December 21, 1993

Appeal of

CORNELL R. GRIMMETT

Under Lease Agreement

PSBCA No. 3456

APPEARANCE FOR APPELLANT:

Cornell R. Grimmett

APPEARANCE FOR RESPONDENT:

Patrice R. Dickey, Esq.

OPINION OF THE BOARD

            Appellant, Cornell R. Grimmett, has timely appealed from a Contracting Officer's decision denying Appellant's request for increased rental for a facility which Appellant leases to the Postal Service.  Appellant has elected to have the appeal processed under the Board's optional accelerated procedure (39 C.F.R. §955.36).  The parties have elected to have the appeal submitted on the record without a hearing.

FINDINGS OF FACT

            1.  On September 4, 1973, Appellant and Respondent entered into a lease agreement under which Appellant agreed to lease a facility located in Taft, Oklahoma, to Respondent for postal purposes at a monthly rental of $165.  The lease term was for five-years and the lease contained two five-year renewal options at a rental of $120 per month (Appeal File (AF)-5).

            2.  Both options to renew were exercised by Respondent and the lease thereafter expired on June 30, 1988 (AF-6).

            3.  In the summer of 1986, prior to lease expiration, Appellant and Respondent negotiated a new lease for the same facility.  The new lease term was for five-years with a commencement date of July 1, 1988.  The new lease also contained two three-year renewal options which could be unilaterally exercised by Respondent.  The rental under the base term of the lease and each renewal option was $175 per month (AF-4).

            4.  Under the terms of the new lease Appellant was responsible for furnishing water and sewer service, "[h]eating and air conditioning equipment as installed," and  was responsible for paying real estate taxes.  Appellant was also responsible for "maintaining the demised premises in good repair and tenantable condition" and for painting the interior of the premises at least once every five years (AF-4).

            5.  On February 20, 1991, Respondent exercised the first of the lease's three-year renewal options covering the period July 1, 1993 through June 30, 1996, at the previously agreed upon rate of $175 per month (AF-3).

            6.  Appellant wrote Respondent on May 7, 1993, and requested a rental increase of $1300 per annum.  As the basis for the request Appellant stated that his costs of operation had increased.  The increased costs were described as follows:

The following is the over-head cost of the Post Office Quarters expenses of the Lessor:

1-Air-conditioner 23,500 BTU (5-yr. warranty)-----------------------$  925.00

1-Wall-Heater Furnace (Natural Gas 6500 BTU 5-yr.

warranty)------------------------------------------------------------------------$  1350.00

Post Office Quarters Roofing (5-yr. warranty)------------------------$ 1457.00

Painting Post Office Quarters both inside and outside and

 replacing Tile Ceiling repair and etc.------------------------------------ $1000.00

P.O. Bldg. Insurance annually  -------------------------------------------  $  542.00

Pest Control Insurance annually -----------------------------------------  $    75.00

Property Taxes annually-----------------------------------------------------  $    88.00

This is a current claim (On April 28, 1993, a Plate-Glass window was broken out from in front of Post Office.--will cost at least                   $ 126.00.

and

1-Metal Door rammed open during a burglary of the Taft, Ok Post Office about 7 or 8 years ago; The U. S. Postal Inspector from Tulsa, Ok MSC. made inspection of the same; but no replacement of that Metal Door which is now giving trouble...                                It will cost -------------at least     $  345.00.

(AF-2)

            7.  In a final decision dated May 11, 1993, the Contracting Officer denied Appellant's request for a rent increase.  The decision stated in pertinent part:

"The terms of the lease are binding on both you as Lessor and the Postal Service.  The Comptroller General has ruled that no officer or employee of the Government can waive, modify or otherwise change the contractual obligations of either party without a compensatory benefit in return.  Accordingly, we are not able to consider your request for an increase in rent."  (AF-1)

Appellant thereafter filed his appeal.

DECISION

            As the party seeking recovery, Appellant has the burden of proof, Roger H. Elliott, PSBCA No. 3285, 1993 Lexis 13 (Feb. 12, 1993); F & B Realty, PSBCA No. 2529, 91-2 BCA ¶ 23,788.  Appellant had full knowledge of his overhead and other fixed costs as a lessor for a period of fifteen years prior to commencement of his present contract.  He was receiving $120 per month rental under the earlier lease and negotiated a rental increase to $175 per month under the present lease.  If Appellant did not believe the $175 was sufficient to cover all costs he was under no obligation to enter into the new lease agreement.  Inasmuch as Appellant freely negotiated a new agreement with full knowledge of his prior costs and with no evidence of oppressive or coercive actions by Respondent, Appellant has not shown entitlement to any rental increase.

            The costs on which Appellant bases his request for relief (Finding of Fact No. 6) are either maintenance costs (including glass window and door repair) required of the lessor under the lease terms or costs of ownership (such as insurance and taxes) ordinarily borne by a lessor.  Appellant has not alleged that the costs associated with the new air conditioner and wall heater furnace were extraordinary costs not required of the lessor and that the installation of such units was directed by the Contracting Officer over protest by Appellant.

            Accordingly, we find no basis for the increase in rental sought by Appellant.  The appeal is denied.

James D. Finn, Jr.

Administrative Judge

Vice Chairman

I Concur:

James A. Cohen

Administrative Judge

Chairman