USPS v. Bellevue Post Office , 836 F.3d 1189 ( 2016 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES POSTAL No. 14-35100
SERVICE,
Plaintiff-Appellee, D.C. No.
2:13-cv-00115-MJP
v.
LORRAINE ESTER, OPINION
Defendant,
and
BELLEVUE POST OFFICE LLC,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, District Judge, Presiding
Argued and Submitted July 6, 2016
Seattle, Washington
Filed September 9, 2016
Before: A. WALLACE TASHIMA, M. MARGARET
McKEOWN, and MILAN D. SMITH, JR., Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
2 USPS V. BELLEVUE POST OFFICE
SUMMARY*
Contracts
The panel affirmed the district court’s order granting
summary judgment to the United States Postal Service and
compelling specific performance for the sale of property in a
case involving a dispute over a lease and purchase option
between Bellevue Post Office LLC and the Postal Service.
The Postal Service and Bellevue’s predecessor-in-interest
entered into an initial lease with options to renew the lease
and an option to purchase a parcel of real property in
Bellevue, Washington where the Postal Service has operated
a branch Post Office location since 1963. When the Postal
Service attempted to exercise the purchase option, Bellevue
refused, arguing that the Postal Service had failed to strictly
comply with the option requirements for the lease renewals.
The panel held that Washington law should be used as the
applicable federal common law in the case. The panel
applied Washington’s heightened evidentiary standard for
specific performance.
The panel held that even under Washington law’s high
standard for awarding specific performance, the Postal
Service successfully provided “clear and unequivocal”
evidence that it exercised its options to extend the term of the
lease in strict compliance with the terms of the lease, and that
the lease therefore continued to exist through the time it also
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
USPS V. BELLEVUE POST OFFICE 3
properly exercised its purchase option. The panel also held
that the Postal Service provided persuasive evidence that its
representatives had adequate contracting authority to validly
exercise the various options in the lease. The panel agreed
with the district court that the initial 1963 lease remained
valid.
COUNSEL
David R. West (argued) and Jeffrey Young, Garvey Schubert
Barer, Seattle, Washington, for Defendant-Appellant.
Teal Luthy Miller (argued) and Christina Fogg, Assistant
United States Attorneys; United States Attorney’s Office,
Seattle, Washington, for Plaintiff-Appellee.
OPINION
M. SMITH, Circuit Judge:
This case involves a dispute over a lease and purchase
option between the Bellevue Post Office LLC (Bellevue) and
the United States Postal Service (USPS). In 1963, USPS and
Bellevue’s predecessor-in-interest entered into a twenty-year
initial lease with five options to renew the lease and an option
to purchase the property. When USPS attempted to exercise
the purchase option, Bellevue refused to honor it, arguing that
the lease had terminated as early as 1983 because USPS had
failed to strictly comply with the option requirements for the
lease renewals. The district court granted summary judgment
for USPS and ordered specific performance of the sale of the
property. We affirm.
4 USPS V. BELLEVUE POST OFFICE
FACTS AND PRIOR PROCEEDINGS
The lease in this dispute spans a fifty-year time period,
during which the parties to the contract changed several
times. The contractual relationship began in 1963, when
Baugh Construction Company (Baugh) and USPS entered
into a lease for a certain parcel of real property in Bellevue,
Washington. Since that time, USPS has continuously
operated a branch Post Office location on the property. The
1963 lease featured an initial twenty-year term, to be
followed by options for one ten-year and four five-year
renewal periods respectively. All told, USPS could lease the
property for a total of fifty years, and the lease would expire
in May 2013 if USPS exercised all of its options to extend the
term of the lease. In order to exercise a renewal option, USPS
was required to give the Lessor (which was defined in the
1963 lease as “Baugh Construction Company, . . . its
successors, and assigns”) written notice of its intent to
exercise the next option at least 90 days before the end of the
then lease term.
The lease also granted USPS an option to purchase the
property at the end of the initial twenty-year lease term, at the
end of each option term, and at the end of the full fifty-year
term, assuming all the previous lease options had previously
been exercised. At each potential purchase point, the purchase
price was lower than the last one. At the end of the full fifty-
year term, assuming all the options to extend the term of the
lease had previously been exercised, USPS had the option to
purchase the property for $300,000. Bellevue estimates the
current value of the property to be in excess of $20,000,000.
