Court Opinion

ID: 5132220
Source: CourtListenerOpinion
Date Created: 2021-12-07 00:01:44.550842+00
Date Added: 2024-06-11T08:23:28.950051
License: Public Domain

Case: 21-1704    Document: 39    Page: 1   Filed: 11/16/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                   7800 RICCHI LLC,
                    Plaintiff-Appellant

                            v.

                    UNITED STATES,
                    Defendant-Appellee
                  ______________________

                        2021-1704
                  ______________________

     Appeal from the United States Court of Federal Claims
 in No. 1:18-cv-01798-DAT, Judge David A. Tapp.
                  ______________________

                Decided: November 16, 2021
                  ______________________

     DREW WILLIAM MARROCCO, Dentons US LLP, Washing-
 ton, DC, for plaintiff-appellant. Also represented by
 SPENCER HAMILTON, Dallas, TX; JOHN DAVID BLAKLEY,
 BLAKE BROWNSHADEL, Dunn Sheehan LLP, Dallas, TX.

     JOSHUA A. MANDLEBAUM, Commercial Litigation
 Branch, Civil Division, United States Department of Jus-
 tice, Washington, DC, for defendant-appellee. Also repre-
 sented by BRIAN M. BOYNTON, STEVEN JOHN GILLINGHAM,
 MARTIN F. HOCKEY, JR.
                  ______________________
Case: 21-1704    Document: 39      Page: 2    Filed: 11/16/2021

 2                                       7800 RICCHI LLC v. US

     Before NEWMAN, REYNA, and CHEN, Circuit Judges.
 CHEN, Circuit Judge.
     7800 Ricchi LLC (Ricchi) appeals the United States
 Court of Federal Claims (Claims Court) entry of summary
 judgment against its claim that the United States Postal
 Service (USPS) breached the implied duty of good faith and
 fair dealing in the lease contract between them. For the
 reasons stated below, we affirm.
                        BACKGROUND
      USPS leased space from Ricchi and its predecessor in
 Dallas, Texas between 1993 and 2018. The last lease
 agreement expired in November 2018. Before the expira-
 tion of the latest lease, USPS experienced issues with the
 building causing it to consider relocating to a different ex-
 isting building or constructing a new building on USPS-
 owned land.
     Given the timeline for USPS to relocate, it sought a
 twelve-month lease extension from Ricchi. Ricchi sought a
 longer term, and the parties discussed the possibility of an
 eighteen-month extension. The parties never formalized
 an extension.
      In May 2018, as the parties were negotiating a poten-
 tial lease extension, an existing building that USPS was
 interested in became available. USPS immediately began
 negotiating to purchase the building and executed a pur-
 chase and sale agreement on July 19, 2018.
     In late July 2018, Ricchi learned that USPS was plan-
 ning to relocate and accused USPS of relocating without
 proper notice. USPS replied that it intended to honor the
 lease through its expiration date of November 30, 2018.
     The Postmaster General approved funding to buy
 USPS’s desired building in August of 2018, and USPS
 closed on the building in September of 2018. USPS
Case: 21-1704     Document: 39    Page: 3    Filed: 11/16/2021

 7800 RICCHI LLC v. US                                     3

 subsequently informed Ricchi that it would vacate by No-
 vember 30, 2018—the end of the lease term.
     Ricchi then brought a breach of contract action in the
 Claims Court. The crux of its claims was that the parties
 had entered into a new, binding agreement by virtue of
 their discussions over the never-executed, short-term lease
 extension. The Claims Court entered summary judgment
 that the negotiations did not rise to an express or implied
 contract; Ricchi does not challenge this ruling on appeal.
      Ricchi also asserted a claim that USPS breached the
 implied duty of good faith and fair dealing under the par-
 ties’ existing contract. In response to USPS’s summary
 judgment motion, Ricchi argued that USPS had a duty to
 disclose to Ricchi USPS’s discussions with third parties
 about relocating. Ricchi did not cite any provision of the
 contract that formed a basis for any such alleged duty.
     The Claims Court granted summary judgment as to
 Ricchi’s implied duty claims for two reasons. See 7800 Ric-
 chi, LLC v. United States, 152 Fed. Cl. 331, 339 (2021).
 First, the Claims Court noted that the implied duty en-
 sures that both parties receive the expected “fruits” of the
 contract. As Ricchi’s “fruits” from the contract were rent
 from USPS, and as USPS paid all rent it was obligated to
 pay, Ricchi had thus received its “fruits.” See id. Second,
 the Claims Court noted that “[t]he scope of the implied duty
 of good faith must be tethered to and grounded in the terms
 of the existing contract and do not attach to negotiations.”
 See id. (cleaned up) (citing Dobyns v. United States, 915
 F.3d 733, 740–41 (Fed. Cir. 2019)). But Ricchi cited no con-
 tractual term to which the implied duty attaches, and no
 new contract was formed.
    Ricchi timely appealed. We have jurisdiction under 28
 U.S.C. § 1295(a)(3).
Case: 21-1704     Document: 39     Page: 4    Filed: 11/16/2021

 4                                       7800 RICCHI LLC v. US

                         DISCUSSION
     Ricchi argues on appeal that the Claims Court erred
 because the duty of good faith and fair dealing attaches to
 the “Renewal Options” provision in the parties’ latest lease
 agreement. See Appellant’s Br. 16. That “Renewal Op-
 tions” provision, according to Ricchi, required USPS to dis-
 close its discussions with third parties about potentially
 relocating from Ricchi’s building. See id. at 17.
     Notably, Ricchi does not fault the Claims Court’s anal-
 ysis of the “Renewal Options” provision. Nor could it; the
 Claims Court’s opinion does not address the provision be-
 cause, as the Government correctly observes, Ricchi never
 presented any argument based on that provision to the
 Claims Court. Despite this failure, we address Ricchi’s
 “Renewal Option” argument and affirm on the merits.
     The Lease’s renewal option provides that “[t]he Lease
 may be renewed at the option of the Postal Service [from
 12/01/2018 until 11/30/2023] provided that notice is sent,
 in writing, to the Landlord at least 270 days before the end
 of the original lease term.” J.A. 16. It is undisputed that
 USPS never sent any such notice, either before or after the
 March 5, 2018 deadline.
     Ricchi’s reliance on the Renewal Options provision is
 problematic for two reasons. First, the provision expired
 on March 6, 2018, before any of the conduct Ricchi com-
 plains of—USPS’s failure to disclose its negotiations for a
 new building in May through July of 2018. Thus, it cannot
 provide the basis for any implied duty. Second, Ricchi’s
 characterization of the parties’ short-term lease extension
 negotiations as being grounded in the renewal provision
 lack merit. The parties were clearly contemplating that
 the extension would be a separate agreement. Neither
 party referenced the expired Renewal Options provision
 during negotiations, nor was USPS seeking a five-year ex-
 tension as required by that provision. The Renewal Provi-
 sion, therefore, “cannot be the basis of a claim for breach of
Case: 21-1704     Document: 39   Page: 5   Filed: 11/16/2021

 7800 RICCHI LLC v. US                                   5

 the implied duty of good faith and fair dealing.” Dobyns,
 915 F.3d at 740–41.
                         CONCLUSION
     We have considered Ricchi’s remaining arguments and
 find them unpersuasive. For the reasons set forth above,
 we affirm the Claims Court’s entry of summary judgment
 against Ricchi on its breach of implied duty claim.
                         AFFIRMED