First Crystal Park Associates Limited Partnership v. United States

In the United States Court of Federal Claims

No. 15-315C

(Filed: January 24, 2017)

) Keywords: Breach of Lease; Offer and

FIRST CRYSTAL PARK ASSOCIATES ) Acceptance; Counter-offer; RCFC 56;

LIMITED PARTNERSHIP, ) Summary Judgment; Contracting Officer.

)

Plaintiff, )

)

v. )

)

THE UNITED STATES OF AMERICA, )

)

Defendant. )

)

Mary Beth Bosco, Holland & Knight, Washington, DC, for Plaintiff. David S. Black, Holland &

Knight, Tyson’s Corner, VA, Kelly A. Krystyniak, Holland & Knight, Washington, DC, and

Leila S. George-Wheeler, Holland & Knight, Washington, DC, Of Counsel.

Sheryl L. Floyd, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,

Department of Justice, Washington, DC, with whom were Deborah A. Bynum, Assistant

Director, Robert E. Kirschman, Jr., Director, and Benjamin C. Mizer, Principal Deputy Assistant

Attorney General, for Defendant. Heather R. Cameron, Senior Assistant General Counsel, Real

Property Division, General Services Administration, Washington, DC, Of Counsel.

OPINION AND ORDER

KAPLAN, Judge.

This case is currently before the Court on the parties’ cross-motions for summary

judgment. The General Services Administration (GSA) had leased space in a building in

Arlington, Virginia from Plaintiff First Crystal Park Associates Limited Partnership (First

Crystal). First Crystal contends that GSA exercised the renewal option in the parties’ lease

agreement but then failed to honor it. For the reasons discussed below, the Court concludes that

GSA never exercised the renewal option, nor did it otherwise reach an enforceable agreement to

modify the lease or enter a new one. Therefore, First Crystal’s motion for summary judgment is

DENIED and the government’s motion for summary judgment is GRANTED.

BACKGROUND1

I. The Lease

First Crystal and GSA entered into Lease Number GS-11B-02077 (“the Lease”) on

January 29, 2009.2 Pl.’s Mot. for Summ. J. (Pl.’s Mot.) Ex. 1.3 The Lease was for office space in

“the building know[n] as 2011 Crystal Drive, located at 2011 Crystal Drive, Arlington, VA.” Id.

at 2. It covered a total of 20,240 rentable square feet of space on the eleventh floor, consisting of

8,545 rentable square feet in Suite 1100/1100A and 11,695 rentable square feet in Suite 1106. Id.

The Lease also included two “unreserved parking permits.” Id. The annual rent for the space was

$838,335.20 and the term of the Lease was five years, beginning January 1, 2009, and ending

December 31, 2013. Id.

Paragraph 5 of the Lease stated that “[t]his lease may be renewed at the option of the

Government” and set forth the terms and rental rate of the renewal. Id. It provided, in pertinent

part, that:

The Government shall have the right to one (1) renewal option for a

FIVE-YEAR TERM at an annual rent of $880,402.80

[($43.4981621 BRSF or $52.53/BOASF) + $6,343.44 for two (2)

unreserved parking permits] for a total annual rent of $888,748.24

payable at the rate of $73,895.52 per month in arrears plus

cumulative operating expense adjustments from the initial lease

term . . . . The renewal option shall become effective provided notice

be given in writing to the Lessor of the Government’s intent to

exercise such option at least 270 days before the end of the original

lease term; all other terms and conditions of this lease shall remain

the same during any renewal term. Said notice shall be computed

commencing with the day after the date of mailing.

Id. (emphasis and brackets in original).

Also on January 29, 2009, First Crystal and GSA entered into Supplemental Lease

Agreement Number 1 (SLA 1). Pl.’s Mot. Ex. 2. SLA 1 stated that it was “being issued to reflect

an expansion of 6,431” rentable square feet, including 5,215 square feet of “office and related

space in Suite 300 located at 2011 Crystal Drive.” Id. at 1. Accordingly, SLA 1 stated that “[t]he

1

The facts in this section are based on the deposition transcripts and the documentary evidence

supplied by the parties in support of their summary judgment motions. Where a fact is in dispute,

it is noted.

2

The actual tenant was the Department of Defense. See Pl.’s Mot. Ex. 12 at 7–9; see also Pl.’s

Mot. Ex. 14 at 1.

3

The parties used GSA’s “Standard Form 2” for the Lease, but struck Paragraph 4, which would

have given the government the right to terminate the Lease at any time with appropriate notice.

Pl.’s Mot. Ex. 1 at 2.

2

Standard Form 2 shall be amended to read as follows,” and then set forth four new paragraphs to

supersede the corresponding original paragraphs in the Lease. Id. Paragraph 1 of the Lease was

amended to encompass the additional space. Under Paragraph 1, as amended, the Lease

encompassed a total of approximately 26,671 rentable square feet, which in turn consisted of

8,545 rentable square feet in Suite 1100/1100A, 11,695 rentable square feet in Suite 1106, 6,431

rentable square feet in Suite 300, and the two parking permits. Id. Paragraph 3 of the original

lease was also amended to increase the annual rent under the Lease from $838,335.20 to

$1,098,790.70. Id. at 2.

