Lublin Corp. v. United States

• Decision Date: 19 September 2012
• Docket Number: No. 07-206C,07-206C
• Parties: LUBLIN CORPORATION, t/a CENTURY 21 ADVANTAGE GOLD, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

LUBLIN CORPORATION,t/a CENTURY 21 ADVANTAGE GOLD, Plaintiff,

v.THE UNITED STATES, Defendant.

No. 07-206C

United States Court of Federal Claims

Filed: September 19, 2012

Government contract; Trial; Alleged breach

of confidentiality agreement; Authority to

contract; Breach; Use of circumstantial

evidence to demonstrate breach; Plaintiff

failed to demonstrate that termination of

subcontract resulted from agency's breach

of an alleged confidentiality agreement.

OPINION

William F. Thomson, Jr., Gilbert & Thomson Law Offices, Fairless, PA, for plaintiff.

A. Bondurant Eley, United States Department of Justice, Washington, D.C., with whom was Assistant Attorney General Tony West, for defendant.

ALLEGRA, Judge:

"Even the clearest and most perfect circumstantial evidence . . .

ought to be received with great caution."¹

Lublin Corporation, t/a Century 21 Advantage Gold (Lublin or plaintiff), a real estate broker, was a subcontractor on a contract that the Department of Housing and Urban Development (HUD) had with another company. Lublin alleges that, in the course of a programmatic review of that prime contract, HUD officials agreed to keep Lublin's answers to various questions confidential. Lublin claims that, despite these assurances, HUD officials leaked its responses to the prime contractor, causing the latter to terminate Lublin. In making this claim, Lublin relies entirely on circumstantial evidence, emphasizing that it was terminatedbarely two hours after its officials met with HUD. Following a trial held in Philadelphia, PA, and for the reasons that follow, the court finds plaintiff has failed to meet its burden of demonstrating that any breach of an alleged confidentiality agreement occurred.

I. FINDINGS OF FACT

Based upon the record, including the stipulation of facts, the court finds as follows:

Lublin is a Pennsylvania corporation that sells real estate under the name Century 21 Advantage Gold. It is managed and owned by its Chief Executive Officer, William Lublin, with the assistance of Ronald Rudolph, a realtor and associate broker.

On August 1, 2004, HUD entered into a contract with Hooks Van Holm, Inc. (HVH), a real estate management corporation. That contract established HVH as HUD's prime contractor for managing, marketing, and overseeing the sale of HUD-owned single family homes in Pennsylvania. HVH is a Georgia corporation that, at the time of the contract in question, was managed by Chief Executive Officer Linda Van Holm and Vice-President Robert Hooks.

On September 13, 2004, HVH entered into a subcontract with Lublin to provide broad listing broker (BLB) services for HVH in Pennsylvania. Under the subcontract, plaintiff was to list for sale HUD-owned single family homes (which were managed by HVH) on a local Multiple Listing Service (MLS), and to field inquiries regarding the properties. Plaintiff received a listing fee of $321 for each property that closed. The subcontract allowed plaintiff to place its company signs at the properties listed, a valuable right to Lublin not only for promotional purposes, but also because its brokers could earn a separate HUD commission of up to five percent for obtaining a buyer. The subcontract's initial term ran from September 13, 2004, through October 1, 2005, but could be extended for additional twelve-month periods "at the sole option of Hooks Van Holm, Inc." The subcontract's termination provision provided:

Either party may cancel this Agreement with or without cause by giving a 30-day written notice via certified mail to the other party. At Hook Van Holm, Inc.'s sole discretion, this Agreement may be terminated with 72 hours notice if the SubContractor is not performing to the terms of the Agreement or if changes occur in HUD policies.

In the early part of 2005, HVH learned from other brokers soliciting its business that it could obtain the BLB services that Lublin was providing at a much lower price. While it believed that Lublin's performance under the subcontract had been adequate, HVH decided to advertise on its website for a new BLB broker for the Pennsylvania region. Mr. Lublin discovered this on or about February 28, 2005, shortly before Ms. Van Holm called him to discuss renegotiating the subcontract to reduce the listing fee from $321 to $100. While the parties disagree as to the substance of this conversation, a preponderance of the evidence supports a finding that Mr. Lublin refused to reduce his company's fee. On March 9, 2005, Mr. Hooks met with Mr. Lublin and Mr. Rudolph. The parties again differ as to what transpired atthis meeting. Messrs. Lublin and Rudolph claim that they verbally agreed to reduce their listing fee to the $100 figure requested; Mr. Hooks indicates that the parties did not discuss this topic at all, but rather discussed who should be responsible for paying the City of Philadelphia for use and occupancy certificates. Again the evidence favors Mr. Hooks on this count.² Following this meeting, Mr. Rudolph sent an email to a number of HVH employees about the certificate issue, prompting Mr. Hooks to ask Mr. Rudolph to refrain from communicating with HVH staff without prior permission.

