Rawlings and any third-
party buyers at the time. On October 31, 2013, just days prior to the scheduled
trial, the parties appeared in court for a pretrial conference, which resulted in a
1
D.C. Code §§ 42-3404.02 to -.14 (2016).
4
second settlement agreement. The second settlement agreement stated the
following:
1. Lynette Rawlings’ mother may submit a contract to
purchase the property at a price of $455,000.00, and if
she does so, the parties must ratify the contract on or
before November 11, 2013.
2. If the above contract does not go through, the parties
agree to ratify a contract recommended by their realtor.
3. Proceeds from the sale to Lynette Rawlings’ mother
would go to Lynette Rawlings.
4. Proceeds from any third-party contract would be split
50/50 between Mr. Juul and Ms. Rawlings.
5. Mr. Juul agrees to vacate the property by the closing
date.
6. Mr. Juul agrees that all rent collected will be paid to the
mortgage company.
7. To the extent not in conflict with this Agreement and
settlement terms, the parties agree to be governed by the
existing Agreement to Sell Property (the first agreement).
8. All claims are dismissed with prejudice.
The parties and their respective counsel signed the settlement agreement
and announced before the trial court that they had reached a settlement. The trial
court stated:
The Court: All right. What do I need to do now?
Mr. Shore (Ms. Rawlings’ attorney): We’ve agreed as
part of our settlement, to dismiss this case.
5
The Court: This case is hereby dismissed.
Mr. Pardo (Mr. Juul’s attorney): With prejudice, your
Honor, so we’re all on the same page.
The Court: Pursuant to the settlement agreement is
dismissed with prejudiced [sic]. Pursuant to the
settlement agreement.
Mr. Shore: Correct.
The Court: That is if you don’t abide by the settlement
agreement you’ll be back in the courthouse. Maybe not
in this court, but in the courthouse.
Immediately following the execution of the settlement agreement,
Ms. Rawlings’ mother submitted a contract to purchase the Property for
$455,000.00. Ms. Rawlings and Mr. Juul ratified the contract and scheduled
closing for February 2014. The following day, the parties’ realtor sent all tenants
on the property a second notice of a first right to purchase the home under TOPA.
The tenants assigned their right to purchase under TOPA to appellant, Mr. Juul’s
mother, only a few days after the parties ratified Ms. Rawlings’ mother’s contract.
On December 24, 2013, Ms. Rawlings filed a pro se “Motion to Petition
Reopening the Case” in the trial court alleging the settlement agreement was
conducted in bad faith. Ms. Rawlings alleged in her motion that during settlement
negotiations she specifically inquired about the tenants on the property, but that
6
Mr. Juul’s attorney stated that all tenancies on the property would be voluntarily
terminated and TOPA would not be relevant. Ms. Rawlings stated that she would
not have entered into the settlement if she had known the tenants were going to
assign their rights to appellant. Ms. Rawlings requested that the trial court vacate
the settlement agreement and reopen the case. Thereafter, the trial court entered an
order granting Ms. Rawlings’ Motion to Reopen the Case. The trial court did not
vacate the settlement agreement but instead stated that the case was reopened for
“purposes of enforcing the settlement agreement.” On January 23, 2014, the Court
held a status hearing on the Motion to Reopen the Case. During that hearing, the
Court read the eight terms of the settlement agreement and Ms. Rawlings,
representing herself, stated that she was misled about the tenants on the property
but that she did not believe that TOPA applied because the transfer was both an
“interfamilial transfer” and “pursuant to a Court-approved settlement agreement.”
The Court acknowledged this possibility and ordered the parties to return in one
month.
Ms. Juul intervened into the case alleging that she was a necessary party
because the tenants assigned to her their right to purchase the property. Ms.
Rawlings, now represented by counsel, subsequently filed a Motion to Enforce the
Settlement Agreement where she argued that the transfer of property to her mother
7
pursuant to the settlement agreement was not a “sale” pursuant to TOPA because
the transfer of the property was an inter-vivos transfer and because the transfer was
made pursuant to a court-approved settlement.
The trial court held a hearing on Ms. Rawlings’ motion and granted the
Motion to Enforce the Settlement Agreement on the grounds that the transfer under
the settlement agreement did not constitute a sale under TOPA because the transfer
was made pursuant to a “court-approved settlement.” The court also ordered Mr.
Juul to cooperate with the sale of the property to Ms. Rawlings’ mother and
ordered the parties to comply with the remaining terms of the settlement
agreement. During the hearing, the trial court judge asserted that by dismissing the
case “pursuant to the settlement agreement” he had approved the settlement
agreement. He also expressed concern that the purposes of the settlement
agreement were being frustrated and that the original litigation was not contrived
to circumvent TOPA rights. Ms. Juul filed a timely appeal.
II.
