Appeal of claim for back rent owed by the government is granted. The contractor leased space to the government. The parties executed an amendment that gave the government access to the basement of the building in exchange for additional rent. The government paid the rent for a while, but then stopped. The government claimed the lease amendment had not been supported by consideration because the original lease had already given the government access to the basement. The CBCA, however, found that the original lease only gave the government qualified access to the basement. The amendment gave the government unlimited access. The government thus received a benefit. The amendment was valid and binding.
Background
Snyder Realty leased property to the Department of Veterans Affairs. The lease required Snyder to build out the property. But the construction cost more than anticipated. To solve the cost overruns, Snyder and the VA executed a lease amendment. Under the amendment, Snyder agreed to give the VA unlimited access to the building’s basement. In exchange, the VA agreed to pay Snyder and additional $5000 per month in rent. The amendment gave the VA extra space and gave Snyder the funds it needed to complete construction.
The VA paid the $5000 for the basement for 4 years, but then stopped. The VA determined that the lease amendment had been redundant. The original lease, the VA reasoned, had already given it access to the basement, so it didn’t need to execute the lease amendment.
Snyder submitted a claim seeking backrent for the basement. The VA didn’t respond, the claim was deemed denied, and Snyder appealed to the CBCA.
Legal Analysis
- Lease Amendment Was Supported By Consideration – The VA argued the lease amendment was not binding because it wasn’t supported by consideration. The VA contended that the original lease gave it access to the basement, so it never received anything in exchange for a $5000 rent increase. The board rejected this argument. The lease gave the VA qualified access to the basement for specific purposes upon reasonable notice to Snyder. The lease amendment gave the VA unlimited access to the basement. The VA thus received a clear benefit.
- Meeting of the Minds Occurred – The VA alleged there had been no meeting of the minds when the amendment was executed. Not so, said CBCA. The evidence showed the parties understood the purpose of the amendment. What’s more, any doubt about their intentions was easily resolved by their course of dealing. The VA paid the extra $5000 for four years.
Snyder is represented by Paul Jay Cohen of Cohen Marraccini, LLC. The government is represented by Neil S. Deol and Donald Mobley of the Department of Veterans Affairs.
