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RW Norfolk Holding, LLC v. CBRE, Inc.

United States District Court, D. New Hampshire

October 25, 2017

RW Norfolk Holding, LLC
v.
CBRE, Inc. and United States Postal Service

          ORDER

          Landya B. McCafferty, United States District Judge.

         RW Norfolk Holding, LLC (“Norfolk”), brings suit against CBRE, Inc. (“CBRE”) and the United States Postal Service, alleging several claims arising out of the Postal Service's solicitation of bids and selection of a winning bid for the purchase of a Postal facility at 345 Heritage Avenue in Portsmouth, New Hampshire (the “property”).[1] Norfolk seeks money damages and both preliminary and permanent injunctive relief to prevent the Postal Service from selling the property to another bidder.

         After Norfolk filed its original complaint, the Postal Service nullified its selection of a winning bid, and terminated the first bidding process. The Postal Service subsequently issued a new solicitation for offers on the property, and set a deadline for the submission of offers for October 18, 2017.

         On October 5, 2017, Norfolk filed a motion for a temporary restraining order (doc. no. 8), seeking to enjoin the Postal Service from receiving offers for or selling the property. Norfolk subsequently filed an amended motion for a temporary restraining order (doc. no. 16) and an amended complaint. The Postal Service and CBRE object to the amended motion for a temporary restraining order.

         On October 12, the court held a hearing on Norfolk's amended motion for a restraining order. At the close of the hearing, the court orally denied the motion from the bench. This order sets forth in more detail the basis for that ruling. See, e.g., United States v. Joubert, 980 F.Supp.2d 53, 55 (D.N.H. 2014) (noting a district court's authority to later reduce its prior oral findings and rulings to writing).

         Background[2]

         In June 2011, the Postal Service awarded CBRE a contract to be its sole provider of real estate management services. As part of that contract, CBRE acts as the Postal Service's agent for its “disposal program, ” which is “a program to sell properties that are no longer required for postal operations, that may include the entire property, or part of a property.” At some point prior to December 23, 2016, the Postal Service engaged CBRE to sell, pursuant to its disposal program, the property located at 345 Heritage Avenue in Portsmouth, New Hampshire.

         I. The First Solicitation of Bids

         On December 23, 2016, CBRE representative Ken White emailed Michael Kane, Norfolk's principal, informing him of the Postal Service's intended sale of the property. CBRE's marketing materials for the property included the following advisory:

CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an "Affiliate") engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this information may be received by our Affiliates, including CBRE Investors, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the Property described and may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE, Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property.

Doc. no. 17 at ¶ 17. CBRE's marketing materials also included the following:

In all instances, however, CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction and will not act in concert with or otherwise conduct its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with the law and any fiduciary duties owed to the client(s) it represents in the transaction.

Id.

         The original deadline for offers was set for June 1, 2017 at 4:00 p.m. Norfolk submitted a timely bid for $6.6 million, which included certain leaseback provisions. White and a Norfolk representative were in contact regarding Norfolk's bid over the first week of June, during which White informed the representative that Norfolk's bid was not the highest but was competitive. White also asked that Norfolk resubmit its bid by 4:00 p.m. on June 22.

         On June 20, White sent Kane a text message informing him that there had been a difference of $275, 000 in the top bids previously submitted. Kane responded with a text message asking if Norfolk had the highest bid, and White responded that Norfolk was “definitely in the mix.” White subsequently extended the deadline for bidding on the property until June 26 at 4:00 p.m. At approximately 1:41 p.m. on June 26, Kane received a voicemail from another bidder, informing Kane that he understood that he and Norfolk had been two of the finalists in the bidding on the property and that he did not intend to increase his most recent bid of about $6.4 million. Kane returned the call, and learned that Norfolk was the highest bidder in the first round, that the next highest bidder had offered $6.375 million, and that the next highest bidder had offered approximately $6.325 million. The caller also informed Kane that he had received the bid information from White, with whom the caller has a pre-existing business relationship.

         About an hour before the 4:00 p.m. deadline on June 26, Norfolk submitted to White a bid in the amount of $6.95 million. At some point over the next two days, White had a conversation with another of Norfolk's principals. Norfolk alleges that during that conversation, White “insinuated” that Norfolk had submitted the winning bid for the property.

         On June 28, White spoke to Kane and informed him that Norfolk had not submitted the highest bid for the property and that he could not disclose the amount of the winning bid. Later that day, Kane called the same bidder who had called him with information about the original round of bids. The bidder congratulated Kane and called him the “seven million dollar man, ” believing Norfolk had won the bid for the property at $7 million. Kane informed the bidder that Norfolk had not won the bid.

         On June 29, White forwarded to Norfolk an email he had received from Brent Davidson, an employee in CBRE's Washington D.C. office, explaining that Norfolk was not the winning bidder on the property. The email read, in relevant part:

Please let RW Norfolk know we appreciate their interest in purchasing 345 Heritage Ave. USPS utilizes a defined sale and bid process to ensure that all interested parties are afforded equal opportunity to purchase USPS assets. The bidding process for 345 Heritage has concluded and a winning bidder has been selected. On CBRE's behalf please thank RW Norfolk for their participation, and we wish them luck with their future endeavors.

Doc. no. 17 at ¶ 30. White also called Kane to tell him that Norfolk had been outbid, and that although he could not disclose the amount of the winning bid, it was less than $100, 000 more than Norfolk's bid.

         After Kane spoke to White, Kane sent the following email to White and Davidson:

Upon receiving your email that you were shutting down the bidding process and that the price difference went from a spread of $225, 000 and $275, 000 respectively to a spread of $50, 000 between us and the higher bid and the lower bid being $550, 000 lower. We were confused and disappointed because it was never stated that this was the final round. When we spoke, Brent, you confirmed for me that this last round of bidding was not necessarily the final round and that ...

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