______________________ DENIED: June 20, 1996 ______________________ GSBCA 12879 RUSSELL & ASSOCIATES - FRESNO, LTD., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Randall L. Mason and Jessica M. Amgwerd of Lewis, D'Amato, Brisbois & Bisgaard, San Diego, CA, counsel for Appellant. M. Leah Wright, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DEVINE, WILLIAMS, and DeGRAFF. DeGRAFF, Board Judge. The parties entered into a lease agreement in 1970. Twenty years later, a dispute developed concerning responsibility for roof repairs. A hearing was held on July 25-26, 1995, and the parties filed post-hearing briefs. The appeal is denied. Findings of Fact The Lease On December 22, 1969, the General Services Administration (GSA) issued a solicitation for offers to lease a minimum of forty-two acres of land upon which the lessor would construct an office building. Actually there are five office buildings. They are connected to one another by breezeways. Respondent's Appeal File, Exhibit 19. In this opinion, we refer to the five structures as "the building." On May 28, 1970, Russell & Associates - Fresno, Ltd. (Russell) and GSA entered into lease number GS-09B-6334. Respondent's Appeal File, Exhibit 20. The general partners of Russell were Robert B. Russell, Monroe M. Tapper, and William Gunther. Mr. Tapper was the managing partner. Transcript at 33- 34. Russell agreed to construct five buildings and lease them to GSA for a term of twenty years (November 8, 1971 through November 7, 1991) plus two five-year options. The annual rent was $2,659,644.73 for the base years and the option years. GSA was not obligated to pay the final four months' rent of the twenty- year term. The tenant in the leased space was the Internal Revenue Service (IRS). Respondent's Appeal File, Exhibit 20. Mr. Russell testified that the roof of the building was well constructed. Transcript at 103-04. The Amendment To The Lease On September 13, 1972, Mr. Tapper wrote to GSA concerning the possibility of modifying the terms of the lease "to make it more nearly net." Russell proposed reducing the rent by $118,500 per year and, in return, GSA would release Russell from "any and all maintenance, repair, and replacement functions and the same will be assumed by the Government." Respondent's Appeal File, Exhibit 2. On June 20, 1973, GSA's Buildings Management Division provided an estimate of the costs GSA would incur if it provided some of the services which Russell was obligated to provide. Not taking inflation into account and assuming that GSA did not take responsibility for long term major repairs to the frame, foundation, interior and exterior walls, roof structure, and roof cover, GSA's estimate was that its costs would be approximately $213,000 per year. Including the costs of long term major repairs to the frame, foundation, interior and exterior walls, roof structure, and roof cover, GSA's estimated actual costs were approximately $236,600. Respondent's Appeal File, Exhibit 34. GSA provided its estimate to Mr. Tapper on July 20, 1973. Taking into account inflation during the remaining initial term of the lease, GSA estimated that the annual cost would increase to $538,060, assuming that Russell continued "to maintain the building foundation, structure, and roof." Respondent's Appeal File, Exhibit 37. On July 26, 1973, in a letter to the contracting officer, Mr. Tapper stated that the parties were "negotiating toward a mutually agreeable dollar amount of rental reduction as a substitute for all Lessor maintenance obligations (except repair of roof, walls, and footings, subject to Paragraph 2 of the Lease) . . . ." Mr. Tapper stated that Russell proposed to reduce the rent by $118,500 in exchange for being relieved of "all maintenance, repair, and replacement obligations of any sort under the Lease except the obligations to repair roof, walls, and footings . . . ." Respondent's Appeal File, Exhibit 38. Mr. Tapper testified that Russell could have retained responsibility for the roof, walls, and structure in exchange for a rent reduction of $200,000 to $210,000. Transcript at 43. During August and September 1973, the parties continued to negotiate concerning an amendment to the lease. Respondent's Appeal File, Exhibits 39, 43-48. On November 26, 1973, the contracting officer issued a decision concerning a dispute between the parties regarding responsibility for maintenance and repair of equipment such as heating, ventilating, and air conditioning equipment. Respondent's Appeal File, Exhibit 5. While litigation was pending regarding this decision, the parties occasionally discussed the possibility of GSA assuming responsibility for operation of the building. Respondent's Appeal File, Exhibits 51-54. In May 1974, GSA's regional office estimated that GSA would incur approximately $175,100 (not adjusted for inflation) of costs per year if GSA provided some of the services which the lease obligated Russell to provide for the next seventeen years. This estimate excludes long term major repairs for the frame, foundation, exterior walls, roof structure, grounds