July 23, 2007

 

Appeal of                                                                               

                                                                                                                                     

NATIONAL POSTAL MANAGEMENT                                                                    

 

LEASE AGREEMENT                                            

 

PSBCA No. 5329                    

 

APPEARANCE FOR APPELLANT:         

J. Leonard Spodek                                                              

Nationwide Postal Management

                                                                       

APPEARANCE FOR RESPONDENT:     

Maria R. Infanger, Esq.                                                                                

Chicago Law Office                                                                         

United States Postal Service                           

 

OPINION OF THE BOARD

 

            Appellant, Nationwide Postal Management, has appealed the contracting officer’s denial of its claim for the cost of making repairs and replacing equipment at the Marinette, Wisconsin Post Office, which it leased to Respondent, United States Postal Service.  This appeal is being decided on the record, without a hearing, under 39 C.F.R. § 955.12.  Only entitlement is at issue (Order of August 4, 2006).

FINDINGS OF FACT

            1.  In 1960, Appellant’s predecessor[1] and Respondent’s predecessor[2] entered into a lease of real property for use as the Marinette, Wisconsin Post Office.  The lease was for a term of 20 years, with three ten-year options that could be exercised by Respondent.  The last of those options having been exercised, the lease term will expire on January 31, 2010.  (Appeal File, pages (AF) 4-8, 16).

            2.  The lease contained the following two provisions relevant to this appeal:

“6.  The Lessor shall furnish to the Government, under the terms of this lease, as part of the rental consideration, the following:  … Lessor shall furnish lighting fixtures, plumbing and toilet facilities, and necessary meters, all as now installed in the demised premises; ….

 

“7.  The Lessor shall, unless herein specified to the contrary maintain the demised premises, including the building and any and all equipment, fixtures, and appurtenances, whether severable or non‑severable, furnished by the Lessor under this lease in good repair and tenantable condition, except in case of damage arising from the act or the negligence of the Government’s agents or employees ….”

 

 [Emphasis added]  (AF 4-5).

 

            3.  In September 2003, water service to the post office had to be shut off because of two significant leaks in the water supply pipes.  Appellant arranged for the necessary plumbing repairs.  (Wagner Declaration; AF 30).

            4.  Through an October 30, 2005 letter to the contracting officer Appellant alleged that it had performed plumbing work at the Marinette Post Office that was not its responsibility and requested reimbursement in the amount of $10,801.42.  The work for which Appellant sought reimbursement was replacement of the water service in September 2003 and installation of a water heater in March 2002.  By letter dated January 24, 2006, Appellant requested that the contracting officer treat its request for reimbursement as a claim and that he issue a final decision.  (AF 18-28, 29).

            5.  In a final decision dated February 10, 2006, the contracting officer denied Appellant’s claim for plumbing repairs, citing paragraph 7 of the lease (Finding 2).  The contracting officer did not specifically address the portion of the claim related to the water heater installation.  (AF 2-3; Meador Declaration, ¶15).  Appellant filed a timely appeal (AF 1).

DECISION

            Appellant, which has the burden of proof in this appeal, e.g., Jereld Michael, PSBCA No. 4779, 04-1 BCA 32,497, argues that language referring to plumbing and toilet facilities in paragraph 6 of the lease – specifically, “all as now installed in the demised premises” – constitutes an exception to the lessor’s general obligation to maintain the premises, contained in lease paragraph 7.  Appellant contends that the above language limits its obligation with respect to, in this case, plumbing facilities originally furnished under the lease and does not require it to replace original equipment that fails.

            Respondent argues that the language of paragraph 6 cited by Appellant does not limit Appellant’s general obligation to maintain the premises, but merely specifies the equipment to be provided by the lessor - which equipment Appellant is obligated to maintain under paragraph 7 of the lease.

            As we have held, the lessor's obligation under a Postal Service lease to maintain the premises “in good repair and tenantable condition” creates a general obligation on the lessor to repair (and to replace if necessary) equipment or building elements.  E.g., M. R. Kaplan, et al., PSBCA Nos. 1147, 1298, 1303, 1310, 88-3 BCA ¶ 20,827; Carlos N. and Betty Lou Taylor (Taylor Investments), PSBCA No. 1675, 88-1 BCA ¶ 20,483; Paoli Plaza Investment Corp., PSBCA Nos. 3711 & 4057, 98-1 BCA ¶ 29,445.  Therefore, unless relieved of the obligation by other lease language, Appellant was responsible for repairing or replacing the water service piping and replacing the water heater, and may not recover the associated costs from Respondent.[3]

            We do not agree with Appellant’s position that the language “as now installed in the demised premises” acts to modify its general maintenance obligation.  Appellant argues that the use of this language, which it claims varies from the “more common ‘boiler plate’ lease terms,” demonstrates that the parties to the lease intended to limit the lessor’s maintenance obligation.  As evidence, Appellant offers what it alleges are excerpts from other Postal Service leases (also from the 1960’s), some of which contain the “as now installed” language in paragraph 6 of the lease and some of which do not.  Even taken at face value, the lease excerpts demonstrate only that the parties to the various leases used many variations in language in paragraph 6.  They do not support Appellant’s argument that the presence of the “as now installed” language yields the interpretation Appellant seeks to attribute to it in the lease before us here.  Appellant has not cited any cases in which the combination of language present in this lease was held to limit a lessor’s general maintenance obligation, and we are aware of none.

            As contained in this lease, the language on which Appellant relies indicates only that the lessor’s obligation to furnish “lighting fixtures, plumbing and toilet facilities, and necessary meters” at the beginning of the lease term was fulfilled by furnishing the items in those categories that were then installed in the demised premises.  We do not interpret this language, as used in this lease, as relieving Appellant of its maintenance obligations during the lease term.

            Accordingly, the appeal is denied.

 

 

 

 

David I. Brochstein

Administrative Judge

Vice Chairman

 

 

I concur:                                                                      I concur:

William A. Campbell                                                 Norman D. Menegat

Administrative Judge                                                Administrative Judge

Chairman                                                                   Board Member

 


[1]   Appellant acquired the property in 2001 (AF 17).

[2]   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 Postal Service, and the Post Office Department was abolished.

[3]   With respect to replacement of the water heater, the record contains no evidence other than an invoice from the contractor that replaced it.  The record contains no evidence of the circumstances that led to the need for its replacement.  However, neither party has argued that the water heater replacement is subject to legal considerations different from those applicable to the replacement/repair of the water service piping, and we have, therefore, considered them together.