Finally, and most pertinent to this case, SLA 1 set forth a new Paragraph 5 that modified

the original renewal option so that it would cover both the eleventh floor space and the newly

added third floor space. As amended, Paragraph 5 reads, in pertinent part, as follows:

The Government shall have the right to one (1) renewal option for a

FIVE-YEAR TERM at an annual rent of $1,156,935.80

[($43.378044/BRSF or $52.647818 / BOASF) + $6,343.44 for two

(2) unreserved parking permits] for a total of $1,163,279.24 payable

at the rate of $96,939.9367 per month in arrears plus cumulative

operating expense adjustments from the initial lease term . . . . The

renewal option shall become effective provided notice be given in

writing to the Lessor of the Government’s intent to exercise such

option at least 270 days before the end of the original lease term; all

other terms and conditions of this lease shall remain the same during

any renewal term. Said notice shall be computed commencing with

the day after the date of mailing.

Id. (emphasis and brackets in original).

II. Dispute Over Renewal of the Lease for the Eleventh Floor Space

A. The February 28, 2012 Email

James Joiner, Jr., was a lease contracting specialist with GSA during the term of the

Lease. See Pl.’s Mot. Ex. 5 at 2. Also known as “leasing specialists,” lease contracting specialists

“assist [contracting officers] and may perform all duties that do not legally obligate the

Government.” Def.’s Mot. App. at A216 (Public Building Service (PBS) Leasing Desk Guide).4

4

In contrast, lease contracting officers “perform the warranted duties that obligate the

Government, including executing and administering lease contracts.” Def.’s Mot. App. at 217.

3

On February 28, 2012, Mr. Joiner sent an email to Gregory Redding, First Crystal’s

representative with respect to matters related to the Lease.5 The subject line of the email read

“GS-11B-02077 Renewal Option and Early Termination of Expansion.” Pl.’s Mot. Ex. 5 at 1.

In the first paragraph of the email, Mr. Joiner stated that “[t]he United States of America

hereby exercises its renewal option under Paragraph 46 of Lease No. GS-11B-02077, for a period

of five years.” Id. He stated that the government had a “valid” renewal option “pursuant to

Paragraph 5 of [the] Lease.” Id. He then quoted, as follows, the original version of Paragraph 5

(which did not reflect its amendment by SLA 1):

The Government shall have the right to one (1) renewal option for a

FIVE- YEAR TERM at an annual rent of $880,402.80…This lease

may be renewed at the option of the GOVERNMENT… The

renewal option shall become effective provided notice be given in

writing to the Lessor of the Government’s intent to exercise such

option at least 270 days before the end of the original lease term.

Id. (emphasis and omissions in original).

Mr. Joiner then reiterated that the “letter is hereby-official notification that the

Government exercises its renewal option right as provided under this lease for approximately

20,240 BRSF yielding 16,760 BOASF.” Id. He further stated that “[t]his action will be followed

up with a supplemental lease agreement in the near future.” Id.

In the next paragraph, Mr. Joiner addressed the third floor space that had been added to

the Lease by SLA 1. He stated that “[a]dditionally, per SLA #1, we would not like to renew the

expansion space portion of the lease (6,431 BRSF yielding 5,215 BOASF).” Id. He explained

that, in accordance with the Department of Defense’s Base Realignment and Closure (BRAC)

initiative, the Department of Defense would be “vacating a good portion of their leased and

Government-owned inventory” between September 15, 2011 and August 31, 2012. “With this in

mind,” Mr. Joiner observed, “I would also like to request that you allow GSA to terminate [the

third floor] portion of the lease effective March 1, 2012.” Id.

The following day, Mr. Redding responded to Mr. Joiner via email. Pl.’s Mot. Ex. 7. He

advised Mr. Joiner that “[w]hile the lease renewal option does not give the Government the right

to selectively renew one portion of the leased space but not the rest, we are willing to accept the

long renewal of just the . . . 11th floor per the renewal option” subject to certain conditions. Id. at

1. Specifically, First Crystal offered to renew only the eleventh floor space if the government

agreed to “renew the 3rd floor space . . . for two (2) weeks, from January 1, 2014, to January 15,

5

Mr. Redding was secretary of the general partner of First Crystal, as well as a vice president

and division counsel with First Crystal’s management and leasing company, Vornado Charles E.

Smith LP (Vornado). Pl.’s Mot. Ex. 12 at 3.

6

Mr. Joiner’s citation to Paragraph 4 was in error. The renewal option was contained in

Paragraph 5 in both the original Lease and in the Lease as amended.

4

2014.” Id. Mr. Redding stated that after the government vacated the third floor space, First

Crystal would “market [it] immediately,” and, if it found a new tenant for a term exceeding

January 15, 2014, First Crystal would waive any further government liability for the third floor

space as of the date of the replacement lease. Id. Mr. Redding closed by noting that it was his

hope that Mr. Joiner “will regard this as a fair balancing of the various interests, as it gives the

Government the space it desires to keep long term along with a reasonable likelihood that the

Government will be relieved of liability for the 3rd floor space earlier than it is otherwise

entitled.” Id. He closed his email by stating “[l]et me know if this works for you.” Id.

On February 29, 2012, Mr. Joiner forwarded Mr. Redding’s response to the contracting

officer, Seyi Gbadegesin, without comment. See Pl.’s Mot. Ex. 8 at 2. Mr. Gbadegesin replied to

Mr. Joiner by saying “[l]et’s discuss.” Id. at 7.

The next day, March 1, 2012, Mr. Joiner sent another email to Mr. Redding. Pl.’s Mot.

Ex. 9. He advised Mr. Redding that the government had a “problem . . . renewing [the third floor

space] for only 2 weeks” and that “[t]o be frank, there is no way that I can do this.” Id. Mr.