and landscaping, roof cover, and protection. In June 1974, GSA's Central Office estimated that GSA would incur approximately $194,800 (not adjusted for inflation) of costs per year if it provided some of the services which the lease obligated Russell to provide for the next seventeen years. The figure is approximately $319,600 if adjusted for inflation at five percent per year. This estimate assumes that Russell would be relieved of maintenance, repair, and replacement obligations except for roof repair, walls, and footings. Respondent's Appeal File, Exhibit 52. On April 19, 1976, GSA informed Russell that because it had not performed the maintenance that GSA believed was required by the lease, GSA would take over all operation and maintenance, except for the exterior walls and the roof, and would begin taking deductions from Russell's rent. Respondent's Appeal File, Exhibit 58. Roof leaks began in March 1978. From then until late 1987, GSA or IRS reported numerous leaks to Russell's local representative, who arranged for repairs to be made. Respondent's Appeal File, Exhibit 116. In the summer of 1979, the parties again began discussing whether it would be possible to renegotiate the terms of the lease. Respondent's Appeal File, Exhibits 86, 88-89. In July 1979, Mr. Thomas Rochford, a GSA realty specialist, was assigned responsibility for negotiating with Russell in order to resolve the parties' differences. Mr. Rochford was employed by GSA from 1977 through 1982. After he left GSA, he founded a company which represents landlords in negotiations with government agencies. Mr. Rochford testified, "It's unusual for me to be sitting on the government side of the table, as [government counsel] would probably gladly affirm." Transcript at 291-98. On August 28, 1979, Mr. Rochford met with Mr. Tapper to discuss how much of a rent reduction would be made if GSA were to take over the operation and maintenance of the building. According to a memorandum to the file prepared by Mr. Rochford concerning the meeting, GSA believed that a rent reduction of between $362,000 and $443,000 would be in order and Mr. Tapper believed that a rent reduction of approximately $210,000 would be fair. At the meeting, a GSA employee pointed out that perhaps the parties' figures were not as far apart as they seemed, because GSA estimated a cost of approximately $223,000 for 1979, and the higher figures included inflation for the remaining term of the lease. Mr. Tapper explained that a reduction of $362,000 would cause Russell to incur a deficit of $118,000 per year. Respondent's Appeal File, Exhibits 88, 89. At the hearing, Mr. Tapper testified that his $210,000 figure represented the maximum deduction Russell could offer if it retained responsibility for the roof, the walls, and the structure. Transcript at 56. In a letter dated December 17, 1979, GSA's Buildings Management Division estimated that, assuming inflation at 6.6 percent per year, it would cost GSA $213,597.48 per year through December 1990, and $177,997.92 for January through June 1991, to assume Russell's maintenance and operation responsibilities, excluding painting. Respondent's Appeal File, Exhibit 90. Mr. Rochford believed that these figures were too low and that GSA would have to pay substantially more than the amounts stated in the letter. Transcript at 350-51, 378-79. Mr. Rochford testified that he does not believe these figures contain any amount for structural maintenance. Transcript at 355. This testimony is consistent with the letter's supporting material and other exhibits which establish how the Buildings Management Division arrived at its estimated cost figures. The supporting material shows that the Buildings Management Division's estimate is equal to the amount that GSA deducted from Russell's rent in 1977, adjusted for inflation. Respondent's Appeal File, Exhibit 90 at 14, 16. Other exhibits establish that the amount deducted in 1977 was needed to perform maintenance work on the building's equipment, and not the building's structure. Respondent's Appeal File, Exhibits 8, 64, 73. In a January 3, 1980 memorandum to the file, Mr. Rochford summarized his discussion with Mr. Tapper during a meeting the same day. The purpose of the meeting was "to finalize negotiations regarding the rental deductions . . . for the Government's assumption of all services and utilities." GSA made three proposals to Russell. First, if Russell would continue to be responsible for painting, for maintaining the roof, foundation, and structural walls, and for latent defects, GSA would deduct approximately $213,600 from the annual rent through 1990, and approximately $178,000 from January through July 1991. Second, if Russell would continue to be responsible for painting, for maintaining the roof, foundation, and structural walls, for latent defects, and for slurry sealing the parking area, GSA would deduct approximately $204,500 from the annual rent through 1990, and approximately $170,400 from January through July 1991. Third, if Russell would continue to be responsible for only structural