Board of Contract Appeals General Services Administration Washington, D.C. 20405 _________________________ DENIED: September 14, 1998 _________________________ GSBCA 14200 WOODBRIDGE CONSTRUCTION CORP., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Michael P. Darrow of Hillman, Brown & Darrow, P.A., Annapolis, MD, counsel for Appellant. Scarlett D. Grose and Ruth Kowarski, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, NEILL, and DeGRAFF. DeGRAFF, Board Judge. The General Services Administration (GSA) entered into a written lease with Woodbridge Construction Corporation (Woodbridge) for the use of space in Anne Arundel County, Maryland. Woodbridge contends that the parties also entered into an oral contract that obligates GSA to reimburse Woodbridge for a front foot benefit assessment imposed by the county to recover the cost of constructing water and sewer lines. GSA says that there is no such oral contract. The Board convened a hearing on May 28, 1998, in order to permit the parties to introduce evidence concerning the oral contract. Because Woodbridge has not established that the parties entered into an oral contract, we deny the appeal. Findings of Fact On March 14, 1977, GSA entered into lease number GS-03-B- 70043 with Woodbridge for a laboratory building and storage facility in Annapolis, Maryland. Exhibit 1 at 1.[foot #] 1 At that time, there was no public water or sewer service available to the leased property, and the property was connected to a septic system. Memorandum of Conference (Nov. 6, 1997); Transcript at 20. The lease said that Woodbridge would provide well water until such time (sic) the facility is connected to city supplied water, and that GSA would pay Woodbridge for well water. Woodbridge was to be responsible for making the connection to city supplied water. Exhibit 1 at 3. The lease contained a tax escalation clause which provided that, every three years, the rent rate would be adjusted to provide for increases or decreases in general real estate taxes. The clause also provided that Woodbridge was to send GSA copies of notices which might affect the valuation of the leased premises so that GSA could contest the valuation for general real estate taxes. Exhibit 1 at 41. In Anne Arundel County, Maryland, where the leased property is located, the county installs water and sewer lines in a street when a majority of the property owners make a request for the lines. The county recovers the cost of constructing water and sewer lines by imposing a fee upon property owners whose property abuts the county right of way where the water and sewer lines are installed. The county bases the fee upon the average width of the property and the cost per foot as determined by the county, and assesses the fee whether the property is improved or unimproved. Anne Arundel County considers this fee, called a front foot benefit assessment, as payment for the benefit that accrues to the parcel of property that is or can be connected to the county water and sewer system. The county assesses property owners in equal annual installments for thirty years. Exhibit 19 at 1-2; Anne Arundel County Code, art. 27, tit. 4. On November 13, 1986, a GSA employee met with several Woodbridge representatives and employees of the Environmental Protection Agency (EPA), the agency that occupied the leased premises, to discuss problems with the premises. The GSA employee was a lease inspector and not a contracting officer. Exhibits 10, 17. Minutes of this meeting state, EPA Headquarters will be funding (sic) for any front footage assessments under a least (sic) amendment with GSA. The minutes do not reflect who made this statement. Exhibit 10. The GSA employee who attended the meeting signed a declaration stating that she did not represent that GSA would pay any front foot assessment, and that she was unaware of the assessment until early 1997. Exhibit 17. According to Woodbridge s executive vice president, who attended the meeting, the EPA wanted to be ----------- FOOTNOTE BEGINS --------- [foot #] 1 All exhibits are part of the appeal file submitted by the parties. ----------- FOOTNOTE ENDS ----------- connected to city water as soon as possible and was willing to pay for the connection. Transcript at 25. On January 10, 1990, the Anne Arundel County Department of Health notified Woodbridge that the septic system serving the leased premises had to be replaced. Exhibit 4. In Supplemental Lease Agreement (SLA) 17, dated December 10, 1991, GSA and Woodbridge amended the lease in order to provide for the installation and maintenance of a sewer connection. According to the amendment, Woodbridge would perform the work necessary to install a sewer connection with a private shopping mall which had access to city sewer lines, and GSA would pay for the work. Exhibits 2 at 51; 18 at 1. Water and sewer lines serving the leased premises were installed by the county, and property owners could connect to those lines in March 1993. The county issued its first front foot benefit assessment bill for the lines