Lake Ridge Apartments, LLC v. BIR Lakeridge, LLC, No. 08-1307 (4th Cir. 2009)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 08-1307 LAKE RIDGE APARTMENTS, LLC, Plaintiff - Appellee, v. BIR LAKERIDGE, LLC, Defendant - Appellant, and BERKSHIRE INCOME REALTY-OP, L.P., Defendant. Appeal from the United States District Court for the Eastern District of Virginia, at Newport News. Raymond A. Jackson, District Judge. (4:07-cv-00008-RAJ-JEB) Argued: May 14, 2009 Decided: July 1, 2009 Before SHEDD and DUNCAN, Circuit Judges, and Frederick P. STAMP, Jr., Senior United States District Judge for the Northern District of West Virginia, sitting by designation. Affirmed by unpublished per curiam opinion. ARGUED: James Bradford McCullough, LERCH, EARLY & BREWER, CHARTERED, Bethesda, Maryland, for Appellant. Kristan Boyd Burch, KAUFMAN & CANOLES, PC, Norfolk, Virginia, for Appellee. ON BRIEF: Genevieve J. Quarfoot, LERCH, EARLY & BREWER, CHARTERED, Bethesda, Maryland; Jonathan L. Hauser, TROUTMAN SANDERS LLP, Virginia Beach, Virginia, for Appellant. Unpublished opinions are not binding precedent in this circuit. 2 PER CURIAM: Lake Ridge Apartments, LLC ( Lake Ridge ) sued Berkshire Income Realty-OP, L.P. and BIR Lakeridge, LLC (collectively, BIR ) for breach of a contract for the purchase and development of a parcel of land. The district court granted Lake Ridge s summary judgment motion. issue of damages, the After holding a bench trial on the district court $774,292 in favor of Lake Ridge. entered a judgment of BIR now appeals the district court s grant of summary judgment and the award of damages. For the reasons that follow, we affirm. I. This case arises out of a contract between BIR and Lake Ridge for the sale of property, as well as an amendment to that contract known as the Sixth Amendment. Under the contract, BIR would purchase an apartment complex from Lake Ridge, and Lake Ridge would build garages on the property for BIR. Under the Sixth Amendment, BIR agreed to purchase an additional parcel of land ( Parcel A-1 ) for $234,000. Lake Ridge would use its best efforts to construct on Parcel A-1 an apartment building of eighteen units. J.A. 24. BIR agreed to pay $144,000 of the total cost for Parcel A-1 at the closing of the parties 3 general purchase and sale agreement on July 1, 2005. factual scenarios remaining $90,000 conditioned parties. upon The Sixth Amendment set out several governing owed the on BIR s the further obligation parcel. action of to at the scenario Each pay was least one of the First, BIR could decide within 30 days of the parties closing -- that is, by August 1, 2005 -- to develop Parcel A-1 itself. If it gave written notice to Lake Ridge before August 1, 2005, BIR could pay Lake Ridge the remaining $90,000 and Lake Ridge would have no further rights or obligations with respect to Parcel A-1. Parcel A-1 J.A. 25. itself, Lake Second, if BIR did not opt to develop Ridge had one year to obtain the necessary building permits and approvals for the new eighteenunit building to be constructed on the parcel. If Lake Ridge delivered the necessary permits before June 30, 2006, BIR would pay the remaining $90,000. 1 Third, if BIR did not develop the property itself and Lake Ridge could not deliver the necessary permits and approvals by June 30, 2006, BIR had two options: BIR could choose to require Lake Ridge to buy back Parcel A-1 for the original down-payment price of $144,000; or, BIR could choose to pay Lake Ridge $90,000 for Parcel A-1. 1 If BIR did not If Lake Ridge subsequently delivered the finished building and a permanent certificate of occupancy for each of the eighteen units, Lake Ridge would receive an additional $1,926,000 under the Sixth Amendment. 4 provide notice of its decision between these two options by July 31, 2006, under the Sixth Amendment BIR would be deemed to have elected to pay Lake Ridge $90,000 for Parcel A-1. Id. Lake Ridge contacted BIR several times in July and August 2005 to ascertain BIR s plans for Parcel A-1, and the parties exchanged e-mails on possibly altering the architectural plans for the new building to be constructed on it. BIR did not exercise its option to develop Parcel A-1 itself by the August 1, 2005 deadline. To the contrary, on October 13, 2005, BIR informed Lake Ridge that it would like to proceed with the process of building the additional 18 units [on Parcel A-1]. J.A. 174. In December, BIR decided that it would prefer for Lake Ridge to accept the $90,000 balance on Parcel A-1 but cancel construction of both the new apartment building and the garages. BIR informed Lake Ridge on December considering holding off the considering delaying construction 