The first change in the property’s ownership occurred in
1964. In January 1964, Baugh transferred the property to
USPS V. BELLEVUE POST OFFICE 5
Edward Ester, Lorraine Ester, Josef Diamond, and Violett
Diamond, who were each granted an undivided 25% interest
in the property. In May of that year, despite Baugh’s previous
transfer of the property to the Esters and the Diamonds,
Baugh purported to assign to John Hancock Life Insurance
Company all rights to receive rent resulting from the lease.
John Hancock thereupon executed a “Power of Attorney to
Receive Rent,” in which it purported to “appoint an attorney
in fact to receive rents for [the] premises.” Specifically, it
appointed Edward Ester and Josef Diamond as its “true and
lawful attorneys” to “ask, demand, collect, and receive from
the Postmaster of Bellevue, Washington, all rents due for the
period beginning the first day of June, 1964.” Thus, as of
June 1, 1964, USPS paid rent to Edward Ester and Josef
Diamond as “attorney[s] in fact” for John Hancock.
In 1968, the Esters and the Diamonds, as the owners of
the property, amended the lease with USPS. The amended
lease defined the “Lessor” as “Edward R. Ester and Lorraine
M. Ester, his wife; and Josef Diamond and Violett Diamond,
his wife.” The amendment lowered the annual rental
payments in exchange for a promise from USPS to assume
the obligation to pay property taxes. The amended lease
stated that “[i]n all other respects, the said lease shall remain
the same and is hereby confirmed.”
In May 1978, Josef and Violett Diamond transferred their
interests in the property to the trustees of four trusts they had
established for the benefit of their grandchildren. After this
transfer, the property was owned by Edward and Lorraine
Ester, who each owned an undivided 25% interest in the
property, and the four trusts for the Diamond grandchildren,
each of which owned an undivided 12.5% interest in the
property.
6 USPS V. BELLEVUE POST OFFICE
When the initial twenty-year lease term was to expire in
May 1983, USPS had its first opportunity to extend the term
of the lease. On February 4, 1982, USPS mailed a form
renewal to “Edward R. Ester and Josef Diamond Attorneys-
in-Fact under Lease.” According to the 1964 Power of
Attorney document, these individuals were authorized to
receive rents from USPS. In the “remarks” section of the
option exercise form, USPS requested that the recipient
“[p]lease notify this office of any change in your address or
the ownership of your property.” The option notice was
delivered (although it was physically received by someone
with an illegible signature), and all parties proceeded for the
next ten years as if the exercise of the option to extend the
term of the lease had been effective. USPS paid rent; the
appropriate owners apparently received that rent because no
one complained that he, she, or it had failed to receive it; and
the owners made no attempt to evict USPS or contest the
renewed lease. Moreover, none of the owners notified USPS
of the change in ownership to the Diamond family trusts, or
instructed USPS to direct correspondence to anyone other
than Edward Ester and Josef Diamond.
The 1983 notice to exercise its option to extend the term
of the lease was signed on behalf of USPS by Gary Duncan,
identified as the “Contracting Officer[,] Seattle Field Office.”
In the current litigation, Duncan submitted a declaration
stating that he was the manager of that field office at the time
he signed the notice. He could not recall the specific
parameters of his contracting authority when he signed the
option exercise notice, but testified that as part of his job he
routinely confirmed that he was acting within his authority
before signing contracts. He had no reason to believe that he
did not follow that practice with regard to the 1983 option
USPS V. BELLEVUE POST OFFICE 7
exercise notice, and could not recall having ever exceeded his
delegated authority while at that post.
In 1989, the trustees of each of the four Diamond family
trusts transferred the trust’s interest in the property to the
grandchild who was the beneficiary of that trust, such that
each grandchild became the owner of an undivided 12.5%
interest in the property, free of trust. Effective upon these
transfers, the property was owned by Edward and Lorraine
Ester, each as to an undivided 25% interest, and the four
Diamond grandchildren, each as to an undivided 12.5%
interest. None of the owners (or Edward Ester and Josef
Diamond as “attorneys-in-fact”) notified USPS about any of
the transfers.