Despite Ms. Juul’s assertion that the trial court exceeded its authority when
it granted Ms. Rawlings’s motion to enforce, it is well settled in the District, and
8
everywhere else, for that matter, that once a court has reopened a case, it has the
power to enforce settlement agreements that are pending before it. Confederate
Mem’l Ass’n v. United Daughters of the Confederacy, 629 A.2d 37, 39 (D.C. 1993)
(citations omitted). However, “a settlement agreement should be enforced
according to its terms and not be modified in favor of either party, absent some
compelling reasons.” Fields v. McPherson, 756 A.2d 420, 426 (D.C. 2000) (citing
Camalier & Buckley, 667 A.2d 822, 825 (D.C. 1995)). Ms. Juul contends that the
settlement agreement was not “court-approved” and therefore, the trial court erred
when it exempted the instant sale of property from TOPA’s requirements. 2 In
order to determine whether the trial court erred by finding that the transfer was
made pursuant to a “court-approved settlement agreement,” and that TOPA,
therefore, did not apply, we must first determine whether this transaction qualifies
as a sale under TOPA.3
2
Ms. Juul also contends that declaratory relief can only be granted for
justiciable claims and that Ms. Rawlings presented no justiciable claim to the court
concerning allegations of fraud in the inducement of the settlement agreement.
However, this contention is belied by the record. Despite appellant’s claims,
Ms. Rawlings argued allegations of fraud during the status hearing after the
reopening of the case, and those allegations were sufficient to create a justiciable
issue. Appellant offers no basis for us to conclude otherwise.
3
Appellant also contends that the trial court erred by finding that the transfer
between the parties to Ms. Rawlings’ mother did not constitute a “sale” under
TOPA because it was pursuant to an inter-vivos transfer. See D.C. Code § 42-
3404.02 (c)(2)(B) (2016). However, the trial court did not conclude that TOPA did
(continued…)
9
TOPA requires that before an owner of a property may “sell” the property or
transfer the property through a “sale,” the owner must provide any tenants of the
property an opportunity to purchase the property at a price and terms that represent
a bona fide offer of sale. D.C. Code § 42-3404.02 (a) (2016). The TOPA statute
explicitly defines the words “sale” and “sell,” id. at 42-3404.02 (c)(1), and also
makes clear what does not constitute a sale under the statute. Id. at 42-3404.02
(c)(2). If there is no “sale” as defined by the statute, the owner is not required to
provide any tenants with an opportunity to purchase the property.
Under TOPA, a transfer pursuant to court order or a court-approved
settlement is not a sale. Id. at 42-3404.02 (c)(2)(M). However, TOPA does not
define what constitutes a “court-approved settlement” and we also have not had the
opportunity to define the term in this or any other relevant context. We note that
(…continued)
not apply to this transaction because it was an inter-vivos transfer. The trial court
based its decision that the transfer was not a “sale” on its finding that the
settlement agreement was a “court-approved settlement agreement.” Because we
review for trial court error, see Sullivan v. United States, 721 A.2d 936, 937 (D.C.
1998), and the record does not support appellant’s contention that the trial court’s
decision was based on a finding that this property exchange was exempt from
TOPA requirements because it was an inter-vivos transfer, this issue is not
properly before us.
10
the Council, in enacting TOPA, viewed court orders and court-approved
settlements as being on equal footing when it came to excluding property transfers
from TOPA’s reach. Therefore, because TOPA was passed to protect tenants’
rights, a “court-approved” settlement, like a court order, should have the
imprimatur, or in other words, the formal endorsement of the court behind it. To
conclude otherwise would open the door to the possibility of disingenuous lawsuits
filed by individuals hoping to evade their TOPA obligations by subsequently
agreeing to settle their disputes and then asking courts to dismiss the pending
lawsuit. As we have repeatedly acknowledged, “the Council . . . enacted TOPA to
discourage the displacement of tenants through the sale of rental properties and to
provide tenants opportunities for home ownership, without interfering with a
landlord’s property rights.” Richman Towers Tenants’ Ass’n v. Richman Towers
LLC, 17 A.3d 590 (D.C. 2011) (quoting Malik Corp. v. Tenacity Group, LLC, 961
A.2d 1057, 1062 (D.C. 2008)). However, TOPA’s exemption for “court-approved
settlement[s]” illustrates the equally important policy of not unreasonably
interfering with an owner’s property right when that right is the subject of a
binding settlement agreement, which our judicial system encourages, entered into
during the course of litigation. See Gabriellan v. Gabriellan, 473 A.2d 847, 850
(D.C. 1984) (“Public policy encourages the drafting of settlement agreements; if
valid, they are binding on the parties.”) (citations omitted). Therefore court-
11
approval is the limiting principle, and thus we must determine what such approval
requires, as it is not defined by the statute.
