Appeal of J. LEONARD SPODEK/WISCONSIN POSTAL HOLDINGS

December 14, 2001

Appeal of

J. LEONARD SPODEK

WISCONSIN POSTAL HOLDINGS

LEASE AGREEMENT

PSBCA No. 4243

APPEARANCE FOR APPELLANT:

J. Leonard Spodek

APPEARANCE FOR RESPONDENT:

Samuel J. Schmidt, Esq.

OPINION OF THE BOARD

Appellant, J. Leonard Spodek, has appealed from two contracting officer's decisions assessing Appellant costs associated with repairs at the Parklawn Station, Milwaukee, Wisconsin, which is leased from Appellant by Respondent, United States Postal Service. Both entitlement and quantum are at issue in this proceeding. A hearing was held in Milwaukee, Wisconsin.

FINDINGS OF FACT

1. In April 1972, the Postal Service entered into a lease with the Reynard Company for a building in Milwaukee, Wisconsin, which was designated the Parklawn Station. The lease was for a ten-year term beginning December 1, 1971, and ending November 30, 1981, at a rental rate of $24,000 per year, and contained four five-year options, exercisable by the Postal Service, all of which provided for rental payments of $15,000 per year. (4243 AF-2).[1]

2. The property subject to the lease was described, in pertinent part, as:

"All of that plot or parcel of land … together with all improvements thereon, including a one-story, part basement masonry building … with platform and/or ramp area …, paved parking, maneuvering and driveway areas of approximately 2076 square feet and off street parking area of approximately 4780 square feet…." (emphasis added) (4243 AF-2).

3. Paragraph 7 of the lease provided, in part:

"The lessor shall, unless herein specified to the contrary, maintain the demised premises, including the building and any and all equipment, fixtures, and appurtenances, … 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. During the continuance of the lease, the interior of the building, including, but not limited to, the walls and ceilings, shall be repainted at least once every five (5) years unless required more often because of damage from fire or other casualty, or unless the five year period is specifically extended in writing by the Contracting Officer. The required painting shall be completed not later than six (6) months following the end of the first and each successive five (5) year period during the continuance of the lease.…" (emphasis added) (4243 AF-2).

4. Paragraph 10 of the lease provided, in part:

"(c) If any building or any part of it on the leased property becomes unfit for use for the purposes leased, the lessor shall put the same in a satisfactory condition, as determined by [Respondent], for the purposes leased. If the lessor does not do so with reasonable diligence, the [Respondent] in its discretion may cancel the lease. For any period said building or any part thereof is unfit for the purposes leased, the rent shall be abated in proportion to the area determined by [Respondent] to have been rendered unavailable to [Respondent] by reason of such condition. Unfitness for use does not include subsequent unsuitability arising from such matters as design, size or location of the building.

(d) If conditions should occur which would otherwise give the Government the right … to incur a cost for which it could obtain reimbursement under this lease, the Government shall not have said rights unless it gives:

(1) written notice of said occurrence … to the mortgagee and the assignee of moneys due or to become due under this lease whose names and addresses are furnished to the Government by Lessor…." (4243 AF-2).

5. Appellant acquired title to the property in February 1992 from the Near North National Exchange Company (4324 AF-3).[2]

6. The front of the Parklawn Station faced east, and was constructed with an outer layer of brick. The west, south, and north sides of the building consisted of masonry block walls. The west side of the building contained a loading dock and a concrete maneuvering area to allow trucks to back up to the dock. The area adjacent to the south side of the building consisted largely of an asphalt parking lot used for parking and loading various postal vehicles. The north side of the building abutted the parking lot of an adjoining business. All four sides of the building were visible to the public. (RExh. 5; 4324 AF-20,-21; Tr. 140, 335, 337-338).

7. By letter dated October 25, 1995, a representative from Respondent's Administrative Services Office advised Appellant that masonry cracks, missing mortar areas and holes at Parklawn were to be tuck pointed (loose mortar removed and replaced) or sealed with caulking. Respondent's representative proposed November 30, 1995, as the date by which repairs were to be accomplished. (4324 AF-7).

8. By letter dated December 4, 1995, the Manager of the Administrative Services Office notified Appellant that cracks and missing mortar in the three masonry block walls would have to be repaired by January 5, 1996, or the Postal Service would proceed with a third-party contractor to have the work done, and would then recover the cost by rental deduction. Appellant was asked to contact the Administrative Services Office within 10 days to discuss the matter. (4324 AF-8).