in January 1994. The assessment for Woodbridge's property was $10,650.36 per year, with $3971.10 attributed to water and $6679.26 attributed to sewer. Exhibits 19 at 1-2; 100. Woodbridge s executive vice president testified that during an April 19, 1994 telephone conversation, the GSA contracting officer told Woodbridge to forward the 1994 assessment bill to GSA for payment. Transcript at 27. On that date, Woodbridge s executive vice president sent a letter to the contracting officer. The letter reads, in its entirety: As per our telephone conversation on the above date, I have enclosed a copy of the Front Foot Benefit and Capital Facility Assessment for the EPA Building. Please contact me if you have any information that may assist me. Exhibit 105. Woodbridge s executive vice president testified that, after sending this letter, he had several conversations with the contracting officer, who assured him that GSA would pay the bill. Transcript at 30. The contracting officer testified that he had some telephone conversations with Woodbridge s executive vice president, who requested that GSA reimburse Woodbridge for the front foot benefit assessment. Transcript at 113. On June 30, 1994, the contracting officer sent Woodbridge a letter stating that GSA had received Woodbridge s April 19, 1994 letter regarding the real estate tax escalation for the front foot benefit and capital facility assessment. The letter says: Before we can even consider processing your payments we will need paid tax receipts by the appropriate taxing authority for 1994's escalation. You must also explain how the Government has benefited from this improvement which caused the increase in assessment. Exhibit 20. Woodbridge s executive vice president testified that, after seeing this letter, he was of the opinion that GSA would pay the front foot benefit assessment and that GSA wanted to see a receipt showing that Woodbridge had paid its taxes. Transcript at 30, 39. The record does not contain any response by Woodbridge to GSA s June 30, 1994 letter. On May 2, 1995, GSA representatives met with Woodbridge representatives to discuss maintenance of the building and an adjustment in the rental rate. Exhibits 18, 22, 102, 103, 104; Transcript at 55. During a recess in the meeting, Woodbridge s representatives conferred concerning the amount of rent proposed by GSA and decided that they would accept GSA s terms, provided that GSA paid the front foot benefit assessment along with a tax escalation. Transcript at 32, 45, 52. Woodbridge s president testified that Woodbridge made its proposal to GSA and when he left the meeting he thought everything was agreed on. Transcript at 45. Woodbridge s executive vice president testified that GSA s contracting officer said that GSA would pay the front foot benefit assessment. Transcript at 32. Woodbridge s chief financial officer testified that the contracting officer indicated that if Woodbridge sent the front foot assessment bills to GSA, GSA would process a payment to Woodbridge. Transcript at 52. Woodbridge s president, executive vice president, and chief financial officer agree that one subject discussed at the meeting was real estate taxes, and that GSA agreed to pay the taxes. Exhibits 102, 103, 104. GSA s group manager over the area that handled the lease testified that the primary focus of the May 2, 1995 meeting was to discuss GSA s assumption of maintenance services at the building and to arrive at a corresponding reduction in the rent. The subject of tax escalations came up in concluding the arrangements concerning the final rent amount, and the front foot benefit assessment issue was raised in the context of discussing the tax escalations. GSA agreed that a tax escalation payment was due, and Woodbridge wanted GSA to pay for the front foot benefit assessment as part of the tax escalation. GSA s group manager testified that there was no detailed discussion of the tax escalation because no one at the meeting had any receipts for taxes paid. The group manager testified that he told Woodbridge to submit receipts for the front foot benefit assessment and that GSA would review the receipts as part of its tax escalation analysis. He said that he never offered to pay the front foot benefit assessment. Transcript at 61-62, 66-68. He also explained that GSA does not actually pay tax bills. GSA uses the tax escalation clause to reimburse building owners after they pay their bills and submit receipts to GSA. Transcript at 69-71. At the time of the May 2 meeting, GSA did not know whether the front foot benefit assessment was a tax based upon the value of the property, or whether it was based upon a pro rata share of paying the cost of construction. Different counties treat assessments in different ways. If an assessment is not based upon the value of the property, GSA does not reimburse the property owner for the assessment as part of its reimbursement for taxes. Transcript at 62-64. GSA s contracting officer testified that at the May 2, 1995 meeting the parties discussed the amount