David Nassif Associates Liquidating Trust v. United States

122 Fed. Cl. 366, 2015 U.S. Claims LEXIS 866, 2015 WL 4389792
CourtUnited States Court of Federal Claims
DecidedJuly 17, 2015
Docket14-230 C
StatusPublished

This text of 122 Fed. Cl. 366 (David Nassif Associates Liquidating Trust v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
David Nassif Associates Liquidating Trust v. United States, 122 Fed. Cl. 366, 2015 U.S. Claims LEXIS 866, 2015 WL 4389792 (uscfc 2015).

Opinion

OPINION and ORDER

Block, Judge.

Plaintiff David Nassif Associates Liquidating Trust (“DNA Trust”) seeks payment for services rendered by David Nassif Associates (“DNA”) on behalf of the United States Office of the Comptroller of the Currency (“OCC”). DNA Trust argues that it is the successor in interest to DNA, and that it is entitled to payment allegedly owed by OCC to DNA under the terms of a lease agreement between OCC and DNA.

On July 28, 2014, defendant moved to dismiss this case for lack of subject matter jurisdiction, pursuant to Rule 12(b)(1) of the Rules of the U.S. Court of Federal Claims (“RCFC”). Defendant alleges that prior to the creation of DNA Trust, DNA had already transferred all of its rights in the lease to a joint venture led by Metropolitan Life Insurance Company (“Purchaser”), under the terms of a novation agreement. Consequently, defendant argues that DNA’s attempt to designate DNA Trust as its successor in interest and to transfer its rights in the lease to DNA Trust was ineffective. Defendant concludes that the court lacks subject matter jurisdiction to hear this case because plaintiff *369 lacks privity of contract with OCC. On September 24, 2014, plaintiff requested that the court hold an oral hearing concerning the motion to dismiss, pursuant to RCFC 12(i) and 7(b).

Before the court are defendant’s motion to dismiss- and plaintiffs motion for oral argument. For the following reasons, the court grants defendant’s motion to dismiss and denies plaintiffs motion for oral argument. ,

I. BACKGROUND

For more than 60 years, the David Nassif Company was the parent organization for a wide variety of real estate development and construction projects. 1 One of its subsidiaries, David Nassif Associates, developed the David Nassif Building, which is located on 400 7th Street SW, Washington, DC. Compl. ¶¶ 1, 5. DNA, a limited partnership registered in the District of Columbia, owned and operated this building from the late 1960s until December 13, 2012, when it sold the property to Purchaser for $734 million, making it “one of the most expensive single assets to trade hands in the history of the District’s commercial real estate market.” 2 This building, which was renamed the Constitution Center following the sale, is the largest private office building in the District of Columbia, with over 1.3 million square feet of rentable space. 3 The Constitution Centel-leases space to a number of government agencies, including the OCC, the Federal Trade Commission, and the Federal Housing Finance Agency (“FHFA”). 4

On February 11, 2011, DNA and OCC entered into lease no. 335-HQ-DC (“the OCC Lease”) for the rental and preparation of office space within the Constitution Center. Under the terms of this lease, DNA agreed to provide over 640,000 rentable square feet of space. DNA also agreed to complete certain modifications and enhancements of the rental space, including the installation of access security enhancements (such as a building and elevator access card security system), security guard services, and the design and installation of a distributed antenna system. 5

Moreover, in addition to the specific enhancements required under the lease, the OCC reserved the right to request “additional security services.” Compl. ¶ 5 (referring to ¶ 20(e) of the OCC Lease). Although subject to the lessor’s (DNA’s) “prior written consent,” such consent was not to be “unreasonably withheld, conditioned, or delayed.” Id. OCC would be “responsible” for payment of costs associated with any additional security services. Id.

On January 31, 2011 — about two weeks prior to the execution of the OCC Lease— DNA entered into a separate but similar lease agreement with the Federal Housing Finance Agency. Compl. ¶ 14. Since the security requirements of OCC and FHFA were substantially the same, OCC and FHFA formed a joint security committee to determine what additional security services to request. Compl. ¶ 15. On October 4, 2011, the OCC submitted to DNA a memorandum entitled “OCC/FHFA Common Area Security Requirements,” which set forth “the scope of the security upgrades and enhancements [OCC and FHFA] want to the building common space.” Compl. ¶ 16.

In this memorandum, the two agencies requested, inter alia, the installation of high- *370 end turnstiles and a security desk in each of the two public entrance lobby areas of the building, as well as the construction of a security guard “ready room” in a separate area off of the 7th Street lobby. Compl. ¶ 18. The memorandum also called for the installation of security cameras along the entire perimeter of the building, in the public entrance lobby areas, and the garage, as well as the construction of a mail room and package screening facility. Compl. ¶ 18. After an extended period of negotiations between OCC, FHFA, and DNA, these parties agreed on a revised conceptual design, allowing DNA to proceed with the modifications. Compl. ¶ 19.

But complications arose, beginning in May of 2012, when DNÁ submitted a memorandum to OCC, informing OCC that DNA had sold the Constitution Center to Purchaser. Compl. ¶.47. At the time, the construction of the tenant improvements was still roughly eight months from completion. Id. Plaintiffs memorandum stated that pursuant to the terms of a purchase and sale agreement 6 between DNA and Purchaser, DNA’s managing director, Timothy Jaroch, would be required to “contract with [Purchaser] to direct and superintend the completion of the OCC interiors project, the amenity spaces, and the security spaces/security enhancements.” Id. On June 7, 2012, at a meeting with OCC and FHFA, DNA reiterated that Mr. Jaroch would continue to be responsible for the completion work after the sale of the Constitution Center. Compl. ¶ 48.

On December 13, 2012, DNA completed the transfer of the Constitution Center to Purchaser. Compl. ¶ 49. On that same day, DNA, Purchaser, and OCC executed a novation agreement, effective December 13, 2012. Id.; see Novation Agreement, Def.’s Ex. at 174. Pursuant to the terms of the novation agreement, DNA “transferred to [Purchaser] all of its rights in and all of the assets related to the [Constitution Center]” and “waive[d] any claims and rights against the government that it now has or may have in the future in connection with the [lease].” Id.; Def.’s Ex. 174-75. Moreover, the parties agreed that Purchaser would “be bound by and ... perform the [lease] in accordance with the terms and conditions contained in the [lease] ... [and Purchaser] assumes all obligations and liabilities of, and all claims against, [DNA] under the [lease] as if [Purchaser] were the original party to the [lease].” Id.; Def.’s Ex. 174-75. Also, on December 13, 2012, DNA directed OQC, in writing, to submit all future rental payments directly to Purchaser. Def.’s Ex. 191.

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122 Fed. Cl. 366, 2015 U.S. Claims LEXIS 866, 2015 WL 4389792, Counsel Stack Legal Research, https://law.counselstack.com/opinion/david-nassif-associates-liquidating-trust-v-united-states-uscfc-2015.