9. In May 1996, the following conditions existed at the Parklawn Station:

Failure of portions of the asphalt paving in the postal vehicle parking area on the south side of the building, resulting in potholes. Numerous cracks in the remaining portion of the parking area made it difficult for carriers to move mail carts to their vehicles in order to load the vehicles for delivery.

Cracking of masonry block walls on the north and west sides of the building.

Cracking of the concrete maneuvering area slab adjacent to the loading dock. The primary crack ran parallel to the loading dock along most or all of the dock's length and divided the slab roughly in half. The portion of the slab between the crack and the dock had heaved and/or settled, resulting in an improper pitch of that portion of the slab. This caused water to pond adjacent to the loading dock. The ponded water froze during the winter months and caused a safety hazard for those walking from the loading dock to their vehicles.

Settlement of steps leading from the south end of the dock down to the maneuvering area slab, creating uneven riser height.

Exterior doors in need of painting on the south, west and east sides of the building.

Cracks in the brick face on the east side of the building.

Windows on the east side in need of glazing, caulking, repair of opening mechanisms, and replacement of broken panes.

(RExh. 1, 3, 5; Tr. 92, 94, 299, 302-304, 387-398, 636).

10. By letter dated August 13, 1996, the contracting officer directed Appellant to have repair work performed to correct the conditions identified above (Finding 9), and stated that if the work was not done in 30 days, the Postal Service would hire a third-party contractor, and would recapture the costs, plus an administrative charge, by rental reduction. (4324 AF-9).

11. In reply, by letter dated August 22, 1996, Appellant asked for an additional 30 days to contract for any work that was his responsibility and to schedule a meeting at the site to review Respondent's requests. (4324 AF-10).

12. By letter dated April 18, 1997, the contracting officer requested that all previously painted interior and exterior surfaces be painted. The contracting officer noted that repairs to the exterior masonry block walls (Finding 9) should be accomplished prior to exterior painting. The contracting officer also stated that if the painting was not accomplished within 30 days, the Postal Service would have the work done by a third-party contractor and would recapture the cost of the work, plus an administrative charge, through rental deductions. The exterior masonry block walls had been painted prior to Appellant's acquisition of the building. Appellant had never had the interior of the building painted. (4243 AF-8; Tr. 400, 652).

13. On or about February 6, 1998, Respondent issued a work order under an indefinite quantity construction (IQC) contract with Martell Construction, Inc., to have the interior of the building painted. The amount of the work order was $7,942.64. The individual work items included moving furniture, repairing damage to plaster walls and water damage to the plaster ceiling, washing the walls, and painting all previously painted surfaces. The repaired areas were to be given two coats of paint, while the other surfaces were to receive one coat. Respondent paid the amount of the work order to Martell in late May 1998, once the work was completed. (4243 AF-13, 14, 17; Stip. 12).

14. Indefinite quantity construction contracts are competitively awarded contracts that contain a schedule of fixed-unit-price work items that can be used in work orders issued by a contracting officer. The purpose of the IQC contracts is to allow many different types of repair and alteration work to be accomplished without the administrative expense of competing each individual project separately. (Tr. 72-75, 442-443).

15. In a final decision issued in May 1998,[3] the contracting officer notified Appellant that he was indebted to the Postal Service in the amount of $7,942.64 for the interior painting performed at Parklawn, plus $200 in administrative costs, for a total of $8,142.64. The contracting officer stated that if Appellant failed to make payment by June 11, 1998, an additional $200 in administrative costs would be assessed and the total ($8,342.64) would be collected by rental offset. Appellant was advised that the balance due would accrue interest at the rate of 7.3 percent, which was the Postal Service cost of capital at the time, until fully recovered. (4243 AF-10; Tr. 445). Appellant filed a timely appeal from the contracting officer's decision, which appeal was docketed as PSBCA No. 4243.

16. By 1998, the condition of parts of the asphalt parking lot had deteriorated further, with holes forming where the tires of the parked vehicles rested. This condition made it difficult to move vehicles from their parking spaces and maneuver them in the lot, especially in freezing conditions. (4324 AF-20, p. 1; Tr. 85-87).

