____________________________ December 11, 1997 ____________________________ GSBCA 13937-RELO In the Matter of ROSEMARIE KELLY Rosemarie Kelly, Bellevue, WA, Claimant. J. A. Hughes, Chief, Policy Branch, Defense Finance and Accounting Service, Columbus, OH, appearing for Department of Defense. WILLIAMS, Board Judge. Claimant, Rosemarie Kelly, an administrative contracting officer employed by the Defense Logistics Agency, seeks reimbursement in the amount of $1,356.90 for the lodging portion of temporary quarters subsistence expenses (TQSE) which she incurred as a result of a permanent change of station (PCS). During the TQSE period, claimant occupied a rental property which she owned in the vicinity of the new duty station. The amount claimant seeks represents interest, tax and utility expenses on the rental property during the TQSE period. The agency denied reimbursement because claimant owned the home and because she had not demonstrated by clear and convincing evidence that the house would have been otherwise rented during the TQSE period. For the reasons stated below, we grant the claim and allow reimbursement for reasonable lodging expenses associated with claimant's occupancy of her rental property during the TQSE period. Neither statute nor regulation provides that in order to be reimbursed for lodging expenses during TQSE, an employee must demonstrate by clear and convincing evidence that the premises occupied would have been otherwise rented for the entire TQSE period. To the extent that some Comptroller General decisions have required such proof, we do not follow them. Rather, we hold that an employee may be reimbursed for reasonable lodging expenses for occupying a property the employee owns (other than the primary residence) during the TQSE period. Such reasonable expenses include a proration of the monthly interest, property tax, and utilities actually paid. Background On May 25, 1994, claimant was advised she was being transferred from Seattle, Washington, to Portland, Oregon. On May 31, 1994, claimant was issued travel orders authorizing her PCS move, including TQSE not to exceed sixty days. Claimant's reporting date at the new duty station was "O/A July 31, 1994." While claimant was awaiting the sale of her primary residence in Bellevue, Washington, where her family remained, she moved into a rental property which she owned in Vancouver, Washington. Claimant has owned the Vancouver home since October 1987 and states that she continuously rented it until the tenant vacated the premises in May 1994. Because of her upcoming transfer, claimant opted to keep the Vancouver home vacant until August 5 when she moved in during her TQSE period. Claimant seeks TQSE for the period August 5 through October 3, 1994. Effective October 8, 1994, claimant entered into a one-year lease, renting the Vancouver property to another tenant. Claimant sold her permanent residence in Bellevue on March 17, 1995. On her 1994 tax return, Form 1040, claimant claimed a loss from the Vancouver real estate rental property. Discussion The Defense Finance and Accounting Service (DFAS) originally denied reimbursement because claimant owned the house in the area of the new permanent duty station that she occupied as temporary quarters, citing Joint Travel Regulations (JTR) paragraph C13000.[foot #] 1 As the agency subsequently recognized, the fact that claimant owned the Vancouver property would not itself bar reimbursement. Rather, the Comptroller General has held that an employee who, while on temporary duty, lodges in a residence which he owns may be paid lodging expenses based on prorated monthly mortgage interest, property taxes, and utilities as costs occasioned by the temporary assignment. E.g., Robert E. Larrabee, 57 Comp. Gen. 147 (1977). ----------- FOOTNOTE BEGINS --------- [foot #] 1 This regulation provides: Generally, the term "temporary quarters" refers to lodging obtained from privately [sic] or commercial sources for the purpose of temporary occupancy after vacating the residence occupied when the transfer was authorized. However, occupancy of temporary quarters that eventually become the employee's permanent residence shall not prevent payment of temporary quarters allowance if the employee shows satisfactorily that the quarters occupied were intended initially to be only temporary. ----------- FOOTNOTE ENDS ----------- However, the agency in this case denied reimbursement because claimant had not proved by "clear and convincing evidence" that "but for her lodging there, the property would have been rented out at all times covered by the claim (August 5- October 3, 1994)," citing Lucius Grant, Jr., 62 Comp. Gen. 635 (1983).[foot #] 2 Although the Comptroller General in Grant and at least one other decision has required such a showing, this requirement has not been uniformly applied. Compare Grant and Doubtful or Fraudulent Travel Claims, B-230385 (Jan. 16, 1990) with Robert E. Larrabee, 57 Comp. Gen. 147 and Matter of the Comptroller General, B-201478, et al. (Aug. 7, 1981). We agree with Larrabee and those General Accounting Office decisions which do not require proof that the property would otherwise have been rented for the entire TQSE period.[foot #] 3 As we recognized in Paul W. Johnson, GSBCA 13815-RELO (Nov. 6, 1997), an employee may recover the expenses of occupying lodgings he owns during TQSE, so long as the employee can support with adequate documentation the calculation of a per day total for such costs; the Board found that properly documented reimbursable costs would include "expenses such as financing, property tax, insurance, and utilities."[foot #] 4 Accord Donald C. Smaltz, GSBCA 14328-TRAV (Oct. 23, 1997) (independent counsel could be ----------- FOOTNOTE BEGINS --------- [foot #] 2 In Buildex Inc. v. Kason Industries, Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citations omitted), the United States Court of Appeals for the Federal Circuit describes clear and convincing evidence: Although not susceptible to precise definition, clear and convincing evidence has been described as evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable. [foot #] 3 To the extent that Grant and Doubtful or Fraudulent Claims require an employee seeking lodging expenses to demonstrate by clear and convincing evidence that a property he owns and occupied during TQSE would otherwise have been rented, we decline to follow those decisions. [foot #] 4 In Johnson the dispute turned on whether the quarters occupied at two locations owned by the employee were "temporary." The record in Johnson established that the employee had previously agreed to lease the first temporary quarters to an independent tenant and renegotiated that lease to commence shortly after the TQSE period began. The second location consisted of two bedrooms and a bathroom in a section of another property the employee owned which was rented to a third party during part of the TQSE period. ----------- FOOTNOTE ENDS ----------- reimbursed for his lodging costs of monthly interest, property tax, and utility costs while occupying a house he purchased in Alexandria, Virginia, due to his temporary work away from his home and regular place of business in California); Matter of the Comptroller General (foreign service appointee whose rental property coincidentally became vacant at time of her temporary duty assignment could be reimbursed interest, taxes, and utility expenses associated with employee's occupancy of dwelling).[foot #] 5 In sum, the intent of TQSE is to reimburse an employee for reasonable subsistence expenses actually incurred when it is necessary for the employee to occupy temporary quarters. CFR 302-5. Claimant may recover reasonable lodging expenses associated with her occupancy of her rental property during the TQSE period, including prorated monthly interest, property tax, and utility costs. Decision The agency should reimburse claimant for her reasonable and adequately documented expenses of occupying her Vancouver house, including her prorated monthly interest, property tax, and utility costs actually incurred as lodging costs during the TQSE period. ______________________________ MARY ELLEN COSTER WILLIAMS Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 5 Similarly, JTR C4555.E allows an employee who purchases and occupies a residence at a temporary duty location to recover actual lodging costs including monthly interest, property tax, and utility costs prorated based on a thirty-day month.