November 17, 1997
Appeal of
MARY LOU BLOOM
KENNETH D. BLOOM
LEASE AGREEMENT
PSBCA No. 4053
APPEARANCE FOR APPELLANTS:
Mary Lou Bloom
Kenneth D. Bloom
1800 Corte Del Sol
Alamogordo, NM 88310-4719
APPEARANCE FOR RESPONDENT:
Mark Brent Ezersky, Esq.
Burlingame Office
United States Postal Service
577 Airport Blvd., Suite 200
Burlingame, CA 94010-2040
OPINION OF THE BOARD
Appellants, Mary Lou Bloom and Kenneth D. Bloom, have appealed from a contracting officer's decision denying their claim for the cost of repairing damage to a building leased by them to Respondent, United States Postal Service. This appeal is being decided on the record in accordance with the Board's Accelerated Procedure. 39 C.F.R. §§955.12; 955.13. Only entitlement is at issue.
FINDINGS OF FACT
1. Respondent, which was then the Post Office Department, first leased the building used as the Hollywood Station, Ruidoso, New Mexico, no later than January 1964, and may have occupied the premises as early as 1956 (Appeal File Tabs (AF) 22; see also, AF 12, 19, 20). From 1964 until 1979, the then-current lease provisions made the lessor generally responsible for maintenance of the property (AF 22).
2. In February 1988, the building was inspected by Respondent's maintenance supervisor.[1] He found, among other conditions, that mortar joints on the north [rear] wall of the facility were cracked. (AF 17).
3. In December 1988, Respondent and the then-lessor of the property entered into a separate contract for "Architectural Barrier Construction," under which the lessor was to construct or install certain features to make the facility handicapped accessible. As part of that work, the lessor constructed ramps at the front (main entrance) and on the side of the building.[2] In the contract's Special Conditions section, the lessor "waive[d] any right, under the lease or otherwise, to require the Postal Service to restore any areas altered pursuant to this agreement to their former condition." (AF 14).
4. In January 1989, Respondent and the then-owner of the property entered into a lease for the period of January 1989 through January 1994. As a part of that lease, the lessor agreed to repaint the interior and exterior and to replace the floor covering no later than April 15, 1989.[3] The lease also contained a "Maintenance Rider" which made Respondent responsible for "ordinary repairs to, and maintenance of, the demised premises except for those repairs that are specifically made the responsibility of the Lessor in this lease." The Maintenance Rider made the lessor specifically responsible for (among others) repairs to common or joint use areas and “structural repairs.” (AF-13).
5. The 1989-1994 lease also contained a provision allowing Respondent to, among other actions, make alterations to, and erect structures on, the premises. If requested by the lessor prior to the end of the lease term, Respondent was obligated to repair any damage or compensate the lessor for any damage caused by the removal of any such structures or alterations. (Id.).
6. In June 1993, Appellants acquired the property from the Federal Deposit Insurance Corp., which had acquired the property through a foreclosure and public sale in September 1992. At the time Appellants acquired the property, there were cracks in the rear block wall of the building and in a retaining wall located in the rear of the property, some distance from the building. (AF 2, 11, 23, 24; Respondent's Supplement, Exhibit (Resp Exh) 2).
7. In July 1993, Appellants and Respondent entered into a new lease for the property for the period of January 8, 1994, through January 7, 1999, with one three-year renewal option exercisable by Respondent. The lease provided that Respondent could terminate the lease at any time by giving 90 days notice. The premises leased included the building, a platform, parking and maneuvering area, driveway, landscaping and sidewalks. (AF 9).
8. The 1994-1999 lease also contained a Maintenance Rider. The Rider made Respondent "responsible for ordinary repairs to, and maintenance of the demised premises except for those repairs that are specifically made the responsibility of the Lessor in this lease," and provided that Respondent's maintenance responsibilities "will be fulfilled at such time and in such manner as the Postal Service considers necessary to keep the demised premises in proper condition." The Rider made the lessor specifically responsible for:
"(1) Repairs to all common or joint use areas . . . .
(2) All repairs to structural elements and all parts of the roof system. The term 'structural elements' as used in this clause is limited to the foundation, bearing walls, floors (not including floor covering), and column supports. . . .”
* * *
(6) Repairs resulting from fire or other casualties, unless such casualties were caused by the negligence of employees or agents of the Postal Service. . . ." (Id.).
9. The lease also contained a provision dealing with alterations to the property. The lease gave Respondent the right to make alterations, attach fixtures and erect structures or additions on the property, provided the alterations or structures were not detrimental to the rights of other tenants on the property. The lease provided that such alterations remained the property of the Postal Service. Prior to the expiration or termination of the lease, Respondent was given the option of either removing the alterations and restoring the property "to as good condition as that existing at the time of entering . . . the lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the Postal Service has no control excepted," or allowing the alterations to become the property of the lessor, in which case restoration rights of the lessor were waived. (Id.).