17. By 1998, some of the reinforcing bars in the masonry block walls had deteriorated in the areas where mortar was missing. In addition a few bricks (from the east face of the building) were missing or had deteriorated. At least one brick was missing from a spot above the main entrance. In some spots exterior masonry blocks had lost pieces due to spalling (chipping and cracking), caused by water penetrating and freezing. (4324 AF-21; Tr. 132-133, 135, 137). However, there was no damage to the interior of the building as a result of these conditions (Tr. 223-224).

18. On or about July 24, 1998, Respondent issued a work order in the amount of $34,488.65 (later increased to $37,636.62 - see Findings 20 and 22, below) under another IQC contract with Martell Construction for "asphalt repairs, concrete repairs, exterior painting, etc." at Parklawn. Martell used subcontractors to perform the asphalt work, painting, and masonry repairs. (4324 AF 16, 18; Tr. 84).

19. Masonry Repairs: Under the work order, Martell performed tuck pointing over an area of 1,710 square feet of the masonry block walls and 228 square feet of the brick wall. In addition, Martell renewed 700 linear feet of caulking around windows and doors, and replaced mortar with caulking in 60 linear feet of masonry block joints. Martell also removed and replaced ten masonry blocks and three bricks. The total cost of this work was $7,127.06.[4] Martell was paid in full for this work. (4324 AF-16; Tr. 136-138, 144-146).

20. Asphalt Parking Lot Repairs: Under the work order, Martell was to have removed approximately one-fourth of the asphalt in the parking lot (141 square yards); removed and replaced base material beneath that section; installed two layers of asphalt in that section (282 square yards); and cleaned and sealed the cracks in the remainder of the parking lot, at a cost of $4,871.26.[5] Martell's subcontractor removed the asphalt and removed and replaced the underlying base material. However, in place of the other work (installing two layers of asphalt in the area where it had been removed, and cleaning and sealing cracks) and contrary to Martell's instructions, the subcontractor applied an asphalt overlay over the entire lot. As part of a later modification to the work order, Respondent paid an additional $643.93 to Martell because of this change.[6] In addition, under the original work order Respondent paid for the replacement of 22 concrete wheel stops at a cost of $264.73.[7] Respondent paid Martell a total of $5,779.92 for this work. (4324 AF-16, 18; Tr. 125, 126, 130-132).

21. Exterior Painting: Under the work order, Martell's subcontractor pressure washed the three masonry block walls and applied two coats of paint at a cost of $5,933.42. Pressure washing was necessary to clean the surface and remove loose paint so the new paint would adhere properly. In addition, the subcontractor painted the area underneath the loading dock canopy, the doors and door frames, and various drains and electrical conduits on the exterior of the building (at a total cost of $775.32). Respondent paid Martell $6,708.74 for this work.[8] (4324 AF-20; RExh. 5 (p. 8); Tr. 140, 143, 147-148).

22. Concrete Repairs: Respondent directed Martell to replace virtually all[9] of the concrete maneuvering area slab. The original work order provided for the removal of 6-inch thick concrete, the installation of the same quantity of 8-inch concrete (including base material), and the replacement of steps at the south end of the loading dock. Once work began, it was determined that the existing concrete was 10 inches thick, rather than 6 inches thick. Part of the later work-order modification included costs for the removal of the additional thickness of concrete and for the installation of additional base material to make up the difference in height. The costs attributable to the replacement of the concrete slab totaled $17,289.58.[10] Included in those costs was $500.00 for a second mobilization, required because the concrete work had to be done in two phases in order to avoid blocking access to the entire loading dock. In addition, the costs associated with replacement of the steps at the south end totaled $731.32.[11] Respondent paid Martell a total of $18,020.90 for this work. (Tr. 105-115, 117-119, 124-125)

23. In a final decision dated November 17, 1998, the contracting officer notified Appellant that he was indebted to the Postal Service in the amount of $37,636.62 for the exterior work performed at Parklawn, plus $550.00 in administrative costs, for a total of $38,186.62. The contracting officer stated that if Appellant failed to make payment by December 1, 1998, an additional $200 in administrative costs would be assessed and the total ($38,386.62) would be collected by rental offset. Appellant was advised that the balance due would accrue interest at the rate of 6.3 percent, which was the Postal Service cost of capital at the time, until fully recovered. (4324 AF-13; Tr. 451). Appellant filed a timely appeal from the contracting officer's decision, which appeal was docketed as PSBCA No. 4324.

24. Respondent incurred at least $550 in administrative expenses in connection with the exterior work performed at Parklawn. Those expenses
consisted primarily of the contracting officer's time, and the project manager's time and travel expenses. Similarly, Respondent incurred at least $200 in administrative expenses in connection with the interior painting at Parklawn. (Tr. 444, 451-452).

