404 27 FEDERAL SUPPLEMENT, 2d SERIES

404 27 FEDERAL SUPPLEMENT, 2d SERIES process, messenger service, transportation, and deposition transcripts). The Second Cir- cuit, however, has disallowed reimbursement for computer research on the grounds that it "is merely a substitute for an attorney's time that is compensable under an application for attorneys' fees and is not `a separately tax- able cost." United Stalest Merritt Meridi- an Const. Corp, 95 F.3d 153, 173 (2d Cir. 1996); see also LeBlanc—Sternben I Fletch- er, 143 F.34 748, 763 (2d Cir.I998). There- fore, I will not allow plaintiffs attorney to be reimbursed $125.13 for her computer re- search time. Accordingly, plaintiffs attorney is entitled to an award of costs in this case in the amount of $3,525.86. CONCLUSION For the foregoing reasons, plaintiffs mo- tion for attorney's fees and costs, pursuant to 42 U.S.C. § 1988, is granted in part, and plaintiffs attorney, Margaret Somerset, is awarded $94,738.16. That sum shall be paid within forty-fwe (45) days of the entry of this order. IT IS SO ORDERED. UNITED STATES of America, Plaintiff, I Jeffrey E. EPSTEIN, Ivan S. Fisher, Ellyn Bank, Debra Elise Cohen, Diane Fisher d/b/a the Fisher Group Fisher & Softer a/k/a Fisher & Sophir, D. Ger- zog, Robert lleilbrun, Suzanne McDer- mott, Christopher II. Martin, Jesse Sie- gel a/k/a Jessie Siegel, Siegel, Martin & Ileilbrun, Ron Softer, and Carmen Tau- sik, Defendants. No. 96 CIV. 8307(DC). United States District Court, S.D. New York. March 31, 1998. Federal government, as landlord, brought proceeding to evict tenants from building. Government moved for partial sum- mary judgment. The District Court, Chin, J., held that: (1) lease unambiguously provided that written consent to sublease was re- quired, precluding claim that government orally consented to sublease; (2) court could apply federal common law to question of whether landlord's consent to sublease was subject to requirement that it not be unrea- sonably withheld; (3) court would apply law of New York, as there was no federal com- mon law on question and no need to create any; and (4) under New York law there was no requirement that consent not be unrea- sonably withheld. Motion granted. 1. Contracts e=147(2) If an agreement sets forth the parties' intent clearly and unambiguously, a court need look no further. 2. Contracts e=,176(2) Whether the text of an agreement is ambiguous or unambiguous is a matter of law to be decided by the court. 3. Contracts e=443(2) A contract is not deemed ambiguous un- less it is reasonably susceptible of more than one interpretation, and the court makes this determination by reference to the contract alone. 4. United States 4=70(7) Provision of lease with United States as landlord, that "Tenant may sublet...with the advance written permission of Landlord," precluded any oral sublease agreement 5. Landlord and Tenant e=76(3) Generally, under New York law, when a lease requires a tenant to obtain the prior written consent of the landlord to sublet or assign leased premises, a landlord may re- fuse consent arbitrarily, unless the lease con- tains a clause specifically stating that the landlord may not unreasonably withhold such consent. EFTA00187391 6. Federal Courts ea413 Federal court could apply federal com- mon law, as opposed to state law, to determi- nation of rights under real property lease with government as landlord. 7. Federal Courts ea413 Law of New York, rather than federal common law, would be applied to question whether consent of government, as landlord, to tenant's sublease of premises was subject to requirement that it not be unreasonably withheld; there was no body of federal com- mon law governing question and no pressing need for national uniformity calling for cre- ation of such law, while state law of landlord and tenant was well developed and parties probably entered into lease believing state law would apply. 8. United States ea70(7) Under New York law, there was no re- quirement that consent of federal govern- ment, as landlord, to sublease not be unrea- sonably withheld; there was no provision to that effect in lease, and under those circum- stances consent could be withheld for any reason or no reason. Mary Jo White, United States Attorney, by Serene K. Nakano, Assistant United States Attorney, New York City, for the United States. Wachtel & Masyr, LLP, by Steven J. Co- hen, New York City, for Jeffrey E. Epstein. Gage & PayRs, by G. Robert Gage, Jr, Ellen J. Casey, New York City, for Ivan S. Fisher, Diane Fisher, Fisher & Softer. Ellyn Bank, New York City, pro se. Debra Elise Cohen, New York City, pro se. D. Gerzog, New York City, pro se. Robert Heilbrun, New York City, pro se. I. The additional defendants are Ellyn Bank. De- bra Elisa Cohen• Diane Fisher dAda The Fisher Masher & Soifer a4/a Fisher & Sophir, D. Gerzog, Robert Heilbrun. Suzanne McDermott, Christopher H. Martin. Jesse Siegel wlr/a Jessie Siegel, Siegel• Martin & Heilbrun, U.S. I. EPSTEIN 405 ale ss27 F.Suppld 404 (S.D.N.Y. 1918) Suzanne McDermott, New York City, pro se. Christopher H. Martin, New York Defend- ers Service, New York City, pro se. Jessie Siegel, New York City, pro se. Siegel, Martin & Heilbrun, by Robert Heil- brun, New York City, pro se. Ron Softer, New York City, pro se. Carmen Tausik, New York City, pro se. OPINION CHIN, District Judge. In this case, the United States (the "Gov- ernment") seeks to evict defendants from a building formerly used as a residence by the Deputy Consul General of the Islamic Re- public of Iran ("Iran"). After diplomatic and consular relations with Iran were severed in 1980, the Office of Foreign Missions ("0FM") of the United States Department of State took poas.ssion of the budding pursuant to the Foreign Missions Act, 22 U.S.C. § 4301 of seq. 0FM leased the building to defen- dant Jeffrey E. Epstein in 1992. Epstein sublet the building to defendant Ivan S. Fish- er in 1996, purportedly without the Govern- ment's consent. Fisher, in turn, sublet a portion of the building to several subtenants. In 1996, the Government purported