29 Main St. LLC v. U.S. Postal Serv. ( 2023 )

22-755
29 Main St. LLC v. U.S. Postal Serv.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 4th day of May, two thousand twenty-three.
PRESENT:
BARRINGTON D. PARKER,
RICHARD J. SULLIVAN,
Circuit Judges,
JOHN L. SINATRA, JR.,
District Judge. *
_____________________________________
29 MAIN STREET LLC,
Plaintiff-Appellant,
v. No. 22-755
UNITED STATES POSTAL SERVICE,
Defendant-Appellee. †
_____________________________________
*Judge John L. Sinatra, Jr., of the United States District Court for the Western District of New
York, sitting by designation.
† The Clerk of Court is respectfully directed to amend the official case caption as set forth above.
For Plaintiff-Appellant: JOHN W. CERRETA , Day Pitney LLP,
Hartford, CT (Matthew J. Letten,
Day Pitney LLP, Hartford, CT;
Stanley A. Twardy, Jr., Day Pitney
LLP, Stamford, CT, on the brief).
For Defendant-Appellee: JULIE G. TURBERT (Sandra S. Glover,
on the brief), Assistant United States
Attorneys, for Vanessa Roberts
Avery, United States Attorney for
the District of Connecticut, New
Haven, CT.
Appeal from a judgment of the United States District Court for the District
of Connecticut (Stefan R. Underhill, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
VACATED.
29 Main Street LLC (“29 Main Street”) appeals the district court’s grant of
summary judgment in favor of the United States Postal Service (“USPS”) on
USPS’s claim that it properly exercised a purchase option for property in New
Milford, Connecticut (the “Subject Property”) pursuant to a lease executed by the
parties in 1969 (the “1969 Main Space Lease”). On appeal, 29 Main Street
principally argues that the district court erred in concluding that the terms of the
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purchase option in the 1969 Main Space Lease were unambiguous and therefore
did not require – or permit – consideration of extrinsic evidence concerning the
intent of the parties. 29 Main Street also argues that that the purchase option in
the 1969 Main Space Lease was extinguished by a subsequent lease, memorialized
in a memorandum, for additional portions of the Subject Property (the “2000
Additional Space Lease” and the “2000 Memorandum”). We assume the parties’
familiarity with the underlying facts, procedural history, and issues on appeal.
We review a district court’s grant of summary judgment de novo. Lucente
v. Int’l Bus. Machs. Corp., 310 F.3d 243, 253 (2d Cir. 2002). Summary judgment is
appropriate only if – after “examin[ing] the evidence in the light most favorable
to, and draw[ing] all inferences in favor of, the non-movant” – “there is no genuine
issue as to any material fact.” Id. (internal quotation marks omitted).
The existence of ambiguity in a contract is a question of law that we also
review de novo. Tourangeau v. Uniroyal, Inc., 101 F.3d 300, 306 (2d Cir. 1996).
When construing the leases at issue, “we must first consider whether the relevant
provisions [a]re . . . ambiguous.” Kerin v. U.S. Postal Serv., 116 F.3d 988, 991 (2d
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Cir. 1997). 1 “A contract is ambiguous if it is susceptible of two different and
reasonable interpretations, each of which is found to be consistent with the
contract language.” Cmty. Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1579
(Fed. Cir. 1993) (applying federal common law); see also Cruz v. Visual Perceptions,
LLC, 311 Conn. 93, 102–03 (2014). If contract terms are ambiguous, the “weighing
of external evidence” is required and “the matter is not amenable to summary
resolution.” Beta Sys., Inc. v. United States, 838 F.2d 1179, 1182 (Fed. Cir. 1988)
(applying federal common law).
We find that the purchase option contained in the 1969 Main Space Lease is
ambiguous because “the language of the contract is susceptible to more than one
reasonable interpretation.” Cruz, 311 Conn. at 103. The purchase option provides
that “the [g]overnment shall have the option to purchase the fee simple title to the
leased premises, including the underlying land, at [certain] times and prices.” J. App’x
at 133 (emphasis added). Ambiguity surrounds the parties’ use of the phrase
“leased premises, including the underlying land.” Id.
