June 13, 2013

Appeal of

REPUBLIC POSTAL GROUP, LLC

PSBCA No. 6434                    

APPEARANCE FOR APPELLANT
Greg Carney

APPEARANCE FOR RESPONDENT
Jacqui De Laet Skoglund, Esq.

OPINION OF THE BOARD
ON RESPONDENT’S MOTION TO DISMISS OR,
IN THE ALTERNATIVE, MOTION FOR SUMMARY JUDGMENT

Appellant seeks $3,079.13 for costs it incurred repairing the lighting system of a building leased to Respondent.   Respondent filed a Motion to Dismiss or, in the Alternative, Motion for Summary Judgment in lieu of an answer.  Respondent asserts that the doctrine of laches bars this appeal because the timing of Appellant’s claim materially prejudiced Respondent’s ability to defend.  Respondent also asserts that the appeal should be dismissed because Appellant waived its contractual right to seek restoration of the leased premises.   We deny the motion.

FINDINGS OF FACT

 1.  Appellant is the owner of a building in Roxana, Illinois which was leased to Respondent and used by Respondent as the Roxana Main Post Office (Post Office) until March 31, 2011, when the lease expired (Documents attached to Appellant’s notice of appeal).

2.  Pursuant to the terms of the lease, Respondent was responsible for most ordinary repairs and maintenance of the Post Office, including the light fixtures (Lease Paragraph 5 & Lease Maintenance Rider).

3.  With certain limitations, the Alterations clause in the lease permitted Respondent to make alterations and/or improvements to the premises.  The lease provided Respondent the option of removing any alterations or improvements prior to the expiration of the lease but required in connection with any such removal that the premises be restored to “as good condition as that existing at the time of entering upon the same under the lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the Postal Service has no control, excepted.”  If, however, Respondent opted not to remove the alterations/improvements, they would become the lessor’s property and restoration rights would be waived.  (Lease Paragraph A.21).

4.  By March 31, 2011, Respondent had vacated the Post Office and returned the keys to Appellant (June 28, 2012 Notice of Complaint and attachment).

5.  Appellant subsequently leased the Post Office building to the Village of Roxana, Illinois (Village).  At some time prior to November 2011, the utilities to the Post Office building were disconnected.  In November 2011, the Village arranged for electrical service to be reconnected.  When electrical service was reconnected, some of the light fixtures failed to illuminate and some emitted smoke.  (June 28, 2012, letter from Village to Appellant; June 18, 2012 letter from Appellant to the Board).

6.  As a result of the electrical issues, the Village hired an electrical contractor to examine the Post Office building’s electrical system.  The contractor recommended certain repairs and advised that the repairs could be accomplished for $3,250.00.  (June 28, 2012 letter from Village to Appellant).

7.  By email dated March 30, 2012, Appellant advised Respondent’s contracting officer about the condition of the Post Office building’s lighting system and requested that Respondent perform the repairs to the lighting system that were recommended in the contractor’s proposal.  The estimate for repairs recommended by the contractor was attached to the email.  (March 30, 2012 email from Appellant to the contracting officer).

8.  On April 2, 2012, Respondent’s contracting officer advised that Respondent would not perform the requested repairs (April 2, 2012 email from the contracting officer to Appellant).  The contracting officer also advised Appellant that its request of Respondent to accomplish the recommended repairs was over a year old and, thus, untimely (April 2, 2012 email from contracting officer to Appellant).

9.  Between April 4 and April 11, 2012, the electrical contractor accomplished repairs to the Post Office building lighting system and subsequently submitted an invoice to Appellant in the amount of $3,079.13.  Appellant paid the invoiced amount to the electrical contractor.  (April 25, 2012 Final Invoice and attachment).

10.  On April 30, 2012, Appellant sent Respondent its claim for $3,079.13 in the form of the invoice from the electrical contractor (June 14, 2012 contracting officer final decision).

11.  By final decision dated June 14, 2012, the contracting officer denied Appellant’s claim.  Based on photographs taken at the time the Postal Service vacated the building, and on discussions he had with Postal Service personnel, the contracting officer asserted that the building’s lighting system was in proper working order as of March 31, 2011, when Respondent vacated the building.  (June 14, 2012 contracting officer final decision).

