April 11, 2001
Appeal of
AFV ENTERPRISES, INC.
Under Lease Agreement
PSBCA Nos. 2691 & 3316
APPEARANCE FOR APPELLANT:
James H. K. Bruner, Esq.
APPEARANCE FOR RESPONDENT:
Margaret E. Harper, Esq.
OPINION OF THE BOARD
Appellant, AFV Enterprises, Inc., has appealed from the default termination of its contract to build and lease to Respondent, United States Postal Service, a post office in Slingerlands, New York, and the denial of its claim for specific performance of the parties' agreement or for monetary damages arising out of the same transaction. A hearing was held in Albany, New York.
FINDINGS OF FACT
1. In May 1987, Respondent solicited offers for the construction of a post office in Slingerlands, New York. By July 1, 1987, Appellant had made an offer, in the form of a proposed Agreement to Lease ("Agreement" or "contract"),[1] to construct and then lease to Respondent a post office on property owned by Appellant and located at:
"The Easterly most . . . portion of lands . . . located on the South side of Kenwood Avenue by the red light of Kenwood Avenue and New Scotland Road intersection. The [property] shall include a driveway 28' [feet] in width from Kenwood Avenue…." (AAF I, J).[2]
2. The proposed Agreement required that the building be completed within 300 days after acceptance (AAF J).
3. Paragraph 14-A of the proposed Agreement provided that the Agreement
"…is contingent upon bidder obtaining a construction loan mortgage of $475,000.00 within sixty (60) days of the Postal Services' [sic] notification to bidder that this agreement has been accepted." (AAF J).
4. Paragraph 14-B of the proposed Agreement provided that the Agreement
"…is contingent upon the Town of Bethlehem zoning ordinances permitting the proposed use, structure and location as set forth in this Agreement to Lease within four months of the Postal Services' [sic] notification to bidder that this agreement has been accepted."[3] (AAF J).
5. Paragraph 5 ("Termination for Default - Damages for Delay - Time Extensions") of the proposed Agreement's General Conditions (PS Form 7400-A, October 1985) provided, in part,
"(a) If [Appellant] refuses or fails to prosecute the work with such diligence as will insure its completion within the time specified in this contract, or any extension thereof, or fails to complete said work within such time, the [Postal] Service may, by written notice to [Appellant], terminate his right to proceed with the work….
(b) [Appellant's] right to proceed shall not be so terminated … if:
(1) The delay in the completion of the work arises from unforeseeable causes beyond the control and without the fault or negligence of [Appellant], including but not restricted to … acts of Government in either its sovereign or contractual capacity, … or delays of subcontractors or suppliers arising from unforeseeable causes beyond the control and without the fault or negligence of both [Appellant] and such subcontractors or suppliers ….
***
Inability to comply with state, city or local construction or zoning laws or ordinances, or with restrictive covenants, shall not normally be regarded as an unforeseeable cause…." (AAF J).
6. Under paragraph 15(a) ("Licenses, Permits, Safety, Indemnification") of the General Conditions, Appellant was
"… responsible for obtaining any necessary licenses and permits required for privately owned buildings, and for complying with any applicable Federal, State, and municipal laws, codes and regulations, in connection with the performance of the work…." (AAF J).
7. By letter dated March 15, 1988, Respondent's contracting officer purported to accept the proposed Agreement. In the letter, the contracting officer stated that acceptance was "contingent upon your revision of the Site Plan to conform with the requirements of Albany Division as follows:"[4] Those requirements included adding a curb cut on Kenwood Avenue, deleting a curb cut on the side of the property adjacent to a street named Carroll Place, and making the building visible from Kenwood Avenue. The letter also stated that the acceptance was contingent on "final SHPO [State Historic Preservation Officer] clearance."[5] Further, the letter stated that "[t]his acceptance constitutes a valid and binding contract between you and the United States Postal Service." (AAF J, N, T).
8. The parties to the Agreement held a preconstruction meeting on March 29, 1988. At that meeting, the parties discussed changing the location of the building on the site because of difficulties involving vehicle access and in order to make the building more visible from Kenwood Avenue. The parties agreed that Appellant would have a revised site arrangement prepared and sent to Respondent's operations office for approval. (RSAF 2, 3; Tr. 333-336, 562). On or about that date, Appellant hired a surveyor to begin work on the project (RAF 29 (Exhibit A)). The record does not demonstrate that Respondent's personnel directed any particular location for the building, or that there was any disagreement among the participants with respect to relocating the building.
9. Thereafter, Appellant's surveyor produced a revised site plan based on discussions with Appellant's and Respondent's representatives. The surveyor had been instructed by Appellant's representatives to prepare a plan that would provide for the post office building, retain the use of a small restaurant already on the property, and leave a portion that could be used later for a small shopping area. In order to meet these parameters, the surveyor suggested locating the building on the west side of the property. The revised plan included access (a curb cut) from Kenwood Avenue, eliminated the curb cut from Carroll Place, and made the post office at least marginally more visible from Kenwood Avenue -- the site conditions that had been listed as contingencies in Respondent's acceptance letter (Finding 7). (RSAF 5; Tr. 541-546).
