Appeal of

PARK RIDGE SOUTH HOLLAND PARTNERSHIP

PSBCA No. 6256

LEASE AGREEMENT

APPEARANCE FOR APPELLANT:
Martin Horwich

APPEARANCE FOR RESPONDENT:
Jacqui De Laet Skoglund, Esq.
Facilities and Environmental Law Unit
United States Postal Service

OPINION OF THE BOARD

            Appellant, Park Ridge South Holland Partnership, seeks payment by Respondent, United State Postal Service, of the cost of repairs performed at a leased post office.  Appellant elected the Board’s Small Claims (Expedited) Procedure, and the parties have submitted this appeal on the record, pursuant to 39 CFR § 955.12.  The parties submitted stipulations of fact.  Respondent submitted a witness declaration and a legal brief.  Appellant submitted neither witness testimony nor a brief

FINDINGS OF FACT

            1.  In 1969, Appellant’s predecessor in interest and Respondent^[1] entered into a lease for the Park Ridge, Illinois Post Office (Appeal File Tab (AF) 1; Stipulations (Stips.) 1, 3).  The lease has been renewed several times, and is scheduled to expire in 2014 (Stip. 2). 

            2.  In 1981, a lease amendment was executed which included a Maintenance Rider establishing the maintenance obligations of the parties.  Paragraph 1, Obligations of the Postal Service, provided:

The Postal Service shall keep the demised premises in good repair and tenantable condition, except that the Postal Service will not be obligated to make any repairs which are the responsibility of the Lessor as specified in paragraph 2 of this rider.  The term “demised premises” as used in this paragraph includes the improvements thereon and the appurtenances thereto, and any and all equipment and fixtures furnished or to be furnished by the Lessor under this lease.  The Postal Service’s responsibilities as stated herein shall be fulfilled at such time and in such manner as the Postal Service considers necessary to keep the demised premises, equipment, fixtures, improvements and appurtenances in proper condition.

Paragraph 2, Obligations of the Lessor, provided:

The Lessor shall be responsible for all structural repairs to the demised premises, for repairs resulting from Acts of God, or acts of the public enemy, for repairs to all common or joint use areas that may be included as part of this lease agreement, for repairs resulting from defects in building construction or installation of equipment, fixtures and appurtenances furnished by the Lessor, for repairs resulting from fire or other casualty or calamity, unless such damage arises from the act or the negligence of the Postal Service’s agents or employees, and for any repairs in postal maintained areas made necessary by any failure to a facility element for which the Lessor is responsible.  Structural repairs as used in this paragraph shall be limited to the foundation, bearing walls, floors, excluding the floor covering, column supports, and the roof system, including but not limited to roof covering, flashing, and insulation.

(AF 2).

            3.  On May 28, 2008, Appellant transmitted a letter to Respondent that addressed responsibility under the lease for several problems at the post office.  Appellant noted the need for repair of downspouts and tuckpointing, which Appellant asserted were Respondent’s responsibilities because they were not structural repairs.  Appellant also stated that interior water damage was evident in the areas directly behind the exterior walls where the downspouts are located, and concluded that this was caused by water coming through the exterior walls where the mortar was deteriorated or by a blockage in the interior drainage system into which the downspouts fed.  (AF 10).

            4.  Tuckpointing is the process of repairing mortar joints between bricks (Declaration of V. Mody (Mody Decl.) ¶ 7).

            5.  On June 6, 2008, Respondent’s contracting officer replied by forwarding a legal analysis prepared by counsel.  That analysis concluded that downspout repairs and tuckpointing were Appellant’s responsibility under Respondent’s interpretation of the lease.  (AF 11).

            6.  On June 12, 2008, Appellant responded, asserting that the downspout repairs and tuckpointing were urgently needed.  Appellant explained that it intended to perform those repairs to avoid additional damage to the property, and that it intended to seek reimbursement from Respondent thereafter. (AF 13).

            7.  As of June 2008, the downspouts leaked at points approximately three feet below the roof gutters where the downspouts entered the building’s internal drainage system plumbing, and were in need of repair (AF 12, 13).

            8.  As of June 2008, the mortar between the bricks at the exterior walls of the Park Ridge Post Office immediately below the leaking downspouts was damaged, and in need of repair.  This damage to the exterior walls was caused by water runoff from the downspouts.  (Mody Decl. ¶¶ 8-9; AF 12; Stip. 8). 

            9.  In July 2008, a roofing contractor retained and paid by Appellant performed the downspout repairs and tuckpointing (AF 16; Stip. 9).

            10.  On November 10, 2008, Appellant submitted a claim for the cost it incurred for the downspout repairs and tuckpointing work, and attached an invoice from its contractor that performed the work.  Appellant’s claim sought $2,240 it paid for the downspout repair work and $6,090 it paid for the tuckpointing work.  To each, Appellant added a 15% “supervision and administrative” fee, resulting in a total claim of $9,579.50.  (AF 16).

            11.  On April 2, 2009, Respondent’s contracting officer denied Appellant’s claim, and Appellant timely appealed (AF 18, 19; Stips. 10-11).