In October 1992, a few months before the expiration of
the ten-year option term, USPS sent another notice evincing
its intention to exercise its option to extend the term of the
lease for another five-year term, as permitted by the 1963
lease. This option exercise notice was addressed to “Edward
R & Lorraine M Ester,” and the four Diamond
grandchildren—“Steven Foreman, Michelle Foreman,
Cynthia L Diamond & Jonathan Diamond.” This correctly
named all of the owners at the time of the option exercise
notice. The record indicates that USPS sent a single copy of
this option exercise notice to Edward Ester’s address, and that
he signed the delivery receipt.
This time, the option exercise notice was signed by USPS
employee John A. Logan, whose position was a “Principal
Real Estate Specialist” in the Seattle Field Office. Logan
submitted a declaration stating that during his tenure, he
“held a Contracting Officer’s warrant with monetary
authority” to execute contracts on behalf of the government,
8 USPS V. BELLEVUE POST OFFICE
and that he “made it a point to be aware of” the extent of that
authority. He did not recall whether he independently
confirmed his authority to sign this particular option exercise
notice, but it was his practice to do so. USPS could not
produce Logan’s contracting warrant under which he
operated in 1992, but did provide his contracting warrant
from 2002, when he worked in the Dallas office. USPS’s
Rule 30(b)(6) witness testified that the 2002 warrant, which
gave Logan Level 1 contracting authority, was a reduction
from his authority in previous positions. This indicated (albeit
circumstantially) that Logan had a higher level of authority in
1992, and would have had authority to sign the option
exercise notice.
As with the previous option exercise, all parties involved
proceeded as if the option exercise had been effective. USPS
remained in the property and paid rent and property taxes on
the property for the next five years; the owners received the
rent, and took no action seeking to evict USPS or contest the
validity of the lease option exercise.
In January 1993, the four Diamond grandchildren
transferred their interests in the property to Edward and
Lorraine Ester, whereupon the Esters each became the owner
of an undivided 50% interest in the property. There is no
evidence in the record that the Esters or any other person
informed USPS of the transfers by the Diamond
grandchildren.
In November 1993, Edward Ester died, leaving his
undivided 50% interest to his estate. Lorraine Ester was
appointed as the personal representative of that estate. At the
end of 1993, therefore, Lorraine Ester owned an undivided
50% interest in the property in her individual capacity, and
USPS V. BELLEVUE POST OFFICE 9
controlled the other undivided 50% interest in the property as
the representative of Edward Ester’s estate.
The then five-year lease term was set to expire in May
1998. In June 1997, USPS sent a notice to exercise its option
to extend the term of the lease for another five years.1 The
notice was addressed to “Est of Edward R Ester and Lorraine
M Ester, Steven Foreman, Michelle Foreman, Cynthia L
Diamond, Jonathan Diamond.” It was therefore addressed to
both the current owners of the property (Edward Ester’s
estate and Lorraine Ester in her personal capacity), and also
included the names of the Diamond grandchildren, who were
no longer owners. Like it did with the previous option
exercises, USPS sent a single copy of the renewal form to
Lorraine Ester’s address, where she signed the delivery
receipt. As before, all parties proceeded as if the relevant
lease option had been validly exercised, thereby extending the
term of the lease for another five-year term.
In 1999, Lorraine Ester, as the personal representative of
Edward Ester’s estate, transferred the estate’s undivided 50%
interest in the property into a trust for the benefit of the
Esters’ descendants. At this point, Lorraine Ester owned an
undivided 50% interest in the property individually, and
controlled the other undivided 50% interest in the property as
the trustee of the Ester Trust.
In April 2001, USPS sent another notice to exercise its
option to extend the term of the lease for another five years,
1
The 1997 notice was signed by Arthur Strange. Bellevue does not
dispute that Strange had sufficient contracting authority to execute the
option exercise notice on behalf of the government.
10 USPS V. BELLEVUE POST OFFICE
beginning in 2003.2 The notice was addressed to “Lorraine
Ester, Pers. Rep. Estate of Edward Ester, S. & M. Foreman /
C. & J. Diamond.” It was once again mailed to Lorraine
Ester’s address. Glenda Ester, Lorraine Ester’s daughter-in-
law, signed the delivery receipt.
