Thanet Corp. v. United States

• Decision Date: 24 January 1979
• Docket Number: No. 263-76.,263-76.
• Citation: 591 F.2d 629
• Parties: THANET CORPORATION v. The UNITED STATES.
• Court: U.S. Claims Court

591 F.2d 629

THANET CORPORATION v. The UNITED STATES.

No. 263-76.

United States Court of Claims.

January 24, 1979.

Garrett M. Heher, Princeton, N.J., attorney of record, for plaintiff. Smith, Stratton, Wise & Heher and Todd D. Johnston, Princeton, N.J., of counsel.

Thomas L. McKevitt, Washington, D.C., with whom was Asst. Atty. Gen. James W. Moorman, Washington, D.C., for defendant. Dorothy R. Burakreis, Washington, D.C., of counsel.

Before DAVIS, KASHIWA and BENNETT, Judges.

ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND PLAINTIFF'S CROSS MOTION FOR SUMMARY JUDGMENT

KASHIWA, Judge:

This case comes before the court on defendant's motion and plaintiff's cross motion for summary judgment. The plaintiff seeks $900,000 in damages for an alleged breach of contract by the United States Postal Service. Having considered the briefs, exhibits, and arguments submitted by both parties, we find in favor of the Government.

The facts are undisputed. On April 4, 1967, an instrument was executed by the Thanet Corporation and submitted to the Postal Service. It offered a five-acre site for the construction of a leased post office in Princeton, New Jersey. Paragraph 9 of the agreement recited the parties' understanding that the Government proposed to transfer and assign its rights to a "lease contractor" who would construct and lease back the postal facility to the Government. The lease was to run for a "primary term" of 20 years, commencing on the day of the assignment to the successful lease contractor. No rent was due until commencement of the primary term. If a responsible lease contractor could not be found within 18 months, the agreement was to terminate.

Paragraph 18 of the contract required the lease contractor to comply with all applicable state, county, and municipal regulations in constructing the post office on the demised premises. Paragraph 18A provided that the agreement was subject to any necessary approval by Princeton Township municipal authorities of the construction of a post office on the premises.

In June and July of 1967 Thanet filed two alternative applications with the Princeton Township Board of Adjustment which sought zoning variances consistent with the use of the land for construction of a post office. On September 7, 1967, the Board denied the applications. On October 20, 1967, Thanet filed a complaint in the Superior Court of New Jersey seeking a reversal of the decision. On December 18, 1967, Thanet filed an amended complaint adding a second count which sought a declaration that the property in question would not be subject to the zoning authority of Princeton Township as long as it was actually used by the Postal Service or its assignee as a general post office.

To eliminate some of the technical defenses in the court proceedings, Thanet suggested revisions of paragraphs 18 and 18A. These revisions were intended to make it clear that the Government did not agree to waive any immunity it might enjoy from state or local regulations. On August 8, 1968, the agreement, as amended, as well as an addendum dated July 17, 1968, was executed by R. W. Wilson, Assistant Director for Realty Management, on behalf of the Postal Service. James F. Noone, Chief of the Real Estate Branch of the Postal Service's Philadelphia Region, notified Thanet of the acceptance by letter dated August 13, 1968.

As previously noted, paragraph 10 of the agreement provided that if the Government was unsuccessful in its efforts to obtain a responsible lease contractor within 18 months, the agreement would terminate. That period was to begin on April 4, 1967, and end on October 4, 1968. The addendum to the contract extended the period for an additional 12 months, to October 4, 1969. The possibility of a second 12-month extension was also raised in the addendum. This second extension could only be invoked by the Government, and the Government's right to extend the period was conditional.

On January 9, 1969, the New Jersey Superior Court, Trial Division, granted Thanet's motion for summary judgment on the ground that the property at issue was not subject to any of the provisions of the zoning and land subdivision ordinances of Princeton Township. Thanet Corp. v. Board of Adjustment, 104 N.J.Super. 180, 249 A.2d 31 (1969). Princeton Township appealed. Upon learning that the Township authorities would appeal the trial court's decision, Thanet twice advised the Postal Service that it was unwilling to continue the court battle unless the Service assumed the litigation expenses. The Postal Service did not respond to these letters.

