Business Litigation Case

Case Name
1st Case: 3511 13TH Street, LLC v. Sonnythia Lewis and 3511 13th Street Residences, LLC, Civil Case No. 03-5320-B; Reported at: 922 A.2d 439, 445 (2007).

2nd Case: 3511 13th Street, LLC v. Lewis, Civil Case No. 320-03; Reported at: 993 A.2d 590 (D.C. 2010).

Court and Presiding Judge
Superior Court for the District of Columbia
1st case/trial – The Honorable Michael Rankin
2nd case/trial – The Honorable Maurice A. Ross

Facts
Steven Madeoy (“Madeoy”), sole owner and managing member of Plaintiff 3511, owns the building adjacent to 3511 13th Street, N.W., Washington, D.C. (“the Property”). Sonnythia Lewis was an unsophisticated landowner and initially purchased the five story rental building in 2001. Lewis was primarily employed in construction work and her intent was to live in the building and renovate those units that needed restoration. By early 2001, however, Lewis had run into significant difficulties with both the tenants and damages to the building and was anxious to sell the building.

Mark Tillmon (“Tillmon”) had worked for Madeoy in the previous (10) years as a “bird dog”, locating properties for Madeoy to purchase. Tillmon discovered Lewis was willing to sell the Property and brought the deal to Madeoy. Using one of his own real estate contract forms, Madeoy wrote in the terms of his offer to purchase the Property, which was ultimately accepted by Lewis. The purchaser was designated as Plaintiff 3511.

The contract called for a $1,300,000 purchase price, to be paid in cash, a $25,000.00 earnest money deposit and settlement to occur on January 16, 2003, in less than two (2) weeks from execution of the contract. Madeoy claims he supplied the $25,000.00 by way of a check made out to either Mark Tillmon or Tillmon Companies, but during discovery could not remember any specifics about the check and could not produce any documentary evidence that the check had either been written or deposited.

The contract provided for two (2) remedies for the Plaintiff if it discovered a cloud on the Property’s title: 1) the return of the deposit; or 2) the requiring of Lewis to clear the cloud on title if the same could be readily remedied by legal action.

Madeoy did not proceed with settlement because his settlement attorney discovered a cloud on the title — that being a previous contract on the Property between Lewis and another prospective purchaser who would not provide a written release of its contract rights. Thus, realizing Lewis was in dire financial straits and the Property was due to go to be foreclosed upon, Madoey planned to bid on the Property at foreclosure sale

Lewis entered into a contract with the Defendant, 3511 13th Street Residences, LLC, on June 14, 2003, and was scheduled to go to settlement on or before June 28, 2003. However, three to four weeks before Lewis and Defendant 3511 went to settlement on June 30, 2003, Madoey was informed of the contract between Lewis and Defendant 3511 and immediately began attempts to stop the settlement, including threats directed toward Lewis, Defendant 3511 and the settlement attorney. Madoey, however, took no legal action to stop the settlement from going forward because it was his intent to buy the property at foreclosure sale.

After conducting an investigation to determine whether Madoey could prove he had provided the $25,000 earnest money deposit called for in his contract with Lewis, and finding he could not, Defendant 3511 went to settlement with Lewis. Madoey and Plaintiff 3511 filed suit on the day of settlement for specific performance and breach of contract, among other things.

Apparently realizing his own case was weak, Madoey then organized the tenants in Lewis’ building to bring their own suit against Lewis and Defendant 3511, claiming they had not been given proper notice of the sale from Lewis to Defendant 3511 and, therefore, had not been able to exercise their statutory right of first refusal to purchase the Property. Madoey then purchased an assignment of the tenants’ rights for a significant amount of money so that, if the tenants’ case was successful, he could walk into the tenants’ position and purchase the Property for the same amount the Defendant 3511 had paid for the Property.

The tenants’ case was referred by Mr. Campen to Defendant 3511’s title insurance company and Mort Faller, Esq. of Shulman, Rogers, Gandal, Pordy & Ecker, P.A. was hired by the insurer to defend Defendant 3511 against the tenants’ case, which was consolidated with Madoey’s case. Mr. Campen continued to represent Lewis in defense of the tenants’ case.

Case Outcome
1st case – Mr. Campen filed a Motion for Summary Judgment, claiming the evidence showed, as a matter of law, that Madoey had not tendered the $25,000 earnest money deposit and, thus, Madoey’s contract failed for lack of consideration. Judge Rankin agreed and dismissed Madoey’s case, leaving only the tenants’ case to go to trial. On November 21, 2005, the jury ruled the tenants had been given the required notice and had waived their right to purchase the building. Madoey and the Tenants’ Association appealed both rulings.

In the published decision entitled 3511 13th Street Tenants’ Association, et al. v. 3511 13th Street N.W. Residences, LLC et al., 922 A.2d 439, 445 (2007), the D.C. Court of Appeals upheld the jury’s ruling in the tenants’ case but overturned Judge Rankin’s ruling, finding that the issue of the $25,000 deposit was not an issue of consideration, but rather one of performance, and thus must be decided by a trier of fact at trial. Accordingly, it remanded the case for a trial on Madoey’s claim of specific performance.

2nd case – Prior to the second trial, both parties waived a jury trial and the matter was tried before the Honorable Maurice A. Ross on April 21 – 23, 2008. On September 16, 2008, Judge Ross ruled in the Defendant 3511’s favor, finding that Madoey’s failure to pay the deposit was a material breach of his contract with Lewis and that the balancing of the equities did not entitle Madoey to specific performance. Madoey filed a second appeal to Judge Ross’ ruling (Case No. CAB 320-03) which was denied. The final case cite is reported at 3511 13th Street, LLC v. Lewis, 993 A.2d 590 (D.C. 2010).