__________________________________________________ MOTION FOR SUMMARY RELIEF GRANTED: April 19, 1995 __________________________________________________ GSBCA 12584 KMS DEVELOPMENT CO., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Lee H. Durst, Jose G. Landeros, and Nancy M. Padberg of Durst & Landeros, Laguna Beach, CA, counsel for Appellant. Robert W. Schlattman, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), DEVINE, and DeGRAFF. DeGRAFF, Board Judge. KMS Development Company (KMS) and the General Services Administration (GSA) entered into a contract for the lease of office space. KMS asserts that the parties entered into one additional express contract and two implied contracts, and that GSA breached all of its contracts with KMS. KMS submitted a claim to the contracting officer for damages, the contracting officer denied the claim, and this appeal followed. GSA filed a motion to dismiss the appeal for failure to state a claim upon which relief can be granted and, alternatively, a motion for summary relief. For the reasons set forth below, we grant GSA's motion for summary relief. Our decision disposes of all but one portion of KMS's claim. Findings of Fact Background On February 20, 1987, KMS and GSA entered into lease GS-09B- 87281. GSA agreed to lease from KMS 9,999 square feet of office space at the Cupania Business Center in Buena Park, California. Paragraph 4 of the lease provides that GSA could terminate the lease at any time after an initial two-year term by giving ninety days written notice to KMS, and that no rent would accrue after the effective date of the termination. The term of the lease began on April 24, 1987, and was for five years. The lease provides that GSA had the right to make alterations to the leased premises. Appeal File, Exhibit 1. The 9,999 square feet of space was occupied by the Immigration and Naturalization Service's (INS's) legalization office until late September 1990. Appeal File, Exhibit 33 at 72. On September 28, 1990, GSA's contracting officer sent a letter to KMS stating that the lease would terminate on December 27, 1990. Appeal File, Exhibit 2. On November 20, 1990, GSA's contracting officer sent a letter to KMS which states that the lease "remains in effect with all terms and conditions as set forth in the original lease . . . . This letter hereby nullifies letter of termination dated September 28, 1990." Appeal File, Exhibit 3. It appears that GSA decided to continue with the lease because the INS intended to open a political asylum office in the Los Angeles, California area and the INS was willing to locate that office in the Cupania Business Center, provided that approximately 17,800 square feet of space was available. Appeal File, Exhibit 17. Also on November 20, 1990, KMS wrote a letter to a GSA realty specialist, stating that it wanted to get a "running start" so that it could move quickly and have the premises ready for occupancy by March 1, 1991. KMS states that, instead of modifying the existing lease, a new lease should be drafted for a term of at least five years. KMS asks for a commitment letter which would "acknowledge GSA's intent to lease approximately 17,800 rentable feet." KMS explains that some of its tenants would have to be relocated and that KMS would initiate this action when it received a commitment letter. Appeal File, Exhibit 16. GSA received this letter from KMS after GSA delivered its November 20, 1990 letter to KMS. Appeal File, Exhibit 36. On January 27, 1991, KMS wrote a letter to one of its consultants. KMS states that Buena Park city officials were going to require KMS to acquire a conditional use permit in order to use the Cupania Business Center space for the political asylum office. KMS states that the city also had concerns about the number ofavailableparking spaces.Appeal File,Exhibit10.[foot #] 1 ----------- FOOTNOTE BEGINS --------- [foot #] 1 This finding of fact is not material to the decision. It is, however, helpful to the reader in understanding the events that follow. ----------- FOOTNOTE ENDS ----------- On January 31, 1991, KMS wrote to GSA's realty specialist. In the letter, KMS states that two sets of drawings were ready, that GSA needed to approve the plans and to authorize construction, that the parties needed to agree upon an amount of rent for five years or more, and that the city of Buena Park needed to process its paperwork. Appeal File, Exhibit 21. In a February 21, 1991 letter to a Buena Park city official, an INS employee explains that the political asylum office had to be located in new space by April 1, 1991. The INS employee states that the INS hoped to locate its political asylum office in the Cupania Business Center. Appeal File, Exhibit 10.