Woodies Holdings, L.L.C. v. United States
15-962
| Fed. Cl. | Dec 14, 2017Background
- Woodies Holding, LLC owns a 10-floor DC building; GSA leased office space to federal agencies under five leases (four at issue for FBI use).
- Leases contained a tax adjustment clause requiring the Government to pay its proportionate share of increases in real estate taxes above a negotiated "base year," calculated by the Government’s percentage of occupancy (rentable sq ft occupied / total rentable sq ft).
- The leases’ tax clauses stated a Government occupancy percentage of 12.98% (and in one lease 2.80% based on specified BRSF figures) with a total building rentable area listed as 372,990 BOMA rentable sq ft.
- GSA later claimed it was mistaken: the 372,990 figure omitted retail space, whereas GSA policy was to include retail; actual total rentable area was about 512,000 sq ft, producing a lower occupancy percentage and smaller tax-share obligation.
- Plaintiff contends the lease language is plain and the Government must pay the stated 12.98% plus interest under the Prompt Payment Act; Government seeks reformation for unilateral mistake or alternative contract construction.
- The court found genuine disputes of material fact about how the numbers were chosen, who supplied them, parties’ knowledge, and GSA practice; summary judgment denied for both sides and trial ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the leases require the Government to pay 12.98% of tax increases | Lease language plainly sets 12.98% based on 372,990 BRSF; Woodies entitled to unpaid tax shares | The percentage is incorrect because the total rentable area omitted retail space; proper percentage is lower | Denied summary judgment for Woodies; material facts disputed about numbers and intent, trial required |
| Whether the tax-adjustment clause should be reformed for unilateral mistake | Reformation unnecessary; contract is clear as written | GSA mistaken as to total rentable sq ft; should reform contract to reflect correct occupancy percentage | Denied summary judgment for Government; reformation requires clear and convincing proof of mistake and that plaintiff knew or had reason to know, issues of fact remain |
| Whether the tax clause should be construed to exclude retail (rather than reformed) | Tax clause wording supports Government paying stated percentage; different clauses can define occupancy differently | BID clause includes retail; tax-adjustment clause should be read similarly to yield lower payment | Court rejects interpretive rewrite absent reformation; differences between clauses mean court will not construe tax clause to exclude retail without reformation proof |
| Applicability of Prompt Payment Act interest to unpaid tax amounts | Plaintiff seeks interest under 31 U.S.C. § 3902 for unpaid tax adjustments | Government says Prompt Payment Act does not apply to genuinely disputed amounts | Court finds a genuine dispute existed; Prompt Payment Act inapplicable to disputed sums; issue of which amounts (if any) are subject to interest remains open for trial |
Key Cases Cited
- Johnson Mgmt. Group CFC, Inc. v. Martinez, 308 F.3d 1245 (Fed. Cir. 2002) (elements for reformation for unilateral mistake follow Restatement approach)
- PCL Constr. Servs. v. United States, 84 Fed. Cl. 601 (2008) (Prompt Payment Act inapplicable to genuinely disputed amounts)
- George Sollitt Constr. Co. v. United States, 64 Fed. Cl. 229 (2005) (interest on contract claims may be available under the Contract Disputes Act)