Spodek v. U.S. Postal Service

• Decision Date: 09 February 1999
• Docket Number: No. 98-CV-10705-MEL.,98-CV-10705-MEL.
• Citation: 35 F.Supp.2d 160
• Parties: J. Leonard SPODEK d/b/a Nationwide Postal Management, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
• Court: U.S. District Court — District of Massachusetts

35 F.Supp.2d 160

J. Leonard SPODEK d/b/a Nationwide Postal Management, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.

No. 98-CV-10705-MEL.

United States District Court, D. Massachusetts.

February 9, 1999.

Stephen H. Oleskey, Hale & Dorr, Boston, MA, for plaintiff.

Andrew L. Freeman, U.S. Postal Service Law Dept., Windsor, CT, for defendant.

MEMORANDUM AND DECISION

LASKER, District Judge.

Leonard Spodek d/b/a Nationwide Postal Management ("Nationwide") sues the United States Postal Service (the "Postal Service" or "USPS") for unpaid rent and real estate taxes arising out of the Postal Service's holding over after the expiration of its lease at the Dorchester Center Station postal facility in Dorchester, Massachusetts. Nationwide also seeks a declaration as to the legal holdover rental rate. The Postal Service moves to dismiss the plaintiff's action pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. The motion is denied.

I.

On December 15, 1965, the Postal Service entered into a lease agreement with Nationwide's predecessor in interest, the John T. Rogan Trust ("Rogan Trust"), for use of the property located at 450 Talbot Avenue in Dorchester, Massachusetts as a postal facility. The lease, as amended, provided for a base term of ten years, commencing January 1, 1966. It also gave the Postal Service four successive five-year renewal options at the end of the base term, each of which was exercised by the Postal Service. The lease also provided that the Postal Service was responsible for payment of all real estate taxes associated with the property.

On March 4, 1995, the Rogan Trust sold the premises to Nationwide. On November 6, 1995, Nationwide notified the Postal Service by letter that the 1965 lease agreement was due to expire on December 31, 1995, and that if the Postal Service continued to occupy the Dorchester facility thereafter, without executing a new lease, the tenancy would be that of a holdover tenancy with a monthly rental rate of $20,000, the Postal Service to be responsible for all expenses, including real estate taxes.

The lease expired December 31, 1995. No further lease agreement has been executed by the parties. Nevertheless, the Postal Service has remained in possession of the premises since January 1, 1996 as a holdover tenant. However, on its unilateral determination, the Postal Service has not paid the holdover rent of $20,000 per month specified by Nationwide in the November 8, 1995 letter. Nor has the Postal Service paid any real estate taxes on the property even though it was obligated to do so under the original lease. Instead, it has paid only $7,362.50 per month, the amount it deems to be the fair market monthly rental value of the premises.

II.

The Postal Service contends that this Court lacks subject matter jurisdiction of the case. It argues first that this Court lacks jurisdiction because of the provisions of the Tucker Act, 28 U.S.C. §§ 1346(a)(2), 1491(a)(1) (1998), which give exclusive jurisdiction to the Court of Federal Claims over claims against the government for just compensation in excess of $10,000. It submits that by holding over it has exercised its power of eminent domain under Section 401(9) of the Postal Reorganization Act, 39 U.S.C. § 401(9) (1998). Therefore, it asserts that the true character of the plaintiff's claim is for just compensation under the Fifth Amendment against the Postal Service for "inversely condemning" the plaintiff's property, which, because it exceeds $10,000, can only be asserted in the Court of Federal Claims.

Alternatively, the Postal Service alleges that if the plaintiff's action is construed as a breach of contract claim, this Court nevertheless lacks jurisdiction because of the provisions of the Contracts Dispute Act ("CDA"), 41 U.S.C. §§ 601-613, which divests district courts of jurisdiction over government contract disputes, prescribing instead an administrative procedure with appeals to the Court of Federal Claims and the Court of Appeals for the Federal Circuit.

Nationwide responds that neither Tucker Act nor the CDA precludes this Court's subject matter jurisdiction. It argues that its claim is an ordinary breach of contract claim against the Postal Service in its own name based on the Service's failure to vacate the Dorchester facility at the end of the lease term. It follows, according to Nationwide, that the Tucker Act does not apply and that this Court has jurisdiction pursuant to section 409(a) of the Postal Reorganization Act, which confers "original but not exclusive jurisdiction over actions brought by and against the Postal Service in the United States District Courts," 39 U.S.C. § 409(a) (1998).

