NEENAN v. USA

Filing 21

PUBLISHED OPINION ; granting 16 Motion for Summary Judgment. The Clerk is directed to enter judgment. Signed by Senior Judge Eric G. Bruggink. (sr) Copy to parties.

In the United States Court of Federal Claims
No. 11-733C
(Filed: August 22, 2013)

**********************
THOMAS F. NEENAN, as Trustee of
the Thomas F. Neenan, Sr. Revocable
Trust,
Plaintiff,

Contracts; offer versus invitation
for an offer; contracting authority.

v.
THE UNITED STATES,
Defendant.
**********************
Wallace L. Taylor, Cedar Rapids, IA, for plaintiff.
Barbara E. Thomas, United States Department of Justice, Civil
Division, Washington, DC, with whom were Steven J. Gillingham, Assistant
Director, Jeanne E. Davidson, Director, and Stuart F. Delery, Assistant
Attorney General, for defendant.
_________
OPINION
_________
BRUGGINK, Judge.
This is an action for breach of contract. Plaintiff, Thomas F. Neenan,
brings this suit as Trustee of the Thomas F. Neenan, Sr. Revocable Trust. He
alleges that the United States (“defendant”) breached an agreement to lease
plaintiff’s office building from May 2011 to May 2016. Defendant has filed
a motion for summary judgment, contending that it did not contract with
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plaintiff. The motion is fully briefed, and we held oral argument on July 17,
2013. For the reasons set out below, we grant defendant’s motion.
BACKGROUND 1
At an unspecified date in the 1970s, Thomas Neenan and his wife built
an office in Arlington, Iowa and began leasing it to the U.S. Postal Service.
Neither party submitted facts regarding the terms of leases prior to 2000. The
most recent lease expired on April 30, 2011. According to plaintiff, he entered
a new lease with the Service commencing on May 1, 2011, at the expiration
of the five-year renewal of the prior lease. Both parties submitted facts
regarding the negotiations leading to that prior lease.
Those negotiations began in January 2000. The Service sent plaintiff
a draft of an unsigned agreement to lease the property from May 2001 to April
2006. The signature page of the draft had the heading “All Individual Offerors
Must Sign.” Def. App. 3. Below were signature lines for both Mr. and Mrs.
Neenan. At the bottom of the page was a space headed by the phrase,
“Acceptance by the Postal Service.” Id. A signature line underneath was
prepared for the Contracting Officer, Dick Heins. Other portions of the lease
stated the rights and obligations of the Neenans. One section, entitled
“Representations and Certifications,” referred to the Neenans as the offerors.
See Def. App. 13-15.
After Mr. Neenan received the draft lease, he made several changes.
While the original draft provided for rental payments of $12,000 per year and
included a government right to termination, Mr. Neenan increased the rental
rate from “$12,000” to “12,600” by changing the first zero to a six, lined