Whether the settlement agreement is “court-approved” is a mixed question
of law and fact “that calls for a mixed standard of review.” See generally Fed.
Mktg. Co. v. Virginia Impression Prods. Co., 823 A.2d 513, 526 (D.C. 2003)
(citation omitted). We review questions of law de novo. See Davis v. United
States, 564 A.2d 31, 55 (D.C. 1989) (en banc). However, the trial court’s factual
determinations will be accepted unless clearly erroneous. Fed. Mktg. Co., 823
A.2d at 526. Despite the trial court’s finding that the settlement agreement was
“court-approved” when the trial court dismissed the case “pursuant to the
settlement agreement,” Ms. Juul argues that the trial court could not have approved
the agreement because the court did not have sufficient facts before it to make an
informed judgment about whether or not to approve the agreement. Ms. Juul
points out that the trial court never read over the terms of the agreement and
neither inquired about the scope of the agreement nor questioned the parties about
the circumstances that led to the agreement before granting the motion to dismiss
the case with prejudice pursuant to that agreement. In essence, Ms. Juul argues
that the trial court’s finding that the settlement was court-approved is erroneous
because the case is not supported by substantial evidence in the record. Despite the
12
trial court’s finding that the settlement was court-approved because it had been
dismissed “pursuant to the settlement agreement,” we are not convinced on this
record that the trial court had sufficient knowledge of, and familiarity with, the
terms and conditions of the settlement agreement to make the kind of informed
judgment that is understood to typically underlie court orders. See Weil v.
Markowitz, 829 F.2d 166, 171-72 (D.C. Cir. 1987) (trial court’s approval of
settlement may be reversed if shown that the trial court did not have sufficient facts
before it to make an informed judgment).
While this issue is one of first impression in our court, a fair reading of our
case law is that settlement agreements are not court-approved unless the trial court
takes some steps to become familiar with, and to understand, the terms of the
settlement agreement before approving it. For example, in Shepherd Park Citizens
Ass’n v. Gen. Cinema Beverages, 584 A.2d 20, 23 (D.C. 1990), we upheld a trial
court’s approval of a settlement agreement after it considered the extent of
investigation, proof problems, strength of defenses, costs of litigation, good faith,
possible collusion, the experience of counsel, and the extent of opposition to the
settlement. Likewise, in Boyle v. Giral, 820 A.2d 561 (D.C. 2003), we upheld a
trial court’s approval of a class action settlement agreement after the trial court
held a hearing on the fairness of the agreement. Thereafter, in Tsintolas Realty Co.
13
v. Mendez, 984 A.2d 181 (D.C. 2009), we reviewed whether there was a material
breach in a settlement agreement that was approved by the trial court without
objection after it read the settlement agreement out loud in open court.
In each of the aforementioned cases, this court noted that the trial court
either read or inquired about the terms of the settlement agreement before giving it
“court approval.” We note that none of the cases mentioned above explicitly
address what is required for a settlement to qualify as “court-approved,” but it goes
without saying that in order for a trial court to approve a “settlement agreement,”
the trial court, at a minimum, must be aware of the terms of the settlement
agreement.
Here, the record prior to reopening the case does not support the trial court’s
subsequent finding that its original dismissal of the case was based on its approval
of the parties’ settlement agreement because it does not appear from the record that
the trial court took any steps to become familiar with the terms of the settlement
agreement prior to granting the parties’ request to dismiss the case with prejudice.
Instead, it appears that the trial court dismissed the case without even a cursory
review of the agreement or any discussion with the parties about the facts and
circumstances that led them to court or to reach the agreement. We hold that to
14
qualify as a court-approved settlement, there must be some record support that the
trial court had an understanding of the terms of the agreement and subsequently
ratified those terms when it approved the settlement agreement. Here, because
there is no record evidence that the trial court ever read or otherwise became
knowledgeable about the terms of the settlement agreement before dismissing the
case between Ms. Rawlings and Mr. Juul, the settlement agreement in this case
was not “court-approved” at the time of the dismissal, and thus the trial court’s
finding of such was erroneous.
III.
While the settlement agreement in this case was not “court-approved” at the
time of the dismissal, this alone does not resolve the matter before us because the
trial court, after reopening the case and having all of the facts before it,
subsequently enforced the settlement agreement and entered an order directing the
transfer of property to Ms. Rawlings’ mother.
To successfully challenge the trial court’s subsequent enforcement of the
settlement agreement, Ms. Juul “must show that the trial court abused its
discretion: this generally requires a showing either that the agreement in question
15
was so manifestly unfair as to preclude judicial approval, or that the court did not
have sufficient facts before it to make an informed judgment.” Weil, 829 F.2d at
172 (internal citations omitted). None of Ms. Juul’s arguments on appeal allege
that the settlement agreement was so manifestly unfair as to preclude judicial
approval. Thus the only question remaining is whether the trial court had
sufficient facts before it to make an informed judgment about whether to approve
the settlement agreement.
