Zebel LLC v. United States
16-420
| Fed. Cl. | Oct 26, 2017Background
- GSA offered Metro West (vacant federal complex in Baltimore) for online auction by IFB; bids required $100,000 registration deposit and were sold "as is, where is" with explicit disclaimers and a requirement that bids be cash, without contingencies, and non-cancelable.
- IFB defined bids as "continuing offers" for 60 days after auction close; deposits could be forfeited for certain breaches and the first- and second-highest bidders could not obtain withdrawal refunds during/after the auction.
- Zebel (plaintiff) registered and bid $10,000,000 late in the auction window; within 20 hours plaintiff sought to retract the bid after discovering public information about high tax assessments and other issues.
- GSA refused to refund the $100,000 deposit, stating the bid was a binding continuing offer and that the property was sold "as is;" the high bidder later defaulted and GSA accepted Zebel’s backup bid within the 60-day window; Zebel then failed to post additional earnest money and was declared in default.
- Zebel sued in the Court of Federal Claims seeking return of the deposit and attorney’s fees, alleging breach of an implied-in-fact contract (refusal to honor revocation) and breach of the implied duty of good faith and fair dealing (failure to disclose material information).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GSA breached contract by refusing to honor Zebel’s bid revocation and return the $100,000 deposit | Zebel argued the IFB did not prohibit bid revocation during the auction and GSA abused discretion by refusing refund | GSA argued IFB made bids continuing, noncancelable offers and deposit was liquidated damages for breach | Court held IFB unambiguously precluded retraction; GSA properly accepted backup bid and retained deposit after Zebel defaulted |
| Whether GSA breached implied duty of good faith and fair dealing by failing to disclose tax assessment and redevelopment info | Zebel asserted GSA had superior knowledge and should have disclosed material facts that affected bidding | GSA argued the information was publicly available and IFB expressly disclaimed warranties and required bidders to conduct due diligence | Court held no breach: info was public, IFB warned bidders to perform due diligence, and superior-knowledge doctrine did not apply |
| Whether the IFB was ambiguous about withdrawability of bids | Zebel claimed IFB listed only specific forfeiture scenarios and therefore other revocation scenarios permitted refund | GSA maintained the IFB’s plain language (continuing offers; "could not be lowered or canceled") barred withdrawal | Court found IFB language unambiguous and harmonized the provisions to forbid unilateral withdrawal by first/second highest bidders |
| Whether a continuing (nonrevocable) offer lacked consideration and was unenforceable | Zebel contended no consideration supported an irrevocable 60-day offer | GSA argued bidders received consideration in being eligible to have their bid considered and induce GSA forbearance/action | Court found sufficient consideration (ability to be considered; reasonable expectation of inducing GSA action) and cited standard contract-law support for nominal consideration sufficing |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (standards for summary judgment)
- Metric Constructors, Inc. v. NASA, 169 F.3d 747 (contract terms given meaning of reasonably intelligent person familiar with circumstances)
- Scott Timber Co. v. United States, 692 F.3d 1365 (superior-knowledge doctrine requires government to disclose information not available to contractor and that contractor had no reason to obtain)
- Giesler v. United States, 232 F.3d 864 (no duty to disclose information that is publicly available)
- Restatement and trial-court rule authorities were discussed but only the above-cited appellate and Supreme Court decisions were treated as controlling authority in holdings