maintenance, GSA would deduct $289,097.48 from the annual rent through 1990, and $240,914.56 from January through July 1991. Mr. Rochford's memorandum to the file states that he told Mr. Tapper that, if Russell chose the third option, the annual rent would be $2,370,547.25. Respondent's Appeal File, Exhibit 14. Mr. Rochford's proposals were based upon the December 17, 1979 estimate prepared by the Buildings Management Division. Transcript at 313. Mr. Tapper testified that, during a telephone conversation following the January 3, 1980 meeting, he told Mr. Rochford that the third proposal was "close to realistic," provided that GSA would assume responsibility for the roof, the building structure, and the foundation, because Russell could not afford a reduction of $290,000. During this same conversation, according to Mr. Tapper, he told Mr. Rochford that Russell wanted GSA to accept the building in "as is" condition, meaning that Russell would be responsible for latent defects and nothing more. Transcript at 60-61, 64. According to a memorandum to the file written by Mr. Rochford, Mr. Tapper called on January 7, 1980, to say that Russell wished to select the third proposal presented by GSA. Russell asked that GSA agree to take over the building in "as is" condition and to state that it was not aware of any latent defects. Respondent's Appeal File, Exhibit 15. According to Mr. Rochford, Mr. Tapper did not say that he wanted an agreement which would leave Russell responsible for only latent defects. Mr. Rochford recalled that he and Mr. Tapper discussed that Russell would be responsible for the structure and for latent defects. Transcript at 317-21, 356, 360. Mr. Rochford testified that, as he understood the Economy Act to read in 1980, GSA was prohibited from taking over structural maintenance of the roof, walls, and foundation unless there was a written justification which showed that the work was necessary. Further, Mr. Rochford understood that a certificate of determination was needed if any amount to be paid by GSA, when combined with amounts previously paid by GSA, would exceed twenty-five per cent of the first year's rent.[foot #] 1 Mr. Rochford testified that he never performed any calculations to determine what GSA would have spent for repairs to the roof, walls, and foundation. Transcript ----------- FOOTNOTE BEGINS --------- [foot #] 1 In 1980, the Economy Act provided: On and after June 30, 1932, no appropriation shall be obligated or expended for . . . alterations, improve- ments, and repairs of the rented premises in excess of 25 per centum of the amount of the rent for the first year of the rental term . . . . 40 U.S.C. 278a (1982). ----------- FOOTNOTE ENDS ----------- at 353-54, 362-63, 376-77, 380-81. A certificate of determination prepared in 1979 shows that GSA had reached the twenty-five percent limitation imposed by the Economy Act. Appellant's Exhibit 53. The initial term of the lease was supposed to expire in early November 1991, with GSA paying rent only for the first six months of 1991. As a result of these terms, the rent reduction agreed to by the parties would be greater per month during 1991 than the monthly reduction to be made for the other years of the initial lease term. On January 8, 1980, Mr. Rochford wrote a note stating that Mr. Tapper called to say that Russell wanted the monthly rent reduction to be uniform throughout the balance of the lease. Mr. Rochford and Mr. Tapper agreed to increase the rental reduction by $8,379.60 per year in order to make the payments uniform for the balance of the initial term of the lease. As a result, Mr. Rochford calculated that the annual rent for the remaining initial term of the lease would be $2,362,167.60 and the annual rent for the option years would be $2,370,547.25. Respondent's Appeal File, Exhibit 91. On January 10, 1980, Mr. Rochford prepared a statement concerning negotiations with Russell. He said that, based upon the December 17, 1979 report prepared by the Buildings Management Division, which "arrived at a figure of $213,597.48 per annum as the amount needed to operate the building," he negotiated with Russell to begin rental reductions in exchange for GSA's assumption of services, utilities, and "maintenance of everything except the roof, structural walls, foundation and latent defects." GSA estimated that it would cost an additional $75,500 per year to paint the building, and so this amount was added to the $213,597.48 to arrive at a figure of $289,097.48 per year ($24,091.45 per month) for operating the building through the end of 1990. This was increased by $698.31 per month (to $297,477.12 per year) in order to keep the monthly payments uniform during the initial term of the lease. "Negotiations were concluded amicably and it was agreed that we would draw up a Supplemental Agreement spelling out the agreed terms." Respondent's Appeal File, Exhibit 16. The difference between the amount of rent stated in the lease ($2,659,644.73) and the amount of rent to be deducted during the initial term of the lease ($297,477.12) is $2,362,167.61. The