On March 12, 2014, on review of Ms. Rawlings’ motion to enforce and after
hearing arguments concerning the settlement agreement and inquiring as to how
the tenants came to assign their rights to appellant, the trial court issued an order
enforcing the original settlement agreement. The record amply demonstrates that
at the time it entered the enforcement order, the trial court was aware of, and
familiar with, the terms and conditions of the settlement agreement. In addition,
the trial court heard argument on the issue of enforcement and possible frustration
of the agreement by Mr. Juul before granting Ms. Rawlings’ Motion to Enforce.
Under TOPA, a “sale” does not include “a transfer pursuant to court order,” D.C.
Code § 42-3404.02 (c)(2)(M) (2012 Repl.), and therefore, once the trial court
ordered Mr. Juul to “cooperate with the sale of the property to plaintiff’s [Ms.
Rawlings’] mother pursuant to the October 31, 2013, Settlement Agreement” and
16
ordered the parties to “comply with the remaining terms of the October 31, 2013
Settlement Agreement,” the trial court cured its original error of not making
sufficient inquiry before approving the settlement at the time of the dismissal. See
Brady v. Fireman’s Fund Ins. Cos., 484 A.2d 566, 568-69 (D.C. 1984) (trial court
erred by not providing notice to attorney of potential liability for not complying
with discovery, but then cured its error when attorney filed, and court considered, a
Rule 60 (b) motion).
Similarly, in this case, the trial court’s erroneous belief that it had approved
the settlement agreement at the time of the dismissal was cured by its subsequent
review, approval, and enforcement of the terms and conditions of the settlement
agreement with full knowledge of the circumstances surrounding the dispute
between Ms. Rawlings and Mr. Juul.
Ms. Juul argues that Ms. Rawlings’ motion to enforce was a request to have
the tenants “stripped of their rights” and that the trial court could not subsequently
issue an order that deprived Ms. Juul of the tenants’ assigned TOPA rights.
However, the TOPA statute does not specify when a trial court order must be
rendered in connection with a transfer of property to be exempt from the definition
17
of a “sale” and thus does not preclude our holding today. 4 When a trial court
reassumes jurisdiction it may decide whether to enforce a settlement agreement
through a court order. 5 Our holding today is consistent with similar situations
where a trial court erroneously renders an order and then subsequently cures its
own error in a new order. See Berry v. Berry, 277 P.3d 771, 776 (Alaska 2012)
(trial court’s error in granting temporary orders before considering a party’s
argument was cured by reconsideration of that order in light of those arguments).
Upon review of the settlement agreement and after argument concerning the
implications of TOPA on the agreement, the trial court in this case decided to
enforce the agreement. Ms. Juul does not point to any changed circumstances that
occurred involving the tenants between the date of the trial court’s original order
4
Moreover, it is apparent from the record that the tenants’ TOPA rights had
not vested at the time the tenants “transferred” those rights to Ms. Juul. TOPA
“rights” only vest upon the execution of an agreement that meets the statutory
definition of a “sell” or “sale.” However, there are many exceptions to the general
rule enumerated in the statute, of which a court-approved settlement is one. See
D.C. Code § 42-3404.02 (b), (c)(1), (c)(2)(A) to (c)(2)(N) (2013 Repl.). But for a
technical defect in the process used by the court to approve the settlement
agreement, a defect that was subsequently cured, appellant never enjoyed TOPA
rights to the property because the tenants were never entitled to a right of first
refusal.
5
Ms. Juul also argues that there was nothing for the trial court to enforce
because her son complied with the terms of the agreement up until that point.
However, given the trial court’s findings on possible fraud, it was well within its
jurisdiction to decide whether to enforce the agreement and order Mr. Juul to
comply with the remaining terms of the agreement.
18
dismissing the lawsuit pursuant to the settlement agreement and the trial court’s
subsequent order to enforce compliance with the settlement agreement that put the
tenants in a materially different position with respect to the enforcement of their
TOPA rights. As the Act makes clear, a tenant’s potential right of first refusal is
not so absolute that it may interfere with the judicial process and the court’s
authority to enforce contracts, including settlement agreements. When the trial
court acts to ensure that a party does not intentionally frustrate the purpose of a
settlement agreement procured through litigation, such action is not erroneous
under TOPA.
IV.
In summary, we hold that while the trial court erroneously found that the
settlement agreement was a “court-approved settlement agreement” at the time of
the dismissal of the case, the trial court subsequently cured its error when it
became familiar with the terms of the agreement and subsequently ratified it by
ordering that the agreement be enforced. Therefore, we affirm the trial court’s
judgment.
So ordered.