1 “We do this under both federal common law and Connecticut law, which . . . would be the
applicable state law.” Kerin, 116 F.3d at 990–91. It remains an open question in this Circuit
whether, for contracts involving the USPS, federal common law applies, based on the general rule
that federal law governs when the United States is a party to a contract, or whether state
contract-law applies. Id. “[W]e need not resolve the question here,” however, “since the
application of both federal and state law lead to the same result.” Id. at 991 (internal quotation
marks omitted).
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On the one hand, in its description of the leased premises, the lease contains
metes-and-bounds language describing the contours of the entire Subject
Property. Naturally then, “fee simple title to the leased premises, including the
underlying land” could mean “fee simple title to . . . the underlying land” of the
entire Subject Property and the entirety of the structures built on top of that land.
Indeed, this is the interpretation the district court adopted. By reading out the
“leased[-]premises” qualifier, the district court concluded that “the . . . subject of
the sale [was] title to the underlying land and, as a matter of law, the entire
building thereon.” Sp. App’x at 20.
On the other hand, the 1969 Main Space Lease makes clear that the leased
premises did not include all of the Subject Property. While the description of the
leased premises started with the metes-and-bounds language, it expressly carved
out spaces from the leased premises. Effectively then, the 1969 Main Space Lease
covered “approximately 80% of the first floor [and] less than 10% of the basement.”
Sp. App’x at 5 (internal quotation marks omitted). Thus, it is equally plausible that
“fee simple title to the leased premises, including the underlying land” would
include only the leased portions of the building and the land underlying those
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areas – but not the balance of the Subject Property or the land beneath the unleased
portions.
It bears noting that the district court itself acknowledged these competing
interpretations of the 1969 Main Space Lease’s purchase-option provision. See
Sp. App’x at 19 (“The problem is that the phrase ‘the leased premises’ risks
ambiguity by lending itself to two interpretations.”); id. at 32 (“I acknowledge that
there is some inconsistency on the face of the Fixed Price Option between the
partially leased edifice (‘the leased premises’) and the offer to sell the entire
property (‘title in fee simple . . [.] to the underlying land’).”). Moreover, the very
case on which the district court relied to conclude that the provision was
unambiguous, Texas Co. v. Crown Petroleum Corp., held that “[o]n the face of the
lease” in that case, which contained a purchase option for demised premises plus
metes-and-bounds language, “there was an ambiguity as to just what property
was intended to be included in the option.” 137 Conn. 217, 224 (1950).
As was the case in Crown Petroleum, we are persuaded that the 1969 Main
Space Lease “is susceptible of two different and reasonable interpretations, each
of which is . . . consistent with the contract language.” Cmty. Heating & Plumbing,
987 F.2d at 1579. Consequently, the district court erred in granting summary
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judgment to the USPS, since “the matter is not amenable to summary resolution”
without the “weighing of external evidence” as to the intended meaning of the
1969 Main Space Lease. Beta Sys., 838 F.2d at 1182.
Turning next to the 2000 Memorandum, however, we agree with the district
court that it was unambiguous and did not “extinguish[]” the purchase option in
the 1969 Main Space Lease. Sp. App’x at 38–41. The parties executed the 2000
Additional Space Lease to cover areas of the first floor and basement that were not
leased under the 1969 Main Space Lease. The accompanying 2000 Memorandum
declares that “[t]here are no purchase options available,” J. App’x at 221, which,
according to 29 Main Street, “conflicts with[] and thus supersedes” “the purchase
option in the 1969 Main Space Lease,” 29 Main Br. at 28. But nothing about the
natural and ordinary meaning of the language from the 2000 Memorandum –
which does not even reference the 1969 Main Space Lease and only notes in one
instance that the building has two leases – conveys that the parties intended to
have the 2000 Memorandum “supersede[],” “modify,” or “rescind” the 1969 Main
Space Lease. 29 Main Street Br. at 26–27 n.11 (internal quotation marks omitted).
We thus agree with the district court that the no-purchase-options language is
unambiguous and susceptible to only one reasonable interpretation – that “[t]here
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are no purchase options” with regard to the property covered by the 2000
Additional Space Lease. See J. App’x at 221.
While we agree with the district court’s findings with regard to the
2000 Memorandum, we nevertheless hold that, in light of the ambiguity in the
1969 Main Space Lease, the district court erred in granting summary judgment in
favor of USPS. Accordingly, we VACATE and REMAND Plaintiff’s claims for
further proceedings consistent with this order.
FOR THE COURT:
Catherine O=Hagan Wolfe, Clerk of Court
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