Ruth Saunders v. Stephen T. Hudgens

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 12-CV-1318
RUTH SAUNDERS, ET AL., APPELLANTS,*
V.
STEPHEN T. HUDGENS, NATHANIEL X. ARNOLD,
AND U.S. BANK NATIONAL ASSOCIATION, APPELLEES.
Appeal from the Superior Court
of the District of Columbia
(CAB-3686-05)
(Hon. Judith N. Macaluso, Trial Judge)
(Argued September 15, 2016 Decided May 10, 2018)
Michael Lasley for appellant.
*
Although the notice of appeal in this case named Jerome Saunders as an
appellant in addition to Ruth Saunders, Mr. Saunders has not pursued or
participated in the appeal. His counsel, who is also Ms. Saunders‟s counsel, has
filed no brief, made no argument, and asserted no claim on Mr. Saunders‟s behalf;
his claims and issues are separate from those pressed by Ms. Saunders, and her
arguments on appeal do not pertain to him. Consequently, pursuant to D.C. App.
Rule 13 (a), we dismiss the appeal of Jerome Saunders for want of prosecution.
See Stancil v. District of Columbia Rental Hous. Comm’n, 806 A.2d 622, 625
(D.C. 2002) (stating that under predecessor to Rule 13 (a), “dismissal is an
appropriate sanction when an appellant is not diligent about prosecuting his
appeal”).
2
Michael S. Steadman, Jr., with whom Michael N. Russo, Jr., was on the
brief, for appellee Arnold.
Wendy Alexander, with whom John E. Rinaldi was on the brief, for appellee
U.S. Bank National Association.
Before GLICKMAN and FISHER, Associate Judges, and NEBEKER, Senior
Judge.
GLICKMAN, Associate Judge: Appellant Ruth Saunders contends the trial
court erred in denying her the equitable relief she sought from appellee Stephen T.
Hudgens for his breach of a contract to sell her a building. Applying the doctrine
of election of remedies to avoid a double recovery for a single wrong, the trial
judge ruled that Saunders could not be granted a decree compelling Hudgens to
perform the contract because she had chosen to obtain alternative relief, namely an
award of monetary damages from appellee Nathaniel X. Arnold for his tortious
inducement of Hudgens‟s breach. Saunders argues that she had made no election
and that she was entitled to receive specific performance from Hudgens in addition
to damages from Arnold because she sought those remedies from different
defendants on different legal theories of liability. Saunders is only partly right: we
agree that she had not elected her remedy and hence was not precluded from
seeking a decree of specific performance, but not that she could get more than one
satisfaction for the wrong done to her. We hold that the judge should have
determined whether Saunders would be entitled to specific performance as an
alternative to damages and, if so, the judge then should have permitted her to
3
choose which remedy to accept. We vacate the provisions of the judgment
respecting her relief and remand for further proceedings.
I. Factual Summary1
The dispute before us concerns competing claims to a four-unit apartment
building located at 219 Adams Street, N.E., in Washington, D.C. (“the Property”).
On March 16, 2005, appellee Hudgens sold the Property to appellee Arnold. The
sale spawned two lawsuits in Superior Court.
First, appellant Saunders sued Messrs. Hudgens and Arnold in CAB No.
3686-05. As pertinent here, Saunders‟s complaint alleged that Hudgens had
breached a contract he had entered to sell the Property to her, and that Arnold had
conspired with Hudgens to induce the breach. (In effect, the claim against Arnold
was one for tortious interference with the sales contract, and we shall sometimes
refer to it that way for convenience.) The complaint sought both compensatory
damages and equitable relief that included cancellation of the sale to Arnold and a
1
The history of this case is complicated. We confine our summary of the
facts to what is pertinent to this decision.
4
decree of specific performance requiring Hudgens to convey the Property to
Saunders.
Second, a group of tenants (or persons claiming to be tenants) sued Hudgens
and Arnold in CAB No. 8531-06, alleging that the sale of the Property violated
their rights under the Tenants‟ Opportunity to Purchase Act (“TOPA”). The TOPA
plaintiffs sought declaratory and injunctive relief setting aside the sale and
compelling Hudgens to provide them with statutory rights triggered by the sales
contract.
