Zoeller v. Brownlee

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
is not citable as precedent. It is a public record.
United States Court of Appeals for the Federal Circuit
04-1332
BRUCE E. ZOELLER,
Appellant,
v.
Les Brownlee, ACTING SECRETARY OF THE ARMY,
Appellee.
___________________________
DECIDED: October 25, 2004
___________________________
Before MICHEL, CLEVENGER, and BRYSON, Circuit Judges.
PER CURIAM.
DECISION
Bruce E. Zoeller appeals from the decision of the Armed Services Board of
Contract Appeals, ASBCA No. 54205, affirming a partial termination of his lease with
the Army. Because we agree with the Board of Contract Appeals that the Army properly
terminated Mr. Zoeller’s lease in this case, we affirm the Board’s decision.
BACKGROUND
Beginning in 1999, Mr. Zoeller leased three parcels of land from the Army at Fort
Leavenworth, Kansas, for farming purposes. The three parcels were referred to as
parcels AA, FW, and FE. The lease was to expire on December 31, 2003. By its terms,
however, the lease was “revocable at will by the Secretary [of the Army].” The contract
also provided that, in the event the lease was revoked or the leased premises were
otherwise reduced, and the premises were being used for farming purposes, “the
Lessee shall have the right to harvest, gather and remove such crops as may have
been planted or grown on said premises, or if funds are available, compensation will be
made to the Lessee for the value of the remaining crops.”
In a letter dated February 21, 2003, Gary Dye, the Chief of the Military Branch,
Real Estate Division, Kansas City District, U.S. Army Corps of Engineers, informed Mr.
Zoeller that the Army was terminating the lease with respect to parcels FE and FW. By
letter dated May 21, 2003, Mr. Zoeller appealed the termination with respect to those
two parcels to the Armed Services Board of Contract Appeals.
The Board construed Mr. Zoeller’s appeal to raise two issues, both relating to the
termination of the lease. First, the Board understood Mr. Zoeller to be contending that
the lease was not properly terminated because Gary Dye, the person who wrote the
letter terminating the lease, lacked authority to effect the termination. After tracing the
delegation of authority to terminate lease agreements, the Board concluded that Gary
Dye did indeed have authority to terminate the lease. Second, the Board understood
Mr. Zoeller to argue that the lease could not be terminated as to only two of the three
parcels. The Board rejected that argument because the contract specifically provided
for adjustments to be made if the leased premises were reduced. The Board found that
Mr. Zoeller had not raised a question as to his entitlement to compensation for any loss
of crops and therefore that no such claim was before the Board.
04-1332 2
Following a motion for reconsideration, the Board affirmed its initial decision. In
its opinion on reconsideration, the Board addressed Mr. Zoeller’s arguments that (1) an
internal Army regulation required that the revocation of leases must be approved at the
same level of command necessary for the original determination that the property was
available for lease to private parties, and (2) that the revocation decision was not made
at the proper level of command. The Board held that the regulation in question,
paragraph 4-4 of Army Regulation 405-80, required the same level of command for a
decision to declare particular property available for private lease as for a decision to
revoke or terminate the declaration of availability. The Board explained, however, that
the regulation did not mean that the decision to revoke a particular lease required that
same level of authority, because the revocation of a lease was different from the
revocation of the determination that particular land should be available for private
leasing. The Board further held that the regulation was an internal operating procedure
of the government designed for the benefit of the government and was not for the
benefit of the government’s contracting party. For that reason, the Board held that Mr.
Zoeller would not have been entitled to relief even if the contracting officer had failed to
comply with the requirements of the regulation.
DISCUSSION
On appeal, Mr. Zoeller contends that the Board of Contract Appeals erred in
determining that the lease agreement was properly terminated, both because Mr. Dye
lacked authority to effect the termination and because the lease could not lawfully be
terminated with respect to fewer than all three parcels. He also argues that under the
contract and the Uniform Relocation Assistance and Real Property Acquisition Policies
04-1332 3
Act of 1970, 84 Stat. 1894, 42 U.S.C. § 4601 et seq., he should have been given at
least 90 days notice prior to the termination of his lease. Finally, Mr. Zoeller contends
that the contracting officer erred in determining that there were no crops on the
premises, and that for that reason he was not entitled to any compensation for the
termination of the lease.
1. Mr. Zoeller concedes that the Army was authorized to revoke the agreement
at will. He contends, however, that there was no such revocation because Mr. Dye, the
person who notified Mr. Zoeller that his lease was being terminated on parcels FE and
FW, lacked authority to revoke the lease.
