DISTRICT OF COLUMBIA COURT OF APPEALS

Nos. 19-CV-559 & 19-CV-542

TERREFE BERHANU; ETHIO, INC.; AND EZEMA, INC., APPELLANTS / CROSS-

APPELLEES,

V.

LANDMARK PETROLEUM, LLC; CAPITOL PETROLEUM GROUP, LLC; AND EYOB

MAMO, APPELLEES / CROSS-APPELLANTS.

Appeal from the Superior Court

of the District of Columbia SEP 30 2020
(CAB-8753-16)

(Hon. Michael L. Rankin, Trial Judge)

(Argued June 18, 2020 Decided September 30, 2020)

Before BLACKBURNE-RIGSBY, Chief Judge, and MCLEESE and DEAHL,

Associate Judges.

MEMORANDUM OPINION AND JUDGMENT

PER CURIAM: Terrefe Berhanu and his company Ethio, Inc. leased two gas
stations from Power Fuel & Transport, Appellee Landmark Petroleum Suppliers’
predecessor-in-interest. For each gas station, the contracting parties simultaneously
entered into two related agreements: (1) a lease agreement requiring Mr. Berhanu
to pay monthly rent and property taxes; and (2) a fuel supply contract requiring him
to purchase all gasoline from Power Fuel at contractually set prices and permitting
him to retain the proceeds from the sale of that gas. In 2009, Mr. Berhanu and Power
Fuel orally modified, at least temporarily, those agreements in two respects. First,
the parties agreed Mr. Berhanu would no longer pay rent on the two properties.
Second, the fuel supply contracts were replaced with a consignment agreement under
which Mr. Berhanu would no longer buy gas from Power Fuel and keep the proceeds
but instead would sell Power Fuel’s gas on a consignment basis, remit all proceeds
to Power Fuel, and receive a flat fee commission for his work. These dual
modifications to the rent and fuel supply obligations allowed Power Fuel to collect
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“somewhere close to rent that [it] would have collected” under the original leases,
with the newly remitted proceeds—minus commissions—roughly offsetting the
abated monthly rent payments.

In 2012, Landmark purchased Power Fuel’s interests in the stations and was
assigned all of Power Fuel’s “rights and obligations” under the “leases” and
“[c]ontracts for sale or consignment of motor fuels.” Landmark then sent what we
call “termination letters” to Mr. Berhanu, purporting to cancel the rent abatement
portion of the 2009 oral modifications while leaving in place the consignment
agreement. In Landmark’s view, the rent abatement was a temporary courtesy
terminable at its discretion, and the consignment agreement permanently replaced
the original fuel supply contracts. In other words, Landmark’s position was that it
was entitled to both the rent payments and the proceeds from gas sales, whereas
under the initial agreements, it was entitled only to the former, and under the 2009
modifications, it was entitled only to the latter. Mr. Berhanu, believing his continued
remittance of the gas sale proceeds satisfied his rent obligations under the 2009
modifications, refused to pay rent for several years. Landmark responded by not
paying him the flat-fee commissions due under the consignment agreement.
Landmark eventually sued for possession of the two gas stations, alleging non-
payment of rent. Mr. Berhanu brought a separate action alleging, among other
things, breach of contract and unjust enrichment.

Following a bench trial, the Superior Court agreed with Landmark that the
rent abatement was temporary and that Landmark’s letters to Mr. Berhanu had
terminated it. The court also found Landmark had no obligations to supply Mr.
Berhanu with fuel—either under the original fuel supply contracts or the 2009
modifications shifting to a consignment agreement—reasoning “Landmark had its
own product to sell or to consign to its tenants.” The court awarded Landmark
$1,394,747.60 in back rent and unpaid property taxes. Both parties appealed.

We vacate the Superior Court’s judgment and remand for further proceedings.
The evidence established, as a matter of law, that the rent abatement and
consignment agreement—i.e., the rights and obligations under the 2009 oral
modifications to the party’s written agreements—were a package deal and both were
assigned to Landmark. Landmark had no right to terminate the rent abatement while
leaving the consignment agreement in place, as it purported to do in its termination
letters to Mr. Berhanu. With that understanding, we leave it for the trial court to
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decide on remand, in the first instance, if those 2009 modifications were ever jointly
terminated by the parties.