to ter- minate Epstein's lease and brought this ac- tion to eject Epstein and Fisher from the building. The Government later amended its complaint to assert a claim for ejectment against the subtenants as well.' The Gov- ernment also sought to recover back rent from Epstein and Fisher. Epstein and Fisher oppose ejectment on numerous grounds, some of which were re- jected when I heard oral argument in this case on December 17, 1997. Defendants' sole remaining defenses are that (1) 0FM orally consented to Epstein's proposed sublet of the premises to Fisher, and (2) 0FM did not properly terminate Epstein's lease be- Ron Soifer, and Carmen Tausik (collectively, the -Subtenants"). The Subtenants were added as defendants after the Government learned that Fisher had sublet to them without consent of OFM. EFTA00187392 406 27 FEDERAL SUPPLEMENT, 2d SERIES cause it breached an implied covenant of good faith and fair dealing by unreasonably withholding written consent to Epstein's re- quest to sublet to Fisher. Because I fmd as a matter of law that (1) the lease unambiguously required the prior written consent of OFM for Epstein to sublet or assign the premises, thereby rendering any alleged oral consent invalid, and (2) OFM was entitled under the lease to unreasonably withhold its written consent to Epstein's re- quest to sublet to Fisher, the Government's motion for partial summary judgment on its claim for ejectment is granted as against all defendants. BACKGROUND A. The Facts The premises at 34 East 69th Street in Manhattan (the "Premise?) were once the residence of the former Deputy General Con- sul of Iran. When the United States severed diplomatic ties with Iran in 1980, the Deputy General Consul vacated, but the Premises remained the property of Iran. The Govern- ment, through the Secretary of State, was entrusted with the care and maintenance of the Premises under the Foreign Missions Act ("FMA"), 22 U.S.C. § 4305(c), and the Vien- na Convention on Consular Relations, Apr. 24, 1963, art. 27(1)(a), 21 U.S.T. 77, 596 U.N.T.S. 261, a multilateral treaty entered into by the United States and Iran, among other nations. In 1992, OFM entered into a two-year lease with Epstein, to run from February 1, 1992 through January 31, 1994. The agreed rent was $15,000 per month. Pursuant to the lease's Use Clause, only Epstein, his family, servants, or approved subtenants or assignees could occupy the premises, Under the Assignment and Sublease Clause, Ep- stein was required to obtain prior written consent of OFM to assign or sublet the Premises. The lease contained no clause prohibiting OFM from unreasonably with- holding its consent to a sublet or assignment. On August 28, 1992, OFM and Epstein extended the lease for three more years, to January 31, 1997. The lease amendment did not alter either the Use Clause or the As-signment and Sublease Clause. Epstein was granted, however, a right of rust refusal to renew the lease upon its expiration at the end of January, 1997. Epstein and his family continued to reside at the Premises until January of 1996, at which time Epstein abandoned. OFM did not discover that Epstein had abandoned the Premises, however, until several months la- ter. In March of 1996, Epstein commenced negotiations with Xenophon Galinas for a possible sublease or assignment of the Prem- ises. The proposed arrangement between Epstein and Galinas included payment by Galinas to Epstein of $100,000 for improve- ments to the Premises made by Epstein dur- ing his tenancy. At the same time, Epstein also commenced negotiations to sublet the Premises to Fisher. Fisher informed Ep- stein, however, that he would not enter into a sublease unless it was approved by the State Department and Fisher could be assured that he could remain in the Premises beyond January 31, 1997. Epstein told Fisher that he had a right of first refusal under the lease amendment, and that pursuant to this right, he would take all necessary steps to renew at the end of the lease term. In the meantime, Galinas contacted OFM directly about a new lease for the Premises beginning in February of 1997. Negotiations between Galinas and OFM culminated in a "letter agreement" dated April 12, 1996 by which Galinas agreed to rent the Premises for a five-year term beginning February 1, 1997 for $16,000 per month, with yearly in- creases, up to $18,000 per month for the last year of the lease term. This agreement was expressly made subject to Epstein exercising his right of first refusal and renewing his lease for personal use only. In other words, OFM told Galinas that it would not consent to any request by Epstein for a sublet be- yond January 31, 1997, and that it would permit Epstein to renew the lease beyond that date only if he occupied the premises personally. On April 16, 1996, Epstein notified OFM by letter that he intended to exercise his right of first refusal and renew the lease. Epstein contends that in a telephone confer- ence between Richard Massey of OFM and EFTA00187393 Jeffrey Schantz, Epstein's transaction coun- sel, on April 19, 1996, OFM orally consented to Epstein's request to sublet the Premises to Fisher. The same day, Epstein wrote back, requesting "written confirmation" of OFM's alleged approval. By letter dated April 26, 1996, OFM formally responded to Epstein's request, In this letter, Thomas E. Burns, a representative of OFM, informed Epstein of OFM's intention to lease the Premises to Galines beginning February 1, 1997 in the event that Epstein decided not to renew the lease and occupy the premises personally, and denied Epstein's request to sublet the Premises to Fisher. OFM's stat- ed reasons for the denial were to (1) "mini- mize any difficulties in turning over the house to the tenant we have selected should Mr. Epstein decide not to reoccupy the premises under the new lease," and (2) "mini- mize the potential for damage to the premis- es from a short-term tenant occupancy." (Schantz Aft, Exh. D). OFM did, however, grant Epstein permission to sublet the Prem- ises to Calines for the remainder of 1996. On May 3, 