345 Prop. Owner, LLC v. U.S. Postal Serv.

• Decision Date: 09 October 2019
• Docket Number: Case No. 18-CV-1476
• Parties: 345 PROPERTY OWNER, LLC, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

345 PROPERTY OWNER, LLC, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.

Case No. 18-CV-1476

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

October 9, 2019

DECISION AND ORDER ON DEFENDANT'S MOTION TO DISMISS

345 Property Owner, LLC ("the Owner") filed an Amended Complaint against the United States Postal Service ("USPS") alleging breach of USPS's lease of the Owner's property at 345 West St. Paul Avenue in Milwaukee, Wisconsin ("the Property").¹ (Docket # 26.) USPS moves to dismiss the Amended Complaint on the grounds that it fails to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons that follow, USPS's motion to dismiss will be granted.

BACKGROUND

The Owner alleges that USPS entered into a lease for the Property effective April 1, 1970. (Id. ¶ 5.) The original lease term expired in 2000, but the lease granted USPS eight successive five-year renewal options and is still in force. (Docket # 26-1 at 1; Docket # 26 ¶¶ 6-7.) The Owner alleges that, pursuant to the terms of the lease, USPS is obligated to maintain the Property. (Id. ¶ 8.) Section 7(a) of the lease states as follows:

The Government shall, unless herein specified to the contrary, keep the [ ] premises in good repair and tenantable condition, except that theGovernment shall not be obligated to repair the [ ] premises in the event of total or partial damage thereto or destruction thereof caused by fire or other casualty or calamity, Acts of God, acts of the public enemy, or acts of a stranger, the repair of which said damage or destruction shall remain the obligation of the Lessor. . . . The term "repair" as used in this subparagraph includes repairs of every character, exterior and interior, structural and nonstructural, ordinary as well as extraordinary, foreseen as well as unforeseen, replacements and renewals. . . . The Government's responsibilities as stated herein shall be fulfilled at such time and in such manner as it considers necessary to keep the demised premises, equipment, fixtures, improvements and appurtenances in proper condition.

(Docket # 26-1 at 2.) The lease also contains the following clause:

Prior to expiration or termination of this Lease the Government shall, if required by the Lessor by notice in writing sixty days in advance of such termination, restore the premises to as good condition as that existing at the time of entering upon the same under this Lease, reasonable wear and tear and damages by the elements or by circumstances over which the Government has no control, excepted.

(Id. at 3 ¶ 9.)

On or about September 13, 2017, USPS' agent, EMCOR, sent the Owner a letter identifying deficiencies in the Property as follows: "There is grass, mold, plants, bird droppings and debris all over the roof. There are a couple roof leaks on the north side. Need roof maintenance and repairs." (Id. ¶ 11.) The letter requested that the Owner "have this work completed no later than 10/13/2017." (Id. ¶ 12.) The Owner contacted EMCOR to inform EMCOR that all maintenance and repair obligations remained with USPS, not the Owner. (Id. ¶ 15.) EMCOR acknowledged this fact. (Id. ¶ 16.) However, nothing happened to remediate the issues raised. (Id. ¶ 17.)

On March 9, 2018, a representative from the Owner toured the Property. (Id. ¶ 18.) On or about April 16, 2018, the Owner sent USPS a letter detailing the issues visually observed and requesting action to address them. (Id. ¶ 19.) The issues included the following: the north roof was covered in moss, plants, birds, and bird droppings; safety netting was installed under various ceilings; epoxy coating on the second floor was wornaway, allowing water to infiltrate the concrete slab on the second floor drive floor and permitting dripping to the floors below; and the east ramp displayed signs of concrete deterioration. (Id. ¶ 20.) USPS did not respond to the April letter. (Id. ¶ 21.) The Owner also expressed concerns about alleged structural deficiencies in the seawall. (Id. ¶ 22.)

On or about July 10, 2018, the Owner sent a notice of default to USPS pursuant to Wis. Stat. §§ 704.17(3) and 704.21(1)(3), providing a deadline of August 15, 2018 to remediate the issues. (Id. ¶ 23.) On July 11, 2018, a representative of USPS replied via email that USPS was looking into remedying the issues. (Id. ¶ 24.) On March 19, 2019, USPS allowed the Owner's engineers to inspect the premises. (Id. ¶ 30.) The engineers observed structural damage to the seawall. (Id. ¶ 31.) On March 21, 2019, USPS produced an investigation report relating to the seawall dated February 14, 2019. (Id. ¶ 32.) The Owner alleges that the structural integrity of the seawall is compromised and requires further inspection and immediate repair. (Id. ¶ 36.)