23, Parcel of 2005 A-1 the that it was development and garages until some undetermined point in the future. -- both J.A. 211. As to the Parcel A-1 building, BIR asked, [W]e will owe you a payout of +/- 90K if we elect not to build, correct? Id. Lake Ridge responded on January 5, 2006, confirming that $90,000 was due as to Parcel A-1, but stating that it would also 5 request expenses and lost profits as to the garages. Lake Ridge asked which BIR to let us know as soon as possible Berkshire will be proceeding on these two items. way J.A. 211. On the same day, BIR informed Lake Ridge that it had decided to hold[] off on proceeding with both the Parcel A-1 project and the garage future. project Id. until some undetermined point in the BIR promised to initiate payment for the 90K owed on Parcel A-1 and requested an itemization of Lake Ridge s costs for the garages. Id. BIR began drafting a side letter agreement to memorialize its new intentions as to Parcel A-1 and the garages. On March 1, 2006, BIR sent Lake Ridge a proposed agreement under which BIR would pay Lake Ridge $90,000 and Lake Ridge shall have no further rights or obligations with respect to Parcel A-1. 50. Three agreement. the weeks later, Lake Ridge declined to J.A. sign the It also indicated that it had been mistaken about $90,000 addition to intended payment the to owed $90,000 seek for the balance, out-of-pocket Parcel Lake A-1 Ridge expenses and project. stated lost that In it profits approximating $1.5 million because BIR had committed to the construction project. J.A. 225. BIR was unwilling to pay this amount, parties communications and the deteriorated. 6 subsequently By the June applied for nor 30, 2006 delivered deadline, the Lake specified Ridge had building neither permits. Consequently, BIR attempted to exercise its option of paying Lake Ridge $90,000 for Parcel A-1. Lake Ridge returned the check and sued for breach of contract. The district court granted summary judgment in favor of Lake Ridge, finding that BIR had anticipatorily breached the contract when it informed Lake Ridge in December 2005 and January 2006 that it wished to delay both construction projects for an undetermined period of time. The district court further found that Lake Ridge had been willing and able to perform its obligations under the contract and was entitled to damages. After holding a hearing, the district court awarded Lake Ridge $774,292 based on testimony from Lake Ridge corporate officers as to the construction costs associated with the projects and estimated lost profits. BIR judgment, damages. now appeals certain the district evidentiary court s decisions, grant and the of summary grant of We address these claims in turn. II. We review a district court s grant of summary judgment de novo. Jennings v. Univ. of N.C., 482 F.3d 686, 694 (4th Cir. 7 2007) (en banc) (citing Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d 277, 283 (4th Cir. 2004) (en banc)). We review a district court s evidentiary decisions for abuse of discretion. Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 240 n.1 (4th Cir. 2009). We review a district court s factual findings at a bench trial for clear error. PCS Phosphate Co., Inc. v. Norfolk S. Corp., 559 F.3d 212, 217 (4th Cir. 2009). III. BIR first argues that the district court erred in granting summary judgment in favor of Lake Ridge based on BIR s alleged anticipatory breach. Relying on Virginia law, BIR argues that it did not engage in anticipatory breach because it did not repudiate the contract by unequivocally and unconditionally announcing its intention to abandon the agreement. that its indicating statements that it in would December delay 2005 developing and BIR contends January Parcel A-1 2006, for an undetermined period of time, did not amount to an unequivocal statement that BIR would refuse to perform under the agreement. Rather, BIR asserts that its overtures offering to pay $90,000 for Lake Ridge to hold off on the construction project were merely a request to construction provision. negotiate a cancellation of the Petr. s Br. at 44 (emphasis omitted). 8 On a related note, BIR argues that Lake Ridge agreed to modify the original agreement and cancel the construction project for $90,000 in January 2006. BIR asserts that Lake Ridge ultimately reneged on this agreement three months later when it requested an additional $1.5 million in costs and lost profits. In addition, BIR argues that because Lake Ridge failed to deliver the necessary building permits before June 30, 2006, and because BIR provided a timely notice that it elected to pay Lake Ridge $90,000, BIR has no additional payment obligations under the Agreement. Lake Petr. s Br. at 38. Ridge constituted responds anticipatory that breach BIR s course of conduct because neither the parties purchase agreement nor the Sixth Amendment gave BIR the right to simply hold off on proceeding with the Parcel A-1 Building until some undetermined point in the future. 