September 26, 1997
Appeal of
J. LEONARD SPODEK d/b/a NATIONWIDE POSTAL MANAGEMENT
LEASE AGREEMENT
PSBCA Nos. 3833 and 3941
APPEARANCE FOR APPELLANT:
J. Leonard Spodek
APPEARANCE FOR RESPONDENT:
Patrice R. Dickey, Esq.
OPINION OF THE BOARD
Appellant, J. Leonard Spodek d/b/a Nationwide Postal Management, leases property to Respondent, United States Postal Service, which Respondent uses as a post office. Appellant performed repairs to the post office parking lot and submitted a claim to Respondent for a portion of the cost, contending Respondent contributed to the damage. The contracting officer denied Appellant’s claim. Respondent subsequently contracted for additional paving repairs, and, in a separate contracting officer’s final decision, asserted a claim against Appellant, contending that the additional repairs were the lessor’s responsibility under the lease. Appellant appealed both of the final decisions, and the two appeals were consolidated for decision.
At the election of the parties, these appeals were submitted on the record without an oral hearing. 39 C.F.R. §955.12. Both parties submitted additional evidence and briefs. Only entitlement is in issue.
FINDINGS OF FACT
1. Respondent leases the Greenville, Texas Post Office from Appellant. The lease was originally entered into in 1970 by the parties’ predecessors,[1] and Appellant acquired the property sometime before October 1992. (Appeal File, Tab (“AF”) B; Supplemental Appeal File docketed September 22, 1995, Tab (“SAF”) K, N).
2. The maintenance provision of the lease provides as follows:
“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. . . . “ (AF B-4, POD Form 1449, May 1966, Paragraph 7).
3. By January 1993, the paved parking lots at the post office were significantly deteriorated. On January 18, 1993, the postmaster advised Appellant of the deteriorated condition of the parking lots and asked him to make the necessary repairs. (Supplemental Appeal File, Tab (“SAF”) N). Appellant did not make repairs, and, as the condition of the pavement worsened, the postmaster made additional written pleas to Appellant to repair the parking lots (SAF K, L, M; July 5, 1996 Declaration of Charles W. Axtell (“Axtell Decl.”) ¶ 3; Deposition of Charles Axtell, Page (“Axtell Dep.”) 14-15).
4. By September 1994, there were a large number of potholes and significant cracking throughout the parking lots and widespread sections of interconnected “alligator” cracking (SAF D and Exhibit 1 thereto; see SAF G). Weeds were visible in cracks in the pavement in some areas, although most of the weeds grew in cracks in the sidewalk, and none of the areas of potholes and broken pavement were in the vicinity of weed growth in the parking lots (Appellant’s Additional Documentary Evidence filed September 22, 1995; Axtell Dep. 12). Oil stains were visible where cars had leaked oil in parking spaces, but none of the oil stains were shown to be associated with potholes, broken pavement or significant cracking of the pavement. (Appellant’s Additional Documentary Evidence filed September 22, 1995; SAF G). The pavement was about 25 years old and showed the results of extensive patching in the past. It was reaching the maximum life expectancy for such a parking lot in Greenville. (SAF D; see Axtell Dep. 15). The potholes -- some several feet across and penetrating into the base -- and cracks were safety hazards for employees and drivers who had to walk across the parking lots, especially at night (SAF K). (See SAF D, Exhibit 1, Photographs; SAF G, Photographs; Axtell Dep. 14-15; Axtell Decl. ¶ 3).
5. Because Appellant did not repair the pavement, on September 1, 1994, the postmaster referred the matter to Mr. Terry Porter, an architect employed by Respondent (SAF J; Axtell Decl. ¶ 4). On September 8, 1994, Mr. Porter and a contract architect visited the Greenville Post Office to inspect the paving and take photographs. They confirmed the deteriorated condition of the pavement, and on September 21, 1994, Mr. Porter wrote to Appellant, advising that the pavement was in need of repair and, in his opinion, replacement. Mr. Porter pointed out that Appellant had done nothing to correct the condition notwithstanding the many letters Respondent had sent to Appellant and informed Appellant that Respondent intended to take immediate action to have the repairs accomplished by contract and recover the costs from rent. (SAF I).
6. In a letter dated November 9, 1994, Appellant objected to Respondent taking any action to repair the parking lots and advised Mr. Porter that Appellant was arranging for repairs. Appellant blamed the deterioration of the parking lots on Respondent’s failure to maintain the pavement properly, including controlling weeds encroaching in paved areas. (Attachment to Respondent’s Supplemental Brief).