10. By June 1988, Respondent's personnel were becoming concerned about the likelihood of approval of the site plan by the Town of Bethlehem. In a memorandum dated June 20, 1988, the Manager, Support Services, in Respondent's Albany Division advised the Director, Field Operations, that the Town appeared to be dissatisfied with the site plan and traffic pattern. The support services manager suggested that alternatives be considered in case the project was delayed or stopped. He also suggested that the Postal Service send representatives to Town meetings in order to sway the Town toward approving the project. (RExh. 11).
11. On or about July 21, 1988, Appellant's representatives had a conversation with Respondent's Real Estate Specialist during which they discussed Appellant's dissatisfaction with the work of the surveyor who had been working on the project for Appellant and the possibility of dismissing him. The Real Estate Specialist encouraged Appellant not to dismiss the surveyor, suggesting that bringing in someone else might just prolong the process. (AAF RR; Tr. 158).
12. The record does not indicate that Respondent formally approved the revised site plan. However, Appellant's surveyor and representatives of Respondent's operations office met on August 9, 1988, to discuss the plan, at which time Respondent's representatives agreed that the plan represented the "best possible usage" of the site. (RAF 13).
13. Appellant's surveyor submitted the plan to the Town of Bethlehem Planning Board for "comments and/or approval" on or about August 22, 1988. By letter of September 1, 1988, the Bethlehem Planning Department requested a large amount of additional information regarding the proposed use of the site and expressed specific concerns about the proposed plan. The primary concerns expressed related to access to the site from the adjoining roads, circulation of both vehicular and pedestrian traffic on the site, and potential drainage problems. (RAF 14, 15).
14. In September 1988, the Postal Service secured a letter from the State Historic Preservation Officer stating that the project would have "no effect upon archeological resources included in or eligible for inclusion in the National Register of Historic Places," as required by Respondent's letter of acceptance (see Finding 7). The "no effect" determination was based on the original building location - i.e., on the east side of the property (Finding 1). The area of possible historical significance addressed by the parties was the Slingerlands Family burial vault/cemetery, which was located on land adjacent to Appellant's property. The burial vault/cemetery was not listed on the National Register of Historic Places. (AAF T; AExh 10, 12; RExh 7; RAF 20).
15. In late October 1988, Respondent's Real Estate Specialist who was involved in this project was contacted by a local real estate developer who was planning a development at a different location along New Scotland Road. The developer suggested that the Postal Service might be interested in having the post office built as part of his development instead of at Appellant's site. (AExh 5 (tab O)). The record does not reflect that the Real Estate Specialist indicated to the developer any interest in pursuing this option.
16. During the Fall of 1988, Appellant, its surveyor, and Respondent's personnel continued their efforts to provide information required by the Town of Bethlehem Planning Board, and participated in a November 1, 1988 public meeting of the Planning Board at which the project was discussed. The Planning Board's primary difficulty with approving the site was traffic problems related to the location of driveways, although other aspects of the proposed site arrangement also were concerns. At the meeting, a Postal Service representative emphasized the need for a new building, based on operational requirements. He also indicated that the Postal Service would locate wherever the Town directed. Ultimately, the Planning Board voted to table discussion of the project, subject to the submittal of additional information. Following the meeting, Respondent's Real Estate Specialist and another Postal Service representative held an informal discussion with the Chairman of the Planning Board to ask his advice. They were told that perhaps they should consider looking at other sites. At that point, the Real Estate Specialist had serious concerns about whether Appellant would be able to secure the necessary permits. (Tr. 162, 163; RAF 15-20, 24; AAF W).
17. In mid-November 1988, the Bethlehem Planning Department requested additional information from Appellant, including a formal traffic study of the Kenwood Avenue/New Scotland Road intersection. The Planning Department also contacted the State office responsible for historic preservation, notified that office that the location of the proposed post office on the AFV site had changed, and asked whether the new location should be submitted to that office for review. As a result, in December 1988, the SHPO wrote to Respondent's Real Estate Specialist and asked him to confirm that the location of the building on the site had changed. The Real Estate Specialist contacted the state office by telephone in April 1989 and indicated that he would send a revised site plan if the time for the contract was extended. The SHPO received no further written communications from Respondent regarding the AFV site. (AAF Y, Z; RExh 9; Tr. 165, 265, 533).
18. By letter dated February 24, 1989, Appellant's representative submitted a revised site plan to the Bethlehem Planning Board and discussed many of the outstanding issues. The letter stated that a traffic study had been done and that the engineer who performed the study would plan to make a presentation to the Planning Board at its meeting on March 7, 1989. In reply, the Planning Board Chairman asked that the traffic study be submitted in advance for staff review and that architectural renderings and legible building plans be submitted. The Chairman advised that after that material was received and reviewed, the proposal would be scheduled for consideration. (AAF RRR, SSS).
19. As of March 1989, Appellant had not yet obtained the permits necessary to allow it to proceed with the project. By letter dated March 2, 1989, the contracting officer noted that 300 days had passed as of January 9, 1989,[6] and directed Appellant to "show cause" why it should not be declared in default of its obligation under the Agreement. The contracting officer stated that after a review of Appellant's response, he would either extend the completion date of the contract or declare Appellant in default. (RAF 28).