27. Respt. s Br. at Lake Ridge further points out that once it realized it had made a mistake and informed BIR that it intended to request its out-of-pocket expenses and lost profits related to Parcel A-1, BIR never indicated that it had changed its mind on holding off on construction. Id. at 28. Instead, BIR confirmed with Lake Ridge that it was not interested in developing Parcel A-1 at that time. parties Lake Ridge argues that because BIR repudiated the agreement, Lake Ridge 9 was excused from further performance under the contract, and in fact properly mitigated its damages by stopping work on the project. Id. at 26. The parties purchase agreement states that it will be governed by, and construed in accordance with the laws of the state in regard to which laws the Property regarding is choice located of [Virginia], law. J.A. without 114. The Virginia Supreme Court has held that for a repudiation of a contract to constitute a breach, the repudiation must be clear, absolute, [and] unequivocal, performance of the contract. and must cover the entire Vahabzadeh v. Mooney, 399 S.E.2d 803, 805 (Va. 1991) (citations omitted). to be squarely met on these facts. We find that standard On January 5, 2006, BIR wrote to Lake Ridge: At this time we are holding off on proceeding with either of these projects until some undetermined point in the future.[] With respect to the building, we will initiate payment for the 90K[.] As for the garages, please itemization of the out of review[.] J.A. 43. mail provide me with an pocket expenses for The message, taken as a whole, is unambiguous. clearly states construction projects. BIR s intent not to proceed The e- with the This intent is further established by the fact that BIR promised to initiate payment for the 90K 10 owed on Parcel A-1 and invited Lake Ridge to submit an itemization of expenses related to the garages for review. In addition, BIR did not express any contrary intent between March and June, even after Lake Ridge stated that it would request out-of-pocket expenses and addition to the garages. lost profits J.A. 341. as to Parcel A-1 in BIR s January 5, 2006 e- mail to Lake Ridge, bolstered and confirmed by its subsequent course of conduct, constituted a clear, absolute, and unequivocal repudiation of the contract. BIR s agreement argument is that similarly the parties modified unpersuasive. BIR their contends purchase that the parties modified their purchase agreement so that BIR could pay Lake Ridge $90,000 and cancel the building project even after the original August 1, 2005 deadline to do so had expired. Based on this allegedly modified agreement, BIR argues that Lake Ridge breached the contract by failing to timely deliver the necessary building permits. The record does not support BIR s argument. Supreme Court has modify the terms acknowledged of their that The Virginia contracting contract by parties express may mutual agreement, but there must be clear, unequivocal and convincing evidence of the parties intent to modify the contract. Stanley s Cafeteria, Inc. v. Abramson, 306 S.E.2d 870, 872 73 11 (Va. 1983). Even if Lake Ridge and BIR did begin to negotiate a modification of their purchase agreement, the record shows that the parties never formally agreed to such a modification. BIR attempted to memorialize this agreement in its proposed side letter, which it sent to Lake Ridge in February and March. 44-46, 49-52. However, Lake Ridge never signed the J.A. letter agreement. Because BIR s January anticipatory breach of district court s grant 5, the of 2006 parties summary e-mail constituted contract, judgment in we affirm favor of an the Lake Ridge. IV. BIR also challenges the district court s decision to admit testimony damages from David hearing. Rudiger These two and Everett claims are Hoffman addressed during the separately below. A. BIR asserts that the district court ordered Lake Ridge to proffer the testimony of failed to do so properly. its witnesses, but that Lake Ridge Citing Md. Cas. Co. v. Therm-O-Disc, Inc., 137 F.3d 780, 783 (4th Cir. 1998), and other cases, BIR contends that a proffer must indicate what a witness is expected 12 to say, and that Lake Ridge did not provide this information. Petr. s Br. at 55-56. BIR further contends that Everett Hoffman s testimony constituted expert testimony based on his industry-wide experience. BIR argues that