November 14, 2001
Appeal of
NATIONAL CONSTRUCTION COMPANY
LEASE AGREEMENT
PSBCA Nos. 4302, 4303 and 4564
APPEARANCE FOR RESPONDENT:
Mark T. Corbly, Esq.
OPINION OF THE BOARD
Appellant, National Construction Company, has appealed from decisions of a contracting officer denying, in part, its claims for restoration and other costs associated with the leases to Respondent, United States Postal Service, of three properties in New York and Massachusetts. At the election of the parties, the appeals were consolidated for the purpose of a decision and submitted on the record pursuant to 39 C.F.R. §955.12. Only entitlement is at issue in this proceeding.
1. On January 21, 1963, Appellant and Respondent[1] entered into a lease for the Corfu, New York Post Office, effective December 31, 1962. The lease had an initial term of ten years, with two five-year options exercisable at the discretion of Respondent. (Appeal File 4302 (AF 4302), tab 1).
2. The lease provided that Appellant (the lessor) would furnish and pay for sewerage services during the term of the lease and would:
“ . . . 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 [the] lease in good repair and tenantable condition, except in the case of damage arising from the act or negligence of the Government’s agents or employees . . ..” (AF 4302, tab 1).
3. During this initial lease period, Appellant performed various repair and maintenance tasks at the facility. In addition, the Postal Service also performed certain maintenance tasks and deducted their costs from rents otherwise due Appellant when Appellant failed to promptly carry out the necessary maintenance item. The maintenance items performed by the Postal Service (for which deductions were made from rental payments otherwise owed), included installing screens, replacing the front doors, plumbing repairs, painting, repairing roof leaks, replacing defective lighting, as well as other miscellaneous maintenance items. (AF 4302, tab 38).
4. Respondent exercised both five-year options, thereby extending the term of the lease to December 30, 1982. In September of 1980, Appellant had the facility hooked up to the city’s sewer system (AF 4302, tabs 20, 38).
5. On October 29, 1982, Respondent and Appellant agreed to extend the lease from December 31, 1982, through December 30, 1987. The Postal Service agreed, in the lease extension, to maintain the premises in good repair and tenantable condition, except for repairs that were specified to be the responsibility of the lessor. The lessor’s repair responsibility included structural repairs (including the roof system), and repairs resulting from acts of God. All other provisions of the original lease remained the same. During this lease extension period, Appellant paid for the repair of a window that was damaged by high winds in 1983. (AF 4302, tab 20).
6. Thereafter, Appellant and Respondent entered into a new lease for the same premises for the period December 31, 1987, through December 30, 1992. Pursuant to this lease, Respondent was responsible for “ordinary repairs to and maintenance of the demised premises, except for those repairs that are the specific responsibility of the lessor in [the] lease.” The lessor’s repair responsibility included, among other items, the responsibility for structural repairs, including repairs to the roof system, as well as for repairs resulting from acts of God. (AF 4302, tab 27).
7. In May of 1988, during this lease period, Appellant performed $496.00 of sidewalk repairs (AF 4302, tab 38).
8. On May 5, 1992, the parties entered into a second new lease for the five-year period December 31, 1992, through December 30, 1997. Pursuant to this lease, Appellant was responsible for structural repairs, including repairs to all parts of the roof system. The Postal Service was responsible for ordinary repairs and maintenance, as well as for payment of water and sewerage service charges, provided that such services were metered separately for Postal Service usage only. In addition, this lease contained a termination provision allowing the Postal Service to terminate the lease at any time by giving 365 days written notice to the lessor. (AF 4302, tab 32).
9. By written notice dated June 17, 1996, Respondent informed Appellant that it would terminate the lease effective June 19, 1997. On June 19, 1997, Appellant acknowledged termination of the lease, accepted the keys for the building from Respondent, and assumed responsibility for the building. Approximately eighteen light fixtures in the facility were defective or inoperable at the time Respondent vacated the facility. (AF 4302, tab 34, 35, 37, 38).
10. Appellant made certain repairs to the heating system in the facility during the winter of 1997/1998 (AF 4302, tab 38).