20. Appellant replied to the show-cause notice in a letter from its attorney dated March 10, 1989, and requested a time extension. In that letter, Appellant attributed the delays to three primary causes -- the change in location of the building on the site (as discussed at the preconstruction meeting), delays by Appellant's surveyor in making some submittals to the Planning Board, and the "exhaustiveness" of the Planning Board review process. Appellant alleged that the question of extending the completion date of the contract because of the need to get the revised site arrangement approved by the Planning Board had been discussed by the parties' representatives, and that Respondent's representatives had indicated that any such extension would be discussed after there was an indication that the Planning Board would approve the new location. Appellant noted that the Town required prior approval by the Planning Board before construction could begin, and argued that the Town "has a reputation for taking a long hard look at any plot plan for any commercial development." Appellant stated that it believed its latest proposal had accommodated the concerns of the Planning Board, that it expected approval of the plan at one of the Planning Board's upcoming meetings -- on April 4, April 18, May 2, and May 16 – and that it could complete construction within three months after it received approval. (RAF 29).
21. By letter
to the Planning Board dated March 24, 1989, Appellant submitted building plans,
architect's renderings, and the traffic study that had been requested by the
Planning Board (Finding 17). In the
letter, Appellant requested that the proposal be placed on the agenda for the
Board's next meeting. (AAF WWW). In an April 14, 1989 letter to the Planning
Board, Appellant again asked that the matter be scheduled as soon as possible
and also asked the amount of the required filing fee. The Planning Board staff replied in an April
27, 1989 letter and advised that the filing fee was $340. There is no evidence Appellant ever paid the
fee. Appellant never completed a formal
application for a building permit. (AAF
22. In a March 29, 1989 memorandum to the contracting officer, the Manager, Support Services, for Respondent's Albany Division noted that the completion date had passed. He also advised that Albany had made alternate plans, that those plans did not include a building of the size covered by the AFV contract, and requested that no consideration be given to extending the contract. (AExh 1).
23. In an April 25, 1989 memorandum to the Principal Real Estate Specialist, the Real Estate Specialist directly monitoring the project commented on Appellant's reply to the show-cause notice. He agreed with some factual statements made and disagreed with others. In the closing paragraph, he expressed his opinion that Appellant's representative was overly optimistic regarding the Town's ultimate approval of the site plan. He stated that from his discussions with the involved parties, he believed that the Town's concerns about the safety of the site were valid. He also expressed the opinion that Appellant's principal representative lacked the ability to work with Appellant's contractors and the Town to complete the project. (AExh 2).
24. In early May 1989, Respondent's Real Estate Specialist received a letter from the owner of another piece of property in Slingerlands. The letter suggested that the Postal Service consider constructing a larger facility on that property. (AExh 5 (Tab T)).
25. On May 12 and 17, 1989, Respondent's Principal Real Estate Specialist had conversations with Appellant's representatives. In the first conversation, Appellant's representatives stated that they had been waiting for a response from the Postal Service since replying to the show-cause letter in March and that they needed some indication within a week as to whether the Postal Service intended to continue with the project. In the second of those conversations, the Principal Real Estate Specialist informed Appellant that the Postal Service had doubts as to whether Appellant would be able to get the necessary permits and that the Postal Service no longer wished to proceed with the contract. The Principal Real Estate Specialist offered to enter into a mutual termination of the contract without liability to either party. He explained that the alternative to such a mutual termination would be a recommendation from him that the contract be terminated for default, which Appellant could then appeal. Appellant's representative declined the offer of the mutual termination. By letter dated June 2, 1989, to Appellant, the Principal Real Estate Specialist confirmed the two conversations and repeated the offer of a mutual termination. The letter stated that unless the contract was otherwise terminated prior to June 15, 1989, he would make the recommendation to the contracting officer that the contract be terminated for default. (Tr. 386, 387; AAF JJ, KK, LL).
26. Thereafter, having received no indication that Appellant was moving forward with the project, the Real Estate Specialist reviewed the contract documents, and discussed the matter with Respondent's project manager and with personnel in the Albany District. He concluded from his review and discussion that Appellant would be unable to proceed with the contract in a reasonable time frame, and he recommended to the contracting officer that the contract be terminated for default. (Tr. 387-388).
27. By letter dated July 5, 1989, the contracting officer terminated the contract for default for Appellant's failure to complete the work by January 9, 1989. Appellant filed a timely appeal, which was docketed as PSBCA No. 2691.[7] (RAF 31, 32).
28. On April 7, 1992, Appellant filed a claim with the contracting officer seeking specific performance of the Agreement or, in the alternative, damages for improper termination. The alternative damages sought by Appellant consisted of lost rent in the total amount of $2,652,498, and costs incurred by Appellant in connection with the Agreement in the total amount of $23,400. In a decision dated June 25, 1992, the contracting officer denied Appellant's claim, and the appeal from that denial was docketed as PSBCA No. 3316. (Notice of Appeal, PSBCA No. 3316; Complaint, filed November 12, 1992).
29. Appellant never applied for a construction loan. Instead, it planned to utilize private financing, through the assets of family members. (Stip. 14; Tr. 564).
DECISION
Jurisdiction[8]
Respondent argues that the Board lacks jurisdiction over this dispute because the contingencies in both Appellant's offer and Respondent's acceptance precluded the formation of a contract between the parties.
Respondent contends that the contingencies related to Appellant's obtaining a construction loan and to the zoning ordinances (Findings 3, 4) made its offer too indefinite to form the basis for an enforceable contract. In the alternative, Respondent argues that even if a contract was formed, it terminated by its own terms upon the non-satisfaction of the same contingencies when the times set out in the contingencies expired.
