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GSA declined to reimburse the claimant for property taxes under a lease. The claimant alleged GSA had breached. CBCA said GSA hadn’t breached. Rather, by not complying with contract-specified deadlines, the claimant had waived its right to reimbursement for the taxes. 

HELF Investments and Los Portales Associates, LP v. General Services Administration, CBCA 7980, 7981, 7982 
  • Claim – The claimant leased buildings to GSA. The leases provided that GSA would reimburse the claimant for property tax increases provided the claimant submitted an invoice for the taxes by a certain date. The claimant didn’t submit an invoice by the required date. GSA refused to pay. The claimant appealed to CBCA. 
  • Breach of Contract – The claimant argued the leases did not state that GSA could completely deny reimbursement just for missing the invoice deadline. Thus, the claimant reasoned, GSA had breached. The board rejected the argument. The leases stated the claimant needed to submit an invoice by a certain date. It was the claimant that had not complied with the lease’s terms. To find that GSA still had a duty to reimburse despite the claimant’s non-compliance would render the lease’s tax reimbursement terms superfluous. 
  • Unreasonable Liquidated Damages – The claimant contended GSA refusal to reimburse was an improper assessment of liquidated damages. The board did not agree. Liquidated damages are intended to reimburse the government for a breach. Here, no one contended that the claimant had breached. To be sure, the claimant had not followed the tax reimbursement provisions. But the contract provided the claimant the right to seek reimbursement; the claimant did not have a duty to seek reimbursement. Thus, GSA did not claim the claimant had breached, nor was GSA assessing liquidated damages for a breach. Rather, the claimant had simply waived its right to be reimbursed. 
  • Windfall – The claimant argued GSA’s refusal to reimburse gave the agency an improper windfall. The board didn’t see it that way. There was no windfall. The claimant had provided GSA exactly what it had bargained for, and GSA had not paid anything less than what the parties had agreed it up. It was the claimant who waived its right to additional money. 

Claimants are represented by Daniel A. Kaplan of the Law Office of Daniel A. Kaplan. The government is represented by Jay Bernstein of the General Services Administration. 

–Case summary by Craig LaChance, Editor in Chief