difference between the amount of rent stated in the lease and the amount of rent to be deducted during the option years ($289,097.48) is $2,370,547.25. Respondent's Appeal File, Exhibits 16, 20. Also on January 10, 1980, Mr. Rochford prepared and signed an Analysis of Values Statement. The statement shows that the gross annual rent to be paid to Russell would be $2,362,167.60, and that Russell would furnish approximately $40,000 per year to maintain the building structure and reserves. Respondent's Appeal File, Exhibit 96. The parties amended the lease on March 3, 1980, when they entered into Supplemental Lease Agreement Number 6 (SLA 6). SLA 6 states that the parties wished to amend the lease "to reduce rental payments and show the Government as responsible for services and utilities." SLA 6 provides that the annual rent for January 1980, through July 1991, was $2,362,169.60, that no rent was to be paid for July 1991 through November 1991, and that the annual rent for the two five-year option terms was $2,370,547.25. SLA 6 also provides: The Lessor agrees to be responsible for the operation, maintenance and repair of the demised premises to the extent of, but only to the extent of: (1) defective conditions, either presently existing (latent or patent) or developing in the future, of the roof, foundation, or exterior walls, exclusive of windows and doors; and (2) any presently existing latent defective conditions of any and all other systems on the premises. The Government agrees to be responsible for all other operation, maintenance and repair of the premises. Any and all other provisions of this lease, to any extent inconsistent with the above, are hereby deleted to the extent, but only to the extent, of any such inconsistency. It is agreed and understood that effective January 1, 1980 neither the Government nor the lessor are aware of any presently existing latent defects and that the Government accepts the premises in an "as is" condition except as stated above. Respondent's Appeal File, Exhibit 20. In an April 15, 1980 letter to Mr. Gunther and Mr. Russell, Mr. Tapper states, "Finally after years of negotiating and litigating with the G.S.A. I have been able to amend the lease on the above mentioned property to be net to us except for real estate taxes and insurance." Concerning his negotiations with GSA, Mr. Tapper states in that same letter, "I refused to accept the ongoing obligation of roof, foundation and exterior walls as the Lessor['s] future obligation would then be an issue as was H.V.A.C. in the past. It was finally agreed that the G.S.A. would assume the ongoing maintenance of the roof, foundation and exterior walls subject to latent defects being the Lessor[']s obligation." Mr. Tapper explains that he refused to accept responsibility for the roof because "the roof was improperly flashed." He states that GSA's agreement to accept the building in "as is" condition left Russell with responsibility for latent defects. There is no evidence to suggest that a copy of this letter was sent to GSA. Appellant's Appeal File, Exhibit 8. Mr. Russell received this letter from Mr. Tapper. Transcript at 113. Mr. Rochford testified that Mr. Tapper's letter does not accurately reflect the parties' negotiations, because it says that GSA would be responsible for some maintenance that the parties never discussed. Transcript at 375. Mr. Tapper testified that, at the time he wrote his April 15, 1980 letter, relations with his two partners were "tense," and he was not having many discussions with them at this time. The tension was created because Mr. Tapper, without the knowledge of his partners, borrowed some of the partnership's funds and made assignments of additional amounts of the partnership's funds, for a total of approximately $3 million. Transcript at 72-73, 83, 86-88. In late 1980, "after this all came to light," Mr. Tapper testified that he resigned or was removed from Russell. Transcript at 73, 83. In its prehearing brief, Russell asserts that Mr. Tapper "was removed for cause due to bilking RUSSELL out of over $3.0 million." Appellant's Prehearing Brief at 6, fn. 2. Mr. Russell took over Mr. Tapper's duties as managing partner. Transcript at 73-74. Mr. Tapper testified that he and Mr. Russell are still friends. Transcript at 73, 74. After The Amendment Was Signed On November 17, 1980, GSA wrote to Russell concerning the need for roof repairs. GSA asked when Russell intended to make the necessary repairs. Respondent's Appeal File, Exhibit 101. On January 28, 1982, GSA sent Russell's representative a diagram of the building, showing roof leaks. GSA's cover letter states that Russell's prompt attention to repair would be appreciated. Respondent's Appeal File, Exhibit 103. On April 19, 1985, GSA wrote to Russell concerning the roof. The letter states that extensive repairs were needed before the next rainy season in order to prevent problems. Appellant's Appeal File, Exhibit 80. Russell took responsibility for making repairs from 1980 through 1987. Respondent's Appeal File, Exhibit 116. In a May 1, 1987 