Russell Corp. v. United States

• Decision Date: 09 July 1976
• Docket Number: No. 64-73.,64-73.
• Citation: 537 F.2d 474
• Parties: RUSSELL CORPORATION, formerly known as Monitor Publications, Inc. v. The UNITED STATES.
• Court: U.S. Claims Court

537 F.2d 474

RUSSELL CORPORATION, formerly known as Monitor Publications, Inc. v. The UNITED STATES.

No. 64-73.

United States Court of Claims.

July 9, 1976.

COPYRIGHT MATERIAL OMITTED

O. P. Easterwood, Jr., Washington, D.C., atty. of record, and Conrad Philos, Vienna, Va., for plaintiff. Lansford F. Butler, Lakewood, Colo., of counsel.

Floyd France, Washington, D.C., with whom was Asst. Atty. Gen., Peter R. Taft, Washington, D.C., for defendant. Herbert Pittle, Washington, D.C., of counsel.

Before NICHOLS, KASHIWA and BENNETT, Judges.

OPINION

PER CURIAM:

This case comes before the court on plaintiff's exceptions to the recommended decision of Trial Judge Kenneth R. Harkins, filed December 9, 1975, pursuant to Rule 134(h), having been submitted to the court on the briefs and oral argument of counsel. Upon consideration thereof, since the court agrees with the trial judge's recommended decision, as hereinafter set forth,^* it hereby affirms and adopts the same as the basis for its decision in this case. It is therefore concluded that plaintiff is not entitled to recover and the petition is dismissed.

OPINION OF TRIAL JUDGE

HARKINS, Trial Judge:

Plaintiff claims representatives of the General Services Administration (GSA) in 1969-70 negotiated a contract to exchange plaintiff's property, lots 2 through 10, block 111, East Denver, Colorado, for 120 acres, in two tracts, of former Federal Correctional Institute property located in Jefferson County, Colorado, and seeks breach damages for defendant's refusal to go forward and transfer the properties. In the exchange, plaintiff would have conveyed real estate with an appraised fair market value of $405,000, and $15,000 in cash, for Government property with a fair market value of $420,000 when appraised on the basis of then current zoning, and a value of $720,000 if the area were zoned for high-density-occupancy usage. Defendant concedes that the proposed agreed price was $300,000 less than the actual fair market value of the Government land at the time in question.

Discussions relative to the exchange agreement commenced on June 28, 1968, when plaintiff was notified that GSA's regional office (region 8) had agreed with the Denver Urban Renewal Authority (DURA) that the entire block 111 would be acquired by GSA in connection with its plans for the Denver Federal building complex. Plaintiff's first formal offer, with a $1,000 earnest money deposit, was submitted on December 26, 1968. Subsequently, on February 24, 1969, the GSA administrator authorized the regional administrator to initiate negotiations for an exchange; by June 6, 1969, an independent contract appraiser had reported on both parties' properties; and, on July 29, 1969, plaintiff submitted its final firm offer on forms prepared by, and in terms acceptable to, GSA's regional representatives. Thereafter, the GSA administrator approved the exchange and, on December 8, 1969, requested the Budget Bureau director to approve transfer of the property from the Department of Justice to GSA, which approval was granted on January 16, 1970. The regional office, on February 19, 1970, was authorized to conclude the exchange after obtaining updated appraisals. Updated appraisals, unchanged from the original appraisals, were submitted by March 23, 1970. At this stage, GSA's regional office, on April 6, 1970, decided not to go forward with the exchange because the regional personnel were fearful they would be subjected to criticism in the event proposed changes in Denver zoning ordinances would permit high-density usage that had not been considered in the independent appraiser's reports. Finally, on April 29, 1970, GSA's central office advised the regional office that the value estimates in the updated appraisals, and the investigation of local zoning on which they were based, were approved.

Plaintiff contends that, under GSA regulations, the regional representatives had agreed upon the terms of the exchange and that this agreement became binding and enforceable when the mechanical formalities of subsequent administrative actions and approvals had been concluded. The issue is whether, under the statute and GSA's regulations applicable to exchanges of real property, GSA representatives in region 8 had the power to change their negotiating posture during the period when administrative formalities remained to be concluded, but which were ultimately concluded in the manner the parties originally had contemplated.

