MOTION TO DISMISS FOR LACK OF JURISDICTION DENIED: December 23, 1992 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, appearing for Appellant. Martin A. Hom, Real Property Division, Office of General Counsel, General Services Administration, Washington, DC, appearing for Respondent. Before Board Judges BORWICK, DANIELS, and HYATT. DANIELS, Board Judge. These two cases involve claims for accrued rent allegedly incurred under contracts for the lease of space by the General Services Administration (GSA) from Universal Development Corporation (UDC). The claims pertain to the period of time in which UDC owned the buildings in question. The claims were not submitted to the contracting officers and decided by them, however, until after UDC had lost ownership through foreclosure proceedings. GSA has moved us to dismiss the appeals for lack of jurisdiction, on the ground that UDC does not have the privity with the Government that is necessary to pursue this litigation. In support of this position, the Government initially relied heavily on a decision of this Board, Albert Ginsberg, GSBCA 9911, 91-2 BCA 23,784 (1991). After the motions were filed, the Court of Appeals for the Federal Circuit reversed this decision. Ginsberg v. Austin, 968 F.2d 1198 (Fed. Cir. 1992). The Board asked the parties to focus their arguments as to jurisdiction on the application of the Court's decision to these cases. Both sides have complied. We agree with UDC that under the law as explained in Ginsberg v. Austin, the appeals are properly before us. Background The following facts 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: 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. . . . The Government reserves the right to contest the amount [or] validity of any valuation for general real estate taxes by appropriate legal proceeding . . . . 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. The trustee's deeds and bills of sale state that what Gill Savings received was "all of the [real] Property . . . , together with all fixtures, personalty and other property described in the Deed of Trust." Id. The deeds of trust have not been placed into the record. 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. 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. The contracting officers specifically stated: This provision of the lease requiring submittal of a payment request and the corollary tax documentation within sixty (60) days from when taxes are due and payable is an integral part of the tax escalation clause. The requisite timely notice and request is more than a mere formality. The sixty (60) day deadline serves the purpose of allowing the Government time to assess the propriety of the taxes and valuation imposed by the various taxing authorities. . . . Appellant's failure to timely submit payment requests and the corollary tax documentation caused the Government to lose its right to contest, by administrative or legal proceedings, the amount or validity of the valuations imposed on the leased premises by the various taxing authorities. Id., GSBCA 11520, Exhibit 10 at 2, GSBCA 11529, Exhibit 13 at 2. Discussion GSA correctly observes that under the Contract Disputes Act of 1978, 41 U.S.C. 605 (1988), a claim may be made, and a denial of it may be appealed to a board of contract appeals, only by one who is in privity of contract with the Government. Erickson Air Crane Co. of Washington, Inc. v. United States, 731 F.2d 810, 813 (Fed. Cir. 1984); United States v. Johnson Controls, Inc., 713 F.2d 1541, 1550-52 (Fed. Cir. 1983). The question before us now is whether UDC retained the privity necessary to pursue its claims for rent accrued during the firm's ownership of the subject properties, even though ownership had been lost through foreclosure proceedings before the claims were filed. A similar situation arose in Ginsberg v. Austin. Mr. Ginsberg had a contract with GSA for the lease of space in an office building. He contracted separately to sell the building and assign the lease to the new owner. In doing so, he "assign[ed] to [the buyer] all of [his] right, title and interest in, to and under the Tenant Leases." Separately, he told GSA that he "relinquishe[d] all rights under the lease agreement effective [on a date which appears to be the date of transfer]." Mr. Ginsberg also filed a claim with the GSA contracting officer for rent which he believed had accrued, but which had not been paid, up to the date on which he transferred ownership of the building. The contracting officer denied the claim because (among other reasons) he thought that Ginsberg lacked standing under the Contract Disputes Act. After analyzing numerous decisions of federal and state courts, the Court of Appeals concluded: Under general principles of both property and contract law, Ginsberg cannot be held to have transferred his back rent claim, unless he expressly so stated. He did not do so. Ginsberg thus retained his claim for accrued but unpaid rent, and is therefore possessed of the requisite standing to pursue the merits of that claim. 968 F. 2d at 1201-02. GSA notes two distinctions between the facts in Ginsberg and those in the instant cases: Ginsberg made his claim before the transfer of ownership, whereas UDC filed its claims after that event; and Ginsberg's assignment was voluntary, whereas UDC's apparently was not. The Court of Appeals did not discuss these distinctions in its decision, which is phrased broadly. The language used in the UDC assignments appears to be similar to the words of the Ginsberg transfer. In the absence of any legal analysis explaining why an involuntary assignment per se divests a contractor of rights he would otherwise have, we hold to the general principle expressed in Ginsberg v. Austin. Because UDC held the property until November 7, 1989, and made no express transfer of its rights to claim back rent for the lease period prior to that date, appellant may pursue the claim at this Board. GSA is also concerned that if UDC succeeds in this litigation, it would receive a windfall, since the purpose of the foreclosure sale was to transfer assets in order to satisfy a debt. This is a legitimate apprehension, but not one for this Board to consider. In hearing these cases, we will resolve a dispute between UDC and the Government, and if UDC prevails, that firm will receive money from the Government. Whether that money stays in UDC's treasury, or by operation of law must be passed along to another party, is a matter we have no authority to decide. We note in this regard that the issue of who would receive what GSA characterizes as a "windfall" may be complex: not only were the properties transferred to Gill Savings in the foreclosure sale, but also, we gather from what the parties have told us orally and from snippets of information in the record, Gill Savings subsequently failed and its assets were taken over by the Resolution Trust Corporation, and UDC either is or was in bankruptcy. We leave to proper authorities the responsibility of sorting out where GSA's money will ultimately go if the appeals are granted. GSA has maintained, in arguing that we have no jurisdiction to hear these cases, that no rent accrued prior to the foreclosure because, under the terms of the contracts, UDC waived its right to additional rent when it failed to "submit copies of paid tax receipts within 60 days from when taxes are due and payable." We agree with UDC that this argument really goes to the merits of the appeals, rather than to jurisdiction. We consider the Government's contention to be in the nature of a motion for summary relief on the basis of the facts set out in this opinion. To expedite a ruling on this motion, we establish a schedule for further proceedings on it. Decision GSA's motion to dismiss the appeals for lack of jurisdiction is DENIED. The Government may supplement its motion for summary relief on or before Monday, January 11, 1993. UDC may respond to the motion no later than Monday, January 25. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ ANTHONY S. BORWICK CATHERINE B. HYATT Board Judge Board Judge