CBCA 7065

DENIED: October 4, 2022 CBCA 7065 FINMARC MANAGEMENT, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Gordon Griffin and Hillary J. Freund of Holland & Knight LLP, Washington, DC, counsel for Appellant. Jay Bernstein and Michael P. Klein, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges GOODMAN, DRUMMOND, and KULLBERG. KULLBERG, Board Judge. Appellant, Finmarc Management, Inc. (FMI), claims the costs, $1,198,862.12, of removing tenant improvements in a property leased by the General Services Administration (GSA). FMI seeks the costs related to tenant improvements to the leased property which included raised flooring and related wiring and equipment that a different lessor installed during a previous lease. Only entitlement is at issue. The parties have elected, pursuant to Rule 19 (48 CFR 6101.19 (2021)), to submit their respective cases on the record without a hearing. On April 1, 2022, the parties submitted a joint stipulation of undisputed material facts (Board Exhibit 1). Subsequently, the Board set a schedule for submission of briefs and reply briefs. For the reasons stated below, the Board denies the appeal. CBCA 7065 2 Background In May 1988, GSA entered into lease number GS-11B-80222 (preceding lease) with Ceridian Corporation (Ceridian) for office and data center space in a building located in Rockville, Maryland (Rockville property). Board Exhibit 1 at 1. Under the terms of the preceding lease, the lessor made tenant improvements according to government plans. Those improvements “includ[ed] . . . all of the equipment at issue in this appeal.” Id. Those improvements remained at the end of the preceding lease. Id. The equipment and improvements included raised flooring for the data center and related wiring and equipment. The record does not include a copy of the preceding lease. The preceding lease expired on July 15, 2005. On July 18, 2005, GSA executed lease number GS-11B-LMD01855 (current lease) with Marsol Fortune Terrace, LLC c/o Finmarc Management, Inc. for the same space that GSA had leased under the preceding lease. Board Exhibit 1 at 2. The current lease contained an Alterations clause, which stated the following: The Government shall have the right during the existence of this lease to make alterations, attach fixtures, and erect structures or signs in or upon the premises hereby leased, which fixtures, additions or structures so placed in, on, upon, or attached to the said premises shall be and remain the property of the Government and may be removed or otherwise disposed of by the Government. If the lease contemplates that the Government is the sole occupant of the building, for purposes of this clause, the leased premises include the land on which the building is sited and the building itself. Otherwise, the Government shall have the right to tie into or make any physical connection with any structure located on the property as is reasonably necessary for appropriate utilization of the leased space. Respondent’s Exhibit 5 at 61 (clause 19). The record does not include any documentary evidence as to when Marsol purchased the Rockville property or the terms of that purchase. The current lease term ran from July 16, 2005, to July 15, 2015. Id. GSA accepted the Rockville property under the current lease in an “as-is” condition, which included tenant improvements from the preceding lease and only a small allowance for tenant improvements under the current lease. Board Exhibit 1 at 2. Through a series of amendments to the lease, the lease period was extended to September 30, 2019. Id. On January 11, 2017, the agency occupying the leased space informed GSA that it intended to vacate the premises and would remove equipment and furnishings but that it would leave the raised flooring and the related wiring and equipment. Board Exhibit 1 at 2. Various exchanges of emails and correspondence ensued in which GSA and FMI CBCA 7065 3 discussed whether the tenant was responsible for removing any of the previously installed improvements. Id. at 3-4. Upon the departure of the tenant on October 10, 2019, tenant improvements installed during the preceding lease that remained included the raised flooring and related wiring and equipment. Id.