I.

In 2001, Mr. Berhanu entered into an agreement to lease a gas station on 12th
Street NE from Power Fuel. Under the lease’s terms, Mr. Berhanu would operate
the gas station for fifteen years and pay $4,000 in monthly rent, subject to periodic
increases. The lease also required Mr. Berhanu to pay all property taxes on the
station to Power Fuel “as additional rent.” The parties simultaneously entered into
a related and coterminous motor fuel supply contract, also for a term of fifteen years.
The fuel supply contract required Mr. Berhanu to buy all fuel sold at the station
exclusively from Power Fuel, and in exchange, he would keep the proceeds of gas
sales.

In 2003, Mr. Berhanu (and his company Ethio) and Power Fuel were parties
to a similar pair of transactions. Mr. Berhanu leased a gas station on South Capitol
Street SW from Power Fuel and agreed to pay a monthly rent of $9,500 with annual
increases. The South Capitol Street lease, like the 12th Street lease, had a term of
fifteen years. Mr. Berhanu was required to pay all property taxes on the South
Capitol Street station as well. As before, the parties also entered into a simultaneous
and coterminous motor fuel supply contract, which expressly stated that it would
“terminate on the date of termination of” the lease. The lease agreement, in turn,
expressly provided that a breach or termination of the fuel supply contract would
constitute a default of the lease itself. The South Capitol Street fuel supply contract,
like the 12th Street contract, required Mr. Berhanu to purchase all gas sold at the
station exclusively from Power Fuel.

Mr. Berhanu and Power Fuel orally modified their business arrangement in
2009. With the nation in an economic recession, Mr. Berhanu indicated he was
having difficulty paying rent. At his request, the parties “made [] oral
modification[s] to their business agreement [and] . . . significantly changed the
financial terms of the written leases and fuel supply agreements.” These were the
new terms: (1) Mr. Berhanu would no longer pay rent for either station, and in
exchange, (2) he would give up his right to retain the proceeds of the gas sales and
instead sell Power Fuel’s gas on a consignment basis, remitting all proceeds to Power
Fuel while receiving flat-fee commissions of $3,000 (for the 12th Street station) and
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$5,000 (for the South Capitol Street station). As the trial court summarized these
dual modifications to their agreements, Power Fuel “would collect the profits from
the [gas] sales in lieu of rent.”

Power Fuel’s owner, Koo Yuen, described the joint 2009 modifications in his
testimony:

I give him like a 30 day break on an ongoing basis, as

needed basis. So, I basically not have him to buy the fuel.
We own the gasoline and then we pay him commission
and so we hope to make the profit that we make instead of
he make, somewhere close to rent that we would have
collected.

He further stated, under those modifications, he “may not [realize] one hundred
percent,” or he might receive “more than one hundred percent” of the profits
expected under the original lease and fuel supply agreement terms, “but that’s the
business risk that we take.” According to Mr. Yuen, he made clear to Mr. Berhanu
that these dual modifications were “strictly a temporary relief,” “not a permanent
modification,” and that they were terminable by Power Fuel at will. He testified that
while he had the right to unilaterally “go back to the 2001 agreement[s] on both the
fuel supply and lease term,” absent some exercise of that authority, the oral
modifications would continue month by month. Power Fuel and Mr. Berhanu never
reduced their oral modifications to writing, though they operated under them for
three years.

