DENIED: May 11, 1993 GSBCA 12138(11520)-REIN, 12139(11529)-REIN UNIVERSAL DEVELOPMENT CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Kenneth K. Takahashi of Takahashi & Associates, P.C., Washington, DC, counsel for Appellant. Martin A. Hom, Real Property Division, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), BORWICK, and HYATT. DANIELS, Board Judge. Universal Development Corporation (UDC) contracted to construct two buildings in the State of Texas and lease office space in those structures, for ten years, to the General Services Administration (GSA). Each contract contains a clause pertaining to adjustment of the amount of rental payments, dependent on changes in real estate tax payments. Several years after the contracts were entered into, UDC asked GSA to make additional payments under this clause. In an earlier opinion, we held that we had jurisdiction over the ensuing appeals of contracting officer decisions unfavorable to UDC, notwithstanding the fact that UDC did not own the buildings when the claims were made. UDC was in privity with the Government until the date on which it transferred ownership to a third party, and it did not transfer its rights to back rent for the lease periods prior to that date; thus, the firm could pursue at the Board its claims for such rent. Universal Development Corp. v. General Services Administration, GSBCA 12138(11520)- REIN, et al. (Dec. 23, 1992). The parties have filed cross-motions for summary relief as to the merits of the claims. We find that the language of the contracts explicitly makes UDC's requests for payment invalid because of the late date on which they were given to the contracting officers. The appeals are therefore denied. Findings of Fact The facts relevant to our decision are uncontested. 1. GSA and UDC entered into two separate contracts for ten-year leases of space in buildings to be constructed in the State of Texas. The amount of space in each building is about ten thousand square feet. The contract at issue in GSBCA 12138(11520)-REIN involves a building in Pasadena; the one in GSBCA 12139 (11529)-REIN involves a structure in Victoria. Appeal Files, GSBCA 11520, GSBCA 11529, Exhibit 1 of each. The contracts were amended to provide that their beginning dates were June 18, 1982, and May 8, 1982, respectively. Id., GSBCA 11520, Exhibit 3, GSBCA 11529, Exhibit 7. 2. Each contract contains a "Real Estate Tax and Operating Cost Escalator Clause." This clause states, in pertinent part: The Government shall pay to the lessor, as additional rent, the proportionate part of any increases in real estate taxes levied, assessed or payable with respect to the land and building comprising the leased premises or of which the leased premises are a part over and above the amount thereof levied, assessed or paid for the calendar year during which the term of this lease commences (base year). Such additional rent by reason of tax increases shall be payable as a lump sum by the Government upon presentation to the Government of copies of paid tax receipts for the base year and for the calendar year for which payment is demanded. . . . To be eligible for a rental adjustment under this clause the lessor must submit copies of paid tax receipts within 60 days from when taxes are due and payable. Failure to submit the request on a timely basis will constitute a waiver by the lessor of his rights to a tax adjustment for the specific year in which the rental adjustment would otherwise apply. Appeal Files, GSBCA 11520, GSBCA 11529, Exhibit 1 at 44 of each. 3. UDC executed a deed of trust for each property to secure promissory notes. Memorandum of Points and Authority in Support of Respondent's Motion to Dismiss, GSBCA 11520, GSBCA 11529, at Attachment 1 of each. UDC defaulted on the notes, and on November 7, 1989, both properties were sold by the trustees, at foreclosure, to Gill Savings Association. Id. These transfers in ownership were made known to GSA, and the contracts were amended to recognize them. Appeal Files, GSBCA 11520, Exhibit 4, GSBCA 11529, Exhibit 8. 4. In letters dated October 10, 1990, UDC asked the contracting officers for additional rental payments on these properties for the years 1983 through 1989. The supplemental amounts were calculated on the basis of property tax payments for those years which were greater than the payments for 1982. For the Pasadena property, the last of the supporting receipts show payments made in January 1990, by Gill Savings; for the Victoria property, the last of the receipts show payments made in January 1989. Appeal Files, GSBCA 11520, Exhibit 6, GSBCA 11529, Exhibit 9. GSA denied these requests as untimely filed. Id., GSBCA 11520, Exhibit 8, GSBCA 11529, Exhibit 11. 5. UDC submitted certified claims in this matter on May 7, 1991. The amounts of the claims were $100,697.75 as to the Pasadena building and $57,405.16 on the Victoria edifice. Appeal Files, GSBCA 11520, Exhibit 9, GSBCA 11529, Exhibit 12. The claims were again denied as untimely. Id., GSBCA 11520, Exhibit 10 at 2, GSBCA 11529, Exhibit 13 at 2. Discussion In 1972, the Court of Claims issued its decision in Hoel- Steffen Construction Co. v. United States, 456 F.2d 760 (Ct. Cl. 1972). The Court held that a contract's requirement that the construction contractor notify the Government, within a fixed period of time, of a claim for an equitable adjustment to the contract's price, was met by oral and written statements which had been made to the Government. The Court cautioned: To adopt [a] severe and narrow application of the notice requirements . . . would be out of tune with the language and purpose of the notice provisions, as well as with this court's wholesome concern that notice provisions in contract-adjustment clauses not be applied too technically and illiberally where the Government is quite aware of the operative facts. Id. at 767-68. Subsequent to this decision, boards of contract appeals took the Court's advice to heart, considering on the merits contractor claims which were filed after the period of time permitted by the relevant contracts, and generally granting those claims where the appellant was able to prove that the Government had not been prejudiced by the delay. The development of the law is well summarized in Powers Regulator Co., GSBCA 4668, et al., 80-2 BCA 