NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2007-5110
INVERSA, S.A.,
and
ASSEMBLY OF CO-OWNERS OF TORRE MIRAMAR CONDOMINIUM,
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
Jason A. Levine, McDermott Will & Emery LLP, of Washington, DC, argued for
plaintiffs-appellants. Of counsel was Matthew M. Leland.
Roger A. Hipp, Trial Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, of Washington, DC, argued for defendant-appellee. On the
brief were Peter D. Keisler, Assistant Attorney General, Jeanne E. Davidson, Director,
Deborah A. Bynum, Assistant Director, and Brian S. Smith, Attorney.
Appealed from: United States Court of Federal Claims
Judge Lawrence M. Baskir
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2007-5110
INVERSA, S.A.
and
ASSEMBLY OF CO-OWNERS OF TORRE MIRAMAR CONDOMINIUM,
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: December 20, 2007
__________________________
Before SCHALL, Circuit Judge, PLAGER, Senior Circuit Judge, and MORAN, District
Judge. ∗
MORAN, District Judge.
DECISION
Inversa, S.A. and the Assembly of Co-owners of the Torre Miramar
Condominium appeal the final decision of the United States Court of Federal Claims
granting partial summary judgment in favor of the United States and dismissing Count II
∗
Honorable James B. Moran, Senior District Judge, United States District
Court for the Northern District of Illinois, sitting by designation.
of appellants’ complaint. Inversa, S.A. v. United States, No. 01-CV-220 (Fed. Cl. Sept.
13, 2005). We affirm.
DISCUSSION
I.
Appellants and the United States Department of State, Office of Foreign
Buildings Operations (FBO) had contracted for the lease of several floors of the Torre
Miramar Condominium for use as an embassy. A dispute arose regarding the amount
of rent to be paid and appellants sued. The parties entered into a Settlement
Agreement that required the execution of a new lease and included the following
provision:
6. Occupancy and Enhancement Project. As of April 9, 1990, FBO was
occupying 366.42 square meters of the ground floor and all rentable areas
of floors one through four and six. As of the date of the execution of the
Memorandum of Negotiations, FBO took possession of the remaining
areas as provided in the permanent lease and began installation of
security and safety enhancements to the building. FBO has budgeted and
shall expend during the initial term of the permanent lease of the security
and safety enhancements an amount in excess of $2,000,000.
Interpretation of the Settlement Agreement was to be in accordance with Panamanian
law.
During the tenure of its lease, the United States made numerous security and
safety modifications to the building, expending more than $3.3 million dollars in the
process. The United States vacated the building in 2004, leaving all of the modifications
in place. Appellants filed suit claiming, among other things, that the United States was
in breach of ¶ 6 of the Settlement Agreement because it did not expend in excess of $2
million for security and safety enhancements. Appellants asserted that even though the
United States spent more than $3.3 million in security and safety modifications, these
2007-5110 2
modifications did not constitute “enhancements” under the terms of the Settlement
Agreement because they did not increase the value of the building for the benefit of the
owners. The Court of Federal Claims disagreed, holding that nothing in the Settlement
Agreement required that, in order to qualify as “security and safety enhancements,”
modifications must increase the value of the building.
II.
Under Panamanian law, where contract terms are clear, they shall be literally
construed. Both parties agree that the term “security and safety enhancements” is not
ambiguous. Appellants proffer a number of experts in Panamanian law and several
dictionaries which purport to define “enhancement” as something that “adds value.”
Appellants then conclude that in order to constitute “enhancements” the modifications
had to add monetary value to the building. We disagree. We agree that “enhancement”
is generally defined as something that “adds value”; however, we do not follow
appellants’ leap that “value” necessarily implies monetary worth. Here, the word
“enhancement” is modified by the words “security and safety.” Our literal interpretation
leads us to conclude that the “value” added by the “enhancements” is to the “security
and safety” of the building, not to its monetary worth. While the enhancements may
indeed affect the building’s worth, such is not the purpose of ¶ 6 of the Settlement
Agreement.
Appellants argue that the term must be read in the context of the purpose behind
the Settlement Agreement, which was to settle a dispute over consideration for the
lease. Appellants imply that a definition that permits all modifications to qualify as
enhancements, regardless of their effect on the value of the building, would run afoul of
2007-5110 3
the parties’ intent at the time of contracting, because the $2 million requirement was
partial consideration for the lease.
Nothing in the terms of the Settlement Agreement supports appellants’ argument.
While ¶ 6 could be construed as additional consideration for a lowered rent payment, it
could just as easily be construed (as the United States argued) as some assurance that
the United States would not withdraw from the long-term lease prematurely, even
though the lease permitted it to do so with six months notice.
The term “security and safety enhancements” is clear on its face and we hold
that it includes all modifications to the building that enhance its security and safety.
Since the parties do not dispute that the United States expended in excess of $3.3
million for such modifications, it was not in breach of the Settlement Agreement as a
matter of law. The decision of the Court of Federal Claims is affirmed.
2007-5110 4