In reply, Appellant argues that the contingencies were not so indefinite as to preclude contract formation. With regard to contract termination, Appellant argues that since neither party raised the issue at the time or attempted to withdraw from the contract, both parties by their actions waived the effectiveness of the contingencies as a means for avoiding the contract.
The record in this appeal contains no indication that either or both of the parties believed that they had failed to consummate a contract for the construction and leasing of a post office. At no time until it filed its motion to dismiss, did Respondent evidence a belief either that no contract had been formed or that the contract had terminated by virtue of the non-satisfaction of any contingency. Rather, both parties treated their agreement as a valid contract. Under these circumstances, where the parties have demonstrated an intent to be bound, the agreement will be enforced. See, e.g., Aviation Contractor Employees, Inc. v. United States, 945 F.2d 1568, 1572 (Fed. Cir. 1991); Folk Construction Co., Inc., ENGBCA Nos. 5839, 5899, 93-3 BCA ¶ 26,094 at 129,726; CORBIN ON CONTRACTS, Revised Edition, 1993, §4.1. This is particularly appropriate in this instance since, as argued by Appellant, neither party attempted to invoke the "contingencies" which Respondent argues made the contract too indefinite to enforce. By that failure, the parties waived any right they may have had to cause the contract to terminate. See, e.g., Hardin, Rodriguez & Bovin, Anesthesiologists v. Paradigm Insurance, 962 F.2d 628 (7th Cir. 1992) and cases cited therein; WILLISTON ON CONTRACTS, 4th Ed., §§38:4, 39:31 (1990). Therefore, we do not accept Respondent's arguments that the contract either never came into being or that it terminated by its own terms due to the "contingencies" in Appellant's offer.
Respondent also argues that its purported acceptance (Finding 7) actually constituted a counteroffer rather than an acceptance, because of the conditions stated therein. Respondent contends that the terms added in the conditional acceptance were unacceptable to Appellant and that, as a result, no contract came into being. Respondent argues that since no contract came into being, either party was free to withdraw from the arrangement. In this argument, Respondent takes the position that its default termination letter of July 5, 1989, was such a withdrawal.
In reply, Appellant argues that even if the contingencies added by Respondent caused its letter of acceptance to be a counteroffer, Appellant by its actions in delivering a satisfactory revised site plan brought the contract into being, although not until August 9, 1988, when the revised site plan was approved (Finding 12).
We agree that Respondent's letter constituted a counteroffer, rather than an acceptance of the offer made by Appellant. However, contrary to Respondent's argument, the proposed revisions were acceptable to Appellant and the counteroffer made by Respondent was accepted as early as March 29, 1988, by Appellant's act of beginning performance in accordance with the terms of the counteroffer -- i.e., by participating in the preconstruction meeting and agreeing to the building location change, and by hiring the surveyor to begin revising the site plan (Finding 8), see e.g., RESTATEMENT OF CONTRACTS, Second, §§50, 59 (American Law Institute, 1981), but no later than August 9, 1988, when the revised site plan was approved by Respondent (Finding 12). Therefore, contrary to Respondent's argument, a contract between the parties, including the requirements inserted via the counteroffer, came into being.
Accordingly, inasmuch as a contract came into being, the Board has jurisdiction to consider the merits of the appeal. Respondent's motion to dismiss is denied.
Merits
Respondent has the burden of proving that the termination was justified by demonstrating that Appellant failed to perform in accordance with the contract. Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). Once Respondent shows that Appellant did not meet the contract requirements, the burden shifts to Appellant to present evidence of excusable causes, see Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419 at 131,429; Pamela J. Sutton, PSBCA No. 1622, 88-3 BCA ¶ 21,031 at 106,237, or to show that the termination was an abuse of the contracting officer's discretion, see Jesse A. Farmer, PSBCA No. 2702, 91-3 BCA ¶ 24,181 at 120,941, recon. den. 92-1 BCA ¶ 24,507; Quality Environment Systems, Inc., ASBCA No. 22178, 87-3 BCA ¶ 20,060 at 101,569.
We have determined that a contract between the parties came into being no later than August 9, 1988, (see discussion under Jurisdiction, above) which contract required Appellant to build a facility within 300 days - i.e., no later than June 5, 1989. It is uncontroverted that Appellant failed to even begin construction by that date. Respondent has met its initial burden of showing that Appellant failed to complete its contract obligations within the specified time. Under the contract's termination for default clause, Respondent thus had the right to terminate Appellant's right to proceed, unless the delay arose from unforeseeable causes beyond Appellant's control and without its fault or negligence. Therefore, unless Appellant proves that its failure was excusable, or that Respondent has otherwise lost its right to terminate, the exercise of Respondent's termination right will be sustained.
Time Extensions
Appellant argues first that it was entitled to an extension in the completion date because of delays caused by the site changes in Respondent's letter of acceptance and because of delays caused by the review process engaged in by the Town of Bethlehem. We do not accept these arguments.
By adopting a contract acceptance date of August 9, 1988, for the purposes of our analysis, we do not begin counting the 300-day performance period until after the site plan was revised to adopt the site changes in the acceptance letter. Therefore, any delays caused by those changes have already been "credited" to Appellant, and it is not entitled to any further extensions due to the site changes.