As to the Contract Disputes Act, Nationwide argues, first, that the present dispute is not covered by the CDA because it relates to a contract — the original 1965 lease — which predates the effective date of the CDA. Second, it asserts that even if the CDA applies, the statute is not an exclusive remedy. It contends that the PRA provides an independent statutory basis for jurisdiction in the district courts over suits to which the Postal Service is a party.

The case thus presents three separate questions of law: (1) whether the plaintiff's action is for compensation for the Postal Service's taking by inverse condemnation or is a contract action such that the PRA provides an independent statutory basis for jurisdiction in this Court; (2) if the claim is for breach of contract, whether the dispute relates to a government contract that is covered by the CDA and therefore only the Court of Federal Claims may hear the case on appeal from administrative adjudication; and (3) if the CDA applies, whether the statute is an exclusive remedy, preempting the PRA.

III. Tucker Act

The Tucker Act grants the Court of Federal Claims exclusive jurisdiction over

any claim against the United States [in excess of $10,0000] founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.

28 U.S.C. §§ 1346(a)(2); 1491(a)(1) (1998).¹ See also Transcapital Financial Corp. v. Office of Thrift Supervision, 44 F.3d 1023, 1024 (D.C.Cir.1995).

The Postal Reorganization Act of 1970 ("PRA"), 39 U.S.C. §§ 101-5605, waives the sovereign immunity of the Postal Service and authorizes it "to sue and be sued in its official name," 39 U.S.C. § 401(1). It also grants jurisdiction to the district courts. Section 409(a) provides that:

the United States district courts shall have original but not exclusive jurisdiction over all actions brought by or against the Postal Service.

39 U.S.C. § 409(a) (1998).

The prevailing view is that the coexistence of the Tucker Act and the PRA provides jurisdiction in the district courts over contract actions in which the Postal Service is a party regardless of the amount involved. See Benderson Development Co., Inc. v. United States Postal Serv., 998 F.2d 959, 962 (Fed.Cir.1993) (recognizing that "the Postal Service, in contradistinction to other federal entities may sue and be sued on contract claims in courts other than the Court of Federal Claims"); Licata v. United States Postal Serv., 33 F.3d 259, 264 (3d Cir.1994) (holding that the Tucker Act does not deprive the district court of jurisdiction over contract suits against the Postal Service) (citations omitted); Jackson v. United States Postal Serv., 799 F.2d 1018, 1022 (5 Cir.1986) (noting that before the enactment of the CDA, "the district courts enjoyed concurrent jurisdiction over suits against the [Postal Service] in eo nomine for breach of a [Postal Service] contract, regardless of the amount involved"); cf. Continental Cablevision of St. Paul, Inc. v. United States Postal Serv., 945 F.2d 1434 (8th Cir.1991) (noting that the Tucker Act did not apply to a contract dispute between the Postal Service and plaintiff-tenant because "[t]he Postal Service is a legal entity separate from the United States"). But see Peoples Gas, Light and Coke Co. v. United States Postal Serv., 658 F.2d 1182 (7th Cir.1981) (holding that 39 U.S.C. § 409(a) of the PRA does not provide an independent basis for district court jurisdiction).

Because the Complaint here seeks damages exceeding $10,000, whether the Tucker Act authorizes subject matter jurisdiction over Nationwide's claim in this Court depends upon the nature of its claim. If the Postal Service's holdover constitutes an "inverse" condemnation, the Tucker Act applies and the Court lacks jurisdiction. On the other hand, if Nationwide's claim is a contract action, the Court has jurisdiction pursuant to section 409(a) of the PRA.

In Benderson, the Federal Circuit held that the district court erred in characterizing the plaintiff's action against the Postal Service as a takings claim and accordingly vacated the district court order transferring the complaint to the Court of Federal Claims. 998 F.2d at 961. The appellate court explained that in determining the nature of a claim against the Postal Service the inquiry should focus on the Service "at the time it took the action that now must be construed as either a taking or a contract action." Id. at 963. It commented that "the Postal Service should not be able to rely on a retroactive claim of inverse condemnation merely to secure a convenient choice of forum (and perhaps remedy), particularly when Congress has indicated that inverse condemnation by government agencies is disfavored." Id. Finding that there were no "objective indicia" of a decision by the Postal Service to use its condemnation power, the court concluded that the dispute was contract-based and that the district court had subject matter jurisdiction. Id.

The ruling applies here. In the instant case, the Postal Service has not pointed to any "objective indicia" that it was exercising its takings power...