10. Within a year of purchasing the property, Appellants removed a large tree (approximately 1˝ feet in diameter at ground level) that was growing at the rear of the property, immediately adjacent to the northeast corner of the building foundation. The stump (cut close to the ground) and the roots of the tree remained in place. (Appellants' rebuttal evidence, Exhibits (Appnt Exh) B, C1, C2; contra Resp Exh 2).
11. In 1994, Respondent had the entire interior of the building painted. In the summer of 1995, Respondent had the exterior of the building painted. Exterior painting included the front of the building (other than the windows and brick areas), the rear, and one side wall. The other side wall, which faced and was very close to an adjacent building, was not painted. (Resp Exh 1, 2; Appnt Exh A1, C1).
12. The front of the building faced a parking lot that was shared with the adjacent building -- a market/convenience store -- not owned by Appellants. There were parking spaces in front of both buildings, but no spaces were reserved specifically for the patrons of either establishment. Therefore, patrons could, and did, park in front of either. (Resp Exh 2, 3(A-1); Appnt Exh B).
13. The parking lot in front of both buildings was repaved at some time between 1982 and 1992 by the previous owner. As of a time no later than September 1996, the parking lot in front of the post office showed signs of deterioration and was in need of repair. In a number of relatively small areas, the top surface had worn away, leaving the base exposed and a small number of potholes. A number of areas also showed signs of cracking, although in those areas the top surface remained in place. (Appnt Exh A1, A2, B; Resp Exh 3 (A2-A8); AF 5).
14. By letter dated September 13, 1996, Appellants filed a claim alleging that Respondent had failed to perform maintenance that was Respondent's responsibility under the terms of the lease and requesting that Respondent either perform the maintenance or compensate Appellants for the costs of having it performed. The items claimed by Appellants to have been neglected by Respondent and for which Respondent was alleged to be liable were the following:
Damage to masonry in the rear wall and the northeast corner of the building ($575)[4].
Damage to a retaining wall in the loading dock/maneuvering area of the property ($2,835).
Damage to the parking lot asphalt paving ($4,645).
Exterior painting -- Paint those areas not recently painted, and repaint those areas which were painted without having first been properly prepared for painting ($2,500).
Interior painting -- repaint all interior walls, ceilings and other areas in need of a fresh coat of paint ($800).
Interior flooring -- Remove and replace worn out flooring.[5]
Exterior grounds -- Remove debris, weeds, and small saplings that are further damaging the retaining wall ($300). (AF 5).
15. By letter dated November 5, 1996, the contracting officer issued a final decision denying Appellants' September 13, 1996 claim. The contracting officer denied the portion of the claim related to paving on the basis that the condition was the result of normal wear and tear. The exterior painting portion of the claim was denied on the basis that it had just been done and the interior painting and flooring portions were denied on the basis that repainting and flooring replacement were not necessary. Finally, the contracting officer noted that Appellants were responsible under the lease for structural repairs, apparently a reference to the claim for repairs to the rear building wall and the retaining wall. (AF 3).
16. On or about November 7, 1996, Appellants received a notification from Respondent that it was exercising its right to terminate the lease, effective February 4, 1997. Respondent ceased operations at the facility on or about November 13, 1996. (AF 2 (letter dated December 1, 1996, and exhibits thereto)).
17. By letter dated December 1, 1996, Appellants informed the contracting officer that a number of items of Postal Service equipment still needed to be removed -- including the "handicap ramp" installed on the side of the building to allow Postal Service personnel to access the loading dock. In a reply dated December 29, 1996, the contracting officer declined to have the ramp removed, stating that it had been installed as a result of a court order, but agreed to remove the other items. (AF 2).
18. In February 1997, Appellants filed a timely appeal of the contracting officer's November 5, 1996 final decision. In their notice of appeal, Appellants also reiterated their demand to have the ramp removed, although it had not been addressed in the November 5 final decision.[6] (AF 2).
DECISION
Appellants claim the right to recover for various items of maintenance and repair that they allege were Respondent's obligations under the lease and which were not performed. Further, Appellants allege that, with respect to maintenance and repair items that were their responsibility, Respondent is liable for failing to advise them of the need for repairs. The burden is on Appellants to prove, by a preponderance of the evidence, their entitlement as to each individual item of the claim. T.W. Cole, PSBCA No. 3076, 92-3 BCA ¶ 25,091 and cases cited therein.