In September 2005, USPS sent a notice to exercise its
option to extend the term of the lease for a final five-year
term, beginning in May 2008.3 Just as with the previous
notice in 2001, it was addressed to “Lorraine Ester, Pers. Rep.
Estate of Edward Ester, S. & M. Foreman / C. & J.
Diamond.” The delivery receipt signature is illegible.
Once the final lease term extension option was exercised,
thereby extending the lease term to May 2013, the 1963 lease,
as amended, contained no more options to extend the term of
the lease. Under the terms of that contract, however, USPS
was entitled to exercise an option to purchase the property.
The 1963 lease stated that the purchase option could be
exercised by giving the “Lessor” notice of its intention to
purchase at least one year in advance of the end of the lease
term. In September 2008, several years before the 2012
option notice cut-off date, USPS sent a letter to “Lorraine
Ester, Trustee,” which purported to “constitute the Postal
Service’s written notice of exercising its option to purchase
the fee simple title to the leased premises, including the
underlying land for $300,000.” The letter was received by
2
The 2001 notice was signed by Marcus Nielsen. USPS has produced
the contracting warrant that establishes he had the contracting authority to
exercise the option to extend the term of the lease.
3
The 2005 notice was signed by Garry Mattox, who undisputedly had
contracting authority to sign the renewal.
USPS V. BELLEVUE POST OFFICE 11
Glenda Ester, who wrote “L.E.” in the “printed name” field
of the delivery receipt. Bellevue does not claim that the letter
failed to reach Lorraine Ester.
In April 2012, just before the one-year notice deadline,
USPS sent another letter, addressed to “Ms. Lorraine
EsterTrustee,” reminding her that it intended to exercise the
purchase option. Glenda Ester again signed the receipt. The
next month, in May 2012, Lorraine Ester transferred both her
individual undivided 50% interest in the property and the
undivided 50% interest of the Ester Trust to Bellevue Post
Office, LLC.
In October 2012, more than four years after USPS’s
original notice to exercise its purchase option, counsel for
Bellevue sent a letter to USPS stating that based on a review
of the “lease history,” he did “not agree that the Postal
Service has any right to purchase the Property.” Bellevue thus
refused to honor the purchase option.
USPS sued for specific performance in the District Court
for the Western District of Washington. Bellevue
counterclaimed for holdover rent. After both sides undertook
discovery, the parties filed cross-motions for summary
judgment. Bellevue argued that the lease had terminated (and
with it, all future options) as early as 1983, due to incomplete
or inaccurate information in the name-and-address blocks of
the notice forms and USPS’s failure to send separate notices
to each Lessor. It also argued that USPS had not adequately
proven whether Duncan in 1983 and Logan in 1993 had
sufficient contracting authority to exercise options to extend
the term of the lease.
12 USPS V. BELLEVUE POST OFFICE
The district court granted summary judgment for USPS
and ordered specific performance of the sale of the property.
It ruled that “there is no material dispute that the postal
service complied with its rent and other lease obligations,”
and that Bellevue’s attempts to declare the contract void were
“legally and factually incorrect.” We affirm.
ANALYSIS
I. Applicable Law
“[O]bligations to and rights of the United States under its
contracts are governed exclusively by federal law.” Boyle v.
United Techs. Corp., 487 U.S. 500, 504 (1988). In the
absence of a governing federal statute, federal law is “of a
content prescribed . . . by the courts—so-called ‘federal
common law.’” Id. This does not mean that we ignore
Washington state contract law; to the contrary. “[T]he
Supreme Court has encouraged the adoption of state law as
the federal law applicable within [the relevant] state.” Dupnik
v. United States, 848 F.2d 1476, 1481 (9th Cir. 1988). State
law should be displaced only when “significant conflict exists
between an identifiable federal policy or interest and the
operation of state law, or the application of state law would
frustrate specific objectives of federal legislation.” Boyle,
487 U.S. at 507 (citations, quotation marks, and alterations
omitted).