DECISION

General

With respect to both appeals, Appellant argues that Respondent may not recover because it failed to notify Appellant's mortgagee of the need for repairs, as required by the lease (see Finding 4). Appellant argues that Respondent was aware of the existence of a mortgage and of the identity of the mortgagee, citing documents related to his purchase of the property and to the previous purchase by Appellant's predecessor-in-interest, Near North National Exchange Company (Finding 5).[12] Those documents, however, do not show the existence of any mortgage related to Appellant's purchase of the property. Although one document refers to a mortgage, that mortgage related to the purchase of the property by Near North. There is no evidence of any mortgage involving Appellant's purchase of the property. Further, even if Appellant had shown the existence of a mortgage and the failure to notify the mortgagee, he would not prevail absent evidence of prejudice to him as a result of the lack of notification, cf. M.R. Kaplan, et al., PSBCA Nos. 1147, 1298, 1303, 1310, 88-3 BCA ¶ 20,827 at 105,314, and he has presented no such evidence. Accordingly, we do not accept Appellant's argument.

PSBCA No. 4243 (Interior Painting)

Respondent argues that, under the terms of the lease, interior painting by Appellant was overdue. Respondent contends that when Appellant failed to have the painting done, Respondent was justified in having the work done by a third-party contractor and recovering the cost from Appellant.

Appellant argues that Respondent should not recover, or that its recovery should be reduced, for a number of reasons. First, Appellant argues that the work room area did not need painting. Appellant also argues that Respondent changed the color of the walls and that such change resulted in the need for additional labor and material. Appellant also questions the reasonableness of the price paid by Respondent because Respondent's IQC contractor subcontracted the work at a lower cost than it charged Respondent. Finally, Appellant questions whether he should be assessed costs for moving furniture and for making repairs to plaster before painting.

We agree with Respondent that Appellant failed to paint the interior of the facility as required by the lease. The wording of the applicable lease provision is unambiguous and does not make Appellant's obligation dependent on whether the painting was "needed." Further, Appellant had not painted the building since he acquired it in February 1992. Therefore, Respondent was justified in having the building painted in early 1998, well after the deadline imposed on Appellant by the lease, when Appellant failed to have the work done after being notified by Respondent that painting was required.

We do not accept Appellant's arguments that Respondent's recovery should be reduced. Appellant has provided no credible evidence that the change in color, if it occurred, increased the cost of the job. Further, Appellant has provided no credible evidence that moving furniture and repairing plaster before painting would not normally be considered incidental to a repainting job, and we decline to so hold. See, e.g., J. Leonard Spodek, Nationwide Postal Management (Clarification), PSBCA Nos. 4206, 4217, 4310, 01-1 BCA ¶ 31,227. In this connection, we note that there is no evidence that damage to the plaster was caused by the negligence of Respondent's personnel.

Finally, that Respondent had the work done through the use of a competitively awarded indefinite quantity construction contract establishes a prima facie case that the costs incurred were reasonable. J. Leonard Spodek (Reconsideration), PSBCA No. 4080, 01-1 BCA ¶ 31,163 and cases cited therein. The fact that the IQC contractor had the work performed by a subcontractor does not, by itself, suffice to overcome Respondent's prima facie case, and Appellant has not offered any other evidence sufficient to do so.

Accordingly, Respondent may recover the $7,942.64 it expended for interior painting, plus interest at 7.3 percent. It may also recover $200.00 in administrative expenses. It may not, however, recover the additional $200.00 assessed because of the rental offset. See, e.g., J. Leonard Spodek and Sara Nathanson, Nationwide Postal Management, PSBCA Nos. 4222 and 4266, 01-1 BCA ¶ 31,162. Except with respect to the additional $200.00, the appeal is denied.

PSBCA No. 4324

Masonry Repairs

Respondent argues that there was extensive cracking and spalling of the masonry block walls and cracks and missing bricks in the front brick façade. Respondent contends that the spalling created a potential hazard for pedestrians near the walls and that there was evidence of interior wall damage caused by the cracks in the block walls. Respondent also argues that if left unchecked, the spalling would have continued and posed a hazard to customers and employees. Respondent contends that the repair measures undertaken were reasonable and necessary to address these problems.

