Zlotolow v. United States

40 Cont. Cas. Fed. 76,910, 35 Fed. Cl. 133, 1996 U.S. Claims LEXIS 39, 1996 WL 134240
CourtUnited States Court of Federal Claims
DecidedMarch 20, 1996
DocketNo. 93-163C
StatusPublished
Cited by2 cases

This text of 40 Cont. Cas. Fed. 76,910 (Zlotolow 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
Zlotolow v. United States, 40 Cont. Cas. Fed. 76,910, 35 Fed. Cl. 133, 1996 U.S. Claims LEXIS 39, 1996 WL 134240 (uscfc 1996).

Opinion

OPINION

MARGOLIS, Judge.

This case involves an alleged failure by the United States Postal Service to provide plaintiffs with timely notice of the Postal Service’s intent to renew a lease for a postal facility in Beverly Hills, California. The lease had a 20-year term with four five-year renewal options. In order to exercise these options, the Postal Service was required to give the landlord written notice of its intent to exercise at least 90 days before the end of the original lease or any renewal term. Plaintiffs claim that defendant failed to give timely notice of the government’s intent to exercise a renewal option. As a result, plaintiffs seek consequential damages of $1,079,-[135]*135890 for the loss of rent at market rate, and the diminished use and value of the property as a result of the Postal Service’s refusal to surrender and vacate the property after the original lease expired on December 31, 1989. Defendant contends that it properly exercised its renewal option, and proffered two certified mail return receipts demonstrating that it notified both the plaintiffs’ predecessor in interest, and the party which held title to the property of its intent to exercise the option. A trial was held on December 5, 1995 in Santa Ana, California. After full consideration of the record, this court finds for defendant.

FACTS

On or about December 19, 1969, Eli N. Feinberg and Eve H. Feinberg executed a lease on a one-story building, located at 3950 Laurel Canyon Boulevard, North Hollywood, California to the Post Office Department, the predecessor to the United States Postal Service (Postal Service), for use as the Studio City Post Office. The lease had an initial term of twenty years, beginning on January 1, 1970 and ending on December 31, 1989, and provided for annual rent of $39,975. The lease also contained four five-year renewal options, which allowed the Postal Service to unilaterally extend the lease until December 31, 2009. Section 5 of the lease, however, required the Postal Service give proper notice, stating “[t]his lease may be renewed, at the option of the Government ... provided notice be given in writing to the Lessor at least 90 days before the end of the original lease term or any renewal term.” Defendant’s Exhibit 1 (emphasis in original).

In 1984, the Laurel 3950 Partnership, a California limited partnership (the Partnership), became the new owner of the Studio City Post Office building. The Partnership consisted of two general partners, Leon Pi-zante and Adolfo Zlotolow. The business address of the Partnership was 9460 Wilshire Blvd., Suite 820, Beverly Hills, California 90212. The “Assignment of Lease,” recorded on October 1, 1984, provided that the Partnership agreed to “assume, to be bound by and to perform the terms[,] covenants, and conditions imposed upon Assignor, by reason of the above mentioned lease.” Defendant’s Exhibit 3. The Postal Service was properly notified, and in November 1984, changed its records to reflect that the Partnership was the new owner of the Studio City facility.

On July 10, 1987, the Postal Service executed Form 7462, Exercise of Renewal Option, in order to renew the Studio City lease for a five-year period beginning January 1, 1990. The form provided the notice of renewal required by the lease, and was sent by certified mail to Franklin Life Insurance Company, holder of a mortgage on the property. The notice of renewal, however, incorrectly listed the address of the Studio City Post Office as 3940, instead of 3950, Laurel Canyon Boulevard. On November 18, 1987, a copy of the renewal form was sent by certified mail to the Partnership, care of Leon Pizante. Pizante’s name, however, was misspelled, “Pigante,” and it was unclear whether the letter was addressed to suite 820, or suite 520, at 9460 Wilshire Boulevard.

On June 7, 1989, the Partnership executed a quitclaim deed, giving Adolfo Zlotolow ownership of the Studio City property. On November 10,1989, Zlotolow wrote to defendant and stated that it had failed to exercise its option to renew the lease. The letter further stated that Zlotolow did not want to renew the lease, and requested that the Postal Service vacate the premises at the expiration of the lease on December 31, 1989. In response, the Postal Service informed Zlotolow that it had properly exercised its renewal option, and enclosed a copy of the renewal form as well as copies of the certified mail return receipts.

DISCUSSION

Plaintiffs claim that they did not receive proper notice under section 5 of the lease of the Postal Service’s decision to renew the lease because 1) defendant failed to fulfill the requirement under California law of exact compliance with the terms of the lease in exercising the lease option; 2) the copy of the renewal notice sent to the Partnership was both wrongly addressed to suite 520, instead of suite 820, and incorrectly addressed to “Pigante” instead of “Pizante”; and 3) one copy of the renewal notice was [136]*136sent to the Franklin Life Insurance Company, the lender/mortgagee, whom plaintiffs claim was not authorized to receive such notice.

Applicable Law

Plaintiffs claim that California law is applicable in this case, citing case law for the proposition that when a rule of law is established by a decision of the courts of California, “the courts are not at liberty to overrule in favor of one followed in decisions of other states.” Plaintiffs’ Memorandum of Contentions of Fact and Law, at 5. To support this contention, plaintiffs cite two eases which involve private parties in California. See In re Perez’ Estate, 98 Cal.App.2d 121, 121, 219 P.2d 35 (1950); Schneider v. Schneider, 82 Cal.App.2d 860, 862, 187 P.2d 459 (1947). Thus, plaintiffs argue, non-California case law has no bearing on this ease, and the court should follow the California case of Bekins Moving & Storage Co. v. Prudential Insurance Co., where the court held that in order to exercise an option to renew a lease, the tenant must comply exactly with the terms of the option. See Bekins Moving & Storage Co. v. Prudential Insurance Co., 176 Cal.App.3d 245, 250,221 Cal.Rptr. 738 (1985). Plaintiffs argue that defendant failed to meet this requirement because defendant misidentified the location of the Studio City Post Office as 3940 instead of 3950 Laurel Canyon Boulevard, as well as addressed the notice to Franklin, instead of the Partnership.

Defendant asserts that California law is not applicable here and argues that federal law is controlling when the United States is involved in litigation stemming from a contract to which it is a party. See Prudential Ins. Co. v. United States, 801 F.2d 1295,1298 (Fed.Cir.1986) cert. denied, 479 U.S. 1086, 107 S.Ct. 1289, 94 L.Ed.2d 146 (1987). See also Keydata Corp. v. United States, 205 Ct.Cl. 467, 482, 504 F.2d 1115 (1974).

Plaintiffs’ assertion that California law governs here is incorrect. While the case law cited by plaintiffs may apply to contracts between private citizens, those which involve the federal government or its agencies are governed by federal law. See Prudential, 801 F.2d at 1298. As the Prudential

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Cite This Page — Counsel Stack

Bluebook (online)
40 Cont. Cas. Fed. 76,910, 35 Fed. Cl. 133, 1996 U.S. Claims LEXIS 39, 1996 WL 134240, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zlotolow-v-united-states-uscfc-1996.