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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 15, 2004 Decided November 30, 2004
No. 04-7010
MICK’S AT PENNSYLVANIA AVENUE, INC. AND
MORTON’S RESTAURANT GROUP, INC.,
APPELLEES
v.
BOD, INC. AND
BARBARA O’DONNELL,
APPELLEES
PAT O’DONNELL
Appellant
Appeal from the United States District Court
for the District of Columbia
(No. 99cv03073)
————–
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Daniel M. Press argued the cause for the appellant Pat
O’Donnell.
Andrew J. Kline argued the cause for appellees Mick’s at
Pennsylvania Avenue, Inc. and Morton’s Restaurant Group,
Inc.
Before: GINSBURG, Chief Judge, and HENDERSON and
ROBERTS, Circuit Judges.
Opinion for the court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: Pat O’Donnell
(O’Donnell) appeals the district court’s summary judgment in
favor of appellees Mick’s at Pennsylvania Ave., Inc. (Mick’s)
and Morton’s Restaurant Group, Inc. (Morton’s). Mick’s was
the lessee of a restaurant property under a 15–year lease of
which Morton’s was a limited guarantor. Mick’s subleased
the property to BOD, Inc. (BOD) under a sublease signed by
Pat O’Donnell and his then-wife Barbara O’Donnell on behalf
of BOD. In addition, the O’Donnells both signed a guaranty
agreement assuring BOD’s performance under the sublease.
The district court concluded that the O’Donnells are liable
under the guaranty for rents and sales taxes BOD owes
Mick’s under the sublease. Having reviewed the district
court’s judgment de novo, we affirm because, as the district
court concluded, ‘‘there is no genuine issue as to any material
fact’’ and the appellees are ‘‘entitled to judgment as a matter
of law.’’ Fed. R. Civ. P. 56(c); see Mick’s at Pennsylvania
Ave., Inc. v. BOD, Inc., 99cv3073 (D.D.C. 2003) (Summary J.
Dec.).
I.
On December 12, 1997 the O’Donnells, on behalf of subles-
see BOD, and Thomas J. Baldwin, Executive Vice President
and Chief Financial Officer of sublessor Mick’s, signed the
sublease for restaurant premises located at 2401 Pennsylvania
3
Ave. N.W., Washington, DC. Under the sublease, which ran
from December 15, 1997 to November 1, 2000, BOD was to
pay monthly ‘‘basic rent’’ of $14,085.05 and ‘‘additional rent’’
consisting of operating costs, taxes, utility costs, insurance
‘‘and all other items of Additional Rent payable by the
Sublessor under the Lease.’’ Sublease at 2, § 3B. The
sublease also provided for an initial three-month ‘‘Rent Con-
cession Period,’’ for which BOD would be exempt from its
basic rent payment obligations provided it complied with all
other sublease terms. On the same day, both O’Donnells also
signed the guaranty, agreeing to guarantee BOD’s perform-
ance under the sublease and to indemnify Mick’s for any
losses arising from the sublease and BOD’s business opera-
tion.
BOD opened a restaurant at the subleased location and
operated it from about December 15, 1997 until March 1999,
when BOD abandoned the premises and ceased paying rent.
On November 17, 1999 Mick’s and Morton’s filed this action
against BOD and each of the O’Donnells, alleging breach of
the sublease by BOD and breach of the guaranty by the
O’Donnells.1 The complaint sought to recover unpaid rent
under the sublease (both basic and additional) and sales taxes
for the months of February and March 1999, which Mick’s
had paid subject to reimbursement by BOD.
In a memorandum opinion and order filed December 11,
2003 (Summary J. Dec.) the district court granted summary
judgment in favor of Mick’s and Morton’s, ordering the
O’Donnells and BOD to pay $131,710.70,2 including four
months’ basic rent ($56,340.20 for January to March 1998, the
Rent Concession Period, and for March 1999, the final month
1The complaint alleged diversity jurisdiction under 28 U.S.C.
§ 1332.
2 The appellees claim total damages of $121,710.70, Appellees’ Br.
5, rather than the $131,710.70 figure calculated and ordered by the
district court, Summary J. Dec. at 1 & n.1. The district court made
an arithmetic error and should amend its order to reflect the proper
amount of $121,710.70.
4
of occupancy), additional rent in the form of operating costs
($53,160.72 for August 1998 to March 1999) and of trash
removal and parking costs ($1,422.11 for March 1999) and
sales tax reimbursements ($10,787.67 for February to March
1999). Pat O’Donnell timely appealed the district court’s
judgment.3
II.
