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ARCON DEV. CORP. v. UNITED STATES

March 9, 1976

ARCON DEVELOPMENT CORPORATION, Plaintiff,
v.
UNITED STATES of America and United States Postal Service, Defendants



The opinion of the court was delivered by: GOURLEY

 This is a civil proceeding involving a lease agreement between the plaintiff, Arcon Development Corporation, and the defendant, United States of America, *fn1" with jurisdiction founded in part upon the Tucker Act, 28 U.S.C.A., § 1346(a)(2) which provides in pertinent part:

 
"(a) The district courts shall have original jurisdiction, concurrent with the Court of Claims, of:
 
. . .
 
(2) Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded . . . upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort."

 The Court has conducted a full and complete trial and has considered the briefs and arguments of counsel. Based thereon, it is the considered judgment of the Court that the defendant, United States of America, did not commit a breach of the lease agreement and accordingly, plaintiff is not entitled to any damages or equitable relief prayed for in its complaint. *fn2"

 The facts may be briefly stated. On June 18, 1963, the defendant, United States of America, entered into a twenty year lease agreement with Lynn H. Luxenburg and Elaine J. Luxenburg, who were the owners of the premises described in the lease, which is the subject matter of this lawsuit. The defendant, United States Postal Service, has been in occupancy of these leased premises located in New Castle, Pennsylvania, and has operated then, as now, a vehicle maintenance facility thereon. On July 13, 1970, the Redevelopment Authority of the City of New Castle, which had been the assignee of said lease from Lynn H. Luxenburg and Elaine J. Luxenburg, conveyed title to the leased premises to the plaintiff in this proceeding, Arcon Development Corporation. On August 19, 1970, the plaintiff, Arcon Development Corporation, and the defendant, United States of America, agreed to a modification of the boundaries of the leased premises so that the leased premises would include land not originally contained in the original lease in lieu of land contained in the original lease which was required for the relocation of South Street in the City of New Castle.

 Pursuant to the agreement that existed between the parties, a condition of the lease agreement was that the defendant, United States of America, make monthly installments of rental payments, in the amount of $960.00 at the end of each calendar month. It was defendant's failure to tender the rental checks for the months of October, November, and December of 1974 that caused plaintiff to send, on December 31, 1974, its corporate officer, Russell Margraff, to the leased premises to make a demand for the rent due. When payment was not forthcoming, the plaintiff on January 2, 1975, again through Russell Margraff, declared a forfeiture of the lease for breach of its condition and served the defendant, United States Postal Service, with a Notice to Quit.

 The pivotal issue before this Court is whether or not, under all the facts and circumstances, it can be said that the defendant's failure to tender plaintiff the rental checks for the months in question, constituted a material breach of the lease agreement?

 It is not in dispute that the plaintiff's office was formerly located at 114 Town Mall, New Castle, Pennsylvania, 16101, and that this was the same address to which the defendant had mailed all of its monthly rental checks under the lease agreement with the plaintiff. It is also not in dispute that on October 29, 1973, plaintiff moved from its offices located at 114 Town Mall, New Castle, to 2656 Wilmington Road, New Castle, Pennsylvania, 16105. Plaintiff filed a change of address form under United States Postal Form 3575 on October 29, 1973, with the New Castle Post Office. This change of address order directed all of plaintiff's mail for a period of one year to be forwarded to the new address listed, which in this case was 2656 Wilmington Road, New Castle, Pennsylvania.

 From October of 1973 to October of 1974, the period in which the United States Postal Form 3575 was in effect, the defendant mailed twelve rental payments to the plaintiff, each bearing plaintiff's old address, 114 Town Mall, New Castle, Pennsylvania. In each and every instance, said payments were forwarded to the plaintiff at 2656 Wilmington Road, New Castle, Pennsylvania.

 Defendant takes the position that it faithfully and honestly fulfilled all of its obligations under the lease, and that its failure to tender the monthly rental payments during the three months in question was the direct result of plaintiff's failure to inform defendant of the change of address. Moreover, defendant contends that under all the circumstances, its failure to tender the payments in question can only be viewed as a technical and not a material breach of the lease agreement.

 The record reveals that from the time plaintiff, Arcon Development Corporation, acquired the leased premises in question, in 1970 until January 2, 1975, the only address furnished by the plaintiff to the contracting officer and/or other representatives of the United States Government specially involved in the leasing of governmental facilities, was the Town Mall address. The record further reveals that defendant, upon learning of the plaintiff's new address, directed a single check in the amount of the three months back rent tendered to the plaintiff. On or about January 6, 1975, the defendant attempted to tender the check and it was refused by the plaintiff. Instead of accepting tender of the check, plaintiff chose to treat the lease as forfeited.

 Federal, not state, law is applied by the Court in construing the construction and application of government contracts. However, in absence of federal cases in point, state law not inconsistent with federal policy may be applied. United States ...


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