The Town's review process also does not provide Appellant an excuse for failing to complete on time. Appellant contends that it was entitled to an extension under the language of the Termination for Default clause (Finding 5), in that the delay caused by the review process was an "unforeseeable cause beyond the control and without the fault or negligence of [Appellant]." We disagree. Under the Agreement, Appellant was unambiguously responsible for obtaining "any necessary licenses and permits required for privately owned buildings." That obtaining a building permit would require Appellant to submit to the Town's Planning Board review process and that the process was particularly rigorous were not "unforeseeable" circumstances and should not have come as a surprise to Appellant (see Finding 20). See, e.g., Local Contractors, Inc., ASBCA No. 37108, 92-1 BCA ¶ 24,491 at 122,236, recon. den. 92-1 BCA ¶ 24,693; S. Head Painting Contractor, Inc., ASBCA No. 26249, 82-1 BCA ¶ 15,629, recon. den. 82-2 BCA ¶ 15,886; Charles I. Cunningham, IBCA 242, 60-2 BCA ¶ 2816.
In Conquest Construction, Inc., PSBCA No. 2350, 90-1 BCA ¶ 22,605, this Board allowed an extension in a case in which the issuance of a building permit was delayed beyond the city's "usual and expected" processing period. In that case, there was no indication that the delay in issuing the permit was due to other than unexplained inefficiencies in the office that issued the permit. In contrast, in the appeal before us the evidence does not establish that the time taken by the Bethlehem Planning Board was unusual, or that the amount of information the Board required was out of the ordinary for a project of this type.
Accordingly, neither the requirement to revise the site plan nor the actions of the Bethlehem Town Planning Board gave rise to an excusable delay in the performance of the project.
Waiver of the
Completion Date
Appellant next argues that, by failing to terminate the contract for default promptly after the time for completion passed, Respondent waived its right to do so without first reestablishing a new, reasonable completion date. Respondent argues that the termination was not made improper by any such delays because Appellant had ceased its efforts to perform prior to the termination.
Appellant's argument is apparently based on the period of time that passed between January 9, 1989, the date Respondent contended was the required construction completion date, and July 5, 1989, the default termination date. However, inasmuch as we have considered June 5, 1989, as the latest completion date for purposes of our analysis, we need only consider the 30-day period between that date and the July 5, 1989 termination date.
In Florida v. United States, 81 F.3d 1093, 1096 (Fed. Cir. 1996), the court stated:
"A waiver of the government's right to
terminate a contract for default may be found when the government allows 'a
delinquent contractor to continue [substantial] performance past a due date,'
under circumstances that justify a conclusion that the default has been
excused. DeVito v. United States,
188 Ct. Cl. 979, 413 F.2d 1147, 1153-54 (Ct. Cl. 1969). The purpose of the waiver doctrine is to
protect contractors who are led to believe that time is no longer of the
essence and undertake substantial efforts after the performance date specified
in the contract has passed. Olson
Plumbing & Heating Co. v. United States, 221 Ct. Cl. 197, 602 F.2d 950,
955 (Ct. Cl. 1979)." (Bracketed language in the original).
The record in this appeal does not show that Appellant took any actions during the period between June 5 and July 5, 1989, that might be construed as substantial performance.[9] Further, there is no evidence that Appellant was led by Respondent to believe that performance time was no longer of the essence. Therefore, we do not accept Appellant's waiver argument.[10]
Procurement Manual
and Realty Handbook
Appellant's next argument is that the termination should be reversed because of Respondent's failure to comply with certain provisions of its Procurement Manual and Realty Acquisition and Management Handbook. The Procurement Manual provisions cited by Appellant describe factors that "may" be considered before
deciding to terminate a contract for default,[11] and direct the contracting officer to make an express determination as to whether causes of delay cited by a contractor constitute excusable delays. Appellant argues that Respondent failed to properly consider the factors listed in the Manual and, in particular, equates that alleged failure with a failure by the contracting officer to properly exercise his discretion when making the termination decision.
Appellant's primary argument appears to be that the contracting officer failed to consider certain relevant information -- e.g., that Appellant had made significant progress toward obtaining the necessary permits -- and that he considered inaccurate information -- e.g., what Appellant contends was the Real Estate Specialist's "poorly informed opinion" that Appellant would never get approval from the Town -- in making the decision to terminate.[12] Appellant also argues that the termination was made because of Respondent's interest in other sites.
The burden of proving that the contracting officer failed to properly exercise his discretion falls on Appellant. Walsky Constr. Co., ASBCA No. 41541, 94-1 BCA ¶ 26,264, recon. den. 94-2 BCA ¶ 26,698; Quality Environment Systems, Inc., ASBCA No. 22178, 87-3 BCA ¶ 20,060. On the record before us, Appellant has failed to meet its burden. The essence of Appellant's argument is that the contracting officer either failed to consider relevant information or considered information that was inaccurate. In the cases cited by Appellant, Jamco Constructors, Inc., VABCA Nos. 3271, 3516T, 94-1 BCA ¶ 26,405, recon. den. 94-2 BCA ¶ 26,792; S.T. Research Corp., ASBCA No. 39600, 92-2 BCA ¶ 24,838, the boards criticized the contracting officers for failing to gather and/or analyze available, relevant information adequately before deciding to terminate. In the appeal before us, the contracting officer was unable to recall at the hearing, which was years after the termination, just what analysis he had gone through before issuing the termination notice. However, he testified that his usual procedure would have been to consider correspondence such as the show-cause letter and the response to the show-cause letter; the procurement and real estate manual provisions on default; and discussions with other knowledgeable Postal Service employees.