1

The facts are drawn from Plaintiff’s Statement of Material Facts, Plaintiff’s
Appendix (“Pl. App.”), Defendant’s Proposed Findings of Uncontroverted
Fact, and the Appendix to Defendant’s Motion for Summary Judgment (“Def.
App.”). Rule 56 of the Rules of the Court of Federal Claims (“RCFC”) allows
a party to dispute a factual assertion from another party by citing to particular
parts of the record or by showing that the other party fails to support the
assertion with admissible evidence. RCFC 56(c)(1)(A)-(B). Some of the
assertions offered by both parties here were not challenged by the other side.
We “consider the fact undisputed,” RCFC 56(e)(2), when a party “fails to
properly address another party’s assertion of fact as required by RCFC 56(c).”
RCFC 56(e).
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through the termination clause, wrote “NONE” beside it, and initialed next to
his changes. See Def. App. 2; Pl. App. 3. He and his wife signed the markedup draft and sent it back to the Postal Service.
Contracting Offer Heins initialed beside the changes made by Mr.
Neenan and signed the lease on January 27, 2000. According to an affidavit
executed by Mr. Neenan, Mr. Heins told him that “the signature line on the
lease for the Postal Service was to verify that changes that may have been
made to the lease were made with the approval of the Postal Service.” Pl.
App. 18-19.
The lease expired in five years with an option for renewal. Contracting
Officer Garry Matox signed that option on September 29, 2005. This extended
the lease until April 30, 2011. At an unspecified date during that extension,
plaintiff’s wife passed away, and he transferred ownership of the Neenan
property to the Thomas F. Neenan, Sr. Revocable Trust.
A month before the expiration of the extension, the Postal Service
contacted plaintiff through Real Estate Contract Specialist Nancy L. Calderon.
As a contract specialist, Ms. Calderon communicated with landlords regarding
the contract terms in a lease. At her deposition, however, she stated, “I cannot
make decisions on my own. I do not have unilateral decision making [sic].”
Def. App. 47. Ms. Calderon also stated that she would obtain the signatures
of “the district manager, the district finance manager, [and] the postal
manager,” before mailing out the terms of a lease. Id. At his deposition,
plaintiff was asked whether he understood that Ms. Calderon “didn’t have the
authority to approve or change terms.” Def. App. 66. He replied, “[t]hat’s
right.” Id.
Ms. Calderon mailed an unsigned lease agreement and cover letter
addressed to Mr. and Mrs. Neenan on March 14, 2011. Ms. Calderon did not
know that Mrs. Neenan had passed away or that plaintiff had transferred
ownership of the Neenan property to the Thomas F. Neenan, Sr. Revocable
Trust. In the letter, Ms. Calderon recited that, “enclosed are copies of a new
Lease agreement for your review.” Def. App. 18. Although she noted that
budget deficits required the Service to reduce rental payments throughout the
country, Ms. Calderon “determined that [the] rental rate will increase slightly”
for the Neenan property. Id. She told the Neenans that, “should the Lease
document meet with your approval, please sign, witness and date, where
indicated and return to my attention.” Id. She also noted that “[a]ll owners of
record are advised to read the Lease thoroughly to ensure that each party is in
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agreement with the terms and conditions of this contract.” Id. The letter
requested a response within 10 days.
The draft lease provided for a five-year, fixed-term lease, ending in
April 2016, with an annual rent of $13,256, and a right for termination by the
government. Mr. and Mrs. Neenan were the “Landlord.” Def. App. 31. The
draft provided signature lines for the Neenans under the heading, “Individual,
Administrator, or Trustee.” Def. App. 33. Also below that heading, the
“Landlord” was informed that he or she had to demonstrate leasing authority.
If the landlord had a spouse, both persons had to execute the lease and submit
“adequate evidence of title.” Id. If the landlord was a trustee, he or she had
to provide “a certified copy of the instrument creating the trust.” Id. At the
bottom of the page was a second heading, “Acceptance by the Postal Service,”
with a signature line for the Contracting Officer, Candace Kinne. Id.
Ms. Kinne testified that she had been a contracting officer since 2006.
When asked what a contracting officer does, Ms. Kinne replied that she
“[s]igns contracts, signs leases, all kinds of real estate documents.” Def. App.
52. According to Ms. Kinne, she was not directly involved in negotiating the
terms of the lease, and those duties belonged to Ms. Calderon. Id. Ms.
Calderon also testified regarding Ms. Kinne’s duties. She stated that Ms.
Kinne makes sure “I present documents to her in the correct manner as
specified by Sarbanes-Oxley, that I have all the correct date and information
attached to said document before she will sign it.” Def. App. 49. At his
deposition, plaintiff was asked whether he understood that Ms. Kinne was “in
charge of signing off on the lease.” Def. App. 69. Plaintiff replied that he did.
Id. He did state, however, that he believed her signature was necessary to form
a contract only if he made changes to the draft. Id.
After plaintiff received the draft lease, he sent a letter to Ms. Calderon
on April 9, 2011. He stated, “I will accept the agreement as written,” Pl. App.
12, but he objected to the termination clause and also noted that the Thomas
F. Neenan Revocable Trust was the current owner of the building. The letter
did not state that Mrs. Neenan had passed away.
A few days later, plaintiff spoke with someone at the Postal Service.
At his deposition, plaintiff noted that he was not sure who that person was, Pl.
App. 4, although he stated in an interrogatory that he believes it was Ms.
Calderon. Pl. App. 14. According to his interrogatory, Mr. Neenan told that
person that his wife had passed away. Id. Plaintiff was told that the
termination clause was not negotiable. See Pl. App. 4. Plaintiff sent a follow4