11. By letter dated March 20, 1998, Appellant filed a claim under the lease in the amount of $49,009.82. This claim included the following items:
a. $7,016.66 -- Maintenance and repair work performed by, or paid for by Appellant from 1963 through 1997 (the period of occupancy by the Postal Service).
b. $2,526.07 – Repair and replacement of the front doors during Respondent’s occupancy of the building.
c. $3,246.00 – Repair and replacement of light fixtures after Respondent vacated the facility.
d. $1,377.85 – Connecting building to the city sewer system.
e. $15,400.00 – Repair and replacement of roof and brickwork damage during the term of Respondent’s occupancy.
f. $12,000 – A reserve against potential asbestos, lead based paint, and lead in drinking water environmental liabilities arising as a result of Respondent’s occupancy of the premises.
g. $866.17 – Defects occurring during the winter of 1997-1998 (after Respondent vacated the facility).
h. $4,243.27 – 10% overhead.
i. $2,333.80 – 5% profit. (AF 4302, tab 38).
12. By letter dated June 16, 1998, Appellant informed Respondent’s contracting officer that it considered the contracting officer’s failure to respond to its March 20, 1998 claim a deemed denial of the claim and asked that the claim be passed on to “higher authorities and/or the appeals board” (AF 4302, tab 39).
13. Respondent did not forward Appellant’s June 16 letter to the Board and, on November 17, 1998, Appellant filed an appeal directly with this Board, which appeal was received and docketed on November 24, 1998, as PSBCA No. 4302 (AF 4302, tab 40, 41).
14. By Order of this Board, on June 8, 2000, the contracting officer issued a final decision on Appellant’s March 20, 1998 claim in which he found that Appellant was entitled to recover that portion of its claim relating to sidewalk repairs (see Finding of Fact No. 7), but denied the remainder of the claim (Respondent’s supplemental evidence).
15. By letter to the Board dated June 13, 2000, Appellant increased the amount of its claim by $41,976.00, which allegedly represented the damage resulting from Appellant’s inability to sell the property after Respondent’s early termination of the lease (Appellant’s supplemental evidence).
Respondent’s primary defense to Appellant’s claims in this, and each of the other two appeals, is that Appellant has the burden of proof with respect to all elements of each of its claims, and that Appellant has failed to meet this burden.
We agree with Respondent that Appellant has the burden of proof and that, for the most part, it has failed to sustain that burden. As further explained below, although we have found for Appellant in some instances, the bulk of Appellant’s claims suffer from a failure to support the claims with evidence sufficient to demonstrate entitlement.
a. Maintenance and Repair Work -- $7,016.66
A substantial portion of the maintenance and repair work Appellant seeks compensation for under this claim item arose during the initial lease period (December 1962 through December 1982) (see generally, Finding of Fact No. (FOF) 3). Under the initial lease, Appellant was responsible for maintaining the facility in good repair and tenantable condition, except for damage resulting from the acts or negligence of Respondent’s agents or employees (FOF 2). Appellant has not offered any evidence to demonstrate that the act or negligence of a Postal Service employee or agent necessitated the maintenance repairs claimed during this time period. Accordingly, there is no merit to Appellant’s claim for reimbursement of maintenance costs incurred during the initial lease period (December 1962-December 1982).
Appellant seeks $12.00 for the cost of repairing a window damaged by high winds in 1983 (FOF 5). This occurred during the lease extension period for this facility (1982-1987). However, under the lease extension, Appellant was responsible for repairs resulting from acts of God. (FOF 3). Accordingly, there is no merit to this claim item.