[foot #] 2 In a February 25, 1991 letter to GSA's realty specialist, KMS represents that it met with city officials on February 22, 1991, to discuss the need for a conditional use permit and the city's concerns. KMS relates that it was making arrangements to obtain parking spaces from a nearby church, and that it was modifying its conditional use permit application and filing its parking variance request. In the letter, KMS suggests that the parties finalize their figures "leading to a lease agreement." KMS mentions that some parts of the space were ready for use and that other areas were being made ready for use. KMS also mentions that the opening date for the political asylum office was April 1, 1991, and that its ability to meet that date would depend upon the "attitude/coop-eration" of the city. Appeal File, Exhibit 22. On February 26, 1991, KMS wrote a letter to an individual who owned two lots near the Cupania Business Center. The purpose of the letter was to discuss KMS's interest in leasing one lot and purchasing the other. In the letter, KMS states, "These transaction(s) are subject to the approval of the City, and the execution of a bonifide (sic) tenant lease between the GSA and KMS Development Company . . . ." Appeal File, Exhibit 10. In a letter to GSA's realty specialist dated March 4, 1991, KMS states that the "scope of the project has been clarified for the most part," and goes on to make a cost proposal "pursuant to concluding the new lease" between KMS and GSA. The letter informs GSA that KMS had filed variance requests with the city of Buena Park, readied the premises for construction, and begun negotiating for parking spaces. KMS states that GSA wished to preempt the city's permit requirements, and that the city's processing of KMS's permit requests would make opening on April 1, 1991, "near impossible." Regarding the lease, KMS states that "[a]n additional 8,215 SF is being added . . . ." KMS proposes either a five-year or a seven-year lease term. KMS states, "KMS ----------- FOOTNOTE BEGINS --------- [foot #] 2 This fact is not material to our decision. It is offered by KMS in support of its position, and is helpful to understanding KMS's argument. ----------- FOOTNOTE ENDS ----------- Development Company is contributing $114,684.- (sic) towards the cost of GSA's improvements to accommodate this transaction." Appeal File, Exhibit 25. In a letter to a congressman dated March 4, 1991, the city explains that it understood that GSA intended to preempt the city's permit requirements. Appeal File, Exhibit 24. On March 11, 1991, KMS wrote a letter to GSA's realty specialist concerning lease terms. The letter states that, according to Buena Park officials, no one from GSA had contacted city officials to discuss preemption of the city's permit requirements. Appeal File, Exhibit 27.[foot #] 3 On March 12, 1991, GSA and INS officials met with KMS representatives at the Cupania Business Center. KMS understood that the political asylum office had to be open by April 1, 1991. In a letter written by KMS to GSA's realty specialist on March 12, KMS states that the parties agreed upon a lease rate ($327,571.44 for the first three years), the number of square feet that GSA would lease (18,697), and the term of the lease (three years firm, two option years). KMS states that, in addition, GSA would reimburse KMS for the cost of completing the work needed to make the premises ready for occupancy by the INS. In the letter, KMS states that it understood that GSA was taking action to preempt Buena Park's permit requirements. Appeal File, Exhibit 28.[foot #] 4 The appeal file contains an unsigned letter dated March 13, 1991, prepared for the signature of the GSA realty specialist. The letter states, The following items were discussed with you . . . at two separate meetings. It was agreed that the lease will be for 5 years, 3 years firm at a rate of $1.46 per square foot for 18,697 net usable square feet. At an annual rental rate of $327,571.44. . . . Also, discussed was the possibility of the Government immediately moving to construct for occupancy, the existing 9,999 square feet under the existing lease. Appeal File, Exhibit 33 at 29. The GSA employee who is responsible for maintaining the lease files states that there is nothing in the files to indicate that this letter was ever sent to KMS. Appeal File, Exhibit 35. The GSA realty specialist, for whose signature the letter was prepared, states that this letter was never sent to KMS. Appeal File, Exhibit 36. KMS's general partner states that he believes that he received this letter, ----------- FOOTNOTE BEGINS --------- [foot #] 3 These facts are not material to our decision. They are contained in exhibits offered by KMS in support of its position, and are helpful to understanding KMS's argument. [foot #] 4 See footnote 3. ----------- FOOTNOTE ENDS ----------- although he does not state when the letter was received and does not have a signed copy of the letter. Appeal File, Exhibit 53.