Stromness Mpo, LLC v. United States

STROMNESS MPO, LLC, Plaintiff, v. UNITED STATES, Defendant.

No. 14-711C

United States Court of Federal Claims

October 15, 2018

Attorneys' Fees; Equal Access to Justice Act; 28 U.S.C. § 2412; Itemized Statement; Net Worth; Prevailing Party; Substantially Justified.

Stephen B. Hurlbut, Akerman LLP, Washington, D.C., for plaintiff. With him was Harold J. Hughes, Ford and Hugh, LLC, Lehi, UT.

Meen-Geu Oh, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, D.C., for defendant. With her were Jessica L. Cole, Trial Attorney, Commercial Litigation Branch, Anand R. Sambhwani, Trial Attorney, Commercial Litigation Branch, Martin F. Hockey, Jr., Deputy Director, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Joseph H. Hunt, Assistant Attorney General, Civil Division, Department of Justice, Washington, D.C. Of counsel was Shoshana O. Epstein, Office of the General Counsel, United States Postal Service.

OPINION

HORN, J.

After the court issued its Opinion in the above-captioned case, see Stromness MPO, LLC v. United States, 134 Fed. Cl. 219 (2017), plaintiff Stromness MPO, LLC (Stromness MPO) filed a motion for attorneys' fees and costs pursuant to Rule 54(d) (2018) of the Rules of the United States Court of Federal Claims (RCFC), requesting that this court award attorneys' fees and costs to Stromness MPO under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412 (2012).¹

FINDINGS OF FACT

The parties' dispute in the above-captioned case revolves around a postal facility in Magna, Utah, which Stromness MPO constructed and leased to the United States Postal Service (the USPS). See Stromness MPO, LLC v. United States, 134 Fed. Cl. at 224. On September 4, 2012, the USPS issued a notice of termination to plaintiff regarding the "'MAGNA - DISTRICT TRAINING CENTER,'" which explained that "'the [District Training Center] Lease will terminate upon its expiration date, 12/31/2012.'"See id. at 246 (capitalization and alteration in original). On September 26, 2012, the USPS began vacating the District Training Center space, and, as of December 28, 2012, the USPS had vacated the District Training Center space, had removed all of its furniture and equipment from the District Training Center space, had ceased physically occupying the District Training Center space, and had left the District Training Center space in a "broom clean" condition. See id. at 247, 280-81. Thereafter, when a member of Stromness MPO wanted access the District Training Center space, the member needed to enter the Magna Main Post Office, inform a USPS clerk that the member of Stromness MPO wanted access to the District Training Center space, and then be escorted to the District Training Center space by a USPS employee. See id. at 248-49. According to Postmaster James Kenyon's testimony at trial, as well as Postmaster Roland Dalton's testimony at trial, neither Postmaster denied a member of Stromness MPO access to the District Training Center space and the Stromness MPO member was not followed into the District Training Center space.² See id. at 248-49.

On May 15, 2013, plaintiff submitted a certified claim to the USPS requesting a contracting officer's final decision on plaintiff's certified claim. Id. at 252. In the May 15, 2013 certified claim, plaintiff asserted that the USPS was a holdover tenant when it maintained complete access and control over the former District Training Center space; that the USPS vacated the incorrect section of the Magna postal facility; that the Magna Main Post Office lease, as amended, and the District Training Center lease, as amended, were a unified lease; that the USPS's termination of the District Training Center lease had deprived plaintiff of the reasonable use of plaintiff's property; that the USPS was unjustly enriched; and that the USPS had violated the covenant of good faith and fair dealing. Id. In its May 15, 2013 certified claim, plaintiff requested that the USPS pay plaintiff the annual rental rate for the District Training Center space through 2019, as well as all heating, air conditioning, lighting, sewage, electrical, and water expenses and for all taxes associated with the District Training Center space. Id. On August 15, 2013, Bradford Meador, a contracting officer with the USPS, issued a contracting officer's final decision denying plaintiff's May 15, 2013 certified claim in its entirety. Id. Mr. Meador stated that the USPS was not a holdover tenant because the USPS's failure to return a key to plaintiff does not "in and of itself" create a holdover tenancy. Mr. Meador also argued that plaintiff "could easily have regained control of the space" by rekeying the exterior door to theDistrict Training Center space or by building a demising wall separating the vacated District Training Center space and the Magna Main Post Office space, which Mr. Meador contended plaintiff was required to do under the "Main Office Lease provisions."

