Howard Town Center Developer, LLC v. Howard University

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

HOWARD TOWN CENTER

DEVELOPER, LLC,

Plaintiff-Counter Defendant, Civil Action No. 13-1075 (BAH)

v. Chief Judge Beryl A. Howell

HOWARD UNIVERSITY,

Defendant-Counter Plaintiff-

Third Party Plaintiff

v.

CASTLEROCK PARTNERS, LLC,

Third Party Defendant.

MEMORANDUM OPINION SETTING FORTH

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The plaintiff Howard Town Center Developer, LLC, (the “Developer”) instituted this

lawsuit against the defendant, Howard University (the “University”), over four years ago, on July

15, 2013. The parties’ dispute, over which this Court possesses diversity jurisdiction, centers on

a parcel of land (the “Property”) located in the Shaw neighborhood of Washington, D.C., that

was leased by the University to the Developer in January 2010, based on the Developer’s

contractual obligation to construct improvements at a cost of over $140,000,000. Instead, the

Property has remained dormant for nearly eight years. Pending before the Court are the

Developer’s claim that the University breached its contract with the Developer and the

University’s claims that the Developer and the third-party defendant, CastleRock Partners, LLC,

are in breach of contract. See Pl.’s Amended Complaint, ECF No. 72; Def.’s Counterclaim and

Third-Party Complaint, ECF No. 15. 1 During an eight-day-long bench trial, the Court heard

evidence on the parties’ claims and counterclaims. For the reasons set forth below, the Court

concludes that the University has sustained its burden of proof on its breach of contract claims,

that judgment must be entered for the University, and that forfeiture is an appropriate remedy.

I. PROCEDURAL BACKGROUND

The parties’ allegations, as well as significant issues raised and either resolved or

deferred in pre-trial motions, are summarized below.

A. THE PARTIES’ CLAIMS

The Developer’s operative complaint in this action, Pl.’s Amended Complaint, asserts

two counts, amounting to a single claim for relief. Count I claims breach of contract because the

Developer “has performed its duties and responsibilities under the agreements,” while the

University “has breached the terms of the Ground Lease and the Development Agreement by

issuing an improper notice of termination and purporting to terminate the Ground Lease” and

“has breached the terms of the Term Sheet by refusing to negotiate in good faith over the Second

Amendments to the Ground Lease and Development Agreement.” Pl.’s Amended Complaint

¶¶ 88–91. In Count II, the Developer seeks declaratory relief, declaring that the Developer “was

not and is not in default under the Ground Lease and the Development Agreement,” “that no

Event of Default occurred,” “that [the University’s] purported termination . . . of June 17, 2013,

is null and void,” “that delays that result from the historic designation process constitutes an

Unavoidable Delay under the Lease,” and “that the construction deadlines contemplated by the

parties will be shifted by at least the amount of time these proceedings are pending.” Id. ¶¶ 95–

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The third-party defendant, CastleRock Partners, LLC, assigned its rights and obligations under the

operative agreements to the Developer, as explained below, but has not been released from its obligations to the

University. See Def.’s Counterclaim and Third-Party Complaint ¶¶ 16–17. Consequently, the third-party defendant

generally will not be referenced separately when discussing the actions of the parties in this matter.

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100. The Developer seeks relief in the form of specific performance of the Term Sheet and

“damages, including the lost value of the Lease during the period during which [the University’s]

actions interfered with [the Developer’s] rights,” or, alternatively, “damages for the period of the

99-year Ground Lease remaining at the time of breach”; declaratory relief; payment of “all of

[the Developer’s] costs and expenses, including attorney’s fees”; and pre- and post-judgment

interest. Id. at 100.

The University’s operative counterclaim and third-party complaint in this action alleges

one claim of breach of contract each against Howard Town Center Developer, LLC, and the

third-party defendant, CastleRock Partners, LLC. As support, the University asserts that the

Developer “breached the Ground Lease by failing to pay rent as and when due” and requests

judgment in its favor “in the amount of $1,475,000, together with additional interest, attorneys’

fees and costs recoverable under the applicable contracts.” Def.’s Counterclaim and Third-Party

Complaint ¶¶ 44, 47, 51, 54.

B. LITIGATION HISTORY

This case’s extensive litigation history includes two memorandum opinions by this Court,

as well as a decision of the D.C. Circuit. Upon instituting this action on July 15, 2013, the

Developer filed a motion for a temporary restraining order, which motion was denied. See Pl.’s

Mot. Temp. Restraining Order, ECF No. 5; Order, dated July 16, 2013, ECF No. 7. The

Developer also requested a preliminary injunction. See Pl.’s Mem. Supp. Mot. TRO and/or

Prelim. Inj., ECF No. 6-1. With the consent of the University, the Developer requested an

extended briefing schedule on its injunction motion, which request this Court granted. See Min.

Order, dated July 30, 2013. The University then filed a counterclaim seeking $1,475,000 for the

second rental payment, originally due under the lease agreement by March 15, 2011, and moved

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for summary judgment on October 15, 2013, which motion this Court granted on December 19,

2013, while denying the Developer’s motion for injunctive relief. See Order, ECF No. 38.

Relevant here, the Court’s decision was based in part on (1) the parties’ representations that a

Term Sheet executed by the parties was “immaterial,” an “agreement to agree and not

enforceable,” Pl.’s & Third-Party Def.’s Mem. P. & A. Opp’n Def.’s Mot. Summ. J. at 7–8 &

n.8, ECF No. 31; see Howard Town Ctr. Developer, LLC v. Howard Univ. (HTC I), 7 F. Supp.

3d 64, 72–73 (D.D.C. 2013); (2) the conclusion that the parties had agreed that the overdue rental

payment was to be made by May 30, 2013, or the parties’ relationship would terminate, see HTC

I, 7 F. Supp. 3d at 73–74; and (3) a determination that the University properly terminated the

parties’ agreements and the Developer’s deposit of $1,475,000 on June 19, 2013, in an account

held by its third-party agent, Closeline Settlements, did not cure its default, see id. at 80–83. The

Court also concluded that in addition to the $1,475,000 payment due to the University, forfeiture

of the Developer’s rights in the lease was an appropriate remedy. See id. at 83–87.

On appeal, the D.C. Circuit vacated the grant of summary judgment to the University,

concluding “[t]here is a genuine dispute whether the Developer was required to pay the

University $1,475,000 by May 30, 2013, and, therefore, whether the University was entitled to

terminate the Ground Lease and to collect $1,475,000 in damages,” and remanded for the Court

to determine “whether the Term Sheet is a legally enforceable contract under D.C. law and, if so,

how the Term Sheet affects both the Developer’s claim . . . and the University’s counterclaim.”

Howard Town Ctr. Developer, LLC v. Howard Univ. (HTC II), 788 F.3d 321, 329–30 (D.C. Cir.

2015). The Circuit declined to address three other arguments raised by the Developer: (1)

whether “it was impossible to make the $1,475,000 rental payment in accordance with the terms

of the Ground Lease because the parties had terminated the escrow account designated to receive

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the payment”; (2) whether “the Developer cured the alleged breach by depositing $1,475,000

into an escrow account on June 19, 2013”; and (3) whether “the district court erred by allowing

the University to terminate the lease in addition to requiring the Developer to pay rent.” Id.

On remand, the parties filed cross-motions for summary judgment, which motions were

denied. See Order, dated Jan. 31, 2017, ECF No. 93. Concluding the Term Sheet was a binding

preliminary agreement, requiring the parties to fulfill the terms contained in the Term Sheet and

negotiate toward the amendments to the Ground Lease and Development Agreement in good

faith, the motions nevertheless were denied because the parties’ good faith in negotiating

presented questions of fact as to which there was a genuine dispute. See Howard Town Ctr.

Developer, LLC v. Howard Univ. (HTC III), No. 13-1075 (BAH), 2017 WL 421909, at *8–9

(D.D.C. Jan. 31, 2017). The Developer’s argument that payment of the $1,475,000 was

impossible was also addressed and rejected as a matter of law. See id. at *9–10. Finally, while

dropping its contention that the deposit of funds with its own third-party agent cured any default,

the Developer argued on remand that the University’s notices to the defendant were insufficient,

relying upon the D.C. Circuit’s observation that “the Ground Lease provides the University must

send two notices to the Developer before it may terminate the lease.” HTC II, 788 F.3d at 328.

Noting that “the Developer received multiple notices of default over the course of the parties’

business relationship,” the merits of the Developer’s arguments regarding notice were left to be

resolved following trial. HTC III, 2017 WL 421909, at *11.

C. BENCH TRIAL

Over the course of the eight-day bench trial, the Developer presented the testimony of

eight witnesses: Ronald Cohen, Manager of Howard Town Center Developer, LLC; Dr. Sidney

Ribeau, Ph.D., former President of Howard University; Steven Callcott, Deputy Historic

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Preservation Office for the District of Columbia; Robert Tarola, former Chief Financial Officer

of Howard University; Eric Siegel, Vice Manager of Howard Town Center Developer, LLC;

Kurt Schmoke, former General Counsel and Vice President of Governmental Affairs for Howard

University; Fabrice Vasques, Managing Director of Phillips Realty Capital; and Dennis Duffy,

Certified General Real Estate Appraiser, testifying as an expert on damages. The University also

called eight witnesses, including five of the Developer’s witnesses: Ronald Cohen, Sidney

Ribeau, Eric Siegel, Kurt Schmoke, and Fabrice Vasques. In addition, the University called

Norman Jenkins, Trustee of Howard University; Bryan Dickson, Vice President at Citi

Community Capital; and Alan Brangman, former Associate Vice President of Facilities and Real

Estate and University Architect of Howard University. 2 During the bench trial, the Court

received the following 272 exhibits into evidence: Joint Exhibits 1–72; Plaintiff’s Exhibits 6, 8,

10, 12–14, 16, 21–22, 27, 33–35, 37, 40, 46–48, 50, 52–56, 58–59, 62, 64, 66, 68–69, 71–73, 75,

78, 80–81, 85–90, 93–94, 96–97, 101–06, 108–09, 111–12, 114, 117, 119, 121–26, 128, 134–35,

137–38, 143, 145–46, 148–51, 153–54, 160–66, 168, 170, 173, 175, 177, 184, 191, 197–98, 202–

03, 209, 212, 215–18, 220, 223, 225, 228–30, 232, 234, 236, 256–59, 261, 276–77, and 296–97;

and Defendant’s Exhibits 1–2, 9–11, 14–15, 17–19, 21, 23, 25–26, 29, 31–32, 34, 36, 42, 44, 49–

63, 67–68, 70–71, 74, 80, 87, 93–95, 100, 104, 109–14, 116–18, 124–25, 129–33, 135–36, 140,

142–45, 149–54, and 156.

Following the bench trial, both parties submitted proposed findings of fact and

conclusions of law. See Pl.’s Prop. Findings Fact Concls. Law, ECF No. 108; Def.’s Prop.

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The transcript of the bench trial appears on the docket as follows: Day 1 AM, ECF No. 112; Day 1 PM,

ECF No. 120; Day 2 AM, ECF No. 113; Day 2 PM, ECF No. 121; Day 3 AM, ECF No. 114; Day 3 PM, ECF No.

122; Day 4 AM, ECF No. 115; Day 4 PM, ECF No. 123; Day 5 AM, ECF No. 116; Day 5 PM, ECF No. 124; Day 6

AM, ECF No. 117; Day 6 PM, ECF No. 125; Day 7 AM, ECF No. 118; Day 8 AM, ECF No. 119. Citations to the

transcript indicate, if not otherwise apparent from the context, the name of the witness testifying to the information

referenced.

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Findings Fact Concls. Law, ECF No. 111. The parties’ respective claims became ripe for

consideration on June 30, 2017. 3 The parties’ post-trial submissions, along with the testimony

and exhibits at trial, have been duly considered.

II. FINDINGS OF FACT

Based upon the testimony presented and exhibits admitted at the trial, the Court makes

the findings of fact set forth below and further states its conclusions of law. See FED. R. CIV. P.

52(a)(1) (“In an action tried on the facts without a jury . . . the court must find the facts specially

and state its conclusions of law separately. The findings and conclusions may be stated on the

record after the close of the evidence or may appear in an opinion or a memorandum of decision

filed by the court.”).

The findings of fact are based on the ample record in this case, which includes nearly

three hundred exhibits and thousands of pages of trial testimony. “Factfinding is the basic

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After postponing a total of three scheduled trial days at the request of the Developer and the Developer’s

counsel so that they could attend the graduations of family members, one of which days was objected to by the

University’s counsel on the ground that the long-scheduled trial could proceed without the Developer’s

representative present, see Pl.’s Mot. One-Day Continuance May 22, 2017 Trial Date, ECF No. 100, and postponing

the parties’ deadlines for submission of their Findings of Fact and Conclusions of Law by four days, also at the

Developer’s request, the Developer and its counsel objected to the University’s counsel’s two requests for

extensions for filing post-trial briefing as a result of emergency eye surgery that precluded counsel from working

during the period of his recovery. Def.’s Mot. Extension Time, ECF No. 106; Pl.’s Resp. Position Statement, ECF

No. 107; Def.’s Mot. Extension Time, ECF No. 109; Pl.’s Resp., ECF No. 110. The University first requested an

extension of one week for the Developer, to June 21, 2017, and two weeks for the University, to July 5, 2017, to

accommodate the University’s counsel’s emergency eye surgery and anticipated recovery period. Def.’s Mot.

Extension Time at 4, ECF No. 106. The Developer objected to that proposal, arguing that the University should

have only until June 28, 2017, on the ground that the Developer and the University should have the same amount of

time for their filings, and that the Developer “d[id] not understand the . . . extension to July 5, 2017 to be based on

the health issues of counsel.” See Pl.’s Resp. Position Statement at 2. The Developer’s proposal, granting it an

extension to June 21, 2017, and the University an extension only until June 28, 2017, was adopted. See Min. Order,

dated June 12, 2017. Then, on June 23, 2017, the University requested a further extension of two days because

counsel’s “recovery has proven to be more extended than initially expected.” Def.’s Mot. Extension Time at 3, ECF

No. 109. The Developer this time objected to any extension whatsoever, again on the ground that the Developer

was entitled to the same extensions granted the University—ignoring the medical necessity for the University’s

requested extension and lack of any such necessity on the part of the Developer—and noting that the Developer had

already submitted its post-trial briefing and thus could not reap the benefit of the extension to which it believed it

would be entitled in the event the University received an extension. See Pl.’s Resp. at 2. The University’s requested

two-day extension for a medical necessity was granted over the Developer’s objection. See Min. Order, dated June

23, 2017. This sampling of the motion practice in this litigation consumed judicial attention and falls short of the

civility generally expected of members of the bar of this Court. See LCvR 83.8(b)(6)(v).

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responsibility of district courts, rather than appellate courts . . . .” Pullman-Standard v. Swint,

456 U.S. 273, 291 (1982) (quoting DeMarco v. United States, 415 U.S. 449, 450 (1974)). “The

ultimate test as to the adequacy of findings will always be whether they are sufficiently

comprehensive and pertinent to the issues to provide a basis for decision, and whether they are

supported by the evidence.” Schilling v. Schwitzer-Cummins Co., 142 F.2d 82, 84 (D.C. Cir.

1944) (footnotes omitted). The findings must be “sufficient to allow [the appellate] court to

conduct a meaningful review, which is the main point of the rule.” Caffey v. West, 1998 U.S.

App. LEXIS 4689, *6–7 (D.C. Cir. Feb. 9, 1998); see also Lyles v. United States, 759 F.2d 941,

943–45 (D.C. Cir. 1985) (noting that “an appellate court requires some reasonable measure of

detail and exactness in the trial court’s findings as a predicate for intelligent review”(internal

quotation marks omitted)); Fasolino Foods Co. v. Banca Nazionale del Lavoro, 961 F.2d 1052,

1058 (2d Cir. 1992) (“All that is required by Rule 52(a) is that the trial court provide findings

that are adequate to allow a clear understanding of its ruling.”). Accordingly, the court need not

“address every factual contention and argumentative detail raised by the parties,” Mayaguez v.