Appellant's position with respect to the causes of its delays, including its opinion that it would be able to obtain Town approval, was set out in its response to the show-cause letter and, therefore, under the contracting officer's usual procedure, that information would have been considered by him prior to deciding to terminate the contract. Appellant has not shown that there was other, relevant information that the contracting officer should have considered but did not. It also has not shown that the contracting officer relied on inaccurate information. Appellant argues that the opinions offered by Respondent's Real Estate Specialist (Finding 23) were inaccurate. In general, a contracting officer is free to consult with and rely on reports of his staff and other personnel in making decisions under the contract. See e.g. Nuclear Research Corp. v. United States, 814 F.2d 647, 649-50 (Fed. Cir. 1987); Pacific Architects and Engineers, Inc. v. United States, 491 F.2d 734, 744 (Ct. Cl. 1974); Stephen Zucker, Packages Services Plus, PSBCA Nos. 3396-98, 96-2 BCA ¶ 28,282. The Real Estate Specialist's opinions in his April 25, 1989 memorandum were clearly identified as such and the contracting officer cannot be faulted for taking them into account in reaching a decision. Further, those opinions were not shown to be other than the Real Estate Specialist's good faith assessment of the mood of the Town officials and of the likelihood of Appellant being able to complete the project within a reasonable time.
Appellant has failed to show that the contracting
officer abused his discretion in deciding to terminate the contract for
default.
The provisions from the Realty Acquisition Handbook cited by Appellant (§§4-705 and 4-707) direct Respondent's personnel to monitor a contractor's progress and to take prompt action if a contractor falls behind or requests contract extensions. Appellant's arguments in connection with these provisions are similar to the arguments made with respect to waiver of the right to terminate. Those arguments have been addressed earlier and will not be repeated here.
Further, Appellant has not shown that the provisions in the Handbook were intended for its benefit. In the absence of such a showing, Appellant may not complain that the provisions were not enforced. Freightliner Corp. v. Caldera, 225 F.3d 1361 (Fed. Cir. 2000); TPI International Airways, Inc., ASBCA No. 46462, 96-2 BCA ¶ 28,602, aff'd 135 F.3d 776 (Fed. Cir. 1998).
"Premature"
Show-Cause Letter
Appellant's next argument is that it was not in technical default when the March 2, 1989 show-cause letter was issued. Appellant does not argue that the early issuance of the show-cause letter had any practical effect on its performance. Further, the legal significance of this argument is unexplained and is unclear, since the contract did not require the issuance of a show-cause letter as a prerequisite to termination. Accordingly, we do not consider this argument further.
Bad Faith
Appellant next argues that Respondent's personnel did not act in good faith in the performance of the contract, thereby harming Appellant's ability to complete the contract. Under this argument, Appellant raises a number of specific contentions, which will be considered in turn.
Appellant first argues that Respondent's Real Estate Specialist directed or requested that Appellant not replace the surveyor (see Finding 11). Appellant argues that, therefore, delays caused by the surveyor should have been the subject of some "special recognition" and "special consideration" when Respondent examined Appellant's request for a contract extension.
As a factual matter, we have not found that the Real Estate Specialist directed Appellant to retain the surveyor. Instead, the Real Estate Specialist merely suggested or encouraged Appellant not to switch personnel for fear of further delaying things. Appellant was free to disregard that advice. Further, the delay allegedly caused by the surveyor and the Real Estate Specialist's role in his retention were set out in Appellant's response to the show-cause letter and, therefore, received consideration in the decision as to whether to terminate the contract. Therefore, we find no bad faith on the part of any Postal Service official with respect to use of the surveyor.
Appellant next argues that it was given certain assurances by Respondent's officials early in the contract performance period that it need not formally request contract extensions at that time. Appellant argues that this should have barred Respondent from faulting Appellant for having failed to request those extensions and should have entitled Appellant to special consideration in the contracting officer's review of Appellant's subsequent request for an extension.
Even accepting Appellant's allegation that such assurances were given, Appellant has not shown that it was harmed thereby. Respondent has not argued that Appellant was remiss in not requesting extensions earlier. Appellant had the opportunity to support the request for a contract extension which it made in the show-cause response using the same information and arguments it could have used earlier, and there is no indication in the record that its arguments would have yielded a different result had they been made earlier. Further, as discussed above, we have reviewed Appellant's claims of excusable delay, as set out in its show-cause response, and have found no basis for concluding that it was entitled to a time extension.