We address each of Pat O’Donnell’s arguments separately.
A. Sales Taxes
First, O’Donnell disputes the award of $10,787.67 reflecting
sales taxes which Mick’s paid subject to reimbursement by
BOD for the months of February and March 1999. O’Donnell
asserts that, because BOD’s obligation to repay the funds
arose under a side oral agreement separate from the sub-
lease, he is not required to cover the tax advances under the
guaranty. We disagree.
The sublease expressly requires that BOD pay as part of
its additional rent under the sublease ‘‘one hundred (100%)
percent [sic] of all items of ‘Additional Rent’, as defined under
Lease, which are payable by Sublessor under the Lease,
including without limitation, ‘Operating Costs’, ‘Taxes’, as
defined in the Lease, utility charges, insurance and all other
items of Additional Rent payable by Sublessor under the
Lease.’’ Sublease at 2, § 3B. The lease, in turn, requires
that the tenant
as Additional Rent, pay all business taxes, rates, duties,
levies, assessments and/or license fees imposed in respect
of any and every business conducted in, on or from the
Leased Premises or in respect of the use or occupancy
thereof, to the authorities having jurisdiction thereof
promptly when the same shall become due and payable,
and before the imposition of any fine or penalties.
3Neither BOD, which defaulted in the district court, nor Barbara
O’Donnell filed a notice of appeal.
5
Lease at 25-26, § 11.02. We agree with the district court and
the appellees that sales taxes plainly come within the broad
category of ‘‘all business taxes, rates, duties, levies, assess-
ments and/or license fees imposed in respect of every busi-
ness conducted’’ by BOD at the leased premises.4 BOD was
therefore required to pay them as additional rent under the
sublease. We further agree that the broad language of the
guaranty obliged O’Donnell to reimburse the sales taxes
Mick’s paid on BOD’s behalf. In the guaranty the O’Donnells
undertook both generally to ‘‘promptly cure any default in
any term covenant, or condition of the Sublease’’ (including
default of BOD’s obligation to pay sales taxes) and, specifical-
ly, to ‘‘indemnify and hold harmless Mick’s TTT from and
against any and all claims and liabilities, causes of action, and
damages, including but not limited to, tax liabilities.’’ Guar-
anty at 2, §§ 2, 3 (emphasis added).
B. Concession Period Rent
Next, O’Donnell challenges the award of rent for the initial
three-month period, January to March 1998. The sublease
provides:
[P]rovided that Sublessee performs all other terms, cove-
nants and conditions of this Sublease, then for the period
commencing on the Commencement Date up through
March 31, 1998 (‘‘Rent Concession Period’’), Sublessee
shall not be obligated to pay Basic Rent to Sublessor
hereunder.
Sublease at 2, § 3A. The district court concluded that under
this proviso the rent conceded during the initial three months
(January to March 1998) later became due when BOD ceased
4 O’Donnell argues that the sales tax is not a tax or fee upon the
business vendor but upon the purchaser because, as this court has
stated, ‘‘[t]he legal incidence of the District of Columbia sales tax is
on the purchaser,’’ United States v. District of Columbia, 669 F.2d
738, 744 (D.C. Cir. 1981). Reply Br. 3-4. In the cited opinion the
court also expressly states that ‘‘the sales tax is imposed on the
vendor,’’ 669 F.2d at 744 n.9 (emphasis added; citing D.C. Code
§ 47-2602), in this case on restaurateur BOD.
6
operating its restaurant in March 1999 in breach of section 14
of the sublease which required that BOD ‘‘continuously oper-
ate its restaurant business in a first-class manner’’ during the
sublease term which did not expire until November 2000. We
agree with the district court’s interpretation of the unambigu-
ous language of the quoted provision. O’Donnell does not
dispute that BOD violated section 14 by abandoning the
restaurant prematurely but contends this breach did not
trigger liability for the conceded rent because the quoted
proviso required only that the sublessee not breach other
terms of the sublease during the Rent Concession Period and
did not authorize retroactive rent obligations based on
breaches after the period ends. We disagree. The proviso
contained no limitation on which sublease terms must be
performed or when in order to preserve the rent concession
but broadly required performance of ‘‘all other terms, cove-
nants and conditions’’ of the sublease, which language unam-
biguously includes the continuous operation requirement in
section 14 (emphasis added).5
C. Equal Credit Opportunity Act
Third, O’Donnell resurrects the affirmative defenses, as-
serted summarily in his answer, of waiver/estoppel, unclean
hands and in pari delicto, each one premised on his theory
that the appellees violated the Equal Credit Opportunity Act,
15 U.S.C. §§ 1691 et seq. (Act). We conclude that, under the
undisputed facts, Mick’s did not violate the Act and that
O’Donnell’s defenses therefore fail.
