SAN FRANCISCO – Today, the United States Court of Appeal for the Ninth Circuit affirmed the $16 million judgment entered by The Honorable Ronald M. Whyte of the U.S. District Court for the Northern District of California in favor of Winston & Strawn LLP's client First National Mortgage Company (First National) in its long-running dispute against Federal Realty Investment Trust (FRIT), a multi-billion dollar real estate investment trust. The dispute centered on a one-page letter regarding a multi-million dollar ground lease and option contract that was signed by First National and FRIT at the height of the dot-com bubble. The contract signed by the chief officers of First National and FRIT in August 2000 gave First National an option to sell FRIT a 39,000-square-foot parcel for an escalating price over 10 years ranging from $13.3 to 17.4 million. The letter also contained a ground lease for the same parcel of land that required FRIT to pay approximately $1.2 million per year (with annual increases) to First National. FRIT claimed that the one-page contract could not be enforced because it did not have an explicit lease duration in it, but the Ninth Circuit found that Judge Whyte correctly let the jury decide whether the parties intended the option provisions in the contract to imply a lease duration.
The $16 million judgment included $6,815,263 in lease damages, $75,000 lease buyout reimbursement, $5,180,750 in put-option damages, $3,001,680 in interest, and $134,485 in costs.