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The contractor argued the government breached a lease agreement for a property in New York. The contractor requested the court declare the lease void or preclude the government from exercising the contract’s purchase option. The government sought to dismiss, arguing COFC could not grant declaratory judgments, only monetary relief. COFC sided with the contractor holding that it had jurisdiction under the Contracts Disputes Act (CDA) to make declaratory judgments.
Broadway Gold, LLC v. United States, COFC No. 24-1364C
- Background – The contractor filed a complaint arguing the government breached a lease agreement with its predecessor-in-interest. The property was located in Brooklyn, NY and USPS was renting it.
- Allegations – The contractor asserted: (1) the breach allowed it to request declaratory judgment that the lease be declared void, and USPS may not buy the property, (2) USPS failed to maintain the property, (3) the government failed to pay rent from December 2023 to present, and (4) the government breached the lease’s purchase option for failure to pay rent.
- Dismissal Motions – The government moved to dismiss counts 1, 3, & 4. Although the merits of the case were not decided, the Court found the counts survived dismissal.
- Declaratory Judgment Jurisdiction: The government claimed COFC did not have jurisdiction to consider count 1 because the court was precluded from entering declaratory judgments. It alleged the court was limited to monetary damages only. The Court disagreed. Not only has the Court clearly held declaratory judgments within its CDA jurisdiction, the instant case called for it. Here, there was live dispute concerning whether USPS could exercise an option in the lease agreement or not because of an alleged breach. A declaration on the terms of the contract would resolve the dispute.
- Failure to State a Claim: The government sought to dismiss counts 3 and 4 alleging the complaint failed to state a claim upon which relief could be granted. It claimed that USPS validly exercised its purchase option making it the equitable owner of the property. The Court was unpersuaded. The contract adequately pled that USPS breached a valid lease agreement prior to exercising the purchase option. If this were the case, it would be barred form exercising its option to purchase.
— Case summary by Joshua Lim, Assistant Editor.
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