Appeal of SJ POSTAL LIMITED PARTNERSHIP

September 10, 1997

Appeal of

SJ POSTAL LIMITED PARTNERSHIP

Under Lease Agreement

PSBCA No. 3811

APPEARANCE FOR APPELLANT:

Alvin S. Nathanson, Esq.

APPEARANCE FOR RESPONDENT:

Robert E. O’Connell, Esq.

OPINION OF THE BOARD ON MOTION FOR RECONSIDERATION

Appellant, SJ Postal Limited Partnership, has filed a limited motion for reconsideration of the Board's Opinion in SJ Postal Limited Partnership, PSBCA No. 3811, 96-2 BCA ¶ 28,607. In that Opinion, the Board held that, under the terms of the lease, Respondent was liable for the payment of assessments for flood control services made against the leased facility in San Jose, California. Appellant seeks reconsideration of that part of the Opinion that limited Appellant's recovery to the flood control fees not paid by Respondent during the period Appellant was the owner of the property in question -- i.e., after the transfer of the property from its original owners to Appellant in 1994.

Appellant argues that in the transfer of the property there was no reservation by the original owners of any rights to pursue claims against Respondent. Further, Appellant argues that all rights of the original owners under the lease were similarly transferred to it. Therefore, Appellant contends that as the assignee under the lease, it succeeded to all the rights and interests of, and that it stands in the same position as, the assignors. As a result, Appellant contends it can recover the same damages from the Postal Service that the original owners could have recovered had they brought this action.

In reply, Respondent makes two primary arguments. Respondent argues first that the record does not show that, in the course of the transfer, the previous owners assigned to Appellant their right to recover damages suffered by virtue of Respondent's partial non-payment of the real estate taxes. Second, Respondent argues that, even accepting Appellant's general proposition that all of the assignors' rights were transferred to Appellant, Appellant may not recover because Respondent owed nothing to the assignors at the time of transfer.

Contrary to Appellant's position, the assignment of a Postal Service lease does not automatically transfer to the assignee the right to receive rents that may have accrued but were unpaid at the time of transfer. Rather, the assignor retains the right to recover such rents unless such right is expressly transferred to the assignee. See, Ginsberg v. Austin, 968 F.2d 1198 (Fed. Cir. 1992). Therefore, what we must consider is whether the rights transferred to Appellant in connection with the assignment of the lease included the right to receive rents, if any, that were due but unpaid at the time of the transfer.^{^[1]}

As noted by Appellant in its motion, at the time of the property transfer, Postal Service Form 7461, "Certificate of Transfer of Title to Leased Property,"^{^[2]} was executed by both Appellant and the original owners and was provided to Respondent. In relevant part, the Certificate of Transfer recited that the property had been,

". . .sold and transferred, with all the rights, rents, and easements thereunto belonging or appertaining and that TITLE therefor passed to [Appellant] . . . and that the said lease for the premises herein described has been duly assigned to [Appellant], and that all rents for the said premises which become due from and after the first day of the first month thereafter following the date of execution of this instrument shall be paid to [Appellant]."

We do not read this language to state that there had been an express transfer of the right under the lease to collect rent that allegedly remained unpaid prior to the date of the transfer. Further, Appellant has not provided any other evidence to show that such a transfer occurred. Accordingly, under Ginsberg, if the right to recover the pre-transfer flood control fees existed, the previous owners retained that right to the exclusion of Appellant. Appellant, therefore, lacks standing under the Contract Disputes Act to seek recovery of flood control fees unpaid during the time preceding its ownership of the property. Therefore, the Board's original Opinion, although couched in different terms, was correct insofar as it limited Appellant's recovery to the period after it acquired the property.

Appellant's limited motion for reconsideration is denied.

David I. Brochstein

Administrative Judge

Vice Chairman

I concur:

James A. Cohen

Administrative Judge

Chairman

I concur:

William K. Mahn

Administrative Judge

Board Member

^{^[1]} Under the Tax Clause Rider, the lessor was to receive reimbursement of general real estate taxes as "additional rent." (Opinion of the Board, Finding 3). Therefore, any claim for the unpaid flood control fees, which were part of general real estate taxes, would be a claim for accrued but unpaid rent.