by which the rent would be reduced when GSA began providing the maintenance services that Woodbridge had been providing according to the terms of the lease. The contracting officer said that, just as the meeting adjourned, Woodbridge brought up the front foot benefit assessment. The contracting officer said that either he or the GSA group manager told Woodbridge to send in the assessment bills for review, but did not make a commitment to reimburse Woodbridge for the assessment. Transcript at 86-88. The contracting officer also testified that GSA agreed that it would pay the tax escalation. Transcript at 90. After the May 2, 1995 meeting, the contracting officer prepared a memorandum of the parties negotiations. The memorandum states that the purpose of the negotiations was to eliminate maintenance as a responsibility of Woodbridge and to provide GSA with a corresponding rent reduction. The memorandum does not discuss the front foot benefit assessment. Exhibit 22. On May 8, 1995, Woodbridge wrote to GSA concerning the leased premises. Woodbridge said, As we agreed, I have enclosed copies of the E.P.A. Facility tax bills for the years 1989 thru (sic) 1995. I have also enclosed the additional assessment bills with regards to Front Foot for the years 1994 and 1995. Woodbridge also enclosed a duplicate of the 1994 front foot benefit assessment bill, which was stamped PAID. The assessment bills that Woodbridge submitted to GSA are separate from the tax bills, which assess a tax based upon the value of Woodbridge's property. Woodbridge s letter asks GSA to adjust the amount of rent based upon tax escalations, and Woodbridge calculated a rent adjustment that included both the property taxes and the front foot benefit assessment as part of the tax escalations. Exhibit 100. In June 1995, GSA sent Woodbridge the calculations that GSA made in order to determine the amount of the tax escalation that GSA would pay. Transcript at 34, 53; Exhibit 21. It was clear to Woodbridge that GSA had not included the front foot benefit assessment in its calculations. Transcript at 54. On August 7, 1995, the parties signed SLA 20, which amended the lease effective October 1, 1995. SLA 20 stated that GSA would assume responsibility for performing all maintenance at the leased facility and established a new annual rental rate. SLA 20 did not mention the front foot benefit assessment or the tax escalation. Exhibit 2 at 114-15. Woodbridge s president testified that the GSA contracting officer told him that the front foot benefit assessment issue was not addressed in SLA 20 because GSA would not pay the front foot benefit assessment until city water was connected to the building. Transcript at 46. Woodbridge s executive vice president testified that he telephoned the contracting officer, who said that GSA would pay the front foot benefit assessment as soon as the building was hooked up to city water. Transcript at 34-35.[foot #] 2 At the hearing, counsel for Woodbridge asked the contracting officer whether he recalled saying that GSA would not pay Woodbridge for the front foot benefit assessment until the building was connected to city water, and the contracting officer responded that he could not recall making that statement. Transcript at 113. The contracting officer testified that, after the May 2, 1995 meeting, there were two issues being discussed. First, the parties were negotiating concerning a connection to city water. Second, Woodbridge wanted GSA to pay for the front foot benefit assessment. The contracting officer did not believe that the lease covered payment for the assessment, but he thought that this could also be the subject of negotiations. He hoped that Woodbridge would submit something to him concerning how the installation of the water and sewer lines benefitted GSA, so that the parties could begin negotiating this issue. Transcript at 108-09. In 1996, GSA paid to furnish and install a line from the county water line to the leased premises. Exhibits 8, 9, 17. In February 1996, the building was connected to the county water line. Exhibit 19 at 2. On January 13, 1997, the GSA contracting officer spoke with a representative from the Anne Arundel county tax office, who told the contracting officer that the front foot benefit assessment was not a tax. She also told the contracting officer that the assessment adds value to the property. Transcript at 91-93, 100; Exhibit 24. On January 20, 1997, Woodbridge submitted a claim to the GSA contracting officer for front foot benefit assessment charges for 1994, 1995, and 1996. Woodbridge also claimed that GSA should pay the associated interest that Anne Arundel County charged Woodbridge. Exhibit 11. GSA denied the claim on March 17, 1997. Exhibit 15 at 10. This appeal followed. As of September 1997, the leased property was not connected directly to the county sewer line. It continued to utilize the ----------- FOOTNOTE BEGINS --------- [foot #] 2 According to Woodbridge s chief financial officer, this telephone call occurred after GSA sent its tax escalation calculations to Woodbridge. Transcript at 54, 57. ----------- FOOTNOTE ENDS ----------- sewer line that is connected to the private shopping mall. Exhibits 18 at 1; 19 at 2. Discussion Woodbridge contends that the GSA contracting officer made an oral promise to pay for the front foot benefit assessment. In order for us to grant this appeal, Woodbridge must prove by a preponderance of the evidence that the contracting officer made such a promise.