Joiner told Mr. Redding that he could not “get approval from management” because GSA’s

“systems will not accommodate such an action.” Id. He further informed Mr. Redding that this

was “not a ‘financial issue.’” Id. Mr. Joiner closed this email by asking whether they “[could]

agree to everything else” after Mr. Redding discussed the matter further with First Crystal. Id.

That same morning, Mr. Redding responded to Mr. Joiner. Pl.’s Mot. Ex. 10. He asked

whether GSA could renew the third floor space if First Crystal did not charge GSA any rent for

those two weeks. Id. Neither Mr. Joiner nor anyone else at GSA responded in writing to this

email. See Pl.’s Mot. Ex. 12 at 14 (Dep. Tr. 50–51); see also Pl.’s Mot. at 8 ¶¶ 14–15.

According to First Crystal, Mr. Redding and Mr. Joiner subsequently spoke by phone on

or about March 1, 2012. See Pl.’s Mot. Ex. 12 at 14 (Dep. Tr. 50–51). Mr. Redding testified that

during that conversation he and Mr. Joiner agreed to a two week extension of the third floor

space at no rent. Id. Further, when asked during his deposition whether he “understood [there] to

be an agreement, oral agreement with Mr. Joiner as -- on or about March 1st, 2012 regarding the

terms of the renewal” of the Lease, he responded “[y]es.” See id. (Dep. Tr. 52).7

B. Subsequent Communications Regarding the Lease

The parties do not dispute that First Crystal and GSA did not execute any subsequent

written agreement relating to a renewal of any of the space at 2011 Crystal Drive. See, e.g., Pl.’s

Mot. Ex. 12 at 14 (Dep. Tr. 50–53); Pl.’s Mot. Ex. 26 at 2. But at some point between April and

June 2012, the government vacated the third floor expansion space. See Pl.’s Mot. Exs. 15–16;

Def.’s Mot. App. at A452 ¶ 14. Thereafter, First Crystal began marketing that space. Pl.’s Mot.

Ex. 3 at 3 ¶ 16.

7

At oral argument on the cross-motions for summary judgment, the government conceded that

Mr. Redding and Mr. Joiner reached a verbal agreement about the renewal of the Lease as to the

eleventh floor space. Oral Argument of Jan. 12, 2017 at 37:21.

5

On August 2, 2012, Mr. Redding sent another email to Mr. Joiner on the same email

chain referenced above, containing the subject line “GS-11B-02077 Renewal Option and Early

Termination of Expansion.” Pl.’s Mot. Ex. 13 at 1. He advised Mr. Joiner that “we need to pick

this renewal project up and move forward on it.” Id. Additionally, he noted his “belie[f]” that he

and Mr. Joiner “had agreed verbally that the 11th floor space would be renewed per the renewal

option, that the 3rd floor space would be renewed for 2 weeks rent free and that VNO would start

marketing the 3rd floor space.” Id. He closed by asking Mr. Joiner “[w]ill you be preparing the

SLA?” Id.

Mr. Joiner did not respond to Mr. Redding’s August 2, 2012 email. See id. But on August

24, 2012, the Department of Defense informed Mr. Joiner, via email, that it “no longer ha[d] a

continuing need at Crystal Park One under lease number LVA02077” and it “[r]equest[ed] to be

released at lease termination.” Pl.’s Mot. Ex. 14 at 1–2.

Mr. Redding emailed Mr. Joiner again on September 10, 2012. Pl.’s Mot. Ex. 13 at 1. He

asked “where are you on preparing the SLA for this one?” Id. Mr. Joiner responded in a

September 11, 2012 email in which he apologized for “not getting back” to Mr. Redding. Id. He

explained that GSA had been “working overtime trying to complete the BRAC close-out,” that

he knew “this SLA [wa]s important,” and that he would “try to have it” to Mr. Redding “in the

next couple weeks.” Id.

C. GSA Notifies First Crystal That It No Longer Needs the Eleventh Floor

Space; a Dispute Arises as to Whether GSA has Already Exercised the

Option to Renew the Lease

On October 26, 2012, Mr. Joiner emailed Mr. Redding again. In this email, he informed

Mr. Redding that, in light of Defense Department reductions, GSA no longer required any of the

space at 2011 Crystal Drive. Pl.’s Mot. Ex. 20 at 1. Specifically, he wrote that the “Department

of Defense is consolidating their resources and no longer requires the remaining square footage

under this lease.” Id. Mr. Joiner stated that he would “contact [Mr. Redding] this next fall to start

the termination process.” Id.

Mr. Redding responded the next day, on October 27, 2012. He advised Mr. Joiner that, in

his view, “GSA ha[d] already exercised the renewal option.” Id. He noted that First Crystal

intended to “hold GSA to that regardless of DOD’s plans for the space.” Id. On January 16,

2013, Mr. Joiner forwarded Mr. Redding’s October 27, 2012 email to CO Gbadegesin. Pl.’s Mot.

Ex. 21 at 1. Just over five months after that, in a June 21, 2013 letter, a new contracting officer,

Tawanda Beverly, rejected First Crystal’s contention that GSA had already exercised its option

to renew the eleventh floor space. Pl.’s Mot. Ex. 22. CO Beverly advised that after reviewing the

emails between Mr. Redding and Mr. Joiner, she had concluded that “[t]he option was not

exercised and GSA will not be responsible for any rent payments after the lease expiration date

of December 31, 2013.” Id. at 1. She asserted that “Mr. Joiner is not a Contracting Officer and,

therefore, does not have actual authority to exercise a lease option.” Id. CO Beverly also wrote

that Mr. Joiner “had no implied authority, because he had no delegated authority to renew the

Government’s lease contract.” Id.

