September 8, 1999

Appeal of

J. LEONARD SPODEK

NATIONWIDE POSTAL MANAGEMENT

LEASE AGREEMENT

(Adger, AL – Main Post Office)

PSBCA No. 4223

APPEARANCE FOR APPELLANT:

J. Leonard Spodek

APPEARANCE FOR RESPONDENT:

Samuel J. Schmidt, Esq.

OPINION OF THE BOARD

Appellant, J. Leonard Spodek/Nationwide Postal Management, has appealed the final decision of the contracting officer assessing against Appellant (lessor) $7,240.00, representing the cost incurred by Respondent, the United States Postal Service, in performing certain deferred maintenance items at the Adger, Alabama Post Office.  A hearing was held in Birmingham, Alabama.  Both entitlement and quantum are at issue in this appeal.

FINDINGS OF FACT

1.  In August 1975, Appellant’s predecessor-in-interest leased property to Respondent to be used as the Adger, Alabama Main Post Office.  The lease was for a ten-year term, with four 5-year options.  In 1994, Respondent exercised the third five-year option, extending the lease term to July 31, 2000.  (Appeal File Tab No. (AF) 1, 5).

2.  In June of 1997, Appellant purchased the Adger Post Office property and assumed responsibility as lessor (AF 2).

3.  Paragraph 11 of the lease (PS Form 7449, July 1971) provides, in pertinent part, as follows:

“(a) The Lessor shall, except as otherwise specified herein and except for damages resulting from the act or negligence of Postal Service agents or employees, 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.

* * *

(c) When the need arises for maintenance or repair or for restoration to a condition suitable for the purpose for which leased, the Postal Service shall (except in emergencies) give the Lessor written notice thereof, specifying a time for completion of the work which is reasonable and commensurate with the work required . . . .  If the Lessor . . . fails to prosecute the work with such diligence as will ensure its completion within the time specified in the written notice (or any extension thereof as may be granted at the sole discretion of the Postal Service) or fails to complete the work within said time, the Postal Service shall have the right to perform the work, by contract or otherwise, and withhold the cost thereof from payments due or to become due under this lease . . . “  (AF 1).

4.  As of September 1997, the asphalt in the parking and driveway areas of the post office was severely deteriorated.  It was approximately twenty years old and had never been repaired or replaced.  In addition to numerous potholes and cracked asphalt, there was a large depression in the customer parking area.  On rainy days, ponding in this depression was severe enough that customers could not park in the customer parking area.  The sub-base eroding over time most likely caused the deteriorated condition of the asphalt.  (Transcript pages (Tr.) 63-67, 74-76, 120, 121, 138; AF 6, 48, 49).

            5.  Also as of September 1997, the paint on the exterior surfaces of the post office had deteriorated.  These surfaces had been last painted approximately five and a half years earlier and were chalky and peeling.  Previously painted metal surfaces had rust spots and flaking paint.  In addition, the wooden base of one of the entrance columns was rotted and the brick front of the post office was mildewed.  These surfaces were visible to the public as well as to the customers of the post office.  (Tr. 62, 67-69, 70, 121, 122; AF 48, 49).

            6.  By letter dated September 24, 1997, the contracting officer advised Appellant that it was necessary to repair or replace deteriorated asphalt in the customer parking and driveway areas of the Adger Post Office and that he was responsible for painting all previously painted exterior surfaces which had not been painted for at least five years.  Appellant was further advised that if these items were not corrected within 45 days of Appellant’s receipt of the letter, the Postal Service would have the work accomplished by a third party contractor and charge Appellant with the cost of that effort.  (AF 7).

            7.  Appellant responded by letter dated October 13, 1997, in which he cautioned Respondent against proceeding with the work and stated that he would fulfill his obligations under the lease.  Appellant also stated he was sending a disposable camera so that photographs could be taken of the alleged asphalt condition.  The Postmaster sent Appellant photographs of the various areas at the post office that were in need of repair, including the condition of the exterior of the post office.  Appellant received the photographs in early November 1997.  (Tr. 70, 71; AF 8, 23, 24).

8.  Appellant never began work on the identified maintenance items and, on December 30, 1997, Respondent issued work order No. 47 under an Indefinite Quantity Contract (IQC) in the amount of $6,980.00 to have the work accomplished.  (AF 8, 10, 48, 49).

            9.  The work order was issued under an IQC contract that was awarded in March 1996, based on a price competition (Tr. 114-116; AF 40, 41).

            10.  Under the work order No. 47, the IQC contractor performed the following tasks:

                        1.  Relocated parking barriers as required to accommodate repaving;

                        2.  Saw cut asphalt areas as required to remove crumbling asphalt;

                        3.  Excavated crumbling asphalt areas;

                        4.  Installed a binder course in the excavated areas;

                        5.  Installed a wearing surface over the entire area;

                        6.  Restriped parking lot, including handicap symbol;

                        7.  Pressure washed front of building and front sidewalk;

8. Painted all bollards, light pole and flag pole;

9. Re-painted previously painted exteriors of the front, sides and back of post office (including doors, windows and dock area).  (AF 47).

            11.  The method chosen by the IQC contractor to repair the deteriorated asphalt (saw cutting, replacement of fill and base course and resurfacing the entire asphalt area) was the most cost effective method of repairing the numerous potholes and areas of cracked asphalt that were present in the customer parking and driveway areas of the Adger Post Office.  In fact, resurfacing, as opposed to simply patching each area of deteriorated asphalt, was the only way to correct the depression and ponding condition that existed in the customer parking area.  (Tr. 120, 121, 123-125).

