Modeer v. United States

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not
citable as precedent. It is a public record.
United States Court of Appeals for the Federal Circuit
06-5019
ROBERT M. MODEER and EMILY W. MODEER,
Plaintiff-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: June 9, 2006
__________________________
Before MICHEL, Chief Judge, PLAGER, Senior Circuit Judge and BRYSON, Circuit
Judge.
MICHEL, Chief Judge.
Robert M. Modeer and Emily W. Modeer (collectively "the Modeers") appeal from
a judgment of the United States Court of Federal Claims, holding the United States
liable for four months, rather than five months, of holdover rent in the amount of
$264,503.00. Because we agree with the court's interpretation of the lease, we affirm.
I. BACKGROUND
The Modeers own property located at 25 Funston Road in Kansas City, Kansas.
Beginning in 1987, the General Services Administration ("GSA") leased this property on
behalf of the United States Environmental Protection Agency under Lease
No. 06P-68579. Most relevant to this appeal is the following provision.
(a) Payment due date.
(1) Rental payments. Rent shall be paid monthly in arrears and will be
due on the first workday of each month, and only as provided for by the
lease.
(i) When the date for commencement of rent falls on the
15th day of the month or earlier, the initial monthly rental
payment under this contract shall become due on the first
workday of the month following the month in which the
commencement of the rent is effective.
(ii) When the date for commencement of rent falls after
the 15th day of the month, the monthly rental payment under
this contract shall become due on the first workday of the
second month following the month in which the
commencement of the rent is effective.
The lease was extended from time to time via supplemental lease agreements, most
recently from July 10, 2002 through July 9, 2003. The annual rent was $793,509.00, to
be paid "at the rate of $66,125.75 per month in arrears." It is undisputed that the final
payment was made on July 1, 2003.
The lease provided that the government was responsible for the cleanup and
removal of hazardous waste which was stored on the property "not later than the
termination date of this lease and any extensions hereof." The parties agree that a
holdover tenancy was created when the cleanup was not completed until November 4,
2003.
On December 5, 2003, the Modeers filed a complaint in the United States Court
of Federal Claims, seeking $330,628.75 for five months of holdover rent plus $4,021.69
for the costs of utilities during the holdover period. After the close of discovery, the
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Modeers filed a motion for summary judgment. The government responded with a
motion to dismiss for lack of subject-matter jurisdiction, or in the alternative, for
summary judgment.
On September 26, 2005, Judge Lynn J. Bush rendered her decision, first
addressing whether the court had jurisdiction under the Contract Disputes Act of 1978,
41 U.S.C. §§ 601-13. Specifically, the court found that the Modeers sent the contracting
officer, Dennis Clemons, a letter on August 7, 2003, providing notice that rent continued
to accrue "at the pro rata rate of $793,509 per year until clean up is complete." The
Modeers had thus adequately presented their claim for holdover rent to the contracting
officer as required by 41 U.S.C. § 605(a), but not their claim for utility costs, such that
the court had subject-matter jurisdiction over the former, but not the latter.1
On the merits of the holdover claim, the court noted that the most recent
supplemental lease agreement covered the lease term from July 10, 2002 through
July 9, 2003, at the rate of $66,125.75 per month; thus, each leasehold month began on
the tenth day of the month and the final payment made on July 1, 2003 "was for the final
month of the lease, June 10, 2003 through July 9, 2003." To the extent that the
government had agreed that it did not pay rent for the period between July 1, 2003 and
July 9, 2003, the court found this to be a non-binding stipulation of law. It concluded
that the Modeers were entitled to only four months of rent for the holdover period from
July 10, 2003 through November 4, 2003. The court also granted the Modeers' motion
for interest on the holdover rent claim running from the date their claim was received by
the contracting officer, later stipulated to be August 11, 2003.
1
This ruling has not been appealed.
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Judgment was entered accordingly. A timely appeal was filed on November 15,
2005. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
II. DISCUSSION
A grant of summary judgment by the Court of Federal Claims is reviewed de
novo. Mann v. United States, 334 F.3d 1048, 1050 (Fed. Cir. 2003). This case turns on
a question of contract interpretation, which is also reviewed de novo. Varilease Tech.
Group, Inc. v. United States, 289 F.3d 795, 798 (Fed. Cir. 2002).
On appeal, the Modeers argue that whether the government paid rent for the
period from July 1, 2003 through July 9, 2003 was a question of fact to which the parties
had stipulated. Because the answer depends on a proper interpretation of the lease,
the court correctly characterized this as a stipulation of law, which was not binding.
The Modeers further contend that payment "in arrears" means "after the rental
month," as the Federal Circuit has held in other cases. Thus, they argue, the final
payment made on July 1, 2003 could not have covered the period from July 1, 2003
through July 9, 2003. Insofar as other cases involved different lease terms, however,
this argument is not persuasive. Regardless, the court correctly found that under the
provisions of this lease, a rental month which commences "on the 15th day of the month
or earlier" is not yet over when the rent for that month is paid. No other interpretation of
the lease is plausible.
In short, we agree with and adopt the reasoning of the lower court. The
supplemental lease agreement applied to a term of one year from July 10, 2002 through
July 9, 2003 in twelve equal payments of $66,125.75 per month. The lease does not
contemplate pro rata payments for periods of time less than a month. Therefore, each
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leasehold month began on the tenth of each calendar month. According to the original
lease provisions, each monthly rent payment was due on the first day of the following
month because the lease commenced on a day before the 15th of the month. Thus, the
first payment, for the period from July 10, 2002 through August 9, 2002, was due on
August 1, 2002. Twelve months later, the final payment made on July 1, 2003 therefore
applied to the period from June 10, 2003 through July 9, 2003. Since the court properly
found that there was no rent due for any period prior to July 9, 2003, holdover rent was
only owed on the period from July 10, 2003 to November 9, 2003, which was correctly
calculated to be four months.
III. CONCLUSION
For these reasons, we affirm the judgment of the lower court in its entirety.
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