The two civil actions were consolidated for pretrial and trial proceedings. In
2010 the proceedings were stayed when Hudgens filed for bankruptcy. Eventually,
the stay was partially lifted to permit the Superior Court litigation to go forward
with some restrictions. Among other things, the order lifting the stay provided that
it did “not extend to execution or enforcement of any judgments against” Hudgens,
and that Hudgens and the bankruptcy trustee would not “be expected, except to the
extent they choose, to participate in the litigation” other than as witnesses.
5
Thereafter, the Superior Court litigation resumed, apparently without Hudgens‟s
participation as a party.2
In a pretrial order issued on December 28, 2010, the trial judge ordered
bifurcation of the consolidated trial proceedings, with a jury trial for the jury-
triable issues in Saunders‟s case to precede a bench trial of the equitable issues in
both that case and the TOPA case. For Saunders, this bifurcation meant a jury trial
of her tortious interference claim seeking an award of damages against Arnold for
conspiring to cause Hudgens to breach his contract to sell the Property to Saunders,
and then a bench trial on her claim seeking a decree of specific performance of that
sale.
At the conclusion of the jury trial, the judge instructed the jury that the
elements of Saunders‟s claim against Arnold were:
2
Mr. Hudgens has not participated in this appeal either. On October 12,
2016, after receiving Mr. Hudgens‟s representation that he was interested in
participating, this court ordered him to file a response within twenty days “setting
forth whether good cause exist[ed] for the court to excuse his failure to have filed a
timely brief in this appeal and to appear for the oral argument.” The order warned
Mr. Hudgens that his failure to respond would “subject this appeal to being
decided by this court on the existing record without further notice[.]” To date, this
court has received no response to the order from Mr. Hudgens.
6
(1) an agreement by Mr. Arnold and Mr. Hudgens; (2) to
participate in a breach of Mr. Hudgens‟[s] contract or
contracts with Ruth Saunders . . . ; [ ] (3) an injury was
caused by an unlawful overt act performed by one of the
parties to the agreement; (4) pursuant to and in
furtherance of the common scheme.
As a predicate to this claim, the judge instructed the jury it would have to find that
a contract had been formed between Hudgens and Saunders, “and if so what the
terms of that contract were.” Finally, without objection from appellant, the judge
instructed the jury that if it found Arnold had conspired to cause Hudgens‟s breach
of Saunders‟s contract to purchase the Property, it should “fully compensate” her
by awarding “damages for breach of contract,” defined as “that amount of money
necessary to place the injured party in the same economic position he or she would
have been in if the contract had not been breached.”
In its verdict, the jury found that Arnold had conspired with Hudgens “to
cause Mr. Hudgens to breach his contract(s) for sale of the [P]roperty . . . to Ms.
Saunders[.]” It awarded her $40,000 in compensatory damages. Pending the
outcome of the bench trial, the judge did not enter judgment on this verdict.
During and at the close of the ensuing bench trial on the outstanding
equitable issues in the two consolidated cases, Saunders argued that she was
entitled to a decree awarding her specific performance of her contract to purchase
7
the Property from Hudgens. In opposition, Arnold argued that the evidence failed
to show that Saunders actually had an enforceable contract; the judge responded
that “unless and until I set the jury verdict aside, the jury‟s verdict establishes that
there was a contract because the jury concluded that there was a conspiracy to
breach the contract.” The judge denied Arnold‟s motion for judgment on the
specific performance claim without prejudice to its later renewal. At no point was
it suggested that Saunders had made an election to accept the award of damages
instead of specific performance.
