Appeal of

VALLEY REALTY COMPANY

PSBCA No. 5344

LEASE AGREEMENT

APPEARANCE FOR APPELLANT:
Lawrence M. Magdovitz, II, Esq.

APPEARANCE FOR RESPONDENT:
Patrice R. Dickey, Esq.

OPINION OF THE BOARD

            Appellant, Valley Realty Company,^[1] leased a post office to Respondent, United States Postal Service.  Appellant performed a number of minor repairs to the building and requested that Respondent reimburse their cost.  Respondent refused, and Appellant appealed the contracting officer’s final decision denying its claim.

            A hearing was held in Memphis, Tennessee, and the parties have submitted post-hearing briefs.  Appellant elected application of the Board’s Small Claims (Expedited) procedure, 39 C.F.R. §955.13.  Entitlement only will be addressed (Transcript of Hearing, Page (“Tr.”) 5).

FINDINGS OF FACT

            1.  On March 1, 2000, Appellant leased to Respondent the building housing the Tutwiler, Mississippi Post Office for the term September 1, 2002, through August 31, 2007, at an annual rental of $12,480.  (Appeal File, Tab (“AF”) 1; Stipulations of Fact, Paragraph (“Stip.”) 1).

            2.  The lease includes a clause entitled “Maintenance Rider, Lessor Responsibility – Except Minor Repairs.”  In pertinent part, the Maintenance Rider provides,

            “a.  The Lessor shall, except as otherwise specified herein and except for damage resulting from the negligence of Postal Service agents or employees, 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.  For the purpose of so maintaining said premises and property, the Lessor may at reasonable times, and upon reasonable notice to the facility manager, enter and inspect the same and make any necessary repairs thereto.  Additionally, the Lessor shall designate maintenance repairmen for electrical emergencies, plumbing emergencies and for heating, ventilating and air conditioning and other emergencies (windows, doors, locks and other elements), who may be called by the Postal Service in the event of any emergency situation involving maintenance when the Lessor or the Lessor’s agent cannot be contacted within a reasonable time.

b.  EXCEPTIONS

            (1)  Minor Repairs.  Notwithstanding the above, the Postal Service, in its sole and absolute discretion, may choose to assume responsibility for individual minor repairs (defined as repairs which the Postal Service reasonably estimates will not exceed $250.00) on a case-by-case basis.  Failure to do so will not absolve Lessor of responsibility to perform any such repair.  If reasonable and appropriate, the Postal Service may use the emergency repair personnel designated by the Lessor to perform such minor repairs.  Any minor repair undertaken by the Postal Service is intended solely to protect against further damage and does not relieve the Lessor from maintaining the premises in good repair and tenantable condition; Lessor shall remain fully responsible for all repairs other tha[n] the minor repairs undertaken by the Postal Service pursuant to this paragraph.  Nor shall Lessor’s responsibility for future repairs of an item or system be limited in any way as a result of the Postal Service’s effecting minor repairs to that item or system pursuant to this paragraph.  The $250.00 figure noted above does not represent a deductible amount to be paid by the Postal Service for any repair undertaken by or the responsibility of Lessor, whether major or minor in nature.”

(AF 1, Lease Page M-1. 2; Stip. 3).

            3.  On September 16, 2002, Appellant hired Dublin Electric Inc. to check the outside lighting system and replace a photo cell light switch and bulbs.  Appellant paid Dublin Electric $148.16 for the work.  (Stip. 6; App. Exh. A).

            4.  On November 23, 2002, Appellant hired Dublin Electric Inc. to check a problem with the exterior lights touching the building gutters and on November 25, 2002, to replace light bulbs and check the lighting.  The total charge for these two visits was $85.60.  (Stip. 7; App. Exh. A).

            5.  On January 8, 2003, Appellant hired Jones Electric Service to install a release valve for a hot water heater.  The amount charged was $33.95.  (Stip. 8; App. Exh. A).

            6.  On October 23, 2003, Appellant hired The Lock Doctor to replace the cylinder on the rear entry door and provide duplicate keys.  The amount charged was $79.18.  (Stip. 10; App. Exh. A).

            7.  On June 20, 2004, Appellant hired Budget Aire Heating & Air Conditioning to service and repair the air conditioning.  The amount charged was $172.27.  Before Respondent referred that repair to the lessor, Respondent’s Field Maintenance Office had estimated its cost to be between $1,500 and $2,000.  (Stip. 9; App. Exh A; Tr. 49-50, 56-57, 63).

            8.  On September 28, 2005, Appellant hired Budget Aire Heating & Air Conditioning to check and repair the air conditioner and to check the generator.  The amount charged was $96.30.  (Stip. 5; App. Exh. A).

            9.  On January 30, 2006, Appellant contacted Respondent requesting reimbursement in the amount of $615.46, the total cost of the above repairs to the Tutwiler Post Office (Stip. 11; see App. Exh. B).

            10.  By letter dated March 1, 2006. a Real Estate Specialist in Respondent’s Southeastern Facilities Service Office in Lawrenceville, Georgia responded to Appellant’s January 30 request.  He advised that he had checked with Postal Service Headquarters regarding the reimbursement policy under the applicable maintenance rider and that it was Respondent’s policy not to reimburse lessors based on submitted invoices for repairs performed by the lessor.  Further, he advised,

“The intent of the minor repairs provision rider is for the POSTAL SERVICE, at its discretion, to assume responsibility for individual minor repairs.  This would be as a matter of convenience for the parties, not a mandatory reimbursable to the lessor.”