The remaining maintenance and repair items claimed by Appellant under this item occurred during the final periods of Respondent’s occupancy of the facility and include sidewalk repairs, damage to a ramp, driveway damage and brickwork and yard cleanup. Respondent was liable for repair and maintenance of the facility during this period except for those repairs that were the specific responsibility of the lessor (FOF 4). In his final decision, the contracting officer conceded liability for sidewalk repairs. However, the contracting officer denied Appellant’s claim for ramp repairs, driveway repairs and brickwork and yard cleanup, concluding that there was insufficient evidence that the damage claimed, if any, was other than ordinary wear and tear. (FOF 14). The only evidence offered by Appellant in this proceeding with respect to these items are four illegible, black and white photocopies of photographs that purportedly show the damage Appellant complains about. This evidence fails to demonstrate that these items were damaged, or that they were in need of repair and maintenance, or that Respondent did not fulfill its lease obligations with regard to these items. See Mary Lou Bloom and Kenneth D. Bloom, PSBCA No. 4053, 98-1 BCA ¶ 29,352. Accordingly, with the exception of the costs associated with sidewalk repairs, Appellant’s claim for maintenance and repair items is denied.
b. Front Doors -- $2,526.07
Appellant claims $526.07 under this item for rental deductions made by Respondent to cover the cost of replacing the front doors in 1975 (see FOF 3). Appellant had the responsibility of maintaining the facility in good repair and tenantable condition during this period of time, except in the case of damage caused by the acts or negligence of Respondent’s agents or employees (FOF 2). Appellant has not offered any evidence, or even alleged that the need to replace the doors was caused by the act or negligence of Respondent’s agents or employees. Accordingly, there is no merit to this claim item.
The remainder of the costs claimed by Appellant under this item is $2,000.00 in “estimated” costs. However, Appellant offered no explanation of what these “estimated” costs represented, nor did Appellant offer any evidence of having incurred the costs claimed. Accordingly, this aspect of the claim item is denied as well.
c. Repair and Replacement of Light Fixtures -- $3,246.00
Appellant claims the costs of repairing or replacing 18 broken or inoperable light fixtures and repairing two openings in the ceiling discovered by Appellant after Respondent vacated the facility (FOF 9). Respondent does not dispute that light fixtures were damaged or otherwise inoperable at the time of vacating the facility, or that there were two openings left in the ceiling from missing light fixtures, but argues that the extent of damage did not exceed ordinary wear and tear. However, Respondent assumed responsibility for ordinary repairs and maintenance of the facility in 1987, and retained that responsibility until vacating the facility in 1997 (FOF 5, 6). This responsibility included replacing or repairing damaged or otherwise inoperable light fixtures as well as repairing openings left in the ceiling. This breach of duty under the lease damaged Appellant in the amount of its costs to repair light fixtures and ceiling openings after Respondent vacated the premises. Accordingly, this claim item is sustained and remanded to the parties for negotiation of the amount due.
d. City Sewer System -- $1,377.85
Appellant seeks the costs of hooking up the facility to the city sewer system in 1980. Appellant has not offered any explanation as to why Respondent should bear the costs associated with hooking up the facility to the city sewer system. More importantly, however, under the terms of the lease then in effect, Appellant was required to furnish and pay for sewerage services (FOF 2). See Poelstra Properties, PSBCA No. 3109, 92-3 BCA ¶ 25,090. Accordingly, this claim item is denied.
e. Roof and Brickwork Damage -- $15,400.00
Appellant claims the costs it incurred in repairing and replacing the roof of the building on multiple occasions during the 35 years the building was occupied by Respondent. However, during the entire period of Respondent’s occupancy of the facility, Appellant was responsible for repairs to the roof (FOF 2, 5, 6, 8). Appellant has not offered any evidence or even alleged any circumstance that would shift the responsibility for maintaining the roof to Respondent. Accordingly, this aspect of the claim is denied.
Appellant also claims an estimated $8,000.00 of brickwork damage to the building allegedly caused by Respondent changing the signage on the building’s exterior. Although Appellant submitted black and white photocopies of photographs of the new signage, Appellant failed to offer any evidence of any damage to the brickwork. Accordingly, this claim item is denied.
f. Environmental Liability Reserve -- $12,000.00
Appellant claims entitlement to payment by Respondent of a $12,000.00 environmental liability reserve. Appellant seeks this reserve to cover potential future environmental liabilities that may arise regarding asbestos or lead-based paint contamination, or lead in drinking water requirements concerning the leased premises. Appellant did not, however, offer any evidence to demonstrate that it has incurred, or necessarily will in the future incur, any costs as a result of these factors, or even if it did, that Respondent would be liable for those costs. Accordingly, this claim item is denied.
g. Defects After Moving -- $866.17
Appellant claims $866.17 in heating system repairs that were accomplished during the winter of 1997/1998 (FOF 10). Appellant did not explain what caused the need for the repairs or why they were the responsibility of Respondent as the former tenant.
