Square's claim on March 21, 1988. Plaintiff appealed this decision to the Secretary of HUD, who denied it on May 13, 1988.
Plaintiff claims that its HAP contract was modified by the Simons letter and sues for breach of contract for HUD's failure to follow the modification with increased payments of $ 45,098 per annum. Since HUD only pays an additional $ 9 per unit or $ 17,280 over and above the original contract rent subsidies, plaintiff is faced with an annual shortfall of $ 15 per unit or $ 28,800 in utility bills. Item 31 at PP 10-12, 21. In its second cause of action, plaintiff claims that the Simons letter represented HUD's final agency decision and seeks enforcement of that decision. Jackson Square requests damages of the past annual shortfall plus $ 28,800 per annum for the balance of the 20-year HAP contract, together with interest and costs. Id. at P 14.
I. Breach of Contract
Plaintiff's first cause of action is for breach of contract. Jackson Square alleges that HUD agreed to a modification of the parties' 1979 HAP contract to address the shortfall created by the error in the estimation of utility costs, as evidenced by Simons' letter. According to the plaintiff, HUD breached this agreement by paying a 1.2 percent increase rather than the 6 percent promised in the alleged contract modification. Items 40 at P 3; 42 at 2.
Defendant urges the court to find that, as a matter of law, no modification of the contract occurred and thus, there was no breach. "Where 'a question of intention is determinable by written agreements, the question is one of the law, appropriately decided . . . on a motion for summary judgment.'" Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 73 (2d Cir. 1989), quoting Mallad Construction Corp. v. County Fed. Sav. & Loan Ass'n, 32 N.Y.2d 285, 291, 298, 344 N.Y.S.2d 925, 298 N.E.2d 96 (1973).
To establish a contract with the Government, a party must demonstrate: (1) mutual intent to contract, including a communicated offer, acceptance and consideration; (2) lack of ambiguity in the offer and acceptance; and (3) actual authority on the part of the Government agent. Solar Turbines v. United States, 23 Cl. Ct. 142, 150 (Cl. Ct. 1991). A valid contract modification must meet the same standard. Id. According to defendants, Jackson Square never agreed to the rent level actually approved by HUD, and HUD never accepted the higher rent levels Jackson Square asserts in its complaint. Thus, the contract was not modified by the amount alleged in the first cause of action.
The defendant points out that Simons' letter to Anderson was an internal memorandum, not addressed or initially sent to plaintiff. Further, the letter does not specifically say that the contract will be modified. It merely approves the increases suggested by the Buffalo office pursuant to HUD regulations. The defendant also asserts than even if this constituted an offer to modify the contract, it was not accepted by Jackson Square. On the contrary, the plaintiff reacted with "shock and dismay" that the approved increase was significantly less than anticipated.
Lastly, defendant argues that the HAP contract clearly states that all amendments to the contract must be in writing. Plaintiff has shown no such writing other than the Simons letter, which was merely an internal memo. Since plaintiff has failed to show a communicated offer, acceptance, and consideration, the court must find that the alleged modification of the contract never occurred and thus could not have been breached.
Jackson Square responds that 24 CFR § 880.204(b)(1)(i)(B) (1990) provides that the approval of an increase in rents to correct a processing error must be made by the Assistant Secretary. At deposition, Simons testified that determination contained in his letter of August 29, 1980, was a final agency action. Item 60 at 20. Thus, even though the letter was not provided to the plaintiff until December, Jackson Square maintains that it constituted a modification of the contract.
The evidence on the record is insufficient to conclude that the Simons letter constituted a modification of the contract. The HAP contract unambiguously states at P 1.1g that:
This Contract, including . . . exhibits, comprises the entire agreement between the parties hereto with respect to the matters contained herein, and neither party is bound by any representations or agreements of any kind except as contained herein or except agreements entered into in writing which are not inconsistent with this Contract.