December 28, 1999
Appeal of
J. LEONARD SPODEK
NATIONWIDE POSTAL MANAGEMENT
LEASE AGREEMENT
(Colony, KS Post Office)
PSBCA No. 4228
APPEARANCE FOR APPELLANT:
J. Leonard Spodek
APPEARANCE FOR RESPONDENT:
Gary Shapiro, Esq.
OPINION ON MOTION FOR SUMMARY JUDGMENT
Appellant, J. Leonard Spodek, has appealed from a decision by the contracting officer assessing Appellant $9,660.17 for repairs to the Colony, Kansas Post Office, which he leased to Respondent, United States Postal Service. Respondent has filed a motion for summary judgment or, in the alternative, for partial summary judgment. The following findings of fact are made for the purpose of deciding Respondent's motion.
FINDINGS OF FACT
1. Respondent leased the building housing the Colony, Kansas Post Office from Appellant for a term beginning July 9, 1992, and ending July 8, 1997, at an annual rental of $5,268. The lease also contained a single five-year renewal option at an annual rental of $5,928, which was exercised by Respondent in 1996, and extended the lease term to July 8, 2002. (Appeal File Tab (AF) 26).
2. Under the lease, the lessor (Appellant) was responsible for maintaining the premises in "good repair and tenantable condition," except for damage resulting from the negligence of Postal Service agents or employees (AF 26).
3. Under the lease, when maintenance or repairs that were the lessor's responsibility were needed, Respondent was to provide notice to the lessor and the lessor's mortgagee, setting a reasonable completion time for the work. If the repairs were not accomplished within that time, Respondent had the right to have the work accomplished by contract and to withhold the cost thereof (including interest and/or administrative costs) from payments otherwise due under the lease. (AF 26).
4. As of April 1997, the masonry on the front of the building required repair or replacement. Nothing done by Respondent or its contractors contributed to the need for repair or replacement of the masonry. (Admission by Appellant[1]; AF 27 (photographs)).
5. As of April 1997, all previously painted interior and exterior surfaces were in need of repainting. Nothing done by Respondent or its contractors contributed to the need to repaint those surfaces. (Admission by Appellant; AF 27 (photographs)).
6. As of April 1997, 10 to 15 stained or damaged ceiling tiles were in need of replacement. Nothing done by Respondent or its contractors contributed to the need to replace those tiles. (Admission by Appellant; AF 27 (photographs)).
7. As of April 1997, two broken windows were in need of replacement. Nothing done by Respondent or its contractors contributed to the need to replace those windows. (Admission by Appellant).
8. By letter dated April 24, 1997, and received by Appellant on April 28, 1997, the contracting officer informed Appellant that the items described in Findings 4-7 were in need of maintenance and gave Appellant 30 days in which to have the work done. The contracting officer warned Appellant that if these items were not accomplished within the 30-day period, the Postal Service would have the work done by contract and would recapture the cost of the work (plus administrative charges) by way of rental reductions. (AF 19) The record contains no evidence that Respondent received any reply from Appellant.
9. On or about June 2, 1997, Respondent's personnel solicited a proposal from a contractor to perform the work. The contractor which provided the proposal was under contract to the Postal Service via an indefinite quantity construction (IQC) contract. The circumstances surrounding the award of the IQC contract and the terms of that contract are not part of the record of this appeal. (AF 18).
10. On or about July 2, 1997, the IQC contractor provided a proposal to perform the work for a total of $7,857.72. The proposed work included repairing the masonry on the front of the building, using a specific method. On August 18, 1997, a work order was issued under the IQC contract for work at several facilities, including $7,494.49 for work at the Colony Post Office. (AF 16, 17).
11. By letter dated September 24, 1997, Appellant was notified of the award to the IQC contractor and was cautioned to take no action to make the repairs himself (AF 15).
12. By letter from Respondent faxed to Appellant's office on November 6, 1997, Appellant was advised that the contractor had found the front of the building to be in worse condition than previously had been thought and that the repair method initially selected could not be used. Appellant was given two options to choose from and was directed to reply by noon of that day. Shortly before noon, an associate of Appellant faxed a reply to Respondent, stating that she had been unable to reach Appellant to inform him of the earlier fax, but that she would do so as soon as she heard from him. (AF 11, 12).
13. Appellant replied to Respondent's fax on November 11, 1997, expressing his disagreement with Respondent's actions in proceeding to repair the building and stating that Respondent's actions had voided the warranty on a newly-replaced roof. Appellant threatened to hold Respondent liable for any damages incurred. The parties exchanged further correspondence on the subject of responsibility for repairs and liability for damage, and on or about November 24, 1997, Respondent authorized its contractor to repair the masonry front of the building by applying a stucco material to it. The additional work increased the cost of the IQC work order by $1,465.68. (AF 4-10).
14. In a final decision dated February 17, 1998, the contracting officer stated that Appellant was liable for $9,660.17 ($9,360.17 for repairs plus $300.00 in administrative costs) for repairs to the post office. In addition, the contracting officer stated that $200.00 in additional administrative costs would be assessed if Appellant failed to pay by March 4, 1998. Appellant filed a timely appeal. (AF 1-2).
DECISION
Summary judgment may be granted only if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987); AFV Enterprises, Inc., PSBCA Nos. 2691, 3316, 98-1 BCA ¶ 29,586; Rood Trucking Co., Inc., PSBCA Nos. 3121, 3132, 93-2 BCA ¶ 25,564.
Respondent argues that it is entitled to summary judgment (in whole or in part) in its favor, alleging that by virtue of the factual propositions deemed admitted by Appellant, Respondent has conclusively demonstrated that the repair work was necessary and that none of the work was required because of actions by Respondent or its contractors. Respondent argues further that the items were Appellant's responsibility under the lease. Finally, Respondent concedes that the admissions do not establish conclusively that the cost of performing the repairs was reasonable, but argues that the record establishes that proposition.
Appellant argues that there remain material issues of fact to be resolved and that summary judgment is inappropriate. Appellant contends that none of the repairs were necessary and that the cost of the work was unreasonable.
Except for the question of the reasonableness of the cost of the repairs, we agree with Respondent that there are no genuine issues of material fact that are left unresolved by this record. As Respondent argues, the record in this appeal establishes conclusively that the repairs were necessary to maintain the building in good repair and tenantable condition, and that neither Respondent nor its contractors caused the conditions that necessitated the repair work. Further, the record establishes that Appellant was responsible under the lease for making these repairs, was notified of the need for the work, but failed to fulfill its lease obligations.
With respect to the cost of the repairs, the existing record shows only that Respondent had the work performed by contracting with a particular contractor, but does not contain evidence concerning the nature of the contract, the procedures that led to its award, or other evidence demonstrating the reasonableness of the price paid for the work. This record is insufficient to resolve the question of whether the work was performed at a reasonable cost. The record is similarly silent with respect to the reasonableness of the administrative fees assessed against Appellant.
Accordingly, Respondent has proved its entitlement to recover its reasonable costs of performing the repair work at issue here, and its motion for summary
judgment is granted to that extent. The motion is denied with respect to the issue of the reasonableness of the incurred costs.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
Norman D. Menegat
Administrative Judge
Board Member
[1] Because of Appellant's repeated failure to reply to Respondent's requests for admissions, the Board ruled that certain factual propositions were deemed to have been admitted by Appellant. Those facts are set out in Findings 4-7.