letter, Mr. Russell stated that Russell had renegotiated the lease to make it a "reasonably net lease. The present owners are responsible only for roof and structural maintenance." Respondent's Appeal File, Exhibit 105. In October 1987, Russell authorized Fresno Roofing to check and repair any leaks reported by the IRS, and to obtain approval for any repair that would exceed $1,000. Appellant's Appeal File, Exhibit 16. On June 28, 1988, Russell wrote to a real estate broker and stated that Russell paid only taxes, insurance and roof maintenance for the building leased to GSA. Respondent's Appeal File, Exhibit 106. Russell accepted responsibility for roof repairs from 1988 through 1991. Respondent's Appeal File, Exhibit 116; Appellant's Appeal File, Exhibits 9, 16. On May 3, 1991, GSA notified Russell that it would renew the lease. Respondent's Appeal File, Exhibit 113. On October 25, 1991, Russell sent a letter to the IRS concerning the roof. The letter states that Fresno Roofing had the authority to make repairs when leaks occurred. The letter also states, "Since the Lease has been renewed, at the present time, for ten (10) years, we thought it wise to establish a program that would conform to the Lessor's obligation to maintain a reasonably waterproof structure." Respondent's Appeal File, Exhibit 117. Sometime in 1991 or 1992, Russell refinanced the debt it owed on the building. The lender required Russell to establish a reserve for roof repairs because Russell might "have to do something with the roof." Transcript at 128-32. Mr. Russell testified that he was surprised by this. He reviewed the lease documents and determined that GSA was responsible for roof repairs. Transcript at 132. At a meeting held in December 1992, Mr. Russell told the IRS that, in his attorney's opinion, SLA 6 relieved Russell of responsibility for roof repairs. Appellant's Exhibit 16. On February 18, 1992, the parties signed SLA 10, in which GSA exercised the two five-year options (November 1991 through November 2001), at an annual rent of $2,370,547.25. Respondent's Appeal File, Exhibit 20. Russell performed roof repairs in 1992 and in 1993. Appellant's Appeal File, Exhibits 9, 16. In January 1993, the IRS contacted Russell and asked whether Fresno Roofing was still authorized to make repairs, after the December 1992 meeting. Russell said that Fresno Roofing was still authorized to make repairs. Appellant's Exhibit 16. The Claim and The Appeal On May 21, 1993, an attorney for Russell sent a letter to a GSA realty specialist, requesting payment of $15,856.69 for expenses incurred by Russell from May 1988 through March 1993, for repairs to the roof. The letter states, "When the Lease was modified during the original term to change the rentals to give the government four months free rent, all maintenance obligations were assumed by the government." Attached to the letter were invoices for most of the work. The invoices do not state when most of the work was performed or what caused the roof to leak. Respondent's Appeal File, Exhibit 17; Appellant's Appeal File, Exhibit 9. Mr. Russell testified that, before May 1993, he verbally protested making roof repairs, although he was not sure when he did so. Transcript at 130-31, 159, 162. On March 14, 1994, the contracting officer responded to an unidentified letter from Russell's attorney.[foot #] 2 The contracting officer stated that, according to his reading of SLA 6, Russell was responsible for maintaining and repairing the building's structure. For this reason, the contracting officer denied Russell's claim for reimbursement for roof repair expenses. Respondent's Appeal File, Exhibit 18. ----------- FOOTNOTE BEGINS --------- [foot #] 2 It seems likely that the contracting officer's letter is in response to Russell's attorney's May 21, 1993 letter, although this is not clear in the record. ----------- FOOTNOTE ENDS ----------- On June 15, 1994, Russell filed this appeal. In its notice of appeal, Russell states that it "seeks reimbursement of all sums it has paid for maintaining the roofs of the leased buildings within four years from its first request for reimbursement to the GSA as well as an adjudication that GSA is obligated and responsible for all current roof repairs, plus all future obligations and responsibilities which are not the result of defective design or construction pursuant to the Supplemental Lease Agreement No. 6." Notice of Appeal at 2. On July 21, 1994, Russell filed its complaint, containing five counts. In Counts 1 and 2, Russell requests: That the Board determine the proper interpretation of SLA 6. Related to this request, Russell asks for declaratory relief, which is not a remedy available in a board of contract appeals. That the Board order GSA to reimburse Russell for all of the expenses it incurred in repairing the roof of the leased building during the last seven years. That GSA be directed to pay unspecified consequential damages. In its response to a motion to dismiss, Russell withdrew Count 5. In a November 9, 1994 order, we dismissed Count 3, Count 4, and the request for