1996, Epstein again wrote to OFM, formally exercising his right of first refusal, believing such right to have been triggered by the April 12, 1996 letter agree- ment between OFM and Cannes. Thereaf ter, on May 7, 1996, Epstein and Fisher entered into a sublease agreement at a rental price of $20,000 per month, despite OFM's express denial of Epstein's request for per- mission to sublet to Fisher. Fisher claims to have entered into the sublease agreement based on Epstein's representations that the sublease was approved by the State Depart- ment and that Epstein had properly exer- cised his right of first refusal to renew the lease. The original sublease was to com- mence May 7, 1996 and terminate on January 31, 1997. In the event that Epstein's lease with OFM was extended, and the new rent under that lease did not exceed $20,000 per month, the sublease would be automatically extended for an additional five-year period. On May 8, 1996, OFM wrote to Epstein informing him that his attempt to exercise his right of first refusal was premature be- cause OFM had not yet made a formal offer to lease the Premises to someone else. On U.S. 1 EPSTEIN 407 Cites, 27 PSupp.2.41 41111 (S.D.N.Y. 1990 May 10, 1996, OFM again wrote to Epstein reiterating that the exercise of his right of first refusal was premature, and explaining that the prior arrangement with Gaines was not a binding contract, but rather merely an "expression of interest: Then, on May 16, 1996, OFM officials visited the Premises and discovered that Fisher, not Epstein, was in possession. Throughout this period, Epstein continued to pay, and OFM continued to accept, rent for the Premises, despite its knowledge that Fisher was in possession. OFM accepted and deposited Epstein's May 1996 rent check on May 28, 1996. On June 3, 1996, OFM sent Epstein a notice of default, as required by the lease, stating that he was in violation of (1) the Use Clause, because he was no longer personally occupying the premises, and (2) the Assignment and Sublease Clause, because he had sublet to Fisher without prior written consent of OFM. Consistent with the terms of the Lease, Epstein was given 30 days to cure the default. On June 28, 1996, OFM accepted Epstein's June rent check. The cure period then expired on July 10, 1996. Epstein had not cured by this time, but rather than terminating the lease, OFM served Epstein with a 10-day notice to cure and demanded the July rent. OFM then accepted Epstein's check for the July rent. Finally, on August 7, 1996, OFM notified Epstein that the amended lease would be terminated as of August 23, 1996 for failure to cure the defaults. OFM demanded that Epstein vacate the Premises and return the keys on o• before that date. Despite OFM's notice of termination, Ep- stein tendered August rent on August 30, 1996. On September 18, 1996, OFM wrote to Epstein stating that rent was being accepted only through August 23, 1996, and refunded the balance to Epstein. On September 16, 1996, OFM wrote to Fisher advising that the lease agreement between OFM and Epstein had been terminated, that he was occupying the premises illegally, and demanded that the Premises be vacated immediately. Fisher met with an Assistant United States Attor- ney on September 23, 1996, who informed Fisher that Richard Massey, the OFM repre- sentative with whom Epstein dealt, would EFTA00187394 408 27 FEDERAL SUPPLEMENT, 2d SERIES swear under oath that he never orally ap- proved the sublet to Fisher. Fisher con- tends that he offered to continue paying rent directly to OFM rather than to Epstein, an offer to which the Government never re- sponded. At that time, Fisher stopped pay- ing rent to Epstein pursuant to the sublease. B. Prior Proceedings 1. The Original Actions The Government commenced this action against Epstein and Fisher in October of 1996. It seeks a declaration by the Court that it is entitled to exclusive possession of the Premises and that it is entitled to have Epstein and Fisher ejected therefrom be- cause Epstein's lease was properly terminat- ed as of August 23, 1996. In addition, the Government seeks dismissal of Fisher's first and second counterclaims, which seek equita- ble relief against the Government.' Finally, the Government demands back rent from Epstein and/or Fisher. In February of 1997, Epstein commenced a holdover proceeding in the Civil Court of the City of New York against Fisher for nonpay- ment of rent under the terms of the sublease. Fisher removed the state court action to this Court. The Government moved for partial sum- mary judgment on its claim for ejectment of Epstein and Fisher. In addition, it sought an order requiring Epstein and Fisher to pay into an escrow fund $15,000 per month from August 23, 1996 to the date this action is finally decided. Epstein cross-moved against Fisher to remand its holdover action to state court, and Fisher cross-moved against Ep- stein for consolidation of the holdover action with the pending federal action. 2. In its first counterclaim, Fisher seeks a declara- tion that the sublease is valid and that Fisher is lawfully entitled to full possession and use of the premises. In its second counterclaim, Fisher seeks a declaration that the sublease was auto- matically renewed for a five-year term. com- mencing January 31, 1997, because Epstein properly exercised his right of first refusal. 