[foot #] 5 The GSA realty specialist has never been a contracting officer. Declaration of John Venegas (Mar. 28, 1995). On March 14, 1991, Craig D. Oka, an architect with J. Shimozono & Associates, wrote a letter to a GSA official concerning the Cupania Business Center. Jim Shimozono was a general partner of KMS. The letter states that J. Shimozono & Associates understood "the great task" that GSA had ahead of it in order to have "the facility ready for the April 1, 1991 opening." The letter goes on to say that the "original General Contractor, Hamilton Contractors" had "already ordered" some materials and labor for "the job." The letter contains a list of materials ordered and labor expended and states that J. Shimozono & Associates would like to discuss with GSA "the possibility of GSA picking up these subcontracts and using the materials for the job." The letter states, "Since much of this work has already been started and/or completed we believe it would be wise for GSA to make use of it." Appeal File, Exhibit 4. Four GSA employees worked overtime on March 14 through 19, 1991, in an attempt to complete alterations to the Cupania Business Center space. Appeal File, Exhibit 33 at 10-18.[foot #] 6 In mid-March 1991, based upon discussions with GSA and INS, the city believed it had negotiated a solution to the conditional use permit and parking problems. The city was willing to allow the asylum office to open with minimal staff on April 1, 1991, and agreed to "fast track" the approval process for the construction permits so that the permits could be issued by April 24, 1991. In return, the office would be restricted to the size originally leased and would not be expanded, and the office would be relocated within six months. Appeal File, Exhibit 33 at 35.[foot #] 7 On March 20, 1991, GSA's contracting officer sent a letter to KMS, terminating the February 20, 1987 lease effective June 18, 1991. The letter states that no rent will accrue after the termination date. Appeal File, Exhibit 5. KMS acknowledges that GSA provided this notice of termination on March 20, 1991. Appellant's Specific Responses to Respondent's Separate Statement at 7 (March 20, 1995). The Claim ----------- FOOTNOTE BEGINS --------- [foot #] 5 See footnote 3. [foot #] 6 See footnote 3. [foot #] 7 See footnote 3. ----------- FOOTNOTE ENDS ----------- On May 16, 1991, KMS submitted a claim letter to GSA. The letter states that it is "for reimbursement of our costs incurred pursuant to the failed attempt in installing the 18,697 S.F. I.N.S. Political Asylum program into Cupania Business Center." This claim, which exceeds $50,000, is not certified. Appeal File, Exhibit 8. On October 14, 1991, KMS submitted another claim letter to GSA. Like the previous claim letter, the October 14 letter requests in excess of $50,000 and is not certified. Appeal File, Exhibit 10. KMS submitted a certified claim, dated January 15, 1993, to GSA. GSA received the claim on January 19, 1993. The claim asserts: 1. GSA breached the February 20, 1987 lease by terminating the lease without providing any notice. 2. On November 20, 1990, the parties entered into a written contract to lease additional space and GSA breached this contract. KMS contends that GSA's November 20, 1990 letter to KMS constitutes a commitment letter sent in response to KMS's November 20, 1990 letter to GSA. KMS contends that GSA's November 20, 1990 letter constituted an agreement to lease additional space from KMS for five years. 3. GSA's actions and KMS's reliance created an implied in fact contract that GSA breached. KMS states that it relied to its detriment upon promises, representations, and statements of GSA, in that it hired architects, contractors, and engineers to remodel space for the political asylum office. The January 15, 1993 claim does not identify any specific promise, representation, or statement of GSA upon which KMS relied. In its May 16 and October 14, 1991 claim letters, KMS stated that it relied upon "GSA's representation of its imminent lease execution." Appeal File, Exhibits 8, 10. KMS contends that the implied in fact contract required GSA to lease 18,697 square feet of space upon the same terms and conditions as contained in the February 20, 1987 lease. 4. GSA breached implied covenants of contractual indemnity contained in the express and implied contracts. KMS contends that the contracts contain an implied covenant which provides that if GSA did not fulfill its contractual obligations or negligently abandoned its contract, GSA would be liable for fully indemnifying KMS for claims of third parties and for expenses incurred by KMS in connection with claims of third parties. Appeal File, Exhibit 11. In its January 15, 1993 claim, KMS requests the following amounts: $ 157,527.92 for the rent that KMS would have collected from GSA if GSA had not breached the February 20, 1987 lease by leaving without providing KMS with notice. $ 320,840.52 per year beginning April 1, 1991, for the rent that