In 2012, Landmark expressed interest in buying the 12th Street and South
Capitol Street stations and leased them from Power Fuel as part of its due diligence
efforts. For several months, Landmark acted as Mr. Berhanu’s landlord and carried
out all obligations under the 2009 modifications. Landmark collected no rent; it
supplied Mr. Berhanu fuel on a consignment basis; it paid him monthly
commissions; and Mr. Berhanu remitted all the proceeds of his gas sales to
Landmark. In December 2012, Landmark bought both stations and—under the
terms of the written assignment agreements between Landmark and Power Fuel—
assumed all of Power Fuel’s “rights and obligations” under the “leases” and
“[c]ontracts for sale or consignment of motor fuels.”
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The original lease agreements, entered into in 2001 and 2003, were attached
to the assignment agreements between Power Fuel and Landmark. Those attached
lease agreements, in turn, referenced the contemporaneous fuel supply contracts.
For instance, the 12th Street lease stated, “Landlord has guaranteed the Power Fuels
Supply Contract dated April 1, 2001.” While the 2009 modifications were not
written, and thus not attached to the assignment agreements, Landmark’s owner,
Eyob Mamo, was aware of the modifications and had operated under them during
the due diligence period. Mr. Yuen told Mr. Mamo, “we have a real estate lease and
I have a temporary modification of adjustment on the business arrangement where
there’s no rent and we control the gas . . . . [W]e have the gas profit to deflate the
rent . . . .” Mr. Yuen also told Mr. Mamo the agreement was “temporary, so he can
actually go back to the original contract if he wish[ed].”

Shortly after Landmark assumed Power Fuel’s rights and obligations via the
assignment agreements, its property manager sent Mr. Berhanu two letters, one to
each station. The letters advised Mr. Berhanu that Landmark was terminating his
“rent abatement” and reinstating the rent required under both leases effective
January 1, 2013. The letters also asserted that the consignment agreement remained
in place because it had permanently “replaced” the original “Fuel Supply Contract,”
which had been “mutually terminated by the parties.” “As an alternative to the
termination of the rent abatement” and continuation of the consignment agreement,
Landmark offered to terminate the leases and consignment agreements altogether
and replace them with new leases and fuel supply contracts.

Mr. Berhanu disagreed with Landmark’s assertions that the rent abatement
was temporary and that the consignment agreement permanently replaced the fuel
supply contracts. In his view, the 2009 modifications permanently supplanted his
obligation to pay rent and his right to retain the gas sale proceeds. He operated
accordingly, refusing to pay rent while continuing to accept gas from Landmark on
a consignment basis and remitting the proceeds in lieu of rent. In response,
Landmark continued to demand rent payments and ceased paying the flat fee
commissions due under the consignment agreement. The parties tried but were
unable to iron out their differences through negotiation.

Landmark filed two complaints for possession of the gas stations in the
Superior Court based on non-payment of rent. Mr. Berhanu brought his own suit
alleging Landmark: (1) breached the “landlord-fuel supplier/independent
operator/franchise relationship” and the “oral flat fee arrangements”; (2) breached
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an implied and statutory covenant of good faith and fair dealing; (3) “misused [its]
power over [Mr. Berhanu] to create unconscionable contract terms and conditions”;
and (4) was unjustly enriched by Mr. Berhanu’s services. All three cases were
consolidated and ultimately proceeded to a bench trial.

In its ruling, the trial court distilled what it viewed to be the pertinent issue:
whether the oral modifications “abat[ing] rent” and requiring “flat fee payment[s]”
to Mr. Berhanu constituted “a temporary modification . . . subject to termination at
the landlord’s discretion,” or instead “was intended as a permanent revision to the
formal contracts.” It concluded the rent abatement and flat fee payments were
temporary modifications terminable at will and that Landmark had in fact terminated
them. As for Landmark’s attendant fuel supply obligations—either for sale (as
originally contracted) or on a consignment basis (as orally modified)—the trial court
found those agreements were never assigned to Landmark “because Landmark had
its own product to sell or to consign its tenants.” Beyond that, the court failed to
explain why, in its view, the rent abatement was temporary and terminable at will
while Mr. Berhanu’s consideration for it—foregoing all gas sale proceeds and
remitting them—remained in place.

The trial court awarded Landmark $1,394,747.60 in unpaid rent and property
taxes and entered a judgment for possession of the 12th Street station. It did not
include any contractual late fees or interest in that award; nor did it enter a judgment
for possession of the South Capitol Street station, which Mr. Berhanu had vacated
before trial.

II.