3. Technically. Epstein asserted only the first ar- gument, and Fisher asserted all four arguments. Epstein is no longer occupying the Premises, but I heard oral argument on the motions on December 17, 1997. Collectively, Epstein and Fisher asserted four arguments in oppo- sition to the Government's motion for sum- mary judgmenta They contend that there are genuine issues of material fact as to whether the Government properly terminat- ed the lease entered into between OFM and Epstein. Specifically, they argue, factual questions exists as to (1) whether the Gov- ernment waived Epstein's alleged default of the lease by accepting rent after the Govern- ment became aware that Fisher was occupy- ing the premises; (2) whether the OFM- Epstein lease permitted oral approval of an assignment or sublease (ie., whether the As- signment and Sublet Clause is ambiguous on the issue of whether an assignment or sublet could be approved orally); (3) whether OFM in fact orally approved the sublease to Fish- er; and (4) whether the Government breach- ed an obligation of good faith and fair dealing inherent in its lease with Epstein by unrea- sonably withholding written approval of a sublet to Fisher, assuming the Court holds as a matter of law that oral approval was, not permitted by the lease. At the conclusion of the argument, I re- solved several of the issues pertaining to these motions on the record. As an initial matter, I denied Epstein's motion to remand and granted Fisher's motion to consolidate. I then addressed the Government's motion for summary judgment and its application concerning the creation of an escrow fund. I granted summary judgment in favor of the Government on Epstein's and Fisher's waiver argument, holding that "no reason- able fact finder could conclude from [the) undisputed facts and the sequence of events, including the acceptance of rent after the cure period but before the actual termination still has an interest in the Court's decision as to whether OFM properly terminated its lease with Epstein. Moreover, Fisher's rights as subtenant derive from Epstein's rights as overtenant. for if I decide as a matter of law that the lease was properly terminated on August 23, 1996. neither Epstein nor Fisher has any right to occupy the Premises beyond that date. Thus, I will treat all four arguments in opposition to the Govern. ment's motion as though they were asserted by Epstein and Fisher jointly. EFTA00187395 U.S. I EPSTEIN 409 CI144027 F.3059.241 404 (S.D.N.Y. 1991) of the lease, that that could constitute a waiver in light of the very clear nonwaiver clause in the lease." (Tr. at 39). I reserved decision, however, on the following issues: (1) whether the lease unambiguously re- quired that OFM's consent to an assignment or sublet be in writing, in which case Massey could not have orally consented, as a matter of law, to Epstein's sublet of the Premises to Fisher, (2) whether OFM was permitted un- der the lease to unreasonably withhold con- sent to Epstein's consent to a sublet to Fish- er, or whether it was bound by an implied obligation of good faith and fair dealing, and (3) whether, assuming the latter, OFM in fact withheld its consent unreasonably. Finally, I ordered Epstein to pay into an escrow fund eight days worth of the $15,000 rent for the month of August 1996 and an additional $15,000 for September 1996 (be- cause OFM had already accepted his tender of rent through August 23, 1996, and Epstein had collected rent from Fisher through Sep- tember 30, 1996). Additionally, I ordered Fisher to pay into the fund $15,000 per month, beginning October 1, 1996 to date, and continuing for each month thereafter. 2. The Government's Addition of the Subtenants as Defendants In the course of discovery on its claims for relief against Epstein and Fisher, the Gov- ernment learned that Fisher had further sub- let the Premises to the Subtenants, also with- out the prior written consent of OFM. The Government then sought leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15 to name the Subtenants as additional defendants in the action. I grant- ed the Government's motion on the record at the December 17, 1997 oral argument. The Government thereafter filed a second amend- ed complaint and served a copy on each of the Subtenants. In an effort to settle the case, I held a conference on January 28, 1998. At the con- clusion of that conference, the Government requested permission to file a motion seeking partial summary judgment against the Sub- tenants. By stipulation and order dated March 6, 1998, all of the named Subtenants, except for Diane Fisher &Wa The Fisher Group and Ron Softer, agreed to be bound by any order I entered with respect to Fish- er's right to occupy the Premises. On March 13, 1998, after the Government submitted its motion, Diane Fisher executed the stipula- tion and order, also agreeing to be bound. To date, Soifer still has not executed the stipulation. Hence, the Government's motion for summary judgment against the Subten- ants is still pending with respect to Softer only. DISCUSSION A. Standards for Summary Judgment The standards applicable to motions for summary judgment are well-settled. A court may grant summary judgment only where there is no genuine issue of material fact and the moving party is therefore entitled to judgment as a matter of law. See Fed. R.Civ.P. 56(c). Accordingly, the court's task is not to "weigh the evidence and determine the truth of the matter but to determine whether thre is a genuine issue for trial." I Anderson Liberty Lobby, Inc, 477 U.S. 242, 249, 106 S.Ct. 2605, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate if, resolving all ambiguities and drawing all inferences against the moving party,id. at 255, 106 S.Ct. 2505 (citing Adickes I S.H. Kress & Ca, 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)), there exists a dispute about a material fact "such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248 106 S.Ct. 2606. Once the moving party meets its initial burden of production, the burden shifts to the nonmoving party to demonstrate that there exist genuine issues I material fact. Matsushita Elec. Indus. Ca Zenith Radio Corp., 476 U.S. 574, 585-86, 106 S.Ct. 1348, 89 L.Ed2d 638 (1986). To defeat a motion for summary judgment, however, the non- moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. at 586, 106 S.Ct. 1348. There is no issue for trial unless there exists sufficient evidence in the record favoring the party opposing summary judg- ment to support a jury verdict in that party's EFTA00187396 410 27 FEDERAL SUPPLEMENT, 2d SERIES favor. Anderson, 477 U.S. at 249, 106 S.Ct. 2506. As the Supreme Court stated in Anderson, "If the evidence is merely color- able, or is not significantly probative, sum- mary judgment may be