In Uncategorized on 11/19/2020 at 17:20

 Especially When A Judge Says What It Says

It’s been a byword for me for fifty years that one cannot discuss a document without having the document before one. Documents never say what one remembers they say.  Sometimes this is even more so when a judge says what it says.

Another façade designated hitter from Judge James S (“Big Jim”) Halpern. 901 South Broadway Limited Partnership, Standard Development, LLC, Tax Matters Partner, Docket No. 14179-17, filed 11/19/20. Two conflicting Deed paragraphs cause IRS to claim that the changes-to-façade-deemed-approved thirty-day quick kick defeats the reserved-in-perpetuity requirement.

“Respondent bases his argument on section 3.2(c) of the Deed. Section 3.1 prohibits the partnership, as Grantor, from making changes to the Building without the Conservancy’s ‘prior express written approval’. That same section allows the Conservancy, as Grantee, to withhold or condition its approval in its ‘sole discretion’. Section 3.2(c), however, provides: ‘All approval rights of the Grantee shall be exercised in the reasonable discretion of Grantee. Grantee further agrees to respond to any request of Grantor not later than thirty (30) days following receipt by Grantee of Grantor’s request. Failure of Grantee to respond to Grantor within the thirty (30) day period shall be deemed to constitute approval of Grantor’s request.'” Order, at pp. 3-4.

CA law says that when two paragraphs in a contract conflict irreconcilably, go with the first. So, say the Broadway Limiteds, absolute discretion rules. Par. 3.2 is inoperative.

But Judge Big Jim sees no irreconcilable conflict.

“…the approval of a request of the partnership by reason of the Conservancy’s inaction would not necessarily frustrate the easement’s stated purpose. Section3.l(a) of the Deed prohibits the partnership from making any change to the Building’s facade without the Conservancy’s approval. The deemed approval of a request to change the facade in a manner that would not ‘significantly impair or interfere with the Property’s conservation and preservation values’ would not contravene the Deed’s purpose as stated in section1.2. A conflict between section 3.2(c)’s deemed approval provision and the Deed’s stated purpose would arise only if that provision were read to apply to requests to alter the Building’s exterior in a manner inconsistent with its historical character. And that potential conflict can resolved simply by reading section 3.2(c) as inapplicable to any such request.” Order, at p. 7.

Yes, Judge, except that’s not what the Deed says. The thirty-day quick-kick doesn’t say “insignificant changes only.” And that the Conservancy can sue for an injunction if the change is significant and they blow the thirty-day cutoff is nothing to the point. Agreements to vary what is sought to be preserved have been frowned upon ever since Belk; see my blogpost “A Thing of Beauty – Accept No Substitutes,” 1/28/13.

But I’m not the judge. I’m only a journo, racing the floodwaters of Dawson’s Creek.

So IRS loses summary J.


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