Corporacion Para El Desarrollo Del Oeste, 824 F. Supp. 2d 289, 295 (D.P.R. 2011), or “discuss

all evidence presented at trial,” Wachovia Bank N.A., Nat’l Ass’n v. Tien, 598 F. App’x 613,

617–18 (11th Cir. 2014). See also Schilling, 142 F.2d at 84 (“While counsel may be

disappointed that findings do not discuss propositions sincerely contended for, that, alone, does

not make them inadequate or suggest that such propositions were not understood by the court.”).

Instead, as the Advisory Committee Notes on Rule 52 explain, a “judge need only make brief,

definite, pertinent findings and conclusions upon the contested matters; there is no necessity for

over-elaboration of detail or particularization of facts.” FED. R. CIV. P. 52(a) advisory

committee’s note to 1946 amendment.

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While “a district court’s opinion should not simply state conclusions where

circumstances require more detail,” courts have “wide leeway . . . in determining what facts to

include.” Thermo Electron Corp. v. Schiavone Constr. Co., 958 F.2d 1158, 1160–61 (1st Cir.

1992) (Breyer, C.J.) (internal quotation marks omitted). In particular, the trial court is tasked

with the “opportunity to judge the witnesses’ credibility,” FED R. CIV. P. 52(a)(6), and should

make that assessment where probative of the legal conclusions. See Cooter & Gell v. Hartmarx

Corp., 496 U.S. 384, 401–02 (1990) (“Issues involving credibility are normally considered

factual matters.” (citing FED R. CIV. P. 52)); Noble v. Sombrotto, 525 F.3d 1230, 1237 (D.C. Cir.

2008) (remanding where district court failed to discuss evidence of “bad faith” and advising

court to “closely scrutinize self-serving” evidence).

In this case, the evidence shows the parties on a collision course toward litigation at least

as early as October 2010, when the Developer lost the opportunity to finance the project with a

particular lender with which the Developer had been in discussions since before entering into the

agreements with the University. After October 2010, the Developer abandoned any intention it

may have had previously to take seriously the agreed-upon deadlines for fulfillment of its

monetary and construction-related obligations to the University. While no provision of any

agreement ever executed by the parties made the Developer’s performance of those obligations

contingent on the Developer securing financing—indeed, the University entered into the

agreement for the express purpose of delegating to an experienced real estate development

professional the risks and rewards of developing the Property—the Developer simply refused to

perform fully absent financing. At the same time, the Developer repeatedly persuaded the

University to forbear from terminating the parties’ agreements with tactics that varied from

agreeing to new deadlines to threatening litigation.

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The Developer’s principals appear to have deeply internalized the view that the

Developer was entitled to hold fast to the Property while failing to fulfill its performance

obligations, operating in an alternate reality in which the flagrant breaching of binding contracts

is “reasonable” if doing so is favorable, from a business perspective, to the Developer. At one

point, one principal of the Developer, Ronald Cohen, even expressed his view that for the

Developer to honor its contractual commitment to make a long overdue $1,475,000 rental

payment to the University, when financing had not yet been secured, would be “STUPID and

that we are not,” Def.’s Ex. 118, Email from Ron Cohen to Eric Siegel and Alan Cohen, dated

May 29, 2013, at 1, despite the University’s certain termination of the agreements. As the

following evidence illustrates, the Developer was dead wrong, at least with respect to its own

conduct.

A. THE PARTIES

1. The plaintiff, Howard Town Center Developer, LLC, is a limited liability corporation

(“LLC”) created for the purpose of developing the Property. Cohen testified that, as an LLC,

Howard Town Center Developer, LLC, is a “standalone entity,” capitalized only for the

purpose of the Howard Town Center project through funding provided by Cohen, his son,

Alan Cohen, and his son-in-law, Eric Siegel. Trial Tr. Day 1 AM at 64:14–15, 65:11. The

three individuals use the “trade name” Cohen Companies. See id. at 99:3–8. Cohen further

testified that the LLC form is used to “limit[] certain exposures you have” as a result of the

risks associated with real estate development. Id. at 63:25–64:1. Siegel testified that

Howard Town Center Developer, LLC, “has no money in its bank account as of today” and,

consequently, in the “narrow” sense that the LLC is unable to pay any judgment rendered

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against it, the instant litigation is “risk free” for the Developer. Trial Tr. Day 5 PM at 26:14–

22, 27:1–16.

2. The defendant, Howard University, is a private university located in the District of Columbia,

“authorized by a charter of the thirty-ninth Congress of the United States in 1867.” Def.’s

Counterclaim and Third-Party Complaint ¶ 1.

3. The third-party defendant, CastleRock Partners, LLC, is also an LLC in the business of

developing real estate, and is headed by Timothy Kissler. See id. ¶ 3; Trial Tr. Day 1 AM at

61:4–17 (Cohen).

B. 2008 – 2009: THE 2008 DEVELOPMENT AGREEMENT AND THE

DEVELOPER’S INITIAL EFFORTS

4. The Property. In December 2008, CastleRock and the University agreed that the University

would lease to CastleRock a parcel of land, located at 2112 and 2146 Georgia Avenue NW,

which CastleRock would develop for mixed residential and commercial use. See generally

Def.’s Ex. 1, 2008 Development Agreement. The University had acquired the parcel of land

from the District of Columbia in an agreement dated February 19, 2008. See id. at 5. Two

buildings were already located on the site: the WRECO (“Washington Railway and Electric

Company”) garage, which was “the first purpose built bus garage for the city’s transit

system,” constructed in 1930, and the Bond Bread building, a large industrial bakery

building, constructed in 1929. Trial Tr. Day 2 PM at 4:7–17 (Callcott).

5. Pertinent Terms of the Declaration of Covenants with the District. Pursuant to the

University’s land conveyance agreement with the District of Columbia, the parcel was

subject to a “Declaration of Covenants . . . recorded in the land records of the District of

Columbia” in 2008. 2008 Development Agreement at 3; see generally Def.’s Ex. 2,

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Declaration of Covenants. The Declaration of Covenants required that the parcel be

developed, specifying four salient terms for its development, described below.

a) The design of the development was to be consistent with the Development

Framework for a Cultural Destination District within Washington, D.C.’s Greater

Shaw/U Street adopted by the D.C. Council in 2005. Declaration of Covenants at

2; see Pl.’s Ex. 261, Draft Development Framework for a Cultural Destination

District within Washington, DC’s Greater Shaw/U Street (the “DUKE Plan”). 4

Notably, the DUKE Plan contemplated the Howard Town Center development

project and specified that the project “[p]reserve . . . all or some façade elements”

of the WRECO garage. DUKE Plan at 30; see Trial Tr. Day 2 PM at 5:15–7:22

(Callcott).

b) The development was required to include a grocery store of no less than 35,000

square feet, unless the District approved a grocery store comprising fewer square

feet. See Declaration of Covenants at 3.

c) Construction was to commence within twenty-four months of the execution of the

Declaration of Covenants and be completed within thirty-six months of said

execution. See id. at 4. In other words, the development was to be completed in

2011.

d) The Developer was to enter into a “CBE Agreement” with the District of

Columbia Department of Small and Local Business Development “requiring that

20% of the equity and development participation of the Developer be comprised

4

The DUKE Plan is named after Edward Kennedy “Duke” Ellington, a Washington, D.C., native. See

DUKE Plan.

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of CBEs,” which are “local, small, or disadvantaged business enterprise[s]”

certified as such under D.C. law. Id. at 5.

6. While never made clear why CastleRock involved the Developer in the development of the

Property, shortly after the 2008 Development Agreement was signed, the Developer took

steps, at its own expense, toward developing the parcel in anticipation of the transfer of

CastleRock’s rights and obligations under the 2008 Development Agreement to the

Developer. See Trial Tr. Day 3 AM at 106:22–113:7. These steps included:

a) retaining Fabrice Vasques of Phillips Realty Capital to prepare a “pro forma

document,” which “sets forth all of the construction costs associated with the

project; all of the sources where these funds will be coming from to pay for those

construction costs and the uses for those funds.” Id. at 107:6–14. The “initial

plan” for financing the project was to obtain funding from the U.S. Department of

Housing and Urban Development (“HUD”), through HUD’s “conduit,” Wells

Fargo. Id. at 113:8–18. Siegel testified that “starting 2009 through 2010 the

economy was in bad shape and conventional financing was very difficult to have,

particularly given the size of this project,” so “HUD financing was really one of

our only options we could pursue.” Id. at 114:4–14; see Trial Tr. Day 6 PM at

9:23–10:17, 13:15–18 (Vasques) (testifying that in 2009 and 2010, financing

sources were “[v]ery limited, the finance world was frozen, . . . [s]o, [the

Developer] applied to HUD”);

b) retaining an environmental consultant, which determined that the site needed

extensive remediation. See Trial Tr. Day 3 AM at 107:16–24; Pl.’s Ex. 231,

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Phase II Environmental Site Assessment, 2112 and 2146 Georgia Avenue, NW,

Washington, DC;

c) retaining two retail brokers, beginning in “approximately April or May of 2009,”

“to seek retail tenants for the project,” in accordance with the requirements of the

Declaration of Covenants. Trial Tr. Day 3 AM at 110:20–111:21; and

d) retaining GTM Architects to do “concept drawings and feasibility studies of the

entire site.” Id. at 112:16–113:2.

C. JANUARY 22, 2010: GROUND LEASE AND DEVELOPMENT

AGREEMENT AND FIRST AMENDMENTS

7. On January 22, 2010, the University and CastleRock executed a Ground Lease Agreement

and a second Development Agreement. See Joint Ex. 1, Ground Lease; Joint Ex. 2,

Development Agreement. Effective that same day, the University, CastleRock, and the

Developer executed an agreement assigning CastleRock’s rights and obligations under the

Ground Lease and Development Agreement to the Developer. See Joint Ex. 5, Assignment

and Assumption of Ground Lease and Development Agreement. 5 Siegel testified that

CastleRock, not the Developer, was the signatory to the Ground Lease and Development

Agreement because CastleRock “was the awardee of the request [for] proposals from

Howard University” and, consequently, given the public nature of the request for proposal

process, “the parties believed it best, from the optic standpoint, to have Castle[R]ock sign the

original document and then assign it to the master developer.” Trial Tr. Day 3 AM at

115:20–24.

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While the Developer now identifies CastleRock only as a “minority partner” in the project, Pl.’s Prop.

Findings Fact Concls. Law ¶ 30, the Developer has previously acknowledged that CastleRock’s “responsibilities as

an assignor are identical to [the Developer’s],” Pl.’s Mem. P. & A. Supp. Pl. & Third-Party Def.’s Mot. Summ. J. at

18 n.2, ECF No. 87.

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8. Pertinent Terms of the Ground Lease. The Ground Lease provided for a lease term of

ninety-nine years, see Ground Lease at 5, as well as a right of first offer to purchase the

Property in the event of its sale, see id. at 68, in exchange for which rent was to be paid to the

University according to a specified schedule.

a) The rent payment schedule required the Developer to pay:

i. $525,000 on January 22, 2010, “which amount shall be deemed earned

and is non-refundable notwithstanding any future termination of this Lease

for any reason whatsoever,” id. at 5;

ii. $1,475,000 upon “the earlier to occur of (i) the date on which [the

Developer] shall make settlement upon a construction loan for the funding

of the costs of constructing the Mandatory Project Improvements (as

defined in the Development Agreement) to the extent such costs are not

funded from [the Developer’s] own resources or other equity sources, or

(ii) March 15, 2011,” id. at 2, 5; and

iii. monthly installments of rent thereafter, beginning no later than December

31, 2014, the latest possible “Rent Commencement Date,” at a monthly

rate of $95,016.25, subject to (1) a percentage reduction during any period

prior to the Rent Commencement Date in which, pursuant to the Ground

Lease, rent is due, if less than 100% of the improvements are occupied by

tenants and (2) increases after the fifth year following the Rent

Commencement Date based on the Consumer Price Index, id. at 6.

In sum, at the outset of the parties’ relationship, the Developer agreed to pay rent

to the University of $525,000 on January 22, 2010; $1,475,000 by March 15,

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2011; and monthly installments of about $95,016.25 no later than December 31,

2014. Over the last seven years, the Developer made only the first payment.

b) The Ground Lease provided that, in the event that the Developer should “at any

time be in default with respect to any rental payments or other charges . . . and

should such default continue for a period of ten (10) days after written notice from

[the University] to [the Developer]; or should [the Developer] be in default in the

prompt and full performance of any other of its promises, covenants or

agreements” in the Ground Lease or the Development Agreement, subject to

defined cure period and notice requirements, including “written notice, . . .

specifying in BOLD FACE CONSPICUOUS TYPE, that [the University] intends

to terminate” the Ground Lease if the default is not cured, the University shall

have the option to terminate the agreements or reenter the Property. Id. at 49–50.

c) The Ground Lease further provided that the University could recover from the

Developer in damages, inter alia, “the worth at the time of award of any unpaid

rent . . . that had been earned and is outstanding at the time of such termination”

and “the reasonable amount of any costs or expenses incurred by [the University]

in enforcing its rights under this [Ground] Lease after such default.” Id. at 51.

9. Pertinent Terms of the Development Agreement. The 2010 Development Agreement “set

forth [the parties’] agreements and understandings concerning the planning, development and

construction of the Project Improvements.” Development Agreement at 1.

a) In particular, the Development Agreement imposed a number of requirements, in

addition to those contained in the Declaration of Covenants, on the Developer,

including that:

16

i. the improvements on the parcel would be constructed at the Developer’s

“sole expense,” id. at 1;

ii. because the parcel “is an integral part of the University’s campus, . . . the

University requires that the Project Improvements be approved by the

University” and “[n]o Work on any of the Project Improvements shall be

commenced that is not approved in accordance with [this Agreement],” id.

at 11;

iii. the Developer “shall develop with Contractor, and deliver to the

University, a comprehensive, integrated project schedule . . . addressing

and setting forth specific dates for the timeline and sequencing of each

distinct portion, aspect or phase of the activities and tasks to be

accomplished by the Developer with respect to the construction and

completion” of the development, id. at 15.

b) The 2010 Development Agreement further dictated the timetable for the

development of the Property, specifying as follows:

i. the Developer shall commence construction as provided in the Declaration

of Covenants, i.e., by December 17, 2010, and achieve completion by

December 17, 2011, or, failing either, shall “pay to the University, upon

demand, all penalties, damages and demands that the University may

become obligated to pay to the District of Columbia,” except that the

University authorizes the Developer to communicate with the District

regarding extension of those two dates, as long as the Developer “keep[s]

the University fully informed” of its discussions with the District, the

17

University “ha[s] the right to participate directly” in those discussions, and

the Developer has no “right to commit the University as to any matter,”

and the University “shall not object” to any extension “consistent with the

schedule for performance of Developer’s obligations,” id. at 17–18;

ii. if construction is not commenced by March 15, 2011, the University may

“give written notice specifying IN BOLD FACE CONSPICUOUS TYPE”

that the Development Agreement and Ground Lease will be terminated if

construction does not begin within thirty days of receipt of notice, id. at

17; and

iii. “the Developer shall achieve Substantial Completion of all of the

Mandatory Project Improvements no later than March 15, 2013 . . . ,

subject to extensions for additional periods of time equal to time actually

lost on account of Unavoidable Delays,” id. at 18, which category includes

delays due to, inter alia, “unanticipated, unusual and extreme weather”

and “other unanticipated events or circumstances beyond the affected

Party’s control,” id. at 7. Significantly for the parties’ future relationship,

the Unavoidable Delays provisions expressly excluded delays due to

“changes in market conditions” affecting costs, “governmental delays”

unless not attributable to the Developer’s actions, or “unavailability to

Developer of any debt or equity financing to provide construction or

permanent funding for the Project.” Id. In other words, if the Developer

was unable to obtain financing or to do so on the timetable the University

expected, as set out in the Development Agreement, the University had the

18

clear contractual right to terminate the agreements and find a developer up

to the job.

10. First Amendments. The same day as the execution of the Ground Lease and Development

Agreement, the parties executed amendments to both agreements, effective January 22, 2010,

addressing various matters, including environmental remediation of the site. See generally

Joint Ex. 3, Ground Lease Amendment; Joint Ex. 4, Development Agreement Amendment.

The Developer’s consultant had “determined in 2009 [the remediation cost] to be

approximately $4 million,” and the University agreed through the Development Agreement

Amendment to shift a substantial portion of those costs from the Developer to itself. Trial.

