CBCA 7753

MOTION FOR PARTIAL DISMISSAL DENIED: April 16, 2025 CBCA 7753 BOYD ATLANTA RHODES, LLC, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Seamus Curley of Dentons US LLP, Washington, DC, counsel for Appellant. Justin Hawkins, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges RUSSELL, VERGILIO, and ZISCHKAU. VERGILIO, Board Judge. A contracting officer of the General Services Administration (agency) denied a certified claim of Boyd Atlanta Rhodes, LLC (lessor or Boyd) seeking an amount in excess of $3 million under a lease for a firm, ten-year term. The lessor maintained that the agency issued the notice to proceed, and accepted the space, on dates well beyond the time frame established in the lease. The lessor sought to be made whole for alleged Government breaches of the lease agreement, compensable delays, and constructive changes during the design-build phase of the lease which preceded acceptance of the space by the agency. The lessor attributes 401 days of delay to Government breaches. The lessor seeks to hold the agency liable for the delayed acceptance and related lost income to the lessor. CBCA 7753 2 Under Board Rule 8(e), 48 CFR 6101.8(e) (2024) (“A party may move to dismiss all or part of a claim for failure to state grounds on which the Board could grant relief”), the agency moves to dismiss the claim for lost rent. The agency contends that, as a matter of law, lost rent is not recoverable for delays to the commencement of the lease term. The lessor calculates part of its recovery owed using lost rent as an element, premised on material breaches by the Government, not contractual changes. Such relief is not expressly precluded by the lease or case law. Accordingly, the Board denies this aspect of the motion to dismiss. The agency also moves to dismiss count II of the complaint, which asserts a “cardinal delay.” The agency contends that the allegations cannot constitute a cardinal change to the lease because, under the Changes clause, the agency has an unrestricted ability to make changes prior to occupancy, such that it cannot be in breach even if it caused the delay. The Board does not interpret the lease to provide the agency with such unfettered discretion that it can take any action and never be in breach. The Board denies the motion; count II remains. Background1 The lease In October 2016, the agency entered into a lease agreement with a firm, ten-year lease term that would begin upon the substantial completion of the premises and the agency’s acceptance. Moreover, “[t]he commencement date of this Lease, along with any applicable termination rights, shall be more specifically set forth in a Lease Amendment upon substantial completion and acceptance of the Space by the Government.” Exhibit 1.2 Boyd became the eventual lessor under a lease amendment effective October 1, 2018, which incorporates a novation agreement signed by the agency and the leasing parties, entered into on June 26, 2018. Boyd became entitled to all rights, titles, and interests of the transferor in and to the lease as if it were the original party to the lease. Exhibit 12. A clause identifies the rent and other consideration the Government is to pay the lessor. The annual rent, $3,452,373.21, is the sum of shell rent, tenant improvement (TI) rent, operating costs, building specific amortized capital (BSAC) costs, and parking (at zero cost). Rent is subject to adjustment based upon the final TI cost and BSAC cost, each to be amortized in the rental rate. Exhibit 1 at 5-6. In exchange for the rental payments and other considerations, the lessor is to provide all improvements to meet the requirements of the lease. Id. at 6. The lease establishes a dollar amount as a tenant improvement allowance 1 This section draws from the complaint and materials referenced therein (i.e., the lease agreement and claim) to put the dispute and resolution in context. 2 All exhibits are in the Rule 4 appeal file. CBCA 7753 3 (TIA), amortized at zero interest over the lease term which the Government may use for TIs. The Government may spend in excess of the amount, reduce TI requirements, make lump sum payments, and/or decrease the rent to account for a lump sum payment. Id. at 6. The Government may make similar determinations regarding its use of BSAC and appropriately alter rental payments. Id.