The critical question in this contractual dispute is not, as the trial court saw it,
whether the 2009 rent abatement was temporary and terminable at Landmark’s will.
It is instead whether, even if temporary and terminable, the rent abatement was
severable from the contemporaneous 2009 consignment agreement. That is a
question the trial court never addressed, apparently because of its erroneous view—
inconsistent with Landmark’s own position taken in its termination letters—that the
consignment agreement was never transferred to Landmark. The assignment
agreements leave no room to doubt Landmark assumed the rights and obligations of
the 2009 consignment agreement, as it was unquestionably a “contract[] for sale or
consignment of motor fuels.”
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As to whether the rent abatement and consignment agreement were severable,

the relevant contracts, documentary evidence, and testimony permit just one
conclusion: they were not. The joint 2009 oral modifications were a package deal,
as both parties to those agreements—Messrs. Yuen and Berhanu—consistently
testified. Mr. Yuen gave up his right to collect rent in exchange for Mr. Berhanu
relinquishing his right to keep the proceeds from gas sales. That package deal was
then assigned to Landmark under the plain terms of the assignment agreement.
Assuming the rent abatement was terminable at Landmark’s will, it was only so in
conjunction with the termination of the consignment agreement; if both those 2009
modifications were terminated, the result was reversion back to the original leases
and fuel supply contracts, which permitted Mr. Berhanu to keep all gas sale
proceeds. For the reasons below, we vacate the trial court’s judgment and remand
the case for further proceedings.

A.

Before we address what rights and obligations were assigned to Landmark,

we must first detail the parameters of the contracts formed by Mr. Yuen (on behalf
of Power Fuel) and Mr. Berhanu. The original written leases and fuel supply
contracts were interrelated and coextensive. For both the 12th Street and South
Capitol Street stations, the leases and fuel supply contracts were entered into
simultaneously—on April 1, 2001, and December 2, 2003, respectively. Under the
express terms of those contracts, the leases and fuel supply contracts were
coterminous. For the South Capitol Street station, the fuel supply contract provided
it would “terminate on the date of termination” of the lease, and in turn, the lease
agreement specified that breaches of the fuel supply contract constituted breaches of
the lease. For the 12th Street station, each agreement was for a term of fifteen years,
and each expressly acknowledged the obligations memorialized in the other. Each
pair of respective leases and fuel supply contracts were, for all intents and purposes,
a single contract. See Bethea v. Investors Loan Corp., 197 A.2d 448, 449 (D.C.
1964) (“Whether a number of promises constitute one contract or more than one is
primarily a question of intention of the parties. . . . [C]onsideration must be given to
whether the parties assented to all the promises as a single whole.”) (quoting Holiday
Homes v. Briley, 122 A.2d 229, 232 (D.C. 1956)); Restatement (Second) of
Contracts § 231 (1981) (“In deciding whether there is a single contract rather than
separate contracts, the court must look to the actual bargain of the parties . . . to
decide whether each promise on one side was sought and given as at least part of the
 8

exchange for each promise on the other side. The form of the agreement is not
controlling.”).

The same is true of the oral 2009 modifications to the written agreements—
the so-called rent abatements and consignment agreements. Messrs. Yuen and
Berhanu testified consistently that each of the two modifications served as
consideration for the other. See generally Hershon v. Hellman Co., 565 A.2d 282,
287 (D.C. 1989) (explaining contract modifications typically “possess the same
elements of consideration as necessary for normal contract formation”). In exchange
for abating Mr. Berhanu’s rent, Mr. Yuen would receive the proceeds from the gas
sales previously kept by Mr. Berhanu. The trial court found as much, describing Mr.
Berhanu’s remittance of the proceeds as payment “in lieu of rent” under the 2009
modifications. Mr. Yuen further explained those dual modifications would yield the
approximate financial benefit he received under the original written agreements—
perhaps netting him slightly less or slightly more—chalking up any discrepancy to
“the business risk” of the deal. And while the 2009 modifications were temporary
in nature, as the trial court described, there was no evidence suggesting either Mr.
Berhanu or Mr. Yuen thought himself entitled to terminate one half of the agreement
without the other. As Mr. Yuen described it, his ability to terminate the
modifications was not an option to do so piecemeal, but instead an option to “go
back to the 2001 agreement[s] on both the fuel supply and lease term.”

In short, the intent of the contracting parties to the 2009 modifications—Mr.

