Appeal of

DERBY MESA PARTNERS

PSBCA No. 6122

LEASE AGREEMENT

APPEARANCE FOR APPELLANT:
Andrew Spodek
Nationwide Postal Management

APPEARANCE FOR RESPONDENT:
Patrice R. Dickey, Esq.
Memphis Law Office
United States Postal Service

OPINION OF THE BOARD

            After Respondent, United States Postal Service, vacated premises it had leased from Appellant, Derby Mesa Partners, Appellant submitted a claim for restoration of the building due to damage allegedly caused by Respondent.  The contracting officer granted a portion of the claim but denied the remainder, and Appellant appealed the denial.

            At the election of the parties, the appeal is being decided on the record in accordance with 39 C.F.R. §955.12 without an oral hearing.  Both entitlement and quantum will be addressed (Order, December 11, 2007).

FINDINGS OF FACT

            1.  In 1993, Respondent leased a building to house its Ysleta Finance Unit in El Paso, Texas.  Appellant succeeded to the lessor’s interest in 2001.  That lease expired June 30, 2005, and, effective July 1, 2005, the parties entered into a new lease (“the Lease”) for the facility.  (Appeal File, Tabs (“AF”) N, O, P; Stipulation of Non-Contested Facts (“Stip.”) 1).

            2.  The Lease authorized Respondent to make alterations to the premises and to remove such alterations prior to the expiration of the lease, restoring the premises “to as good condition as that existing at the time of entering upon the [Lease], reasonable and ordinary wear and tear and damages by the elements . . . excepted.”  If Respondent elected not to remove the alterations or improvements, under the Alterations clause they became “the property of the Lessor and any rights of restoration are waived.”  (AF N, General Conditions to USPS Lease, section A.21, Alterations).

            3.  Under the Lease’s Maintenance Rider, Respondent was “responsible for ordinary repairs to, and maintenance of the demised premises except for those repairs that are specifically made the responsibility of the Lessor in this Lease.”  Appellant was specifically responsible for all repairs to the roof system and for “[a]ny ordinary repairs by the Postal Service which were made necessary by the failure of any element for which the Lessor is responsible.”  Respondent was responsible for maintaining the air conditioning system, including the condensers, which were located at ground level just outside the facility’s furnace room.  There were no condensate drain lines on the roof or in the ceiling.  (AF N (Maintenance Rider - USPS Responsibility (Partial), (v2.2, June 1999), section c); Stip. 3; Declaration of S. Rybicki (“Rybicki Decl.”) ¶3C).

            4.  The Lease permitted Respondent to terminate on 30 days’ notice after May 31, 2006.  Respondent vacated the premises on September 11, 2006, and, by written notice dated September 25, 2006, terminated the lease effective October 31, 2006.  (AF H, J, K; Stip. 4).

            5.  On September 29, 2006, Appellant requested that Respondent restore the premises and suggested a joint inspection to determine what restoration was needed (AF J; Stip. 5).

            6.  By letter to Respondent dated September 29, 2006, Appellant identified eight conditions it believed Respondent was required to restore or repair.  On December 12, 2006, Appellant furnished Respondent with an estimate of $5,720 from an El Paso contractor to correct the eight conditions.  The estimate listed the conditions and gave a price for each without explaining the repairs intended.  (AF F, G (p. 4); Stip. 5, 7).  The conditions were as follows:

                        a.  A number of small holes were left in brick and masonry block walls where Respondent’s signs, fire extinguishers, etc., had previously hung (AF G (pp. 9, 13-15); Complaint Exhibit B (pp. 4-7, 14); Rybicki Decl. ¶3A).  Appellant’s contractor’s estimate to repair this condition was $1,600 (AF F).

                        b.  Before vacating, Respondent removed lobby counters, exposing the bare concrete floor, which was not tiled in those locations as was the rest of the lobby.  Photographs of the concrete floor did not demonstrate that the untiled concrete floor in the lobby or elsewhere in the building was damaged or exhibited wear of any significance.  (AF G (pp. 11-12, 17-18); Complaint Exhibit B (pp. 5, 8, 13, 22-23); Rybicki Decl. ¶3B).  Appellant’s contractor’s estimate was $1,200 (AF F).

                        c.  There were a number of stained ceiling tiles that Appellant claimed Respondent was required to replace.  In August of 2006, Respondent had written to Appellant asking that it repair the leaking roof and replace approximately 6 ceiling tiles that had been damaged due to roof leaks.  Due to continuous rain in the area, Appellant had been unable to fix the leaks for two or more weeks after receiving the letter.  (Rybicki Decl. ¶3C and Exhibits A-C; AF G (p. 10); Complaint Exhibits B (p. 8), G (pp. 24-25)).  Appellant’s contractor’s estimate was $600 (AF F).

                        d.  Respondent had applied a plastic window tint to a large window in the rear of the building.  By the time the Postal Service vacated the premises, most of the plastic had been torn or peeled from the center of the window leaving the plastic tint only around the edges of the window.  The contracting officer offered to remove the remaining tint, but Appellant rejected the offer as it was in the process of selling the building and wanted only a monetary payment.  (AF G (p. 8), H (p. 9); Complaint Exhibit B (p. 10), G (p. 26); Rybicki Decl. ¶3D).  Appellant’s contractor’s estimate was $1,500 (AF F).

                        e.  One electrical outlet was missing (AF G (p. 7); Complaint Exhibit B (p. 10); Rybicki Decl. ¶3E).  Appellant’s contractor’s estimate was $60 (AF F).