6

“Additionally,” CO Beverly asserted, “although Mr. Joiner stated that the option was

exercised, it was ineffective as a counter-offer.” Id. She described the emails between Mr. Joiner

and Mr. Redding subsequent to the February 28, 2012 email as “simply propos[ing] counter

offers” and stated that “[t]here are no indications that any counteroffer was accepted or that both

you and Mr. Joiner understood the terms of a mutual agreement.” Id. And, “[e]ven if a contract

was formed,” she stated, “the government would not be bound by Mr. Joiner’s actions because

he lacks authority.” Id. at 2.

Mr. Redding responded to CO Beverly’s letter on July 16, 2013. Pl.’s Mot. Ex. 23. He

wrote that First Crystal was “entitled to rely on Mr. Joiner’s conduct, as ratified by GSA.” Id. at

1. Mr. Redding alleged that First Crystal “reasonably believe[d] that Mr. Joiner had the authority

to act for and bind the government,” that it “relied on this conduct,” and that it would be

“prejudiced if GSA were to disregard his actions now.” Id. According to Mr. Redding, “over the

course of many years” GSA had affirmed Mr. Joiner’s authority to act for and bind the

government by having Mr. Joiner “terminate leases and take other contractual actions.” Id. He

cited instances in which Mr. Joiner exercised lease terminations and in which other lease

contracting specialists purportedly exercised lease options. Id. Mr. Redding continued that “[i]n

reliance on Mr. Joiner’s exercise of the renewal option,” First Crystal had “not marketed the

subject space to other potential tenants” and had “not tak[en] other steps it had taken with other

vacated space to prepare them for occupancy by others.” Id.

Further, Mr. Redding opined that Mr. Joiner’s email of February 28, 2012 “was

unambiguous and was not in any way made contingent upon an agreement with respect to the

[third floor space] that he desired to terminate early.” Id. Mr. Redding also alleged that he and

Mr. Joiner “did in fact agree verbally on the phone to the terms respecting [the third floor

space].” Id. He concluded that First Crystal “expect[ed] the government to honor the exercise by

Mr. Joiner of the lease option” for the eleventh floor and “the agreement we reached . . . with

respect to the [third floor space].” Id. at 2. He warned that if the renewal was not honored First

Crystal would pursue legal action as well as “appropriate action with respect to termination

options purportedly exercised by Mr. Joiner” and other similarly situated GSA employees on

other First Crystal leases. Id.

At some point after Mr. Redding submitted this letter, Vornado (as First Crystal’s

management and leasing company) requested a meeting with GSA regarding the parties’ dispute.

See Def.’s Mot. App. at A284–85 (Dep. Tr. 64–65); see also id. at A318 (Dep. Tr. 66–68). This

meeting took place in November 2013. Id. at A284–85; see id. at A318. T.C. Hairston, Jr., a

GSA contracting officer, testified that each party “presented their side,” but that the government

believed that “if the contracting officer doesn’t exercise the option, the government has not

exercised its option under the lease,” and as a result, the parties reached a “stalemate[].” Id. at

A318–19 (Dep. Tr. 68–68).

D. The Lease is Terminated

By late November 2013, the government had vacated the remainder of the leased

premises at 2011 Crystal Drive. See Def.’s Mot. App. at A452 ¶ 16. GSA continued to pay full

rent on all space until the end of the period prescribed in the Lease, December 31, 2013. See id.

¶¶ 15–16.

7

On December 23, 2013, CO Beverly emailed Mr. Redding to advise him that she would

be “forwarding a[n] SLA to terminate the . . . lease.” Pl.’s Mot. Ex. 24 at 3. That same day, Mr.

Redding replied that First Crystal would “not be signing the SLA.” Id. CO Beverly responded,

noting that it was her understanding that First Crystal was marketing the space vacated by GSA.

Id. at 2. Mr. Redding replied that First Crystal was doing so only “[i]n the interest of mitigating

our damages.” Id. at 1–2.

III. First Crystal’s Request for a Contracting Officer’s Final Decision

On February 4, 2014, Mitchell N. Schear, the president of Vornado and an “authorized

signatory” for First Crystal, submitted a request for a contracting officer’s final decision in a

letter forwarded to CO Beverly via email. Pl.’s Mot. Ex. 25. Mr. Schear asserted that GSA had

exercised a renewal option for the eleventh floor space when Mr. Joiner sent Mr. Redding the

initial February 2012 email purporting to do so. See id. at 3. He stated that “GSA’s subsequent

refusal to honor the renewal exercise is a breach of the Lease.” Id. First Crystal continued that

“Mr. Joiner had actual authority to renew the Lease” because the “Lease does not specify who

must sign the lease renewal notice,” but “does name specific individuals who are authorized to

take other actions under the lease.” Id. Alternatively, First Crystal argued that “Mr. Joiner had

implied or apparent authority” to renew the lease as evidenced by the actions of Mr. Joiner and

other lease contracting specialists in terminating other leases. See id. at 3–4.