up letter to Ms. Calderon on April 15, 2011. He told Ms. Calderon that he
believed his proposed changes were proper, but acknowledged that “apparently
your authorities do not concur.” Pl. App. 13.
Soon thereafter, plaintiff spoke on the telephone with Ms. Calderon.
At his deposition, plaintiff stated that he told Ms. Calderon he would sign the
lease with only the change in ownership indicated. Plaintiff testified that Ms.
Calderon’s response was, “‘[i]f that’s the only change, then it’s a deal.’” Pl.
App. 5.2
Before plaintiff sent the draft to the Service, he made changes.3 He
crossed out his wife’s name in each place where the draft lease indicated her
as a landlord, edited the rental payment address to refer to the trust, and
changed the signature page to refer to the trust. Mr. Neenan also signed the
last page on behalf of the trust.
Plaintiff faxed the marked-up lease to Ms. Calderon on or about April
20, 2011. Contracting Officer Kinne, however, did not sign it. Soon after the
termination of the prior lease on April 30, 2011, the Postal Service vacated the
building.
In his complaint filed November 3, 2011, plaintiff contends that the
Postal Service was obligated to extend the lease until 2016. A contract was
formed, plaintiff asserts, when he signed the draft lease sent by the Service.
Defendant moves for summary judgment under RCFC 56. Defendant contends
that plaintiff did not enter into a new contract with the Service because the
Service never made an offer to plaintiff.
DISCUSSION
Defendant’s motion challenges plaintiff’s proof of the elements of a
contract with the government: (1) mutuality of intent to contract; (2) lack of

2

As defendant points out, Mr. Neenan immediately qualified this statement:
“‘[i]t’s no problem’ is the way she put it. And then she told me to fax the
lease, and when I did that, I assumed it was a done deal.” Pl. App. 5.

3

For purposes of this motion, defendant stipulates that the lease attached to its
appendix of facts is the lease plaintiff faxed to the Postal Service. Defendant
otherwise reserves its right to dispute that fact.
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ambiguity in offer and acceptance; (3) consideration; and (4) a government
representative having actual authority to bind the United States in contract.
Anderson v. United States, 344 F.3d 1343, 1353 (Fed. Cir. 2003). According
to defendant, plaintiff fails to establish facts showing that defendant made an
offer which plaintiff could accept merely by signing the draft lease. We agree
with defendant.
An offer does not exist unless the offeror manifests an intent to be
bound. See Linear Tech. Corp. v. Micrel, Inc., 275 F.3d 1040, 1050 (Fed. Cir.
2001) (stating that a valid offer was not made because the alleged offeror did
not manifest an intent to be bound); see also Restatement (Second) of
Contracts § 24 (1981) (“An offer is the manifestation of willingness to enter
into a bargain, so made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.”). The existence of
detailed terms, such as in the draft lease here, does not show that intent in
every case. See Restatement (Second) of Contracts § 26 cmt. d (“Even though
terms are specified in detail, it is common for one party to request the other to
make an offer.”). A document may show the “willingness to enter a bargain”
but it “is not an offer if the person to whom it is addressed knows or has reason
to know that the person making it does not intend to conclude a bargain until
he has made a further manifestation of assent.” Id. § 26.
According to defendant, the most obvious indicator that the government
was withholding consent until a later time appears on the signature page of the
draft. The signature line for the contracting officer, below the heading,
“Acceptance by the Postal Service,” was not executed when Ms. Calderon
mailed the draft to plaintiff. The only logical inference, defendant contends,
is that acceptance would come later – that plaintiff’s executed response would
amount to an offer to defendant.
Defendant also points to the requirement set out in the draft that
plaintiff had to provide evidence of authority to lease, a particularly relevant
requirement when the nominal ownership had changed. Such a requirement
suggests that the contracting officer reserved the right to review proof of
contracting authority. The government further relies on the negotiations
between plaintiff and the Postal Service in 2000. That agreement was not
consummated until after the government first sent an unsigned lease; plaintiff
made changes, signed the lease, and sent it to the government; the contracting
officer approved the changes with initials and then signed the lease. We agree
with defendant that the absence of a signature and the requirement of proof of