granted." Id at 249-50, 106 S.CL 2506 (citations omitted). With these standards in mind, I turn to the Government's motions for partial summary judgment. B. The Government's Motion for Partial Summary Judgment against Epstein and Fisher 1. Whether the Lease Permitted Oral Consent to a Proposed Sublet or As- signment Epstein and Fisher contend that summary judgment should be denied because there exists a genuine issue of material fact as to whether OFM orally consented to Epstein's request to sublet the Premises to Fisher. The Government, on the other hand, argues that the lease unambiguously required that a sublet or assignment of the Premises be ap- proved in advance in writing, and that, there- fore, even if OFM did orally consent, such consent was invalid as a matter of law. 11-31 In contract disputes, the Court be- gins by examining the language of the con- tract itself to determine the parties' intent. Stroll I Epstein 818 F.Supp. 640, 643 (S.D.N.Y.), affd, 9 FM 1637 (2d Cir.1993). If the agreement sets forth the parties' in- tent clearly and unambiguously, the Court need look no further. See Sterling Drug Inc. Bayer AG, 792 F.Supp. 1357, 1366-66 (S.D.N.Y.1992), red in part, remanded in part, 14 F.3d 738 (2d Cir.1994). Whether the text of an agreement is ambiguous or unam- biguous is a matter of law to be decided by the Court. Sterling Drug, 792 F.Supp. at 1366. A contract is not deemed ambiguous unless it is reasonably susceptible of more than one interpretation, and the Court makes this determination by reference to the con- tract alone. Banque Ambe et Internationale D'Investissement I. Maryland Nat'l Bank, 67 F.3d 146, 162 (2d Cir.1995). 141 The lease clearly provides that Ep- stein was required to obtain the advance written consent of OFM to sublet the Prem-ises to Fisher. The Assignment and Sublet Clause expressly states that "Tenant may sublet all or part of the Premises, or assign this lease or permit any other person to use the Premises with the advance written per- mission of Landlord" (Massey Decl., Exh. B at 4) (emphasis added). Epstein's and Fisher's argument that the word "may" sug- gests that OFM could approve a sublease or assignment in writing or orally is tortured. Only one interpretation of this clause is tena- ble: prior written consent of OFM was re- quired for a sublet. Epstein's and Fisher's argument would render the language of the clause meaningless, and I am obliged to read the lease in a manner that gives full force and effect to all clauses contained therein. See Lloyds Bank PIC Republic of Ecua- dor, No. 96 Civ. 1789 ( ), 1998 WL 118170, at •8 (S.D.N.Y. Mar. 16, 1998). Accordingly, OFM could not have orally consented to Ep- stein's proposed sublet to Fisher, as a matter of law, and, therefore, I need not reach the question of whether OFM actually gave oral consent. 2. Whether the Lease Permitted OFM to Unreasonably Withhold Written Consent to a Proposed Sublet The last issue to be decided on this motion is whether OFM was entitled to refuse Ep- stein's proposed sublet to Fisher arbitrarily, or whether it breached a duty of good faith and fair dealing implicit in the lease agree- ment by unreasonably refusing to grant such consent in writing. Resolution of this issue turns on whether federal contract law or New York landlord-tenant law applies. [51 Generally, under New York law, where a lease requires a tenant to obtain the prior written consent of the landlord to sub- let or assign leased premises, a landlord may refuse consent arbitrarily, unless the lease contains a clause specifically stating that the landlord may not unreasonably withhold such consent See Dress Shirt Sales, Inc., Hotel Martinique Assocs., 12 N.Y2d 339, 239 N.Y.S.2d 660, 662, 190 N.E2d 10 (Ct.App. 1963). The Assignment and Sublet Clause in the lease between OFM and Epstein re- quired Epstein to obtain prior written con- sent of OFM to a proposed sublet, but it EFTA00187397 U.S. EPSTEIN 411 ch.. 27 F.Suppld 404 (5.D.N.Y. 1991) contained no provision prohibiting OFM from of landlord and tenant. Powers t United unreasonably withholding such written con- sent. The Government, relying on New York landlord-tenant law, asserts that it was enti- tled to withhold its consent to Epstein's pro- posed sublet to Fisher for any reason, or for no reason at all. Epstein and Fisher, howev- er, disagree. They contend that, because the Government is a party to the lease, interpre- tation of the lease is governed by principles of federal common law, not New York State law. Pursuant to federal common law of con- tracts, Epstein and Fisher continue, the lease between OFM and Epstein contains an im- plied covenant of good faith and fair dealing, citing Neal & Co. t! United States, 36 Fed. Cl. 600 (1996), re 121 F.3d 683 (Fed.Cir. 1997). The requirement of good faith and fair dealing, they argue, prohibits OFM from withholding consent unreasonably. OFM's refusal to consent to Epstein's proposed sub- let of the Premises to Fisher, they contend, was motivated by its desire to enter into a lease with Galinas at a higher rent beginning February 1, 1997. Such conduct was unrea- sonable, they argue, and, therefore, OFM breached the implied covenant of good faith and fair dealing in the lease. (6,7) I conclude that New York landlord- tenant law rather than general federal con- tract principles should apply. As a threshold matter, although I agree as a policy matter that federal law should apply, there is no federal statutory or common law governing landlord-tenant relations. Federal law should apply because the United States is a party. I have jurisdiction over this action based on 28 U.S.C. § 1345 and the FMA 22 U.S.C. § 4301 et seq. The subject matter of this action is a landlord-tenant dispute, how- ever, and while application of federal law is appropriate in federal question cases where applicable federal substantive law exists, there is no federal statutory or common law 4. In United Stales! Bedford Associates, 657 Ii.2d 1300 (2d Cir.1981 , cert. denied, 456 U.S. 914. 