ASBCA 63409

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) Flatland Realty, LLC ) ASBCA No. 63409 ) Under Contract No. DACW43-1-14-49 ) APPEARANCE FOR THE APPELLANT: Mr. Tyler Brinkmann Owner APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq. Engineer Chief Trial Attorney Brandon D. Belt, Esq. Engineer Trial Attorney U.S. Army Engineer District, St. Louis OPINION BY ADMINISTRATIVE JUDGE MCILMAIL Appellant challenges the government’s revocation of its lease, and requests $800,000, plus interest. The parties have submitted the appeal on the record under Board Rule 11. We conclude that the revocation was a breach, and award $210,000, plus interest. FINDINGS OF FACT In 2014, the government and an entity known as KFE, LLC, entered into a 15-year lease requiring KFE to operate a commercial concession eventually called “The Lake House Carlyle,” at the Dam East Recreation Center, Carlyle Lake, in Illinois. 1 On February 4, 2016, the lease was assigned to appellant, Flatland Realty, LLC. 2 The assignment extends the lease expiration date to September 14, 2030, and includes a Use and Development Plan (UDP). 3 The UDP includes a “Five-Year Plan” that sets forth development benchmarks for “Year One” through “Year Five,” as well as minimum performance requirements for those periods that include the provision of kayaks and bicycles for rent to visitors to the lake, and the operation of a fish restaurant. 4 1 R4, tab 3 at 24, 39-40, 49, tab 7 at 116. 2 R4, tab 4 at 52-53. 3 Id. at 52-53 ¶¶ 2-3, 58-60. 4 Id. at 58-60 §§ II, V.  The lease provides that “[t]he use and occupation of the premises shall be subject to the general supervision and approval of the District Engineer,” and that “[m]odifications to [the UDP] must be approved in writing by the District Engineer prior to implementation of the change.” 5 The lease also provides that “[t]his lease may be revoked in the event that the Lessee violates any of its terms and conditions and continues and persists in such non-compliance,” and that “[f]ailure to satisfactorily correct any substantial or persistent noncompliance within the specified time is grounds for . . . revocation of the lease, after notice in writing of such intent.” 6 The lease does not contain a termination for convenience clause. Finally, the lease provides that if “this lease is revoked, the Lessee shall vacate the premises, remove [its] property, and restore the premises . . . within such time as the District Engineer may designate,” and that “if the Lessee shall fail or neglect to remove said property and restore the premises, then, at the option of the District Engineer, said property shall either become the property of the United States without compensation therefore, or the District Engineer may cause the property to be removed and no claim for damages against the United States or its officers or agents shall be created by or made on account of such removal and restoration work.” 7 Within a few months of the assignment of the lease, Flatland proposed that the UDP be revised. 8 The government approved some revisions and disapproved others, stating that “[t]he intent of the lease is to provide water based outdoor recreational opportunities to the public.” 9 In 2020, the parties began discussions on a new UDP: in August 2020, the government responded to a proposal by Flatland that would “offer the facility to the public as an event venue for weddings and parties for the next five years.” 10 The government agreed that, during “Year 1,” Flatland could “run the building as an event venue, under the conditions and guidelines for COVID-19,” but rejected that proposal for Years 2-5, explaining that although “[t]he building may be used for events during the off-season (October through April),” the UDP “needs to demonstrate offering recreational opportunities during the recreational season (May through September) that are dependent upon the lake project’s natural and other resources.” 11 The government admits that Flatland was “allowed to use the space as an event venue for a limited amount of time during the COVID-19 pandemic as a temporary accommodation.” 12 Indeed, on several occasions in 2021, the government 5 R4, tab 3 at 27 ¶ 5(d). 6 Id. at 32 ¶ 19(a). 7 Id. at 29-30 (alterations added). 8 Gov’t br., ex. B. 9 Id. at 2. 10 Id., ex.