The Equal Credit Opportunity Act provides in relevant
part:
5 O’Donnell argues for the first time in his reply brief that the
Rent Concession Period proviso, as construed by the appellees and
the district court, produces an unenforceable retroactive forfeiture.
Reply Br. 5 (citing Red Sage Ltd. P’ship v. Despa Deutsche
Sparkassen Immobilien-Anlage-Gasellschaft MBH, 254 F.3d 1120,
1129 (D.C. Cir. 2001)). Having failed to raise it earlier, O’Donnell
has waived this argument. See Amgen, Inc. v. Smith, 357 F.3d 103,
117 (D.C. Cir. 2004).
7
It shall be unlawful for any creditor to discriminate
against any applicant, with respect to any aspect of a
credit transaction—
(1) on the basis of race, color, religion, national origin,
sex or marital status, or age (provided the applicant has
the capacity to contract); TTTT
15 U.S.C. § 1691(a). To implement this provision, the Feder-
al Reserve Board has promulgated the following regulation:
‘‘[A] creditor shall not require the signature of an applicant’s
spouse or other person, other than a joint applicant, on any
credit instrument if the applicant qualifies under the credi-
tor’s standards of creditworthiness for the amount and terms
of the credit requested.’’ 12 C.F.R. § 202.7(d)(1). O’Donnell
claims the appellees violated the statute and the regulation by
requiring O’Donnell to co-sign the sublease and the guaranty
for his wife’s restaurant although O’Donnell was not himself a
principal of BOD. We reject O’Donnell’s Equal Credit Op-
portunity Act claim for two reasons.
First, under the Act the sublease is not a ‘‘credit instru-
ment’’ subject to 12 C.F.R. § 202.7(d)(1). The Act defines
‘‘credit’’ as ‘‘the right granted by a creditor to a debtor to
defer payment of debt or to incur debts and defer its payment
[sic] or to purchase property or services and defer payment
therefor.’’ 15 U.S.C. § 1691a(d) (emphasis added). Mick’s
did not grant any credit right to BOD under the sublease but
acted simply as a sublessor of the restaurant property enti-
tled to receive monthly rent payments for the term of the
sublease.6 Further, neither Mick’s nor Morton’s falls within
6 In contrast, Brothers v. First Leasing, 724 F.2d 789 (9th Cir.
1984), cited by O’Donnell, involved a consumer automobile lease
which the Ninth Circuit concluded fit within the Act’s definition of
‘‘credit transaction’’ because it required the consumer lessee to pay
a fixed sum in equal installment payments at fixed intervals. See
724 F.2d at 793 n.8. The court there based its holding on the
premise that the anti-discrimination provisions of the Act apply to
all transactions covered by the Consumer Leasing Act, 15 U.S.C.
§§ 1667-1667e. See id. at 791-94. The reasoning in Brothers, there-
fore, has no application to a commercial real estate lease.
8
the Act’s definition of ‘‘creditor’’ as ‘‘any person who regular-
ly extends, renews, or continues credit; any person who
regularly arranges for the extension, renewal, or continuation
of credit; or any assignee of an original creditor who partici-
pates in the decision to extend, renew, or continue credit.’’
15 U.S.C. § 1691a(e) (emphasis added). There is no evidence
that either Mick’s or Morton’s, each of which is in the
restaurant business, ‘‘regularly’’ extends or arranges credit,
which, as an element of O’Donnell’s affirmative defenses, he
must demonstrate on summary judgment. See Celotex Corp.
v. Catrett, 477 U.S. 317, 322-23 (1986) (‘‘[T]he plain language
of Rule 56(c) mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party
who fails to make a showing sufficient to establish the exis-
tence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.’’).