KMS would have collected from GSA if GSA had not breached the November 20, 1990 express contract and the implied contract. $ 279,061.50 for three times the amount KMS spent ($93,020.50) to remodel the abandoned space, to attempt to obtain permits from the city of Buena Park, and to restore the building. KMS claims this amount as breach of contract damages. $ 6,778.07 for the amount KMS spent to market the space abandoned by GSA. KMS claims this amount as breach of contract damages. $ 21,844.86 for the expenses of foreclosure and bankruptcy. KMS claims this amount as breach of contract damages. Appeal File, Exhibit 11. On July 2, 1993, GSA's contracting officer issued a decision denying KMS's claim. Appeal File, Exhibit 12. KMS filed this appeal on September 20, 1993. The complaint, filed October 29, 1993, contains the following counts: 1. Breach of contract. KMS alleges that, on September 28, 1990, GSA issued a notice terminating the lease and, on November 20, 1990, GSA rescinded its notice. KMS alleges that, although GSA never provided KMS with another notice terminating the lease, GSA later vacated the premises and paid no further rent. 2. Breach of contract. KMS alleges that, on November 20, 1990, KMS and GSA entered into an express written contract to remodel and lease additional space. Specifically, KMS alleges that GSA agreed to lease 18,697 square feet of space for five years beginning March 1, 1991, on the same terms as the February 20, 1987 lease. KMS alleges that this agreement constituted either a new contract entered into on November 20, 1990, or an extension of the February 20, 1987 lease. According to KMS, GSA breached this contract. 3. Implied in fact contract. KMS alleges that the parties entered into an implied contract "[b]y way of the acts, conduct, statements, omissions, and/or the reasonable and detrimental reliance of appellant on the statements or conduct of respondent, together with the reasonable or necessary inferences and presumptions arising therefrom . . . ." Complaint at 9. KMS alleges that the terms of the implied contract are that GSA would lease 18,697 square feet of space for five years on the same terms as the February 20, 1987 lease. According to KMS, GSA breached this contract. 4. Implied contractual indemnity. KMS alleges that all of the parties' contracts imposed upon GSA the obligation to indemnify KMS for foreseeable damages resulting from GSA's negligent performance of its contract. KMS alleges that GSA breached this implied contractual obligation and so owes KMS for third-party claims made against KMS by creditors and lenders. GSA's Regulations GSA's regulations provide, "Contracting officers, acting within the scope of their appointments, are the exclusive GSA agents to enter into and administer leases on behalf of the Government in accordance with agency procedures." 48 CFR 570.104 (1994). The regulations also provide that leases must be awarded in writing. 48 CFR 570.209 (1994). Discussion GSA's Motions On February 13, 1995, GSA filed a motion to dismiss this appeal for failure to state a claim upon which relief can be granted and, alternatively, a motion for summary relief. When considering a motion for failure to state a claim, our review is limited to the complaint. When considering a motion for summary relief, we are permitted to consider all of the facts and supporting documents proffered by the parties. Here, it is appropriate for us to consider the motion for summary relief instead of the motion to dismiss. The parties conducted discovery for nearly one year and then supplemented the appeal file with all of the exhibits that they wish to include in the record of this case. Because the record is fully developed and because GSA had the opportunity to determine the factual bases for KMS's claim, we will consider the motion for summary relief. Summary relief is appropriate if GSA can show that there is no genuine issue as to any material fact and that it is entitled to relief as a matter of law. A fact is material if it will affect our decision. An issue is genuine if enough evidence exists such that the fact could reasonably be decided in favor of KMS at a hearing. Summary relief will be granted if GSA demonstrates that there is an absence of evidence to support an essential element of KMS's case. Although KMS is entitled to the benefit of the doubt as to the facts, KMS cannot rest its opposition upon allegations, conclusions, and denials contained in its pleadings. If GSA demonstrates the absence of a genuine issue as to any material fact, the burden shifts to KMS to set forth specific facts demonstrating that there is a genuine issue as to a material fact to be resolved at a hearing. Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986); Rule 8(g). Material Facts Accompanying its motion for summary relief, GSA filed a statement of material facts as to which it asserts there is no genuine dispute. KMS responded to GSA's motion on March 20, 1995. KMS agrees with some of GSA's proposed material facts, takes issue with some of GSA's proposed material facts, and puts forward additional issues of fact that it believes are material and disputed by GSA. GSA filed its reply on March 29, 1995. The Board asked the parties to reply to written questions concerning some of the facts, which the parties did on April 10 and 17, 1995. KMS disputes some of GSA's proposed material facts because GSA quotes from or refers to selected portions of exhibits. Similarly, KMS disputes some of GSA's proposed material facts because, according to KMS, the facts as presented by GSA are incomplete. In its statement of proposed material facts, GSA sets forth only the facts which it believes are material to a resolution of the motion for summary relief. GSA's proposed material facts are all supported by the exhibits to which GSA cites in its motion. GSA fairly characterizes the contents of the exhibits upon which it relies to support its motion. GSA is not required to do anything more. KMS disputes some of GSA's proposed material facts because they contain argument as well as facts. We do not include any of GSA's arguments in our findings of fact. KMS disputes some of GSA's proposed material facts because, in KMS's view, the facts are not relevant. We disagree. The relevance of GSA's proposed material facts is made clear in GSA's motion for summary relief. In addition, KMS's assertion that a fact is not material does not create a genuine dispute concerning the fact. KMS's responses to GSA's proposed material facts contain legal argument and statements unsupported by the exhibits to which KMS cites. As explained above, a party opposing a motion for summary relief cannot rest upon argument and unsupported statements. KMS had an obligation to come forward with evidence to refute GSA's proposed material facts, if such evidence exists. KMS's arguments and unsupported statements do not create a genuine dispute concerning an issue of material fact. We carefully examined all of the issues of fact that KMS contends are material and disputed by GSA. Many of these purported facts are not supported by the exhibits cited by KMS. Other facts are not material to a resolution of the motion for summary relief. In our findings of fact, we do not include "facts" put forward by KMS which are unsupported by the record. We include facts stated by KMS which are supported by the record and which are helpful to an understanding of KMS's position. The Parties' Arguments GSA makes four arguments. First, GSA argues that it terminated the February 20, 1987 lease by providing the notice required by the lease contract. Second, GSA argues that the evidence does not support a conclusion that the parties entered into an express contract on November 20, 1990. Third, GSA argues that there is no implied contract between the parties because the parties intended that any contract they entered into would be written and because GSA is not bound by any act of an employee which is outside the employee's authority. Finally, GSA argues that it is not responsible for indemnifying KMS for claims made by third parties because there is no evidence to establish that GSA agreed to indemnify KMS, that any GSA employee possessed the requisite authority to agree to indemnify KMS, or that there was an appropriation of funds for such an agreement. KMS contends that "the particular form of contract involved is really quite irrelevant" and "[t]he particular terms or conditions of the lease or agreement are quite unimportant." Appellant's Memorandum (Mar. 20, 1995) at 3, 10. KMS does not address GSA's first two arguments, set forth in the preceding paragraph. Neither does KMS address GSA's argument that the parties intended that their contract would be written or GSA's argument that it is not bound by unauthorized acts of its employees. KMS contends that the following is evidence of an implied contract: The INS told Buena Park that it hoped to locate its political asylum office in the Cupania Business Center; GSA caused KMS to terminate the leases of other tenants in order to make room for INS; GSA employees attempted to preempt Buena Park's permit requirements; GSA employees attempted to complete alterations to the Cupania Business Center space and KMS consented to this because the parties reached an agreement on March 12-13, 1991, concerning lease terms; and GSA reached an agreement with Buena Park to eliminate permit problems. KMS argues that GSA is estopped from denying the existence of an implied in fact contract. KMS cites to state law in support of its argument that GSA breached an implied covenant of indemnity. The February 20, 1987 Lease In its claim, KMS asserts that GSA did not provide proper notice of the termination of the February 20, 1987 lease. The uncontroverted evidence establishes that GSA