CBCA: You Can’t File a Claim Before You Become a Government Contractor; 3 Crescent Drive Owner I LLC et al. v. Department of Agriculture, CBCA 6867

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Appeal alleging the government breached a lease is dismissed. The claimant asserted that the government failed to vacate leased premised by the end of a lease term. At the time, the claimant submitted its claim, however, it was not yet the lessor. After the claim was submitted the previous lessor executed a lease amendment that recognized the claimant as the new lessor. The board only has jurisdiction to hear claims filed by contracting parties. Because the claimant was not a contracting party when it filed the claim, the board could not consider the claim. Contractor status does not relate back to the time in which a claim is filed.

The Department of Agriculture entered into a lease with L/S Three Crescent Drive, LP. The lease was for a term of ten years ending on February 22, 2020.

As February 2020 approached and the lease was about to end, another company, 3 Crescent Drive Owner, was preparing to buy the property and to step in as the new lessor. But 3 Crescent had not yet taken over the lease when it expired on February 22, 2020.

When the lease expired, the agency did not vacate the premises. Although it was not yet the lessor, 3 Crescent submitted a claim demanding that the government immediately vacate and pay rent for the holdover period.

A month after 3 Crescent submitted its claim, L/S Three and the government executed a lease amendment. The amendment formally recognized 3 Crescent as the new lessor with all the terms and conditions of the lease remaining in effect. As part of the amendment L/S Three released the government from any claim arising out of the lease.

Thereafter, the Department of Agriculture denied 3 Crescent’s claim. 3 Crescent appealed to the ASBCA.

The board, however, found that it was compelled to dismiss the appeal. The board has jurisdiction over a “claim. A claim is a demand for payment made by a contracting party. Here, when 3 Crescent filed its claim, it was not the lessor and thus not a contracting party. It only become a party after the claim was submitted. Contractor status does not relate back to the time the claim is filed.

The board also noted that even if it had jurisdiction to consider the claim, relief was not available. The lease amendment executed by L/S Three waived any claim against the government. 3 Crescent had agreed to be bound by L/S Three’s previous actions. Thus, 3 Crescent could not now maintain a claim against the government.

3 Crescent is represented by Brett D. Orlove and Kumail Mizra of Yochelson, Fox & Beyda, LLP. The government is represented by Elin M. Dugan of the Department of Agriculture.

CBCA - 3 Crescent Drive