unspecified consequential damages contained in Counts 1 and 2. On June 12, 1995, Russell sent a letter to its attorney, stating that it incurred $7,159.78 in roof repair expenses after May 1993. Appellant's Exhibit 92. On July 22, 1995, three days before the hearing began, Mr. Russell inspected the roof and found it to be in excellent condition. Transcript at 142. The Cause of Damage To The Roof Russell called James T. Coe to testify as an expert witness concerning what caused damage to the roof. Mr. Coe provided an opinion as to the cause of the roof damage that necessitated the repairs for which Russell seeks reimbursement. Mr. Coe testified that some of the repair work was needed due to normal wear and tear, and other work was needed due to activity on the roof. Mr. Coe did not identify which work was needed due to wear and tear or to activity on the roof, or which of the invoices contained in the appeal file represent work due to either wear and tear or activity on the roof. Mr. Coe based his opinion upon exhibits contained in the appeal file, but he did not explain how any particular exhibit corresponded to any of the repairs for which Russell claims reimbursement. Mr. Coe never inspected the roof. Mr. Coe talked to an unidentified person who works for the roofing company that, for many years, performed roof repairs for Russell at the building leased by GSA. The person to whom Mr. Coe spoke said that the company did not attempt to distinguish between repairs that were needed due to normal wear and tear, and repairs that were needed due to activity on the roof. Transcript at 260-68. Mr. Coe is an assistant professor of finance at Georgia Southern University and president of a corporation that engages in real estate consulting. Transcript at 222. Mr. Coe does not possess any training or education that would qualify him to provide an expert opinion about the cause of damage to a roof. His knowledge, skill, and experience in this area derive from his employment with the United States Postal Service, where he held a variety of administrative positions. In his capacity as a contracting officer, Mr. Coe evaluated lease requirements for items such as roof repairs, and he issued decisions concerning responsibility for roof repairs. Transcript at 222-44. His experience in deciding how to allocate responsibility for roof repairs comes from "assembling and documenting a record . . . as to the nature of the [roof's] condition." Transcript at 244. Between 1976 and 1982, Mr. Coe visited approximately thirty-five roofs with architects and engineers who pointed out to him the conditions that they determined were causing problems with the roofs. Based upon the record and the information provided by the architects and engineers, Mr. Coe then took responsibility for deciding whether the tenants or the owners were responsible for repairing the roofs. Transcript at 222-51. Discussion The language of SLA 6 is clear. It imposes upon Russell the obligation to repair defective roof conditions which developed after SLA 6 was signed. Russell is not entitled to recover the money it seeks. Clear Language The primary issue in this appeal is resolved by reliance upon familiar rules governing contract interpretation. When we interpret a contract, our goal is to give effect to the intent of the parties. Our first step is to read the contract to see whether its terms are clear. We will read the contract so as to give a reasonable meaning to all of its provisions and not read it in a manner which leaves some contract terms meaningless, superfluous, or useless. Both Russell and GSA argue that SLA 6 is clear. Russell reads the agreement as providing that it is responsible only for operation, maintenance, and repair caused by defective conditions and latent defects in the roof. Russell contends that its responsibility is limited to defective roof construction or design. GSA reads the agreement as providing that Russell is responsible for defective conditions in the roof, even if the conditions are not caused by construction or design. SLA 6 provides that Russell is responsible for defective conditions "either presently existing (latent or patent) or developing in the future," of the roof, foundation, and exterior walls. According to Russell's reading of this language, the only roof repairs which it must make are those which are needed due to design or construction defects. All design and construction was completed, however, long before SLA 6 was signed, and so all design and construction defects were present when the parties entered into SLA 6. Whether such defects had not yet been discovered (i.e., they were latent) or had been discovered (i.e., they were patent), the fact remains that the defects existed at the time the parties entered into SLA 6. Therefore, we conclude that all design and construction defects -- which are the only defects for which Russell says it is responsible -- fall within the category of "presently existing (latent or patent)" defective conditions. If the only defective conditions for which Russell says it is responsible fall