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contracting authority are strong indicators that the lease could not be finalized
merely by plaintiff’s signature.
Plaintiff attempts to limit the effect of the absence of a signature by
offering the statement by Contracting Officer Heins in 2000,4 that “the reason
for the signature line on the [2000 draft] lease for the Postal Service was to
verify that changes that may have been made to the lease were made with the
approval of the Postal Service.” Pl. App. 18-19. Plaintiff construes this
statement to mean that Mr. Heins viewed the unsigned draft as an offer.
We view that construction as going beyond the literal meaning of his
statement. Mr. Heins did not affirmatively state that no signature was
necessary if the landlord made no changes. Indeed, such a construction does
not explain at what point anyone with contracting authority for the government
would have signed the agreement. Cf. Anderson, 344 F.3d at 1353 (stating
that, to be valid, an agreement with the government must be entered by
someone with contracting authority). Plaintiff’s construction of the facts also
directly conflicts with the language of the 2000 draft, which refers to the
Neenans as “offerors.” The events in 2000 are thus fully consistent with
defendant’s position, namely, that the Postal Service forwarded an unsigned
draft to the Neenans, the Neenans made changes to the lease, and the
contracting officer only signed the modified agreement.
And even if Mr. Heins meant what plaintiff infers, his was the statement
of a different contracting officer as to negotiations with respect to a different
lease. That Mr. Heins made an ambiguous statement ten years earlier about his
intent regarding a different lease does not constitute a pattern or practice
sufficient to bind his successor at a later time. In any event, even if the
statement bound Mr. Heins’ successor, plaintiff made changes to the draft in
2011 which, according to the Heins statement, needed “approval of the Postal
Service.” Pl. App. 18-19.
Plaintiff contends, however, that representations made by Real Estate
Contract Specialist Nancy Calderon vitiate these signature problems.
According to plaintiff, Ms. Calderon’s signed letter forwarding the draft
agreement showed the government’s intent to be bound, and that her signature,