Eight months later, the judge issued a Memorandum Decision and final
Order of Judgment in the consolidated cases. The judge entered a monetary
judgment against Arnold and in favor of Saunders in the amount of the jury‟s
verdict ($40,000) and denied Saunders‟s request that Hudgens be ordered to
perform his contract to sell the Property to her.3 In her Memorandum Decision, the
judge explained that she denied specific performance because Saunders had elected
to receive the remedy of damages and awarding her specific performance in
3
In pertinent part, the final order also entered judgment in favor of the
TOPA plaintiffs in CA No. 8531-06 and voided Hudgens‟s sale of the Property to
Arnold. The success of the TOPA plaintiffs does not necessarily mean Saunders
could not prevail on her claim for specific performance; she asserts the TOPA
plaintiffs reached an agreement with her and supported her action. Whether this is
so remains to be determined.
8
addition would result in an impermissible double recovery:
Ms. Saunders elected to vindicate her contract rights by
suing Mr. Arnold for damages based upon the theory that
he tortiously interfered with her contract to buy the
Property. . . . Through its verdict, the jury found that Ms.
Saunders had a valid contract with Stephen Hudgens to
purchase the Property and that Mr. Arnold conspired with
Mr. Hudgens to interfere with her contract rights. The
jury awarded her damages of $40,000. . . . Ms.
Saunders‟[s] offer [to purchase the Property] is not
specifically enforceable because she received monetary
damages for breach of her contract to buy the Property.
A plaintiff cannot secure the double recovery of both
damages for breach and specific performance of a
contract. See Ingber v. Ross, 479 A.2d 1256, 1263 (D.C.
1984) (double recovery prevented by barring cumulative
remedies).
II. Discussion
In this appeal, Saunders contends that the trial judge erred in refusing to
award her specific performance on the ground that she had elected the remedy of
damages and was not entitled to a double recovery. We agree with this contention
in part, but only in part. The judge was correct in recognizing that Saunders is not
entitled to receive both monetary damages from Arnold and specific performance
9
from Hudgens; however, Saunders was entitled to pursue both of those remedies to
verdict before having to elect between them.4
A. Standard of Review
Specific performance is an equitable remedy, “and the determination
whether or not to order specific performance is confided to the „sound and
informed discretion‟ of the trial court.”5 However, “[d]espite the discretionary
element, a trial court can commit error in granting or refusing [specific
performance].”6 Here, the court determined that Saunders was not entitled to
4
Saunders has represented without contradiction that Arnold has not
satisfied (i.e., paid) the monetary judgment against him. If our understanding that
this remains so is incorrect, and Saunders has accepted full payment from Arnold
in satisfaction of that judgment, the “one satisfaction” rule would bar her from
pursuing Hudgens for additional relief for the same harm. See generally 47 AM.
JUR. 2D Judgments § 769 et seq. (2017).
5
Independence Mgmt. Co. v. Anderson & Summers, LLC, 874 A.2d 862,
867-68 (D.C. 2005) (quoting Drazin v. American Oil Co., 395 A.2d 32, 34 (D.C.
1978)). Nonetheless, absent circumstances rendering it inequitable or impossible,
the remedy of specific performance “is almost routinely available to enforce
contracts for the purchase of land.” 3 DAN B. DOBBS, LAW OF REMEDIES § 12.8 (1)
(2d ed. 1993) (footnote omitted) (hereinafter “DOBBS”); see also Tauber v. Quan,
938 A.2d 724, 732 (D.C. 2007) (“[I]t is routine for courts to enforce contracts to
purchase real estate by ordering that they be specifically performed.”).
6
12 JOSEPH M. PERILLO, CORBIN ON CONTRACTS, § 63.1 (2012) (citing
Beckwith v. Clark, 188 F. 171, 178 (8th Cir. 1911)).
10
specific performance as a matter of law because of the rule against duplicative
recovery. “Where the matter under review is a question of law . . . this court
exercises de novo review.”7
B. The Alternative Remedies
For tortiously inducing Hudgens to breach his contract with Saunders, the
trial judge correctly instructed the jury that Arnold would be liable to Saunders for
breach-of-contract damages.8 We therefore understand the jury‟s damages award
to represent the sum of money the jury deemed necessary to fully compensate
Saunders for her loss by placing her in the same economic position she would have
been in had Hudgens performed his contract to sell her the Property. In other
7
Independence Mgmt. Co., 874 A.2d at 867 (quoting Technical Land, Inc.
v. Firemen’s Ins. Co., 756 A.2d 439, 443 (D.C. 2000)).