In support of his position, Mr. Zoeller argues that the decision to remove land
from the program under which Army property was leased to private parties had to be
made at the same level of command as the decision to make the property available for
such uses in the first instance. He cites paragraph 4-4(f) of Army Regulation 405-80 for
that proposition. That regulation states that “[w]hen real property under outgrant is
needed for Army purposes, the revocation/termination of availability will be approved at
the same level of command that was needed for the original DOA.”
We agree with the Board that the level of authority needed to determine whether
land is available for lease to private parties (“outgrant”), or whether the determination of
availability should be revoked, is not the same as the level of authority needed to
terminate a specific lease. Thus, although Mr. Dye may have lacked authority to make
and revoke availability determinations with regard to the land, he was authorized to
terminate Mr. Zoeller’s lease. Deciding whether to revoke a particular lease is a more
specific action than deciding whether particular land should be made available for
04-1332 4
private use or deciding whether the determination of availability should be revoked.
Moreover, the Board correctly ruled that Army Regulation 405-80 is designed for
internal regulatory purposes and is not intended to protect the Army’s contracting
partners. For that reason, the Board was correct to hold that Mr. Zoeller cannot obtain
any relief even if the Army violated the requirements of that regulation with respect to
the level of authority for availability determinations. See American Farm Lines v. Black
Ball Freight Serv., 397 U.S. 532, 538-39 (1970); Freightliner Corp. v. Caldera, 225 F.3d
1361, 1365 (Fed. Cir. 2000) (“In order for a private contractor to bring suit against the
Government for violation of a regulation, that regulation must exist for the benefit of the
private contractor.”). Mr. Zoeller’s rights were defined by the terms of the lease, which
provided that the lease could be revoked at will. Furthermore, as the Board held, the
specific authority to revoke the lease was delegated to Mr. Dye. Mr. Zoeller therefore
cannot complain that the revocation was unauthorized and invoke the lack of authority
to overturn the revocation.
2. With respect to Mr. Zoeller’s argument that the Army could not properly
terminate the lease as to only two of the three parcels, we agree with the Board that
paragraph 11 of the lease clearly contemplated a partial revocation when it referred to
cases in which the Army “materially reduces the lease area” prior to the expiration date
of the lease. Paragraph 11 specifically explains what would happen in the event that
the Army revoked the lease or otherwise materially reduced the leased area, which
indicates that the Army was authorized to take action having either effect.
3. Mr. Zoeller asserts that the government breached the contract and the
Uniform Relocation Act by failing to provide him with sufficient notice to enable him to
04-1332 5
remove his crops from the premises. The government responds by arguing that Mr.
Zoeller did not raise that issue before the Board of Contract Appeals and therefore
those arguments are not properly before us. After reviewing the materials that Mr.
Zoeller submitted to the Board of Contract Appeals, we agree with the government that
Mr. Zoeller failed to raise that argument before the Board and therefore has waived his
argument that the government failed to provide him with sufficient notice prior to the
termination of his lease.
4. Finally, Mr. Zoeller contends that the Army breached the contract by
destroying the bare root stock that remained on the land without providing him with
compensation. Specifically, he alleges that the plants growing on parcels FE and FW
were perennials and that the “root stock” of those plants had significant value. Because
the contract provided that he would be compensated for the loss of crops remaining on
the premises if funds were available, he contends that the Army erred when it
determined that there were no crops on the premises.
In response, the government argues that Mr. Zoeller failed to raise this issue
before the Board and has therefore waived it for purpose of this appeal. The Board held
that the issue of compensation for plants on the leased property was not before it. That
finding is supported by the record, which contains a memorandum of a telephone
conference call between the parties and a Board staff attorney on June 6, 2003. In the
memorandum, the staff attorney noted that the only issue before the Board was the
propriety of the partial termination of the lease. The memorandum further noted that
“the contractor’s submitting a monetary claim to the contracting officer, in an amount
certain for his losses, was discussed. Once final decision is issued, appellant may
04-1332 6
choose to file an additional appeal to the Board in the event the claim is denied.” In light
of the staff attorney’s memorandum, we sustain the Board’s finding that the issue of
compensation for the loss of the root stock on parcels FE and FW was not before the
Board in this appeal and therefore is not properly before this court, even though Mr.
Zoeller referred to the issue of compensation in some of the materials he submitted to
the Board.
04-1332 7