MOTION TO DISMISS DENIED: January 17, 2023

MOTION TO DISMISS DENIED: January 17, 2023

CBCA 7330, 7348

MATHER ENTERPRISES,

Appellant,

v.

DEPARTMENT OF VETERANS AFFAIRS,

Respondent.

John M. Duggan and David L. Ballew of Duggan Shadwick Doerr & Kurlbaum LLC,

Overland Park, KS, counsel for Appellant.

Neil S. Deol, Office of General Counsel, Department of Veterans Affairs, Decatur,

GA; and Laetitia C. Coleman, Office of General Counsel, Department of Veterans Affairs,

Arlington, TX, counsel for Respondent.

Before Board Judges BEARDSLEY (Chair), GOODMAN, and CHADWICK.

GOODMAN, Board Judge.

Appellant, Mather Enterprises, appealed from a decision of a contracting officer of

respondent, Department of Veterans Affairs, dated January 28, 2022, and that appeal was

docketed as CBCA 7330. Respondent has filed a motion to dismiss CBCA 7330 for failure

to state a claim for which relief can be granted.1 We deny the motion.

1

Although CBCA 7330 is consolidated with CBCA 7348, this motion only

addresses CBCA 7330.

CBCA 7330, 7348

2

Background

This appeal concerns the lease of a building in Leavenworth, Kansas, that appellant

leases to respondent as a facility to supply prescription medications to veterans. The lease

commenced in 2001. In 2013, the parties entered into an agreement entitled “Stipulation of

Settlement” (the stipulation) to resolve a previous appeal concerning the lease. Portions of

the stipulation were included in supplemental lease agreement (SLA) 57, which was executed

simultaneously with the stipulation. The current appeals involve a dispute as to the scope of

maintenance that each party is obligated to perform as agreed in the stipulation and SLA 57.

The Relevant Lease Provisions

The lease contained the following provisions to which the parties refer in their

briefing of the motion to dismiss:

7.2 MAINTENANCE BY LESSOR:

Building equipment and maintenance requirements are to be met by the lessor.

The lessor must have a building superintendent or a local, designated

representative available to promptly correct deficiencies or attempt to correct

deficiencies within three (3) hours after written or oral notice of such condition

from the VA. If no substantial attempt has been made to correct the

deficiencies within the specified time, action will be taken by VA to correct

such deficiencies and the cost of repairs will be deducted from the next

month’s rental payment.

The lessor is responsible for total maintenance of the leased premises in

accordance with paragraph 14, GSA Form 3517. Such maintenance and

repairs includes, but is not limited to, exterior care of the building and the site:

all sidewalks, parking areas, driveways, private access roads, lawns and

shrubbery, including all repair and replacements. All equipment and systems

shall be maintained to provide reliable service without unusual interruption,

disturbing noises, exposure to fire or safety hazards, or unusual emissions of

dirt. The lessor’s maintenance responsibility includes initial supplies of all

items, materials, and equipment necessary for such maintenance. All

maintenance work will be done in accordance with applicable codes, and

inspection certificates will be displayed as appropriate. The lessor shall

provide the labor, material and supervision to adequately maintain the

structure, the roof, the exterior walls, windows, doors and any other necessary

building appurtenances to provide watertight integrity, structural soundness,

and acceptable appearance.

CBCA 7330, 7348

3

Without any additional charge, the Government has the right to require the

lessor or his representative to test once a year, with proper notice, such

systems as fire alarm, sprinkler, [deleted by parties] etc., to ensure proper

operation. Upon request, appropriate operations and maintenance manuals

shall be made available for the Government’s review during these tests. A

representative of the Contracting Officer shall witness these tests.

