Meyer Grp., Ltd. v. United States

• Decision Date: 30 April 2015
• Docket Number: No. 12-488C,12-488C
• Parties: THE MEYER GROUP, LTD., Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

THE MEYER GROUP, LTD., Plaintiff, v. THE UNITED STATES, Defendant.

No. 12-488C

United States Court of Federal Claims

April 30, 2015

Contract Disputes Act; Commercial Real Estate Brokerage Agreement; Extension Clause; Real Estate Leases; Federal Rule of Evidence 801(d)(2); Breach of Contract; Damages Equaling Brokerage Commissions On Transactions That Occurred After Brokerage Agreement Was Terminated; Expectation Damages; Market Rate for Real Estate Brokerage Commissions.

Thomas E. Shakow, Aegis Law Group, LLP, 801 Pennsylvania Avenue, N.W., Suite 740, Washington, D.C., 20004, for Plaintiff.

Stuart F. Delery, Jeanne E. Davidson, Donald E. Kinner, and Douglas T. Hoffman, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, D.C., 20044, for Defendant.

OPINION AND ORDER

WILLIAMS, Judge.

Plaintiff, The Meyer Group, Ltd. ("Meyer Group"), claims that the Government, through the Postal Regulatory Commission ("PRC") breached an exclusive real estate brokerage agreement ("Agreement") by refusing to recognize Plaintiff as its real estate broker and the "procuring cause of" certain lease transactions. Specifically, Plaintiff claims that PRC improperly failed to request that the landlord pay Plaintiff commissions based on four lease transactions that it procured for PRC, after the termination of its Agreement. Plaintiff seeks $469,516.35 in damages plus interest under the Contract Disputes Act ("CDA").¹ Pl. Post-Trial Br. 74-75.

This matter comes before the Court following a trial on liability and damages. The Court finds that PRC breached the Agreement by failing to recognize Plaintiff as its exclusive broker and procuring cause with respect to two claimed transactions. Specifically, PRC failed to inform the landlord that Meyer Group was the procuring cause of both the Seventh Amendment to the Original Lease and the first Bryan Cave Sublease. JX 27 at 2. Consequently, the landlord failed to pay Meyer Group its agreed-upon commissions. The Court finds that Meyer Group "submitted" the location of the Seventh Amendment to the Original Lease to PRC within the meaning of the Agreement prior to termination and that the Agreement covered this transaction even though it was consummated 655 days after the Agreement was terminated. The Court also finds that Meyer Group "submitted" the location of the fifth floor Bryan Cave sublease to PRC during the life of the Agreement and that the Agreement covered this transaction even though it occurred 412 days after the Agreement was terminated. The Court finds that Meyer Group did not submit the location of the second Bryan Cave sublease to PRC and that the third Bryan Cave sublease was not covered by the Agreement because it occurred 825 days after the Agreement was terminated.

To remedy this breach, the Court awards Plaintiff damages equaling the commissions Plaintiff lost - a 3.5% commission, or $402,185.76, for the Seventh Amendment to the Original Lease, and a 3% commission, or $1,923.75, for the first Bryan Cave sublease, totaling $404,109.51, plus interest calculated pursuant to 41 U.S.C. § 7109(a)(1).

Findings of Fact²

The Parties and Other Key Individuals

Meyer Group is a licensed real estate brokerage company with its principal place of business in the District of Columbia. JSF ¶ 3. William Meyer, also known as Bill Meyer, is founder, President, and owner of Meyer Group. Tr. 15:19-16:3 (Meyer). James Rayborn worked as a Senior Vice President for Meyer Group. JX 12 at 1. Meyer Group also employed Mekonnen Tekle, who performed lease audits and financial analyses for clients. JX 244 at 6:7-20. Meyer Group typically represents tenants in office lease negotiations. Tr. 16:6-8 (Meyer).

PRC is an independent agency that was known as the Postal Rate Commission until 2006, when the Postal Accountability and Enhancement Act changed the agency's name to the Postal Regulatory Commission. JSF ¶¶ 1-2. PRC's offices are located at 901 New York Ave, NW,Washington, D.C. ("the Building"). JSF ¶ 1. When Meyer Group starting working with PRC in October 2003, its main points of contact were PRC's Secretary and Chief Administrative Officer, Steve Williams, and the Deputy Secretary, Garry Sikora. After Messrs. Williams and Sikora left the agency in 2009, Meyer Group communicated first with Judy Grady, the Assistant Director of Strategic Planning, and then Shoshana Grove, who became Secretary and Chief Administrative Officer in September 2009. Tr. 197:4-25 (Goldway). Ms. Grove reported to Chairman Ruth Goldway, who was a Commissioner of PRC starting in 1998, and became Chairman in 2009. Tr. 196:15-22; 198-14-15 (Goldway).