By letter dated November 5, 1969, Thanet's president, Ridgely Cook, advised the Postal Service that if he did not have a signed extension of the agreement by November 15, 1969, he would request that the appeal be dropped. Again, the Postal Service did not respond to Thanet's request.

On December 10, 1969, the New Jersey Superior Court, Appellate Division, affirmed the decision of the trial court. 108 N.J.Super. 65, 260 A.2d 1 (1969). The Township sought to have the Supreme Court of New Jersey review the Appellate Division ruling.

By letter dated February 10, 1970, Thanet's president advised the Postal Service that due to its lack of interest and financial support Thanet would neither extend the lease nor continue the appeal in the New Jersey Supreme Court. On that same day, the court denied certification. 55 N.J. 360, 262 A.2d 207 (1970). After learning that the court had refused to hear the case, Mr. Cook wrote a letter to the Postal Service on February 12. In that letter he stated:

Would you please contact me at your earliest convenience to let me know whether you plan to go ahead with the post office. If so I would like to negotiate a lease with you.

In response to Mr. Cook's letter, Mr. Noone advised him that the whole project was being reviewed at the headquarter's level.

By letter of March 30, 1970, Thanet's attorney informed the Postal Service that his client believed that the agreement remained in effect. He explained that Thanet would look to the Government for full performance if the United States Supreme Court either denied certiorari or affirmed the holding of the New Jersey courts.

In response to an inquiry by Township authorities, the Postal Service pledged, in a letter dated April 27, 1970, that it would not seek to have a post office constructed on any site unless it received the approval of all municipalities and agencies. The Township allowed the time in which to petition the United States Supreme Court for certiorari to expire on May 10, 1970.

Mr. Noone informed Thanet on June 30, 1970, that the Postal Service would not further consider the construction of a postal facility under their agreement. He stated that the Government felt that it would not be able to obtain a responsible lease contractor by using the Thanet site. Thanet filed this petition on June 28, 1976.

Plaintiff's theory of the case is that the instrument accepted by the Government in August 1968 was a bilateral contract. The period for performance of the agreement, as extended by the addendum, was 30 months. Under certain circumstances, the period for performance could be extended by the Government for an additional 12 months. Plaintiff argues that the Government exercised its option to extend the period for performance for the additional one-year period, until October 4, 1970. Mr. Noone's letter of June 30, 1970, notifying Thanet that the Government would not perform under the contract, is thus said to be a material breach of the agreement.

Defendant describes the instrument in question as an option to lease rather than a bilateral contract. It argues that the Government made no promise to perform, and was under no duty to perform until it assigned the lease to a responsible lease contractor. The defendant further argues that even if it had a duty to make a good faith effort to find a lease contractor, such duty terminated on October 4, 1969, when the time for performance expired in accordance with the terms of the addendum. It denies that the Government exercised its option to extend the period for performance. Since the contract terminated on October 4, 1969, and this petition was filed on June 28, 1976, the defendant asserts that the claim is barred by the statute of limitations. 28 U.S.C. § 2501 (1976).

Fortunately, we need not characterize the agreement in question as either a bilateral contract or an option to lease. While we note our agreement with the Government's statement that this is "an unusual legal instrument," the precise label which we attach to it is not important to our holding. The central purpose of the transaction — to allow the Government to find a contractor which would lease the land, build a post office, then lease the land and the building back to the Government — was understood by both parties. Thanet clearly recognized the necessity of obtaining any legally necessary zoning variances for construction of a post office on the proposed site. The parties agreed to a 30-month time period within which the Government could assign the lease to a responsible lease contractor. The right to extend the period for one additional year was reserved to the Government. This right, however, was subject to a condition precedent.

The language of the July 17, 1968, addendum is crucial to our decision. It provided:

If Princeton Township authorities or the courts should decide that a postoffice sic can be constructed on the demised premises within the period, the United States Government will be allowed to extend the time for another 12 months after the first extension. All other terms and conditions in the lease are then same sic.

This language controls the disposition of the two primary issues in this case. First, whether the condition precedent to the Government's right to extend the period of performance was fulfilled on October 4, 1969. Second, if the condition was fulfilled, whether the...