Tr. Day 3 AM at 116:7–15 (Siegel). Specifically, the amendments provided that:

a) the University would, at its own cost, hire a consultant to prepare a remediation

report and plan, in coordination with the Developer, and “endeavor to cause the

Consultant to complete a draft [remediation plan] by approximately mid-March,

2010,” Development Amendment Agreement at 2;

b) the Developer would be responsible for implementation of the remediation plan,

see id. at 2–3;

c) the Developer would be responsible for remediation costs up to $750,000, and the

University would cover the costs in excess of that amount, see id. at 4–6; and

d) as a means of facilitating the Developer’s reimbursement by the University for the

environmental remediation expenses in excess of $750,000, “the University and

the Developer shall establish an escrow account . . . with an escrow agent . . .

reasonably acceptable to the University and Developer,” into which the Developer

would deposit the first two rental payments “when due and payable under the

19

Lease.” Id. at 4. The account was to bear interest, which interest would “be

added to” and “included as a part of” the funds in the account. Id. at 5. The funds

in the escrow account would be disbursed by the escrow agent, upon receipt of

specified documentation, to cover incurred remediation costs. Id. The parties

entered into an escrow agreement, effective January 25, 2010, to form the

required escrow account. See Joint Ex. 6, Escrow Agreement.

D. SPRING 2010 – FEBRUARY 2011: THE DEVELOPER SEEKS

MODIFICATION OF THE AGREEMENTS

11. Following the signing of the agreements and amendments thereto, the Developer continued

to pursue financing for the project. Siegel testified that “[a]round March or April of 2010,

HUD representatives had a site tour” and, after a subsequent meeting, the Developer was

given a “green light to file an application” to obtain HUD financing for the project. Trial Tr.

Day 3 AM at 114:17–21.

12. At the same time, the Developer sought to extend the deadlines for commencement and

completion of construction contained in the Declaration of Covenants. Siegel testified that in

his view those deadlines were “unrealistic” and “candidly ridiculous” at the time they were

entered into two years earlier, in 2008, by the University and the District. Id. at 105:9–19.

Based on this view, “beginning in the spring of 2010, Ron Cohen and [Siegel] met with

various council members” seeking revision of the schedule, and those council members

“seemed very supportive of the approach” outlined by the Developer. Id. at 130:9–19

(Siegel). Siegel further testified that he would learn later, in October 2010, almost ten

months after executing the Ground Lease and Development Agreement with the University,

that changing the schedule “required an administrative change from [the deputy mayor’s]

office, not from the council members.” Id. at 131:5–11.

20

13. Meanwhile, the parties undertook to fulfill their obligations under the Development

Agreement Amendment and applicable law regarding the environmental remediation of the

Property site. Those efforts culminated in the filing with the District, of a remediation plan,

known as the “Corrective Action Plan,” dated November 17, 2010, which was approved by

the District’s Department of the Environment (“DDoE”) on December 4, 2010. Pl.’s Ex.

234, Corrective Action Plan. Siegel testified that no construction could be done on the site

prior to the District’s approval of a Corrective Action Plan. See Trial Tr. Day 3 AM at

121:24–122:3.

14. The Developer First Accuses the University of Delay. Just prior to the District’s approval of

the Corrective Action Plan, in a letter dated December 2, 2010, the Developer expressed to

the University its belief that the University had delayed the environmental remediation

process. See Pl.’s Ex. 72, Letter from Ronald Cohen to Diane Branch, Assoc. Vice President

of Real Estate Development and Asset Mgmt., Howard Univ., dated Dec. 2, 2010, at 2. First,

citing a provision of yet another agreement between the parties “that the Developer is not to

release the environmental reports to any governmental agency without the prior approval of

Howard,” the Developer objected to the University’s forwarding of an environmental report

to the DDoE. Id. (emphasis added). The Developer’s letter ignored the plain language of the

cited agreement, which imposes the nondisclosure obligation only on the Developer, not the

University. In any event, according to the Developer, the University’s action resulted in the

DDoE issuing directives requiring remediation of the site before any excavation permits

could be granted, a result characterized by the Developer as “unnecessary bureaucratic

delay[],” without acknowledging any other potential reasons for this requirement, such as the

safety of the community or environment. Id. Second, the Developer expressed its view that

21

the University had failed to comply with the Development Agreement Amendment’s

provisions regarding the timing of the production of the remediation report and plan,

asserting that the report was produced “a full six (6) months after it was required” under that

amendment. Id. In fact, the University was merely required to “endeavor to cause the

Consultant to complete a draft [remediation plan] by approximately mid-March, 2010,”

Development Agreement Amendment at 2, and, according to the Developer, produced the

report in August of that year, see Pl.’s Ex. 72, Letter from Ronald Cohen to Diane Branch,

dated Dec. 2, 2010, at 2.

15. In the same letter, the Developer represented that “[u]ntil the [remediation plan] is approved,

the Developer is unable to complete its excavation permit application because DDoE

comments, qualifications and conditions to the [plan] will determine certain basic questions

as to whether excavation beyond the garage levels will be necessary.” Id. at 3. According to

the Developer, in light of the status of the remediation plan, “the March 15, 2011 deadline to

commence construction is not realistic, and has not been for some time, beyond the control of

the Developer.” Id. At the same time the Developer was shifting fault for delay on the

University, the Developer had been unsuccessful in obtaining any financing for the project.

16. The University responded to the Developer, stating the University’s view that the University

“has proceeded appropriately and with diligence” with the work required for environmental

remediation, and that “[a]lthough that process has not proceeded strictly in accordance with

the schedule outlined in the Amendment, the deviations from that schedule were caused by a

number of factors beyond Howard’s control.” Pl.’s Ex. 46, Letter from Troy Stovall to

Ronald Cohen, dated Dec. 9, 2010, at 1. Contrary to the Developer’s proffer of the

remediation plan as a justification for delay, the University further stated it did “not believe

22

that any delays in the implementation of the process outlined in the Amendment have

materially impaired the Developer’s ability to proceed with any of the numerous other steps

necessary to commence and complete the Project as and when contemplated in the

Development Agreement.” Id. at 1. Countering the Developer’s contention that disclosure

of an environmental report to the DDoE was improper, the University expressed its belief

that disclosure was permissible and, moreover, was “required under applicable law.” Id. at

2. 6

17. The December 15, 2010 Meeting. On December 15, 2010, the Developer submitted to the

University plans the Developer describes as “reflect[ing] conceptual design, building

specifications and schematic design for the project.” Pl.’s Ex. 109, Letter from Developer to

Diane Branch, dated Dec. 15, 2010; see also Pl.’s Ex. 236, Howard Town Center Feasibility

Study by GTM Architects, dated Dec. 15, 2010. That same day, representatives for the

Developer and the University met to discuss the project. See Trial Tr. Day 3 AM at 127:18–

128:4 (Siegel). At that meeting, the Developer presented those plans to the University and

also informed the University that the Developer had “lost the opportunity to finance the

project with HUD” in October 2010. Id. at 128:11–14, 115:3–4. The Developer raised the

“difficulty in getting conventional financing for an entire city block project and the need to

potentially phase the project if [the Developer] could not secure financing for an entire city

block.” Id. at 128:14–17. 7 Stovall responded by “suggest[ing] that the University might be

6

While the Developer presses the view that the University “mishandl[ed] [the] environmental issues”

affecting the Property, Pl.’s Prop. Findings Fact Concls. Law at 1, the evidence hardly supports that characterization.

The University did not comply strictly with the generally framed deadline in the amendment to the Development

Agreement, but took appropriate actions to comply fully with applicable environmental and safety laws. Moreover,

while the Developer is also critical of the fact that the University “submitted a report to the District without the

Developer’s approval,” that criticism also seems misplaced given the lack of any evidence indicating the

Developer’s approval was in fact required. Id. ¶ 86.

7

The record is thin as to the reasons why the Developer lost the HUD financing. Siegel testified that “we

received a letter from them, a formal letter, that upon communications with the District they felt that there were

23

open to the idea of master-leasing one of the [two planned] residential towers as a way to

finance the entire project at once.” Id. at 129:1–3. In such an arrangement, the University

would have rented an entire tower from the Developer and handled the unit-by-unit rental

agreements itself. See id. at 129:4–15.

18. Under the Development Agreement, the Developer was required to submit a conceptual

design for the University’s approval before submitting building specifications or a schematic

design, presumably to give the University ample time to review these designs separately and

avoid the inefficiencies of moving forward on a conceptual design not approved by the

University, but the Developer failed to follow this procedure. See Development Agreement

at 12–13. The University did not respond to the Developer’s proposed plans within twenty

days, the amount of time specified in the Development Agreement. See Trial Tr. Day 3 AM

at 129:19–130:3; Development Agreement at 12. 8

19. In a letter dated January 20, 2011, Stovall wrote to the Developer indicating that the

University was “continuing to review [the submitted] documents in greater detail” but was

“writing this preliminary response to identify certain discrepancies between” the Developer’s

documents and “the program for development contemplated in the Ground Lease and

Development Agreement.” Joint Ex. 7, Letter from Troy Stovall to Ronald J. Cohen, dated

Jan. 20, 2011, at 1. Specifically, Stovall noted that “it appears from [the documents] that the

other priorities they wanted to have HUD pursue” with available funding. Trial Tr. Day 3 AM at 115:3–9. Despite

Siegel’s seeming placement of the blame for the loss of the HUD financing on the District, other evidence suggests

that the Developer’s negotiation tactics may have played a role. A letter from Cohen to a Wells Fargo representative

regarding the HUD financing, dated September 16, 2010, reveals that Cohen found certain terms of one of Wells

Fargo’s proposed agreements to be “a deal breaker” and expressed the view that at Wells Fargo, “the right hand does

not know what the left hand is doing,” further asserting that “Wells Fargo must convince [Cohen] that it has its act

together, or [he is] going to sever [their] relationship.” Def,’s Ex. 11, Letter from Ronald Cohen to Catherine Pharls,

Wells Fargo Multifamily Capital, dated Sept. 16, 2010, at 1–2.

8

In discussing a later instance in which the Developer sent the University documents in mid-December that

invited a response, counsel for the Developer “recognize[d]” that the period during which the University did not

respond was “the holidays.” Trial Tr. Day 1 AM at 19:7–9.

24

commencement of construction will occur approximately at the end of January, 2012, rather

than by March 15, 2011, as required under the Development Agreement” and that “the area

of the proposed grocery store . . . is significantly less than the minimum required by both the

Development Agreement and the Covenant.” Id. at 1–2. Stovall reminded the Developer

that the District’s approval was needed for modifications to the schedule and grocery store

requirements and, with respect to the former, the University’s approval as well. See id. The

letter further included a “reminder that the Ground Lease requires that the Developer tender

$1,475,000 to the University, by March 15, 2010 [sic], in payment,” id. at 2, which rental

payment due date was only two months away. Finally, Stovall requested that the Developer

“contact [him] at [the Developer’s] earliest opportunity to schedule a time for a detailed

discussion of the concerns identified in this letter.” Id. 9

20. The Developer responded to the University, expressing the view that the concerns outlined in

the University’s letter reflected “a direct departure from the results of [their] meeting on

December 15, 2010,” where a “detailed discussion of the revised project schedule” had

occurred. Joint Ex. 8, Letter from Developer to Troy Stovall, dated Feb. 1, 2011, at 1.

Notwithstanding the Developer’s execution of the Development Agreement along with a first

amendment to that agreement that incorporated construction deadlines, the Developer now

complained “that neither the District nor the University set forth realistic deadlines three

years earlier.” Id. With respect to the items for which the Developer needed District

approval, the Developer represented that it had been “informed in December by . . . staff [at

the deputy mayor’s office] that a representative of Howard University intervened in [the

9

While the Developer describes the University’s letter as “not[ing] only unspecified ‘discrepancies,’” Pl.’s

Prop. Findings Fact Concls. Law ¶ 90, the above-cited evidence demonstrates that, to the contrary, the University

provided details as to the identified discrepancies.

25

Developer’s] process and insisted that [the deputy mayor’s office] not communicate with the

Developer on this matter at this time and that it should be taken up with the administration of

Howard University,” and, thus, the Developer had “been stymied in [its] efforts to meet with

the District to address” the issues requiring District approval. Id. at 2. The Developer made

this accusation without acknowledging that the Developer was required by the Development

Agreement to “keep the University fully informed” of all communications with the District

regarding the deadlines. Development Agreement at 18. 10 The Developer again for a second

time raised the issue of building the project in two phases and the University “potentially

master leasing a residential tower for student housing,” conveying that this potentiality “has a

real impact on the progress of the designs.” Joint Ex. 8, Letter from Developer to Troy

Stovall, dated Feb. 1, 2011, at 3.

21. Toward the letter’s conclusion, the Developer alluded for the first time to litigation with the

University, stating it “can only assume through reading between the lines . . . that the

University is setting up the Developer to assert termination of the Ground Lease and that this

venture is heading toward litigation” but that the Developer was “prepared to vigorously

defend [its] actions and efforts to date.” Id. The Developer also noted that it “feels that the

Closing Date . . . needs to be renegotiated.” Id. The Developer understood that the “Closing

Date” was the date upon which the $1,475,000 payment was to be made. See Trial Tr. Day 3

AM at 140:12–15 (Siegel). Despite the aggressive tone of this letter, the Developer still had

not secured financing for the project, and, according to the Developer, would not have been

prepared to make the rental payment or move forward without that financing in place. See,

10

The Developer now acknowledges this, but apparently begrudgingly, since it notes that the phrase “keep

the University fully informed” should be understood to mean “the Developer was not required to include the

University on all its communications.” Pl.’s Prop. Findings Fact Concls. Law ¶ 199 n.5.

26

e.g., Trial Tr. Day 1 PM at 100:5–12 (Cohen) (explaining “because we . . . did not secure our

financing, . . . we just weren’t in a position to break ground” by December 17, 2010, as

required by the agreements).

22. The Historic Factories Blog Post. Later that month, on February 22, 2011, Branch, the

Associate Vice President of Real Estate Development and Asset Management at the

University, forwarded Cohen an email containing the text of a blog post entitled “Bread for

the City: Shaw’s Historic Bakeries” discussing the historic nature of the Bond Bread building

on the Property. Def.’s Ex. 14, Emails Between Ronald Cohen, Diane Branch, Maybelle

Bennett, and Scott Roberts, dated Feb. 22, 2011. She asked Cohen, “Are we concerned that

there will be an application to deem this property historic? What are your

recommendations?” Id. at 1. Cohen forwarded the email to Siegel and wrote, “??? FYI- we

need to monitor this . . . .” Id. Siegel testified that upon receiving this email, he “went back

to the Duke Plan” and verified its requirement that “some portion of the corner of V and

Georgia Avenue,” i.e., the WRECO garage, but not the Bond Bread building, be preserved.

Trial Tr. Day 3 PM at 93:15–94:4.

23. Siegel testified that between February 1, 2011, and the end of the month, Stovall “was

essentially requesting information from [the Developer] so that he could evaluate th[e]

master lease concept” and two-phase plan newly proposed by the Developer but conceded

that the University did not agree to either alternative plan. Trial Tr. Day 3 AM at 143:7–

144:10. With the March 15, 2011, deadline for payment of the $1,475,000 rent installment

looming, on February 28, 2011, the Developer submitted to the University a memorandum

setting out a schedule for the development, based on a two-phase project, and moving the

Closing Date to “the earlier of settlement on a construction loan or February 15, 2012,” with

27

“excavation to begin December 8, 2011.” See Def.’s Ex. 15, Memorandum from Ronald J.

Cohen to Troy Stovall, dated Feb. 28, 2011, at 1–3.

E. MARCH – AUGUST 2011: THE UNIVERSITY AGREES TO CERTAIN

OF THE DEVELOPER’S PROPOSED MODIFICATIONS, BUT THE

DEVELOPER SEEKS FURTHER MODIFICATION

24. A month later, on March 31, 2011, Stovall represented that the University had undertaken “a

considered review of the entire history of the Developer’s interaction with the University

since the Project’s inception” and was “prepared to approve the revised schedule for the

Project” provided by the Developer on February 28, 2011, which included a scheduled

construction commencement date of December 8, 2011. Joint Ex. 9, Letter from Troy

Stovall to Developer dated Mar. 31, 2011, at 1.

25. At the same time, however, after consideration of the Developer’s proposals to change the

development plan to, inter alia, “divide its development into two phases,” the University did

“not believe [the Developer’s explanations for the proposals] warrant changes” to the

development plan set out in the agreements. Id. at 2.

