Appeal of

CHAPMAN CHILDREN'S TRUST II

PSBCA No. 4822

APPEARANCE FOR APPELLANT:
Kent Canada, Esq.

APPEARANCE FOR RESPONDENT:
Judith K. Zehner, Esq.

OPINION OF THE BOARD

            Appellant, Chapman Children’s Trust II, has appealed from the decision of the contracting officer denying its claim for a pro rata share of the cost of installing water and sewer piping on a site previously purchased from Appellant by Respondent, United States Postal Service.  Appellant alleges that Respondent breached an implied-in-fact oral contract between it and Appellant.  Respondent contends that no contract ever came into being between the parties regarding the installation of utilities.  The appeal is being decided on the record in accordance with 39 C.F.R. §955.12.  Only entitlement is at issue in this proceeding.

FINDINGS OF FACT

            1.  On December 1, 1999, Contracting Officer Larry L. Andrews^[1] accepted, on behalf of Respondent, an offer by Appellant to sell to the Postal Service approximately 3.5 acres of land in the city of Amarillo, Texas.  Respondent intended to use the property as the site of a new post office.  Paragraph 21 of the contract provided,

“Seller shall ensure that adequate water and sewerage service are available to the site and that electrical service and natural gas can be brought to the site by the Postal Service.”  (Appeal File Tab (AF) 1).

The parties closed on the property and title passed to Respondent on or about February 16, 2000.  At the time of closing, the property included three utility easements which Appellant was authorized to access in order to extend utilities to adjacent properties.  (AF 5, 6).

            2.  The property was bounded on the north by Amarillo Boulevard, and on the south by a property that Appellant had sold to another entity, ESA Texas, Inc. (ESA), for the construction of a hotel.  At the time of the property sale to Respondent, there was a 16-inch water main running along Amarillo Boulevard, immediately north of the Postal Service property.  In addition, a sewer line ran to a point near the northeast corner of the property and terminated in a manhole.  (AF 14 (¶1.A and attachment); Deposition of Joseph Laehr (Laehr Deposition), p. 14, Exhibit A; Appellant's response to Respondent's interrogatories (Appnt. Response), p. 3).  These lines satisfied Appellant’s obligation under the contract of sale to ensure that water and sewerage service were “available to the site.”  (AF 18, 19).

            3.  Sometime between December 1, 1999, and February 16, 2000 (when the closing occurred), the parties had a discussion concerning how to connect the utility lines to provide service to both the Postal Service and ESA sites.  Participating in the conversation were the contracting officer and the contracting officer’s representative/project manager (COR), for Respondent, and Mr. George Chapman and another person who was an employee of Appellant, for Appellant.  Mr. Chapman advised Respondent’s representatives that he believed the city of Amarillo would require that water and/or sewer lines be run in a loop around the perimeter of both tracts.  He proposed that Appellant design and construct the water and sewer lines and that the parties share the cost on a pro rata basis.  Respondent’s representatives agreed to consider the proposal, but stated that they would have their engineers and architects check with the City and that they would get back to Mr. Chapman once they decided what to do.  (Deposition of Larry Andrews (Andrews Deposition), p. 17-20; Laehr Deposition, pp. 30-31; contra, Appnt. Response, p.3).

            4.  On or about December 22, 1999, engineers for Appellant developed an estimate of the cost of installing the utility lines around both properties.  The estimate for installing the portion of the water and sewer lines that ran through the Postal Service property was $42,451.00.  (AF 15).

            5.  By letter dated March 3, 2000, Mr. Chapman wrote to the contracting officer as follows:

“In conjunction with Extended Stay America and United States Post Office to facilitate Extended Stay America’s starting construction before Post Office, Extended Stay America and myself had Keys & Shehan Engineering, construct a set of drawings for water and sewer….

Enclosed is an invoice for United States Post Office portion of those drawings….”

Enclosed with the letter was an invoice for $4,000 from Keys & Shehan Engineering addressed to “G R Chapman Limited Partnership.”  The invoice stated that it was for “Post Office portion of utilities for Post Office & Extended Stay America.  Cost opinion for construction is $42,451.00.”  (AF 7).  When the contracting officer received the letter, he wrote across the front, “No Postal Service Responsibility” and forwarded it to the COR (Andrews Deposition, pp. 24-25).

            6.  Appellant contracted with a construction company to extend the sewer line from its initial termination point (at the Postal Service property’s northeast corner) west along the northern edge and then south along the Postal Service property’s western border and continuing onto the ESA property.  The first part of this extension (along the northern edge) would have been required by the City of Amarillo in order to serve the new post office, with or without the need to also serve the new hotel on the ESA property.  Appellant also contracted to run water lines south from the existing 16-inch main (along Amarillo Boulevard), along both the eastern and western boundaries of the Postal Service property onto the ESA property.  These water lines were not required by the City of Amarillo in order to serve the new post office.  (Appnt. Response, p. 4; AF 14, ¶¶1.A, 1.B, 1.D, 1E; Laehr Deposition, pp. 28-32, 48).  Installation of the water and sewer lines occurred sometime between April 4, 2000, and May 25, 2000 (AF 14, ¶¶1.B, 1.D; Laehr Deposition, pp. 17, 31, 32).