DECISION

Although denominated by Respondent as a motion to dismiss or, in the alternative, a motion for summary judgment, the motion does not address the standards for granting summary judgment,  i.e., that there are no genuine disputes as to any material fact  and that Respondent is entitled to judgment as a matter of law.  See, e.g., Sammy’s Delivery Service, Inc., PSBCA No. 6431, 2013 WL 1643454 (April 16, 2013); Sharon Roedel, PSBCA No. 6347, 11-2 BCA ¶ 34,808; Franklin Wilborn, PSBCA No. 6260, 10-2 BCA ¶ 34,608.  Moreover, the current record indicates that the actual condition of the lighting fixtures at the time the lease ended is in dispute.  Given the claim before us here, the actual condition of the fixtures at that time is clearly a material fact, therefore, summary judgment would be inappropriate on the current record. 
In the alternative, Respondent moves to dismiss this case but failed to identify the legal basis to do so.  It is clear that Respondent's defense of laches, on which it primarily relies, is an affirmative defense which cannot be a basis for dismissing an appeal on jurisdictional grounds.  See Woodside Summit Group, Inc., ASBCA No. 54554, 05-2 BCA ¶ 33,113; Granite State Mfg., Inc., ASBCA No. 43313, 93-2 BCA ¶ 25,695.  We therefore infer that Respondent's motion to dismiss must be one for failure to state a claim on which relief can be granted. Respondent presents two arguments.

Laches

Respondent argues first that Appellant’s claim should be barred, citing the doctrine of laches.  Respondent argues that Appellant unreasonably delayed giving notice of its claim, having waited for nearly a year after the lease ended before doing so.  (Findings 1, 4, 7).  Respondent also argues that its ability to mount a defense has been prejudiced by that delay.  Specifically, Respondent contends (1) that it had no opportunity to examine the lighting before Appellant allowed the electrical contractor to perform work on the fixtures, thereby compromising Respondent’s ability to present evidence regarding the condition of the fixtures at the time the lease expired, (2) that the postmaster then assigned to Roxana has retired and is unavailable to provide information regarding the appeal, and (3) that the ability of Postal Service personnel to recall relevant facts has been compromised by the length of the delay.

 Even if the affirmative equitable defense of laches might ultimately apply to a claim brought within the time allowed by the Contract Disputes Act's statute of limitations (see 41 U.S.C. § 7103(a)(4)(A)), which we need not decide at this time, we would not consider it except upon a showing of special facts making the delay culpable.  C.I. Whitten Transfer Co., GSBCA No. 13911-RATE, 97-1 BCA ¶ 28,860 at 143,988; see also, Cornetta v. United States, 851 F.2d 1372, 1381 (Fed. Cir. 1988) (en banc); Cornetta, 851 F.2d at 1384 (Michel, J., concurring); S.E.R., Jobs For Progress, Inc. v. United States, 759 F.2d 1, 9 (Fed. Cir. 1985) ("laches cannot ordinarily be invoked as a defense to legal claims where a statute of limitations is normally available to preclude the recovery on stale claims, unless the offended party has been unmistakably prejudiced by the delay in the assertion of the claim").

The defense of laches requires a showing of unreasonable and unexcused delay by the claimant, and, as a result, prejudice to the other party.  See JANA, Inc. v. United States, 936 F.2d 1265, 1269 (Fed. Cir. 1991), cert. denied, 502 U.S. 1030 (1992).  For the first element, the passage of time alone is insufficient.  See Cornetta, 851 F.2d at 1377-78.  In this regard, and on the present record, there has been no demonstration of the special facts necessary to show that any delay was unreasonable and unexcused, and therefore culpable.  Putting aside the question of the reasonableness of the delay in asserting the claim, Respondent has not offered evidence in support of its assertion that it has been prejudiced thereby.  We note that in his final decision, the contracting officer specifically made reference to photographs taken immediately before and after the building was vacated, and that he determined that the lights were working on the last day the Postal Service occupied the building.  This calls into question Respondent’s assertion regarding its difficulty in presenting evidence regarding the condition of the fixtures.  Respondent’s assertions regarding the unavailability of the postmaster and the fading memories of the other Postal Service personnel are unsupported by any evidence in the current record.  There is no evidence that the postmaster is, in fact, unavailable merely because he has retired.  With regard to the other personnel, we note again that in his final decision, the contracting officer indicated that he had consulted with these personnel and had concluded that the lights worked on the last day.  There is no indication that the personnel he consulted were unable to remember the condition of the Post Office.  Respondent has not met its burden of demonstrating the applicability of laches based on the current record. 

Waiver

 Respondent also argues that Appellant’s claim should be dismissed because Appellant waived any claim for restoration under the terms of the lease as there is no indication that the condition of the lighting fixtures resulted from an alteration or improvement (see Finding 3).  Quite apart from a lack of evidence as to whether the lighting system at issue was part of an alteration or improvement, we see no indication that Appellant has claimed liability on a restoration theory, which therefore appears to be irrelevant to our inquiry (Appellant's responsive brief at 2).  As opposed to a restoration claim, the essence of Appellant’s claim is that Respondent failed in its maintenance or repair obligations under the lease, which Respondent does not argue has been waived (see Finding 2).

 Accordingly, Respondent’s motion to dismiss or, in the alternative, motion for summary judgment is denied.  Further proceedings will be established by separate order.

       William A. Campbell
       Administrative Judge
       Chairman

I concur:                                             I concur:

_________________                       _________________
Gary E. Shapiro                                Peter F. Pontzer
Administrative Judge                        Administrative Judge
Vice Chairman                                  Board Member