March 31, 1993
Appeal of
EDWARD R. ESTER and LORRAINE ESTER
Under Lease Agreement
(Bellingham Main Postal Facility)
PSBCA No. 3051
APPEARANCE FOR APPELLANT:
Gustav G. Kostakos, Esq
APPEARANCE FOR RESPONDENT:
Mark Brent Ezersky, Esq.
OPINION OF THE BOARD
Appellant has appealed a Contracting Officer's decision assessing costs incurred by Respondent, Postal Service, for emergency repairs to the air handling system at a facility leased to Respondent. The parties have stipulated that the amount in controversy is $3,789.54. A hearing was held at the parties' request.
FINDINGS OF FACT
1. On September 16, 1963, Appellant's predecessor and Respondent entered into a lease agreement under which Respondent leased a postal facility in Bellingham, Washington, for a period of twenty years. The lease contained six five-year renewal options. The rent for the base term was $45,850 per year, while the option rental amounts started at $44,000 per year and gradually decreased to $38,000 per year (Appeal File (AF)-10). The base lease and option amounts subsequently were decreased by an additional $6,700 per year as the result of a lease amendment pertaining to tax payment responsibility which is not relevant to this appeal (AF-10).
2. In regard to maintenance responsibility the lease provided:
"The Lessor shall, unless herein specified to the contrary, maintain the demised premises, including the building and any and all equipment, fixtures and appurtenances, whether severable or non-severable, furnished by the Lessor under this lease in good repair and tenantable condition, except in case of damage arising from the act or the negligence of the Government's agents or employees. For the purpose of so maintaining said premises and property, the Lessor may at reasonable times enter and inspect the same and make any necessary repairs thereto. The Lessor shall furnish and replace necessary filters at his expense." (AF-10)
3. During the base term of the lease the heating system for the facility often malfunctioned. Appellant, Edward Ester, on numerous occasions made certain adjustments to the system to enable it to function properly. Oftentimes in the very early years of the base lease term Mr. Ester was assisted by a Postal Service employee experienced in boiler maintenance (Transcript (Tr.) 60-61, 66).
4. On June 15, 1983, a meeting was held between Mr. Ester and representatives of Respondent pertaining to the malfunction of the heating system and procedures to follow to make the air handling and control portion of the system fully operational (RX-3; Tr. 33-34). At the meeting it was agreed that Appellant would supply all parts needed to make the air handling and control subsystem operational and Respondent would supply a maintenance person to perform the labor (Tr. 34-36). Mr. Ester interpreted that agreement to mean that Respondent would assume full maintenance responsibility for the air handling system for the duration of the lease and that he in turn would supply any parts needed (Tr. 68, 73, 80-81; RX-2).
5. There was never a written lease amendment prepared as a result of the June 1983 meeting. No representative of Respondent attending the 1983 meeting had authority to amend the lease. Only the Contracting Officer (who did not attend the meeting) had such authority (Tr. 37, 44).
6. Subsequent to the June 1983 meeting a Postal Service technician made major repairs to the air handling and control portion of the heating system in order to make the complete heating system fully operational. The repairs were not what could be designated as routine maintenance and took approximately two weeks to complete (Tr. 14-16). The parts for the repairs were supplied by Mr. Ester (Tr. 24, 64-65).
7. The Postal Service maintenance technician made at least three other trips to the Bellingham facility from 1983 to 1986 to make repairs to the heating system. Each time, Mr. Ester supplied the parts required for repair (Tr. 23-25; 64‑66). The record does not support a conclusion that Respondent provided any repair assistance subsequent to 1986 (TR. 24).
8. In February 1990, the Bellingham heating system ceased operating. Postal Service personnel attempted to contact Mr. Ester but were unable to locate him. Accordingly, Respondent entered into a contract for emergency repair service with a third party contractor. Repairs were made to the air handling portion of the system at a cost of $3,639.54 (Tr. 44-45; AF-8).
9. On August 20, 1990, Respondent's manager, Support Services Office, Seattle Field Division, wrote Appellant seeking reimbursement for the repairs to the air handling system made by the third party contractor in February 1990 plus $150 in administrative costs. Appellant refused to make payment and by final decision dated January 3, 1991, the Contracting Officer advised Appellant the amount in dispute would be deducted from rental amounts (AF-5, 6).
10. A meeting was held by the parties on March 1, 1991, to discuss the dispute over the responsibility for payment of the February 1990 repairs. By letter dated May 13, 1991, the Contracting Officer reaffirmed his January 3, 1991, final decision. This appeal followed (AF-1, 2).
DECISION
We have previously held that where a lessor does not make reasonable and necessary repairs when obligated to do so pursuant to the terms of a lease, the Postal Service may have the repairs made and deduct rental amounts due under the lease as compensation for the cost of the repairs unless precluded by a specific
lease provision. Camden Securities Company, PSBCA Nos. 1266, 1325; M. R. Kaplan (Penner Financial Group), et. al., PSBCA Nos. 1147 et al., 87-3 BCA ¶19,969. There exists no such specific prohibitory provision in the Bellingham lease. The issues before us, therefore, are the extent of Appellant's repair obligations and the effect, if any, of the June 1983 meeting upon such obligations.
Here Appellant was obligated pursuant to the specific terms of the lease to maintain the premises (Finding of Fact No. 2). That obligation would include making all reasonable and necessary repairs to the heating system when it failed to operate. Thus, the obligation to repair the system in mid-winter 1990, when it ceased operating, was Appellant's, unless by earlier lease modification the parties had agreed otherwise.
Appellant argues that the parties orally agreed in June 1983 that as long as Appellant provided repair parts for the air handling system all other labor and maintenance work and costs for the duration of the lease would be Respondent's obligations. Other than Mr. Ester's subjective impression of what agreement transpired from the June 1983 meeting, Appellant has presented no persuasive evidence in support of its argument. In fact the evidence supports a contrary conclusion.
At the June 1983 meeting the parties agreed that Respondent would provide a technician to make major repairs to the air handling and control portion of the heating system to make it fully operational. Appellant in turn was to provide all parts required by the technician. The repairs were not routine maintenance, as it took approximately two weeks to complete all the work. Thereafter on three other occasions from 1983 to 1986 the same procedure was followed by the parties in order to make the system operational. However, the record does not indicate that from 1986 to 1990 Respondent ever provided repair assistance to Appellant and no written agreement was ever signed by the parties transferring maintenance responsibilities for the air handling system to Respondent. It thus appears from the record that any repairs performed by Respondent were infrequent, sporadic, and made gratuitously to assist Appellant. We therefore conclude that no agreement was reached in June 1983 that Respondent would take over the maintenance and repair tasks in issue.
As additional support for this conclusion we note that the Contracting Officer was not present at the June 1983 meeting and no representative of Respondent attending that meeting had authority to amend the lease. It is established that Respondent is not bound by agreements or representations made by an official lacking proper authority. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384 (1947); Henry Burge and Alvin White, PSBCA No. 2431, 89-3, BCA ¶21,910.
We thus hold that when the Bellingham facility's heating system ceased operating in February 1990, Appellant was obliged to repair the system. Respondent attempted to contact Appellant, but Appellant was unavailable. Considering the time of year (mid-winter) Respondent reasonably entered into an emergency contract for repair services and is entitled to be reimbursed by
Appellant for the cost of that contract related to the air handling system. The appeal is denied.
James D. Finn, Jr.
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Board Member