On March 21, 2005, in an effort to give Mr. Lublin a second chance to accept the lower fee, Mr. Hooks faxed Lublin a new subcontract that provided for a $100 listing fee. This subcontract made several other significant changes, among them removing plaintiff's signage rights.³ Mr. Lublin testified that he does not remember receiving a copy of the new contract, but also testified that if he had, "[i]t would have been signed . . . and faxed back." Mr. Lublin's testimony, however, is contradicted by an email he sent on March 30, 2005, in which he stated to HVH officials, "[w]e have already faxed you back the March contract." Despite this statement, plaintiff did not introduce into evidence a signed copy of the new subcontract. The court finds incredible Mr. Lublin's claim that he either never received or, alternatively, received and sent back signed a new subcontract.⁴ It credits instead Mr. Hooks' testimony (supported by several emails) that a subcontract was sent to Mr. Lublin, but never received back.

When Mr. Lublin did not return the new subcontract, Ms. Van Holm decided to investigate how to terminate HVH's contract with Lublin. On March 24, 2005, Ms. Van Holm sent an email to the company's outside legal counsel (at the law firm of Greenberg Traurig), indicating:

I need to terminate a contract for a Listing Broker, they had one of the old contracts. We anticipate problems with them. How do you suggest we word thetermination letter? [There is] a potential law suit over listing[s] they currently have and that will be switched over to the new listing broker.

Ms. Van Holm's communication did not identify Lublin as the subcontractor in question. While at this time, HVH was still somewhat undecided as to whether to terminate plaintiff, it was prepared to do so if it did not hear back from Lublin soon regarding the revised subcontract. Later on March 24, 2005, Mr. Hooks received an email from Michael Hunter of Hunter Realty, a listing broker who offered to perform the same services being supplied by Lublin. That same day, Mr. Hooks responded to Mr. Hunter expressing interest in contracting Hunter Realty and indicated to Mr. Hunter that HVH's program manager (Kia Williams) would be contacting him. Another email indicates that Ms. Williams, in fact, contacted Mr. Hunter that same day, providing him with her contact information.

On the morning of March 25, 2005, HVH's counsel requested a copy of the listing broker agreement so that she could review the termination provision in the contract. She also asked for more details as to why the BLB relationship was being terminated. That same day, Ms. Van Holm provided her counsel with a copy of Lublin's subcontract and sent an email in which she responded: "[W]e are terminating the agreement because we want to use another firm at a lower cost. We offered the opportunity to them to keep the agreement for the same lower price, but they have not responded." On March 28, 2005, Mr. Hooks contacted HVH's outside counsel, via email, asking whether the lawyer had reviewed the subcontractor contract "in regards to the most appropriate way to terminate?" The lawyer responded by separately emailing both Mr. Hooks and Ms. Van Holm (the former at 2:56 pm, the latter at 4:27 pm) indicating that, based on her reading of the subcontract, HVH could "terminate the contract" either with 72 hours notice or 30 days notice, depending upon the circumstances.⁵ The lawyer indicated that she would "be happy to draft the termination letter if you'd like." The next day, March 29, 2005, the attorney forwarded HVH a proposed letter to effectuate the subcontract termination. Neither the emails nor this draft letter specified which subcontract was to be terminated, but at trial, both Mr. Hooks and Ms. Van Holm convincingly testified that all these documents were referring to HVH's subcontract with plaintiff. When it received this draft letter, HVH decided that it would terminate Lublin and took steps to finalize a contract with Hunter Realty.

Meanwhile, on or about March 20, 2005, Kathleen Roe, a site coordinator at the Philadelphia HUD office, contacted Mr. Rudolph and asked that Lublin participate in a Quality Management Review (QMR) program. The review was designed to identify and correct problems in HUD's field operations, assessing, inter alia, the effectiveness of prime real estate contractors in implementing HUD's Property Disposition Program.⁶ While Messrs. Lublin andRudolph were concerned about participating in the QMR, they eventually agreed to meet with HUD officials at 1:30 pm on March 30, 2005. In the conversation that led to this appointment, Mr. Lublin asked Ms. Roe for assurances of confidentiality; she responded that any comments made during the QMR process would not be associated with a particular person if mentioned in the final...