26. Notably, Stovall also highlighted the fact that the Developer “failed to pay the $1,475,000

rental payment that became due under the Ground Lease on March 15, 2011,” and explained

that the University did “not concur” with the Developer’s position that the failure was

justified. Id. at 2 (emphasis in original). Nevertheless, having agreed to push back the date

for commencement of construction, the University also agreed to “postpone the due date for

that payment until December 8, 2011,” as requested by the Developer. Id. (emphasis in

original). Having rejected a two-phase project, however, the University did not grant the

Developer’s request that “only half of the next ground lease payment” be paid at that time.

28

Def.’s Ex. 15, Memorandum from Ronald J. Cohen to Troy Stovall, dated Feb. 28, 2011, at

2.

27. Siegel testified that at the end of April 2011, the Developer met with the deputy mayor to

brief him on the project. See Trial Tr. Day 3 PM at 9:7–13 (Siegel). According to Siegel, the

Developer did not request revision of the covenant deadlines in that meeting, however,

because, notwithstanding the University’s clear rejection of the Developer’s proposed change

to the development plan to permit two phases, it “couldn’t ask for deadlines . . . unless [the

Developer] knew whether [it] w[as] building all at one time or in two phases.” Id. at 9:14–

20. Notably, the Developer still had not secured financing at this point.

28. Siegel further testified that during the months of May, June, and July, the Developer and the

University discussed how they would proceed with the project, with the University

explaining that master-leasing could be considered if the rental rate reflected a twenty

percent discount off the market rate, which the Developer believed “wasn’t economically

feasible.” Id. at 3:24–25.

29. By the summer of 2011, the Developer had still been unable to secure financing after the

possibility of the HUD funding had evaporated. In good news on the financing front,

however, in a “letter of intent” dated July 7, 2011, J.P. Morgan Investment Management,

Inc., “set forth the general terms and conditions under which [it] would be prepared to enter

into a [redacted] joint venture agreement” with the Developer regarding the development,

“based upon the information [the Developer has] supplied . . . to date.” Pl.’s Ex. 212, Letter

of Intent from J.P. Morgan Investment Management, Inc., to Ron Cohen, dated July 7, 2011,

at 1. The letter of intent was “non-binding” and required the Developer to sign and return a

29

copy of the letter to J.P. Morgan “no later than July 15th, 2011” if the developer agree[d] to

the terms and conditions described.” Id. at 4.

30. Siegel testified that he provided the letter of intent from J.P. Morgan to the University and

continued discussions regarding the plan for the project, sending a further proposal for terms

of the project to the University on July 28, 2011. See Trial Tr. Day 3 PM at 5:4–11, 7:6–14.

In that proposal, the Developer “approach[ed] the [two-phase] idea from the expense side,”

suggesting the University agree to “defer[]” the Developer’s rental payment obligations for

the improvements made to the Property, i.e., accept late payments with interest, in exchange

for the Developer building the project in a single phase, as provided in the Development

Agreement, and as the University had consistently required. Trial Tr. Day 6 AM at 70:18–

71:11.

31. The District Expresses Concerns to the University. In a letter dated August 19, 2011, Stovall

provided to the Developer a copy of a letter dated August 15, 2011, from the District

regarding the Declaration of Covenants and requested that the Developer respond by August

26, 2011, so that the University could, in turn, respond to the District. See Def.’s Ex. 19,

Letter from Troy Stovall to Ronald J. Cohen, dated Aug. 19, 2011, at 1. The letter from the

District stated that the University “was required to cause its selected developer to achieve

Commencement of Construction . . . by December 17, 2010” and noted that “Howard ha[d]

yet to achieve” that milestone. Id. at 3. The District represented that it was “willing to

consider extending the deadline for Commencement of Construction to October 1, 2012 if

Howard” delivered, by September 16, 2011, (1) an updated schedule of performance; (2)

additional security in the amount of $100,000; and (3) the “CBE Agreement executed by the

Developer, as required under the Covenants.” Id.

30

32. The Developer responded in a letter, dated August 22, 2011, repeating many of its previous

assertions regarding the project, including that “neither the District nor the University set

forth realistic deadlines three years earlier when the Declaration of Covenants was executed,”

even though these were the terms to which the Developer had agreed in the Ground Lease

and Development Agreement, and that “a representative of Howard University intervened in

[the Developer’s] process” with the District, causing delays, even though the University was

merely enforcing the term of the Development Agreement requiring that it be informed of the

Developer’s communications and negotiations with the District. Joint Ex. 10, Letter from

Developer to Troy Stovall, dated Aug. 22, 2011, at 1, 2. The Developer also informed the

University of its position with respect to the three items requested by the District, asserting

that the Developer would (1) not agree to a revised schedule with the District until “Howard

and the Developer agree on terms to pursue the entire project or, alternatively, to develop it

in phases”; (2) “not provide any additional money until Howard and [the Developer] reach an

agreement on how to proceed; and (3) not sign the CBE Agreement until the University and

the Developer “have an amended Ground Lease (and corresponding amended Development

Agreement) in place.” Id. at 2. With respect to the requested $100,000, in particular, Siegel

testified that “the position we had in response was we’re not interested in posting security.”

Trial Tr. Day 3 PM at 10:3–6. Again, the Developer was not open to investing additional

money in the project when it had not obtained a funding commitment and did not know if the

project was going to move forward.

33. Also on August 22, 2011, Stovall responded to the Developer’s July 28, 2011, proposal,

which reflected an expense-side version of the two-phase approach previously rejected by the

31

University, stating that the “proposal is not acceptable to Howard University.” Pl.’s Ex. 90,

Emails Between Eric Siegel and Troy Stovall, dated Aug. 20, 21, 22, 2011, at 1.

F. AUGUST – SEPTEMBER 2011: WITH THE DISTRICT POSING

QUESTIONS, THE UNIVERSITY DEMANDS ASSURANCE OF

PERFORMANCE FROM THE DEVELOPER, WHICH INSTEAD OF

PROVIDING SUCH ASSURANCE, ALLUDES TO LITIGATION

34. In a letter dated August 30, 2011, Stovall responded to the Developer’s August 22, 2011,

letter “to make clear” that “[t]he Developer’s proposed modifications to the Project are not

acceptable; and the terms the Developer has proposed to us for the alteration of its

obligations are likewise unacceptable.” Joint Ex. 11, Letter from Troy Stovall to Developer,

dated Aug. 30, 2011, at 1. Referring to prior discussions and correspondence between the

parties, Stovall noted that he had “made it abundantly clear . . . that (i) although the

University was willing to listen to and consider [the Developer’s] proposed changes, and

although the parties may engage in further discussions about them, [the Developer] should

not assume that they are or will be approved; and (ii) our continuing discussions should not

be construed to delay . . . efforts to carry out the Project as previously agreed.” Id. at 1–2.

35. Stovall also informed the Developer of the University’s position that under the governing

agreements, the Developer alone is responsible for securing financing and that any delay in

doing so does not warrant delay in execution of obligations under those agreements; and that

the Developer’s “accusations concerning the University’s purported interference with [the

Developer’s] communications with District representatives” were “responded to . . . many

months ago” and “any misunderstanding on the part of the District as to [the Developer’s]

authority to deal directly with the District was dispelled late last year.” Id. After

enumerating the Developer’s lapsed obligations under the agreements, Stovall expressed

concern that the Developer had stated repeatedly that it was “unable or unwilling to proceed

32

with the construction and completion of the Project according to the single-phase program”

specified in the agreements, unless “the University agree[d] to significant financial

concessions.” Id. at 3–4.

36. Finally, Stovall’s letter demanded that the Developer provide assurances to the University by

September 8, 2011, including, inter alia, (1) “unqualified ratification of [the Developer’s]

obligations under the existing Project Documents and an unqualified statement that the

Developer is ready, willing and able to timely comply with and perform” those obligations;

(2) “[r]easonable evidence” of the Developer’s ability to obtain tenants, financing, and

permits consistent with its obligations; and (3) “written affirmation of [the Developer’s]

intent and ability . . . to timely pay to the University the rent payment in the amount of

$1,475,000.00 due on December 8, 2011” and comply with the other milestone dates set out

in the Developer’s February 28, 2011, memorandum and approved by the University on

March 31, 2011. Id. at 5–6.

37. Having received no assurances from the Developer by September 8, 2011, in a letter dated

September 9, 2011, the University wrote to the District, copying the Developer, among

others, “to update [the District] on the status” of the Project, informing the District that while

the University “requested substantiated assurances from the Developer of its ability and

intent to fulfill its contractual obligations to the University and the District[,] . . .

[u]nfortunately, as of this date [the University] ha[s] not received those assurances.” Def.’s

Ex. 23, Letter from Troy Stovall to Senthil Sankaran, Director of Development, Office of the

Deputy Mayor for Planning and Economic Development, dated Sept. 9, 2011, at 1.

38. As noted, despite the District’s demand to the University setting a strict deadline, the

Developer did not timely respond on September 8, 2011. Siegel explained that the Developer

33

did not timely respond because Siegel “was busy working on a chronology of events to make

sure that the recitation of facts was precise and accurate.” Trial Tr. Day 3 PM at 13:9–16.

The Developer responded to the University’s letters of August 30 and September 9, 2011, in

a letter dated September 15, 2011, setting out the Developer’s perspective on the chronology

of events, followed by a warning to the University: “Conduct yourselves accordingly.” See

Joint Ex. 12, Letter from Developer to Troy Stovall, dated Sept. 15, 2011, at 1–7. Yet, rather

than “conduct” itself in accordance with extant agreements or provide any of the assurances

requested by the University and the District, the Developer continued to press its desired

modifications to the agreements, expressing its “hope that we can put these issues behind us

and continue” negotiating terms that “can realistically form the basis for a modified ground

lease.” Id. at 7. Reading between the lines, as the Developer was wont to do, see Joint Ex. 8,

Letter from Developer to Troy Stovall, dated Feb. 1, 2011, at 3, the Developer appears to

have been seizing an opportunity, leveraging the pressure exerted on the University by the

District’s demand for assurances to, in turn, pressure the University to concede to terms more

favorable to the Developer, which terms the University had resisted. Indeed, acknowledging

the harm to the University of continued delay in the project, the Developer noted that “the

University has foregone approximately $1,000,000 in potential lease revenue upon delivery

of this project by failing in a timely manner to come to terms with the economic realities of

the environment we currently operate in and by modifying [sic] ground lease terms

accordingly so that we can break ground expeditiously.” Joint Ex. 12, Letter from Developer

to Troy Stovall, dated Sept. 15, 2011, at 7. As the Developer put it, in a prescient, and not-

so-oblique, threat of litigation, “[o]therwise, we will find ourselves mired in dispute, and the

project will remain dormant for the foreseeable future.” Id. At this point, the Developer still

34

had no funding secured and, as Cohen and Siegel made very clear in their testimony, moving

forward with the project and any further investment of the Developer’s funds—even as

relatively small an amount as the $100,000 demanded by the District—was not going to

happen.

G. SEPTEMBER 2011: THE UNIVERSITY SENDS THE FIRST NOTICE OF

DEFAULT TO THE DEVELOPER

39. On September 26, 2011, the University sent the Developer a notice that the Developer “is in

default under the Project Documents” for its failure to comply with the requirements of those

documents in the time provided. Joint Ex. 13, Notice of Default, dated Sept. 26, 2011, at 1.

The University also stated that “the Developer is in anticipatory breach of the Project

Documents,” noting that “the Developer has evidenced repeatedly its inability and/or

unwillingness to proceed with the construction and completion of the Project according to the

program” set out in the governing agreements, most recently by failing to provide the

assurances requested in the letter dated August 30, 2011. Id. at 3–4. In other words, the

University did not buckle to the pressure applied by the Developer to accede to further

concessions, under the threat of litigation; the Developer’s bullying tactics did not work.

40. Cohen feigned surprise at the University’s reaction to the Developer’s utter failure to provide

assurances but only to threaten litigation, testifying that upon receiving this letter, he said to

Siegel, “Let’s get to the bottom of this. . . . Where is this coming from? Something we

messed up on? Something they’re posturing?” Trial Tr. Day 2 AM at 78:4–79:7. With the

Developer’s bluff called, the Developer owned up to its inability to secure financing. In a

letter dated September 29, 2011, the Developer responded to the September 26, 2011, Notice

of Default, explaining its “great difficulty in securing conventional financing for the entire

project” after losing the HUD financing and noting the “shortfall” of $1,500,000 “in

35

financing this $145,000,000 project.” Joint Ex. 14, Letter from Developer to Troy Stovall,

dated Sept. 29, 2011, at 1. The Developer responded “to each of [the University’s] alleged

defaults in turn so that [the University] can receive the positive assurances [it] seek[s] that,

with the exception of this $1,500,000 shortfall, [the Developer] ha[s] not stopped [its]

efforts.” Id. at 2. The Developer’s responses focused on the “financing hurdle[s]” involved

in the project and its continuing efforts to obtain financing; the Developer’s reasons for

failing to comply with certain requirements, such as the requirement that it erect and

maintain signage for the project so the community would be aware of the development

planned for the site, characterizing its failures as “reasonable” or “prudent”; and the

Developer’s progress in obtaining tenants, including a grocery store exceeding the square

footage requirements of the Declaration of Covenants. Id. at 1–5. In this September 2011

exchange, the University simply refused to be bullied or threatened and the Developer finally

responded substantively to the University and District’s request from a month earlier, in

August 2011. The parties then tried to reset the working relationship.

H. OCTOBER – DECEMBER 2011: THE UNIVERSITY CONTINUES ITS

RELATIONSHIP WITH THE DEVELOPER NOTWITHSTANDING THE

DEVELOPER’S DEFAULTS

41. The Proposed Memorandum of Understanding. While Stovall was primarily responsible for

the project and had the authority to issue the Notice of Default and engage in other

communications with the Developer, see Trial Tr. Day 1 PM at 16:12–16 (Ribeau), some

within the University did not agree with Stovall’s approach. Dr. Hassan Minor, a Senior

Vice President of the University in charge of governmental relations, had been responsible

for the Howard Town Center development project at its inception, before the project was

transferred to Stovall. See id. at 3:18–4:15, 35:7–14 (Ribeau). Dr. Ribeau testified that the

36

Howard Town Center project was “Dr. Minor’s baby” and reassigning it to Stovall had been

“tough.” Trial Tr. Day 1 AM at 35:10–36:11. On October 21, 2011, Dr. Minor emailed Dr.

Ribeau expressing his view that Stovall had employed a “‘default to litigation’ approach” to

the project and his understanding that he (Dr. Minor) had been tasked with “see[ing] if it was

possible to change the final destination of the [Howard Town Center development] train from

injunctions, damages and years of litigation to building permits, construction, ribbon-cuttings

and occupancy.” Pl.’s Ex. 6, Emails Between Dr. Hassan Minor and Dr. Sidney Ribeau,

dated Oct. 21, 2011, and Nov. 2, 2011, at 2. Dr. Minor “enclosed a draft of a new

[Memorandum of Understanding (“MOU”)] that ha[d] been developed in the last 3 days with

the [Developer].” Id.

42. Along with Dr. Minor, Norman Jenkins helped develop the MOU on the University’s behalf.

See Joint Ex. 15, Email and Memorandum from Eric Siegel to Norman Jenkins, cc: Ron

Cohen, dated Oct. 17, 2011. Jenkins is an alumnus of Howard University and has

volunteered for the University for many years, now serving as a trustee. See Trial Tr. Day 7

AM at 4:2–7, 4:24–5:10 (Jenkins). Jenkins “run[s] a company [that] develop[s] and

acquire[s] all classes of real estate” and testified that Dr. Ribeau asked him to become

involved in the Howard Town Center project because he “wanted someone with a

development background to come in and also have a sympathetic ear and a different lens than

the University might have, to see if we can get the project moving.” Id. at 4:14–17, 5:11–17.

Both Cohen and Siegel used the same words to express their view that Jenkins was “a breath

of fresh air.” Trial Tr. Day 1 AM at 92:12–19 (Cohen); Trial Tr. Day 3 PM at 26:14–15

(Siegel).

