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United States Postal Serv. v. Bellevue Post Office, LLC

United States District Court, W.D. Washington

January 30, 2014

UNITED STATES POSTAL SERVICE, Plaintiff,
v.
BELLEVUE POST OFFICE, LLC, Defendant

For United States Postal Service, Plaintiff, Counter Defendant: Harold Malkin, LEAD ATTORNEY, Christina Nicole Dimock, U.S. ATTORNEY'S OFFICE (SEA), SEATTLE, WA; Janine Castorina, UNITED STATES POSTAL SERVICE, WASHINGTON, DC.

For Bellevue Post Office LLC, an Alaska limited liability company, Defendant, Counter Claimant, Counter Defendant, David R West, GARVEY SCHUBERT BARER, SEATTLE, WA; Jeffrey C Young, GARVEY SCHUBERT BARER (WA), SEATTLE, WA.

For Bellevue Post Office LLC, an Alaska limited liability company, Counter Claimant: David R West, GARVEY SCHUBERT BARER, SEATTLE, WA.

OPINION

Marsha J. Pechman, Chief United States District Judge.

Page 1185

ORDER GRANTING UNITED STATES POSTAL SERVICE'S MOTION FOR SUMMARY JUDGMENT AND DENYING BELLEVUE POST OFFICE'S MOTION

This matter comes before the Court on the parties' cross-motions for summary judgment. (Dkt. Nos. 25, 29.) Having reviewed the motions, the responses (Dkt. Nos. 40, 42), the replies (Dkt. Nos. 47, 49), and all related papers, the Court GRANTS the Postal Service's motion and DENIES Bellevue Post Office's motion.

Background

This is a lease dispute between the United States Postal Service and the Bellevue Post Office LLC. The Postal Service seeks to compel specific performance of an option to purchase real property it has leased from Defendant since 1963. Both the Postal Service and Defendant move for summary judgment.

A. Lease Agreement Contained an Option to Purchase Clause

In 1963, the Postal Service leased from Baugh Construction Company property in Bellevue, Wash. (hereafter " Bellevue Way Property" ). (Dkt. No. 26-1 at 2.) The " Post Office Department Lease" contained an initial twenty-year term (from 1963-1983), with optional renewals of five to ten year periods. (Dkt. No. 26-1 at 2.) In total, if it exercised all of these renewals, the Postal Service could lease the Bellevue Way Property until May 2013. (Id.)

The Lease also contained an option contract, wherein the Postal Service could purchase the property for a set price at the end of each renewal period, or at the end of the full term. That clause set out the following:

The government shall have the option to purchase the fee simple title to the leased premises, including the land, at the following respective times and prices:
At end of the basic lease term....$575,000.00
At the end of first 10-year renewal option....$500,000.00
At the end of first 5-year renewal option....$450,000.00
At the end of second 5-year renewal option....$400,000.00
At the end of third 5-year renewal option....$300,000.00
At the end of fourth 5-year renewal option....$300,000.00
in accordance with any applicable Federal States in effect now or hereafter while this lease is in effect; provided, however, that the Government shall give the Lessor notice of the election to purchase at least one year in advance of the respective times set out next above.

(Dkt. No. 26-1 at 3.)

In 1968, the then owner of the property, Edward Ester, Lorraine Ester, Josef Diamond and Violett Diamond, and the Postal Service executed an Amendment to the Lease. The Amendment, entitled " Post Office Department Amendment to Lease (Tax Clause Rider)" made two substantive changes to the Lease: (1) it established a new schedule for rent amounts for the optional lease renewals; (2) it required the government pay the applicable real estate taxes. (Dkt. No. 26-2 at 2.) It did not address the terms of the purchase option. (Id.).

After the 1968 Amendment, ownership of the Bellevue Way Property changed several times, but always included some combination of the Ester and Diamond families. Lorraine Ester, however, since

Page 1186

1964 has held an interest in the Property. (Dkt. Nos. 27-1 at ...


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