Respondent vacated the facility on June 19, 1997 (one year prior to the time the heating system was repaired), and Appellant assumed responsibility for the premises at that time (FOF 9). Appellant has not submitted any evidence to demonstrate that Respondent’s agents or employees had any role in the damage to the heating system subsequent to lease termination. Accordingly, this claim item is denied.
h. Inability to Sell the Property
The final issue to be
addressed under PSBCA No. 4302 is the additional $41,976.00 Appellant seeks as
damages because of an inability to sell the property after Respondent
terminated the lease. Appellant calculated the amount claimed by multiplying
the daily rental payment rate of the lease, $79.20, by 530 days (representing
the period from June 17, 1996, the date Respondent gave notice of its intent to
terminate the lease on June 19, 1997, to December 31, 1997, the
originally-specified lease termination date). However, Appellant does not
explain what action
or actions by Respondent caused problems for Appellant, or how the amount claimed
relates to its inability to sell the property.[2]
Appellant has not submitted any evidence in support of this claim item and has not even alleged any specific action by Respondent that caused Appellant to be damaged. Moreover, Respondent had the right to terminate the lease on one year’s notice without incurring any liability (FOF 8). More importantly, however, there is no evidence that this claim item has been submitted to the contracting officer, or that a final decision has been issued on the claim, both of which are prerequisites to this Board’s jurisdiction to consider it on appeal. 41 U.S.C. §605. Accordingly, this claim item is dismissed without prejudice.
16. On December 21, 1964, Respondent entered into a lease with Appellant for the Monson, Massachusetts Post Office. The lease had an initial term of ten years, from November 1, 1964, to October 31, 1974. The lease contained four five-year renewal options, exercisable by Respondent by providing 60 days written notice to the lessor prior to the expiration of any term of the lease. Respondent exercised each of the five-year renewal options, thereby extending the lease through October 31, 1994. (AF 4303, tabs 8, 16, 17, 19).
17. Clause 6 of the lease specified that the lessor was to furnish and pay for water and sewerage service, properly protect all windows and doors, and furnish plumbing and toilet facilities, necessary meters and a heating system (AF 4303, tab 8).
18. Clause 7 of the lease required Appellant to maintain the premises, including all equipment, fixtures and appurtenances furnished by Appellant, in good repair and tenantable condition, except for damage arising from the act or negligence of Respondent’s agents and employees (AF 4303, tab 8).
19. In 1966, Respondent directed Appellant to replace the exterior front door hinges on the building with hinges that could not be removed from the outside. Appellant performed this task at a cost of $198.00. (AF 4303, tab 35).
20. During 1969 and 1970, Respondent performed certain minor maintenance tasks (including repairs of leaking plumbing), and deducted their costs from rents otherwise due Appellant (AF 4303, tab 35).
21. In August of 1981, Appellant had the facility hooked up to the city’s sewer system. Thereafter, in 1992, Appellant contracted with Bay State Gas Company to provide the Monson Post Office with a gas service hookup. During installation of the gas line, the contractor damaged a roof drainpipe. The damaged drainpipe caused water to back up on the roof. Appellant subsequently repaired roof damage caused by the water backup problem. In February 1994, one of Respondent’s employees damaged a thermostat, and Appellant repaired it at a cost of $62.50. (AF 4303, tab 35).
22. In the fall of 1994, the parties agreed to a new lease for the Monson Post Office for the period November 1, 1994, through October 31, 1999. Under the terms of this new lease, Respondent had the right to terminate the lease any time after November 1, 1996, upon providing Appellant written notice of termination at least 365 days in advance of the termination date. (AF 4303, tab 28).