                        f.  The handle was missing from the door to the women’s restroom (AF G (p. 6); Complaint Exhibit B (p. 11); Rybicki Decl. ¶3F).  Appellant’s contractor’s estimate was $60 (AF F).

                        g.  A section of the tile floor in the women’s restroom did not match the remainder of the floor.  The tile in the questioned area matched the size but was not close to matching the color of the surrounding floor tile.  Grout about an inch in width surrounded the mismatched section.  (AF G (p. 16); Complaint Exhibits B (p. 11), J; Rybicki Decl. ¶3G).  Appellant’s contractor’s estimate was $500 (AF F).

                        h.  Four small holes were left in the tile wall in the women’s restroom by removal of a hand towel dispenser (AF G (p. 5); Complaint Exhibit B (p. 12); Rybicki Decl. ¶3H).  Appellant’s contractor’s estimate was $200 (AF F).  Respondent estimated the total cost of repairing these holes and those in the brick and masonry block discussed in Finding 6a, above, to be $300 based on the cost to seal the holes with a sealant that matched the brick or tile, as appropriate, and to seal and repaint the patches in the masonry block wall to match the existing.  Three hundred dollars for this work was a reasonable price.  (Rybicki Decl.  ¶¶5A and 5H).

            7.  On February 12, 2007, the contracting officer visited the building to assess any damage left by Respondent.  Based on her personal review of the conditions and advice from local postal officials, she emailed Appellant on February 23, 2007, that she believed Respondent was responsible for the missing electrical outlet and the door handle, but not the rest of the conditions.  (AF B, C, D, E; Stip. 8, 9; Rybecki Decl. ¶¶3, 4).

            8.  By March 19, 2007, Respondent had installed the electrical outlet (Finding 6e, above) and the door handle for the women’s restroom (Finding 6f).  (AF C).

            9.  On April 13, 2007, the contracting officer issued a final decision addressing Appellant’s restoration claims.  She granted Appellant’s claims for restoration of the electrical outlet and door knob on the women’s restroom (Findings 6e and 6f, above) by performing the required repairs.  She granted a total of $300 for repair of the holes in the walls (Findings 6a and h, above), and denied the remainder of Appellant’s claim.  (AF B; Stip. 10).

            10.  Appellant filed a timely appeal (Stip. 11).

DECISION

            Appellant argues that Respondent is liable for the cost of repairing or restoring the specified damage to the facility and that the estimate it obtained from a local contractor establishes that the amount of Respondent’s liability is $5,720.  Respondent concedes it is liable for the $300 granted by the contracting officer in her final decision to repair holes in the walls.  However, Respondent denies it is liable for any further monetary recovery.

            Appellant did not show that any of the conditions Appellant complained of resulted from the removal of alterations made by Respondent during the term of the Lease.  Absent such a showing, the Lease’s Alterations clause (Finding 2) did not impose a duty to restore on Respondent.  However, Respondent does not dispute that it had an obligation to repair damage to the premises at the end of the Lease term.  Under the Lease’s Maintenance Rider, Respondent was responsible for ordinary repairs and maintenance (Finding 3) and retained that responsibility until the end of the Lease term.  See National Constr. Co., PSBCA No. 4302, 4303, 4564, 02-1 BCA ¶ 31,661 at 156,426.

            Respondent concedes Appellant’s entitlement to $300, the reasonable cost of repairing the holes left by removal of Respondent’s signs, fire extinguishers (Finding 6a), and a towel dispenser (Finding 6h), and Appellant has not shown entitlement to any greater amount for this work.  The absence of detail or explanation in Appellant’s estimate limits its use in determining the reasonable cost of the repairs, and Respondent submitted persuasive evidence justifying the $300 figure as reasonable for the repairs.  Respondent satisfied any restoration obligation with respect to the missing outlet and door handle by replacing them (Findings 6e, 6f, 8).

            The untiled concrete floor left by the removal of the counter and the other areas of the concrete floor (Finding 6b) were not shown to be in need of repair or restoration.  The photographs submitted by Appellant do not show damage or unreasonable wear to the floor (Finding 6b).  Accordingly, Appellant has not shown Respondent to be liable for restoration or repair of the concrete floor.

            Appellant argued that Respondent was liable for replacement of the stained ceiling tiles, suggesting that the staining resulted from condensate leakage from the air conditioning system, which system was within Respondent’s maintenance responsibility.  However, the air conditioning condensate piping was not on the roof or in the ceiling (Finding 6c), and the evidence does not support Appellant’s alternative suggestion that the staining resulted from handling of the tiles by Respondent’s employees.  From the evidence in the record, the likely source of ceiling tile staining was water from leaks in the roof, a building element within Appellant’s maintenance responsibility (Findings 3, 6c).  Because the staining of the tiles resulted from the failure of an element for which Appellant was responsible, Respondent is not liable for replacing them.

             Appellant has failed to establish Respondent’s liability for the condition of the floor tile in the women’s restroom.  The mismatched tile was not shown to be within Respondent’s repair duty under the Maintenance Rider.  Moreover, Appellant did not show that Respondent installed the mismatched tile.

            While the window tint needed attention, by declining the contracting officer’s offer to remove the damaged plastic tint (Finding 6d), Appellant waived any duty of Respondent to repair it.

            Appellant is entitled to recover $300 for repair of the holes in the walls, plus Contract Disputes Act interest thereon.  To that extent, the appeal is granted, but it is otherwise denied.

Norman D. Menegat
Administrative Judge
Board Member

I concur:                                                                      I concur:
William A. Campbell                                                     David I. Brochstein
Administrative Judge                                                  Administrative Judge
Chairman                                                                     Vice Chairman