July 10, 1996

Appeal of

J. LEONARD SPODEK d/b/a NATIONWIDE POSTAL MANAGEMENT

UNDER LEASE AGREEMENT

PSBCA No. 3850

 

APPEARANCE FOR APPELLANT:

J. Leonard Spodek

 

APPEARANCE FOR RESPONDENT:

Mark T. Corbly, Esq.

 

                                                    OPINION OF THE BOARD

 

Appellant, J. Leonard Spodek d/b/a Nationwide Postal Management, has filed a timely appeal from a final decision of a contracting officer denying his claim for reimbursement of an administrative charge deducted from rental payments otherwise due Appellant under his lease of real property to the United States Postal Service (Respondent).  Appellant contends that Respondent’s deduction from his rent was improper and that he is entitled to recover the withheld fee plus his costs to prosecute this appeal.  Respondent asserts that its withholding of the administrative fee was reasonable and proper under the circumstances and that it is entitled to retain the amount deducted from Appellant’s rental payments.

At the joint request of the parties, the appeal is being decided on the record in accordance with 39 C.F.R. §955.12.

Findings of Fact

1.  On November 25, 1968, Respondent’s predecessor, the Post Office Department,[1] entered into a lease of real property for use as the Ashland, ME Post Office for a base term of 10 years and four, five-year renewal options (Appeal File (AF) Tab 1).  Appellant purchased the property and became the assignee of the lease in 1993 (AF Tab 3).

2.  In order to correct deteriorating and hazardous conditions of the property’s sidewalk, the parties orally agreed to share the cost of removing and replacing the sidewalk.  The parties confirmed their agreement in writing by letters dated March 10 and 23, 1994 (AF Tabs 4 & 5).  Appellant drafted the March 23, 1994 letter which authorized award of the sidewalk replacement contract to Nelson Craig in the amount of $1,530.00.  In this letter Appellant specifically agreed to make “[p]ayment . . .  upon receipt of your [Respondent’s] written confirmation, accompanied by photographs of the completed job, that the job has been satisfactorily completed” (AF Tab 5).

3.  Work on the project was completed to the satisfaction of Respondent by June 8, 1994, and by letter of that date the Officer in Charge of the Ashland Post Office informed Appellant that the work had been satisfactorily performed and that Appellant’s share of the cost could be remitted directly to Mr. Craig (AF Tab 6).  Included with this letter were the photographs of the project requested by Appellant in his March 23, 1994 letter.  In a letter dated June 13, 1994, to Mr. Craig, with copy to Respondent, Appellant acknowledged receipt of the photographs, and requested the correction of what appeared to Appellant to be a “lip on the walk that could be a ‘trip and fall’ hazard” (AF Tab 7). 

4.  By letter dated July 26, 1994, referencing a telephone call with Appellant of that same day, Respondent’s Officer in Charge sent Appellant additional photographs of the completed sidewalk which she stated show that “the lip has been patched” (Complaint Exh. E).  She therefore requested that Appellant remit payment to Mr. Craig at Appellant’s earliest convenience.  On August 17, 1994, and again on October 13, 1994, Respondent requested that Appellant pay his one-half share of the sidewalk replacement work to Mr. Craig (AF Tabs 8 & 9). 

5.  In a letter to Respondent dated October 17, 1994, Appellant replied that he could not determine from the photographs of the patched work whether the potentially hazardous lip had been fixed (AF Tab 10).  On that same day Appellant orally advised Respondent that he would pay Mr. Craig the remainder of the contract price if Respondent’s Facilities Service Office notified him in writing that Respondent had inspected the work and found it to be proper (Complaint p. 3; Respondent’s Brief pp. 2-3).

6.  On November 2, 1994, Respondent’s architect for the District of Maine, accompanied by a United States Postal Service Facilities Specialist, visited the Ashland Post Office to review the sidewalk replacement work (AF Tab 11).  By letter dated December 7, 1994, the Architect advised Appellant that the quality of the work was good, that it conformed to the contract drawings and that it had no defects.  He therefore recommended that Mr. Craig be paid in full (Id.).

