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Straus v. United States Postal Service

United States District Court, E.D. Pennsylvania

November 7, 2017




         In 1966, Plaintiffs Laurence A. Straus, Michael S. Straus, and William M. Straus' (“Straus Brothers”) father leased to Defendant United States Postal Service (“USPS”) a building which has since housed the Richmond Station Post Office (“Richmond Station”).[1] The first lease agreement provided an option for USPS to purchase the property and the land on which it stood for a fixed price. An amendment to the agreement, which was signed in 1982, also contained an option for USPS to purchase the property but for fair market value. USPS now wishes to buy the property. It maintains that it is entitled to do so for the fixed price. The Strauss Brothers disagree and have sued seeking a declaratory judgment that they have no obligation to sell the property to USPS for either a fixed price or for market value. They also claim that USPS, which still occupies the building, is a holdover tenant which owes them back rent.

         Both parties filed cross motions for summary judgment. The Plaintiffs seek an order affirming their right not to sell Richmond Station and denying that USPS' has a right to continued possession of and to exercise any purchase option. USPS, in turn, seeks an order compelling Plaintiffs to convey Richmond Station to USPS.

         I. Facts

         The following facts are not in dispute between the parties. On August 1, 1966, USPS[2]and the Straus Brothers' father, Howard Straus, entered into a lease concerning Richmond Station (the “1966 Lease”). Paragraph 5 of the 1966 Lease provides USPS with six consecutive renewal options, each for a term of five years. Paragraph 6 grants USPS an option to purchase Richmond Station at certain times for a fixed price - $240, 000 (the “Fixed Price Option”).

         In 1982, the parties executed an amendment to the 1966 Lease (the “1982 Amendment”), which became effective on July 1, 1982. Paragraph 5 of the 1982 Amendment reduces the annual rent for the property from the $18, 850 set forth in the 1966 Lease to $17, 054 for the remainder of the original lease term and for six renewal term options, each for a set period of five years. The 1982 Amendment also grants USPS an option to purchase the property at fair market value at any time during the remaining term of the lease and any renewal term (the “Fair Market Value Option”).

         USPS renewed its tenancy through the last renewal option term paying the rent rate set out in the 1982 Amendment. On July 28, 2015, one year and a few days prior to the expiration of the final renewal term, it sent a letter to exercise the option to purchase the property. The letter purported to “constitute[] notice” that USPS “has elected to purchase the fee simple title to the leased premises . . . including the underlying land, at the end of the sixth 5-year renewal option term for the purchase price of $240, 000.00, as provided in Paragraph 6 of the Post Office Department Lease, dated August 1, 1966.” The letter did not refer to the 1982 Amendment. USPS scheduled a closing for the transfer of Richmond Station. The Straus Brothers did not appear, disputing USPS' right to exercise the Fixed Price Option. The Straus Brothers then brought this suit against USPS.

         I. Legal Standard

         “[S]ummary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.” Alabama v. North Carolina, 560 U.S. 330, 344 (2010) (citations and internal quotation marks omitted); see also Fed. R. Civ. P. 56(a). The Court must grant summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The same standard applies to cross-motions for summary judgment. See Lawrence v. City of Philadelphia, 527 F.3d 299, 310 (3d Cir. 2008).

         “A genuine issue is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the non-moving party in light of his burden of proof.” Doe v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir. 2007) (citing Celotex Corp. at 322-26); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-52 (1986). “The non-moving party may not merely deny the allegations in the moving party's pleadings; instead he must show where in the record there exists a genuine dispute over a material fact.” Doe, 480 F.3d at 256 (citing Celotex, 477 U.S. at 322-26). In ruling on a motion for summary judgment, a court must “view the facts in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor.” Burton v. Teleflex Inc., 707 F.3d 417, 425 (3d Cir. 2013).

         II. Analysis

         Plaintiffs' argument on their motion for partial summary judgment is that a plain reading of the 1966 Lease and the 1982 Amendment shows that the Fixed Price Option to purchase the property was superseded by the Fair Market Value Option in the 1982 Amendment. They contend further that having failed to timely pursue the Fair Market Value Option and the lease agreement for the Property now having expired, USPS is a holdover tenant at Richmond Station. In its motion for summary judgment USPS asks for a judgment directing the Straus Brothers to specifically perform - to tender title to the leased premises to USPS in accordance with the Fixed Price Option set forth in the 1966 Lease.

         1. The Inter-Relationship of the 1966 Lease and 1982 Amendment Terms

         Preliminarily, both motions require an analysis of the inter-relationship of the terms of the 1966 Lease and the 1982 Amendment. More specifically, the question before the Court is, given the language in the relevant provisions of the two documents, what effect the Fair Market Value Option of the 1982 Amendment had on the Fixed Price Option in the 1966 Lease.[3] The focus is thus on whether the language of the provisions unambiguously supports either Plaintiffs' or Defendant's construction. Whether an ambiguity exists is a question of law that may be decided on a motion for summary judgment. See United States v. Hardwick, 544 F.3d 565, 570 (3d Cir. 2008) (stating that interpretation of a contract is a question of law). However, if a review of the relevant provisions leads to the conclusion that the contract is ambiguous, the meaning of the contract is a question for the trier of fact and summary judgment will be denied. See Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 362 (3d Cir. 1987) (“The process of interpreting a document is potentially a ...

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