DECISION

            The lease obligated Respondent to keep the Park Ridge Post Office in good repair and tenantable condition unless an exception in the lease specifically made the repairs at issue the responsibility of Appellant (Finding 2).  An exception to Respondent’s overall repair responsibility obligated Appellant to perform structural repairs, defined in part as including “the roof system, including but not limited to roof covering, flashing and insulation” (Finding 2).  Respondent argues that the roof system includes downspouts and that, therefore, Appellant is responsible for the repairs at issue.  Appellant disagrees.

            However, the parties have failed to submit evidence to permit an enlightened analysis of the issue.  Respondent submitted a declaration from an architect in its employ.  On this point, in a single declarative sentence, the witness stated simply that “The roof downspouts are part of the building’s roof system.”  (Mody Decl. ¶ 10).  We have given this statement negligible weight, and ultimately reject it as unpersuasive and unhelpful.  We were not provided with the declarant’s experience with regard to roof systems, the basis for his conclusion, any supporting analysis, or reference to industry standards.  As Appellant did not submit testimonial evidence, the totality of the record on this question consists of photographs of the downspouts, which we deem insufficient to allow us to determine whether they are part of the roof system within the meaning of the lease.^[2]

            Respondent argues that the appeal should be denied because Appellant failed to satisfy the burden of proof which it posits is borne by Appellant because it is Appellant that seeks an affirmative monetary recovery.  That position is overly simplistic.  The burden of proof, which ultimately controls the result of this appeal due to the parties’ failure to present persuasive evidence, does not depend on the vagaries of whether Respondent performed the repairs and then deducted the costs from the rental, or whether Appellant performed the work in the first instance.  Cf. Fruit Growers Express Co., ASBCA No. 28951, 84-1 BCA ¶ 17,158 (government offset does not change nature of a claim from a government claim to a contractor claim).  To be sure, Appellant must prove that the repairs were necessary, that it incurred costs to perform those necessary repairs, and that the costs incurred were reasonable.  All such elements have been proved.  See, infra.

            The lease does not clearly allocate responsibility for downspouts to either party and, as described above, the parties have failed to present evidence sufficient to allow us to perform meaningful contract interpretation analysis.  We therefore find the lease ambiguous in this regard and note that the parties have not presented evidence concerning their intentions at the time of contracting.  Because Respondent is responsible overall to keep the premises in good repair and tenantable condition, and these repairs were necessary for the premises to be kept in that condition, we believe that Respondent bears the burden to demonstrate that the definition of roof system in the exception to its repair responsibility includes downspouts.  See Mary Lou Bloom and Kenneth D. Bloom, PSBCA No. 4053, 98-1 BCA ¶ 29,352 (Respondent must show that retaining wall was a structural element where lease makes Appellant responsible only for specifically enumerated items such as structural elements); R. H. Fulton, Contractor, IBCA 769-3-69, 71-1 BCA ¶ 8,674 (party seeking to invoke exception to general repair responsibility under warranty clause bears burden of proof); see also Spodek v. Henderson, 217 F.3d 854 (Table) (Fed. Cir.1999) (unpublished) (lessor bears burden of proving exception to its overall obligation to keep premises in good repair); Container Co. v. United States, 90 F. Supp. 689, 692 (Ct. Cl. 1950).  Respondent has failed to meet that burden.

            The Board need not determine whether tuckpointing constitutes a structural repair because we find that the acknowledged need for tuckpointing was caused by the failure of the downspouts, for which we hold Respondent responsible (Finding 8).  See Real Properties MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829 (maintenance clause excepts from lessor's responsibility an obligation to repair damage arising from Respondent’s act or negligence); cf. J. Leonard Spodek d/b/a Alabama Postal Holdings, PSBCA Nos. 4124, 4127, 01-2 BCA ¶ 31,424 (lessor responsibility for roof repairs includes repair of water damage caused by failure of the roof). 

            Under these circumstances, Appellant may be reimbursed for the costs of the repairs that were necessary to keep the Park Ridge Post Office in good repair and tenantable condition (Findings 7-8) which it incurred (Findings 9-10), but which were Respondent’s responsibility.  See Trust of Anthony J. Penachio, Sr., PSBCA No. 4965, 04-1 BCA ¶ 32,599; N.J. Hastetter, Trustee for Thomas and Judith Hastetter, PSBCA No. 3064, 92-3 BCA ¶ 25,189.  Appellant has proved that it incurred the costs of repairs that it claimed (Findings 9-10).  Such actually incurred costs are presumptively reasonable where as here, Respondent has not presented evidence to the contrary.  See Jereld Michael, PSBCA No. 4779, 04-1 BCA ¶ 32,497 (actual costs presumed reasonable in the absence of evidence from Respondent that they are not).  However, Appellant has not proved that it incurred or otherwise is entitled to recover the “supervision and administrative fees” it sought.  Accordingly, Appellant may recover $8,330, consisting of $2,240 it incurred for the downspout repair work, and $6,090 it incurred for the tuckpointing work.  The appeal is sustained in that amount.

Gary E. Shapiro
Administrative Judge
Board Member

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

[2]  Respondent also argues that the downspout repairs having been performed by a roofing contractor supports its view that downspouts are part of the roof system.  We find the argument unpersuasive particularly since the same roofing contractor performed the tuckpointing work.