Berhanu and Mr. Yuen—is clear on this record: the 2009 modifications were part
of a single, unified agreement modifying the parties’ prior written contracts. See
Tauber v. Quan, 938 A.2d 724, 729 (D.C. 2007) (“[C]ontracts are to be construed to
effectuate the intent of the parties.”).

B.

Power Fuel assigned all of its “rights and obligations” under the “leases” and
“[c]ontracts for sale or consignment of motor fuels” to Landmark via assignment
agreements executed in December 2012. By assuming those rights and obligations,
Landmark assumed the leases and fuel supply contracts as orally modified in 2009
because successors-in-interest are bound by their predecessors’ contract
modifications if they have actual or constructive notice of them. See 2301 M St.
Coop. Ass’n v. Chromium, LLC, 209 A.3d 82, 89 (D.C. 2019) (citing Stanley’s
 9

Cafeteria, Inc. v. Abramson, 226 Va. 68, 73 (Va. 1983)). Landmark had actual
notice of the modifications. Not only was it told about the 2009 modifications before
voluntarily assuming Power Fuel’s rights and obligations, it operated under them for
a time and its termination letters to Mr. Berhanu demonstrate its awareness of them.
Those termination letters acknowledge the existence of Mr. Berhanu’s rent
abatements and the “flat fee [consignment] agreement under which” he sold
Landmark’s fuel and remitted the proceeds.

To be sure, the termination letters also asserted the consignment agreement

permanently “replaced” the fuel supply contracts while describing the rent
abatement as “temporar[y]” and “terminated” by force of the letters themselves. But
that self-serving interpretation of the 2009 modifications—permitting Landmark to
keep the half of the deal beneficial to it and terminate the half that was not—is not
consistent with the joint and complementary 2009 modifications described by
Messrs. Berhanu and Yuen. And even if Landmark’s agents sincerely believed that
lopsided deal was assigned, they were unreasonable in that belief and failed to reduce
their self-advantageous interpretation to writing before assuming all of Power Fuel’s
rights and obligations under the 2009 modifications. See generally Parker v. U.S.
Trust, 30 A.3d 147, 151 (D.C. 2011) (a contract is ambiguous only if “there is more
than one interpretation that a reasonable person could ascribe to the contract, while
viewing the contract in context of the circumstances surrounding its making”). That
one party has a sincere but unreasonable interpretation of a contract is no basis for
imposing that interpretation on the other party. See id.

As for the trial court’s view that Landmark assumed no fuel supply obligations
whatsoever—not even those under the 2009 consignment agreement—that is flatly
contradicted by the record. It is: (1) contrary to Landmark’s own original
understanding, evinced in its termination letters, purporting to be obliged by the
consignment agreement; (2) contrary to Landmark’s owner’s testimony that there
was a consignment agreement between Landmark and Mr. Berhanu and that he was
withholding commission payments only because Mr. Berhanu was not paying rent;
(3) contrary to Landmark’s current understanding, articulated at oral argument in
this appeal, that the consignment agreement was assigned to it; (4) contrary to the
assignment agreements transferring “all Assignor’s rights and obligations” under
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“[c]ontracts for sale or consignment of motor fuels”;1 (5) inconsistent with the trial
court’s own rationale for rejecting Mr. Berhanu’s unjust enrichment claim—
because “a written or oral contract existed between the two parties and governed all
issues raised in this litigation”—which is wrong if there was no consignment
agreement or fuel supply contract between the parties; and (6) otherwise
unsupported by the evidence. The trial court’s stated reason for adopting this view—
that Landmark had its own fuel to sell or consign—is of no moment. Neither the
fuel supply contracts nor the consignment agreements precluded Landmark from
supplying its own fuel. It was simply bound to do so under particular contractual
terms, which is an entirely separate question.