(Stip. 12; App. Exh. B; see Tr. 58).

            11.  By letter dated March 6, 2006, Appellant submitted a second request for reimbursement of $615.46 for the minor repairs it had performed, pointing out that the repairs had been done at the request of Respondent and requesting a contracting officer’s final decision if Respondent declined to pay (Stip. 13; AF 2).

            12.  By final decision dated March 15, 2006, the contracting officer denied Appellant’s claim.  In her letter, the contracting officer mentioned as a reason for denying the claim that the estimated cost of each repair had exceeded $500.^[2]  Appellant appealed.  (Stip. 14, 15; AF 2, 3).

            13.  In December 2003, Respondent established a maintenance response hotline to which post offices reported needed repairs.  A record was maintained of all the requests and their disposition.  (Tr. 43).  As reflected in the response line records, Respondent performed a number of repairs at the Tutwiler Post Office that cost less than $250 and did not charge Appellant for them (Tr. 55, 67).  On April 20, 2004, plumbing was cleaned out, and the lessor was not charged (Tr. 64-65).  On October 12, 2005, the flagpole rope was off line and the flag could not be raised, and Respondent fixed it (Tr. 60).  On November 8, 2005, the postmaster bought paint for restriping the parking lot but got the city to provide the labor (Tr. 58-59).  On February 13, 2006, Respondent’s employees repaired a deadbolt lock (Tr. 58).  On May 25, 2006, Respondent’s employees painted the handicap access ramp (Tr. 59-60).

DECISION

            Appellant argues that the Minor Repairs clause made Respondent responsible for all repairs that cost less than $250 and required Respondent to reimburse Appellant for repairs it performed at a cost less than $250.  Respondent argues that the clause allows Respondent sole discretion to determine whether it will perform a minor repair at its own expense, but Appellant contends that Respondent’s interpretation renders the provision, at best, meaningless and that including the clause in the lease constitutes fraud on Respondent’s part if it never intends to perform minor repairs.

            Where the language of a contract is unambiguous, it must be given its plain and ordinary meaning, see McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996); Steelhead Constructors, Inc., ASBCA No. 55283, 06-2 BCA ¶ 33,388 at 165,530, recon. denied, 2006 ASBCA LEXIS 106, December 15, 2006, and we find the language of the Minor Repairs clause to be clear and unambiguous.  The Minor Repairs clause grants Respondent the right to perform certain minor repairs to Appellant’s building, notwithstanding Appellant’s general responsibility for maintenance, but does not obligate Respondent to do so (“the Postal Service, in its sole and absolute discretion, may . . .”).  If Respondent chooses not to perform the repair, Appellant is not absolved of its obligation to do so.  The clause anticipates possible lessor responses to Respondent’s performance of such repairs by providing that if Respondent exercises its discretion and performs a minor repair, Appellant is not relieved of its obligation to maintain the premises generally or of its responsibility for future repairs to the particular building element repaired by Respondent.

            Notwithstanding that its interpretation of the Minor Repairs clause is not supported by the language of the clause, Appellant argues that at the time the lease was negotiated the parties interpreted the Minor Repairs clause to require Respondent to pay for all repairs under $250 and that Appellant gave consideration in the form of a lower rent in exchange for being relieved of responsibility for all minor repairs.  As we find the provision unambiguous, we may not resort to extrinsic evidence to interpret it.  Id.; Coast Federal Bank, FSB v. United States, 323 F.3d 1035, 1038, 1040-1041 (Fed. Cir. 2003) (en banc) (“When the contractual language is unambiguous on its face, our inquiry ends and the plain language of the Agreement controls.”).  Under the circumstances present in this appeal, we rely only on the language finally included in the lease, see National Constr. Co., PSBCA No. 3616, 95-2 BCA ¶ 27,756, and conclude that the lease authorizes Respondent to perform minor repairs but does not obligate it to do so or to reimburse Appellant when Appellant performs minor repairs.

            Even accepting the plain meaning of the Minor Repairs clause, Appellant argues that Respondent breached its duty under the clause to exercise its discretion reasonably as it never chose to perform any repairs and because it failed to estimate the cost of repairs reasonably.  As mentioned above, Appellant is in error when it says Respondent never performed repairs under the Minor Repairs clause (Finding 13).  Additionally, Appellant has not shown that Respondent breached any duty owed Appellant regarding estimates of repair costs.  The Minor Repairs clause authorizes Respondent to decide not to perform repairs even if their estimated cost is less than $250 and always to deny reimbursement for lessor-performed repairs.  Therefore, whether reasonable estimates were made in all cases does not affect whether Appellant should be reimbursed for the minor repairs it performed. 

            The appeal is denied.

Norman D. Menegatbr
Administrative Judge
Board Member

[1]  This appeal was originally docketed in the name of Appellant’s president, Lawrence M. Magdovitz.  The caption has been corrected.

[2]  The reference to a $500 threshold was in error (Tr. 71).