23. Pursuant to this new lease, Appellant agreed to be responsible for maintaining the premises in good repair and tenantable condition, except for damage resulting from the act or negligence of Respondent’s agents or employees. The lease also granted the Postal Service,
“the right to make alterations, attach fixtures and erect additions, structures or signs in or on the premises . . . which fixtures, additions or structures so placed in, upon or attached to the said premises shall be and remain the property of the [Postal Service] and may be removed or otherwise disposed of by the [Postal Service]. Prior to expiration or termination of this lease the [Postal Service] shall if required by the Lessor by notice in writing sixty days in advance of such expiration or termination, restore the premises to as good condition as that existing at the time of entering upon the same under this lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the [Postal Service] has no control, excepted.” (AF 4303, tab 28).
24. On November 1, 1996, Respondent provided written notice to Appellant that it would terminate the lease effective November 4, 1997. Respondent removed certain counters and partitions when it vacated the facility. In so doing, Respondent patched the tile flooring under the removed counters and partitions with tiles that did not match the original tiles. (AF 4303, tabs 34, 35).
25. On October 1, 1997, the rear door of the building was damaged during a break-in. Respondent had vacated the facility by this date. (AF 4303, tab 35).
26. By letter dated March 31, 1998, Appellant filed a claim under the lease with the contracting officer, in the amount of $55,064.22, for restoration damages and other miscellaneous claim items. Appellant’s claim listed the following items:
a. $359.04 for miscellaneous repairs to the facility accomplished by Respondent in 1969 and 1970.
b. $1,595.00 for sewer hook-up in 1981.
c. $18,578.00 for removal by Respondent at lease termination of counters, partitions and flooring.
d. $4,444.61 for gas service hookup and roof repairs.
e. $200.00 for repairing break-in damage that occurred on October 1, 1997, after Respondent vacated the facility but prior to lease termination and $4,680.00 to repair building lighting.
f. $4,320.00 to replace building lettering and repair a fascia board.
g. $12,000.00 for an environmental liability reserve for the removal and correction of asbestos, lead based paint and lead in the drinking water at the facility.
h. $198.00 for a 1966 correction to the hinges of the front door.
i. $1,300.00 for damage caused by Respondent’s removal of window air conditioners Respondent installed during the term of the lease.
j. $4,467.46 – 10% overhead.
k. $2,622.11 – 5% profit. (AF 4303, tab 35).
27. By letter dated June 16, 1998, Appellant informed Respondent’s contracting officer that it considered the contracting officer’s failure to respond to its March 31, 1998 claim a deemed denial of the claim and asked that the claim be passed on to “higher authorities and/or the appeals board” (AF 4303, tab 36).
28. Respondent did not forward Appellant’s June 16 letter to the Board and, by letter dated November 17, 1998, Appellant filed an appeal directly with this Board, which appeal was received and docketed on November 24, 1998, as PSBCA No. 4303 (AF 4303, tabs 37, 38).
29. By Order of this Board, on June 8, 2000, the contracting officer issued a final decision on Appellant’s March 20, 1998 claim in which he granted Appellant’s claim with respect to costs related to fascia board repairs and replacing the lettering. The contracting officer agreed to pay these costs upon receipt of satisfactory evidence of the work having been performed and payment made by Appellant. The contracting officer denied the remainder of the claim (Respondent’s supplemental evidence).
a. Miscellaneous Repairs in 1969 and 1970 -- $359.04
Appellant was required to maintain the premises in good repair and tenantable condition, except for damage arising from the act or negligence of Respondent’s agents and employees during the time period these repairs occurred (FOF 18). Appellant has not submitted any evidence to demonstrate that the act or negligence of Respondent’s employees caused the repairs being claimed under this item (FOF 20). Appellant is not entitled to recover anything under this claim item.
b. City Sewer System -- $1,595.00
Appellant claims the cost of hooking up the Monson Post Office to the city sewer system (FOF 21). However, Appellant was required to furnish and pay for sewerage services under the terms of the lease in effect at the time the Monson Post Office was hooked up to the city sewer system (FOF 17), and has not offered any arguments or evidence to support its claim that Respondent should bear the cost of hooking up the facility to the city sewer system. In these circumstances, there is no basis to find Respondent liable for the costs associated with connecting the post office to the city sewer system. See Poelstra Properties, PSBCA No. 3109, 92-3 BCA ¶ 25,090. Accordingly, this claim item is denied.
