Background
Michael Ball agreed to sell David Hubbard a District of Columbia house for $665,000. The contract identified the buyer as “221 35th LLC (To Be Formed),” but Hubbard initialed each page and signed the buyer’s signature line. After Hubbard failed to close, Ball sold the property to someone else and sued Hubbard for breach of contract, seeking $26,000 in damages.
While Ball was temporarily unrepresented and did not participate in the litigation, Hubbard filed an unopposed summary-judgment motion. The Superior Court ruled that the contract was unenforceable because the contemplated LLC was never formed and Ball failed to provide required Tenant Opportunity to Purchase Act documents. It also concluded that Hubbard could not be personally liable because he acted only as an agent for the LLC. The court awarded Hubbard his $10,000 deposit plus $15,720 in attorney’s fees and costs.
The Court’s Holding
The District of Columbia Court of Appeals reversed. Neither formation of the LLC nor delivery of the TOPA documents was a condition precedent to Hubbard’s performance under the contract. The integrated contract contained no conditional language making formation of the LLC necessary, and Hubbard’s conclusory account of an unwritten agreement could not override the contract’s plain terms. Moreover, Hubbard could not rely on his own decision not to form the LLC to avoid performance.
The TOPA clause gave Hubbard a conditional right to void the contract, not an automatic excuse from performance. He first had to notify Ball of noncompliance and allow three days to cure, and the record did not establish that he followed that process. The court also held that Hubbard was not entitled to judgment as a matter of law on personal liability: a nonexistent LLC lacked capacity to contract, promoters generally are liable for contracts made on behalf of unformed entities, and a factual dispute remained over whether Ball agreed to look solely to the contemplated LLC for performance. The case was remanded for further proceedings.
Key Takeaways
- An unopposed summary-judgment motion cannot be granted merely by default; the trial court must independently determine that the movant is legally entitled to judgment.
- A contractual right to void after notice and an opportunity to cure is not the same as a condition precedent that automatically excuses performance.
- A person signing for an unformed entity generally faces promoter liability unless the other contracting party agreed to bind only the future entity.
Why It Matters
The decision underscores that courts must distinguish contractual promises and termination rights from true conditions precedent, which can produce the harsh result of eliminating performance obligations entirely. That analysis remains necessary even when the summary-judgment motion is unopposed.
The opinion also highlights the personal-liability risk of contracting through an entity that has not yet been formed. Merely identifying a proposed LLC and disclosing an intent to purchase through it does not, without more, establish that the counterparty agreed to release the individual promoter from liability.