provided KMS with notice of termination of the February 20, 1987 lease, as required by its terms. Paragraph 4 of the lease provides that GSA could terminate the lease at any time after an initial two-year term by giving ninety days written notice to KMS. Nearly four years into the lease term, on March 20, 1991, GSA's contracting officer sent a letter to KMS, terminating the lease ninety days later, on June 18, 1991. KMS acknowledges that GSA provided notice of termination on March 20, 1991. GSA is entitled to summary relief concerning KMS's claim that GSA breached the February 20, 1987 lease by terminating the lease without providing proper notice. There are no material facts in dispute and the facts establish that the notice provided by GSA was in accordance with the terms of the lease. Thus, GSA is entitled to relief as a matter of law. November 20, 1990 Express Contract The letters exchanged by the parties on November 20, 1990, do not constitute an express contract to lease 18,697 square feet of space for five years. There is no evidence to suggest that GSA's letter to KMS was sent in response to KMS's letter to GSA, as KMS claims. In fact, GSA did not receive KMS's letter until after GSA delivered its November 20, 1990 letter to KMS. KMS's letter requests a commitment letter reflecting GSA's intent to lease 17,800 square feet of space, and states that a new lease should be drafted. GSA's letter simply rescinds its previous letter canceling the February 20, 1987 lease and states that the terms of that lease remain in effect. GSA's letter does not indicate that GSA agreed to lease any additional space for any amount of time. The two November 20, 1990 letters do not constitute an express contract because they do not evidence either an unambiguous offer and an unconditional acceptance, or a mutuality of intent to be bound to a contract. GSA is entitled to summary relief concerning KMS's claim that the parties' November 20, 1990 letters constitute an express contract. There are no material facts in dispute and the facts establish that the two letters do not amount to a contract. Thus, GSA is entitled to relief as a matter of law. Implied Contract An implied in fact contract is the same as an express contract, except that circumstantial evidence is used to establish the existence of an implied in fact contract. An implied in fact contract is "founded upon a meeting of minds, which . . . is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding." Baltimore & O.R. Co. v. United States, 261 U.S. 592, 597 (1923). In order to prove the existence of an implied in fact contract, an appellant must establish, as a fact, that the parties mutually intended to contract and that there was a definitive offer and unequivocal acceptance, just the same as if there had been an express contract. City of El Centro v. United States, 922 F.2d 816 (Fed. Cir. 1990), cert. denied, 501 U.S. 1230 (1991). Extensive negotiations which the parties hope will lead to an agreement do not constitute an implied in fact contract. Pacific Gas & Electric Co. v. United States, 3 Cl. Ct. 329 (1983), aff'd, 738 F.2d 452 (Fed. Cir. 1984)(table). No implied contract can exist if the parties intend that their contractual relationship will be established by an express, written agreement. City of Klawock v. United States, 2 Cl. Ct. 580 (1983), aff'd, 732 F.2d 168 (Fed. Cir. 1984)(table); Kilmer Village Corp. v. United States, 153 F. Supp. 393 (Ct. Cl. 1957). In deciding whether parties mutually intend that their agreement will be established by a written document, it is appropriate to examine controlling regulations to determine whether they require a written agreement to be executed before the Government is bound to a contract. American General Leasing, Inc. v. United States, 587 F.2d 54 (Ct. Cl. 1978). An essential element of an implied contract is that it must be entered into by a Government employee with the authority to bind the Government. The actions of an employee which are inconsistent with an agency's regulations are unauthorized and will not bind the agency. "Clearly, federal expenditures would be wholly uncontrollable if Government employees could, of their own volition, enter into contracts obligating the United States." City of El Centro, 922 F.2d at 820; New America Shipbuilders, Inc. v. United States, 871 F.2d 1077 (Fed. Cir. 1989); City of Alexandria v. United States, 737 F.2d 1022 (Fed. Cir. 1984). When the Government, in a motion for summary relief, puts forward facts to support a contention that its employees lacked the authority to enter into a contract, the opposing party must counter the contention with facts of its own in order to create a genuine dispute. New America Shipbuilders, Inc.; H.F. Allen Orchards v. United States, 749 F.2d 1571 (Fed. Cir. 1984), cert. denied, 474 U.S. 818 (1985); EWG Associates, Ltd. v. United States, 231 Ct. Cl. 1028 (1982). Thus, in