March 7, 2006        

 

Appeal of                                                                     

                                                                                                                                      

LAWRENCE M. MAGDOVITZ                                                                           

                                                                                                     

LEASE AGREEMENT                                            

 

PSBCA No. 5311

 

APPEARANCE FOR APPELLANT:         

Lawrence M. Magdovitz, II, Esq.

                                                                       

APPEARANCE FOR RESPONDENT:     

Patrice R. Dickey, Esq.

Memphis Law Office

United States Postal Service

 

OPINION OF THE BOARD

 

            Lawrence M. Magdovitz and J. G. Carter[1] leased a post office to Respondent, United States Postal Service.  When the roof developed leaks, Respondent directed Appellant to fix it.  Appellant did not repair the roof within the time allowed by Respondent, and Respondent engaged a contractor who performed the repairs.  The contracting officer demanded that Appellant pay its repair costs, and Appellant appealed.

A hearing was held, and the parties submitted briefs.  At the election of Appellant, this appeal is being processed under the Board’s Small Claims (Expedited) procedures, 39 C.F.R. §955.13, and entitlement only will be addressed (Transcript of Hearing, p. (“Tr.”) 5).

FINDINGS OF FACT

            1.  On August 2, 1995, Respondent leased from Appellant the building used as the Caddo, Oklahoma Post Office.  The initial term of the lease was August 16, 1997, through August 15, 2002, and on August 24, 2000, Respondent exercised the first and only five-year renewal option, extending its occupancy to August 15, 2007.  (Appeal File, Tabs (“AF”) 8, 9; Stipulations (“Stip.”) 1, 2, 4).

            2.  Under the lease’s Maintenance Rider-Lessor Responsibility provision (Aug. 1992) (“Maintenance Rider”), the Lessor (Appellant) is required to maintain the premises “in good repair and tenantable condition.”  (AF 9; Stip. 3).

3.  The Maintenance Rider also provides that if, after written notice, the Lessor fails to fulfill his maintenance obligation “the Postal Service shall have the right to perform the work by contract or otherwise and withhold the cost thereof (which may include administrative cost and/or interest) from payments due or to become due under this Lease.”  In the written notice, Respondent is to specify a time to complete the repairs that is “reasonable and commensurate with the nature of the work required.”  The Maintenance Rider gives Respondent discretion to grant the Lessor an extension of time to complete the repairs.  (AF 9; Stip. 3).

            4.  Leaks developed in the post office roof in early 2004 (Tr. 44-45; Appellant’s Exhibits (“App. Exh.”) A, C; Respondent’s Exhibit (“Resp. Exh.”) 8).  Appellant re-roofed the building in March 2004 (Tr. 46-47; App. Exh. B, D), but leaks returned in September 2004 (Tr. 48-51; App. Exh. E, K).  Appellant engaged a different contractor who installed a new rubber roof in October or November 2004 and provided a 5-year labor warranty on the roof (Tr. 51-55, 58-60, 69, 80-81; App. Exh. G, H, J, L, M).

            5.  Leaks reappeared in August 2005.  During rains Respondent put out more than a dozen mail tubs lined with plastic trash bags in an effort to catch the water falling onto the workroom floor.  After each rain ended and the leaking subsided, before the affected workroom area could be used for postal purposes, the tubs had to be removed and about 45 minutes of mopping by postal employees was required.  This continued with each rainfall until the roof was repaired.  (Resp. Exh. 1, 2, 4, 5).

6.  By certified letter dated August 18, 2005, Respondent’s real estate specialist notified Appellant that the Caddo Post Office roof was leaking onto the workroom floor in several areas and that the leaks had damaged some ceiling tiles.  The letter instructed Appellant to repair the roof no later than October 3, 2005, and advised that if he did not do so, Respondent would have the work done and deduct the cost from future rental payments.  The letter included a contact telephone number for the specialist.  Appellant received the letter on August 23, 2005.  (AF 7; Stip. 5).

            7.  On August 23, 2005, the specialist sent Appellant another certified letter that was identical to the first except it added a requirement to repair a workroom light and changed the date for completion of all the work, including the roof, to October 7, 2005.  Appellant received the second letter on August 25, 2005.  The approximately 45 days between Appellant’s receipt of the first letter and the October 7, 2005 completion date was a reasonable time period for completion of the roof repairs.  (Tr. 19, 24, 40; App. Exh. N; AF 6; Stip. 6).

            8.  Appellant did not repair the roof by October 7, 2005.  By letter to Appellant dated October 13, 2005, the real estate specialist noted Appellant’s failure to repair the roof and stated Respondent’s intention to obtain the needed repairs through a third-party contractor.  The specialist asked that Appellant take no further action to accomplish the repairs.  Appellant received this letter on October 18, 2005.  (AF 5; Stip. 7).

9.  After the October 7, 2005 deadline passed, Respondent engaged a roofing contractor, who repaired the Caddo Post Office roof on October 20, 2005.  Respondent paid the contractor $1,835 for the repair work (patching) and for preparing an assessment of the roof’s condition.  (Tr. 20-21, 40-41; AF 2, 4).