4

Plaintiff does not give a specific date for this statement, but we assume it
occurred in 2000 in connection with the draft agreement, when Mr. Heins
served as contracting officer.
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not on the lease but on the cover letter, constituted assent by the government.
Although plaintiff acknowledges that he made changes to the draft by
substituting the trust, he contends that Ms. Calderon approved those changes
over the telephone when she stated “it’s a deal.”
Plaintiff acknowledges the difficulty of this approach. Ms. Calderon
did not have express authority to contract with plaintiff. She was not the
contracting officer. But plaintiff contends that Ms. Calderon was clothed with
implied authority to execute the lease. We defer for a moment the question of
whether Ms. Calderon had authority to bind the government. We will assume
that she did and will consider only the question of whether there was a binding
offer by the government.
Ms. Calderon’s cover letter is plainly not, in itself, an offer. It merely
forwarded the draft agreement. And we cannot ignore the fact that the
enclosed draft lease was not signed and that the wording of the draft was
inconsistent with an unconditional offer. The draft clearly reserved to the
Postal Service the right to review plaintiff’s evidence of contracting authority.
The trust agreement that plaintiff attached to the marked-up lease is that
contracting authority. Only after the contracting officer’s final review of the
lease and proof of authority, followed by a signature, would there be final
approval.
Nor is the secondary evidence offered by plaintiff sufficient to
overcome these deficiencies. Ms. Calderon’s telephone statement that “it’s a
deal,” aside from its obvious authority problem, is consistent with defendant’s
position that the Postal Service was waiting to see an offer, in writing, from
plaintiff. An intent later to adopt a written agreement will not prevent an oral
contract, “but the circumstances may show that the agreements are preliminary
negotiations.” Restatement (Second) of Contracts § 27 (1981). Ms.
Calderon’s alleged statement does not eliminate the need for a signature by the
contracting officer or the requirement for the landlord to demonstrate authority
to lease.
An independent difficulty arises with plaintiff’s position. Because
plaintiff relies on Ms. Calderon’s signed cover letter and her statement, “it’s
a deal,” plaintiff must show that Ms. Calderon had actual contractual authority
to bind the government. See Winter v. Cath-dr/Balti Joint Venture, 497 F.3d
1339, 1344 (Fed. Cir. 2007) (“Where a party contracts with the government,
apparent authority is not sufficient; an agent must have actual authority to bind
the government.”). Plaintiff concedes that Ms. Calderon lacked express
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authority, but suggests that actual authority may be implied. See, e.g., H.
Landau & Co. v. United States, 886 F.2d 322, 324 (Fed. Cir. 1989); John
Cibinic, Jr., Ralph C. Nash, Jr., & Christopher R. Yukins, Formation of
Government Contracts 96-97 (4th ed. 2011).5 A person has implied actual
authority if that authority is “an integral part of the duties assigned.” Cibinic,
et al., 96 (citing Landau). “Contracting authority is ‘integral’ when an
employee cannot perform [her] duties without it, and the authority is an
essential or necessary part of the employee’s occupation.” Biofunction, LLC
v. United States, 92 Fed. Cl. 167, 172 (2010) (citing SGS-92-X003 v. United
States, 74 Fed. Cl. 637, 652 (2007)).
As defendant correctly notes, Ms. Calderon’s duties involved
negotiating the terms of each lease, securing the signature of the landlord, and
forwarding the document to the contracting officer. She stated that she could
not make decisions on her own and that she received approval from her
superiors before sending out the draft lease. Plaintiff acknowledged this lack
of independent authority. In his April 15, 2011 letter to Ms. Calderon, he said
he felt his changes to the draft lease were reasonable but acknowledged that
“apparently your authorities do not concur.” Pl. App. 13. At his deposition,
plaintiff also admitted that, to his understanding, Ms. Calderon did not have
authority to change the terms of the draft lease. Ms. Calderon’s duties were
therefore only ministerial. Contracting authority was not necessary for Ms.
Calderon to exercise her duties. See H. Landau & Co. v. United States, 20 Cl.
Ct. 400, 407 (1990) (holding that a person did not have contracting authority
when “[h]is only contract-specific duties were purely ministerial”); cf. Stevens
Van Lines, Inc. v. United States, 80 Fed. Cl. 276, 280-81 (2008) (holding that
two high-ranking employees with managerial duties had implied authority).
We conclude that none of the plaintiff’s offered evidence, even if fully
credited, is sufficient to show an unambiguous offer by the Postal Service to

5

Although apparent authority does not bind the government, Landau, 886 F.2d
at 324, plaintiff asserts that “if the employee appears to have authority and
there is nothing in the law or regulations that would put a third party on notice
of the employee’s lack of authority, the employee can bind the agency to a
contract.” Resistance to Def.’s Mot. for Summ. J. 9. Plaintiff contends that
we supported that proposition in Brunner v. United States, 70 Fed. Cl. 623
(2006). Brunner does not, however, support that contention. See id. at 627-41
(discussing the history of apparent authority and why it does not apply to
government contracts).
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be bound upon plaintiff’s signing of the draft lease.6 Accordingly, we grant
the government’s motion for summary judgment. The Clerk is directed to
enter judgment for defendant and dismiss the case with prejudice.

/s/Eric G. Bruggink
Eric G. Bruggink
Judge

6

Defendant also argued that plaintiff failed to properly accept the agreement.
We deem analysis of that issue to be unnecessary.
10