Appellant argues only that there was no evidence of interior damage caused by this condition. Therefore, Appellant argues, the repair work constituted preventive maintenance which was not his responsibility under the lease.

As argued by Appellant, his obligation under the lease to maintain the property in "good repair and tenantable condition" does not encompass an obligation to perform work which is properly classified as preventive maintenance, M.R. Kaplan, et al., PSBCA Nos. 1147, 1298, 1303, 1310, 88‑3 BCA ¶ 20,827 at 105,315, for which no immediate need has been shown, M.R. Kaplan, et al., at 105,325. In this instance, Respondent stipulated that the interior of the building had not been damaged by leaks that were corrected by tuck pointing (Finding 17). There is also no evidence that the other conditions that were repaired by Respondent had any effect on the interior of the building. We are also not persuaded that these conditions represented a hazard to Postal Service customers or employees. While the repairs might have had the effect of preventing future water leaks or other structural problems, Respondent has not shown that this work was other than preventive maintenance for which there was no immediate need, or that it was done for other than purely cosmetic purposes. See Edward R. and Lorraine Ester, PSBCA No. 1559, 88-2 BCA ¶ 20,573. Therefore, Respondent has not provided evidence to support its decision to undertake the repairs at Appellant's expense.

Accordingly, this portion of the appeal is sustained.

Parking Lot Repairs

Respondent argues that the asphalt parking lot on the south side of the building was severely deteriorated and in need of repairs. Respondent argues that replacing the portion that was most deteriorated and overlaying the remainder was the most reasonable method for completing the repairs.

Initially, Appellant argues that he is not responsible for maintaining the parking lot surface because the property described in the lease (Finding 2)[13] does not include "improved" off-street parking. Appellant reads the property description to apply the term "paved" only to the "parking, maneuvering and driveway areas," and not to the "off street parking area of approximately 4780 square feet." Based on this description, Appellant argues that the parking area in question must have been paved by Respondent at some time after the lease was entered into and that, as a result, he is not obligated to maintain the asphalt parking lot. In reply, Respondent argues that the word "paved" in the property description is intended to describe both areas. Were it otherwise, Respondent argues, the off-street parking area would not have been listed as an "improvement" to the property.

With regard to the work as originally planned, Appellant questions the extent of the planned asphalt removal and the fact that the quantity of asphalt to be installed (282 square yards) was twice the quantity that was to be removed (141 square yards) (See Finding 20). Appellant also argues that the cleaning and sealing of cracks was preventive maintenance and, therefore, not his responsibility. Finally, Appellant questions whether he should be liable for the replacement of the 22 concrete wheel stops in the parking lot. In reply, Respondent argues that, in fact, only about 1/4 of the asphalt was removed (141 square yards), and that the amount of asphalt to be replaced (282 square yards) was simply an indication that two layers of asphalt were required. With respect to sealing the cracks, Respondent argues that the difficulty in moving mail carts because of the cracks made their repair necessary. Finally, Respondent argues that it was Appellant's burden to show that the wheel stops could have been replaced at a lower cost, and that he has failed to do so.

We do not accept Appellant's initial argument that he is not responsible for repairing the parking lot because it was originally unimproved/unpaved. Given that the parking lot is listed as an "improvement" with a specific area in the property description in the lease, and the absence of any evidence that the lot was initially unpaved, Appellant has failed to persuade us that the lot was unpaved at the beginning of the lease term. Accordingly, Appellant's argument is rejected.

With regard to the parties' other arguments, we conclude that Respondent's original plan for replacement of part of the lot and repair of cracks in the remainder was a reasonable approach to maintaining the lot in "good repair and tenantable condition" in the absence of action by Appellant. The cost of that plan under the IQC contract would have been $4,871.26 (Finding 20). Because of an error in communications between Respondent's IQC contractor and its subcontractor, the subcontractor performed work that was more costly, and Respondent paid an additional $643.93 as a result (Finding 20). Inasmuch as the original plan would have yielded a satisfactory result, Appellant may be assessed only the cost of that plan.

In addition, replacement of the 22 concrete wheel stops has not been shown to have been necessary. The evidence submitted does not show that they had been damaged or were otherwise in need of replacement. Further, the notice to Appellant that work needed to be performed (Finding 10) did not list the wheel stops as a needed repair. Accordingly, Appellant may not be assessed the cost ($264.73) of replacing the wheel stops.

This portion of the appeal is sustained as to any recovery by Respondent in excess of $4,871.26, but is otherwise denied.