37

43. The proposed MOU between the Developer and the University was reviewed by a consultant

retained by the real estate committee of the Howard University Board of Trustees. See Pl.’s

Ex. 50, Memorandum from Sumner Partners & S. Klebanoff to Josh Rales, Trustee of

Howard University, cc: Sidney Ribeau, Troy Stovall, dated Nov. 14, 2011. In an eight-page

memorandum relaying its assessment to a trustee of the University, the consultant noted its

“previous and standing recommendations to terminate the transaction and re-market the

property based on the default and actions of the [Developer]” and stated that the “‘take away’

from [its] review of the [MOU] is that there is nothing new in [the Developer’s] proposal—in

fact, it just continues the ‘free look’ that [the Developer] has been provided for calendar year

2011.” Id. at 1. Indeed, for the two years that the Developer had exclusive rights to the

Property’s leasehold, the Developer had paid only the initial rental payment on the execution

of the agreements in January 2010 and failed to make any other rental payment. 11

44. Certain persons within the University appear to have been persuaded by the consultant’s

standing recommendation. Robert Tarola, who at the time was the University’s Chief

Financial Officer, took over responsibility for the project from Stovall at some point “late in

2011.” Trial Tr. Day 2 PM at 44:24–45:2. Tarola testified that at the time he took over,

“[t]here were a few people that had a view that [the Developer] would not be able to perform.

And as a result a better deal could be obtained.” Id. at 58:24–59:5.

45. Others within the University continued to desire preservation of the University’s relationship

with the Developer, if the University and the Developer could formulate “a deal equal to the

11

The Developer cherry picks from a document containing notes from a November 8, 2011, meeting with Dr.

Ribeau to suggest that the motivating factor behind the consultant’s recommendation that the Developer be

terminated and the Property remarketed was that the “[d]eal was done below current market,” Pl.’s Prop. Findings

Fact Concls. Law ¶ 121 (quoting Pl.’s Ex. 53, Notes from Meeting with President Ribeau, dated Nov. 8, 2011, at 2),

but viewed in its totality, that document, along with the consultant’s report and the entire record in this case,

demonstrate that the Developer’s failure to perform was the precipitating factor for the consultant’s consideration of

the consequences to the University of continuing with or terminating that relationship.

38

original.” Pl.’s Ex. 52, Emails Between Dr. Hassan Minor, Dr. Sidney Ribeau, and Robert

Tarola, dated Dec. 11–12, 2011. As noted, Dr. Ribeau had asked Dr. Minor to develop the

MOU and had brought in Jenkins for that purpose. See supra Part II.H.41–42. Tarola

testified that after Stovall’s departure from the University for personal reasons, see Trial Tr.

Day 1 PM at 60:24–61:4 (Ribeau), Dr. Ribeau “asked [Tarola] to pick up the project and see

if [he] c[ould] get it moving to a positive result.” Trial Tr. Day 2 PM at 59:6–12.

I. DECEMBER 2011 – MARCH 2012: DURING NEGOTIATIONS, THE

DEVELOPER FURTHER DEFAULTS, AND THE UNIVERSITY SENDS

TWO ADDITIONAL NOTICES OF DEFAULT

46. The Developer failed to make the $1,475,000 second rental payment on December 8, 2011.

Cohen testified that while the Developer “had the money to do whatever was necessary to get

this project off the ground, including funding whatever equities was required, and any other

obligations financially that it took to get this project up and running,” after “collective

decision input from the attorney, from [his] son, from [his] son-in-law, Eric Siegel, and

[him]self,” he decided not to make payment as required by the extended deadline proposed

by the Developer and accepted by the University in March 2011. Trial Tr. Day 2 AM at

103:2–104:14; see also supra Part II.E.24.

47. On December 28, 2011, Tarola transmitted to Cohen, via email, a “letter agreement that

Howard University propose[d] [the parties] jointly execute to move the Town Center project

forward.” Joint Ex. 16, Email from Robert Tarola to Ron Cohen, cc: Timothy Kissler and

Dr. Hassan Minor, dated Dec. 28, 2011, at 1. The email further stated, “We are prepared to

negotiate in good faith toward an immediate resolution of issues that have caused project

delays.” Id. The referenced letter agreement states that the parties “desire to engage in

discussions . . . aris[ing] out of a pending dispute between the University and Developer

39

concerning Developer’s obligations.” Id. at 2. Under the heading “Negotiations,” the letter

agreement provides that “the parties . . . acknowledge that they are about to commence

negotiations . . . concerning the obligations owed to the University by Developer . . . with a

view to a settlement by the parties of their dispute” and further provides, inter alia, that “[n]o

[w]aiver” of any rights under the existing agreements would occur as a result of the letter

agreements and “while there may be many matters which the parties hope to discuss, no

agreement reached with respect to any matter . . . shall have any effect whatsoever unless

such agreement is reduced to writing.” Id. at 2–3. The Developer executed this agreement,

“with some minor changes,” on January 4, 2012. See Def.’s Ex. 34, Email from Eric Siegel

to Robert Tarola, dated Jan. 4, 2012, at 1, 4.

48. On January 12, 2012, Dr. Ribeau sent an email to Tarola, Dr. Minor, and Klebanoff

designating them as the University’s “negotiating team for the current phase of project

deliberations.” Pl.’s Ex. 55, Emails from Dr. Ribeau and Dr. Minor, dated Jan. 12, 2012, at

2. In response to a question from Dr. Minor about Jenkins’s relationship to the negotiating

team, Dr. Ribeau stated that Dr. Minor would “replace Norm on the team” but “[h]e should

still be on call.” Id. at 1.

49. The Second Notice of Default. Notwithstanding the University’s commitment to negotiate

toward a modified agreement with the Developer regarding the Howard Town Center project,

on February 3, 2012, the University sent the Developer, for the second time, a notice of the

Developer’s defaults, and in the same document gave the first notice of the University’s

intent to terminate the agreements with the Developer. See Joint Ex. 17, Notice of Default

and Notice of Intent to Terminate, dated Feb. 3, 2012. The notice states that “[t]he

Developer has failed to perform a number of its important obligations and responsibilities

40

under the Project Documents, including those listed in the University’s letter to the

Developer dated September 26, 2011, and subsequent correspondence” and that “[a]s a result

of those prior notices to the Developer and the failure of the Developer to completely cure

the defaults itemized in those notices within the applicable cure periods,” the Developer now

has only one “further opportunity to cure” before “it may be terminated by the University.”

Id. at 1, 3. The notice further cites the Developer’s failure to pay $1,475,000 by December 8,

2011, as agreed by the parties in the letters between Stovall and the Developer, and warns

that “if that failure is not cured . . . within ten (10) days after this notice, then such failure

shall also constitute an event of default” for which, pursuant to the Ground Lease, the

Developer would have one “further cure period [of] ten (10) days” before becoming subject

to termination for that default. Id. at 3 (emphasis and capitalization omitted). The letter

advises that “the University is not waiving any of the rights and remedies available to the

University at law and in equity on account of the Developer’s failure to timely cure the

Developer’s defaults” and, “specifically,” that “[n]o failure to exercise and no delay in

exercising, on the part of the University, any right, remedy, power or privilege, shall operate

as a waiver thereof.” Id. at 4.

50. This second notice was signed by Tarola. Id. He testified that the decision to send the notice

at this juncture was made not by him but the lawyers advising the University as to the

project. Specifically, Tarola testified that with respect to this notice, he “was deferring to

legal counsel to make sure that the legalities were as they wished.” Trial Tr. Day 2 PM at

60:23–61:7; see also id. at 61:15–62:4 (plaintiff’s counsel reading Tarola’s deposition

testimony stating the February 3, 2012 Notice of Default and Notice of Intent to Terminate

“seemed to be counterproductive”).

41

51. Cohen testified that after receiving this notice, he consulted with Siegel and Michael

Hollander, the Cohen Companies’ General Counsel, and considered the past interactions and

present positon of the parties, including “what [Cohen] considered at some point some[]

posturing on Howard’s part,” and notwithstanding the reference in the default notice to the

Developer’s failure to make the second rental payment, “the decision was just not to make

the payment.” Trial Tr. Day 2 AM at 112:6–22. Siegel testified that “it’s always been a

surprise to [him] that the University had been pushing so hard for a rental payment that they

could never use because it was always going to . . . make a clean site,” i.e., to cover

environmental remediation costs in excess of $750,000, pursuant to the Development

Agreement Amendment, and, thus, “the money would never be used by the University for

their own purposes.” Trial Tr. Day 4 AM at 27:5–12.

52. Rather than cure the default even in part by making the second rental payment, the

Developer’s response to the February 3, 2012, Notice of Default and Notice of Intent to

Terminate was a blunt threat of litigation. On February 7, 2012, the Developer emailed a

letter to Tarola, which stated its purpose was “to ensure that the University is on notice that it

should take all necessary steps to preserve the written and electronic records associated with

the Howard University Town Center project.” Def.’s Ex. 36, Email from Eric Siegel to

Robert Tarola, cc: Dr. Hassan Minor, Michael Hollander, Timothy Kissler, and

mvahey@dccouncil.us, attaching Letter from Developer to Robert Tarola, dated Feb. 7,

2012, at 2. The letter further stated, “Failure to preserve such documents shall subject the

University to a claim for spoliation of evidence in the District of Columbia, in addition to

legal pursuit of any other rights and remedies the Developer may have against the University.

Conduct yourselves accordingly.” Id. at 3. Siegel testified that he included that warning

42

because he “was concerned based upon . . . prior dealings with the University that while [the

Developer] had [its] records, . . . records might be lost.” Trial Tr. Day 3 PM at 29:19–30:3.

He further testified that while the letter anticipated litigation, he denied that he “perceive[d] it

as a threat” but was “indicating . . . we may have a dispute here that’s going to rise to the

level of litigation.” Trial Tr. Day 4 PM at 43:2–44:2.

53. On February 15, 2012, following the February 3, 2012, Notice of Default and Notice of

Intent to Terminate and the Developer’s response, the parties executed a letter agreement,

substantially similar to the one sent via email to the Developer by Tarola almost two months

earlier, on December 28, 2011, but including Kissler, principal of CastleRock, as a signatory

and party to the negotiations and noting the February 3, 2012, Notice of Default as a basis for

the contemplated discussions. See Joint Ex. 18, Re: Howard Town Center, dated Feb. 14,

2012, at 1–2.

54. The Third Notice of Default. On March 5, 2012, the University sent the third notice of

default, and the second notice of intent to terminate, to the Developer. See Joint Ex. 20,

Notice of Default and Notice of Intent to Terminate, dated Mar. 5, 2012. This notice

reiterated the University’s intent to terminate, announced in the February 3, 2012, Notice of

Default and Notice of Intent to Terminate, based on the defaults first noticed in the

September 2011 Notice of Default. Id. at 1. This notice further provided that the

Developer’s failure to pay $1,475,000 “ha[d] not been cured within the required cure period

. . . and now constitutes an Event of Default,” id. at 2, and consequently that “the University

intends to terminate the Ground Lease, the Development Agreement and the other project

documents if this event of default is not cured within ten (10) days.” Id. at 1–2 (emphasis

and capitalization omitted). Tarola testified that he believed this notice to be “[n]o more

43

productive” than the notice sent on February 3, 2012. Trial Tr. Day 2 PM at 63:10–12. Yet,

in his testimony, Siegel conceded that in sending these notices, the University was “certainly

well within [its] right to do so.” Trial Tr. Day 4 PM at 47:5–48:21.

55. The evidence reflects that the Developer was unwilling to enter into the “settlement”

resolving “the obligations owed to the University by Developer” contemplated by the

February 14, 2012, letter agreement, see Joint Ex. 18, Re: Howard Town Center, dated Feb.

14, 2012, at 1, until a financing commitment had been secured. For example, on April 3,

2012, Kissler wrote an email to Tarola stating that “Ron is very close to agreeing to our deal.

He would like to hear from JP Morgan, but they have not responded as of yet” and

expressing his view that “a brief conversation between Norm and Ron would tip the scales in

our favor.” Pl.’s Ex. 12, Emails Between Timothy Kissler, Robert Tarola, Norman Jenkins,

Dr. Sidney Ribeau, dated Apr. 3, 4, 2012. Tarola forwarded this email to Jenkins and

Ribeau, addressing Jenkins specifically in stating that “Kissler believes that Ron Cohen

would commit to my proposal if he had some assurance from you that the new Howard team

will be supportive of the project,” and providing a summary of the details of the proposal

offered by Tarola. Id. at 1. Tarola inexplicably stepped over the part of Kissler’s comments

indicating that a financing commitment was really the hold up to the Developer moving

forward, even though every document for the deal expressly excluded financing or the lack

thereof as a reason for delay or non-performance. Jenkins recognized the Developer’s

maneuvering, stating in response that he would prefer commencement of construction sooner

but “suspect[ed] [the specified date] is driven by financing?” and concluding by opining that

“if we can get this deal, we should take it.” Id. In his response, Ribeau offered, “If we can

get the right deal, it’s a home run for us.” Id.

44

J. APRIL 2012: THE PARTIES SIGN A TERM SHEET

56. On April 10, 2012, after nearly six months of negotiations and two letter agreements aimed at

resolving their dispute, the parties executed a three-page “Term Sheet” designated as “For

Settlement purposes.” Joint Ex. 21, Term Sheet, dated Apr. 6, 2012, at 1; see Trial Tr. Day 2

AM at 135:24–136:8 (counsel for both parties stipulating that the Term Sheet was fully

executed by April 10, 2012). This is the same Term Sheet that the Developer previously

advised the Court was “immaterial,” see Pl.’s & Third-Party Def.’s Mem. P. & A. Opp’n

Def.’s Mot. Summ. J. at 7–8, and, indeed, the Developer’s original complaint in this matter is

conspicuously devoid of any reference whatsoever to the Term Sheet, see generally Pl.’s

Compl., ECF No. 3. In an about-face on appeal, however, the Developer pushed this Term

Sheet front and center as a reason for vacatur and remand of the grant of summary judgment

against it. See supra Part I.B (discussing this case’s litigation history).

57. Provisions of the Term Sheet. In twelve simple paragraphs, the Term Sheet withdrew the

University’s second and third notices of default, sent in February and March 2012,

conditioned on “[t]he timetable for cure of the monetary default . . . defined herein.” Term

Sheet at 1. Under this “timetable” for “RENT, SCHEDULE, AND OTHER ITEMS,” the

following steps were expressly required:

a) execution of the Term Sheet itself;

b) execution of an amendment to the escrow agreement such that the $525,000 paid

by the Developer thus far to the parties’ escrow account would be released to the

University upon execution of the Term Sheet;

c) execution of amendments to the Ground Lease and the Development Agreement

by April 30, 2012;

45

d) commencement of construction by April 15, 2013, with phasing of the project

permitted;

e) automatic termination of the lease if the “Developer fails to break ground by

September 15, 2013,” at which point “both parties agree that all actions, by either

party, prior to the execution of the Ground Lease Amendment shall not be

grounds for litigation,” i.e., a walk away provision; and

f) “[p]ayment of past due ground rent in the amount of $1,475,000,” with $100,000

to be paid “no later than ten (10) days after execution of th[e] Term Sheet” and

“the balance of $1,375,000” to be paid “no later than ninety (90) days after the

execution” of the amendments to the Ground Lease and the Development

Agreement, id. at 2. 12

58. With respect to the University’s withdrawal of the Developer’s defaults, Jenkins testified that

“[t]he way [he] understood the term sheet to work is: Provided that all of the terms within the

term sheet were agreed upon and complied with, then there would be a waiver.” Trial Tr.

Day 7 AM at 27:17–22. 13

59. Consistent with the original Ground Lease and Development Agreements, and first

amendments thereto, no term of the Term Sheet made either party’s performance contingent

on the securing of financing for the project. See generally id. Tarola testified that even

without financing having been secured by the Developer, he “understood that the Developer

12

The $100,000 initial installment requirement may have been driven in part by the District’s prior request

for security in the amount of $100,000 to demonstrate the parties’ commitment to the Howard Town Center project.

See Def.’s Ex. 19, Letter from Troy Stovall to Ronald J. Cohen, dated Aug. 19, 2011, at 3.

13

While the Developer summarizes Jenkins’s testimony as demonstrating “he understood the Term Sheet to

‘waive’ the defaults,” Pl.’s Prop. Findings Fact Concls. Law ¶ 143, and Siegel testified to his view that the

Developer could walk away scot free from the deal following the signing of the Term Sheet, see Trial Tr. Day 3 PM

at 34:4–8 (testifying that the default language was so the Developer “could have a playing field going forward” and

“wouldn’t be held in a default posture, that it would be over”), the portion of Jenkins’ testimony cited in the text

belies the Developer’s characterization of the Term Sheet’s intended effect.

