Filed: Mar. 25, 2019
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 18-2234 _ Prairie Land Holdings, L.L.C. lllllllllllllllllllllPetitioner v. Federal Aviation Administration lllllllllllllllllllllRespondent _ Petition for Review of an Order of the Federal Aviation Administration _ Submitted: January 17, 2019 Filed: March 25, 2019 _ Before BENTON, MELLOY, and KELLY, Circuit Judges. _ MELLOY, Circuit Judge. Prairie Land Holdings, L.L.C. (“Prairie Land”) petitions for review of an adverse order by the Fede
Summary: United States Court of Appeals For the Eighth Circuit _ No. 18-2234 _ Prairie Land Holdings, L.L.C. lllllllllllllllllllllPetitioner v. Federal Aviation Administration lllllllllllllllllllllRespondent _ Petition for Review of an Order of the Federal Aviation Administration _ Submitted: January 17, 2019 Filed: March 25, 2019 _ Before BENTON, MELLOY, and KELLY, Circuit Judges. _ MELLOY, Circuit Judge. Prairie Land Holdings, L.L.C. (“Prairie Land”) petitions for review of an adverse order by the Feder..
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United States Court of Appeals
For the Eighth Circuit
___________________________
No. 18-2234
___________________________
Prairie Land Holdings, L.L.C.
lllllllllllllllllllllPetitioner
v.
Federal Aviation Administration
lllllllllllllllllllllRespondent
____________
Petition for Review of an Order of the
Federal Aviation Administration
____________
Submitted: January 17, 2019
Filed: March 25, 2019
____________
Before BENTON, MELLOY, and KELLY, Circuit Judges.
____________
MELLOY, Circuit Judge.
Prairie Land Holdings, L.L.C. (“Prairie Land”) petitions for review of an
adverse order by the Federal Aviation Administration’s Office of Dispute Resolution
for Acquisition (“ODRA”) regarding property Prairie Land leases to the
Administration. Having jurisdiction under 49 U.S.C.§ 46110, we affirm.
I. Background
In 1997, Respondent Federal Aviation Administration (“FAA”) entered into a
lease agreement with an Arkansas company, Southern Steel and Wire Co.
(“Southern”), for a “pole site” of 0.009 acre in Fort Smith, Arkansas (the “property”).
The lease permitted the FAA to construct and maintain on the property a “Low Level
Windshear Alert System,” which is a series of weather stations used to monitor wind
speed and direction near the airport. The lease lasted ten years, whereupon the FAA
and Southern renewed it for an additional ten. The renewed lease is the subject of the
current dispute, and the relevant portions are as follows:
1. PREMISES:
The Lessor hereby leases to the Government [the property].
....
2. TERM:
To have and to hold, for the term commencing on October 1, 2007, and
continuing through September 30, 2017, inclusive, PROVIDED, that
adequate appropriations are available from year to year for the payment
of rentals.
....
8. RESTORATION:
The Government shall surrender possession of the premises upon the
date of expiration or termination of this lease. . . .
....
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11. HOLDOVER:
If after the expiration of the lease, the Government shall retain
possession of the premises, the lease shall continue in force and effect
on a month-to-month basis. Rent shall be paid in accordance with the
terms of the lease, in arrears on a prorated basis, at the rate paid during
the lease term. This period shall continue until the Government shall
have signed a new lease with the Lessor, acquired the property in fee or
vacated the leased premises.
In 2015, Southern sold the property and surrounding land to Prairie Land.
Southern also assigned its lease with the FAA to Prairie Land. That same year, the
Fort Smith City Planning Commission rezoned Prairie Land’s newly acquired land
for commercial development.
At the beginning of 2017, Prairie Land and the FAA began discussing the
renewal of the lease. By August of that year, however, Prairie Land made it clear to
the FAA that it no longer wanted to lease the property. Prairie Land wanted to
develop the property into a commercial center, so it sent the FAA a “notice of
termination,” advising the FAA to vacate the premises by the expiration of the
lease—September 30, 2017.
The FAA did not vacate, and in October 2017, Prairie Land initiated a contract
dispute with the ODRA, an adjudicatory office of the FAA tasked with resolving such
disputes. Prairie Land moved for summary judgment, claiming that under Arkansas
law the FAA did not have a unilateral right to remain as a holdover tenant. The
ODRA disagreed, and in April 2018, it issued an order denying Prairie Land’s
motion. The ODRA concluded that: (1) federal law, not Arkansas law, governed
interpretation of the lease agreement; and (2) the plain language of the holdover
provisions permitted the FAA to “holdover on the property until either a new lease
is agreed upon or it acquires the property in fee.” Prairie Land timely filed the instant
petition for judicial review.
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II. Discussion
The sole issue on appeal is whether the ODRA erred in concluding that the
FAA’s continued occupancy of the property, without Prairie Land’s consent and after
the expiration and termination of the lease, is permitted by the lease agreement. We
review the ODRA’s nonfactual determinations under the Administrative Procedure
Act, specifically 5 U.S.C. § 706. Friends of Richards-Gebaur Airport v. FAA, 251
F.3d 1178, 1184–85 (8th Cir. 2001). Under that statute, we may “hold unlawful and
set aside agency action, findings, and conclusions” if they are “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A); see also Friends of Richards-Gebaur
Airport, 251 F.3d at 1185.
“Federal common law governs the interpretation and construction of a contract
between the United States and another party.” United States v. Basin Elec. Power
Coop., 248 F.3d 781, 796 (8th Cir. 2001); see also Boyle v. United Tech. Corp.,
487
U.S. 500, 504 (1988) (“[O]bligations to and rights of the United States under its
contracts are governed exclusively by federal law.”). We look to state law for
guidance in defining the contours of the federal common law, though, unless “a
‘significant conflict’ exists between an identifiable ‘federal policy or interest and the
[operation] of state law[,]’ . . . or the application of state law would ‘frustrate specific
objectives’ of federal legislation.”