Bellevue asks us to apply Washington law, which
“requires a higher showing to award the remedy of specific
performance of a breached land contract, as opposed to the
remedy of an award of money damages for the breach.”
Keystone Land & Dev. Co. v. Xerox Corp., 353 F.3d 1070,
1076 n.6 (9th Cir. 2003). A plaintiff must provide “clear and
USPS V. BELLEVUE POST OFFICE 13
unequivocal evidence that leaves no doubt as to the terms,
character, and existence of the contract.” Kruse v. Hemp,
853 P.2d 1373, 1377 (Wash. 1993) (en banc) (quotation
marks omitted). We agree that Washington law should be
used as the applicable federal common law in this case. Lease
contracts for the postal service do not inherently implicate
“clear and substantial interests of the National Government,
which cannot be served consistently with respect for . . . state
interests.” Dupnik, 848 F.2d at 1481 (quoting United States
v. Yazell, 382 U.S. 341, 352 (1966)). No specific federal
interests (other than the generalized interest in USPS
shouldering a lighter burden in this particular litigation) will
“suffer major damage if the state law is applied.” See id.Thus, we apply Washington’s heightened evidentiary
standard for specific performance. We hold, nevertheless, that
USPS has shown clearly and unequivocally that it has a
contractual right to purchase the property.
II. Options
“Well-known principles of contract law guide us in the
proper construction of federal contracts.” Wapato Heritage,
LLC v. United States, 637 F.3d 1033, 1039 (9th Cir. 2011).
“A written contract must be read as a whole and every part
interpreted with reference to the whole, with preference given
to reasonable interpretations.” Klamath Water Users
Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir.
1999).
Under general principles of contract law, an optionee to
an option contract can only exercise the option “strictly in
accordance with its terms.” 15 Williston on Contracts § 46:12
(4th ed. 2010); see New Eng. Tank Indus. of N.H., Inc. v.
United States, 861 F.2d 685, 687 (Fed. Cir. 1988) (“It is well
14 USPS V. BELLEVUE POST OFFICE
settled that to properly exercise [an] option, the government’s
acceptance of the offer had to be unconditional and in exact
accord with the terms of the contract being renewed.”);
Lockheed Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319,
323 (Fed Cir. 1997) (similar) (citing Corbin on Contracts,
§ 284 (1963)).4
Thus, Bellevue is correct about one thing: USPS must be
held to the exact terms of the 1963 lease, as amended.
However, we note that this standard of exactitude is
calibrated to what the contract actually requires, not an
indefinite standard of scrupulous paperwork or best practices.
See Lockheed, 108 F.3d at 323 (“[A]n option, like any
contract, is circumscribed by its terms.”).
The terms of the 1963 lease require USPS’s notice to be
“given in writing to the Lessor.”5 Bellevue contends that the
4
USPS suggests that the strict compliance requirement only applies
to the option to purchase the property, and is irrelevant to the “earlier
duties under the contract, including its lease-renewal notices.” This is not
the case; the requirement applies to contractual options generally,
including options to renew a lease. See New Eng. Tanks, 861 F.2d at 687;
Wapato Heritage, 637 F.3d at 1033.
5
“Lessor” is defined as “Baugh Construction Company, . . . its
successors, and assigns.” Bellevue argued to the district court below, and
implies in its appellate briefing that perhaps the proper meaning of
the“Lessor” for option purposes is as it was defined in the 1968
amendment: “Edward R. Ester and Lorraine Ester, his wife; and Josef
Diamond and Violett Diamond, his wife.” According to this interpretation,
USPS would have had to give notice to these four individuals and not their
successors and assigns, apparently even after they transferred their
interests in the property or passed away. This is not a reasonable
interpretation of the contract language. As an initial matter, it conflicts
with the clear language of the 1968 amendment, in which the parties made
one specific change with regard to the payment of rent and property taxes
USPS V. BELLEVUE POST OFFICE 15
1983 lease renewal was ineffective because it was addressed
to “Edward R. Ester and Josef Diamond Attorneys-in-Fact
under Lease,” when the actual Lessors at the time were
Edward Ester, Lorraine Ester, and the four Diamond trusts. It
contends that because the delivery receipt is illegible, USPS
is unable to “prove actual receipt . . . by either of its two
addressees, Edward Ester or Josef Diamond.” It further
contends that the 1993 lease renewal was ineffective because
although the notice named all of the Lessors, USPS only sent
a single notice rather than separate copies to each owner, and
the delivery receipt was signed only by Edward Ester.