7. On November 9, 1994, North East Texas Asphalt & Construction prepared an estimate to perform paving repairs for Appellant at the Greenville Post Office. For a price of $5,780, North East Texas offered to patch all holes and low areas and replace base where needed on the back and side lots[2] ($2,800) and apply two coats of sealer to the entire lot and stripe all parking areas ($2,980). (AF C-6).
8. By letter dated December 21, 1994, Appellant advised Respondent that he had entered into a contract with North East Texas Asphalt & Construction to perform the paving repairs. Appellant provided a copy of that company’s November 9 estimate signed by Appellant on December 7, 1994, showing Appellant’s acceptance of the offer (AF C-6). Appellant requested that Respondent pay one-half the estimated cost to repair the paving, contending that it was Respondent’s poor maintenance that caused the damage. Appellant claimed the full cost of seal coating, asserting that it was Respondent’s duty under the lease to seal the lot. The total claim was for $4,380 (AF C-4).
9. It was Respondent’s practice, at least through 1995, to perform housekeeping of the parking lots, consisting of sweeping, policing, spraying weeds and putting down material to absorb any oil leaks, on an as-needed basis, using products purchased at a local discount store (Axtell Dep. 7, 9-12, 16). Respondent never applied any sealer to the parking lot (Axtell Dep. 10-11).
10. Preventive maintenance for asphalt parking lots, as recommended by the Asphalt Institute, would include regular cleaning, weed control and occasional resealing of the surface to prevent water penetration below the paving (Exhibit A to Appellant’s Answer to Respondent’s Answer and Counterclaim).
11. In March and April 1995, Respondent’s contract architect developed plans and specifications for use in soliciting offers for performance of pavement repairs at Greenville, with the architect’s total project fee amounting to $5,754. The solicitation’s scope of work called for repairs only to a 100' x 85' section at the rear of the building at the south end of the employee parking and truck maneuvering areas. For the western 25 feet of the repair area, the solicitation called for removal of the asphalt and base to 8 inches and replacement with a new base of crushed rock. Then, the entire 100' x 85' repair area was to receive a 1 ½ inch overlay of new asphalt. (SAF D, Exhibit 2, Sheet A1).
12. Respondent issued the solicitation, with bids due on May 23, 1995 (Supplemental Appeal File docketed April 24, 1996, Tab (“SAF II”) C), and sent a copy to Appellant, which he received on May 1. On May 2, 1995, Appellant wrote to the contracting officer and advised that he had already completed repairs to the Greenville parking lots and repeated his demand that Respondent pay $4,380 as its share of his repair costs (AF C-2).
13. At some time before May 2, 1995, North East Texas Asphalt & Construction had performed repair work on the parking lots. The company patched some spots, and there was some improvement to the areas they worked on, but this work did not bring the paving to the level desired by Respondent. The work was not in compliance with the plans and specifications prepared by Respondent’s architect, was of questionable workmanship and was not a long-term solution for the paving deterioration. (Axtell Decl. ¶ 5; Axtell Dep. 13-16; SAF D[3] ¶¶ 6, 8).
14. In a final decision dated May 11, 1995, the contracting officer denied Appellant’s claim for $4,380, contending that all of the work set forth in North East Texas Asphalt’s contract was Appellant’s responsibility under the lease. The contracting officer did not mention that Respondent considered Appellant’s repair work inadequate and that Respondent was continuing its procurement of paving work for Greenville notwithstanding Appellant’s statements that he had already completed paving repairs. (AF A-1). Appellant’s timely appeal was docketed as PSBCA No. 3833 (AF C-1).
15. On May 24, 1995, without further notice to Appellant, Respondent awarded a contract in the amount of $12,650 to Hutson Construction Co., Inc., to perform the pavement repairs described in the solicitation. Hutson’s bid had been the lowest of the six bids received by Respondent in response to the solicitation. (SAF II A, D, E).
16. At the May 31, 1995 pre-construction conference with Hutson, Respondent expanded the work to be done, and, by modification on June 12, 1995, again without notice to Appellant, substantially increased the work and areas to be addressed by Hutson’s contract. The price was increased by $20,357.70, raising the total contract price to $33,007.70. (SAF II B; Attachment to Respondent’s Supplemental Brief; October 16, 1995 letter from J. Donald Geddie).