14. 552.270-6 – MAINTENANCE OF BUILDING AND PREMISES –

RIGHT OF ENTRY (SEP 1999)

Except in case of damage arising out of the willful act or negligence of a

Government employee, Lessor shall maintain the premises, including the

building, building systems, and all equipment, fixtures, and appurtenances

furnished by the lessor under this lease, in good repair and condition so that

they are suitable in appearance and capable of supplying such heat, air

conditioning, light, ventilation, safety systems, access and other things to the

premises, without reasonably preventable or recurring disruption, as is

required for the Government’s access to, occupancy, possession, use and

enjoyment of the premises as provided in the lease. For the purpose of so

maintaining the premises, the Lessor may at reasonable times, enter the

premises with the approval of the authorized Government representative.

The Stipulation

On October 3, 2013, the parties entered into the stipulation. The stipulation contained

the following provisions relevant to the current appeals and the provisions of the lease quoted

above.

4.

Beginning August 1, 2013 through November 30, 2013, Lessor shall

continue to perform routine maintenance, which shall include all manufacturer

recommended and industry accepted preventative maintenance, on the

premises (excepting and excluding improvements added by SLA 40 on or

about 2/16/10). Specifically excluded from the Lessor’s obligation to perform

routine maintenance under the Lease during this period is that Lessee will take

immediate action to maintain, repair or make any necessary changes to the fire

alarm system to insure that the fire alarm system is tested, inspected and

operational in accordance with local and national code and requirements.

5.

. . . Effective December 1, 2013 until the end of the Lease term and

vacating of the leased premises the Lessee is solely responsible for all

CBCA 7330, 7348

4

maintenance, repairs, replacement, real estate taxes, and costs associated with

routine and preventative maintenance of the leased premises.

....

7.

Effective December 1, 2013, SFO Section 7.2 shall be amended to

replace the word “Lessor” in this clause with “Lessee”, such that the Section

7.2 shall be entitled “Maintenance by Lessee” and all other instances of the

word “Lessor” shall be replaced with “Lessee” in this clause. The Lessee shall

maintain the building, premises, grounds and parking lot consistent with the

standards set out in the Lease.

8.

Effective December 1, 2013, GSA Form 3517B Paragraph 14 shall be

amended to replace the word “Lessor” in this clause with “Lessee,” such that

the Section 7.2 shall be entitled “Maintenance by Lessee” and all other

instances of the word “Lessor” shall be replaced with “Lessee” in this clause.

However, the last Sentence of GSA Form 3517, paragraph 14 shall be

amended to read: “Lessor may at reasonable times enter the premises with

approval of the authorized Government representative in charge and will

observe all applicable VA security policies during these visits.”

SLA 57

SLA 57, executed on October 3, 2013, contained these same provisions from the

stipulation.

The Claim

Appellant filed a claim with respondent’s contracting officer on October 19, 2021,

alleging that respondent has failed to meet its maintenance obligations to keep the leased

premises in “good repair and condition” so that it is “suitable in appearance” and capable of

supplying “heat, air conditioning, light, ventilation, safety systems, access and other things

to the premises, without reasonably preventable or recurring disruption.” The claim further

alleges breach of contract and the duty of good faith and fair dealing, requests declaratory

relief, and includes a monetary claim. The contracting officer denied the claim on

January 28, 2022, and appellant appealed to this Board.

Discussion

Respondent has filed a motion to dismiss CBCA 7330 for failure to state a claim for

which relief can be granted. The basis of respondent’s motion is that the maintenance which

CBCA 7330, 7348

5

appellant was required to perform before entering into the stipulation, and which respondent

agreed to perform as the result of the stipulation, was “as is required for the Government’s

access to, occupancy, possession, use and enjoyment of the premises as provided in the

lease,” as stated in paragraph 14. Thus, respondent asserts that, before the stipulation,

appellant was only obligated to perform maintenance that benefitted respondent, and after

the stipulation, respondent was only required to and only performed maintenance that it

determined was necessary for its own benefit. Therefore, respondent maintains that the

maintenance which appellant asserts was not performed was that which was required solely

for appellant’s benefit and was not respondent’s obligation. Respondent asserts that “[t]here

is no language in the lease requiring the Government, in operating the building, to provide

specific services for the benefit of the landlord.” Respondent’s Motion to Dismiss at 7.