Landmark was thus bound by both aspects of the 2009 modifications and had
no right to retain the consignment agreement while terminating the rent abatement,
as it purported to do in its termination letters. A party cannot “affirm a contract in
part and repudiate it in part.” Travis v. Travis, 203 A.2d 173, 175 (D.C. 1964); see
also Cooper v. Cooper, 35 A.2d 921, 924 (D.C. 1944). We take no issue with the
trial court’s finding that Landmark “had the option every month to terminate the rent
abatement and revert back to” the original leases. Mr. Yuen was clear that the 2009
modifications were temporary and terminable at will. Landmark was just not
permitted to cancel the rent abatement independent of the consignment agreement
as it purported to do in its termination letters. Landmark’s right to terminate the
2009 modifications was limited to terminating them in their entirety and thereby
reverting to the original written contracts governing both lease and fuel supply terms.
In short, Landmark was free to operate under the 2009 modifications and receive gas
sale proceeds while forgoing rent, or to terminate those modifications and operate

1
While Landmark highlights that no fuel supply contracts were attached to
the assignment agreement, that is of no import under the plain terms of the
assignment agreement itself. It provides that Landmark assumed all rights and
obligations under any contracts for sale or consignment of motor fuels, “without
limitation” to whatever agreements were attached. And it is of course unsurprising
that the parties did not attach oral contracts to the assignment agreement;
Landmark’s awareness of those contracts’ existence meant that it assumed the rights
and obligations under them.
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under the written fuel supply and lease agreements, collecting rent but forgoing the
gas sale proceeds. It was not entitled to pick its half of the bargain.2

C.

What is left to determine is whether the 2009 modifications were, at some

point, jointly terminated. Having held those modifications were not severable,
contrary to the trial court’s reasoning, we leave the question of their termination for
the trial court to address in the first instance. On remand, the court should decide,
based on the parties’ actions and statements, if they terminated the 2009
modifications somewhere along the way. If they did not, it appears Mr. Berhanu
fulfilled his core obligations under the 2009 modifications: (1) he accepted gas on
a consignment basis, (2) remitted the proceeds to Landmark, and (3) paid no rent
because none was required under those modifications (save for property taxes). On
the flipside, it appears Landmark failed to pay Mr. Berhanu the commissions due
under the consignment agreement if it remained in force. In any event, these are
issues for the trial court to determine in the first instance.

D.

The parties raise a host of additional subsidiary issues. For instance,

Landmark argues the trial court erred when it did not award it late fees and interest
on any unpaid rent as contemplated in the written leases. Mr. Berhanu argues the
assignment of the 12th Street lease from Power Fuel to Landmark was ineffective
because he never provided written consent to its assignment, as required by the
lease’s terms; Landmark counters that Mr. Berhanu’s continued dealings with
Landmark, and failure to object to the assignment, waived any right he had to written
consent.

2
Landmark further contends Mr. Berhanu “did not challenge . . . Landmark’s
termination of the temporary rent abatements.” That is false. Mr. Berhanu made his
objections clear, not only by refusing to pay rent but also in a 2014 letter from his
counsel explaining that he was refusing to pay rent because he was not required to
do so under the 2009 modifications. Mr. Berhanu’s view was that the 2009
modifications were permanent, and he made clear his view that Landmark’s
description of “voluntary [rent] ‘abatements’” were “mischaracterizations.”
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We do not resolve these questions because doing so would be premature in

light of our holding above. We note, however, that the question whether Mr.
Berhanu waived his right to written consent by transacting with Landmark for some
years might be affected by the analysis above. It is true, as Landmark points out,
that Mr. Berhanu “did not object” to Power Fuel’s assignment of rights and
obligations to Landmark, and Mr. Berhanu operated with Landmark as its landlord
and fuel supplier for some years. But his conduct of paying no rent and remitting all
gas sale proceeds suggests a waiver of the assignment of rights and obligations under
the 2009 modifications to the contracts—which, as we have held, is what was
assigned to Landmark. His conduct did not suggest any acquiescence to Landmark’s
view that Mr. Berhanu was both required to pay rent and remit all proceeds from gas
sales under a consignment arrangement.

III.

We vacate the Superior Court’s judgment and remand for further proceedings
consistent with this opinion.

So ordered.
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ENTERED BY DIRECTION OF THE COURT:

JULIO A. CASTILLO
Clerk of the Court

Copies to:

Honorable Michael L. Rankin

Director, Civil Division

Copies e-served to:

Don Allen Resnikoff, Esquire

Alphonse M. Alfano, Esquire

Matthew M. Moore, Esquire