Based on its contention that GSA was “bound by its action renewing the Lease,” First

Crystal asserted that it was entitled to “monthly rent in the amount of $78,598.67 plus continued

adjustments for changes in real estate taxes . . . plus continued operating cost adjustments.” Id. at

4–5. Further, it stated that “these damages . . . are continuing in nature.” Id. at 5. “In the

alternative,” First Crystal argued, “should GSA maintain its position that Mr. Joiner did not have

the authority to exercise the lease renewal,” then “GSA has not validly terminated eleven of

Vornado’s other leases.” Id. First Crystal therefore demanded “additional rents on these leases

total[ing] $13,184,215.11.” Id.

On April 4, 2014, CO Beverly issued a “Contracting Officer’s Final Decision.” Pl.’s Mot.

Ex. 26. She stated that she had reviewed First Crystal’s request and “associated records” and her

“review . . . support[ed] the final decision that [the Lease] was not effectively renewed because

James Joiner did not have proper authority to exercise a renewal option.” Id. at 1.

CO Beverly noted that “[n]o supplemental lease agreement was ever prepared or

executed to memorialize the exercise of the renewal option.” Id. at 2. She asserted that “actual

authority is required to bind the Government” and that “Mr. Joiner has not been delegated any

contracting authority and he is not a warranted contracting officer.” Id. Therefore, CO Beverly

concluded that “Mr. Joiner did not have the actual authority to bind the government.” Id. at 3.

She also stated that “acting on Mr. Joiner’s e-mail renewal, without seeking verification from the

Contracting Officer, was a decision taken at the Lessor’s risk.” Id. at 2. She further asserted that

Mr. Joiner did not have any implied or delegated authority to exercise the renewal option

because “he would have had to have authority to obligate the Government funds required” and

“[o]nly a warranted Contracting Officer can commit the Government to expending funds.” Id. at

3.

8

Finally, CO Beverly rejected as irrelevant situations cited by First Crystal in which lease

specialists had terminated other leases with First Crystal on behalf of GSA, noting that “[a]

termination does not require an obligation of additional Government Funds.” Id. Further, CO

Beverly noted that the actions taken by lease contracting specialists on the other leases were

“either memorialized in bilaterally signed SLAs and/or impliedly ratified by being part of the

negotiated GSA/VNO ‘marketability program.’” Id.

IV. This Action

On March 27, 2015, First Crystal filed this action. Compl., ECF No. 1. In Counts I–V of

its complaint, First Crystal asserts alternative theories for breach of contract based on GSA’s

failure to honor Mr. Joiner’s exercise of GSA’s alleged option to renew the lease for the eleventh

floor space. Id. ¶¶ 32–52. In Count VI it claims that, in the event that Mr. Joiner lacked the

authority to renew the lease as the government contends, then other “BRAC-affected leases

identified in Paragraph 19 [of the complaint]” were improperly terminated because they were

“effected by non-contracting officers.” Id. ¶ 54. As relief, First Crystal asks that the Court

“sustain the appeal” of the contracting officer’s final decision, award damages including interest,

and award any other appropriate relief. Id. at 27.

First Crystal filed its motion for summary judgment on May 16, 2016. ECF No. 18. On

August 12, 2016, the government filed its response and cross-motion for summary judgment.

ECF No. 21. Oral argument was held on January 12, 2017. See Order, ECF No. 29.

DISCUSSION

I. Subject Matter Jurisdiction

The Tucker Act grants the United States Court of Federal Claims jurisdiction “to render

judgment upon any claim against the United States founded either upon the Constitution, or any

Act of Congress or any regulation of an executive department, or upon any express or implied

contract with the United States, or for liquidated or unliquidated damages in cases not sounding

in tort.” 28 U.S.C. § 1491(a). Further, the Court has “jurisdiction to render judgment upon any

claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41 [i.e.,

the Contract Disputes Act].” Id. § 1491(a)(2). The Contract Disputes Act applies to contracts for,

inter alia, “the procurement of property, other than real property in being.” 41 U.S.C. § 7102(a);

see also Forman v. United States, 767 F.2d 875, 878–79 (Fed. Cir. 1985) (holding that Contract

Disputes Act applies to lease agreements).

Here, First Crystal is asserting contract claims arising out of a lease. It presented these

claims to the contracting officer on February 4, 2014. Pl.’s Mot. Ex. 25. The contracting officer

then issued a final decision on April 4, 2014. Pl.’s Mot. Ex. 26. Therefore, the Court has subject

matter jurisdiction over the claims alleged in First Crystal’s complaint pursuant to the Tucker

Act and Contract Disputes Act.

II. Summary Judgment Standards

The standards for granting summary judgment are well established. Summary judgment

may be granted where there is no genuine issue of material fact and the movant is entitled to

9

judgment as a matter of law. Rules of the Court of Federal Claims (RCFC) 56(a); Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A fact is material if it “might affect the outcome

of the suit under the governing law.” Anderson, 477 U.S. at 248. An issue is genuine if it “may

reasonably be resolved in favor of either party.” Id. at 250.

“The moving party bears the burden of establishing the absence of any genuine issue of

material fact,” and all significant doubts regarding factual issues must be resolved in favor of the

party opposing summary judgment. Mingus Constructors, Inc. v. United States, 812 F.2d 1387,

1390 (Fed. Cir. 1987). “The fact that both parties have moved for summary judgment does not

mean that the court must grant judgment as a matter of law for one side or the other; summary

judgment in favor of either party is not proper if disputes remain as to material facts.” Id. at

1391. Further, the court should act with caution in granting summary judgment and may deny

summary judgment “where there is reason to believe that the better course would be to proceed

to a full trial.” Anderson, 477 U.S. at 255.