8
See Paul v. Howard Univ., 754 A.2d 297, 309 n.23 (D.C. 2000) (“One
who intentionally and improperly interferes with the performance of a contract . . .
between another and a third person by inducing or otherwise causing the third
person not to perform the contract, is subject to liability to the other for the
pecuniary loss resulting to the other from the failure of the third person to perform
the contract.”) (quoting RESTATEMENT (SECOND) OF TORTS § 766 (Am. Law Inst.
1979)). Damages for tortious interference may, in some cases, go beyond “normal
contract expectancy,” 2 DOBBS § 6.6 (1), but we need not discuss that here.
11
words, the damages award was the monetary equivalent of specific performance of
the contract.9
A plaintiff is entitled to be made whole, but not more than whole. “Where
the parties have entered into a contract, being made whole means realizing the
benefit of the bargain that they struck.”10 Thus, as the trial judge correctly
recognized, Saunders is not entitled to receive both the monetary equivalent of
specific performance and specific performance too. That would constitute being
made whole twice – an “impermissible double recovery”11 for the same wrong. It
9
Campbell-Crane & Assocs. v. Stamenkovic, 44 A.3d 924, 936 (D.C. 2012)
(“We presume that the jury followed the instructions of the court.”). At oral
argument, Saunders‟s counsel suggested that the jury actually awarded her
rescission damages rather than breach-of-contract damages. Saunders did not
make this claim in the trial court, and given how the jury was instructed, we are not
persuaded to so interpret its award. We will note, however, that even if the jury
awarded Saunders rescission damages, she still would be obliged to choose
between receiving them and receiving specific performance, because the two
remedies are inconsistent in that rescission is premised on disaffirmance of the
contract while specific performance is premised on its affirmance. See Dean v.
Garland, 779 A.2d 911, 915 (D.C. 2001); 3 DOBBS § 12.7 (6).
10
Allen v. Yates, 870 A.2d 39, 52 (D.C. 2005).
11
Ingber v. Ross, 479 A.2d 1256, 1263 (D.C. 1984); see also Giordano v.
Interdonato, 586 A.2d 714, 717 (D.C. 1991) (holding that damages for breach of
contract and specific performance of the contract were “duplicative” remedies that
could not both be obtained). We recognize that, in appropriate cases, specific
performance can be combined with damages other than benefit-of-the-bargain
damages. See 3 DOBBS § 12.8 (1). The present case does not appear to present
(continued…)
12
makes no difference that Arnold was not a party to the sales contract and was held
liable only in tort. “A person can sue any number of parties, and obtain a judgment
against any one, or several of them, but can gain but one satisfaction, even though
that person may pursue numerous possible avenues of relief simultaneously and
may obtain several judgments against different persons for the same obligation or
liability.”12 The Second Restatement of Judgments provides the following apt
illustration of this point:
3. A breaks a contract with B as a result of the acts of C.
Following a trial in which the issue of damages was
litigated, B obtains judgment against A for $1,000 and is
paid that amount by A. Under applicable law, the
measure of damages for the losses recoverable from a
person inducing breach of contract is the same as that in
determining the damages recoverable from the person
breaking the contract. B has no claim against C.[13]
(…continued)
such a situation, as Saunders has not identified additional damages caused by
Arnold‟s interference with her contract.
12
47 AM. JUR. 2D Judgments § 769 (footnotes omitted).
13
RESTATEMENT (SECOND) OF JUDGMENTS § 50 cmt. d (Am. Law Inst.
1982).