c. Respondent’s Removal of Counters, Partitions and Flooring -- $18,578.00
Appellant claims $18,578.00 in damages resulting from Respondent removing counters and partitions at the time of lease termination and for patching a 35-year-old floor with tiles that did not match the original tiles. (FOF 24). Respondent does not dispute that it removed counters and partitions when vacating the facility. However, Respondent argues that the measure of damages for failure to restore at the time of lease termination is the cost of restoration or the diminution in market value of the property caused by nonperformance, whichever is less, See J. Leonard Spodek d/b/a Alabama Postal Holdings, PSBCA No. 3964, 97-2 BCA ¶ 28,995, and that Appellant failed to demonstrate that the cost to restore is less than the diminution of value.
As noted previously, this decision is limited to addressing only issues of entitlement. The cost of restoration and whether or not a diminution in value resulted from Respondent’s failure to restore the premises at lease termination are determinations that are addressed in the quantum phase of proceedings. See San Nicolas v. United States, 617 F.2d 246, 249 (Ct. Cl. 1980); Adelaide Bloomfield Management Company v. General Services Administration, GSBCA No. 13125, 97-1 BCA ¶ 28,914. To the extent Appellant can show it was damaged, it may obtain recovery. Accordingly, this claim item is remanded to the parties to determine damages.
d. Gas Service Hookup and Roof Repairs -- $4,444.61
Appellant claims entitlement to the costs of hooking up the Post Office to a gas service (in lieu of using heating oil), and the costs of roof repairs that Appellant believes were necessary because of damage to a roof drain pipe caused by the gas service provider (FOF 21). Appellant has not cited any provision of the lease that would shift these costs to Respondent. In fact, the lease specified that Appellant was to furnish and maintain the heating system (FOF 17, 18). However, as Respondent damaged the thermostat (FOF 21), it is liable for its cost of repair. Accordingly, this claim item is sustained to the extent that Respondent must reimburse Appellant for the cost of replacing the thermostat damaged by Respondent’s employee, but is otherwise denied.
e. Break-in Damage and Lighting Repairs -- $4,880.00
Appellant seeks to recover the costs of repairing damage to a door and the light fixtures in the building at the termination of the lease (FOF 25). However, Appellant was responsible for maintaining the facility in good repair and tenantable condition during the term of Respondent’s occupancy (FOF 18). Although there is evidence of damage to the door, Appellant did not submit any evidence to demonstrate that the act or negligence of Respondent’s agents or employees caused the damage. Moreover, Appellant’s evidence of damage to light fixtures consists of photocopies of two photographs of light fixtures in the facility. It is not apparent from an examination of these photocopies whether there is any damage to the light fixtures. More importantly, however, this evidence does not satisfy Appellant’s burden of demonstrating that damage to the light fixtures, if any, was the result of acts or negligence by Respondent’s employees. Accordingly, Appellant is not entitled to recover the costs associated with repairing either the door or the light fixtures in the building.
f. Replace Building Lettering and Repair Fascia Board -- $4,320.00
Respondent has conceded liability for these items and will pay Appellant upon receipt of satisfactory evidence of payment made to repair the damage.
g. Environmental Liability Reserve -- $12,000.00
Appellant also claims entitlement to payment by Respondent of a $12,000.00 environmental liability reserve for the Monson Post Office. However, here also, Appellant has not offered any evidence to demonstrate that Appellant has incurred, or necessarily will incur, any costs as a result of these factors. (See section f. of Decision under PSBCA No. 4302, supra). Accordingly, this item is denied.
h. Correction of Front Door Hinges -- $198.00
In 1966, Respondent directed Appellant to replace the exterior hinges on the front door of the post office with hinges that could not be removed from the outside. Appellant performed this task at a cost of $198.00. (FOF 19). There is no evidence that the old hinges were defective. Therefore, this work did not fall within Appellant’s maintenance responsibilities for the facility and is compensable. Accordingly, Appellant is entitled to recover its costs in performing this work.