Cracks in Rear Wall
Appellants argue that the cracks in the rear wall of the building were caused by the roots of a tree that Respondent negligently allowed to grow near the affected corner of the building. Appellants contend that the tree roots grew under the foundation and exerted upward pressure, causing the damage. Respondent argues that the damage was caused by settlement of the building and that, in any event, Appellants are responsible for repairs to the wall under the terms of the Maintenance Rider inasmuch as the wall is a "structural element."
We agree with Respondent that the building wall was a structural element, as that term was used in the Maintenance Rider, and was, therefore, an item for which Appellants were specifically responsible. Appellants' argument appears to rely on the provisions making Respondent liable for repairs of "casualties" caused by the negligence of Respondent's employees. In this instance, however, Appellants have failed to prove, by a preponderance of the evidence, that the conduct of Respondent's employees caused the "casualty" at issue.
The first step in such a proof is establishing the cause of the damage. The evidence on the actual cause of the damage consists of two sworn statements by lay persons with no established relevant experience or qualifications, one expressing his opinion that the damage was caused by the tree roots and the other opining that the cause was normal settling of the building. We are not in a position to evaluate the credibility of either of these opinions, and in this record submission we are not persuaded that the damage was caused by the tree roots. Further, the photographs in evidence, while illustrating the damage, do not, by themselves, provide a basis for concluding that one alleged cause of damage was more likely than the other. Accordingly, Appellants have not met their burden of proof with respect to this claim item.
Retaining Wall Cracks
Appellants argue that the cracks in the retaining wall were caused by a small sapling that Respondent's employees negligently allowed to grow adjacent to the wall. Respondent argues primarily that the retaining wall is also a structural element, as that term is used in the Maintenance Rider, and that Appellants are therefore responsible for repairs. In that context, Respondent argues that the wall bears the load of thousands of pounds of soil behind it and that without the presence of the wall, the facility would not be structurally stable.
The Maintenance Rider expressly limits the definition of "structural element" to the "foundation, bearing walls, floors . . . and column supports." (Finding 8). This definition suggests that structural elements are limited to items that are, as a minimum, part of the building and would not include a retaining wall elsewhere on the property. Respondent argues that the retaining wall is a "bearing wall" in that it "bears" a substantial load and that its failure would affect the structural stability of the building. Even if we agreed with Respondent that the definition of "bearing wall" would encompass a retaining wall with those characteristics, the evidence does not support Respondent's characterization of the wall. That characterization appears only in Respondent's brief. There is no evidence in the record that would allow us to find either the load on the wall or the effects that would result from its failure. Accordingly, Respondent has not shown that the retaining wall was a structural element, one of the items for which Appellants were specifically responsible. Since the Maintenance Rider makes Appellants responsible only for repairs to specifically enumerated items, Respondent remained responsible for the wall under its general maintenance and repair obligations. Therefore, Respondent is liable for the cost of repairing the retaining wall.
Parking Lot Pavement Repairs
Appellants claim the cost of making repairs to the parking lot, which had deteriorated over time. The contracting officer denied this part of the claim on the basis that the damage was the result of normal wear and tear. Appellants disagree and argue that there is no wear-and-tear exception to Respondent's obligation to perform maintenance. In its brief, Respondent argues only that the parking lot is a common or joint use area and is, therefore, Appellants' responsibility under the language of the Maintenance Rider. Appellants argue that the parking lot is not a common or joint-use area, as that term is used in the Maintenance Rider.
We agree with Appellants. The Maintenance Rider makes the Postal Service responsible for "ordinary repairs to and maintenance of" the premises -- which included the parking area (Finding 7). As argued by Appellants, the language excepts Respondent only in certain specific conditions, none of which is repairs or maintenance made necessary by ordinary wear and tear. The only "wear and tear" exception in the lease related to Respondent's obligations in the event it opted to remove alterations at the close of the lease (Finding 9), but did not relate to Respondent's basic maintenance and repair obligations.
As also argued by Appellants, the parking lot in front of the post office is not a "common or joint use area" as that term is used in the portion of the Maintenance Rider specifying Appellants' area of responsibility. The parking lot in front of the post office was part of the "demised premises" that had been leased exclusively to Respondent, was under its control, did not remain within the control of the lessor, and was not intended for the mutual use of any other tenant. See, generally, Friedman on Leases, 3rd Ed. 1990, §10.103a. Although the post office parking lot and the lot belonging to the adjacent store (which had a different owner) were used by patrons of both establishments, Respondent could have exercised its right to exclusive use of its parking lot, a right it had under the lease. Therefore, the parking lot was not a common area and its maintenance was not Appellants' responsibility.
Accordingly, we conclude that, under the Maintenance Rider, Respondent was responsible for maintenance of the parking lot and is liable for necessary repairs.