17. Hutson completed the repair work, as modified, and final payment in the total amount of $33,007.70 was authorized by the contracting officer on July 21, 1995 (SAF II F).
18. In a January 9, 1996 final decision, the contracting officer determined that Appellant was liable for costs relating to the pavement repairs Respondent accomplished totaling $32,896.67, consisting of a portion of the cost of the Hutson contract ($27,142.70[4]) plus the architect’s fees of $5,754. The letter also asserted Respondent’s claim for 10% interest. (Exhibit A to Respondent’s Supplemental Brief). Appellant’s timely appeal from that final decision was docketed as PSBCA No. 3941.
DECISION
Appellant’s Claim -- PSBCA No. 3833
Appellant argues that he is entitled to recover one-half the amount he paid for repair of the potholes in the parking lot because, according to Appellant, Respondent failed to maintain the lots adequately by allowing weeds to grow in cracks in the pavement and not properly treating oil leaks from parked cars. He alleges that these omissions caused the deterioration of the pavement. Appellant also argues that good preventive maintenance practice would have required Respondent to seal coat the parking lots occasionally, and that Respondent is thus liable for the seal coat applied by North East Texas Asphalt.
Respondent argues that the deterioration of the pavement was not shown to have resulted from its negligence or failure to perform any duty under the lease. Respondent contends that it was Appellant’s failure to maintain the pavement properly, including regular seal coating, that led to its deterioration.
Appellant’s responsibility under the lease to maintain the parking lots in good repair and tenantable condition (Finding 2) includes performing the repair work shown in North East Texas Asphalt’s estimate, unless the damage addressed by the repairs arose from the act or negligence of Respondent’s employees. See Camden Securities Co., PSBCA Nos. 1266, 1325, 86-1 BCA ¶ 18,519 at 93,008. Respondent’s alleged failure to maintain the parking lots is the only conduct identified by Appellant as a basis for Respondent’s liability for the damage, but Appellant has not shown that Respondent breached any duty it owed to Appellant or that there was a connection between Respondent’s housekeeping practices and the damage to the parking lot. While there were some weeds in cracks in the pavement and oil stains in parking spaces, none of these areas were shown to have been near the potholes and broken pavement that required repair (Finding 4). Thus, Appellant has not shown that the repairs performed by North East Texas Asphalt were of damage that arose from the act or negligence of Respondent’s employees, and therefore, Respondent is not liable for their cost.
Appellant has not shown seal coating of the parking lots to have been Respondent’s duty under the lease. While Appellant correctly points out that, except as necessary to keep the premises in good repair and tenantable condition, he is not required by the lease to perform preventive maintenance, see, e.g., Real Properties MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829 at 138,757; J. Leonard Spodek, Nationwide Postal Management, PSBCA No. 3530, 95-1 BCA ¶ 27,450, his argument that therefore it must be Respondent’s duty to do so is rejected. It is the lease that defines Respondent’s duties, and there is nothing in the lease that requires Respondent to perform preventive maintenance such as seal coating parking lots. Thus, Respondent is not obligated to reimburse Appellant when he performs preventive maintenance and is not liable for the cost of seal coating the parking lot.
Respondent’s Claim -- PSBCA No. 3941
Arguments of the Parties
Respondent argues that the repairs it contracted with Hutson to perform were necessary because Appellant’s repairs were inadequate and the pavement remained below the standards of maintenance required of Appellant by the lease. It contends its costs were reasonable and that, except for the addition of concrete paving in certain places, the work was not an improvement. Respondent claims the right to deduct from rent the costs of the Hutson paving work, less the cost for what it concedes was an improvement, and that it is entitled to recover its architect’s fees associated with performing the work plus interest until the total amount of its claim is recovered.
Appellant argues that Respondent may not collect for the Hutson work, because at the time that work was performed, Appellant had already caused the parking lot to be repaired and Respondent ignored his objections to Respondent performing further paving work. He also claims he received insufficient notice that Respondent considered North East Texas Asphalt’s work inadequate and that Respondent intended to proceed with its solicitation for further repairs. Appellant also argues that much of the work performed by Hutson was an improvement to the parking lot that is not his responsibility.