Appellant’s position is that respondent does not, as respondent claims, have the

“complete and unfettered discretion to perform whatever maintenance it desires to benefit

itself” but rather must perform the “total maintenance of the leased premises.” Appellant’s

Opposition to the Motion at 2-3.

The Board looks to Rule 12(b)(6) of the Federal Rules of Civil Procedure for guidance

in deciding a motion to dismiss for failure to state a claim. Board Rule 8(e) (48 CFR

6101.8(e) (2021)). Thus, in considering this motion, we must assume that all well-pled

factual allegations are true and indulge in all reasonable inferences in favor of the

nonmovant. Under this standard, appellant’s claim must be plausible on its face when

drawing all reasonable inferences in favor of the appellant. OWL, Inc. v. Department of

Veterans Affairs, CBCA 7184, 22-1 BCA ¶ 38,013, at 184,614 (2021); see ITS Group Corp

v. Department of Agriculture, CBCA 6621, 20-1 BCA ¶ 37,602, at 182,552.

We find appellant’s claim plausible on its face when drawing all reasonable inferences

in favor of appellant. There is clear and unambiguous language in the stipulation and SLA

57 that resolves the motion. Both documents state: “Effective December 1, 2013 until the

end of the Lease term and vacating of the leased premises, the Lessee is solely responsible

for all maintenance, repairs, replacement, real estate taxes, and costs associated with routine

and preventative maintenance of the leased premises.” (Emphasis added.) Therefore, the

stipulation and SLA are clear that the lessee (respondent) is responsible for all maintenance.2

2

Both parties cite case law in support of their positions. In further support of

its motion, respondent also notes that appellant asserts remedies provided in paragraphs 15

and 16 of the lease. While these paragraphs provide remedies for respondent and were not

mentioned in the stipulation, appellant argues in its claim and in response to the motion that

these paragraphs were amended to provide remedies to appellant. We need not address the

case law or additional arguments in order to resolve the motion. The clear and unambiguous

CBCA 7330, 7348

6

While paragraph 14 of the lease, after the stipulation and SLA, continues to state that

maintenance is to be performed “as is required for the Government’s access to, occupancy,

possession, use and enjoyment of the premises as provided in the lease,” this does not mean

that there are specific maintenance tasks that would benefit appellant and not respondent, as

respondent suggests. Such would be an unreasonable interpretation, in light of the

amendment to the last sentence of paragraph 14. This sentence originally read: “For the

purpose of so maintaining the premises, the Lessor may at reasonable times, enter the

premises with the approval of the authorized Government representative.” The amended

sentence read: “Lessor may at reasonable times enter the premises with approval of the

authorized Government representative in charge and will observe all applicable VA security

policies during these visits.” The deletion in the amended sentence of the phrase “for the

purpose of so maintaining the premises” is consistent with the previously quoted language

in the stipulation and SLA that “the Lessee is solely responsible for all maintenance, repairs,

replacement, real estate taxes, and costs associated with routine and preventative

maintenance of the leased premises.” Respondent’s obligation is reiterated by the last

sentence of paragraph 7 of the stipulation, included in SLA 57, which reads: “The Lessee

shall maintain the building, premises, grounds and parking lot consistent with the standards

set out in the Lease.”

Decision

Respondent’s motion to dismiss for failure to state a claim for which relief can be

granted is DENIED.

Allan H. Goodman

ALLAN H. GOODMAN

Board Judge

We concur:

Erica S. Beardsley

ERICA S. BEARDSLEY

Board Judge

Kyle Chadwick

KYLE CHADWICK

Board Judge

language of the stipulation and SLA 57 states respondent’s obligation to perform all

maintenance, the breach of which would provide a remedy to appellant.