within the category of "presently existing (latent or patent)" conditions, then what does SLA 6 mean when it says that Russell is responsible for defective conditions "developing in the future?" Russell reads "developing in the future" as if it encompasses only latent design or construction defects which manifest themselves after SLA 6 was signed. Russell's reading, however, does not take into account the fact that, although SLA 6 restricts "presently existing" defects to either latent or patent defects, there is no similar restriction upon defects "developing in the future." Also, Russell's reading of "developing in the future" is encompassed within its reading of "presently existing (latent or patent)." Russell's reading of SLA 6 would make the words "developing in the future" meaningless. This is not an acceptable interpretation of the parties' agreement. We agree with GSA that SLA 6 does not limit Russell's responsibility to design or construction defects. SLA 6 creates two categories of defective roof conditions for which Russell is responsible. First, the responsibility for "presently existing (latent or patent)" defective conditions in the roof means that Russell is responsible for defective conditions, whether inconspicuous or obvious, which were present when SLA 6 was signed. Second, the responsibility for defective conditions "developing in the future" in the roof means that Russell is responsible for defective conditions which come into being after SLA 6 was signed. This reading of the contract gives meaning to all of its provisions and does not create any internal inconsistencies or conflicts. Russell contends that GSA's reading of SLA 6 renders meaningless the parties' agreement that they were not aware of any latent defects and that GSA would take the premises in "as is" condition. We disagree. The final sentence of SLA 6 states that the parties were not aware of any latent defects and that GSA would take the premises in "as is" condition, "except as stated above." The "except" language means that GSA did not completely accept the building in "as is" condition. Rather, GSA accepted the building in "as is" condition, subject to the responsibilities that the preceding sentences of SLA 6 imposed upon Russell. One of those responsibilities was to repair defective conditions developing in the future in the building's roof. Russell contends that GSA's reading of SLA 6 renders meaningless the provision that GSA will be responsible for "all other operation, maintenance and repair of the premises." We disagree that this provision is meaningless. The provision means that GSA is responsible for operation, maintenance, and repair other than the operation, maintenance and repair for which Russell is responsible according to SLA 6. In summary, we do not agree with Russell's reading of SLA 6, because it gives effect only to the language that makes Russell responsible for "presently existing (latent or patent)" defects, and gives no meaning to the language that makes Russell responsible for defects "developing in the future." We agree with GSA's reading of SLA 6, because it gives meaning to all of the language of the parties' agreement. Ambiguity Even if Russell could convince us that the language of SLA 6 is ambiguous, we would not adopt Russell's interpretation of that language. The evidence of the parties' intent when they entered into SLA 6 supports GSA's reading of the language of the agreement. Mr. Rochford's Testimony Russell argues that if we consider the testimony of the witnesses at the hearing when we interpret SLA 6, we should ignore Mr. Rochford's testimony because he had a "total inability to recall his negotiations with Mr. Tapper" and because his memory was "by and large non-existent." Russell describes Mr. Rochford as having "long-term career ties to GSA" and attributes Mr. Rochford's testimony to his "loyalty to his former employer." Russell unfairly characterizes both Mr. Rochford's ties to GSA and his testimony. Mr. Rochford began his employment with GSA nearly twenty years before the hearing and worked there for approximately five years. After leaving GSA, he founded a company, for which he now works, which represents landlords in negotiations with the government. As Mr. Rochford explained, today, it is unusual for him to side with the government. There is no evidence to support Russell's assertion that we should disregard Mr. Rochford's testimony because of any long-term ties or loyalty to GSA. As for his testimony at the hearing, it is not true that Mr. Rochford had a "total inability" to recall the negotiations leading up to SLA 6 or that his memory was "non-existent." For instance, Mr. Rochford recalled that all of the rent reduction options he offered left the responsibility for structural maintenance with Russell and that his discussions with Mr. Tapper did not include GSA assuming responsibility for the structure. Mr. Rochford clearly recalled that he did not make the calculations that would have been needed to determine if the Economy Act would prevent GSA from assuming responsibility for