Exterior Painting

Respondent argues that Appellant's responsibility to keep the premises in good repair and tenantable condition, combined with his obligation to put the property in a "satisfactory condition" if it becomes "unfit for the purposes leased" (Findings 3, 4), yields a more general requirement that Appellant maintain the building in a "condition suitable for conducting postal business."[14] Respondent argues that the evidence shows that the exterior walls were in need of painting and were visible to the public and that, therefore, Respondent may recover the cost of painting.

Appellant argues that although the lease expressly obligates him to perform interior painting, it is silent with respect to exterior painting. Appellant contends that this silence implies that exterior painting is not his responsibility. Appellant also argues that the exterior of the building was not painted when Respondent originally occupied it and that, therefore, if Respondent wanted the exterior painted, Respondent should bear the cost.

We have held that Appellant's obligation as lessor to keep the premises in good repair and tenantable condition includes the requirement to paint exterior walls under certain circumstances. See, e.g., J. Leonard Spodek, Nationwide Postal Management, PSBCA Nos. 4206, 4217, 4310, 00-2 BCA ¶ 30,979, clarified 01-1 BCA ¶ 31,227; J. Leonard Spodek, Nationwide Postal Management, PSBCA No. 4223, 99-2 BCA ¶ 30,559. Where, as here, the lease does not expressly require exterior painting, Respondent must demonstrate that painting the exterior at the lessor's expense was justified.

In order to prevail, Respondent must show that the exterior painting was necessary for other than purely cosmetic purposes. Edward R. and Lorraine Ester, PSBCA No. 1559, 88-2 BCA ¶ 20,573. In these appeals, Respondent has alleged that the walls were in need of painting and that they were visible to the public. In support of its contention that the walls were in need of painting, Respondent relies on testimony by a previous manager of the Parklawn Station that she was dissatisfied with the appearance of the exterior of the station and did not consider the condition of the paint on the building to be appropriate for a postal retail facility. That evidence is insufficient to carry Respondent's burden of showing that the painting was not done for purely cosmetic purposes -- that painting was necessary, for example, to maintain the premises in a condition suitable for a business purpose, J. Leonard Spodek, Nationwide Postal Management, PSBCA Nos. 4206, 4217, 4310, 00-2 BCA ¶ 30,979, clarified 01-1 BCA ¶ 31,227, or to repair actual damage or prevent imminent damage to the building, Real Properties MLP Limited Parnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829 at 138,759; Edward R. and Lorraine Ester, PSBCA No. 1559, 88-2 BCA ¶ 20,573.[15]

We disagree with Respondent's argument that the language in this lease requires Appellant to provide a higher level of maintenance than that required by the "good repair and tenantable condition" standard. Respondent argues that the language requiring Appellant to put the building in "satisfactory condition" if it becomes "unfit for use" imposes the higher level of maintenance responsibility on the lessor. The provision cited by Respondent, which allows Respondent to cancel the lease or abate the rent, equates the phrase "unfit for use" with a situation in which the property has been "rendered unavailable" for use as a postal facility. See, e.g., Carolyn C. Watts, PSBCA No. 1553, 1987 PSBCA LEXIS 64 (August 27, 1987) (building rendered unfit for use by an explosion that seriously damaged an outside wall of the facility). We need not attempt to completely define the phrase "unfit for use." However, we conclude that the Parklawn Station did not become "unfit for use" because of the condition of the paint on the exterior masonry block walls. Therefore, the language cited by Respondent did not impose any maintenance requirement on Appellant beyond his obligation to keep the premises in good repair and tenantable condition.

Accordingly, this portion of the appeal is sustained.

Concrete Repairs

Respondent argues that replacement of the concrete slab in the maneuvering and dock area was necessary in order to correct the improper pitch, which was causing drainage problems and hazardous conditions during the winter. Respondent also argues that repair methods would not have resolved the problem.

Appellant argues that Respondent had the entire concrete slab replaced, with no attempt at a repair. Appellant contends that a repair was possible, and that it could have been accomplished at a lower cost than the cost of replacing the entire slab.