            7.  Respondent planned to connect the new post office building to the water and sewer lines running along Amarillo Boulevard.  During construction, Respondent considered the possibility of connecting to the water and sewer lines that Appellant had installed along the western edge of the property, but ultimately decided not to do so.  (AF 14, 15,¶ 17; Laehr Deposition, Exhibit A)

            8.  On or before July 12, 2000, the contracting officer authorized payment of the $4,000 invoice from Keys & Shehan Engineering (Finding 5).  He did so after consulting with the COR and coming to the conclusion that the invoice was probably for the work in designing the sewer line that had been installed by Appellant along the northern edge of the property.  That line was required by both the Postal Service and ESA, and the contracting officer believed that it was appropriate for the Postal Service to share in that expense.  (Andrews Deposition, pp. 25, 41, 42, Exhibit A).

            9.  On or about July 12, 2000, Appellant sent Respondent an invoice in the amount of $38,428.00 as Respondent’s portion of the cost of installing the utilities.  By letter dated September 1, 2000, Contracting Officer David Bright stated that Respondent would be willing to share equally in the cost of installing the sewer line along the northern edge of the Postal Service property, since that line was required in order to serve both the Postal Service and ESA properties.  Contracting Officer Bright offered to pay $4,298 as Respondent’s share, but declined to pay any other costs.  (AF 13, 16).

            10.  By letter from counsel, dated March 12, 2001, Appellant again sought payment in the amount of $38,428.00, on the basis that there had been an agreement between the parties that Respondent would pay its pro rata share of the costs and that the amount sought was Respondent’s share.  In a final decision dated June 20, 2001, Contracting Officer Larry Andrews denied Appellant’s claim on the basis that the Postal Service had never agreed to share the costs of installing the utilities in a loop around the property.  (AF 18, 19).  Appellant filed a timely appeal.

DECISION

            Appellant argues the existence of an implied-in-fact contract between the parties, under which Appellant agreed to design and construct the water and sewer lines in a loop around both the Postal Service and ESA properties, and Respondent agreed to pay its pro rata share of the costs.  Appellant argues that this agreement was made during a telephone conversation between, among others, Mr. George Chapman, representing Appellant, and Contracting Officer Larry Andrews, representing the Postal Service.  Appellant contends that as a result of the contract, it installed utilities along the north, east, and west sides of the Postal Service property, and that Postal Service personnel were aware that the work was going on.  Appellant also argues that Respondent affirmed the existence of the contract when, in July 2000, it paid the March 2000 invoice that Appellant had stated was for Respondent’s portion of the design work for the utilities.  Appellant argues that Respondent was, therefore, liable for the payment of its share of the costs.

            Respondent argues that the evidence does not support Appellant’s claim that there was a contract, either express or implied, between the parties regarding the installation of the utility lines.  Respondent contends specifically that the evidence does not support Appellant’s contention that the contracting officer accepted Mr. Chapman’s proposal that the Postal Service pay Appellant a pro rata share of the costs involved.

            In this appeal, as the party seeking recovery, Appellant has the burden of proving the existence of a contract between the parties.  Whether the alleged contract is express or implied-in-fact, Appellant’s burden is the same.  It must show a mutuality of intent to contract, offer and acceptance, consideration, and that Respondent’s representative had actual authority to bind Respondent.  Hanlin v. United States, 316 F.3d 1325, 1328 (Fed. Cir. 2003); Howard Nettleton, PSBCA No. 3454, 95-2 BCA ¶ 27,909.

            In this instance, Appellant has failed to prove the existence of the contract it alleges.  Specifically, we agree with Respondent and conclude that Appellant has failed to demonstrate that the contracting officer accepted Mr. Chapman’s proposal.  We have found, by a preponderance of the evidence, that the contracting officer did not accept Mr. Chapman’s proposal during their conversation but, instead, indicated that the Postal Service would first check with the City of Amarillo to determine exactly what would be the requirements imposed on the Postal Service in order to have utilities serve its property.  Further, there is no evidence that Respondent’s personnel resumed the dialog with Appellant regarding utilities after having determined what the City would require.

            Appellant places great emphasis on the fact that, in July 2000, the contracting officer authorized payment of the invoice Respondent had received in March 2000.  Appellant views this as confirmation that the contracting officer believed there was a contract between the parties.  Appellant contends that the Board should not consider evidence of the contracting officer’s subjective reasons for authorizing the July payment, but should consider only the objective fact that Respondent made the payment as evidence in determining whether the contracting officer believed there was a contract between the parties.  We are not persuaded by Appellant’s argument.  The issue before the Board is whether there was, in fact, a contract between the parties, and the Board may consider, and has considered, both the fact that the payment was made and Respondent’s reason for making it – i.e., the belief by the contracting officer that the payment represented the Postal Service share of costs associated with designing the sewer line along Amarillo Boulevard.  Respondent’s payment, therefore, does not compel a conclusion that Respondent entered into a contract to pay a pro rata share of the utilities loop.

            Appellant has not demonstrated the existence of a contract under which Respondent was obligated to pay a pro rata share of the cost of installing the sewer and water lines.  In the absence of such a contract, the Board lacks jurisdiction to consider the appeal.  Coastal Corp. v. United States, 713 F.2d 728 (Fed. Cir. 1983); See, also, Alta Construction Co., PSBCA No. 1463, 90-1 BCA ¶ 22,527 at 113,064.  Accordingly, the appeal is dismissed.

David I. Brochstein
Administrative Judge
Vice Chairman

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
Norman D. Menegat
Administrative Judge
Board Member

[1]  Mr. Andrews was the Postal Service contracting officer for the acquisition of the land.  David Bright was the contracting officer for the construction of the post office building on the property.  Unless otherwise indicated, references to the “contracting officer” in this Opinion refer to Mr. Andrews.