46

had some substantial assets and should be able to pay what was due to the University; so [he]

expected it to be paid and, indeed, . . . was looking for cash as a way of showing good faith to

continue the project.” Trial Tr. Day 5 AM at 17:19–18:4. Tarola “felt that the Developer

needed to show commitment to the project in the form of cash contributed toward moving

that along . . . . [T]he cash was not important to Howard University, being a billion-dollar

company, but it was important to make sure that we had the commitment to move forward

with the project.” Id. at 18:11–19.

60. Siegel understood that pursuant to the Term Sheet, the money owed by the Developer would

“be paid in two different installments, subject to the first one being within ten days and the

second one would be subject to the second amendment documents being signed.” Trial Tr.

Day 6 AM at 66:5–11.

K. APRIL – MAY 2012: THE INITIAL PROPOSALS FOR SECOND

AMENDMENTS

61. Siegel testified that “between the 10th and approximately the 19th of April,” i.e., “[a]fter the

signing of the term sheet[,] we learned from J.P. Morgan that they were no longer interested

in moving forward with the project.” Trial Tr. Day 4 PM at 86:14–87:3. Apparently, the

Developer had no other possible financing options by then to move the project forward, more

than two years after execution of the first amendments to the Ground Lease and Development

Agreement.

62. On April 19, 2012, Tarola briefed the Real Estate Committee of the Howard University

Board of Trustees “on developments subsequent to the approval to commence ‘default

proceedings’ at the January 26, 2012 meeting.” Pl.’s Ex. 8, Report of the Real Estate

Committee, Howard University Board of Trustees, dated Apr. 19, 2012, at 4. The Committee

Report summarizes the Term Sheet as providing for, on the Developer’s part, the release of

47

the $525,000, payment to the University of “past due ground rents,” and “release of litigation

risk for past acts. In return, the Developer would receive a default waiver from Howard and

a new construction start date and ground rent payment schedule.” Id. Jenkins, at that time a

trustee of the University and serving as Chair of the Real Estate Committee, relayed to the

Committee that, according to the Developer, “facts have changed subsequent to the execution

of the term sheet” in that “the financial backing [it] had from JP Morgan may no longer be

viable” but that “the Developer appears motivated and willing to proceed with this project.”

Id.

63. The Developer did not make the $100,000 payment as required by the Term Sheet. Cohen

testified that, at some point, after “assessing where [the Developer] w[as] financially in this

project, [he] immediately called [Jenkins]” and told him he was “just not in a position to pay

this money” because the Developer was “almost $2 million out-of-pocket.” Trial Tr. Day 1

AM at 103:4–9. Jenkins “was upset,” and Cohen “fully underst[oo]d” given that he “went

back on a promise” to the University. Id. at 103:9–10. The Developer continued to conduct

itself as if the contract documents conditioned its responsibilities and obligations to the

development project on securing financing, when the documents expressly provided the

opposite.

64. The University’s April 23, 2012, Drafts. On April 23, 2012, the University sent a first draft

of the contemplated amendments to the Developer. See Def.’s Ex. 42, Email from Robert

Tarola to Timothy Kissler, Ronald Cohen, and Eric Siegel, cc: Norman Jenkins, Bridget

Sarikas, Odessa Jackson, and David Gifford, attaching three documents: (1) Termination of

Escrow Agreement; (2) Second Amendment to Ground Lease; and (3) Second Amendment to

Development Agreement, dated Apr. 23, 2012. The University’s proposed second

48

amendments were fully consistent with the Term Sheet’s outline of the parties’ intent,

including the University’s concession to a two-phase project, a concept that the University

had not originally agreed to and resisted for over two years. The salient terms of these

documents are summarized below.

a) The proposed Termination of Escrow Account provided for the termination of the

existing escrow account between the parties and release of the amounts currently

in the account to the University. See id. at 2–3.

b) The proposed Second Amendment to Ground Lease provided for payment of the

$1,475,000 in two installments, one of $100,000 and one of $1,375,000, on “April

__, 2012” and “July __, 2012,” respectively. See id. at 6.

c) The proposed Second Amendment to Development Agreement took into account

the termination of the escrow account, providing that environmental remediation

costs in excess of $750,000 would be paid by the University directly to the

Developer or any third-party contractor and that rental payments should be made

directly to the University by the Developer; provided for mandatory submission

dates for the design documents required of the Developer by the Development

Agreement; provided for construction of the project in two phases; provided for

construction of the project in two phases, as the Developer had requested; and, in

accordance with the “walk away” provision of the Term Sheet, provided that “if

for any reason (including due to any Unavoidable Delay and/or any action of

inaction on the part of the University or the District, whether or not constituting a

default or breach on the part of the University), the ‘commencement of

construction,’ as defined in . . . the Development Agreement, has not occurred by

49

September 15, 2013, the Ground Lease and the Development Agreement shall

terminate and be of no further force or effect.” Id. at 12–14.

65. The Developer’s May 2, 2012, Drafts. On May 2, 2012, nine days after the University

transmitted its draft documents and two days after the date provided by the Term Sheet for

execution of the amendments, the Developer responded to the University with its revisions.

See Joint Ex. 23, Email from Eric Siegel to David Gifford, cc: Norman Jenkins, Bridget

Sarikas, Odessa Jackson, Robert Tarola, Timothy Kissler, Ronald Cohen, and Michael

Hollander, attaching (1) Termination of Escrow Agreement; (2) Second Amendment to

Ground Lease; and (3) Second Amendment to Development Agreement, dated May 2, 2012.

The Developer’s proposed changes shifted the fundamental financial risks of the project from

the Developer to the University by making explicit that the Developer would not make

further investments, even rent payments past due, until financing was secured. The

Developer’s redlines reflect the following changes, inter alia:

a) to the proposed Termination of Escrow Agreement, the Developer inserted the

precise amount currently in the parties’ escrow account for release to the

University, but made no other changes, see id. at 2;

b) to the proposed Second Amendment to Ground Lease, the Developer inserted a

provision amending the definition of “Closing Date” to be contingent on

financing, id. at 23; deleted the University’s provisions requiring payment of the

$1,475,000 in two installments on dates certain and replaced it with a provision

making its payment contingent on financing, id. at 24–25; inserted the terms for a

rental payment schedule, contemplated by the University’s April 23, 2012, draft,

that would defer the Developer’s obligations to pay rent, id. at 25–26; inserted an

50

amendment making execution of a Memorandum of Lease, to be recorded with

the District of Columbia, contingent on financing, id. at 27; and deleted the phrase

“(other than financial inability)” from the “force majeure” (i.e., excuse of

performance in the event of an Act of God or the like) clause of the Ground

Lease, id.; and

c) to the proposed Second Amendment to Development Agreement, the Developer

deleted the portion of the definition of “Unavoidable Delay” providing that

inability to obtain financing is not an unavoidable delay, id. at 10; amended the

definition of “Construction Commencement Deadline” to be contingent on

financing, id.; and deleted the walk away provision, id. at 13. Siegel testified that

he deleted the walk away provision in its entirety, notwithstanding this key

provision in the Term Sheet, because he “didn’t think it was reasonable.” Trial

Tr. Day 3 PM at 52:7–24.

66. The University’s May 4, 2012, Drafts. Two days later, on May 4, 2012, Tarola sent an email

responding to the Developer’s redlines stating, “We have reviewed the documents you sent

and note that they depart considerably from the Term Sheet. We also note that payments to

Howard as agreed within the Term Sheet are already past due.” Joint Ex. 24, Emails

Between Eric Siegel and Robert Tarola, attaching (1) Second Amendment to Ground Lease;

(2) Second Amendment to Development Agreement, dated May 4, 2012. In the attached

proposed amendments, the University continued to seek the $1,475,000 rental payment in

two installments, one of $100,000 on May 10, 2012 and the balance on July 31, 2012, and

reinserted the proposed walk away provision. See id. at 7, 17. The University accepted the

Developer’s changes regarding recording of a Memorandum of Lease contingent on

51

financing and, in modified form, its proposed deferred rental payment schedule, but rejected

the Developer’s other proposals to make its performance contingent on financing. See

generally id.; see also Joint Ex. 25, Email from David Gifford to Eric Siegel, dated May 7,

2012 (attaching blacklines of the University’s proposed documents). The entire purpose of

the Development Agreement from the outset, as Dr. Ribeau and Tarola explained, was to

outsource to a developer, with professional experience in the development arena and real

estate community, the responsibilities and risks associated with the development project, for

the benefit of the University and surrounding community. See Trial Tr. Day 1 PM at 43:17–

44:7 (Ribeau) (explaining that the University’s motivation was not the profitability of the

development project but the “value it added to the community” and the purpose of hiring a

developer was “to do things that developers do that really wasn’t in our portfolio of things to

do”); Trial Tr. Day 5 AM at 106:5–7 (Tarola) (explaining that from “the business

perspective” the purpose of the relationship with the Developer was “improving the campus”

with “other people’s money”).

67. The Developer’s May 8, 2012, Drafts. The Developer responded on May 8, 2012, with

proposed revisions to the University’s most recently transmitted proposed second

amendments to the Ground Lease and Development Agreement. See Joint Ex. 26, Email

from Eric Siegel to Robert Tarola, cc: David Gifford, Norman Jenkins, Bridget Sarikas, Tim

Kissler, Ron Cohen, and Michael Hollander, attaching (1) Second Amendment to

Development Agreement; (2) Second Amendment to Ground Lease, dated May 8, 2012. In

these drafts, the Developer proposed, inter alia, modifying the Construction Commencement

Deadline to be October 1, 2013, nearly six months later than the Term Sheet’s

commencement date of April 15, 2013, see id. at 7; deleting the University’s proposal for

52

mandatory submission dates for required design documents, see id. at 8; reinserting a change

to the definition of “Closing Date” to be the earlier of the date on which the Developer settles

on a construction loan or September 30, 2013, id. at 19; and inserting a provision requiring

payment of the $1,475,000 only on the newly defined Closing Date, id. at 21, which ignored

the $100,000 partial payment of the second rental payment and effectively made the second

rental payment due upon the Developer securing financing, or an outside date fifteen days

after the Term Sheet’s walk away date of September 15, 2013, which the Developer proposed

extending until October 1, 2013, id. at 10–11.

68. Execution of the Termination of Escrow Agreement. The parties executed the Termination of

Escrow Agreement, effective May 10, 2012, releasing the funds in escrow to the University

and dissolving the parties’ escrow account. See Joint Ex. 27, Termination of Escrow

Agreement, dated May 10, 2012.

69. On May 15, 2012, in a letter to “Members of the Finance and Executive Committees” of the

Howard University Board of Trustees, Tarola relayed that “[l]ate last week [the University]

received the first payment from the developer under the term sheet” and that “we are working

with the developer to solidify new agreements that would move the project forward.” Pl.’s

Ex. 13, Confidential Letter from Robert Tarola to Members of the Finance and Executive

Committees, dated May 15, 2012, at 6. In that letter, Tarola also thanked Jenkins for

“helping to negotiate to a satisfactory resolution.” Id.

L. MAY – DECEMBER 2012: THE UNIVERSITY FORBEARS FROM

TERMINATING THE DEVELOPER WHILE ASSISTING THE

DEVELOPER IN PURSUING FINANCING

70. Following the Developer’s drafts transmitted on May 8, 2012, which reflected terms the

University had explicitly rejected, for a period of time, the University neither accepted those

53

drafts nor proposed revisions to them. While consistently refusing to execute agreements

that conditioned the Developer’s performance of any of its obligations on securing financing,

the University recognized that for the relationship with this Developer to continue, obtaining

financing was paramount and therefore the University took steps to assist the Developer in

this regard.

71. Jenkins testified that the University’s response to those drafts was to give the Developer an

opportunity to secure financing for the project. See Trial Tr. Day 7 AM at 11:5–16. In fact,

during that period, Jenkins assisted the Developer in its efforts to obtain financing. See id. at

11:17–12:3; Def.’s Ex. 50, Email from Eric Siegel to Norman Jenkins, attaching clean draft

amendment documents, dated May 23, 2012. Specifically, Jenkins “introduced the developer

to some of [his] existing partners, [Quadrangle Development Corp.,] who were prominent

Washington, D.C. developers, to see if they might be able to land on some sort of

arrangement, because that group had a dedicated fund to do development in the Washington,

D.C. market.” Trial Tr. Day 7 AM at 11:20–12:3.

72. Siegel testified that he “was instructed by Robert Tarola to give regular updates on where we

were with the financing, which we did” and expressed his view that “the university, Norman

Jenkins, was very generous to putting [sic] us in touch with potential financing sources.”

Trial Tr. Day 3 PM at 60:9–25; see also Pl.’s Ex. 161, Confidential Letter from Robert

Tarola to Members of the Finance and Executive Committees, dated July 31, 2012, at 4 (“We

have introduced the developer to two interested investors/lenders and are in regular contact

about financing progress.”).

73. In addition to financing, the University also assisted the Developer in pursuing a tax

abatement for the project with the District. See Trial Tr. Day 3 PM at 60:9–18 (Siegel). On

54

November 12, 2012, Tarola sent a letter to the District expressing the University’s support

for the tax abatement bill, noting that the University “has been working closely with the

Developer and the District for some time to bring this project to reality” and “fully supports

the Tax Abatement Act as a means to help the project come to fruition.” Joint Ex. 28, Email

from Robert Tarola to Timothy Kissler and Eric Siegel, attaching Letter from Robert Tarola

to the Council of the District of Columbia, dated Nov. 12, 2012, at 2.

74. The Demolition Permit Applications. By November 2012, the second amendments to the

Ground Lease and Development Agreement remained unsigned, with the parties’ differing

provisions unreconciled and the Developer still without financing secured. Nevertheless, in

early November 2012, Jenkins relayed to Tarola that the Developer was seeking the

University’s signature for its applications to the District for permits allowing demolition on

the Property. See Pl.’s Ex. 14, Emails Between Norman Jenkins, Robert Tarola, and Eric

Siegel, dated Nov. 6, 2012. Jenkins explained that he told Siegel “we would not sign until

we had certainty of funding.” Id. at 1. Jenkins testified that he recommended that the

University “not begin demolition of the building” because “we didn’t have a deal” and “the

project wasn’t capitalized.” Trial Tr. Day 7 AM at 12:20–13:3.

75. Early in 2012, the University had recruited a new University Architect, Alan Brangman, who

became involved in the Howard Town Center project. See Trial Tr. Day 8 AM at 5:6–6:11.

Brangman testified that he believed demolition before the second amendments were signed

was inadvisable “because that would have been giving up control of the site, and that also

would have put the University at risk with respect to activities taking place on the property

before it was under the direct and true control of the developer.” Id. at 9:19–10:2. Brangman

further testified that the Developer was “asking to demolish various section of the buildings

55

that were on the site” notwithstanding the “historic nature of some of those properties.” Id. at

10:4–7.

76. The Citi Community Capital Term Sheet. On November 27, 2012, Siegel emailed Jenkins,

stating the Developer was “working diligently on the tax abatement and finalizing the capital

stack.” Joint Ex. 30, Emails from Eric Siegel to Norman Jenkins, dated Nov. 5, 27, 2012, at

1. The email also attached a letter from Citi Community Capital “offer[ing] an opportunity

to submit a preliminary application . . . for financing” and attaching a “Term Sheet dated

November 21, 2012.” Id. at 2. This bank Term Sheet set an estimated closing date of May

30, 2013, for the loan, see id. at 8, and listed the application fees, see id. at 13–14. Vasques

testified that in his view, by soliciting the application and related fees from the Developer,

Citi demonstrated that “[t]hey were very serious about moving forward to try to get this

done.” Trial Tr. Day 6 PM at 21:3–11.