III. Counts I–V

The primary focus of the parties in briefing their cross-motions as to counts I–V of the

complaint has been on whether Mr. Joiner, as a lease contracting specialist, had the authority to

exercise the Lease’s renewal option or whether, in any event, his exercise of the renewal option

was ratified by the contracting officer. For the reasons set forth below, however, it is not

necessary to address those issues because the terms of the option required a renewal of all of the

space covered by the Lease, including the space on the third floor. Even assuming that he had

authority to exercise the renewal option, Mr. Joiner did not unconditionally accept the terms of

the option in his February 2012 email, because he sought to renew only the eleventh floor space.

Further, to the extent that Mr. Joiner and Mr. Redding came to a subsequent verbal agreement

regarding the eleventh floor space, such agreement was not a binding contract because it was

never reduced to writing as the parties apparently contemplated and because, in any event, Mr.

Joiner lacked the authority to modify the existing lease or bind GSA to a new one.

A. The Alleged Exercise of the Option to Renew

A lease provision providing a party with the option to renew is an option contract. See 15

Williston on Contracts § 46:12 (4th ed. 2015). In order to create a valid and binding contract, an

option must be accepted, see Uniq Comput. Corp. ex rel. U.S. Leasing Corp. v. United States, 20

Cl. Ct. 222, 230 (1990), and “an acceptance may not change, add to, or qualify the terms of the

offer,” 2 Williston on Contracts § 6:10 (4th ed. 2015). Thus, “[i]t is well settled that to properly

exercise [an] option, the government’s acceptance of that offer ha[s] to be unconditional and in

exact accord with the terms of the contract being renewed.” 4737 Conner Co. v. United States,

65 F. App’x 274, 276 (Fed. Cir. 2003) (quoting New Eng. Tank Indus. of N.H., Inc. v. United

States, 861 F.2d 685, 687 (Fed.Cir.1988)) (alterations in original). Where the response to an offer

does not match the terms of the offer, there is no acceptance and thus no formation of a contract.

First Commerce Corp. v. United States, 335 F.3d 1373, 1381 (Fed. Cir. 2003) (citing Iselin v.

United States, 271 U.S. 136, 139 (1926)) (observing that “[u]nder the traditional ‘mirror image’

rule . . . mismatch between offer and acceptance negates contractual liability”); see also 4737

Conner Co., 65 F. App’x at 276–77 (holding that inclusion of different term in purported

exercise of lease renewal option converted purported exercise into counter-offer); Alliant

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Techsystems, Inc. v. United States, 178 F.3d 1260, 1275 (Fed. Cir. 1999) (observing that the

inclusion in a purported exercise of an option of “an affirmative requirement that depart[s] from

the terms of the option” results in “the option clause impos[ing] no obligations”); Lockheed

Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319, 323–24 (Fed. Cir. 1997) (holding that

Army’s attempt to effect a “partial exercise” of the option was improper).

Here, the February 28, 2012 email sent by Mr. Joiner did not unconditionally accept the

exact terms of the Lease’s renewal option. See Pl.’s Mot. Ex. 5 at 1. In fact, in the email Mr.

Joiner actually cited the language of Paragraph 5 of the original lease agreement, which had been

superseded by the new Paragraph 5 set forth in SLA 1. The option set forth in SLA 1 covered

more square footage and set a higher rental price than the square footage and rental rate set forth

by Mr. Joiner in his email. Thus, by virtue of SLA 1, GSA was leasing from First Crystal 26,671

rentable square feet, which included 8,545 rentable square feet in Suite 1100/1100A, 11,695

rentable square feet in Suite 1106, and 6,431 rentable square feet in Suite 300. Pl.’s Mot. Ex. 2 at

1. Further, the Lease’s renewal option, as amended, stated that the “Government shall have the

right to one (1) renewal option for a FIVE-YEAR TERM at an annual rent of $1,156,935.80

[($43.378044/BRSF or $52.647818 / BOASF) + $6,343.44 for two (2) unreserved parking

permits] for a total of $1,163,279.24 payable at the rate of $96,939.9367 per month in arrears.”

Id. at 2 (brackets in original).

Mr. Joiner did not match those terms in his purported exercise of the renewal option; in

effect, he countered them. First, Mr. Joiner sought renewal of a different amount of rentable

square feet than that provided for by the renewal option: the renewal option was for the leasing

of 26,671 rentable square feet, while Mr. Joiner proposed renewing only 20,240 rentable square

feet. Compare Pl.’s Mot. Ex. 2 at 1–2, with Pl.’s Mot. Ex. 5 at 1. Second, in his email, Mr. Joiner

proposed a different rental rate. While the renewal option provided for renewal at a total annual

rate of $1,163,279.24, Mr. Joiner’s email proposed an annual rate of $880,402.80. Compare Pl.’s

Mot. Ex. 2 at 2, with Pl.’s Mot. Ex. 5 at 1. Finally, Mr. Joiner not only sought to exclude the

third floor portion of the leased premises from any renewal (contrary to the terms of the option),

but also sought early termination of the Lease as to that space. Pl.’s Mot. Ex. 5 at 1. But neither

selective renewal of only the eleventh floor space nor early termination of the third floor space

was part of the Lease or its renewal option. See Pl.’s Mot. Ex. 2 at 2. Accordingly, Mr. Joiner’s

email included different and additional terms from the Lease’s renewal option. It was thus not

unconditional and not an acceptance, and could not operate as an exercise of the renewal option;

instead, it served as a counter-offer. 4737 Conner Co., 65 F. App’x at 276–77; First Commerce

Corp., 335 F.3d at 1381.