For the reasons set forth, GSA's regional representatives acted within their powers and no contract came into existence.

GSA's authority to enter into an exchange agreement with plaintiff is derived from the Federal Property and Administrative Services Act of 1949.¹ The GSA administrator is authorized to supervise and direct disposition of surplus property and utilization within the Government of excess property that is not required for the needs of a particular Federal agency.² In the exercise of his responsibilities for the operation and maintenance of governmental buildings, properties, and grounds, the GSA administrator can acquire by purchase, condemnation, or otherwise, real estate and interests therein.³ The GSA administrator is authorized to promulgate such regulations as he deems necessary to effectuate his functions under the act,⁴ and may delegate and authorize successive redelegations to any official of the General Services Administration.⁵

The powers conferred in the Federal Property and Administrative Services Act of 1949 have been implemented by the Federal Property Management Regulation.⁶ Transfers of property that is excess to the needs of a particular agency in the executive branch to the GSA for use by another agency or for disposal are regulated by subsection 101-47.203-7. This section prescribes the use of GSA Form 1334⁷ and requires approval of the Bureau of the Budget (now Office of Management and Budget) in transfers that involve properties having an appraised fair market value of $100,000 or more.⁸ Budge Bureau approval is required for transfers of real property between Government agencies; BOB approval of the terms of exchange contracts between GSA and outsiders is not required.

The essence of plaintiff's case is found in the relationship between GSA's regional offices and the Washington central office in procedures for dealing with parties outside the Federal Government. GSA functions at three levels of organization—the central office, located in Washington; 10 regional offices; and special field activities. Supporting staff functions are in the central office; operations are administered largely by regional and field offices. The regional offices, headed by regional administrators (formerly regional commissioners) are completely integrated and parallel the organizational pattern of the central office. General operating authority for supervision of GSA programs in a particular region has been granted to the regional administrator, under comprehensive delegations of authority, so that the regional administrators are the active and fully empowered heads, with the usual managerial responsibilities, in their respective offices.⁹

The Public Building Service (PBS) is responsible for design, building or leasing, operation, protection, and maintenance of Federal buildings.¹⁰ When plaintiff's exchange agreement was negotiated, GSA personnel in the Property Management and Disposal Service (PMDS) and in PBS had responsibility for exchanges of real property. PBS was responsible for the type of exchange involved with plaintiff; but personnel from both services—in region 8 and in the central office—were active on plaintiff's exchange agreement.

In the central office, GSA officials concerned with plaintiff's contract were the GSA administrator, PBS commissioner, PMDS commissioner, and PMDS appraisal staff director; in region 8, the officials were the regional administrator, PBS regional director, PMDS regional director, and PMDS appraisal staff chief. The PBS regional director was responsible for development and negotiation of the exchange agreement.¹¹

Internal GSA procedures applicable to the exchange of real property in this case are provided in two regulations: GSA Order ADM 7800.6, "Exchange of Government-owned real property" (Oct. 10, 1968), and a PMDS All Regions Memorandum, dated September 4, 1969, entitled "Exchange of Surplus Real Property."¹² ADM 7800.6 is the basic order for exchanges of real property. As in the case of procedures for acquisition or disposition of realty in most corporate or large organizations, it is complex and its structure reflects the special character of land transactions. The attachment to ADM 7800.6 requires several stages of consideration and approvals at the highest levels of GSA's hierarchy.

ADM 7800.6 divides realty exchanges by type between PMDS and PBS, and provides that PBS shall be responsible for real property exchange transactions for the acquisition of property for an "authorized GSA program use," which includes the acquisition of real property for parking, motor vehicle facilities, and other facilities for which PBS is responsible.¹³ Where excess property of another Government agency is involved in a PBS exchange, the regulation provides that custody and control of the property "shall be transferred by PMDS to PBS, prior to initiation of the exchange transaction."¹⁴

The attachment to ADM 7800.6 recites that the economic magnitude, complexities, and statutory involvements in an exchange program require a high degree of coordination by the PBS and PMDS and free exchange of information at both the central office and regional levels.

The importance of agreements to exchange land is underscored by the prominent role played by the GSA administrator in the procedures. Section 5 of ADM 7800.6, with five subsections, is devoted to steps in the sequence that require his approval. Approval of the GSA administrator is required before any...