10.  By letter dated October 31, 2005, the contracting officer demanded that Appellant pay the cost of the roof and other repairs performed at the Caddo Post Office.  He stated that if Appellant did not pay the full amount by November 14, 2005, Respondent would deduct its repair costs from Appellant’s rent (AF 2).[2]  Appellant filed an appeal from that demand, which was docketed as PSBCA No. 5311.

DECISION

            Respondent has demonstrated that repairs were necessary to stop significant leaks in the Caddo Post Office roof, that it followed the procedures set forth in the lease to notify Appellant of the need for repairs and that Appellant failed to accomplish the repairs within the time allowed.  It has established a prima facie showing of entitlement to recover its reasonable costs of the roof repairs.  See J. Leonard Spodek, National Postal Management, PSBCA No. 4209, 99-1 BCA ¶ 30,600; Real Properties MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829 at 138,756.

            Appellant argues that the time Respondent allowed him to repair the roof was inadequate.  He testified that as the owner of more than 600 post offices, he receives a large number of repair requests daily and it is difficult for him to engage local contractors quickly to perform repairs at post offices in small towns such as Caddo.  However, given the obvious hardship on postal operations in the Caddo Post Office caused by the leaking roof (Finding 5), the limited nature of the repairs needed (which apparently took only one day to perform), and the fact that Respondent engaged a contractor to perform the work within two weeks after Appellant’s deadline passed (Finding 9), we are satisfied that the 45 days allowed for the repair was “reasonable and commensurate with the nature of the work required.”  (Findings 3, 7).  We do not doubt that managing the repair and maintenance at 600 post offices is a daunting task, but that does not excuse Appellant’s failure to meet the requirements of his repair obligation under the lease for the Caddo Post Office.

  Appellant argues that he was making arrangements for the repair and would have repaired the roof but that Respondent acted hastily in performing the work itself just two weeks after the deadline given Appellant.  He points out that Respondent often did not perform repairs at other post offices so quickly after the lessor’s deadline passed.  Appellant also suggests that he or someone in his office may have told a postal employee that he was attempting to get a roofer to work on the Caddo roof.  However, he did not complete the repairs within what we have found to be a reasonable time, and there is no evidence that he requested an extension of the time to complete the repairs, as permitted by the Maintenance Rider (Finding 3).

Finally, Appellant argues that actions of Respondent voided the 5-year warranty he received from the roofer who installed the roof in late 2004 (Finding 4).  However, at this time the Board is considering only entitlement issues and not quantum.  Whether Appellant could have obtained the roof repair work for less than Respondent’s costs is an issue relating to the amount of Respondent’s recovery, which is not at issue at this stage of the proceeding.  As to entitlement, however, that the roofer may have refused to consider the roof repair needed in 2005 as warranty service, i.e. to be done at no labor cost to Appellant, does not excuse Appellant’s failure to repair the roof within the time allowed.

Appellant also argues that Respondent knew of the roofer’s refusal to honor his warranty and failed to tell Appellant.  While there is hearsay evidence suggesting that Appellant’s roofer commented to the postmaster before the October 7 deadline that he would not honor his warranty because someone else had performed work on the roof (Resp. Exh. 1), Appellant presented no evidence that would show that Respondent performed any work on the roof between the 2004 new roof installation and the October 20, 2005, repair.  Furthermore, it was Appellant’s responsibility to arrange for the repair of the roof and to supervise any contractor performing the work.  He has not shown any duty on Respondent’s part to advise him of the postmaster’s interaction with Appellant’s roofer under the circumstances of this appeal.

Appellant has alleged an independent claim against Respondent for the value of the warranty he claims was lost due to Respondent’s actions.  This claim has not been presented to the contracting officer.  Absent submission of a claim in a sum certain to the contracting officer and a final decision by the contracting officer from which an appeal is taken, the Board lacks jurisdiction over Appellant’s claim for the value of the allegedly lost warranty.  See Linda Copman, PSBCA Nos. 4889, 4903, 03-2 BCA ¶ 32,342; Sunshine Development, Inc., PSBCA No. 4200, 99-1 BCA ¶ 30,149.  Accordingly, that claim is dismissed without prejudice.

Otherwise, the appeal is denied.  Respondent is entitled to recover from Appellant’s rent its reasonable costs of repairing the roof at the Caddo Post Office.  See Massapequa Partners Limited Partnership, MPL Group, Inc., PSBCA No. 3817, 97-2 BCA ¶ 29,058 at 144,632.  Determination of the amount of those costs is remanded to the parties.

 

 

Norman D. Menegat

Administrative Judge

Board Member

 

 

 

 


[1] Mr. Magdovitz conducted all communication with Respondent and pursued this appeal.  Accordingly, we refer to him herein as “Appellant” although he was but one of the two co-lessors.

[2] The parties have resolved the dispute regarding the other repairs, leaving only the roof repair at issue in this proceeding (Tr. 12, 13).