Where a lessor has failed to make reasonable and necessary repairs in order to maintain the leased premises in good repair and tenantable condition, the Postal Service may perform such repairs and deduct their reasonable cost from the rent. Massapequa Partners, PSBCA No. 3817, 97-2 BCA ¶ 29,058 at 144,632; M. R. Kaplan (Penner Financial Group), et al., PSBCA Nos. 1147, et al., 87-3 BCA ¶ 19,969; Edward R. and Lorraine Ester, PSBCA No. 1559, 88-2 BCA ¶ 20,573 at 104,000. However, it is Respondent’s burden to demonstrate that the repairs to the parking lots were necessary, that Appellant breached the lease terms by failing to make them and that Respondent’s cost of performing the work was reasonable. See Real Properties MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829 at 138,756; M.R. Kaplan, et al., PSBCA Nos. 1147, et al., 88‑3 BCA ¶ 20,827 at 105,318.
Respondent has failed to provide sufficient evidence of the condition of the parking lots after North East Texas Asphalt’s work was completed to meet its burden of demonstrating that its subsequent work under the Hutson contract was necessary to restore the parking lots to good repair and tenantable condition. Respondent conceded that Appellant’s efforts improved the spots where the work was done (Finding 13). That Respondent wanted more extensive work done and that Appellant’s efforts did not comply with the plans and specifications Respondent’s architect developed (Finding 13) do not demonstrate that Appellant’s work was inadequate to restore the parking lots to the standard of good repair and tenantable condition required of Appellant by the maintenance clause of the lease. Mr. Porter’s assessment of North East Texas Asphalt’s work was directed to the quality and durability of the repairs (Finding 13). Respondent did not offer evidence to show that significant dangerous potholes and cracking remained or that the parking lots contained any other defects rendering them not in good repair and tenantable condition after North East Texas Asphalt had completed its work.
Appellant’s duty under the contract is to maintain the parking lots in good repair and tenantable condition, and he is not obliged to do all the work Respondent would like performed at the post office if that work exceeds the standard of lessor maintenance required by the lease. While Appellant’s repair work may have been less than Respondent wanted, Respondent has not shown that the work done by North East Texas Asphalt failed to restore the lots to the standard required by the lease. Accordingly, Respondent may not recover its costs of repairs.
Conclusion
The appeal of PSBCA No. 3833 is denied, and PSBCA No. 3941 is sustained.
Norman D. Menegat
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
[1] Respondent’s predecessor was the Post Office Department. Pursuant to the Postal Reorganization Act, P.L. 91-375, 84 Stat. 719 (1970), all the functions, powers and duties of the Post Office Department were transferred to the United States Postal Service, and the Post Office Department was abolished.
[2] The Greenville Post Office has three paved parking lots: a customer parking lot in front of the building, a parking lot on the north side of the building used for Postal Service vehicles, and an employee parking and truck maneuvering area at the rear of the building where the loading docks are located (SAF G). The customer parking lot had oil stains but not the potholes and cracking of the other lots (Appellant’s Additional Documentary Evidence filed September 22, 1995).
[3] Tab D of the Supplemental Appeal File contains a Declaration of Terry Porter dated September 20, 1995. In paragraph 6, Mr. Porter describes the condition of the paving after North East Texas Asphalt performed its work, but he attributes his knowledge of the condition to his visit on September 8, 1994, a date well before Appellant’s contractor performed any work. Respondent filed an amended declaration, dated October 17, 1995, in which the date of Mr. Porter’s visit is stated to be May 31, 1995. We have accepted the revised version as representing the correct date of Mr. Porter’s visit and that the observations reported in his Declaration occurred on May 31, 1995, after North East Texas Asphalt completed its work. References in this Opinion to SAF D are to the declaration with the corrected date plus the attachments that accompanied the original declaration in Supplemental Appeal File Tab D. We do not accept, however, the photographs accompanying the declaration and the comments written on them as descriptive of the conditions after North East Texas Asphalt performed its work. The photographs bear the camera-imprinted date of September 8, 1994, the date of Mr. Porter’s earlier visit to the site. These photographs are obviously of the pre-repair conditions and are not evidence of the work done at Appellant’s direction. Photographs Respondent allegedly took on May 31, 1995, were not produced, and Respondent alleges they were lost in processing (See October 16, 1995 letter from J. Donald Geddie).
[4] Respondent’s architect concluded that of the total price of the Hutson contract, $5,865 for replacing an area of asphalt paving with concrete was an improvement. This left, in his view, $27,142.70 as the lessor’s responsibility (Attachment to Respondent’s Supplemental Brief).