            12.  By final decision dated April 6, 1998, the contracting officer notified Appellant that he was indebted to the Postal Service in the amount of $7,240.00, representing the $6,980.00 cost of the work order, plus $250.00 in administrative costs[1].  Appellant filed a timely appeal of this final decision.  (AF 13, 14).

            12.  By stipulation, the parties agreed that the line item amounts contained in the work order, which were paid by Respondent to the IQC contractor, represent the quantum for each specific item of work performed (Tr. 206).

DECISION

            Respondent argues that the maintenance and repairs undertaken by the Postal Service were necessary and that the lease placed the responsibility on the lessor to carry out such repairs in order to keep the facility in good repair and tenantable condition.  In this regard, Respondent argues that Appellant’s obligation extends to keeping the premises in a condition suitable for which it was leased.  Respondent further argues that it gave Appellant sufficient notice of the need to accomplish the repairs and that, when Appellant failed to do so, it had the right to have the work done and charge Appellant with the cost of the work.  Finally, Respondent argues that the costs incurred in having the work done were reasonable.  Appellant argues that the lease places the responsibility on the Postal Service to paint the exterior of the facility and to perform general housekeeping such as pressure washing mildew off the exterior.  Appellant further argues that the need for asphalt repairs to the parking and driveway areas was caused by Respondent’s use of heavier trucks than the post office was originally designed for.  Finally, Appellant argues that the parking areas and driveways had become obsolete[2] and that, in such a case, Respondent’s only option under the lease was to abate the rent.

            We have found that the asphalt in the customer parking areas and driveways was severely deteriorated and in need of repair.  (Finding of Fact No. (FOF) 4). Similarly, there is no dispute that the exterior of the post office was in need of painting and removal of mildew, and that one of the entrance columns was rotted[3].  (FOF 5). 

The lease between the parties clearly placed the responsibility of maintaining the premises in good repair and tenantable condition on the lessor (FOF 3).  Although the lease did not specifically require exterior painting at five-year intervals (as was the case with respect to interior painting), Appellant’s obligation to keep the facility in good repair and tenantable condition, as well as suitable for the purpose for which it was leased, encompassed the requirement to perform exterior painting and to remove mildew on exterior brick surfaces when conditions required it since these surfaces were visible to the public and postal customers (FOF 5).  Cf. Edward R. and Lorraine Ester, PSBCA No. 1559, 88-2 BCA ¶ 20,573 (Postal Service not allowed to recover for exterior painting because painted surfaces were not visible to postal employees or the public).

Respondent’s letter to Appellant on September 24, 1997, coupled with the postmaster’s action of sending Appellant photographs of the condition of the exterior of the facility in early November, provided Appellant sufficient notice of the deteriorated condition of the exterior (FOF 6, 7).  Thus, Respondent gave Appellant an adequate time in which to accomplish the necessary repairs and, when Appellant failed to do so, Respondent accomplished the work in a reasonable and cost effective manner[4] (FOF 8-11).  All of the repairs were accomplished at a reasonable cost under a contract that was awarded based on a price competition.  See Real Property MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829.

Appellant’s argument that the deteriorated condition of the asphalt was caused by Respondent’s use of heavier trucks than the asphalt was designed for is rejected since Appellant offered no evidence in support of this argument.  A mere allegation of a party does not constitute probative evidence.  Postal Vehicle Supply Service, PSBCA No. 624, 1979 PSBCA Lexis 34 (Oct. 30, 1979).  Appellant’s argument that the parking and driveway areas are obsolete is also rejected.  Appellant likewise offered no evidence to support this argument.  Moreover, the fact that Respondent expanded the employee parking area and installed a return drive does not relieve Appellant of his responsibilities under clause 11 of the lease to maintain the premises.

Accordingly, Respondent may recover from Appellant $6,980.00 – representing the cost of work order No. 47.  However, Respondent offered no proof to support the incurrence or reasonableness of its claim for $250.00 in administrative costs and may not recover this amount from Appellant.

The appeal is sustained to the extent that Respondent may not recover $250.00 in administrative costs from Appellant, but is otherwise denied.

William K. Mahn

Administrative Judge

Board Member

I concur:

James A. Cohen

Administrative Judge

Chairman

I concur:

David I. Brochstein

Administrative Judge

Vice Chairman

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[1]  We note that $6,980 plus $250 equals $7,230 rather than $7,240.

[2]  Appellant does not explain what he means when he refers to the parking areas as “obsolete.”  However, earlier in 1997, the Postal Service had installed, at no cost to the lessor, an expanded concrete employee parking area and return drive at the post office.  The project involved replacing a small portion of the existing asphalt parking area with concrete.  (Tr. 64, 118).  We assume that Appellant believes this action rendered the existing parking and driveway areas obsolete.

[3]  In fact, Appellant conceded that the asphalt was deteriorated and in need of repair and that exterior previously painted surfaces were deteriorated and in need of repainting  (AF 48, 49).  In addition, Appellant has conceded that repair of the rotted entrance column was necessary and accepts responsibility for the cost of this repair.  (Appellant’s reply brief, pg. 2).

[4]   We note that the requirement to pressure wash the brick exterior was not included in the notice provided to Appellant on September 24, 1997 (FOF 6).  However, Appellant received notice of the condition of the brick exterior when he received the photographs sent by the Postmaster (FOF 7).  Appellant has not argued that the work was not necessary or offered evidence that he could have had the work accomplished at a lower cost.  Accordingly, Respondent may recover the cost of that work as well.  See J. Leonard Spodek d/b/a/ Nationwide Postal Management, PSBCA No. 3710, 96-2 BCA ¶ 28,457; M.R. Kaplan, et al., PSBCA Nos. 1147, 1298, 1303, 1310, 88-3 BCA ¶ 20,827 at 105,314.