14,463, at 71,319-22 -- a case which, like Hoel-Steffen, involved a contractor's claim for an equitable adjustment for constructive changes to contract requirements. This Board has similarly followed the Court's guidance in considering claims brought under economic price adjustment clauses in supply contracts. See, e.g., Chemray Coatings Corp., GSBCA 10117, 91-1 BCA 23,356 (1990); Sky Top Plastics, Inc., GSBCA 7000, et al., 91-1 BCA 23,350 (1990). We have also reviewed claims under a lease contract for adjustments to rental payments consequent to changes in real estate tax assessments -- the same sort of claims that are present here. Helmsley-Spear, Inc., GSBCA 7357, et al., 85-3 BCA 18,277. In all of these cases, the filing of the claims beyond the prescribed time limit was found not to have been prejudicial to the Government. In each of the cases, however, the contract was silent as to what would happen if the contractor filed a claim outside the time limit. Thus, there was room for the tribunal to construe the relevant clause in a manner consistent with the dictum of Hoel-Steffen. The boards have recognized that a late filing could invalidate a claim, however, if "such result is clearly mandated by the clause." Interlog Corp., ASBCA 21212, 77-1 BCA 12,362, at 59,836. In the instant cases, we are confronted with this sort of clear contract clause. The clause permits the contractor to receive increased rental payments, commensurate with increases in real estate tax charges, but only if the firm "submit[s] copies of paid tax receipts within 60 days from when taxes are due and payable." If the contractor does not make each submittal within the specified period, its inaction "will constitute a waiver by the lessor of his rights to a tax adjustment for the specific year in which the rental adjustment would otherwise apply." The right to increased payments is thus circumscribed by the very clause which creates it. The Court of Appeals for the Federal Circuit has repeatedly stated that "agreed-upon contract terms must be enforced. . . . [C]ontracting parties must be held to their agreements." Madigan v. Hobin Lumber Co., 986 F.2d 1401, 1403-04 (Fed. Cir. 1993) (citing numerous decisions); Reliance Insurance Co. v. United States, 864 F.2d 863 (Fed. Cir. 1991). Here, UDC was entitled to increased payments only if it submitted a copy of each tax receipt within sixty days of the date on which the tax was due. The contractor waited until October 1990 to send GSA its receipts for payment of taxes, although the last of these receipts bear dates in January 1990 (and, incidentally, reflect payment by UDC's successor as owner of the properties). October is more than sixty days after January, so the request was made later than the last date on which the Government was contractually required to honor it. UDC has produced evidence that another of its contracts with GSA contained an identical restriction on payment of additional rent due to real estate tax increases, and that in response to a late request for such payment under that contract, GSA compensated UDC. Affidavit of Bobby Ward (Attachment to Appellant's Motion for Summary Judgment), Exhibits A, B.[foot #] 1 Appellant maintains that this "practice" demonstrates that the agency is obligated to make the payments sought. The contention misconstrues the law regarding course of performance; repeated actions, relied upon by the other party, are necessary to establish that that party should be estopped from asserting a contrary position. Universal Development Corp. v. General Services Administration, GSBCA 11468, slip op. at 7 (Nov. 30, 1992). Whether GSA acted permissibly in making payment under the other contract is not now before us. We note that even if UDC were to prevail as to entitlement, for two reasons, it would receive far less money than it claims. First, UDC improperly used 1982 as the base year for its calculations. The contracts say that "[i]f the initial lease does not commence during a calendar year in which the property has been fully assessed, then the base year for tax purposes will be adjusted to the first year of full assessment." Appeal Files, GSBCA 11520, GSBCA 11529, Exhibit 1 at 44 of each. The tax receipts show that the taxes for 1982 were minimal, and that the assessments did not cover the buildings as well as the land until 1983 (for some taxing authorities) and 1984 (for others). Id., GSBCA 11520, Exhibit 6, GSBCA 11529, Exhibit 9. Thus, adjustments could appropriately be made only from the later years. W. David & Janet M. Kimbrell v. General Services Administration, GSBCA 11325, (Dec. 2, 1992), appeal docketed, No. 93-1289 (Fed. Cir., Apr. 1, 1993); Otto K. Wetzel, GSBCA 7466, 85-2 BCA 18,099. Second, the contract states that when GSA is required to make payments based on increased taxes, it has to pay only the part of the increase which is commensurate with the percentage of the building that the Government leases. Appeal Files, GSBCA 11520, GSBCA 11529, Exhibit 1 at 44 of each. According to the contracting officers, GSA occupied seventy-six percent of the building in Pasadena and fifty-four percent of the structure in Victoria. Id., GSBCA 11520, Exhibit 10 at 2, GSBCA 11529, Exhibit 13 at 2. Thus, any increases in taxes could not have been passed through fully to the Government. ----------- FOOTNOTE BEGINS --------- [foot #] 1 UDC alleges that an identical provision exists in two other contracts for which additional rent payments were made, but appellant has not supplied any documentation to support this statement. ----------- FOOTNOTE ENDS ----------- Decision UDC's motion for summary relief is denied and GSA's cross- motion is granted. The appeals are DENIED. _________________________ STEPHEN M. DANIELS Board Judge I concur: _________________________ ANTHONY S. BORWICK Board Judge HYATT, Board Judge, concurring. I concur in the majority opinion to the extent that it determines appellant has waived its right to recover the monies in issue. I do not concur in the dicta, set forth in the final paragraph of the opinion, addressing the amount to which appellant might theoretically have been entitled had it pursued its claim under the lease in a timely manner. I would not reach the matters discussed in this paragraph. _________________________ CATHERINE B. HYATT Board Judge