March 31, 1997 GSBCA 14037-RELO In the Matter of HOLLY ROWE Holly Rowe, Rome, NY, Claimant. Bobby A. Derrick, Acting Director, Finance and Accounting Policy Implementation, and Frank A. Baldwin, Office of General Counsel, Defense Finance and Accounting Service, Indianapolis, IN, appearing for Department of Defense. GOODMAN, Board Judge. Ms. Holly Rowe is a civilian employee of the Defense Finance and Accounting Service. She requested, and was denied, an extension of her temporary quarters subsistence expenses (TQSE) period and subsequently requested reimbursement of hotel expenses during the requested extended period, which the agency also denied. She has requested that this Board review the agency s denial. Ms. Rowe was granted an initial period of TQSE which was to expire on June 12, 1996. On May 20, 1996, Ms. Rowe located a permanent place of residence and established a move-in date of June 6, 1996. On May 26, 1996, Ms. Rowe was notified by the landlord that the landlord would not allow her to occupy the expected quarters because the landlord s daughter had moved back to town and needed a place to stay. On June 10, 1996, Ms. Rowe filed for an extension of the TQSE period. She received a verbal denial on June 24, 1996. She found other quarters, but was unable to have her furniture delivered to them until July 1, 1996. She sought reimbursement of the hotel bill incurred from June 13 to July 1, 1996, in the amount of $400.80. On July 2, 1996, she received a denial from the agency which stated: You stated that the landlord s daughter is returning to town and will need a place to live. The landlord will be giving the apartment she promised to you to her daughter. Your failure in not signing a lease was not a reason beyond your control (that could not have been reasonably anticipated in advance) occurring within the initial period of temporary quarters. Ms. Rowe appealed the initial denial and by memorandum dated July 30, 1996, received a second denial of her request which cited the same reasoning as the initial denial. By memorandum received by this Board on December 13, 1996, she requested our review of the agency decision. The agency filed a report which recited the factual history of this dispute and stated, in pertinent part: Paragraph C13004-A-2, JTR, Vol. II, provides . . .: Extensions of the temporary quarters may be authorized only in situations where there is a demonstrated need for additional time due to circumstances which have occurred during the initial 60-day period of temporary quarters occupancy and which are determined to be beyond the employee's control and acceptable to the DOD components concerned. Examples of compelling reasons which could be considered as beyond the employee's control may include, but are not limited to, the following situations: a. shipment and/or delivery of HHG [household goods] to new residence is delayed due to extended transit time incident to ocean transportation, strikes, customs clearance, hazardous weather, fires, floods or other acts of God, etc.; b. new permanent residence cannot be occupied because of unanticipated problems (i.e., delays in settlement on new residence, short term delay in construction of new residence, etc.); c. inability to locate permanent residence which is adequate for family needs because of housing conditions at the new official station; d. sudden illness, injury, or death of employee or immediate family member. The Agency properly denied Ms. Rowe s request . . . [h]er failure to obtain the apartment was not beyond her control in that she could have ensured the apartment s availability by signing a lease. Under New York law with regard to the rental of most real property, only a written contract or lease is legally binding. . . . Furthermore, since she did not sign a lease, the loss of the apartment could have been reasonably anticipated. The agency s letter to the Board dated January 21, 1997, transmitting the agency report states in part: The landlord s withdrawal of the apartment was beyond the employee s control, however her failure to have entered into a contract with the landlord allowed the action to be taken. The signing of the contract was within the employee s control. In response to an inquiry from the Board dated March 4, 1997, Ms. Rowe stated that the original lease was a verbal agreement for the duration of one year, with a monthly rent of $350. The written lease that she signed for the apartment she actually occupied was also for one year, with a monthly rent of $450. A copy of the written lease was furnished to the Board. The Comptroller General, in deciding matters arising from this regulation, has stated that he would not overturn an agency exercise of discretion unless the exercise of discretion, made pursuant to a statute or regulation, is arbitrary, capricious, or contrary to law. Mark A. Wohlander, B-238300 (Oct. 4, 1990). We follow the same standard. The agency s decision in this matter is based upon arbitrary and erroneous factual assumptions and conclusions which are contrary to law. Presumably, the agency s statement that [u]nder New York law with regard to the rental of most real property, only a written contract or lease is legally binding refers to New York s statute of frauds that provides that leases for a period longer than one year are void unless in writing. N.Y. Gen. Oblig. Law  5-703 (McKinney 1989). The original lease was for a period of one year. Thus, the lease that the landlord breached was a binding and enforceable agreement. The agency s decision was based upon an erroneous legal conclusion that the lease was not binding. Since the verbal lease was binding and enforceable, it is an incorrect assumption that since Ms. Rowe did not sign a lease, the loss of the apartment could have been reasonably anticipated. Additionally, it is not correct to assume, as has the agency, that Ms. Rowe could have ensured the apartment s availability by signing a lease, nor can one conclude that her failure to have entered into a contract allowed the action [withdrawal of the apartment] to be taken. Ms. Rowe had a binding and enforceable verbal agreement upon which she relied. She had arranged to move her household goods into the apartment on a specific date. While the agency believes that it would have been prudent for Ms. Rowe to enter into a written lease, the existence of the verbal, enforceable lease did not prevent the landlord from breaching the lease. It is speculative to assume that the landlord would have allowed Ms. Rowe to occupy the apartment even if a written lease had been executed. Since the original lease was legally binding and enforceable, the existence of a written lease would not necessarily have ensured a different result, placed the matter within Ms. Rowe s control, or made the loss of the apartment reasonably anticipated. The landlord s decision to breach the lease and withhold the apartment was beyond Ms. Rowe s control and unanticipated, regardless of whether she had a verbal or written lease. Accordingly, the withdrawal of the apartment was beyond Ms. Rowe s control, arose during the initial TQSE period, and was not reasonably anticipated. Ms. Rowe promptly sought and made arrangement for other quarters. Under such circumstances, the agency abused its discretion in failing to extend the TQSE period from June 13 through July 1, 1996, and reimburse Ms. Rowe for the amount she seeks. Ms. Rowe is entitled to reimbursement for the hotel bill in the amount of $400.80. _________________________ ALLAN H. GOODMAN Board Judge