this case, it is the contractor's burden to establish that the Government employees with whom it dealt possessed the requisite authority to bind the agency. As mentioned earlier, KMS offers five pieces of circumstantial evidence to establish that the parties had an implied in fact contract to lease 18,697 square feet of space for five years. For several reasons, KMS's evidence does not persuade us that such a contract exists. First, the fact that the INS told Buena Park that it hoped to locate its political asylum office in the Cupania Business Center is evidence of INS's desires, not evidence that GSA entered into a contract with KMS. Second, KMS's contention that GSA caused KMS to terminate the leases of other tenants is not supported by the record. Third, it is not clear what attempts were made by GSA employees to preempt Buena Park's permit process. Even if preemption was discussed, this is consistent with GSA's hope that it could occupy KMS's space by April 1, 1991, and not evidence of a contract between the parties. Fourth, assuming that KMS permitted GSA to attempt completing alterations because KMS believed it had reached an agreement concerning lease terms, GSA's actions do not establish that the parties entered into an implied contract. The actions of GSA are consistent with the terms of the February 20, 1987 lease which permitted it to make alterations and with its desire to utilize the Cupania Business Center for the political asylum office and to move into that space by April 1, 1991. Finally, the agreement that Buena Park contends it reached with INS and GSA would have permitted INS to occupy only 9,999 square feet of space for a six month term, which is not consistent with the terms of the implied contract that KMS contends exists or the terms of the agreement that KMS alleges the parties reached a few days earlier. In addition, this agreement would not have permitted INS to occupy space on April 1, 1991, which the parties understood was necessary. Even if KMS's evidence of the existence of an implied contract were stronger, summary relief is appropriate because GSA has demonstrated that there is an absence of evidence to support two essential elements of KMS's case. In its motion, GSA puts forward evidence to show that the parties intended to establish their contractual relationship in writing and to show that no authorized representative of GSA ever entered into an agreement with KMS. KMS does not counter GSA's evidence concerning either of these points. The record establishes that the parties intended that their contractual relationship would be established by a written lease entered into by a GSA contracting officer. In a November 20, 1990 letter, KMS states that a new lease should be drafted and asks for a written commitment from GSA. In a February 26, 1991 letter, KMS states that it expected to execute a lease with GSA. In its May 16 and October 14, 1991 claim letters, KMS asserts that GSA stated that it intended to execute a lease. GSA's regulations require that leases be entered into by contracting officers and awarded in writing. KMS is charged with knowledge of regulations governing the formation of contracts, and the regulations make it clear that a lease can only be entered into in writing by a contracting officer. In the face of these facts, KMS has not suggested that any evidence exists to establish that the parties intended to enter into anything other than a written lease. Instead, the evidence demonstrates that the parties intended that, after their discussions and negotiations were finished, a written lease would be awarded by a GSA contracting officer. The record also establishes that no GSA employee with the authority to bind the agency ever entered into any agreement with KMS. According to GSA's published regulations, only a contracting officer has the authority to enter into a contract. KMS dealt with a realty specialist and not with the contracting officer. KMS does not attempt to convince us that it ever entered into an agreement with or had any dealings with the contracting officer concerning leasing added space. Even if KMS had dealt with the contracting officer, the contracting officer would have lacked the authority to award an unwritten lease because GSA's regulations require that lease awards be in writing. GSA is entitled to summary relief concerning KMS's claim that the parties entered into an implied in fact contract. There are no material facts in dispute and the facts establish that there was no mutual intent to be bound by anything other than a written contract and that KMS was not dealing with a GSA employee with authority to contract. Thus, GSA is entitled to relief as a matter of law. KMS argues that GSA should be estopped from denying the existence of a contract. But, estoppel cannot be used to create a contract where none exists. In addition, estoppel cannot take the place of dealing