Second, the assertion made before the district court and on
appeal that O’Donnell was not a principal involved in BOD’s
operations is at odds with O’Donnell’s own representations at
the time he signed the sublease and the guaranty. The two
documents variously characterize O’Donnell as one of BOD’s
‘‘principals,’’ Sublease at 5, § 7A, the ‘‘Sublessee,’’ id. at 9
(under O’Donnell’s signature), BOD’s ‘‘President’’ or ‘‘Vice
President,’’ id. at 10 (in ‘‘Acknowledgements’’ by notaries
public), one of BOD’s two ‘‘sole shareholders, directors and
officers’’ and one ‘‘hav[ing] a material business interest in the
Sublessor [sic],’’ Guaranty at 1. Having represented himself
to Mick’s and Morton’s when he signed the sublease and the
guaranty as an officer and shareholder of BOD in order to
secure the sublease for BOD, O’Donnell is equitably estopped
from claiming otherwise now to avoid liability under the
guaranty. See First Am. Disc. Corp. v. Commodity Futures
Trading Comm’n, 222 F.3d 1008, 1016 (D.C. Cir. 2000) (‘‘Un-
der the doctrine of equitable estoppel, ‘a party with full
knowledge of the facts, which accepts the benefits of a
transaction, contract, statute, regulation, or order may not
subsequently take an inconsistent position to avoid the corre-
sponding obligations or effects.’ ’’ (quoting Kaneb Servs. v.
FSLIC, 650 F.2d 78, 81 (5th Cir. 1981))).
9
D. Prior Breach of Lease
Finally, O’Donnell claims any breach of his obligations
under the sublease or the guaranty is excused because Mick’s
itself first breached its implied obligation under the sublease
to cooperate with BOD in transferring the restaurant’s liquor
license into BOD’s name. O’Donnell contends that, by failing
to pay taxes owed to the District of Columbia for a period
preceding the sublease term, Mick’s impeded BOD’s ability to
effect the transfer in breach of this implied obligation. We
reject O’Donnell’s prior breach theory which, as the district
court observed, rests on ‘‘an attenuated chain of events.’’
Summary J. Dec. at 5.
It is true that the sublease required BOD to transfer the
liquor license to its own name by May 31, 1998, after which
time, if it had not, Mick’s had ‘‘the option, in its sole and
absolute discretion, to cancel th[e] Sublease by sending writ-
ten notice to Sublessee no later than June 7, 1998 in which
event th[e] Sublease shall be cancelled.’’ Sublease at 4, § 5B.
If no timely notice was sent, BOD was to continue its efforts
to change the license name while retaining ‘‘the right to
continue to operate under Sublessor’s Alcoholic Beverage
License,’’ subject to Mick’s’ continuing option to cancel upon
30 days’ notice. Id. We find no breach, however, of any
obligation on the part of Mick’s to assist in securing the
license change. As BOD acknowledges, the sublease imposes
no such express obligation on Mick’s. Further Mick’s took no
affirmative step to prevent BOD from obtaining the license in
its own name in breach of an implied obligation.7 See R. A.
7 Nor did Mick’s make any attempt to take advantage of the
contractual consequence of BOD’s failure to transfer the license by
invoking section 5B to cancel the sublease. O’Donnell nonetheless
claims that by failing to pay the taxes, and thereby preventing the
license transfer, Mick’s harmed BOD in two ways. First, O’Donnell
points to the assertion in Barbara O’Donnell’s affidavit below that
this failure ‘‘put BOD’s restaurant in serious risk of being shut
down by the D.C. Government,’’ Affidavit of Barbara O’Donnell at 2,
¶ 5, but this risk never materialized. Second, O’Donnell claims that
‘‘the lack of a liquor license required BOD to pay cash (COD) to
alcoholic beverage distributors,’’ Reply Br. 8, but O’Donnell may not
10
Weaver & Assocs. v. Haas & Haynie Corp., 663 F.2d 168, 177
n.67 (D.C. Cir. 1980) (‘‘The prohibition against active interfer-
ence is an implied contractual term.’’ (emphasis added; citing
Karrick v. Rosslyn Steel & Cement Co., 25 F.2d 216, 217-18
(1928); Minmar Builders Inc. v. Beltway Excavators, Inc.,
246 A.2d 784, 787 (D.C. App. 1968); Matthew A. Welch &
Sons, Inc. v. Bird, 193 A.2d 736, 738 (D.C. Mun. App. 1963);
Horlick v. Wright, 104 A.2d 825, 827 (D.C. Mun. App. 1954))).
* * *
In light of our foregoing analyses, we conclude that addi-
tional discovery would not alter the undisputed material facts
or the disposition of O’Donnell’s claims and that, therefore,
the district court did not abuse its discretion in denying
O’Donnell’s discovery request. See Paquin v. Fed. Nat’l
Mortgage Ass’n, 119 F.3d 23, 28 (D.C. Cir. 1997). According-
ly, for the reasons set forth above, we affirm the judgment of
the district court.
So ordered.
rely on this allegation first raised in his reply brief. Amgen, Inc. v.
Smith, 357 F.3d at 117.