102 S.Ct. 1767, 72 L.Ed.2d 173 (1982). the Sec. and Circuit upheld the district court's applies• tion of federal contract law to determine whether the United States and a potential lessor of a commercial building had in fact made a contract, stating that "tilhis court undoubtedly has power Skates Postal Seru, 671 F.2d 1041, f042, 1046 (7th Cir.1982); Reed United States Postal Sera., 660 F.Supp. 178, 181 (D.Mass-1987). The question remains, therefore, what law applies in the absence of a federal rule on point. As the Supreme Court has made clear, my power to create federal common law in the absence of federal landlord-tenant law is lim- ited. Several recent Supreme Court deci- sions have reaffirmed the principle that the power of the federal courts to fashion princi- ples of federal common law is limited. See, e.g., O'Melveny & Myers FDIC, 512 U.S. 79, 87-88, 114 S.Ct. 20487 129 L.Ed.2d 67 (1994) (noting that cases where the formula- tion of a "special federal rule" are "few and restricted"); Kamen I Kemper Fin. Servs., Inc., 500 U.S. 90, sir, 111 S.Ct. 1711, 114 L.Ed.2d 152 (1991) (noting that a federal court "should endeavor to fdl the interstices of federal remedial schemes with uniform federal rules only when the scheme in ques- tion evidences a distinct need for nationwide legal standards or when express provisions in analogous statutory schemes embody con- gressional policy choices readily applicable to the matter at hand") (citations omitted). While this recent Supreme Court authority leaves room for federal courts to create prin- ciples of federal common law in certain nar- row circumstances, generally a "significant conflict between some federal policy or inter- est and the use of state law" is required before "judicial creation of a special federal rule (is) justified." O'Melveny, 512 U.S. at 87, 114 S.Ct. 2048. While few courts have addressed the precise issue of whether leases to which the Government is a party are governed by general federal common law of contracts or state landlord-tenant law, there is some case law on point. The Second Cir- cuit has not yet spoken definitively on this issue,4 but recently noted the existence of a to apply federal law in disputes between the United States and its lessors?' Id. at 1309 n. 7. The court in Kerin I. United States Postal Sera., 116 F.3d 988 (2d ir.1997), acknowledged the Bedford Associates decision, but implied that Bed. ford Associates involved the issue of creation of a lease only, stating that there is "room for fair debate" as to whether federal or state law ap. EFTA00187398 412 27 FEDERAL SUPPLEMENT, 2d SERIES conflict between the Federal Circuit and the Seventh Circuit concerning "whether federal common law or state law applies to the inter- pretation of Postal Service Leases?' Kerin United States Postal Sera, 116 F2d 988, 990 (2d Cir.1997). On the one hand, the Federal Circuit has held that federal law applies to resolve disputes between the Unit- ed States and its lessors or tenants. See. e.g., Forman I United States, 767 F.2d 875, 879-80 (Fed. ir.1985); 6 Kelley United State* 19 CI.Ct. 155, 162 (1989). On the other hand, the Seventh Circuit has held that state substantive law governs in landlord- tenant disputes involving the Government. See Powers United States Postal Sett, 671 F.2d 1041,1043-46 (7th Cir.1982).. The Second Circuit in Kerin did not reach the issue of whether federal common law or state law applied because, in that case, feder- al law and state law led to the same result. See Kerin, 116 F.3d at 991. I agree with the Seventh Circuit's conclusion, for two reasons. First, although Epstein and Fisher argue that a federal rule should be created to pro- mote the creation of a uniform body of law in landlord-tenant disputes involving the Gov- ernment, there is no "distinct need" for a nationwide legal standard or a uniform na- tional rule. See Kamen, 500 U.S. at 98 Ill S.Ct, 1711. Landlord-tenant law traditional- ly has been a matter of state law. There is no compelling reason to disrupt expectations that tenants and landlords may have under state law merely because they are entering into a lease with the federal government. Courts have long held that, "[albsent control- ling federal legislation or rule of law, ques- tions involving real property rights are de- plies to the interpretation of a lease to which the Government is a party. Id. at 990-91. 5. While the Forman court stated that federal law governs in landlord-tenant disputes involving the Government, it nevertheless relied on state law cases in interpreting the particular provision of the Postal Service lease at issue. See 767 P.M at 88041. 6. Other courts, too, have applied state substan- tive law as the rule of decision In landlord-tenant disputes involving the Government. See, e.g., Braxton'. United States, 858 F.2d 650. 655 (11th Cir.19881 (holding that Florida law applies to determine whether one who occupies land for-termined under state law, even when the United States is a party." United States 1 O'Block, 788 F.2d 1423, 1435 (10th Cir.198M (citing Oregon ex rel. State Land lid Corvallis Sand & Gravel Co., 429 U.S. 363, 378-81, 97 S.Ct. 582, 60 L.Ed.2d 650 (1977)).7 Second, application of state substantive law directly on point is eminently more logi- cal than application of general principles of federal contract law. While application of general federal contract law to Government contracts may be appropriate in certain in- stances, where, as here, the particular gov- ernment contract is a lease for the use of real property, the adoption of state common law of landlord-tenant relations, a body of law that has developed precisely to address the rights and duties of individuals in the unique relationship of landlord and tenant, makes sense. Application of the state rule, which permits a landlord to refuse consent to a sublet or assignment arbitrarily in the ab- sence of a clause to the contrary, better serves the interests of the Government as a landlord because it permits the Government to have unfettered discretion in deciding who occupies its property. Given the sensitive political considerations that often come into play when governmental property, such as the property here in issue owned by Iran, is involved, the Government should have as much discretion as possible. Noting that federal landlord-tenant law does not exist, Judge Posner stated in Pow- The Federal Courts could of course create that law, picking and choosing among ex- isting state laws and proposed reforms in accordance with the recommendations of kited by the Government must pay the Govern- ment a reasonable rent for the period of his occupancy); Reed. 660 F.Supp. at 181 (holding that Massachusetts law governs the rights of the parties under a Postal Service lease). 