Appellant next argues that Respondent's failure to obtain SHPO approval based on the revised site plan exacerbated Appellant's difficulties in obtaining Town approval of the project (see Finding 17). The "no effect" letter that Respondent received from SHPO constituted "clearance" with respect to the original building location (Findings 7, 14). While we agree with Appellant that Respondent never sought SHPO clearance for the revised site arrangement - i.e., with the building on the west side of the property - we do not accept the argument that such failure contributed to Appellant's difficulties in obtaining Town approval of the site plan. The record does not contain evidence that the issue of SHPO approval created any such difficulties, and Appellant has cited none. Instead, the record shows that the Town's difficulties with the plan related primarily to traffic flows, which had no relationship to SHPO approval.[13]
Appellant's final bad-faith argument is that Respondent's officials made public statements and exhibited actions that were the equivalent of repudiating the contract. Based on the statement made by one of Respondent's representatives at the November 1, 1988 Planning Board meeting (Finding 16), Appellant argues that the Postal Service had lost interest in the AFV site by that time. Appellant refers to approaches made to the Postal Service by other parties who had sites to offer (Findings 15, 24), and also cites the fact that Respondent was discussing alternate plans during the time Appellant's site plan was being considered by the Planning Board and was concerned that the post office, even if built, would be inadequate for the area (Findings 10, 22). Based on these events and on other statements (none of which, contrary to Appellant's argument, was public), Appellant concludes that Respondent had "repudiated" the contract prior to terminating it for default.
Appellant has cited no law in support of its position, and it is not clear just what Appellant means when it argues that the Postal Service repudiated the contract. Ordinarily, repudiation of a contract requires an unequivocal statement by one party that it does not intend to perform its obligations under the contract or other circumstances justifying the other contracting party's belief that the first party will breach the contract. Danzig v. AEC Corporation, 224 F.3d 1333 (Fed. Cir. 2000) petition for cert. filed, 69 U.S.L.W. 3619 (U.S. Feb. 28, 2001)(No. 00-1395); B & E Mail Transport Inc., PSBCA Nos. 971, 973, 974, 82-2 BCA ¶ 15,965; Fairfield Scientific Corp., ASBCA No. 21151, 78-1 BCA ¶ 13,082, recon. den. 78-2 BCA ¶ 13,429. Nothing cited by Appellant meets this test. There is no indication from the record that Respondent would not have entered into the lease prescribed by the Agreement to Lease had Appellant been able to secure the necessary permits and construct the building on time.[14]
If by "repudiation" Appellant instead means to argue that
Respondent's personnel, by their statements and conduct, somehow undermined
Appellant's efforts to secure approval by the Town and breached Respondent's
implied duty to cooperate, this argument also fails. There is in every contract an implied duty on
the part of both parties to cooperate and not to negligently or willfully
interfere with the performance of the other party. Peter Kiewit Sons' Co. v. United States, 138 Ct. Cl. 668, 151 F. Supp. 726, 731 (1957); George
A. Fuller Co. v. United States, 108 Ct. Cl. 70, 69 F. Supp. 409 (1947); Fowler
& Butts, PSBCA No. 2545, 91-1 BCA ¶ 23,391. The record in
this appeal does not indicate that Respondent breached that duty. The fact that Respondent was holding internal
discussions concerning the possibility of building a different facility if
Appellant failed to get the necessary permits was not shown to have had the
effect of influencing the Town officials in their deliberations. Further, although Respondent was approached
by two individuals regarding the possible use of different sites, the evidence
does not show that those proposals were seriously considered at that time or that
the Town officials were even aware that such initiatives had been made.
The only public action
evidenced in the record before us was the statement by a Postal Service
representative at the meeting in November 1988 to the effect that the Postal
Service would locate the facility wherever the Town directed (Finding 16). There is no evidence that the
representative's statement had any effect on the Town's deliberations
concerning the problems it perceived with Appellant's site. We do not consider that single statement
sufficient to support a conclusion that Respondent failed in its duty to
cooperate with Appellant or that Respondent interfered with Appellant's
efforts.
Accordingly, we do not accept Appellant's argument.
"Supremacy" Power
Appellant's final argument is that Respondent should have exerted its "supremacy" power to end the extended delays caused by the Town's site review process. Appellant contends that it eventually became apparent that the Town was not likely to grant the permit to build a post office at Appellant's site. At that point, Appellant argues, Respondent should have asserted "sovereign immunity" over the project and allowed Appellant to proceed.
For the purposes of this decision only, we assume, without deciding, that Respondent could legally have taken the action urged by Appellant and could have directed Appellant to proceed with construction on privately owned property without securing a building permit from the Town of Bethlehem. The question then becomes whether, as a contractual matter, Respondent would have been obligated to do so.
There is no express contract provision requiring Respondent to exercise any such power. However, as indicated above, Respondent, as a contracting party, had an implied duty to cooperate with Appellant and not hinder its performance. See Peter Kiewit Sons' Co. v. United States, 138 Ct. Cl. 668, 151 F. Supp. 726, 731 (1957); George A. Fuller Co. v. United States, 108 Ct. Cl. 70, 69 F. Supp. 409 (1947); Fowler & Butts, PSBCA No. 2545, 91-1 BCA ¶ 23,391.
In this appeal, Appellant's duties unambiguously included the responsibility for securing any permits and for complying with any applicable local codes necessary to permit it to construct this privately-owned building (Finding 6). Although Respondent had the duty to cooperate with Appellant and not hinder its efforts, Respondent had no duty to relieve Appellant of its contractual obligation to comply with admittedly applicable local procedures. Arnette B. Fleming Hauling, Inc., PSBCA No. 2872, 91-2 BCA ¶ 23,868 at 119,567; International Dictating Services of Boston, VABCA No. 2014, 88-3 BCA ¶ 21,182 at 106,923; see also Banks Constr. v. United States, 176 Ct. Cl. 1302, 364 F.2d 357 (1977); West End Welding & Fabrications, ASBCA No. 40423, 96-1 BCA ¶ 28,151; Four Roses Painting Co., PSBCA No. 1013, 83-1 BCA ¶ 16,541 at 82,250, recon. den. 83-2 BCA ¶ 16,691, and we do not accept Appellant's argument.