77. The following day, Tarola signed the demolition permit applications as requested by the

Developer, though Jenkins’s and Brangman’s position remained not to begin demolition on

the site until the project was capitalized. See Pl.’s Ex. 134, Application for Raze Permit,

2146 Georgia Ave. NW, dated Dec. 3, 2012, at 4; Pl.’s Ex. 135, Application for Raze Permit,

2112 Georgia Ave. NW, dated Dec. 3, 2012, at 4.

78. On December 4, 2012, the Developer paid Citi Community Capital $176,750 in fees for an

application for a loan. See Pl.’s Ex. 165, Email from Alex Diaz, Cohen Companies, to

Fabrice Vasques, cc: Ron Cohen, Eric Siegel, Alan Cohen, and Michael Hollander, dated

Dec. 4, 2012.

79. One week later, Tarola sent a letter to the Developer advising that while the University

“signed and authorized [the Developer] to submit an application for a [demolition] permit,” it

56

did so “notwithstanding the existence of unresolved disputes between the University and

Developer.” Joint Ex. 31, Letter from Robert Tarola to Developer, dated Dec. 11, 2012, at 1.

Tarola further explained that the Developer was “not authorized by the University to

commence demolition under [the applied-for] permit without further approval by the

University” given the failure of the parties yet to reach a “satisfactory resolution” to their

disputes. Id. at 1–2. The letter made clear that “the University is not waiving any defaults on

the part of the Developer.” Id. at 1. The record contains no response from the Developer to

the University’s concerns expressed in this December 11, 2012, letter. 14

80. Notwithstanding the University’s expressed concern about the status of the project, including

the lack of executed second amendments to the Ground Lease and Development Agreement

and lack of secured financing, the Developer sent a letter to the University on December 18,

2012, advising that “the contractor will be mobilizing on Monday, January 7, 2013 to

commence asbestos abatement and demolition” and to “[p]lease make sure any equipment,

personal items and vehicles have been removed from the building prior to that date.” Joint

Ex. 32, Letter from Developer to Howard University, dated Dec. 18, 2012.

M. DECEMBER 2012 – FEBRUARY 2013: THE PARTIES RESUME

NEGOTIATIONS, AND THE UNIVERSITY SETS A FINAL DEADLINE

FOR THE $1,475,000 RENTAL PAYMENT

81. During late 2012, shortly after the Developer had positive news regarding potential financing

from Citi Community Capital, which had authorized the Developer to submit a loan

application on December 4, 2012, the Developer restarted its efforts to obtain the District’s

14

The Developer characterizes the University’s December 11, 2012, letter as a “reversal of its position to

allow demolition to proceed,” Pl.’s Prop. Findings Fact Concls. Law ¶ 190, but no evidence supports the

Developer’s implication that the University authorized the Developer to begin demolition, and, to the contrary, the

evidence shows that the University was opposed to the Developer’s beginning demolition from the moment the

Developer proposed demolition due to the unresolved second amendment issues and the Developer’s continuing

default in failing to make either installment payment on the second rental payment as required by the parties’ Term

Sheet.

57

approval to alter the construction deadlines in the Declaration of Covenants between the

District and the University. Specifically, the Developer sent Andre Byers, a District official,

emails on December 10 and 11 requesting new deadlines and representing that its suggested

deadlines came from “the Second Amendment to the Ground Lease and Development

Agreement that [the Developer has] negotiated with Howard University, who agrees to these

deadlines.” Joint Ex. 33, Emails Between Eric Siegel, Andre Byers, Robert Tarola, and

Norman Jenkins, dated Dec. 10, 11, 18, 19, 2012, at 3. On December 18, 2012, Byers

forwarded the emails to Tarola inquiring whether he was “familiar with the request below,”

id. at 2, and that same day, Tarola forwarded the emails to Siegel asking him to “advise

[Tarola] about this email trail and the reference to a ‘second amendment,’” id. At this point,

no second amendments had been finalized, an issue of such concern to the University that

Tarola’s letter of December 11, 2012, had instructed the Developer that no demolition on site

was authorized.

82. The Developer Resends Its May 8, 2012, Drafts. On December 19, 2012, in response to

Tarola’s email, the Developer emailed Tarola, copying Jenkins, transmitting the same draft

amendment documents sent by the Developer on May 8, 2012, but noting in the email that

the “two-phased construction schedule” conceded to by the University and contained in the

transmitted drafts was “now moot because [the Developer is] building the entire project at

one time,” and further advising that the “University’s formal request to the District via Andre

Byers to revise [the Covenant] dates is all we need” to get “the paperwork . . . in order for

our lender and equity’s due diligence to get to closing.” Id. at 1; see Trial Tr. Day 4 PM at

132:3–23.

58

83. On December 27, 2012, Tarola sent Byers a letter advising him that the “University has

approved” the new deadlines for construction proposed by the Developer and assuring the

District that the University “remains committed to the prompt and successful completion of

this Project” notwithstanding that “a number of . . . issues remain unresolved” between the

University and the Developer. Joint Ex. 34, Letter from Robert Tarola to Andre Byers, cc:

Ronald Cohen, dated Dec. 27, 2012, at 1.

84. The same day, Tarola sent the Developer a letter responding to the Developer’s December

18, 2012, letter regarding its intent to begin demolition, reiterating the University’s position

that “[a]lthough [the] continuing discussions have been productive, they have not yet yielded

a complete settlement arrangement acceptable to Howard University,” and, consequently, the

University “cannot at this time agree to the Developer’s possession of the Project property, or

approve the commencement of any work (including demolition).” Joint Ex. 35, Letter from

Robert Tarola to Developer dated Dec. 27, 2012.

85. In an email to Siegel, Tarola explained that the parties “need to reach agreement on the

ground lease amendment and term sheet payments before [the University] can give [the

Developer] access to the property.” Joint Ex. 36, Emails Between Eric Siegel, Andre Byers,

Robert Tarola, and Norman Jenkins, dated Dec. 10, 11, 18, 27, 2012, Jan. 1, 2013, at 2. In

response, on January 1, 2013, the Developer promised to “reach out tomorrow morning . . .

about the time frame for receiving the draft Second Amendments to the Ground Lease and

Development Agreements for [the Developer’s] review” and provided that “the outside date

to ‘true up’ on the initial ground lease payment of $1.425 million [sic] would be May 30,

2013 (the date of closing on the financing with Citi Community Capital . . . ).” Id. at 1.

Again, the Developer was seeking to condition the required rental payments on the securing

59

of financing, contrary to any provision in the contract documents or in the parties’ Term

Sheet.

86. The University’s January 11, 2013, Drafts. On January 11, 2013, David Gifford, outside

counsel for the University in the negotiations with the Developer, transmitted revised draft

documents requiring, inter alia, payment of the $1,475,000 by May 10, 2013, as well as

liquidated damages for failure to meet construction deadlines and evidence of financing. See

Joint Ex. 37, Email from David Gifford to Eric Siegel, attaching (1) Second Amendment to

Ground Lease; (2) Second Amendment to Development Agreement, dated Jan. 11, 2013, at

3. 15 These drafts again reflected the University’s position, consistent with the original

contract documents, that the financial risks rested on the Developer and the Developer’s

failure to perform was not excused by financing difficulties. In its cover email, the

University also reiterated its position that “[t]he submission of these drafts remains merely a

part of the negotiations concerning the obligations owed to the University by Developer with

a view to compromise and settlement by the parties of their dispute.” Id. at 1.

15

The Developer asserts the University’s selection of May 10, 2013, for payment of the second rental

payment was inconsistent with the Developer’s “discussions with Mr. Jenkins and Mr. Tarola that the payment

would be tied to a closing date on or before October 1, 2013,” but cites no evidence in support of this proposition.

Pl.’s Prop. Findings Fact Concls. Law ¶ 215. Nor does such evidence exist in the record, which reflects that while

Jenkins and Tarola may have discussed a construction commencement date of October 1, 2013, with the Developer,

they never discussed the long overdue rental payment being made that day. See Joint Ex. 34, Letter from Robert

Tarola to Andre Byers, cc: Ronald Cohen, dated Dec. 27, 2012, at 1; Trial Tr. Day 5 AM at 109:17–110:22 (Siegel)

(asserting that in May 2012 Jenkins agreed to a commencement-of-construction deadline of October 1, 2013, though

acknowledging that “[t]he only document that memorializes that [discussion] would be [the Developer’s own] May

8 draft”).

While the record is unclear as to the University’s reasons for selecting the precise date of May 10, 2013,

this date in May, but a year earlier, was the date set out in the University’s May 4, 2012, drafts of the second

amendments as the deadline for payment of the $100,000 installment of the second rental payment and “May 10”

may have been a vestige of those prior drafts. See Joint Ex. 24, Emails Between Eric Siegel and Robert Tarola,

attaching (1) Second Amendment to Ground Lease; (2) Second Amendment to Development Agreement, dated May

4, 2012. In any event, the May 10, 2013, date is generous given the Developer’s assertion that it would close on

financing no later than May 30, 2013, and the fact that a commitment letter would be issued at any point “if the

developer or any party to a transaction requested a commitment, and it was agreed that it was necessary.” Trial Tr.

Day 7 AM at 45:5–11, 53:10–13 (Dickson).

60

87. Around December 2012, principal responsibility for heading the project had been shifted

from Tarola to Kurt Schmoke, then General Counsel for the University, though Tarola

nevertheless remained involved in the project. See Trial Tr. Day 5 AM at 57:9–18.

88. On Friday, January 25, 2013, Tarola scheduled a meeting for the following Monday, January

28, 2013, with Siegel and other members of the University’s team to discuss the draft

amendment documents sent by the University on January 11, 2013. Pl.’s Ex. 22, Emails

Between Eric Siegel and Robert Tarola, et al., dated Jan. 25, 2013. In an email confirming

the meeting, Siegel expressed that he would “be there ready to work together to finalize the

documents.” Id. at 1.

89. Shortly before the scheduled meeting, in response to an email from Siegel asking where the

meeting would take place, Tarola sent Siegel an email, copying the University team, stating

that “we have to postpone the meeting” and “are meeting internally first later today.” Joint

Ex. 39, Emails Between Eric Siegel and Robert Tarola, cc: Odessa Jackson, Norman Jenkins,

and Kurt Schmoke, dated Jan. 28, 2013, at 1. Siegel responded stating that he “await[s] next

steps” and “advised” that “[t]his will further impact ‘construction commencement.’” Id.

90. The University’s February 1, 2013, Email. On February 1, 2013, Kurt Schmoke emailed

Siegel, copying, inter alia, Dr. Ribeau, noting that University “officials . . . met to assess our

current position with respect to this development” in light of the University’s “concerns

about the lack of progress being made” and advised that the “University will take no further

action in support of the current developer” unless the Developer “has obtained sufficient

financing from a reliable source,” the $1,475,000 rental payment “has been made to Howard

University by May 30, 2013,” and “architectural drawings sufficient to obtain construction

permits . . . are developed by [the Developer] and approved by Howard University.” Joint

61

Ex. 40, Emails Between Kurt Schmoke and Eric Siegel, dated Feb. 1, 2013, at 2. Siegel

responded within two minutes asking Schmoke to call him immediately. See id. at 1.

Schmoke subsequently sent an email reflecting that a call had taken place and stating that he

“appreciate[s] the fact that [they] agree that if the [Developer] does not obtain financing . . .

by May 30, 2013, we . . . part company on this project. . . . [I]t is very clear that if the

financing is not obtained the relationship between your company and the university is

dissolved.” Id. 16

91. In requesting certainty of financing, the University was responding to the Developer’s

repeated efforts to make its project obligations contingent on its securing of financing.

Schmoke testified that he viewed financing as “the number one issue” for the Developer and

believed that if financing was secured, “everything else would fall into place.” Trial Tr. Day

6 AM at 122:5–20.

92. Tarola testified that, around this time, he “felt the lawyers . . . wanted to kill the deal” given

the Developer’s intransigence, but, in his view, the February 1, 2013, email from Schmoke

“should not have killed the deal” and was not “intended to kill the deal.” Trial Tr. Day 2 PM

at 104:10–14; Trial Tr. Day 5 AM at 77:5–11.

93. By this point in 2013, Brangman had taken on some of Tarola’s responsibilities with respect

to the project, though Tarola still remained involved. See Trial Tr. Day 8 AM at 5:6–6:22.

Brangman testified that he took “on those responsibilities at the direction of Dr. Ribeau,”

16

In a footnote, the Developer takes issue with the University’s statements during this litigation that the

Developer agreed in the February 1, 2013, phone call between Schmoke and Siegel to make the second rental

payment on May 30, 2013, asserting that “[t]he University’s representations both to this Court and to the D.C.

Circuit are flatly contradicted by the testimony of both Mr. Schmoke and Mr. Siegel that the two men did not

discuss the payment on their telephone call.” Pl.’s Prop. Findings Fact Concls. Law ¶ 234 & n.6. While the

evidence does not show that the timing of the payment was discussed on that call, the University’s representation is

hardly “baseless,” id., given the Developer’s own representation in its original Complaint that at some point during

discussions in 2013 the Developer and the University “agreed that [the Developer] would not be obligated to tender

the Payment called for under the Amendment until May 30, 2013,” Pl.’s Compl. ¶ 23.

62

who “needed somebody to be involved in the project who had experience in real estate

development,” and “that was not always something that Mr. Tarola was happy with.” Id. at

6:7–11, 6:20–22.

N. FEBRUARY – MAY 2013: THE HISTORIC NOMINATIONS ARE FILED,

AND THE PARTIES CONTINUE TO NEGOTIATE

94. The Historic Preservation Nominations Email. On February 7, 2013, Brangman forwarded

to Siegel an email from Rebecca Miller, Executive Director of the DC Preservation League

(“DCPL”). See Joint Ex. 41, Emails Between Rebecca Miller, Alan Brangman, and Eric

Siegel, dated Feb. 7, 8, 2013. In her email, Miller notified Brangman that DCPL had

nominated the Bond Bread building and WRECO garage for historic status, which

nominations are considered by the DC Historic Preservation Review Board. See id. at 2.

Miller shared that she “understand[s] that Howard University has plans to raze these

buildings” and “would like to propose a meeting to discuss [its] plans and to determine if

there is a way to retain these buildings while still carrying out the goals of the University’s

project.” Id. In response to Brangman’s email, Siegel replied, “Someone must call me to

discuss how we jointly address this immediately or this project will come to a screeching

halt.” Id. at 1.

95. The DCPL action to nominate the buildings on the Property could not have been a surprise

given those buildings’ historic nature, as indicated in the DUKE Plan, which had long

required the preservation of at least the façade of the WRECO garage, and a blog post

forwarded to the Developer in February 2011, which discussed the Bond Bread building. 17

17

Apparently as support for its position that the Developer was surprised by the designation of these

buildings, the Developer suggests that the DUKE Plan routinely included landmark designations, but notably failed

to for these two buildings, which instead referenced “only . . . the preservation of some” of the WRECO garage.

Pl.’s Prop. Findings Fact Concls. Law ¶ 259 (“The DUKE Plan did not include a landmark designation for these

buildings.”). The Developer has it exactly backward. Testimony at trial revealed that as a general matter the DUKE

63

Moreover, not long before DCPL filed the nominations, the Developer met with personnel at

the District’s Historic Preservation Office, at Siegel’s request, “to share the project that was

being proposed and to just be sure that the Office of Planning was aware of the project

pending and that it was moving forward.” Trial Tr. Day 2 PM at 10:24–11:2, 11:12–14

(Callcott). “At the initial meeting [with the Developer], . . . the Preservation Office identified

. . . both [the WRECO garage and Bond Bread building] as potentially meeting the

designation criteria, and that [the Office] wouldn’t be surprised if [DCPL] would be

interested in having them designated.” Id. at 11:3–11.

96. Gifford transmitted a draft Second Amendment to the Development Agreement to Siegel on

February 8, 2013. See Joint. Ex. 42, Email from David Gifford to Eric Siegel, attaching

Second Amendment to Development Agreement, dated Feb. 8, 2013.

97. On February 14, 2013, Siegel transmitted a letter to the University, providing in his cover

email that “[t]he letter is not offered to be confrontational but simply to set forth the realities

of the situation to date while we continue to work together to finalize the Second

Amendment documents and keep to an expeditious schedule to move the project forward.”

Joint Ex. 43, Emails Between Eric Siegel, Robert Tarola, and Kurt Schmoke, dated Feb. 1,

14, 2013, attaching Letter from Developer to Robert Tarola, at 1. The letter asserted that “the

Developer has experienced two Unavoidable Delays” precluding the Developer from

“adhering to the precise Project Schedule that was submitted . . . on January 31, 2013, and

meeting a Construction Commencement Date of October 1, 2013.” Id. at 5. According to

the Developer, the Unavoidable Delays were (1) delays by the University in executing

Plan “wanted to leave it open-ended as to whether or not properties would be preserved” subject to review “under

the city’s historic preservation law,” but deemed the WRECO garage so historic that, in an exception to that general

rule, it directed that building be preserved. Trial Tr. Day 2 PM at 7:1–22 (Callcott); see DUKE Plan at 30.