Similarly, the 1998 renewal notice included the names of the
Diamond grandchildren, even though they had transferred
their interests in the property a few years earlier. The 2001
renewal notice, addressed to “Lorraine Ester, Pers. Rep.
Estate of Edward Ester” and the four Diamond grandchildren
also does not specifically note that Lorraine Ester was a
Lessor in her individual capacity. Finally, in 2005, USPS’s
notice was addressed to “Lorraine Ester, Pers. Rep. Estate of
Edward Ester” and the four Diamond grandchildren, instead
of Lorraine Ester in her personal capacity and Lorraine Ester
as the trustee of the Ester Trust.
According to Bellevue, each and every one of the
“attempted” exercises of an option to extend the term of the
lease was fatal to the continuing viability of the lease,
because notice was not “given in writing to the Lessor.” We
disagree. The option terms do not require that USPS prepare
multiple copies of the written notice to be specifically
and agreed that “in all other respects, the [1963] lease shall remain the
same and is hereby confirmed.” Moreover, such a result would be, as the
district court noted, an “absurdity.”
16 USPS V. BELLEVUE POST OFFICE
delivered to each and every Lessor.6 The lease does not
specify whether the notice of exercise must be delivered by
hand service or certified mail; whether it can be delivered to
an agent, attorney, or employee; whether a Lessor must
personally sign the delivery receipt; or that the name-and-
address box on the form notice must accurately state the
names and legal role of each and every Lessor. It only says
that written notice must be “given in writing to the Lessor.”
A reasonable interpretation of the word “given” does not
imply the degree of punctiliousness Bellevue insists is
required. See Give, WEBSTER’S THIRD NEW INTERNATIONAL
DICTIONARY (1961) (third definition, “to put into the
possession of another for his use”); give, THE AMERICAN
HERITAGE DICTIONARY (4th ed. 2000) (fourth definition, “to
convey by a physical action”). For each lease renewal, USPS
“gave” written notice via certified mail of its intention to
exercise its option to at least one person who was a Lessor at
the time of the renewal, and Bellevue has provided no
evidence indicating that the notice was not delivered to, or
put into the possession of, all Lessors accordingly.
6
Our opinion in Wapato Heritage does not create such a requirement.
In Wapato, the Department of the Interior held land in trust on behalf of
an Indian tribe, and executed a lease on behalf of the trust beneficiaries.
637 F.3d at 1035. The lease stated that the lessee had an option to renew
the lease “provided that notice of the exercise of such option shall be
given by the Lessee to the Lessor and the Secretary in writing.” Id.(emphasis added). The lessee only provided notice to the Secretary, and
not the Lessor. We held that the contract unambiguously required the
lessee to give written notice to both the Lessor and the Secretary (and that
the Secretary was, by implication, not the Lessor). Id. at 1040. It failed to
do so, and the option was therefore invalid. Id. The contract here, unlike
in Wapato, did not by its terms require separate notice to be given to more
than one party.
USPS V. BELLEVUE POST OFFICE 17
Furthermore, the parties’ actions over the decades
unambiguously demonstrate that the notice was given to the
Lessors, because everyone involved continued to perform the
lease as agreed upon for thirty years after the first alleged
defect. USPS continued to pay rent, which Bellevue and its
predecessors continued to accept. USPS continued to pay
property taxes on Bellevue’s behalf (which is consistent with
the lease as amended in 1968, and not a tenancy at
sufferance). In 1987, the owners refused USPS’s request that
they paint the building on the property, and an attorney acting
on behalf of Edward Ester and Josef Diamond represented
that USPS’s remedies in the matter were “limited to
terminating the lease.” The owners further affirmed the
existence of the lease when they twice offered USPS
$1,000,000 to strike the purchase option from the lease.
