CBCA 3041

DENIED: March 31, 2015 CBCA 3041 MLJ BROOKSIDE, LLC, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Stephen O. Cole of Macfarlane Ferguson & McMullen, Clearwater, FL, counsel for Appellant. Elyssa Tanenbaum and Leonard Lucas, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges VERGILIO, SHERIDAN, and SULLIVAN. SULLIVAN, Board Judge. This appeal arises from a lease agreement between MLJ Brookside, LLC (MLJ), the appellant, and the General Services Administration (GSA), the respondent. With its appeal, MLJ seeks to overturn GSA’s decision to terminate the lease for default and receive as damages rent payments it would have received if GSA had not terminated the lease. GSA has filed a motion for summary relief, pursuant to Rule 8(a) of the Rules of the Civilian Board of Contract Appeals (48 CFR 6101.8(a) (2013)), seeking a determination that the termination for default was proper as a matter of law and MLJ should repay rent amounts paid after the breach of the lease agreement. The Board grants GSA’s motion in part and denies MLJ’s appeal. CBCA 3041 2 Background The Lease MLJ is the owner of Brookside Professional Building, located in Wesley Chapel, Florida (the premises). Amended Complaint ¶ 3. On August 3, 2007, GSA and MLJ entered into lease no. GS-04B-47858 for the premises (the lease). Appeal File, Exhibit 1 at 1-2.1 The lease contained several terms that govern the resolution of this appeal. The lease provided that MLJ would provide the premises for the period of the lease “to be used for such purposes as determined by the General Services Administration.” Exhibit 1 at 1. The term of the lease was ten years, from February 2, 2009, to February 1, 2019, but beginning on February 1, 2014, GSA could terminate the lease after giving the lessor sixty days’ notice. Exhibit 3 at 1-2.2 The lease also incorporated by reference a clause that permitted GSA to substitute any agency tenants for those that may have been named on the original lease. Exhibit 1 at 60 (48 CFR 552.270-25 (1999) (GSAR 552.270-25), Substitution of Tenant Agency). The lease further provided that GSA could obtain a reduction in the rent if the premises were vacant, prior to the expiration of the term of the lease, with notice of thirty days to the lessor: A. If the Government fails to occupy any portion of the leased premises or vacates the premises in whole or in part prior to expiration of the term of the lease, the rental rate will be reduced. B. The rate will be reduced by that portion of the costs per [American National Standards Institute/Building Owners and Managers Association] Office Area square foot of operating expenses not required to maintain the space. Said reduction shall occur after the Government gives 30 calendar 1 All exhibits are found in the appeal file, unless otherwise noted. The page numbers cited are the Bates numbers indicated on the exhibits. 2 The initial term of the lease was from February 1, 2008. Respondent’s Statement of Uncontested Facts ¶ 10. However, the parties executed a modification, adjusting the term to begin on February 2, 2009, when the first tenant agency took occupancy of the premises. Id. ¶¶ 11, 12; Exhibit 3 at 1. CBCA 3041 3 days prior notice to the Lessor and shall continue in effect until the Government occupies the premises or the lease expires or is terminated. Exhibit 1 at 3, 22 (GSAR 552.270-16, Adjustment for Vacant Premises). Notice was defined in the lease as “written notice sent by certified or registered mail, Express Mail or comparable service, or delivered by hand.” Id.