The landlord for the Building was BP/CRF 901 New York Ave, LLC ("BP/CRF"), and Meyer Group and PRC had communications with employees of Boston Properties ("BP"), a joint venture partner in the ownership of the Building. JSF ¶¶ 6-7. Mr. Gregory Storrs was responsible for leasing vacant office space in the building. Id. ¶ 8. Mr. Storrs, who has been in commercial real estate since 1986, was BP's Director of Leasing for Washington, D.C., and was responsible for five buildings BP owned, including 901 New York Ave, NW. JX 243 at 9:2-18. The parties also communicated with Ms. Susan DeRosa, a BP property manager for 901 New York Ave, NW. Id. at 17:21-18:1.

The Start of the Relationship Between Meyer Group and PRC

Meyer Group's relationship with PRC began in 2002, when, upon learning PRC was seeking to relocate to new office space in Washington, D.C., Meyer Group began contacting PRC with information about the real estate market. Eventually Meyer Group was interviewed to become PRC's broker. JX 1-4; Tr. 17:18-23 (Meyer). In 2003, before the Agreement was signed, Meyer Group provided services to PRC, including taking PRC employees on building tours, because Mr. Meyer felt that he had a "green light" from PRC that he would be its broker. Tr. 19:11-21; 130:2-10 (Meyer). Mr. Meyer would not have taken PRC employees on tours without an understanding that Meyer Group would be engaged as a broker, because he expected a commission if PRC ended up signing a lease. Id. at 129:15-130:10.

After being selected, Meyer Group wrote the exclusive brokerage Agreement, and on October 28, 2003, Mr. Rayborn sent the Agreement to PRC's Deputy Secretary, Mr. Sikora, inviting him to make changes. JX 20 at 1; Tr. 19:11-20:23 (Meyer). PRC did not make any changes to the Agreement. Tr. 20:3-8 (Meyer). Over six months later, on May 5, 2004, the then-Chairman of PRC signed the Agreement. JX 27.

The Agreement, written from the perspective of PRC, provided, in full:

The Meyer Group, Ltd. is hereby appointed, through its representatives, William J. Meyer and James M. Rayborn, as our exclusive real estate broker and will be given the exclusive right to assist us in obtaining a lease or purchasing premises in the Washington, D.C. metropolitan area. The appointment of The Meyer Group, Ltd. is effective for a period of twelve (12) months from the date that you countersign this letter, and will continue on a calendar month-to-month basis thereafter unless The Meyer Group, Ltd. receives written notice to the contrary. Postal Rate Commission, on ten (10) days written notice to The Meyer Group, Ltd, may terminate this agreement for non-performance at any time.

The Meyer Group, Ltd. will use its best efforts to secure a location or locations satisfactory to us. We will cooperate with you in good faith in your efforts to secure satisfactory premises and to maintain this relationship. In that regard, we will, among other things, refer to The Meyer Group, Ltd. all inquiries and offerings received by us with respect to the lease of such premises, regardless of the source of such inquiry or offerings. All negotiations will be conducted solely by The Meyer Group, Ltd. and under its direction, subject to our final approval. The Meyer Group, Ltd. will have no authority to sign a lease, or make any financial commitments, on our behalf.

The Meyer Group, Ltd. will acquire information on all locations that meet our requirements. The Meyer Group, Ltd. will carefully select and present to us those locations, which are the most suitable for our purposes. If and when we decide on a location, The Meyer Group, Ltd. will negotiate the terms of the lease taking advantage of its knowledge of real estate market and the terms of the leases previously negotiated by The Meyer Group, Ltd.

We recognize that the landlord generally assumes responsibility for the commission of The Meyer Group, Ltd. and of any other licensed real estate broker whose cooperation is solicited. We will therefore cooperate and work with The Meyer Group, Ltd. in its efforts to obtain its commission. In that regard, we shall inform the landlord of The Meyer Group, Ltd.'s representation of us before entering into any lease agreement. We shall also recognize and confirm The Meyer Group, Ltd. as the procuring cause of and in the said transaction. We shall further require, as a condition of entering into a lease agreement, that the landlord undertake an obligation to pay a commission (in accordance with typical market rates) to The Meyer Group, Ltd., which obligation shall be set forth in the lease agreement or in a written side agreement.

Subsequent to the expiration or termination of this agreement, we will continue to recognize The Meyer Group, Ltd. as our exclusive broker and the procuring cause in accordance with the provisions hereof, with respect to any prospective locations that have been submitted by The Meyer Group, Ltd. during the term of this agreement. In addition, The Meyer Group, Ltd. will have thirty (30) days after expiration or termination of this agreement to provide to us a list of those prospective locations submitted to us during the term of this agreement.

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in Washington,

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