On September 9, 2013, approximately nine months after the USPS vacated the District Training Center space in December 2012, USPS built a demising wall separating and securing the Magna Main Post Office space and the United States mail from Stromness MPO's District Training Center space. See id. at 250. That same day, on September 9, 2013, the USPS informed plaintiff that it would be removing the lock cylinders on the exterior door that provided access to the District Training Center space. See id. at 251. Also on September 9, 2013, Stromness MPO changed the lock cylinders on the exterior door to the District Training Center space. See id.

On June 18, 2014, an attorney with the USPS sent an email message to an attorney representing Stromness MPO, which stated, in full:

The Postal Service has determined that it does not have a need to lease the space formerly used as the District Training Center in Magna, UT. The Postal Service believes that it properly terminated the District Training Center lease as set forth in the Contracting Officer's Final Decision.

In an effort to reach a resolution without litigation, however, the Postal Service is willing to offer $100,000 to settle this matter in Full. In addition to this payout, the Postal Service would agree to amend the Main Office Lease to remove the current Postal Service right to approve a new tenant in the terminated space, and replace it with language that allows Landlord to lease that space without Postal approval so long as the new tenant is not one whose business would be in competition with the Postal Service and would not unreasonably interfere with the Postal Service's quiet enjoyment of its space.

The $100,000 offer was roughly calculated using the following elements and accounting for the Postal Service's belief that it has more than a 50% chance of being successful in any litigation, but that using a 50% figure would be a reasonable compromise:

1) Portion of the Rent: The Postal Service terminated lease effective 12/31/12. There is a factual dispute regarding why the keys were not returned to the Landlord at that time. Regardless, by end of 9/13, the Postal Service had secured its remaining space and tendered the keys to Landlord. Annual Rent for period ending 12/12 was $108,149. The Postal Service compromise for 9 months with 50% discount: $40,555.

2) Portion of Real Estate Taxes: Similar analysis to rental obligation above. Taxes annually for district training space share, for 9 months with 50% discount: $6,760.

3) Portion of the Cost to Upgrade Terminated Space: The Postal Service obtained an estimate of $97,000 to add a restroom, separate utility meters, add a 2nd point of ingress/egress, and move the fence to provide parking to the terminated space. Landlord, who I believe is also in the general contracting business, may even be able to complete this work for less. Postal Service compromise with 50% discount: $48,500.

Please discuss this Settlement Offer with your clients and let me know if we can reach an agreement.[³]

The parties, however, were unable to reach a settlement agreement resolving plaintiff's claims included in its May 15, 2013 certified claim.

Subsequently, plaintiff filed a fifteen-count complaint in this court in the above-captioned case. Id. at 253. In the civil cover sheet attached to plaintiff's complaint, plaintiff indicated that the "Amount Claimed" by plaintiff was "$2,964,300.00 (ESTIMATED)." (capitalization in original). Defendant then filed a partial motion to dismiss plaintiff's complaint, in which defendant argued that this court should dismiss plaintiff's claims included in the complaint that had not been presented to the contracting officer for a final decision and that plaintiff's implied-in-fact contract claim and plaintiff's claims sounding in tort as asserted in plaintiff's complaint were outside of this court's jurisdiction. On January 10, 2015, plaintiff submitted a supplemental, certified claim to the contracting officer for a final decision. See id. at 253. In plaintiff's January 15, 2015 supplemental certified claim, plaintiff requested a declaration that the USPS be required to move the demising wall to the correct location and that the USPS allow plaintiff access to restrooms, hallways, parking, and code-compliant ingress and egress. Id. Plaintiff also requested payment from the USPS for the fair market rental value of the vacated District Training Center space and parking area and requested reimbursement of property taxes for 2006-2009 and for 2012, as well as a declaration that plaintiff was entitled to receive property tax reimbursements from USPS for the years in which the vacated District Training Center space remains "uninhabitable." Id. On March 18, 2015, Shirley Wheeler, a different contracting officer, issued a contracting officer's final decision granting plaintiff's request for property tax reimbursement for the years 2006-2009 and 2012, but denying, in full, the remainder of plaintiff's supplemental, certified...