i. Respondent’s Removal of Window Air Conditioners -- $1,300.00
Appellant claims that the Postal Service caused damage to the building estimated at $1,300.00 when it removed Postal Service installed window air conditioning units at lease termination. Appellant’s only evidence of damage are five black and white photocopies of photographs of the building. These photocopies, however, are not clear enough to show whether there was any damage to the building. This claim is denied for lack of proof. See, e.g. National Construction Company, PSBCA No. 3902, 3929, 99-2 BCA ¶ 30,509.
30. On January 22, 1965, Appellant and Respondent entered into a lease for the Southborough, Massachusetts Post Office. The initial lease had a ten-year term, from June 1, 1964 to May 31, 1974, with four five-year options exercisable by Respondent. (AF 4564, tab 3).
31. Under clause 9 of the lease, the Postal Service was granted
“the right to make alterations, attach fixtures and erect additions, structures or signs in or on the premises . . . which fixtures, additions or structures so placed in, upon or attached to the said premises shall be and remain the property of the [Postal Service] and may be removed or otherwise disposed of by the [Postal Service]. Prior to expiration or termination of this lease the [Postal Service] shall if required by the Lessor by notice in writing sixty days in advance of such expiration or termination, restore the premises to as good condition as that existing at the time of entering upon the same under this lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the [Postal Service] has no control, excepted.” (AF 4564, tab 3).
32. Respondent subsequently exercised all four five-year options, thereby extending the lease through May 31, 1994. The parties then agreed to lease extensions which extended the term of the lease through May 31, 1999. (AF 4564, tabs 8-10).
33. In November 1988, the Postal Service altered the Southborough Post Office by cutting through the wall at the West end of the loading platform to create a four-foot wide door and attaching a 26-foot trailer to the building at this location to provide additional space for processing the mail. Before doing so, however, Respondent requested and received Appellant’s approval to make these alterations. (AF 4564, tabs 5-7).
34. By letter dated October 7, 1994, the Inspector of Buildings of Southborough informed Appellant that the trailer infringed on the rear set back specified in the town’s zoning regulations and that the trailer lacked a permit. The letter further informed Appellant that if the infractions were not corrected within ten days, legal proceedings would be instituted to have the trailer removed. (AF 4564, tab 14, Exhibit G).
35. Appellant hired an attorney to address the trailer issue with the town of Southborough. Appellant was billed $939.50 for the attorney’s work on the trailer issue. (AF 4564, tab 14).
36. By letter dated August 18, 1999, Appellant filed a claim in the amount of $15,880.05 for costs associated with the trailer addition to the facility ($5,968.46); damage to the building ($7,500.00); and ant extermination performed by Appellant after the Postal Service vacated the facility ($280.50); plus 10% overhead ($1,374.90); and 5% profit ($756.19) (AF 4564, tab 14).
37. By letter dated June 20, 2000, Appellant informed Respondent’s contracting officer that it considered the contracting officer’s failure to respond to its August 18, 1999 claim a deemed denial of the claim and asked that the claim be docketed by the Postal Service Board of Contract Appeals (AF 4564, tab 16).
38. During an August 2, 2000 telephone conference with the parties concerning PSBCA Nos. 4302 and 4303, the Board determined that Appellant’s June 20, 2000 letter should be treated as an appeal of a deemed denial of Appellant’s August 18, 1999 claim. The Board docketed this appeal on August 4, 2000.