Boyle, 487 U.S. at 507 (first alteration in original)
(citations omitted). In Arkansas, “[t]he first rule of interpretation of a contract is to
give to the language employed the meaning that the parties intended.” Wal-Mart
Stores, Inc. v. Coughlin,
255 S.W.3d 424, 429 (Ark. 2007) (citation omitted). A
reviewing court “must consider the sense and meaning of the words used by the
parties as they are taken and understood in their plain and ordinary meaning.”
Id.
The court is also to gather the parties’ intention from “the whole context of the
agreement,” not merely “from particular words and phrases.”
Id.
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Here, the lease clearly establishes a ten-year term for its duration. Upon the
expiration of that term or termination of the lease by the FAA,1 the lease obligates the
FAA to “surrender possession of the premises” to Prairie Land. However, the lease
qualifies that surrender language in paragraph 11, where it anticipates the FAA
“retain[ing] possession of the premises” after “the expiration of the lease.” In such
an event, the lease is to “continue in force and effect on a month-to-month basis,”
with the FAA paying rent at the same rate and time established by the lease, “until the
[FAA] shall have signed a new lease with [Prairie Land], acquired the property in fee
or vacated the leased premises.” Surrendering possession is thus left to the FAA’s
discretion in a holdover situation.
Based on these terms, we conclude that the FAA’s continued occupancy of the
property is permitted. The FAA has retained possession of the premises after the
expiration of the lease. It has not signed a new lease with Prairie Land, acquired the
property in fee, or vacated the leased premises. Therefore, under the plain language
of the lease, the lease continues in full effect, and the FAA is fully within its rights
to continue possessing the property. The ODRA did not err in concluding the same.
1
Regarding termination, the lease provides:
7. CANCELLATION:
The Government may terminate this lease, in whole or in part, if the
Real Estate Contracting Officer (RECO) determines that a termination
is in the best interest of the Government. The RECO shall terminate by
delivering to the Lessor a written notice specifying the effective date of
the termination. The termination notice shall be delivered by registered
mail, return receipt requested and mailed at least180 [sic] days before
the effective termination date.
There is no reciprocal provision permitting Prairie Land to unilaterally terminate the
lease.
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Prairie Land argues that our interpretation ignores the nature of a fixed-lease
term and conflicts with basic principles of contract interpretation. Prairie Land insists
that our interpretation: (1) does not comport with the plain language of the surrender
provision; (2) renders the lease term and restoration provisions superfluous; and (3)
unreasonably reconciles the FAA’s duty to vacate and the holdover provision. We
disagree. Our interpretation recognizes the unique nature of the contract at issue,
looking at “the whole context of the agreement” and not merely particular words or
phrases. Wal-Mart Stores, 255 S.W.3d at 429. The FAA is no ordinary tenant, and
the purpose of the lease is atypical. Instead of leasing the property for residential or
commercial purposes, the FAA is leasing the property for long-term public safety
reasons. The FAA thus contracted with Southern in such a way as to minimize
interference with its operations2 and the possibility of being forced to relocate against
its wishes, and the plain language reflects that. We see no superfluity in our
construction of the lease, nor do we think that our reading unreasonably harmonizes
the various terms of the lease.3
2
For instance, the lease provides:
9. INTERFERENCE WITH GOVERNMENT OPERATIONS:
The Lessor agrees not to erect or allow to be erected on the leased
property or on adjacent property of the Lessor, any structure or
obstruction of whatsoever kind or nature that may interfere with the
proper operation of the facilities installed by the Government under the
terms of this lease unless consent hereto shall first be secured from the
Government in writing.
3
We express no opinion as to whether Prairie Land may have some other
remedy in the event the FAA holds over for an unreasonable period of time, refuses
to negotiate in good faith for a lease extension, or unreasonably delays
commencement of condemnation proceedings.
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III. Conclusion
Accordingly, we deny Prairie Land’s petition for review.
KELLY, Circuit Judge, dissenting.
As I read the lease, the holdover provision’s conditional language (“If after the
expiration of the lease, the Government shall retain possession of the premises . . .”
(emphasis added)) explains what happens once the FAA becomes a holdover tenant,
but it is silent as to how the holdover tenancy may be established in the first place.
The FAA interprets this silence as allowing it unfettered discretion to become a
holdover tenant at the end of the lease. Given the lease’s important public safety
purpose, this interpretation may be reasonable. But in my view, it would be just as
reasonable to interpret this silence as calling for application of the common-law
understanding of holdover tenancies. And at common law, a tenant becomes a
holdover tenant only when the “landlord consents to [the] tenant’s remaining in
possession of the leased premises after the expiration of the term.” 49 Am. Jur. 2d
Landlord and Tenant § 289.
Because the lease’s holdover provision “is fairly susceptible to more than one
equally reasonable interpretation,” it is ambiguous as a matter of law. Yancy v. Hunt,
547 S.W.3d 116, 121 (Ark. Ct. App. 2018) (quoting Spann v. Lovett & Co.,
389
S.W.3d 77, 88 (Ark. Ct. App. 2012)). As a result, I would remand the case to the
ODRA for further proceedings. See United States v. Seckinger,
397 U.S. 203, 216
(1970) (holding that ambiguous contractual provisions should be construed against
the drafter, even if the drafter is the government); Hanners v. Giant Oil Co. of Ark.,
Inc.,
284 S.W.3d 468, 473 (Ark. 2008) (“Where an ambiguity is found within the
contract, parol evidence may be admitted . . . to prove an independent, collateral fact
about which the written contract was silent.”). Accordingly, I respectfully dissent.
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