7. Indeed, the Supreme Court has articulated that the normal federal disposition where no substan- tive federal provision Is relevant to the legal issue at hand is for "federal courts [to) 'Incorporatk) [state law] as the federal rule of decision.'" Kamen, 500 U.S. at 98, III S.Ct. 1711 (emphasis added) (quoting United States I. Kimbell Foods, Inc., 440 U.S. 715, 728, 99- S.M. 1448, 59 L.Ed.2d 711 (1979)). EFTA00187399 U.S. ■ EPSTEIN 413 CIO: as 27 F.Survad 404 (S.D.N.Y. 1998) eminent scholars and practitioners. It is not to be expected that the federal courts would do a very good job of devising a model code of landlord-tenant law, since they have very little experience in land- lord-tenant matters; and though eventual- ly some body of law would emerge it would not in all likelihood be a uniform body, because there are [thirteen] federal cir- cuits and the Supreme Court could be expected to intervene only sporadically • • (Vie do not have to balance compet- ing federal and state interests in this case after all. The overriding federal interest here is in certainty of right and obligation flowing from conformity to known law; the state interest is in offering its landlords a like certainty. These interests converge in favor of adopting ... state law rather than federal common law. Powers, 671 F.2d at 1045-46. This reasoning is quite convincing, particularly in a case such as this, where the Government and Epstein, in all likelihood, "entered [a) legal relationship with the expectation that their rights and obligations would be governed by state-law standards." Kamen, 600 U.S. at 98, 111 S.Ct. 1711. Finally, Er Win's and Fisher's reliance on Neal & Ca United States, 36 Fed. Cl. 600 (1996), alrd 121 F.3d 683 (Fed.Cir.1997), is therefore misplaced. There, the United States Court of Federal Claims stated that lelvery contract, including those in which the Government is a party, contains an im- plied covenant of good faith and fair dealing," id at 631, and from this statement, Epstein and Fisher extrapolate that there exists an implied covenant of good faith and fair deal- ing in the lease agreement between Epstein and the Government at issue here. The facts of Neal & Co. are distinguish- able, however. Neal & Co. involved a con- struction contract to build a housing project entered into between the Government and a contractor, not a lease for occupancy of real property. While a lease is a type of contract, the considerations surrounding a lease of real property are sufficiently different from those involved in a conventional contract as to mili- tate against the extension of Neal & Co. and like cases to landlord-tenant disputes. A construction contract does not implicate the Government's rights, as a possessor of a valuable leasehold, to regulate the possession and use of real property under its control. Thus, as between general federal contract principles and specific state landlord-tenant law, the latter should be applied. Land is unique. It is logical, therefore, that a land- lord should have virtually complete say in who occupies its property. See Mann The- atres Corp. I Mid-Island Shopping Plaza Ca, 94 A.D.2d 466, 464 N.Y.S.2d 793, 798 (2d Dep't 1983) (noting that landlords have a "substantial interest in controlling the as- signability of leases"), eV, 62 N.Y.2d 930, 479 N.Y.S.2d 213, 468 N.E2cl 51 (CLApp. 1984). It makes sense for the law to permit a landlord to unreasonably withhold consent to a proposed sublet unless the parties spe- cifically bargain otherwise. See Alex M. Johnson, Jr., Correctly Interpreting Long- Term Leases Pursuant to Modern Contract Law: Toward a Theory of Relational Leases, 74 Va. L.Rev. 751, 758 (1988) (discussing the majority view that absent contractual agree- ment to the contrary landlords are permitted to unreasonably withhold consent to a sublet or assignment, and noting that the rule stems from the "paramount importance of the lessor's ability to control the selection of his tenants so as to protect the value of his reversionary interest" in the leasehold). [SI I therefore adopt the relevant rule of New York landlord-tenant law for purposes of deciding the remaining issue in this dis- pute, and hold that, consistent with New York law, OFM was entitled to arbitrarily withhold its consent to Epstein's request to sublet the Premises to Fisher. Even assum- ing OFM had a hidden agenda in refusing Epstein's request to sublet to Fisher, specifi- cally, that it preferred to enter into a new lease with Galinas at a higher rental price, it was, entitled to withhold its consent to a sublet for a good reason, a bad reason, or no reason at all. There existed no implied cove- nant of good faith and fair dealing in its lease with Epstein requiring OFM to act reason- ably in deciding whether to approve Ep- stein's proposed sublet, and, therefore, OFM cannot be held liable for a breach thereof. EFTA00187400 414 27 FEDERAL SUPPLEMENT, 2d SERIES • Thus, I need not reach the issue of whether OFM in fact unreasonably withheld consent. And, as Fisher was occupying the Premises pursuant to an illegal sublet, OFM was with- in its rights to terminate Epstein's lease. Accordingly, the Government's motion for partial summary judgment on its claim for ejectment of Epstein and Fisher from the Premises is hereby granted. C. The Government's Motion for Partial Summary Judgment Against the Sub- tenants Eleven of the twelve Subtenants signed a stipulation