West v. US Postal Service

• Decision Date: 10 April 1995
• Docket Number: Civ. A. No. 4:94cv51.
• Citation: 907 F. Supp. 154
• Parties: Francis T. WEST, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant and Third-Party Plaintiff, v. REAL PROPERTIES MLP LIMITED PARTNERSHIP and Lincoln National Life Insurance Company, Third-Party Defendants.
• Court: U.S. District Court — Eastern District of Virginia

907 F. Supp. 154

Francis T. WEST, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant and Third-Party Plaintiff, v. REAL PROPERTIES MLP LIMITED PARTNERSHIP and Lincoln National Life Insurance Company, Third-Party Defendants.

Civ. A. No. 4:94cv51.

United States District Court, E.D. Virginia, Newport News Division.

April 10, 1995.

William Francis Stone, Jr., William F. Stone, Jr., Attorney at Law, P.C., Martinsville, VA, for Francis T. West.

Anita Kay Henry, United States Attorney's Office, Norfolk, VA, for United States Postal Service.

Hugh McCoy Fain, III, Spotts, Smith, Fain & Rawls, Richmond, VA, for Real Properties MLP, Ltd.

Raymond Lee Hogge, Jr., Williams, Kelly & Greer, P.C., Norfolk, VA, for The Lincoln National Life Insurance Company.

OPINION AND ORDER

KELLAM, District Judge.

In the opinion and order of December 6, 1994, the Court requested counsel to deal with whether the notice given Lessor of the need and necessity for repairs to the heating and air conditioning in the leased premises meets the requirements of the lease between the parties. The lease in this case called for notice to Lessor of any need for repairs and a 30 day period to commence them. Copy of that notice was to be given to the Mortgagee. If Lessor did not commence the repairs and the government wished to cancel the lease because of such a default, or if it desired to make the repairs and deduct the cost thereof from the rent, it was required to give Mortgagee written notice of Lessor's failure to commence the repairs and allow Mortgagee 30 days to commence the work or to determine whether it would make the repairs. As is hereafter shown, the government made the request of Lessor to repair the heating and air conditioning. A copy of that notice was sent to Mortgagee as required by the lease. Lessor did not take action to make the repairs. Without further notice to Mortgagee, as required by the lease, government undertook to make the repairs and thereafter called upon Lessor to reimburse it for the costs. When Lessor failed to do so, government commenced making deductions from the monthly rents then payable to Mortgagee.

The issue is whether the government (Postal Service) complied with the terms of the lease as set out in paragraph 10.

I.

The contract between the parties is unambiguous. The "United States as a contractor must be treated as other contractors under analogous situations." United States v. Standard Rice Co., Inc., 323 U.S. 106, 111, 65 S.Ct. 145, 147, 89 L.Ed. 104 (1944). "A government contract should be interpreted as are contracts between individuals with a view to ascertain the intention of the parties and give it effect accordingly, if that can be done consistent with the terms of the instrument." Hollerbach v. United States, 233 U.S. 165, 171-172, 34 S.Ct. 553, 555, 58 L.Ed. 898 (1914). "When problems of the interpretations of its contracts arise the law of contracts governs." Standard Rice, 323 U.S. at 111, 65 S.Ct. at 147. Continuing there, the court said it would "treat it United States like any other contractor and not revise the contract which it draws on the ground that a more prudent one might have been made." Id. See also United States v. American Surety Co., 322 U.S. 96, 64 S.Ct. 866, 88 L.Ed. 1158 (1944).

It is customary, where Congress has not adopted a different standard, to apply to the construction of government contracts the principles of general contract law. Priebe & Sons, Inc. v. United States, 332 U.S. 407, 411, 68 S.Ct. 123, 125-126, 92 L.Ed. 32 (1947). See also Standard Rice, 323 U.S. at 106, 111, 65 S.Ct. 145, 147.

"Suits to enforce contracts with federal agencies are governed by federal common law." Western Securities Company v. Derwinski, 937 F.2d 1276, 1280 (7th Cir.1991). See Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573; Price v. Pierce, 823 F.2d 1114, 1119-1120 (7th Cir.1987); Falls Riverway Realty, Inc. v. City of Niagara Falls, 754 F.2d 49, 55 n. 4 (2nd Cir.1985); Lawrence v. United States, 378 F.2d 452, 461 (5th Cir.1967).

In Forman v. United States, 767 F.2d 875, 879-880 (Fed.Cir.1985), the court applied federal law to the interpretation of a lease between the Postal Service and the lessor, saying "Federal law, rather than the law of the individual states, seems appropriate at least for that kind of a specialized lease." Too, in Falls Riverway Realty v. City of Niagara Falls, 754 F.2d 49, 55 (2nd Cir.1985), in footnote 4, the court said "We note that contracts with the government are governed by federal common law." citing Priebe & Sons, supra.