[foot #] 3 A preponderance of evidence is that which is more convincing than evidence which is offered in opposition to it. Hale v. Department of Transportation, 772 F.2d 882, 885 (Fed. Cir. 1985). Woodbridge must adduce evidence that makes the existence of a contested fact more likely than not. McClendon v. Health and Human Services, 23 Cl. Ct. 191, 195 (1991) (citing Black s Law Dictionary 1064 (5th ed. 1979)). In order to meet its burden of proof, Woodbridge relies upon the testimony of its executive vice president, its president, and its chief financial officer, who said that GSA promised to pay for the assessment. GSA, however, countered that testimony with the testimony of its group manager and its contracting officer, who said that they promised only to review Woodbridge s request for reimbursement for the front foot benefit assessment. All of the witnesses seemed equally credible and the testimonial evidence is equally balanced. Woodbridge cannot prevail by relying solely upon the testimony of its witnesses because a tie is less than a preponderance of the evidence . . . . Grumman Data Systems Corp. v. Dalton, 88 F.3d 990, 995 (Fed. Cir. 1996). Woodbridge relies upon several other pieces of evidence to tip the balance of the evidence in its favor. For the reasons explained below, we do not find that the evidence relied upon by Woodbridge adds any weight to its position. Woodbridge says that the "notes" of the May 2, 1995 meeting support its contention that GSA agreed to pay for the front foot benefit assessment. Woodbridge s Post-Trial Memorandum at 2. The only documents that contain any record of that meeting are the memorandum of the parties negotiations that the contracting officer prepared and SLA 20. The memorandum documents the fact that the parties discussed GSA's assumption of Woodbridge s maintenance responsibilities and a corresponding rent reduction. The memorandum sets out the background for SLA 20, which modified the lease by giving GSA maintenance responsibilities and by reducing the rent. Neither the memorandum nor SLA 20 mentions ----------- FOOTNOTE BEGINS --------- [foot #] 3 If Woodbridge can establish that the contracting officer made such a promise, then it must also establish that the contracting officer had the authority to bind GSA, and that there was a mutual intent to be bound, a definite offer and unconditional acceptance, and consideration. Edwards _______ v. United States, 22 Cl. Ct. 411, 420 (1991). ________________ ----------- FOOTNOTE ENDS ----------- the front foot benefit assessment, so neither document supports Woodbridge s contention that GSA agreed to pay for the assessment at the May 2 meeting. Woodbridge also says that the April 19, 1994 letter it sent to GSA confirms that the contracting officer promised to pay for the assessment. Woodbridge s Post-Trial Memorandum at 3. The April 19 letter, which is quoted in its entirety in our findings of fact, states that Woodbridge enclosed a copy of the bill for the assessment and asks GSA to contact Woodbridge if GSA had any information that might assist Woodbridge. The letter contains Woodbridge's request for GSA's aid or advice, and does not reflect a commitment by GSA to pay the bill. The letter does not confirm that the contracting officer agreed to pay for the front foot benefit assessment. Next, Woodbridge says that its May 8, 1995 letter, and GSA's failure to dispute the accuracy of that letter, confirm that the contracting officer promised to pay the assessment. Woodbridge s Post-Trial Memorandum at 3-5. Woodbridge sent its May 8 letter as a result of the parties May 2, 1995 meeting. At that meeting, GSA agreed to pay Woodbridge a tax escalation. The lease's tax escalation clause permitted GSA to reimburse Woodbridge for an assessment only if it was based upon an increase in the value of the property, and GSA did not know whether the front foot benefit assessment represented a recovery of costs by the county or whether it was based upon an increase in the value of the property. Part of GSA's process for paying a tax escalation is to have the property owner send GSA receipts for taxes paid. GSA says that, at the May 2 meeting, it told Woodbridge to forward its assessment bills or receipts for GSA's review. Woodbridge s May 8 letter forwarded to GSA copies of tax bills and assessment bills, and a receipt for the 1994 assessment. The letter contains Woodbridge s calculations in support of a rent adjustment pursuant to the lease s tax escalation clause, and those calculations include payment of the front foot benefit assessment. Although Woodbridge's