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various documents enabling the Developer to begin demolition on the Property, and (2) the

“more troubling . . . recent filing of two historic preservation applications to deem buildings

on the property ‘historic.’” Id. at 7. At the time, the Developer still had not obtained

financing for the project, but this fact was not referenced in the letter as a basis for

Unavoidable Delay, since lack of financing was expressly excluded as a justification for

Unavoidable Delay in the Development Agreement. See generally id.; Development

Agreement at 7, 18. In blaming the University for delays in beginning demolition, the

Developer fails to acknowledge that the parties had not resolved their second amendment

disagreements and, in particular, the Developer’s proposed changes, which altered

fundamentally its second rental payment obligation to make it contingent on financing.

98. The parties exchanged further drafts of the amendment documents, without coming to final

agreement on all terms of all documents. See Joint Ex. 45, Email from Timothy McCormack

to Eric Siegel, attaching (1) Second Amendment to Ground Lease and (2) Second

Amendment to Development Agreement, dated Feb. 20, 2013; Joint Ex. 46, Email from Eric

Siegel to Timothy McCormack, attaching (1) Second Amendment to Ground Lease and (2)

Second Amendment to Development Agreement, dated Feb. 21, 2013; Joint Ex. 47, Email

from Timothy McCormack to Eric Siegel, attaching Second Amendment to Development

Agreement. The University declined to accept the Developer’s persistent demand to

condition payment on securing financing. In its draft dated February 21, 2013, the Developer

finally dropped its proposed language making payment contingent on financing and agreed to

a May 30, 2013, deadline for the $1,475,000 rental payment to “coincide with [the] closing

date” for financing. See Joint Ex. 46, Email from Eric Siegel to Timothy McCormack,

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attaching (1) Second Amendment to Ground Lease and (2) Second Amendment to

Development Agreement, dated Feb. 21, 2013, at 6.

99. The University’s March 6, 2013, Drafts. In an email on March 6, 2013, the University’s

outside counsel noted that the University had accepted the last draft of the Second

Amendment to Development Agreement submitted by the Developer and attached a

blackline document reflecting only minor changes to the Second Amendment to Ground

Lease. See Joint Ex. 48, Email from David Gifford to Eric Siegel, attaching (1) Second

Amendment to Ground Lease and (2) Second Amendment to Development Agreement, dated

Mar. 6, 2013, at 1–6. The University’s outside counsel also wrote, “I have been asked to

confirm specifically the parties’ understanding that the timing for the payment of the

$1,475,000 Additional Rent payment will not be affected by the outstanding historical

preservation challenge, or any other circumstance, and time is of the essence for the payment

of that sum.” Id. Siegel testified that he did not believe the University’s position regarding

the rental payment was reasonable “[b]ecause we were still dealing with the historic issues,”

which impacted the Developer’s ability to close on financing. Trial Tr. Day 5 PM at 77:11–

79:20. In other words, despite dropping its request for language making its rental payment

obligations contingent on financing, and agreeing in its drafts transmitted on February 21,

2013, to a date certain for the rental payment, the Developer continued to operate in

accordance with an alternate reality in which its rental payment obligations were contingent

on financing, regardless of the requirements of any contract document.

100. The following day, the University’s outside counsel sent Siegel “an updated version of

the Second Amendment to Development Agreement” that incorporated several changes

requested by, and favorable to, the Developer. Joint Ex. 51, Email from David Gifford to

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Eric Siegel, attaching Second Amendment to Development Agreement, dated Mar. 7, 2013,

at 1. Thus, by March 7, 2013, the parties appeared to be close to executing agreements,

almost one year after execution of the April 2012 Term Sheet. The Developer threw a

proverbial wrench in this progress, however, by demanding new concessions from the

University.

101. The Developer’s Request for Further Changes. On March 12, 2013, Siegel sent

Brangman “for [his] consideration . . . two changes to the Ground Lease,” one of which was

“language to address the fact that the D.C. Preservation League has filed the historic

preservation applications and the potential impact of historic designation on the Development

Program and payment of the initial ground lease payment of $1,475,000.” Joint Ex. 52,

Emails Between Alan Brangman and Eric Siegel, dated Mar. 12, 13, 2013, at 2. In reply,

Brangman told the Developer that its proposal for “[r]eturn of payment” in the case of certain

contingencies related to the historic applications was not “going to work” but provided that,

instead, the University “might agree to placing the payment in escrow.” Id. at 1.

102. On March 14, 2013, Siegel transmitted to Gifford a draft of the amendment to the Ground

Lease reflecting the changes discussed with, but not approved by, Brangman. See Joint Ex.

54, Email from Eric Siegel to David Gifford, dated Mar. 14, 2013. Brangman and Gifford in

separate emails to Siegel informed the Developer that the proposed escrow arrangement for

the $1,475,000 rental payment was not acceptable to the University. See Joint Ex. 55, Email

from Alan Brangman to Eric Siegel, dated Mar. 22, 2013; Joint Ex. 56, Email from David

Gifford to Eric Siegel, attaching draft documents, dated Mar. 27, 2013.

103. On April 1, 2013, “[u]pon returning from spring break,” Siegel responded to Gifford’s

March 27, 2013, email and the attached drafts. Joint Ex. 57, Email from Eric Siegel to David

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Gifford, dated Apr. 1, 2013, at 1. He expressed that several of the University’s proposed

terms were unacceptable to the Developer. In particular, he conveyed that the Developer

“cannot agree that the University is entitled to collect $1,475,000 should the Development

Agreement and Ground Lease be terminated on May 30 for non-payment, particularly now

that there is looming . . . two historic preservation applications that may materially negatively

impact the project or, at worst, mark its end.” Id. Siegel added, “[W]e have already

expended over $1 million towards this project” and “[i]f May 30 comes and we fail to make

payment as obligated to do so under this Second Amendment, the agreement automatically

terminates, and we are out all of the money we have expended.” Id. Thus, Siegel asserted

that, as already “stated in [his] March 7 email,” the Developer’s proposed “changes are non-

negotiable.” Id. The Developer simply does not acknowledge that this possibility of losing

“all of the money [it] ha[s] expended” was a risk assumed by the Developer in the original

agreements.

104. Brangman sent an email expressing the University’s views as to the reasonableness of its

March 27, 2013, proposed but rejected changes, and the parties decided to meet in person.

See Def.’s Ex. 109, Emails Between Eric Siegel and Alan Brangman, dated Apr. 9, 2013.

After that in-person meeting, the Developer sent a letter to the University, acknowledging

that the Developer had been required to preserve the WRECO garage under the DUKE Plan

applicable to its development program from its inception, but asserting that the preservation

of the Bond Bread building was an unexpected requirement and, accordingly, “must be paid

for by the University.” Def.’s Ex. 110, Letter from Developer to Alan Brangman, dated Apr.

15, 2013, at 2. The Developer further advised that “the $1,475,000 ground lease payment to

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be tendered on or before May 30, 2013 is now a potential issue because we do not know what

we are building as a result of these historic applications.” Id.

105. In a letter dated the following day, Brangman responded stating that “the University does

not come to the same conclusions” as the Developer, noting that the governing agreements

do not require the University to “absorb any costs associated with the development of this

property other than as expressly stated in the project documents,” which costs are the

Developer’s responsibility under those agreements. Def.’s Ex. 111, Letter from Alan

Brangman to Ron Cohen, dated Apr. 16, 2013, at 1. With respect to the $1,475,000 payment,

the letter provides that “the University views [that] upcoming payment as a commitment to

continue with the redevelopment of the property and more importantly as a cure for the fact

that a default condition currently exists with respect to the project,” asserting that the

“University does not in any way see a linkage between your obligation to make that payment

as scheduled and the actions of DCPL.” Id. at 2.

106. The Developer’s Historic Preservation Efforts. Meanwhile, the Developer worked to

account for the historic preservation requirements likely to affect the Property. In particular,

the Developer consulted with its architects and historic preservation contractors to get an

estimate of the added expense of historic preservation, which estimate was $7,000,000 to

$8,500,000. See Pl.’s Ex. 117, Email from Eric Siegel to Alan Brangman, dated Apr. 11,

2013, attaching Letter from Alan Cohen to Eric Siegel, dated Apr. 9, 2013, at 2.

107. Concerns Raised Regarding the Developer’s Plans. The Developer also communicated

with multiple individuals regarding the proposals it intended to submit to DCPL in hopes of

obtaining DCPL’s support before the District’s Historic Preservation Review Board. The

Developer’s proposals included demolishing the entirety of the WRECO garage. See Def.’s

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Ex. 112, Emails Between Eric Siegel, Sean Cahill, et al., dated Apr. 18, 23, 2013, at 2. In an

email to Eric Siegel, Sean Cahill, an architect and member of the Board of DCPL, expressed

his view that the Developer’s proposal “enter[ed] a very slippery slope” given its reliance on

the need for environmental remediation in accordance with city requirements to justify

minimal preservation of the historic buildings even though “[t]he contaminants can certainly

be remediated with the building in place.” Id. at 1. After “strongly suggest[ing] [the

Developer] rethink this position,” Cahill advised that “[a]ll developers have to deal with

these issues. Welcome to developing in the District.” Id. at 1–2. He further expressed his

view that the Developer “is starting a war here” and that the “lack of movement on this will

be seen as disappointing at best.” Id. at 2. While Cahill believed in a “solution where both

sides are satisfied and supportive of the project” that could be accomplished in a “timely

manner,” he thought such a solution was not possible “with the design submission attached.”

Id.

108. Notwithstanding Cahill’s recommendation, the Developer submitted a plan that, in

DCPL’s view, “lack[ed] . . . any retention of the WRECO garage” and, thus, was not agreed

to by DCPL. Def.’s Ex. 114, Emails Between Eric Siegel and Rebecca Miller, dated May 3,

2013, at 1. Responding to Miller’s email rejecting the Developer’s proposal, Siegel

expressed his view that it was “a shame that this project may die if the financing goes away

at this late hour.” Id.

109. On May 23, 2013, the Historic Preservation Review Board held a hearing at which it

considered DCPL’s nomination applications for the WRECO garage and Bond Bread

building, as well as a proposal by the Developer, dated April 30, 2013, regarding the use of

those buildings in its construction. See Trial Tr. Day 2 PM at 20:5–22:4 (Callcott). At that

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hearing, the Board “designated the two [buildings] as landmarks” and “found that substantial

revisions would be needed for [the Developer’s proposal] to be an acceptable preservation

solution that was consistent with the preservation law.” Id. at 20:8–16 (Callcott). In the

following weeks, the Developer or its architects met with personnel at the Historic

Preservation Office several times to develop a new plan for construction on the site. See id.

at 21:2–22:4 (Callcott). The Developer also “sought a path forward through” the so-called

Mayor’s Agent process, Trial Tr. Day 4 AM at 26:15–17 (Siegel), which allows “projects of

special merit . . . that may not be entirely consistent with the preservation law” to go forward

despite “some amount of demolition,” if they serve some other public interest, such as

“clean[ing] up a site” having “environmental remediation issues,” Trial Tr. Day 2 PM at

16:12–17:11 (Callcott).

O. MAY 2013: THE DEVELOPER AGAIN REFUSES TO MAKE THE

$1,475,000 RENTAL PAYMENT AS REQUIRED

110. Consistent with its “non-negotiable” position expressed in March and April 2012, two

days before the May 30, 2013, deadline for payment of the overdue rent, the Developer

transmitted a letter to Brangman communicating that “until the[] historic issues are

resolved,” it did “not intend to make any further monetary payments to Howard University.”

Def.’s Ex. 116, Email from Eric Siegel to Alan Brangman, Robert Tarola, and Norman

Jenkins, cc: Alan Cohen, Ron Cohen, and Tim Kissler, dated May 28, 2013, attaching Letter

from Developer to Alan Brangman, dated May 23, 2013, at 2. The Developer also warned

that “[s]hould Howard University determine that it is not advisable to continue working with

the Developer,” the Developer would nevertheless “hold firm to this property.” Id. at 3. The

Developer further stated that it was “too invested to walk away” from the project. Id.

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111. Having established a belligerent tone of non-negotiable terms and implicitly threatening

litigation to “hold” onto the Property, id., the Developer offered the University a path

forward that the Developer was willing to pursue. Specifically, the Developer proposed,

“[a]s an alternative, if the University is adamant about receiving a lease payment,” that the

University “consider swapping the adjacent University parking lot for the land subject to the

ground lease.” Id. In this arrangement, the Developer contemplated that the University, not

the Developer, would then be responsible for “pursu[ing] remedies with the District” for the

“severely constrained site.” Id.

112. Cohen’s May 29, 2013, Email to Siegel and Alan Cohen. On May 29, 2013, Cohen

emailed Siegel and Alan Cohen to inform them that Jenkins was “not an advocate of

swapping sites” but that Cohen “d[id]n’t know whether he [wa]s posturing.” Def.’s Ex. 118,

Email from Ron Cohen to Eric Siegel and Alan Cohen, dated May 29, 2013. He advised the

two that the University was “trying to schedule a meeting for this Thursday to discuss” and

they “should both attend and offer no compromise.” Id. He further advised them that “[t]he

best word to describe the payment if we were to make it is STUPID and that we are not.” Id.

113. That same day, Siegel emailed Jenkins to decline the meeting Cohen had mentioned,

citing existing travel plans, and offered to meet instead on June 3, 2013. See Joint Ex. 60,

Emails Between Norman Jenkins and Eric Siegel, cc: Alan Cohen, Ron Cohen, and Kurt

Schmoke, dated May 29, 31, 2013. Jenkins replied clarifying that no meeting had been

proposed by the University but that “the university owed [the Developer] a ‘thoughtful

response’ to [its] letter” and “[p]reparation of that response is in process.” Id.

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P. JUNE – JULY 2013: THE FINAL NOTICES OF DEFAULT AND

TERMINATION AND THE DEVELOPER’S RESPONSE

114. The Fourth Notice of Default. On June 3, 2013, having received no rental payment from

the Developer on May 30, 2013, the University sent the Developer a fourth notice regarding

its defaults. See Joint Ex. 61, Notice of Default and Notice of Intent to Terminate, dated June

3, 2013, at 1. The reason cited for the notice was “that the Developer is in default of the

Ground Lease by reason of its failure to pay to the University the sum of $1,475,000.00 due

December 8, 2011, . . . which due date was extended by the University through May 30,

2013.” Id. As required by the Ground Lease, in bold face and all-capitalized type, the letter

provided, “PLEASE BE ADVISED THAT THE UNIVERSITY INTENDS TO

TERMINATE THE GROUND LEASE IF THAT FAILURE IS NOT CURED BY THE

PAYMENT IN FULL OF THE SUM OF $1,475,000.00 BY THE DEVELOPER TO THE

UNIVERSITY WITHIN TEN (10) DAYS AFTER THIS NOTICE.” Id. (emphasis omitted).

115. The Developer responded to this notice the following day by requesting a meeting and

again proposing conditions on the rental payment, including return to the Developer should it

decide, within six months, to “walk away” from the property. Joint Ex. 63, Emails Between

Alan Brangman and Eric Siegel, dated June 4, 5, 2013, at 2; see Joint Ex. 62, Emails

Between Alan Brangman and Eric Siegel, dated June 4, 2013. The Developer’s proposed

conditioned payment of the second rental payment was again rejected by the University. See

Joint Ex. 63, Emails Between Alan Brangman and Eric Siegel, dated June 4, 5, 2013, at 1.

116. Not all of the Developer’s stakeholders were of the view that the Developer should

continue to refuse to make the rental payment. In an email on June 7, 2013, the principal of

CastleRock, which shared the Developer’s rights and obligations under its agreements with

the University, expressed his opinion to Siegel that he did “not think that being in capital ‘D’

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default is a position where we can stay” and adopting a view, expressed by Tarola, that “[t]he

timing is bad, but the payment is required, to keep the purchase option alive. Unfortunately

it is a nonrefundable payment, but then again, we have had the property under

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