Appellant has not shown that its failure to complete the project by the contract completion date was excusable or that Respondent lost its right to exercise its authority to terminate the contract. Accordingly, the appeal in PSBCA No. 2691 is denied.
Because we have upheld Respondent's default termination of the contract, Appellant may not recover the lost rent and other costs it is seeking.[15] Accordingly, the appeal in PSBCA No. 3316 is denied.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
Norman D. Menegat
Administrative Judge
Board Member
[1]. Revisions were made to the proposed Agreement as late as October 23, 1987. The exact nature of those revisions is not clear from the record and is not material to the decision in these appeals.
[2] "AAF _" refers to Appellant's Appeal File, "RAF _" to Respondents Appeal File, "RSAF _" to Respondent's Supplemental Appeal File, "AExh _" to Appellant's Hearing Exhibits, "RExh _" to Respondent's Hearing Exhibits, "Stip." to paragraphs in the parties' prehearing stipulation, and "Tr. _" to the hearing transcript. The parties stipulated that the version of the Agreement at AAF J represents the actual Agreement (Stip. 1; Tr. 82).
[3] The Hamlet of Slingerlands is within the Town of Bethlehem, New York.
[4] Internally, Respondent's Albany Division was the operational "customer" for which the Slingerlands post office was being constructed and leased by the Facilities Service Office in Windsor, Connecticut (Tr. 21, 485).
[5] Although not stated in the letter, obtaining SHPO clearance was understood by Respondent to be its responsibility under the agreement (Tr. 117).
[6] Based on an assumed March 15, 1988 acceptance date (Finding 7).
[7] In December 1989, at Appellant's request, this appeal was dismissed without prejudice pursuant to 39 C.F.R. §955.31. The appeal was restored to the Board's active docket in October 1991.
[8] Shortly before the hearing in these appeals, Respondent filed a motion to dismiss the appeals for lack of jurisdiction, arguing that because of the several contingencies set out above (Findings 3, 4, 7) no valid contract ever came into being. The Board deferred a decision on the motion until completion of the hearing.
[9] Even if we based our analysis on the earlier acceptance date of March 29, 1988, the result would be the same. The record before us indicates that the only actions taken by Appellant after January 23, 1989 (the completion date based on the earlier acceptance date), consisted of correspondence with the Town of Bethlehem Planning Board (see Findings 18, 21). Appellant did not incur significant expenses in reliance on any assumption that Respondent had elected not to terminate the contract. See, e.g., Acme Process Equip. Co. v. United States, 171 Ct. Cl. 324, 336, 347 F.2d 509, 515-516 (1965), rev'd on other grounds 385 U.S. 138 (1966).
[10] In support of its waiver argument, Appellant also cites the fact that Respondent took no action to enforce the time limits contained in the financing and zoning contingencies, and in a provision which required 45 days' notice prior to occupancy of the building. We disagree with Appellant and conclude that it has failed to show that it relied on the failure to "enforce" those provisions as an indication that Respondent did not intend to enforce the final completion date.
[11] The Manual suggests that the contracting officer consider such factors as the specific failure of the contractor and the excuses for such failure; the availability of the "supplies or services" from other sources; and the urgency of the need for the "supplies or services," and whether they can be obtained sooner from other sources. (AExh 4).
[12] Appellant also alleges that the "PS personnel with the most knowledge of the AFV situation were less than forthcoming on the extent of [their] own culpable activities as to delays and difficulties experienced by AFV." Appellant's Brief, p. 37. Appellant does not expand on this allegation of "culpable activities," except to reference the opinions expressed by the Real Estate Specialist in commenting on Appellant's response to the show-cause letter (Finding 23).
[13] Under the National Historic Preservation Act, an agency is required to consider the effect of an "undertaking" on any "…site, building, structure, or object that is included in or eligible for inclusion in the National Register [of Historic Places]" (emphasis added). As noted in Finding 14, the cemetery which was the area of possible historical significance addressed by the parties was not in the National Register. Further, under National Park Service regulations, it also would generally not have been considered eligible for inclusion in the Register. 36 C.F.R. §60.4. Therefore, since no "historic" property was at risk in this undertaking, for the purposes of this contract the SHPO "no effect" letter would have been equally applicable to the revised site arrangement. See, generally, 16 U.S.C.S. §470f [Section 106 of the National Historic Preservation Act of 1966, as amended]; 36 C.F.R. Part 60; 36 C.F.R. Part 800. Accordingly, it has not been demonstrated that any further SHPO "clearance" was necessary.
[14] We note that by the time, in May 1989, that Respondent's Principal Real Estate Specialist stated to Appellant that the Postal Service no longer wished to proceed with the project (Finding 25), there was no longer sufficient time for Appellant to have completed construction before the June 5, 1989 completion date (See Finding 20).
[15] In its April 1992 claim, Appellant also sought specific performance of the Agreement. As noted in our earlier Opinion partially granting Respondent's motion for summary judgment, that remedy is unavailable in any event in a Board proceeding. AFV Enterprises, Inc., PSBCA Nos. 2691 & 3316, 98-1 BCA ¶ 29,586.