Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-35100/USCOURTS-ca9-14-35100-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES POSTAL

SERVICE,

Plaintiff-Appellee,

v.

LORRAINE ESTER,

Defendant,

and

BELLEVUE POST OFFICE LLC,

Defendant-Appellant.

No. 14-35100

D.C. No.

2:13-cv-00115-MJP

OPINION

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.

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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.

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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.

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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 fiftyyear 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

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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.

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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 Attorneysin-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

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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,

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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

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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, therebyextending 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.

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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-inlaw, 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.

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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.

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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 onlywhen “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

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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

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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

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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.”

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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-andaddress 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’STHIRD NEWINTERNATIONAL

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.

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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.

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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.

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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.

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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.

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