Indeed, notwithstanding its litigating position in this case, First Crystal’s response to Mr.

Joiner’s February 28, 2012 email reflects that it did not understand him to be exercising the

option set forth in Paragraph 5, as amended by SLA 1. In his responsive email, Mr. Redding

stated (correctly, in the Court’s view) that “the lease renewal option does not give the

Government the right to selectively renew one portion of the leased space but not the rest.” Pl.’s

Mot. Ex. 7 at 1. For that reason, Mr. Redding responded to the email with another counter-offer,

stating that First Crystal was “willing to accept the long renewal of just the 20,240 BRSF (16,760

USF) on the 11th floor per the renewal option terms stated in the lease” subject to several stated

conditions. Id. Thus, First Crystal rejected Mr. Joiner’s counter-offer and attempted to engage in

further negotiations.

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Because Mr. Joiner’s February 28, 2012 email did not unconditionally accept the terms of

the renewal option and sought different terms, it was not an acceptance but a counter-offer. Thus,

even assuming that Mr. Joiner possessed the authority to exercise the renewal option (a

proposition on which the Court expresses no position), he never did so. Instead, he initiated and

engaged in negotiations with Mr. Redding regarding both the renewal of the eleventh floor space

and the early termination of the third floor space.

B. Modification of the Existing Lease/New Lease Agreement

Although Mr. Joiner’s February 28, 2012 email did not exercise the Lease’s renewal

option, the question remains whether the parties came to any subsequent enforceable agreement

modifying the Lease or entering into a new lease that provided a long-term extension of the

eleventh floor space. At oral argument, the government conceded that—as a matter of fact—Mr.

Joiner and Mr. Redding eventually reached a verbal agreement regarding the eleventh floor

space. Oral Argument of Jan. 12, 2017 at 37:21. The government points out, however, that

notwithstanding Mr. Redding’s efforts to secure a written contract memorializing this verbal

agreement, none was ever executed. Further, the government argues that Mr. Joiner lacked the

authority to either modify the existing lease or enter a new one because he was not a contracting

officer during the relevant time period.

“Oral understandings which contemplate the finalization of the legal obligations in a

written form are not contracts in themselves.” SCM Corp. v. United States, 595 F.2d 595, 598

(Ct. Cl. 1979) (holding that oral representations made by the parties did not constitute a contract

where parties intended to execute written agreement and understood that such agreement was a

condition precedent to payment). Rather, “[w]hen legal obligations between the parties will be

deferred until the time when a written document is executed, there will not be a contract until

that time.” Id. (citation omitted).

Here, the record strongly suggests that both Mr. Joiner and Mr. Redding clearly

understood that there would be no final, binding contract until the parties executed a

supplemental lease agreement. Mr. Joiner closed his initial February 2012 email by noting it

would “be followed up with a supplemental lease agreement in the near future.” Pl.’s Mot. Ex. 5

at 1. When Mr. Redding emailed Mr. Joiner in August 2012, he indicated his concern that the

parties “need[ed] to pick this renewal project up,” stated that he “believe[d]” he and Mr. Joiner

had a verbal agreement, and asked whether Mr. Joiner would be preparing a supplemental lease

agreement. Pl.’s Mot. Ex. 13 at 1. When he followed up with Mr. Joiner again in September

2012, Mr. Redding asked “where are you on preparing the SLA for this one?” Id. On September

11, 2012, when Mr. Joiner replied by email, he stated that he would try to have a supplemental

lease agreement to Mr. Redding “in the next couple weeks.” Id. Thus, the parties appeared to

understand that there would be no new lease until a supplemental lease agreement was signed.8

8

The Court further notes that “[p]arties are presumed to know and required to be cognizant of

the governing regulations.” SCM Corp., 595 F.2d at 598. Thus, the parties’ understanding that

there would be no binding lease until the execution of a written agreement is also informed by

both 48 C.F.R. § 570.801, requiring the contracting officer to use Standard Form 2 (or a short

12

Further, and in any event, even if there were some dispute in the record as to Mr.

Redding’s and Mr. Joiner’s subjective understanding of the need to reduce their verbal

agreement to writing, “[i]t is well established that a purported agreement with the United States

is not binding unless the other party can show that the official with whom the agreement was

made had authority to bind the government.” Mil-Spec Contractors, Inc. v. United States, 835

F.2d 865, 867 (Fed. Cir. 1987) (quoting SER, Jobs for Progress, Inc. v. United States, 759 F.2d

1, 4 (Fed. Cir. 1985)). Here, Mr. Joiner lacked such authority.

Thus, as GSA’s leasing desk guide provides, licensed contracting officers have

“exclusive authority to enter into, amend, and administer leases on the Government’s behalf.”

Def.’s Mot. App. at A212. They may delegate their authority to perform lease management only

for tasks “not involving amendments to the lease.” See id. The desk guide reflects the provisions

defining a contracting officer’s authority set forth in GSA’s regulations. For example, 48 C.F.R.