It seems from the above citations that federal common law will govern the interpretation and construction of the contract. However, as pointed out in the Court's opinion and order of December 6, 1994, it appears that federal common law and the law of Virginia on the construction and interpretation of contracts is about the same.

II.

The applicable provisions of the lease are set out in the opinion of the Court of December 6th, 1994, filed December 8th, 1994, and will not be restated in detail here (See page 7, Article III, 1994 opinion). As there stated, the Lessor was required to maintain the building, equipment and fixtures in good repair. If repairs were needed, Lessor was required to make them to the satisfaction of the government. Failure so to do gave the government the right to cancel the lease, or itself make the repairs. However, before attempting to cancel the lease or make the repairs with the right to reimburse itself out of the accruing rents, the government was first required to give Lessor written notice of the need of the repairs, with copy to Mortgagee, and allow Lessor 30 days to commence the repairs. If Lessor failed to take action within said time, before government could cancel the lease or itself undertake to make the repairs with the idea of deducting the costs from the rents, it was required to give Mortgagee a written notice of its intention to cancel the lease or itself make the repairs and deduct the costs thereof from the rents and allow Mortgagee an additional 30 days opportunity to commence the repairs.

The lease further provided that if the government becomes dissatisfied with Lessor's progress in making repairs, or any condition occurs which would give the government the right to cancel the lease or to incur a cost for which it could obtain reimbursement pursuant thereto, the government will not have said right or rights unless and until written notice thereof is first given to the assignee of money due or to become due hereunder and the mortgagee of any mortgage on the premises — and the government shall have afforded such assignee and mortgagee not less than 30 days opportunity, in addition to the aforesaid mentioned time allotted to lessor, to commence ... necessary repairs (Underscoring added) (Provisions of Lease, par. 10(a)). Paragraph 10(e) authorizes the government to make the repairs if Lessor or mortgagee fail to do so, and deduct the costs from the rent. Paragraph 10(d) provides that if and when the government gives a notice to Lessor under paragraph 10, to send a copy thereof to any mortgagee and assignee of rents hereinabove referred to. The lease in paragraph 11 gives the government the right to make repairs in the event the Lessor fails to do so when the Lessee requires Lessor to do so, and to make repairs for the account of the Lessor and obtain reimbursement from Lessor for the costs thereof.

As shown in Article V of the 1994 opinion, on October 23, 1991, Postal Service wrote RRP to remind it that since a proposed sale of the premises to Postal Service had fallen through, repairs were needed to the premises and that if those repairs were not corrected by Lessor, Postal Service would complete the repairs and deduct the costs from the rents. RRP was requested to advise Postal Service of its intent to complete the repairs by November 8, 1991. Copy of this letter was sent to Lincoln/West, as was required by the lease, but no further notice was given Lincoln/West of any response from RRP, or of Lessor's refusal to make the repairs. Nor was the 30 day written notice given Lincoln/West of any failure of Lessor to make the repairs, or a call made upon Mortgagee to make the repairs or an opportunity for Lincoln/West to make the repairs. The next correspondence was a letter from Postal Service to RRP dated November 27, 1992 advising the heating and air conditioning repairs had been completed. A copy of the October 21, 1991 letter was attached. The November letter requested Lessor to reimburse Postal Service for the costs of $101,000.00 by December 31, 1992; otherwise, deductions would be made from the rent. Copy of that letter was sent to Lincoln/West. (See Exhibits P-22 and P-23). Under date of August 11, 1994, Postal Service notified RRP that beginning August 1, 1994, it would begin monthly deductions from the rent to reimburse it for the $101,000.00 costs for the heating and air conditioning plus $32,512.00 for interest (See Ex. P-29).

The evidence is clear that Postal Service did not give Lincoln/West any separate 30 day notice of Lessor's failure to make the requested repairs as required by the lease, and then allow Lincoln/West a period of 30 days to deal with the issue or make the repairs. The only notice to Lincoln/West was a copy of the 30 day notice given by Postal Service to Lessor requesting the repairs. Postal Service attempts to escape this requirement asserting that it sent Lincoln/West a copy of its notice to Lessor which substantially meets the requirements of the lease. The issue is whether Postal service has complied with the terms of the lease to permit it to deduct the costs of the repairs from the rents.

Lincoln/West assert that the language of the lease is clear and controlling; that under its terms Postal Service was required to give a 30 day written notice to Lessor with copy to Lincoln/West; that if Lessor failed or refused to...