Although Respondent argues that replacement of the entire concrete slab was necessary to correct the improper pitch, it introduced no evidence to that effect. The testimony by Martell's project manager cited by Respondent[16] was only to the effect that simply filling in the crack that ran the length of the slab (Finding 9) would not have solved the pitch problem. There was no evidence introduced to show that replacement of the entire slab was necessary in order to correct the improper pitch of the portion closest to the loading dock. In fact, Respondent's architect-engineer testified that it is possible to fill in concrete to correct an improper pitch, and that it is possible that replacement of only a portion of the slab would have corrected the problem.[17] Accordingly, Respondent has not met its burden of showing that replacement of the entire slab was necessary in order to remedy the ponding problem. See, e.g., Nationwide Postal Management, PSBCA No. 4080, 00-1 BCA ¶ 30,848, recon. den. sub nom. J. Leonard Spodek, 01-1 BCA ¶ 31,163; Real Properties MLP Limited Parnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829 at 138,756.

Although Respondent has not demonstrated that complete replacement of the slab was necessary, it has shown that some remedial measure was required in order to eliminate the ponding problem. In addition, although Appellant argued that something short of complete replacement was appropriate, he offered no evidence of what such measures would have cost. The record shows that approximately one-half of the slab (the portion closest to the loading dock) had shifted and was causing the ponding problem (Finding 9). Based on this, we consider it appropriate to allow Respondent to recover the cost of the second mobilization ($500.00), plus one-half of the remaining costs attributable to replacing the concrete slab (($17,289.58 - $500.00) ÷ 2), for a total of $8,894.79 (Finding 22). Since replacing the portion of the slab closest to the dock would have required replacing the steps at the south end, Respondent may also recover the cost of that replacement, which was $731.32 (Finding 22).

Accordingly, this portion of the appeal is sustained as to any recovery by Respondent in excess of $9,626.11, but is otherwise denied.

Administrative Fees and Interest

Respondent may recover $550.00 in administrative expenses in connection with administering the exterior work at Parklawn (Finding 24). It may not, however, recover the additional $200.00 assessed in connection with the rental offset. Respondent may recover interest on the amounts due, at 6.3 percent. See, e.g., J. Leonard Spodek and Sara Nathanson, Nationwide Postal Management, PSBCA Nos. 4222 and 4266, 01-1 BCA ¶ 31,162.

Accordingly, as explained above, the appeals are sustained in part and denied in part. They are remanded to the parties for final calculations of the amount due from, or to be refunded to, Appellant.

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] "4243 AF-" and "4324 AF-" refer to Respondent's appeal files in PSBCA Nos. 4243 and 4324, respectively; "Stip." refers to the Stipulation filed by the parties; "RExh." refers to Respondent's hearing exhibits; "AExh.” refers to Appellant's hearing exhibits; and "Tr." refers to the hearing transcript.

[2] Appellant did not acquire the property directly from the original lessor, there having been at least two other owners in between the Reynard Company and Appellant. (4243 AF-3).

[3] The decision was erroneously dated May 27, 1997 (4243 AF-10).

[4] Original work order items 042/00/007 through 042/00/024, 045/20/001 through 079/00/002, and 079/00/006 (4324 AF-16).

[5] Original work order items 025/13/001 through 025/13/014, 079/00/003, and the negotiated deduction of $.50 per linear foot for sealing cracks; one-half of original work order items 010/00/009 through 022/00/029 and 025/77/001; and one-half of work order modification items 022/00/001 through 022/00/020. (4324 AF-16, 18).

[6] Work order modification items 025/13/009 through 025/13/014, and 079/00/003 (4324 AF-18).

[7] Original work order item 025/15/031.

[8] Original work order items 045/10/002 and 099/00/016 through 099/00/034.

[10] Original work order items: 024/00/002 through 024/00/010; 025/15/001 through -025/15/025; negotiated items for second job mobilization and allowance for "high early" concrete; and one-half of items 010/00/009 through 022/00/029 and 025/77/001. Work order modification items: 025/15/007; and one-half of items 022/00/001 through 022/00/020. (4324 AF-16, 18)

[11] Original work order items: 033/00/029 and negotiated item for demolition of steps. (4324 AF-16).

[12] Appellant cites documents in the record of a different appeal before this Board. However, the same documents appear at 4243 AF-3.

[13] "…together with all improvements thereon, including … paved parking, maneuvering and driveway areas of approximately 2076 square feet and off street parking area of approximately 4780 square feet…."

[15] Respondent also relies on photographs of the walls before and after they were painted. (Respondent's brief, p. 8). The walls obviously looked cleaner and more uniform in color after painting than before. However, the photographs alone do not demonstrate that the walls were not in "good repair and tenantable condition" before they were painted.