the district court should have excluded Hoffman s testimony because Lake Ridge had indicated that it would offer only lay opinions. BIR s assertions mischaracterize the record. BIR s contentions, clearly detailing would give. Lake the Ridge provided testimony each of a Contrary to three-page its three proffer witnesses With respect to Everett Hoffman specifically, Lake Ridge s proffer stated that he would testify about the costs of construction for the Parcel A-1 building and the garages and his method for determining these costs. This information was more than sufficient to give BIR notice of the substance of Hoffman s testimony. Moreover, the district court did admitting Hoffman s testimony as a lay opinion. not err in As the district court pointed out, [t]here s no way under the sun that you can call any lay witness who will not have some experience external to the job he or she is working in. J.A. 460. Hoffman testified about his cost calculations for the Parcel A-1 project and based his rationale for these calculations on his previous experience in the industry. The district court did not abuse 13 its discretion in finding that his testimony did not constitute expert testimony under Rule 701. B. BIR s arguments unpersuasive. as to David Rudiger are similarly BIR contends that under Federal Rule of Evidence 701, the district court should not have admitted David Rudiger s testimony on Lake Ridge s ability to building permits by June 30, 2006. obtain the necessary BIR emphasizes that under Rule 701, a lay witness s testimony must be based on personal knowledge and perceptions. BIR highlights that Rudiger did not testify to any personal experience with seeking or obtaining building permits, either in connection with this project or generally, or testify about his knowledge regarding the process for obtaining such permits in Virginia. Petr. s Br. at 51. Because Lake Ridge did not lay a proper foundation for Rudiger s testimony, BIR argues that the district court should have excluded it. BIR exaggerates the alleged deficiency in the foundation for Rudiger s lay witness testimony. Lake Ridge perform test requirements, would have borings draw up had to to Rudiger testified that prepare determine structural the architectural building s foundation plans plans, foundation and site plans, and get approval from Virginia Power because part of the 14 proposed parking lot for the building fell on a Virginia Power easement. He stated that because Lake Ridge had previously dealt with Virginia Power on the same site in getting their approval for the location of parking lots underneath of their easement . . . we didn t perceive any problem in that regard. J.A. 3924. At trial, the district court overruled BIR s objection to Rudiger s testimony, noting that if [Rudiger s] been involved in this project, he knows what is required to get a building permit. The record Id. at 390. shows that Rudiger testified in sufficient detail about the process for obtaining permits, and about his involvement in this and other similar construction projects, to lay a foundation for his opinion that Lake Ridge would have been able to obtain the necessary building permits by June 30, 2006. The district court did not abuse its discretion in admitting Rudiger s testimony. V. Lastly, BIR argues that the district court should not have awarded damages to Lake Ridge because Lake Ridge failed to show that it would have been able to obtain the necessary building approvals by June 30, 2006. Contracts and relying on Citing the Second Restatement of the 15 asserted inadmissibility of Rudiger s testimony, BIR argues that an injured party may not recover damages after an anticipatory breach of contract by the other party if the injured party could not perform its promise. BIR further argues that Rudiger s testimony, even if admissible, falls far short of establishing that Lake Ridge could have timely obtained the permits. Petr. s Br. at 55. We affirm the district court s award of damages. As noted above, the district court did not err in admitting Rudiger s testimony. gained Rudiger s through prior testimony experience, obtain the proper permits. testified that Lake Ridge permits by June 30, 2006. demonstrated of the his steps knowledge, necessary to Based on his experience, Rudiger could have obtained the necessary BIR failed to present any contrary evidence showing that Lake Ridge could not have timely obtained the permits. Based on the evidence presented at trial, the district court s factual findings were not clear error. VI. For the foregoing reasons, the judgment of the district court is AFFIRMED. 16

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