May 8, 1995 letter to GSA makes it clear that Woodbridge wanted GSA to pay for the front foot benefit assessment as part of the tax escalation, the letter does not state that the contracting officer promised to pay for the assessment. The letter sounds as if Woodbridge was responding to the request that GSA says it made for Woodbridge's assessment bills or receipts. GSA's disagreement with Woodbridge's May 8 letter was evident in the tax escalation calculations that it sent to Woodbridge in June 1995, because GSA's calculations included no amount for the front foot benefit assessment. In summary, Woodbridge's May 8 letter does not confirm that the contracting officer promised to pay the front foot benefit assessment, and GSA did make it clear that it disagreed with Woodbridge's decision to include the assessment as part of the tax escalation. Woodbridge argues that it made no sense for GSA to ask for front foot benefit assessment receipts if it had no intention of paying for the assessment. Woodbridge s Post-Trial Memorandum at 5-6. GSA asked for tax receipts on June 30, 1994, and for tax or assessment receipts at the May 2, 1995 meeting. As of May 1995, GSA did not know whether the front foot benefit assessment imposed upon Woodbridge was a tax based upon the value of the property, or whether it was an assessment based upon a pro rata share of paying the cost of constructing the water and sewer line. If the assessment was actually an increase in the general real estate tax, GSA could use the tax escalation clause to make an adjustment to the rental rate after Woodbridge paid the bill and submitted a receipt to GSA. It made sense for GSA to ask Woodbridge for front foot benefit assessment receipts because if the assessment had proved to be a tax, GSA would have needed receipts before it could have reimbursed Woodbridge. Woodbridge contends that the water and sewer lines benefitted the property, and that GSA admitted that it would pay the assessment if the lines added a benefit to the property. Woodbridge s Post-Trial Memorandum at 5-6. Anne Arundel County believes that the lines added value to the property, but the evidence does not establish that a benefit to the property was the same as a benefit to the Government. Having the new sewer line available to the building did not provide any benefit to the Government, because the building occupied by the EPA was never connected to that sewer line. Although Woodbridge asks to recover the amount of the assessment for 1994, 1995, and 1996, the building was not connected to the water line until 1996, so the water line did not benefit the Government until some time in 1996. According to the assessment bills, only $3971.10 of the assessment was attributable to water and so, even if the Government benefitted from the water line in 1996, there is no evidence that the benefit to the Government was the same as the amount of the assessment. In addition, we find no admission by GSA that, if the lines added a benefit to the property, it would pay the assessment. The contracting officer raised the issue of a benefit to the Government in his June 30, 1994 letter to Woodbridge, when he said that before GSA "could even consider processing" a payment, Woodbridge would have to explain how the water and sewer lines benefitted the Government. The letter does not, however, say that GSA would pay the assessment if the lines benefitted the Government. The contracting officer testified that in May 1995, he thought that he and Woodbridge could negotiate concerning reimbursement for the front foot benefit assessment, and he hoped that Woodbridge would submit something to him concerning how the installation of the water and sewer lines benefitted GSA so that they could begin negotiations. Even though the contracting officer was willing to consider negotiating with Woodbridge, his statements do not constitute an admission that GSA would pay for the assessment. Finally, Woodbridge says that the notes of the November 1986 meeting with the EPA support its position. Woodbridge s Post- Trial Memorandum at 7. No GSA contracting officer attended that meeting, and the GSA representative at the meeting never stated that GSA would pay for any front foot benefit assessment. The notes of the meeting do not support Woodbridge s position that GSA promised to pay for the assessment. In summary, the evidence relied upon by Woodbridge is insufficient to establish that, more likely than not, the contracting officer (or anyone else from GSA, for that matter) promised to pay for the front foot benefit assessment. The testimony introduced by Woodbridge at the hearing is counterbalanced by the testimony introduced by GSA, and the documents relied upon by Woodbridge do not show that GSA made any oral promise to pay for the front foot benefit assessment. Decision The appeal is DENIED. __________________________________ MARTHA H. DeGRAFF Board Judge We concur: ________________________________ _________________________ _________ ANTHONY S. BORWICK EDWIN B. NEILL Board Judge Board Judge