agreeing to be bound by the Court's decision on the Government's claim for ejectment against Epstein and Fisher. I now grant the Government's motion for par- tial summary judgment against Epstein and Fisher; hence, the motion is also granted with respect to these eleven Subtenants. The remaining Subtenant, Ron Softer, did not sign the stipulation. He has not respond- ed to the Government's motion because the motion is not returnable until April 20, 1998. Softer, however, can have no greater rights than Fisher. Hence, the Government's mo- tion is granted as to Softer as well. Of course, if Soifer believes he has some basis for arguing that he has greater rights than Fisher has, he may make a motion for recon- sideration within ten days hereof. CONCLUSION For the foregoing reasons, the Govern- ment's motion for summary judgment on its claim for ejectment is granted as to Epstein, Fisher, and all of the Subtenants. SO ORDERED. UNION CARBIDE CORPORATION, indi• vidually and on behalf of and as the suc- cessor in interest of Seadrift Polypropy- lene Company, Plaintiff, I MONTELL Montell Polyolefins; Montell North America Incorporated; Montell USA Incorporated; Technipol S.r.l.; Montedison SpA.; Montell Fi- nance USA, Inc.; Royal Dutch Petrole- um Company, p.l.c.; The Shell Transport and Tradi ompany, p.l.c.; Shell Pe- troleum ; The Shell Petroleum Company Limited; Shell Petroleum Inc.; Shell Oil Company; Shell Polypro- pylene Company; Shell Canada Limited; Shell International Chemical Company Limited; and Shell Iglanationale Re- search Maatschappij M, Defendants. No. 95 Civ. 0134(SAS). United States District Court, S.D. New York. Aug. 4, 1998. Producer of polypropylene resin brought antitrust action against alleged conspirators, arising out of one conspirator's termination of negotiation to construct new resin manu- facturing plants. Following settlement with one alleged conspirator, remaining conspira- tor moved for summary judgment. The Dis- trict Court, Scheindlin, J., held that: (1) there was fact issue whether conspiracy existed to limit trade in resin; (2) termination was ancil- lary restraint of trade, precluding determina- tion that it was per se violation of Sherman Act § 1; and (3) there was no unreasonable restraint of trade, under rule of reason stan- dard. Summary judgment granted in part 1. Federal Civil Procedure o=2484 Due to the potential chilling effect of prolonged antitrust litigation on competition, parties that forward economically implausible antitrust claims must come forward with more persuasive evidence to support them EFTA00187401 Page I of 2 VVestiaw. Page 1 Maria Tankenson Hodge Current Firm Information Unknown hodgfranOislands.vi Position: Member Education: University of California at Berkeley, Boalt Hall School of Law, Berkeley, CA, J.D., Doctor of Jurisprudence University of California, Santa Cruz, California, 1989 B.A.Govt. , Bachelor of Arts in Government Admitted: 1971 California, 1972 Virgin Islands, 1974 U.S. Court of Appeals 3rd Circuit U.S. Supreme Court, 1983 Affiliations: The West Indian Company, Limited, Director, 1989 - Present Representative Clients: Public Services Commission The West Indian Company, Limited Virgin Islands Port Authority References: Chase Manhattan Bank, N.A., St. Thomas, Virgin Islands Kodak Corporation, Hato Rey, Puerto Rico Prudential Securities, St. Thomas, Virgin Islands West Practice Categories: Estate Planning Family Law Litigation & Appeals Real Estate Law Land Use & Zoning 2007 Thomson/west. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?prft=HTMLE&destination=atp&sv=Full... 5/22/2007 EFTA00187402 Page 2 of 2 Page 2 Areas of Practice: General Civil Litigation Appellate Practice Real Estate Civil Practice END OP DOCUMENT 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?prft=HTMLE&destination=atp&sv —Full... 5/22/2007 EFTA00187403 Entity Information Page 1 of 1 NYS Department of State Division of Corporations Entity Information Selected Entity Name: J. EPSTEIN & COMPANY, INC. Selected Entity Status Information Current Entity Name: J. EPSTEIN & COMPANY, INC. Initial DOS Filing Date: NOVEMBER 18, 1988 County: NEW YORK Jurisdiction: NEW YORK Entity Type: DOMESTIC BUSINESS CORPORATION Current Entity Status: INACTIVE Selected Entity Address Information DOS Process (Address to which DOS will mail process if accepted on behalf of the entity) GOLD & WACHTEL, ESQS 10 EAST 53RD STREET NEW YORK, NEW YORK, 10022 Registered Agent NONE NOTE: New York State does not issue organizational identification numbers. Search Results New Search Division of Corporations. State Records and UCC Home Page NYS Department of State Home Page http://appsext8.dos.state.ny.us/corp_public/CORPSEARCH.ENTITYJNFORMATION?p nameid=1423231&p_corpid=13073... 5/14/2007 EFTA00187404 Entity Information Page 1 of 1 NYS Department of State Division of Corporations Entity Information Selected Entity Name: JEFFREY E. EPSTEIN, INC. Selected Entity Status Information Current Entity Name: J. EPSTEIN & COMPANY, INC. Initial DOS Filing Date: NOVEMBER 18, 1988 County: NEW YORK Jurisdiction: NEW YORK Entity Type: DOMESTIC BUSINESS CORPORATION Current Entity Status: INACTIVE Selected Entity Address Information DOS Process (Address to which DOS will mail process if accepted on behalf of the entity) GOLD & WACHTEL, ESQS 10 EAST 53RD STREET NEW YORK, NEW YORK, 10022 Registered Agent NONE NOTE: New York State does not issue organizational identification numbers. Search Results New Search Division of Corporations, State Records and UCC Home Page NYS Department of State Home Page http://appsezt8.dos.state.ny.us/corp_public/CORPSEARCH.ENTITY INFORMATION?p_nameid=1423230&p_corpid=13073... 5/14/2007 EFTA00187405 United States District Court Eastern District of Pennsylvania - Docket Report Page 1 of 7 CLOSED, STANDARD United States District Court Eastern District of Pennsylvania (Philadelphia) CIVIL DOCKET FOR CASE #: 2:02-cv-07671-CN SHANKS'. WEXNER et al Date Filed: 10/02/2002 Assigned to: HONORABLE CLARENCE C. NEWCOMER Date Terminated: 10/21/2003 Cause: 28:1332 Diversity-Breach of Contra