39. By final decision dated September 19, 2000, the contracting officer granted Appellant’s claim to the extent of a payment of $939.50 for attorney fees associated with the trailer placement on the leased premises, as well as $280.50, representing the costs incurred by Appellant for insect extermination. In addition, the contracting officer agreed to pay $750.00 for brick damage repairs, but denied the remainder of the claim. (AF 4564, tab 20).
a. Trailer Addition -- $5,968.46
Appellant claims costs associated with correcting certain zoning infractions concerning the trailer attached by the Postal Service to the west end of the Southborough Post Office (FOF 33, 34). Appellant included both the costs of an attorney hired to work on this issue ($2,968.46), as well as 60 hours of its principals’ time, at $50.00 per hour ($3,000.00). The contracting officer allowed $939.50 of attorney costs, but denied the remaining costs claimed. Appellant’s own evidence demonstrates the attorney hired by Appellant charged only $939.50 for his work related to the trailer issue, with the remainder of his billing related to his efforts to obtain a zoning variance to enlarge the building (FOF 35), which is not at issue in this appeal. Thus, Appellant’s entitlement to recovery of attorney costs is limited to the attorney charges for work on the trailer issue that has been conceded by Respondent.
The sole evidence in the record to support Appellant’s claim that its employees expended 60 hours of work on the trailer issue consists of copies of the letters Appellant’s principals wrote concerning the issue. The claim was not supported by any specific evidence of costs incurred, such as payroll records, time sheets, diaries or logs, and Respondent argues that the claim fails for lack of proof. However, it is reasonable that Appellant expended some amount of time on this issue and, since only entitlement is at issue, to the extent Appellant can furnish Respondent adequate documentation to support the costs it claims, Appellant should be compensated. Accordingly, this item is remanded to the parties for negotiation of quantum to reimburse Appellant for any salary costs it can satisfactorily document that it incurred in resolving the trailer issue.
b. Repairs to Building -- $7,500.00
The $7,500.00 figure Appellant claims under this item represents its estimate of the cost to repair the damage resulting from the hole where a doorway was cut to attach the trailer to the building. Appellant did not offer any evidence to support the amount claimed. However, the contracting officer conceded liability for this item and, in his final decision, agreed to pay Appellant $750.00 for what he termed brick damage repairs (FOF 39). We agree that Respondent is liable for paying Appellant the reasonable cost of repairing the hole in the building. Again, because only entitlement is at issue, we do not address the amount of recovery. This item is remanded for negotiation by the parties of a payment for the reasonable cost of repair.
c. Ant Infestation -- $280.50
There is no dispute between the parties on this item. The contracting officer conceded that Appellant was entitled to recover the costs for this item. Therefore, the appeal is sustained with respect to this claim. (FOF 39).
The appeal under PSBCA No. 4302 is sustained to the extent that Appellant is entitled to recover for the sidewalk repairs it accomplished, as well as to recover the costs of repairing damaged light fixtures and ceiling openings. In addition, Appellant’s claim concerning its alleged inability to sell the property is dismissed without prejudice. PSBCA No. 4302 is otherwise denied.
The appeal under PSBCA No. 4303 is sustained to the extent that Appellant is entitled to recover the costs of replacing a thermostat ($62.50 has been claimed by Appellant as its cost for this item); the costs associated with replacing the building lettering and repairing the fascia board; the costs of correcting the front door hinges; and the damages sustained as a result of Respondent’s removal of counters, partitions and flooring. PSBCA No. 4303 is otherwise denied.
The appeal under PSBCA No. 4564 is sustained to the extent that Appellant is entitled to recover those attorney fees Appellant incurred for the attorney’s work on the trailer placed behind the post office, as well as any documented salary costs incurred by Appellant’s principals who worked on this same item; the reasonable cost of repairing the hole where the trailer was attached to the building; and the cost of exterminating the ant infestation. PSBCA No. 4564 is otherwise denied.
Appellant’s claims under each appeal includes a markup of 10 % overhead and 5 % profit on the direct costs it allegedly incurred, or will incur. To the extent Appellant can demonstrate that it incurred overhead, it may recover reasonable overhead costs, as well as a reasonable profit for each of the above items for which entitlement has been found.
The items that have been sustained in each of these appeals are remanded to the parties to negotiate quantum.
William K. Mahn
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
[1] Respondent was then 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] For example, Appellant does not explain why it seeks to double recover rental payments for the time period June 17, 1996 to June 19, 1997. Respondent vacated the facility on June 19, 1997 (see FOF 9), and has presumably paid Appellant rents owed for this period.