STANDARD OF REVIEW

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) challenges the sufficiency of the complaint on the basis that the plaintiff has failed to state a claim upon which relief can be granted. A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme Court has interpreted this language to require that the plaintiff plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). In Ashcroft v. Iqbal, the Supreme Court elaborated further on the pleadings standard, explaining that a "claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," though this "standard is not akin to a 'probability requirement.'" 556 U.S. 662, 678 (2009).The allegations in the complaint "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (internal citation omitted).

When determining the sufficiency of a complaint, the court should engage in a two-part analysis. See McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). First, the court must "accept the well-pleaded facts in the complaint as true" while separating out "legal conclusions and conclusory allegations merely reciting the elements of the claim." Id. (citing Iqbal, 556 U.S. at 680). Next, "[a]fter excising the allegations not entitled to the presumption [of truth], [the court must] determine whether the remaining factual allegations 'plausibly suggest an entitlement to relief.'" Id. (citing Iqbal, 556 U.S. at 681). As explained in Iqbal, "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." 556 U.S. at 679. All factual allegations and any reasonable inferences must be construed in the light most favorable to the nonmoving party. Price v. Bd. of Educ. of City of Chicago, 755 F.3d 605, 607 (7th Cir. 2014).

APPLICABLE LAW

Although federal law governs obligations to and rights of the United States under its contracts, federal courts may look to state law to supply the rules of decision where federal law is silent. Powers v. U.S. Postal Service, 671 F.2d 1041, 1043 (7th Cir. 1982) (citing United States v. Fox, 94 U.S. 315, 320 (1877)). As there is no federal common law of landlord and tenant, the Seventh Circuit has elected to apply state law to disputes under postal service leases. Powers, 671 F.2d at 1042-46; cf. U.S. Postal Service v. Ester, 836 F.3d 1189, 1195 (9th Cir. 2016) (applying state law to postal service lease). Under Powers, Wisconsin supplies the rules for resolving this dispute. However, because Wisconsin law is in harmony with generalprinciples of contract interpretation and the common law of landlord and tenant on the relevant points, as shown below, little turns on this distinction.

ANALYSIS

The heart of the Owner's complaint is that USPS breached its lease with the Owner by failing to keep the Property "in good repair and tenantable condition" as required by Section 7(a) of the lease. Count One seeks eviction under Wisconsin law. (Docket # 26 ¶¶ 37-45.) Count Two seeks monetary damages for an unlawful taking. (Id. ¶¶ 46-59.) Count Three seeks monetary damages for breach of contract. (Id. ¶¶ 60-67.) Count Four seeks monetary damages for breach of the implied covenant of good faith and fair dealing. (Id. ¶¶ 68-72.) Count Five seeks a declaratory judgment. (Id. ¶¶ 73-76.) However, the Amended Complaint fails to state a claim on any of these counts.

1. Counts One, Two, and Three: Breach of the Lease

The first three counts rely on the Owner's claim that USPS breached the lease by failing to keep the Property in "good repair and tenantable condition" as required by Section 7(a) of the lease. (Id. ¶¶ 38, 48, 63.) To support this claim, the Owner alleges that USPS failed to remedy the following "maintenance deficiencies":

a. the North roof was covered in moss, plants, birds, and bird droppings;

b. safety netting was installed under all exterior concrete coffered ceilings on the first floor;

c. safety netting was installed under the entire maintenance shop ceiling;

d. epoxy coating on the second floor was worn away, which allowed water to infiltrate the concrete slab on the second floor drive floor and permitted dripping to the floors below;

e. and the East ramp displayed obvious signs of concrete deterioration.

(Id. ¶ 20.) The Owner also alleges that there are structural deficiencies in the seawall due to failure to maintain it. (Id. ¶ 22.)

USPS argues that the Owner has not pleaded a plausible claim for breach of the lease. USPS argues that the Owner misinterprets USPS's maintenance obligations under thelease and that the deficiencies alleged cannot constitute a breach of the lease, and therefore these three counts must be dismissed. (Docket # 27-1 at 9, 14-15, 15-21.)

A claim for breach of contract requires a contractual duty, a breach of that duty, and damages flowing from that breach. Matthews v....