§ 570.103(b) provides that “[t]he contracting officer has exclusive authority to enter into and

administer leases on the Government’s behalf.” Id. And 48 C.F.R. § 570.402-1 states that it is the

contracting officer who may enter into a “succeeding lease.” Id.; see also id. § 1.601(a)

(“Contracts may be entered into and signed on behalf of the Government only by contracting

officers.”); id. § 552.270-4(d) (contracting officers have “the authority to enter into, administer,

and/or terminate contracts”).9

Nor did Mr. Joiner have any implied authority to modify the Lease or enter into a new

lease. Actual authority to bind the government is implied when it is integral to the duties

assigned to the particular government employee. H. Landau & Co. v. United States, 886 F.2d

322, 324 (Fed. Cir. 1989). But Mr. Joiner cannot possess implied authority to modify an existing

lease or enter a new one where, as here, governing regulations state that only a contracting

officer has such authority. Winter v. Cath-dr/Balti Joint Venture, 497 F.3d 1339, 1346 (Fed. Cir.

2007) (finding that government official could not have implied authority to modify contract

because the contract and regulations stated that only the contracting officer had authority to

modify the contract).

Finally, First Crystal does not (and could not) argue that any verbal agreement reached by

Mr. Joiner and Mr. Redding to extend the Lease as to only the eleventh floor was ratified by the

contracting officer. “Ratification is ‘the affirmance by a person of a prior act which did not bind

him but which was done or professedly done on his account, whereby the act, as to some or all

form alternative) to award leases, and 48 C.F.R. § 570.802, describing the use of specific forms

to amend a lease, such as when “obtaining [the] partial release of space” or when “revising the

terms of a lease.”

9

Further, to the extent that any agreement between Mr. Redding and Mr. Joiner is viewed as a

modification of the amount of space to be leased, such a modification would be subject to 48

C.F.R. § 552.270-14. Under that provision, incorporated into the Lease, only the “Contracting

Officer may . . . by written order, make changes within the general scope of this lease in any one

or more of the following: . . . Amount of space, provided the Lessor consents to the change.” Id.

§ 552.270-14(a)(4). Thus, absent the contracting officer’s written change order pursuant to this

section, the government cannot be held liable under the changes clause. Id. § 552.270-14(d).

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persons, is given effect as if originally authorized by him.’” Schism v. United States, 316 F.3d

1259, 1289 (Fed. Cir. 2002) (quoting Restatement (Second) of Agency § 82 (Am. Law Inst.

1958)). “For ratification to be effective, a superior must not only (1) have possessed authority to

contract, but also (2) have fully known the material facts surrounding the unauthorized action of

her subordinate, and (3) have knowingly confirmed, adopted, or acquiesced to the unauthorized

action of her subordinate.” Leonardo v. United States, 63 Fed. Cl. 552, 560 (2005) (citations

omitted), aff’d, 163 F. App’x 880 (Fed. Cir. 2006). Further, silence on the part of the authorized

official “in and of itself is not sufficient to establish a demonstrated acceptance of the contract.”

Harbert/Lummus Agrifuels Projects v. United States, 142 F.3d 1429, 1434 (Fed. Cir. 1998).

Here, First Crystal identifies no evidence that a contracting officer (or any other official

with contracting authority) had knowledge of any subsequent lease modification or new lease

agreed to by Mr. Redding and Mr. Joiner, much less that he or she acquiesced in such a

modification or new lease. In fact, the only points at which a contracting officer seems to have

been advised of developments regarding the Lease were when Mr. Joiner and Mr. Redding had

their first exchange of emails in February 2012, and then in January 2013 after Mr. Joiner had

informed Mr. Redding that GSA was not renewing the Lease and would seek to terminate it at

the end of its term. See Pl.’s Mot. Ex. 8 at 2; Pl.’s Mot. Ex. 21 at 1.

Accordingly, First Crystal and GSA never entered an enforceable agreement to modify

the existing lease or enter a new lease for the eleventh floor space. For that reason and the others

set forth above, the government’s motion for summary judgment as to Counts I–V of the

complaint must be GRANTED, and First Crystal’s motion must be DENIED.

IV. Count VI of the Complaint

The complaint’s sixth count alleges improper termination of other leases by GSA

employees who were not contracting officers, as identified in paragraph nineteen of the

complaint. See Compl. ¶ 54. First Crystal did not elaborate on Count VI in its motion for

summary judgment or in opposing the government’s motion other than to explain that it intended

to argue “[o]nly in the alternative” that “if Mr. Joiner did not have the authority to exercise the

lease renewal and GSA had not validly terminated the other BRAC-affected leases because the

terminations were not [e]ffected by contracting officers,” then First Crystal was entitled to

“$15,913,544.00 in damages.” See Pl.’s Opp’n to Def.’s Cross-Mot. for Summ. J. & Reply to

Def.’s Response to Pl.’s Mot. for Summ. J. at 1 n.1, ECF No. 23.

The government has requested summary judgment as to Count VI on the ground, among

others, that each of the leases identified by First Crystal was ultimately terminated by a

supplemental lease agreement signed by a government official with authority to do so. See Def.’s

Mot. at 9–11, 27. The government’s appendix contains the supplemental lease agreements

terminating each such lease. See Def.’s Mot. App. at A421–47.

In the face of these signed agreements, First Crystal provides no basis for its argument

that “GSA did not validly terminate the BRAC-affected leases” or its claim that it is entitled to

the rents “owed under the leases which had not been properly terminated.” Compl. ¶ 54. The

government is therefore entitled to judgment as a matter of law as to Count VI.

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CONCLUSION

For the reasons discussed above, First Crystal’s motion for summary judgment is

DENIED and the government’s motion for summary judgment is GRANTED. The Clerk of the

Court is directed to enter judgment accordingly. Each party shall bear its own costs.

IT IS SO ORDERED.

s/ Elaine D. Kaplan

ELAINE D. KAPLAN

Judge

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