13
C. Election of Remedies
To say that Saunders would not be entitled to both damages for breach of
contract and specific performance of the contract does not mean she was required
to elect between those two remedies without knowing how the court would rule on
her entitlement to each of them. This court rejected such a requirement in
Giordano, seeing “nothing in law or policy” to justify it.14 We explained that
because “[t]he purpose of the doctrine of election of remedies is not to prevent
recourse to any remedy, but to prevent double redress for a single wrong,”15 the
“correct course” (absent unfair prejudice to the defendant) is to permit the plaintiff
to go to the trier of fact on both theories of relief without compelling the plaintiff
to choose in advance which remedy he or she seeks.16 Duplication of remedies is
prevented “by permitting the plaintiff to pursue both remedies to verdict and by
requiring the plaintiff to choose one of them only when it comes time to write the
14
Giordano, supra footnote 11, 586 A.2d at 717 (rejecting trial court‟s
ruling that “plaintiff had to elect between her alternative claims before the case was
submitted to the jury” and could not “await the jury verdict and then select the
remedy which becomes more advantageous”).
15
Id. (quoting Twin City Fed. Sav. & Loan Ass’n v. Transamerica Ins. Co.,
491 F.2d 1122, 1125 (8th Cir. 1974) (emphasis in the opinion of this court).
16
Id. at 718 (citing North Am. Graphite Corp. v. Allan, 184 F.2d 387, 389
(D.C. Cir. 1950)).
14
judgment or enforce the remedy.”17 As we stated in Giordano, although a verdict
for the plaintiff on both claims enables the plaintiff to choose the remedy that is
more “advantageous,” there is “nothing objectionable” in that.18
Thus, the trial judge erred in denying Saunders‟s request for a decree of
specific performance solely on the theory that she had “elected to vindicate her
contract rights by suing Mr. Arnold for damages,” and without making findings as
to whether Saunders otherwise would be entitled to specific performance if she
wanted it. That the jury had adjudicated only Saunders‟s damages claim was due
solely to the judge‟s decision to bifurcate the trial and defer judicial resolution of
the specific performance claim; it was not due to Saunders‟s abandonment of the
equitable remedy in favor of the legal one.19
17
2 DOBBS § 9.4.
18
586 A.2d at 717.
19
Arnold argues that even if the trial judge erred in denying specific
performance for the reason stated, the denial was legally correct and should be
upheld for other reasons. He contends, for example, that Saunders cannot be
granted specific performance because “she failed to demonstrate that she
performed, or offered to perform, or was ready, willing, and able to perform,
nearly all of the essential and material terms required of her” under her
agreements with Hudgens, and that her own “unclean hands” barred her from
obtaining equitable relief. Brief for Appellee Arnold (emphasis in the original).
Saunders disputes these contentions. Given that Arnold did not appeal the
judgment entered in her favor establishing his liability for inducing Hudgens to
(continued…)
15
III. Conclusion
For the foregoing reasons, we vacate the trial court‟s orders (1) entering
judgment against Arnold and in favor of Ruth Saunders in the amount of $40,000
and (2) denying Ms. Saunders‟s request for a decree compelling Hudgens to
perform his contract to sell the Property to her. We remand the case for the trial
court (1) to determine whether Ms. Saunders is entitled to a decree of specific
performance20 and, if so, (2) to allow her to elect her remedy before the entry of a
final judgment. As for Ms. Saunders‟s co-appellant, Jerome Saunders, we grant no
(…continued)
breach the contract; that Arnold‟s standing to make these arguments is unclear; that
Arnold‟s alternative grounds for affirmance would require this appellate court to
immerse itself in a factual record best scrutinized, in the first instance, by the trial
judge as trier of fact; and that the trial judge has yet to consider whether any of the
alternative grounds identified by Arnold should preclude Saunders from obtaining
a decree of specific performance, we consider it premature to reach and resolve the
issues Arnold raises.
Similarly, it is premature for this court to consider whether Saunders‟s
potential entitlement to specific performance is affected by, or subject to, the
TOPA rights of the tenants who prevailed in CAB No. 8531-06. See footnote 3,
supra.
20
No argument has been made to us that the (partially lifted) automatic stay
resulting from Hudgens‟s bankruptcy filing or any order of the bankruptcy court in
his case precludes a decree requiring specific performance of his contract with
Saunders, and we express no view on that subject.
16
relief and dismiss his appeal for want of prosecution, as explained in footnote *,
supra.
Vacated and remanded.