CBCA 7186

DENIED: March 1, 2022 CBCA 7186 PURPLE HEART HEROES LLC, Appellant, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent. John R. Sharp and Keith Bradley of Squire Patton Boggs (US) LLP, Denver, CO, counsel for Appellant. Hank W. Askins, III, Office of General Counsel, Department of Veterans Affairs, Charleston, SC, counsel for Respondent. Before Board Judges ZISCHKAU, SULLIVAN, and CHADWICK. CHADWICK, Board Judge. The parties disagree about how to read a lease. The lessor and appellant, Purple Heart Heroes LLC (PHH), argues that it is owed $142,927 under a “unit price list” appended to the lease. The tenant and respondent, Department of Veterans Affairs (VA), argues that the lease does not by its terms require payment of the disputed amount in the price list. We agree with VA and deny the appeal. CBCA 7186 2 Background VA awarded PHH the subject lease for office space in Norristown, Pennsylvania, in August 2019. The annual rent for the first five years is $424,215.36 plus fixed operating expenses. The lease includes multiple exhibits. The dispute centers on exhibit L, a ten-page schedule of prices with no title. VA’s solicitation for the lease, issued in April 2019, included a spreadsheet in the same format titled “Unit Price List.” Apparently on that basis, both parties refer to untitled lease exhibit L as the “unit price list.” The last two rows in exhibit L state: SHEET TOTAL $374,527.00 SHEET TOTAL, EXCLUDING ITEMS THAT ARE PART OF TI [tenant improvement] BUDGET $142,927.00 PHH first sent VA the data shown in exhibit L in June 2019, during the solicitation process. PHH’s transmittal email emphasized, “The Sheet Totals . . . provide two amounts—one for the Total Amount, and one for the Total Amount, Excluding items that are part of the TI budget.” Neither party cites any language in the August 2019 executed lease that cross- references exhibit L or explains its purpose. PHH contends that exhibit L relates to paragraph 1.09 of the lease. Paragraph 1.09 is titled “Tenant Improvement Fee Schedule (Jun 2012)” and states: For pricing TI costs, the following rates shall apply for the initial build-out of the Space and are included in the total cost of TI. ARCHITECT ENGINEER FEES: $84,642.25 TOTAL TI CONSTRUCTION COSTS— INCLUDING A/E [architect/engineer] FEES $1,446,173.27 Other lease terms deal extensively with improvements. Among them, paragraph 1.18 titled “Building Improvements (Mar 2016)” provides, “Before the Government accepts the Space, the Lessor shall complete all Building improvements as identified at design and contained in VA-approved construction drawings.” Paragraph 4.01.F states, “Construction of TIs and completion of other required construction work: The Lessor shall complete all work required to prepare the Premises” within 150 days of receipt of a notice to proceed. CBCA 7186 3 Lease exhibit F is the standard form 1364. It shows the components of the total lease price and indicates that the price includes “build-out costs” totaling $2,545,135.52, which is the sum of $1,446,173.27 in “tenant improvements” (as a “lump sum” not amortized in the rent) and $1,098,962.25 in “shell build-out” costs. (Capitalization altered.) These same two “TI” and “Shell” cost figures are repeated in lease exhibit N, a schedule titled “Tenant Improvements Cost Summary (TICS).” Surprisingly, neither party tells us whether PHH actually completed the “build-out” and the improvements, or whether VA paid PHH for such deliverables, before VA occupied the building. We see no reason to doubt it. In January 2021, PHH submitted a certified claim to VA for $142,927, the “sheet total” of exhibit L excluding the tenant improvements budget. PHH argued that VA “explicitly agreed to reimburse PHH for the work and material specified in Exhibit L” and “understood, prior to executing the Lease, that PHH expected to be reimbursed for the work and material specified in Exhibit L.” The contracting officer denied the claim in August 2021, writing in part, “[Given] the clear understanding that . . .