Exterior Painting
Appellants argue that, although the exterior of the building (other than the wall adjacent to the neighboring store) was painted, the job was not done properly and needed to be redone. Respondent argues generally that it need only restore the building to the same condition as that existing at the time the parties entered into the last lease, reasonable and ordinary wear and tear excepted, and that it has done so.
The evidence shows that Respondent had the exterior of the building painted in 1995. Although Appellants challenge the quality of the job, they have introduced insufficient evidence to show that at the time the lease terminated, the exterior was in need of repainting. There are a number of photographs in evidence, some of which show the rear wall of the building apparently in need of painting and others showing the rear wall in an acceptable (although not perfect) condition. However, the evidence does not demonstrate that the photographs showing the wall in need of painting were taken at or about the time the lease terminated, rather than at a time before the building was painted in 1995. Based on this evidence (or lack thereof), we conclude that Appellants have not shown that exterior painting was necessary to put the building in proper condition as of the time the lease terminated.
Because of this result, we need not directly address Respondent's "restoration" argument. However, we note that that language (Finding 9) applies only where Respondent has made alterations to the building and chooses to remove those alterations at the termination of the lease. It does not apply to Respondent's general maintenance obligation under the Maintenance Rider.
Interior Painting
The evidence is similarly inconclusive with respect to the need for interior painting at the time the lease terminated. Respondent argues that the interior was painted in 1994 and that the condition of the building at the end of the lease was the same as at the beginning of the last lease, ordinary wear and tear excepted. Appellants argue only that the interior of the building was generally in need of painting. However, there is virtually no evidence from which we can determine whether or not the interior of the building required painting as part of Respondent's maintenance obligation at the time the lease terminated. Accordingly, Appellants have failed to fulfill their burden of proof with respect to this portion of their claim.
Floor Covering
Appellants have offered no evidence in support of their claim that the flooring was worn through in some places and in need of replacement at about the time the lease terminated. Accordingly, Appellants have failed to fulfill their burden of proof with respect to this portion of their claim.[7]
Outside Grounds Maintenance
In their claim and their Complaint, Appellants demanded the cost of removing grass, weeds, saplings, and debris from the rear of the property. The only evidence related to this claim item are several photographs showing what appear to be tall grass and weeds and some bushes at the rear of the property. The photographs do not show anything that the Board can identify as debris, and the parties did not address this item in their briefs. Based on the meager record presented, the Board cannot conclude that this situation represents a breach by Respondent of its obligation to maintain the premises. Accordingly, Appellants have failed to carry their burden of proof with respect to this portion of the claim.
Removal of Handicap Access Ramp
Appellants argue that Respondent is obligated to remove the ramp installed on the side of the building. They argue that it was installed in violation of the provision in their lease regarding alterations (Finding 9) in that it partially blocked access to the rear of the property and was, therefore, detrimental to the rights of other tenants. Respondent argues that the ramp was installed before Appellants became owners of the building and that the previous owner specifically waived any right under the lease then in effect that he might have had to have the ramp removed (Findings 3 and 4).
We agree with Respondent. The ramp was installed before Appellants' last lease came into effect and, therefore, was not subject to the conditions of the alterations clause of that lease with regard to the other tenants.[8] In any event, as argued by Respondent, the owner of the property when the ramp was installed expressly waived his right to have the ramp removed at the end of the lease period. Therefore, Appellants do not have the right to compensation for the cost of removing the ramp.
Summary
Respondent is liable for the reasonable, actual costs of repairing the parking lot and the retaining wall. Accordingly, to that extent Appellants' appeal is sustained, but is otherwise denied. The matter is remanded to the parties for the negotiation of quantum.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
[1] For the period of 1979 to 1989, the record reflects that leases were in effect but does not contain the lease provisions. Therefore, for that period the record does not indicate which party had general maintenance responsibility. (AF 20).
[2] Construction of ramps was not one of the items specifically listed in the Architectural Barriers contract to be accomplished by the lessor. However, ramps did not exist prior to that time (AF 14(Survey), 17), and the parties have proceeded on the assumption that the ramps were constructed at that time. (Respondent's brief; Appellants' reply brief).
[3] The record does not indicate whether this work was actually accomplished.
[4] Specific dollar values claimed for each of the items appeared for the first time in Appellants' Complaint.
[5] No dollar value specified. This item was not mentioned in Appellants' Complaint.
[6] In their Complaint, Appellants valued this item at $575.
[7] This item does not include repairs allegedly necessary to the wooden subflooring, which item is one of the two subjects of Appellants' claim in PSBCA No. 4133.
[8] Further, the record does not show that there were other tenants.