with an employee who has the authority to contract and cannot substitute for following the procedures required by an agency's regulations. New America Shipbuilders, Inc.; EWG Associates, Ltd.; Pacific Gas & Electric Co.; City of Klawock. KMS's estoppel argument fails because no implied contract exists here and because KMS never relied upon any representations made by a GSA employee who was authorized to bind GSA to a contract and who complied with the agency's regulations which require that a lease award be written. Indemnity KMS alleges a breach of an implied in fact contract of indemnity. The Anti-Deficiency Act, 31 U.S.C. 1341 (1988 and Supp. V 1993), bars an unlimited, unfunded indemnification agreement such as the one KMS asserts exists, and KMS has not controverted GSA's assertion that no agent of the Government had the authority to enter into such an agreement. California- Pacific Utilities Co. v. United States, 194 Ct. Cl. 703 (1971). In addition, there is no evidence of either offer and acceptance or mutual assent to a contract of indemnity. GSA is entitled to summary relief concerning KMS's claim that GSA breached an implied in fact contract of indemnity. There are no material facts in dispute, the facts establish that KMS was not dealing with a GSA employee authorized to enter into such an implied contract, and there is no evidence of either offer and acceptance or mutual assent. Thus, GSA is entitled to relief as a matter of law. The Remaining Portion of KMS's Claim KMS claims that it is owed $157,527.92 because GSA failed to provide proper notice of termination of the February 20, 1987 lease and that it is owed $320,840.52 per year because GSA breached a November 20, 1990 express contract and an implied contract. As explained above, GSA provided notice of termination of the February 20, 1987 lease in accordance with its terms. The parties did not enter into an express contract on November 20, 1990, and did not enter into an implied contract. Accordingly, these portions of KMS's claim are denied. KMS also claims that it is owed $279,061.50 for three times the amount that it spent to remodel abandoned space, to attempt to obtain city permits, and to restore the building; that it is owed $6,778.07 for marketing costs; and that it is owed $21,844.86 for bankruptcy and foreclosure expenses. KMS asserts that it is owed this money due to GSA's breach of an unspecified contract. The only contract between the parties is the February 20, 1987 lease. In its claim and in its complaint, KMS identifies only one breach of the February 20, 1987 lease contract: GSA's failure to provide proper notice of termination of the lease. As explained above, however, the notice provided by GSA was proper. In its opposition to GSA's motion for summary relief, KMS asserts that GSA's breach consists of its abandonment of the February 20, 1987 lease. GSA did not breach the lease by abandoning the premises. Instead, it vacated the leased premises after providing KMS with the notice required by the lease. In its opposition to GSA's motion for summary relief, KMS asserts that GSA breached the February 20, 1987 lease contract when its workers entered the premises on March 14-19, 1991, and performed some construction work. If GSA's actions constitute a breach of the February 20, 1987 lease contract, then GSA owes KMS for whatever damages these actions caused. Presumably, this is the amount claimed by KMS to restore the building, which is part of its request for $279,061.50.[foot #] 8 GSA's motion for summary relief does not address whether there are disputed issues of material fact concerning this portion of KMS's claim or whether GSA is entitled to relief as a matter of law. Therefore, the portion of the claim that requests damages for restoring the leased premises remains before us for decision. Finally, in its opposition to GSA's motion for summary relief, KMS alleges that GSA breached the February 20, 1987 lease by terminating it in bad faith. KMS's allegations are based upon operative facts substantially different from those underlying the claim that it presented to the contracting officer. We lack jurisdiction to consider a claim which has never been presented to the contracting officer for decision. 41 U.S.C. 605(a) (1988); Santa Fe Engineers, Inc. v. United States, 818 F.2d 856 (Fed. Cir. 1987). Decision The motion for summary relief is GRANTED. An order will follow concerning further proceedings in this appeal. ______________________________ MARTHA H. DeGRAFF ----------- FOOTNOTE BEGINS --------- [foot #] 8 KMS's request for $279,061.50 is three times the amount of actual damages KMS claims it incurred. We know of no authority to support KMS's request for treble damages. ----------- FOOTNOTE ENDS ----------- Board Judge We concur: ______________________________ ______________________________ STEPHEN M. DANIELS DONALD W. DEVINE Board Judge Board Judge