Lorraine Ester’s son John described the purchase offer in a
press interview with the King County Journal. All of this is
strong circumstantial evidence that at each juncture, USPS’s
written notice was effectively “given” to the “Lessors.” See
Dynamics Corp. of Am. v. United States, 389 F.2d 424, 430
(Ct. Cl. 1968) (“[T]he practical interpretation of a contract, as
shown by the conduct of the parties, is of great weight in
interpreting the contract.”).
Thus, there is no material dispute that all Lessors were
“given” written notice, as evidenced by their continued
recognition of the lease for nearly thirty years after the first
alleged termination. Even under Washington law’s high
standard for awarding specific performance, USPS
successfully provided “clear and unequivocal evidence” that
it exercised its options to extend the term of the lease in strict
compliance with the terms of the lease, and that the lease
therefore continued to exist through the time it also properly
exercised its purchase option. See Kruse, 853 P.2d at 1377.
18 USPS V. BELLEVUE POST OFFICE
III. Contracting Authority
The federal government cannot enter into valid and
binding contracts except through the actions of “a
government representative having actual authority to bind the
United States in contract.” Keehn v. United States, 110 Fed.
Cl. 306, 326–27 (2013) (quoting Anderson v. United States,
344 F.3d 1343, 1353 (Fed. Cir. 2003)). Bellevue argues that
the 1963 lease terminated in 1983 or 1993, because USPS did
not provide “clear and convincing evidence” that Duncan and
Logan had adequate contracting authority to validly exercise
the various options in the lease.
USPS could not produce a contracting warrant for either
Duncan or Logan during the relevant time periods, which is
unsurprising for documents of that age. However, none of the
law cited by Bellevue indicates that the government must
produce the actual warrant to show that an officer had
sufficient authority to contract.7 USPS produced ample
evidence that both Duncan and Logan were authorized to
renew the lease. Each submitted a declaration stating that he
had contracting authority, that he was in the habit of
confirming the limits of his authority before signing
contracts, and that he had no reason to believe he would have
7
Bellevue principally relies on U.S. Postal Service v. Sunshine
Development Inc., 674 F. Supp. 2d 619 (M.D. Pa. 2009). In that case
(which, of course, is not binding on this court), a postal service employee
who undisputedly lacked authority signed a lease renewal. Id. at 623.
After the time for exercising the lease option had lapsed, an officer with
proper authority attempted to retroactively ratify the unauthorized
transaction. Id. at 627. The court ruled that the lease was not validly
renewed. Id at 628. Sunshine does not stand for the proposition that a
government agency must produce an actual contract warrant in order to
prove that an employee had the requisite authority to enter into a contract.
USPS V. BELLEVUE POST OFFICE 19
acted in excess of his authority. Arthur Strange provided
further testimony that, based on Logan’s contracting warrant
from 2002, Logan would have had even higher authority
while he worked in the Seattle Field office in the early
nineties. USPS bore its initial burden on summary judgment
to identify record evidence that “demonstrate[s] the absence
of a genuine issue of material fact” on this issue. Celotex
Corp. v. Catrett, 477 U.S. 317, 323, 325 (1986) (quoting Fed
R. Civ. P. 56(e)). Once USPS made this showing, Bellevue
was required to “set forth specific facts showing that there is
a genuine issue for trial.” Anderson v. Liberty Lobby,
477 U.S. 242, 250 (1986). This required Bellevue to “do more
than simply show that there is some metaphysical doubt as to
the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). Bellevue has not met
that burden. It simply speculates that Duncan or Logan might
not have had the requisite authority, and notes that
unauthorized transactions by federal employees do occur.
That is not enough to defeat summary judgment where USPS
has provided persuasive (albeit not conclusive) evidence that
each had appropriate contracting authority.
We agree with the district court that the 1963 lease
remained valid. The owners continuously treated the lease,
the various lease options, and the purchase option as valid
and enforceable for fifty years, and reaped the benefit of their
bargain. Now that the term of the lease has ended, and they
are faced with losing a valuable piece of property at a price
well below its current value, they wish to avoid its burdens.
This they cannot do.
20 USPS V. BELLEVUE POST OFFICE
CONCLUSION
The district court’s order granting summary judgment to
USPS and compelling specific performance for the sale of the
property is AFFIRMED.