Pennsylvania Avenue Development Corp. v. One Parcel of Land

670 F.2d 289, 216 U.S. App. D.C. 131, 1981 U.S. App. LEXIS 15087
CourtCourt of Appeals for the D.C. Circuit
DecidedDecember 18, 1981
DocketNos. 80-1538, 80-1574
StatusPublished
Cited by7 cases

This text of 670 F.2d 289 (Pennsylvania Avenue Development Corp. v. One Parcel of Land) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pennsylvania Avenue Development Corp. v. One Parcel of Land, 670 F.2d 289, 216 U.S. App. D.C. 131, 1981 U.S. App. LEXIS 15087 (D.C. Cir. 1981).

Opinion

Opinion for the Court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

These consolidated appeals challenge the District Court’s allocation of a condemnation award of $7,250,000. In No. 80-1538, the National Press Building Corporation [133]*133(NPBC) complains of the District Court’s refusal to enter judgment in its favor for the entire award. In No. 80-1574, Edmund W. Dreyfuss, Stanley Reines, Sidney Teplin, Stanley Rosensweig, Robert L. Wolfson, Warren K. Montouri, and S & L Management Company, Inc. (Dreyfuss) appeal the court’s decision to limit their award to $2,120,000. For the reasons hereinafter appearing, we affirm the judgment of the District Court in No. 80-1538, and reverse and remand in No. 80-1574.

I

Through a complicated chain of title, NPBC acquired title to the two properties here at issue, the Munsey Building and the National Theater, located in the District of Columbia.1 By deeds dated May 23, 1963, Arnold Gottlieb and Wolfe R. Charney, as trustees, conveyed to Massachusetts Mutual Life Insurance Company title to the land underlying the two buildings. By a third deed bearing the same date, Gottlieb and Charney conveyed title to the Improvements to E Street Corporation. By a lease likewise dated May 23, 1963, Massachusetts Mutual leased its interest in the land to E Street Corporation. The latter then conveyed its interest in the Improvements to Jerry Wolman and Earl M. Foreman, as trustees. Dreyfuss is their successor in interest. Subsequently, Bankers Life Insurance Company succeeded in interest to Massachusetts Mutual as owner and lessor of the land. In January, 1979, NPBC purchased the interest of Bankers Life for $3,800,000, based on a contract of sale made in September, 1977. Thus, as of the time condemnation occurred, NPBC was the fee owner of the land involved, subject to a lease of such land to Dreyfuss, which also owned the buildings.

The lease in question is an elaborate document providing for a minimum thirty-year term at a fixed rental payment of $259,875 per year. After the initial term, the lessee may opt for six ten-year renewal periods, at an annual rental of 6.75 percent of the market value of the property at that time, not to go below $259,875. The lease also contains a provision indicating the agreed method of allocation of the proceeds of any condemnation award in the event of a total taking of the property.2

On April 13, 1979, the Pennsylvania Avenue Development Corporation (PADC), a corporation created by Act of Congress, commenced condemnation proceedings against the property in question. PADC, NPBC and Dreyfuss had previously entered into a contract by which PADC would acquire the property for $7,250,000. The parties agreed that PADC would institute condemnation proceedings to determine the appropriate division of the agreed award, which PADC deposited with the court. By consent of the parties, $3,850,000 was disbursed to NPBC, the lease having clearly provided that NPBC’s portion of the award was not to be less than that amount.

On December 21, 1979, the District Court issued a Memorandum Opinion denying NPBC’s motion to allocate the entire award' to itself and holding that Dreyfuss would be permitted to present evidence at trial as to the value of its leasehold interest. Trial began on February 13, 1980, with NBPC maintaining alternative positions, i.e., that it was entitled to the entire award or, if not, that it was entitled to a substantial portion of the remaining award money. Dreyfuss claimed a significant portion of the award for itself. On April 18,1980, the court filed an Order accompanied by a Memorandum Opinion again denying NPBC’s request for an award of all of the remaining funds and awarding $5,130,000 (including the original $3,850,000) to NPBC, and the remaining $2,120,000 to Dreyfuss. Both sides appealed, each seeking a larger share of the award.

[134]*134II

In construing a contract, the task of the District Court is to determine the intention of the parties to it. “It is an elementary principle of contract interpretation that the plain and unambiguous meaning of a written agreement is controlling, in the absence of some clear evidence indicating a contrary intention.” Vogel v. Tenneco Oil Company, 465 F.2d 563, 565 (D.C.Cir. 1972). Generally, the interpretation of a contract is a question of law for the courts and, unless the trial court is forced to turn to extrinsic evidence, appellate courts are not limited to review under the “clearly erroneous” standard made applicable to questions of fact by Fed.R.Civ.P. 52(a). Washington Metropolitan Area Transit Authority v. Mergentime Corp., 626 F.2d 959, 961 (D.C.Cir.1980).

If there is a prior agreement between the parties as to allocation of a condemnation award, that agreement, of course, governs the disposition of the award. Where a lease in condemnation is silent as to the tenant’s rights, the tenant has a right to prove his damages in the condemnation proceeding inasmuch as a term-of-years leasehold constitutes a possessory interest in the fee. Goldstein, Leasehold Damages in New York City, in S. Searles, A Practical Guide to the Legal and Appraisal Aspects of Condemnation 139,140 (1969); Hershman, Eminent Domain: Current Concepts and Practical Problems, in S. Searles, supra, 3, 11-12.

Under most leases, allocation of the award between lessor and lessee is not problematical because “leases generally include a clause which makes them terminate in case of condemnation. This is sufficient to bar the award. It is unnecessary to state expressly that the tenant is to have no compensation for his term.” Friedman on Leases 510-11 (1974). Courts have, however, looked with disfavor upon clauses resulting in forfeiture of the lessee’s entire interest upon condemnation and, where possible, have construed such provisions to avoid this harsh effect. 2 Nichols, Eminent Domain § 5.23[2] at 5-94 (3d rev. ed. 1980). See In re Condemnation, 38 Pa.Commw.Ct. 535, 394 A.2d 657 (1978).

For example, in United States v. Right to Use and Occupy 3.38 Acres of Land, 484 F.2d 1140 (4th Cir. 1973), the lease in question provided:

If the entire leased premises shall be taken for any public or quasi-public use under any statute or by the right of eminent domain .. . then all obligations of the LESSEE under this lease shall cease and terminate as of the date on which the LESSEE surrenders, or is deprived of, the physical possession and occupation of said demised premises....

Id. at 1143 n.3. Although the Fourth Circuit indicated that “[s]uch a clause effectively terminates the tenancy,” id. at 1144, it allowed the lessee to recover the bonus value of the lease based on the lessee’s reservation in the lease of the “right to file and prosecute its claims against [the] taking authority for damages resulting from such taking.” Id. at 1143 n.3.

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670 F.2d 289, 216 U.S. App. D.C. 131, 1981 U.S. App. LEXIS 15087, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pennsylvania-avenue-development-corp-v-one-parcel-of-land-cadc-1981.