7.  On December 16, 1994, Respondent notified Appellant that payment was required by December 21, 1994, or an administrative fee would be assessed (Complaint Exh. K; Respondent’s Brief p. 3).   On December 23, 1994, Appellant sent a check to Respondent, made payable to Mr. Craig, for his one-half share of the cost of the sidewalk replacement work (AF Tab 15; Complaint Exh. L).

8.  By letter dated January 13, 1995, Respondent advised Appellant that it would be deducting a pro rata share of $350.00 from Appellant’s January and February 1995 rental checks to reflect Respondent’s administrative costs associated with the project (AF Tab 12).   Deductions totaling that amount were thereafter made from the two rent checks (AF Tabs 12 & 15).

9.  Subsequent letters and telephone conversations addressed the issue of Appellant’s liability for the administrative costs and the propriety of the deduction from the rent otherwise due Appellant (AF Tabs 13-15).  On May 3, 1995, Appellant requested a final decision from the Contracting Officer regarding the reimbursement of the withheld administrative fee (AF Tab 16).

10.  The Contracting Officer issued a final decision dated June 1, 1995, denying Appellant’s claim for reimbursement of the withheld fee (AF Tab 17).  Appellant filed a timely notice of appeal thereafter.

Decision

Appellant contends that Respondent’s withholding of the administrative fee was unwarranted and that he is entitled to recover the amount withheld and the costs he incurred in presenting this appeal.  According to Appellant, he paid his share of the cost of the sidewalk replacement work within a reasonable time after he was provided adequate assurance that the work was satisfactorily completed and therefore he is not liable to Respondent for any additional costs.  Respondent argues that it incurred additional costs because of Appellant’s delay in paying his share of the sidewalk replacement work and, as a result, it contends it is entitled to be reimbursed for those costs. 

We agree with Appellant that he is not liable for the administrative fees withheld from his rental payments.  It is undisputed that the parties agreed to share the cost of the sidewalk replacement work and that Appellant would pay his share upon receipt of Respondent’s written confirmation of satisfactory completion and supporting photographs (FOF 2).  Although confirmation of satisfactory completion and accompanying photographs were provided to Appellant by Respondent, the work was not acceptable, and corrective action was required (FOF 3-4).  Appellant had doubts about the acceptability of the corrective work and therefore requested additional assurance of satisfactory performance.  Appellant received that additional assurance in early December 1994 (FOF 6-7) and sent Respondent a check for his share of the cost of the work within a reasonable time (December 23, 1994) thereafter.

It is not possible to determine from the photographs in the record whether Appellant was reasonable in questioning the acceptability of the corrective work.  However, it certainly was reasonable and in accordance with the parties’ agreement for Appellant to obtain confirmation that the corrective work had been properly performed.  Since the Officer in Charge had overlooked a potentially hazardous condition initially and Appellant was unable to determine from the photographs of the corrected work whether that condition continued to exist, it was reasonable for Appellant to request additional confirmation of satisfactory performance, and his delay in making payment until such confirmation was received was consistent with the terms of the parties’ agreement and did not breach any obligation he owed to Respondent.  Therefore, Respondent was not entitled to extract an administrative fee from Appellant or to deduct that fee from rental payments otherwise due Appellant. 

Neither is Appellant entitled to recover his costs of prosecuting his claim against Respondent.  Such costs are not recoverable,[2] except to the extent that recovery may be allowed in a subsequent proceeding under the Equal Access to Justice Act, 5 U.S.C. §504.

Conclusion

The appeal is sustained with respect to the recovery of the withheld administrative fee plus interest in accordance with the Contract Disputes Act.  Appellant’s claim for recovery of the cost of prosecuting this appeal is denied.

James A. Cohen

Administrative Judge

Chairman

 

I concur:

David I. Brochstein

Administrative Judge

Board Member

 

I concur:

Norman D. Menegat

Administrative Judge

Board Member


[1]All functions, powers and duties of the Post Office Department were transferred to the United States Postal Service by the Postal Reorganization Act, P.L. 91-375, 84 Stat. 719 (1970).

[2]Beckman Construction Co., ASBCA No. 48141, 96-1 BCA ¶28,205; Propper International, ASBCA No. 46334, 95-2 BCA ¶27,884; Marine Hydraulics International, ASBCA No. 46116, 94-3 BCA ¶27,057.