Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Architect, realtor allegedly used sham landmark designations to block projects by property developer, (Jul 23, 2015)

By Linda O’Brien, J.D., LL.M.

An architect and a realtor have engaged in anticompetitive conduct by utilizing the historic landmark designation process to obstruct and delay the home renovation projects by a competing property developer, according to a complaint filed in the federal district court in Washington, D.C. (Gross v. Wright, July 21, 2015).

Jay Gross and his company—11th Property Group—purchase, renovate, and develop distressed residential properties in the Washington, D.C. area. Stephen Wright is an architect and manager of the architecture firm, Leo A. Daly Company. Thomas Woodruff is a realtor and partner in real estate brokerage firm, Central Properties, LLC. Wright, Leo A. Daly Co., Woodruff, and Central Properties compete directly with Gross’ business of buying, selling, developing, and renovating properties throughout the District of Columbia.

The complaint states that, in 2014, Gross purchased a property in the Grant Circle neighborhood, adjacent to a property occupied by Wright and Woodruff. With the intention of rehabilitating the single family home for use consistent with the residential zoning area, Gross obtained the necessary permits and began the renovations, which included raising the roof to create a three-unit residential structure. During the renovation, Gross received a request from Woodruff for information about his property development plans and invited Gross to meet and discuss those plans. However, Woodruff misrepresented the purpose of the meeting and immediately criticized Gross for his plans for the property improvements.

In January, Wright and Woodruff allegedly began formulating a plan to eliminate Gross’ competing business. First, the defendants contacted neighboring residents as well as representatives of their local Advisory Neighborhood Committee (ANC) to use the historic district and landmark process to block Gross’ plans to turn his property into a three-unit structure. Such historic district designation would prevent Gross from raising the roof on his property and cost Gross hundreds of thousands of dollars. The defendants also were aware that the D.C. Zoning Commission was planning to amend municipal zoning rules so that Gross would not be able to renovate his property into a three-unit structure under the amended rules, according to the complaint.

The complaint also alleges that Wright and Woodruff arranged covert ANC meetings to foster animosity and resistance among neighboring residents and to spur support for their application to designate Gross’ property as an historic landmark. The defendants also used their professional clout to coerce their local ANC and the D.C. Office of Planning to hold meetings directly related to Gross’ rights in his property and ensured that Gross received no notice of these meetings.

In February 2015, the defendants submitted an application to the Historic Preservation Review Board (HPRB) of the Historic Preservation Office (HPO) to have the Grant Circle neighborhood designated as a historic district and the Gross property designated as a historic landmark. The pending applications froze all permitted activity at Gross’ property, and he was unable to obtain new building permits or continue work on the property. Gross was not initially aware of the defendants’ plan to file a historic landmark application, did not support the filing of such application, and opposed the designation of his property as a historic landmark by the HPRB, Gross claims.

In April 2015, the HPRB denied the historic landmark application for Gross’ property, noting the suspicious fact that Wright and Woodruff’s nearly identical property was not also the subject of a landmark application. Although the application was denied, the defendants accomplished their goal of freezing all progress toward in the issuance of building permits for Gross’ property. In an attempt to obstruct other projects by Gross in the D.C. area, in May 2015, the defendants contacted the Department of Consumer and Regulatory Affairs (DCRA) and suggested that the permits for other Gross properties under construction be reviewed.

Gross contends that the defendants’ historic landmark applications were not rooted in preservation. Instead, they seek to selectively preserve properties in a manner that suits their pecuniary and professional interests. Wright and Woodruff previously remodeled and renovated their own residence and did not similarly apply for historic landmark designation for their residence, which was architecturally and historically identical to Gross’ property. As a result of the defendants’ interference with his business, Gross was forced to spend time and resources resolving the suspended building permits, historic district and landmark designations, and damage to his reputation, the complaint charged.

The plaintiffs assert claims for tortious interference with prospective advantage, abuse of process, malicious prosecution, civil conspiracy, and violations of the Clayton Act. The action seeks damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:15-cv-01166-CRC.

Attorneys: Roger C. Simmons (Gordon & Simmons, LLC) for Jay Gross and 11th Property Group, LLC.

Companies: 11th Property Group, LLC; Leo A. Daly Company; Central Properties, LLC

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