the structure of the building, and that he believed the Economy Act would have been violated if GSA had assumed responsibility for structural maintenance. It is true that Mr. Rochford stated that he did not recall certain specific events. For example, Mr. Rochford did not recall the contents of certain pieces of correspondence. He did not remember exactly how the amount of the rent reduction was calculated. He did not remember some details concerning dollar figures. He did not recall who drafted part of SLA 6. He did not remember the precise dates that certain events occurred. Mr. Rochford's inability to remember details, most of which are immaterial to the issues presented in this appeal, is hardly surprising, given that the negotiations for SLA 6 occurred fifteen years before the hearing. Mr. Rochford impressed the presiding judge as a thoughtful witness who truthfully responded to the questions he was asked. There is no reason to disregard his testimony, as Russell asks us to do. The Evidence In 1973, both parties were attempting to agree upon a rent reduction that would leave Russell with responsibility for the roof, walls, and footings. This is evidenced by the rent reduction estimate that GSA gave to Mr. Tapper in July 1973, and the letter prepared by Mr. Tapper in July 1973. GSA revised its rent reduction estimate in May 1974, still assuming that Russell would retain responsibility for the building's structure. When GSA took over Russell's maintenance responsibilities in 1976, it did not assume responsibility for the exterior walls and the roof. In August 1979, the parties met to continue their discussions concerning a rent reduction. Mr. Tapper believed that a reduction of $210,000 would be fair, and Russell could have reduced its rent by $200,000 to $210,000 and still retained responsibility for the roof, the walls, and the structure. In December 1979, GSA estimated that it could reduce Russell's rent by approximately $213,600 per year and assume responsibility for operating and maintaining the building. This amount does not include any money for structural maintenance. In January 1980, the parties met to discuss a rent reduction. GSA provided three options to Russell. Each option was based upon GSA's December 1979 estimate, and each option called for Russell to retain responsibility for the roof, foundation, and walls. The third option called for a rent reduction of approximately $289,000 per year. Mr. Rochford wrote a memorandum to the file in January 1980, stating that Russell wished to select the third option put forward by GSA at the parties' meeting earlier that month. In a later January 1980 note to the file, Mr. Rochford explained that the $289,000 rent reduction would have to be increased to approximately $297,500, in order to accommodate Russell's wish to have uniform payments throughout the initial term of the lease. In a January 1980 memorandum, Mr. Rochford summarized his negotiations with Russell. He explained that the amount of the rent reduction was based upon Russell retaining responsibility for the roof, walls, foundation, and latent defects. Later in January 1980, Mr. Russell prepared a statement for the file which states that Russell would furnish approximately $40,000 per year to maintain the building structure and reserves. The amount of the rent reduction contained in SLA 6 is equal to the amount that GSA predicted it would cost to operate and maintain the building, assuming GSA did not take over responsibility for structural operation and maintenance. Mr. Rochford's testimony concerning the parties' negotiations and agreement is credible, as well as consistent with the documentation that he prepared while the negotiations were being conducted. He recalled that he and Mr. Tapper discussed that Russell would be responsible for the structure and for latent defects. Mr. Rochford believed that the Economy Act would have been violated if GSA had agreed to assume responsibility for structural maintenance and repairs, and he never prepared the certificate of determination that would have been needed in order to exceed the Economy Act limitation. It is not important whether, in fact, the Economy Act would have been violated if GSA had agreed to take over structural maintenance. But, Mr. Rochford's memory of his concerns about the Economy Act was quite clear and is entirely consistent with the documentary evidence. For more than ten years after SLA 6 was signed, Russell assumed responsibility for roof repairs and performed those repairs without protest. In May 1987, Russell stated that it was responsible for roof and structural maintenance. In June 1988, Russell told a real estate broker that Russell paid for roof maintenance. In October 1991, Russell stated that it had an obligation to maintain a reasonably waterproof structure. These actions do not estop Russell from arguing that it is entitled to reimbursement for the expenses it incurred in repairing the roof and do not mean that Russell waived its right to request reimbursement. But, Russell's actions after SLA 6 was signed are probative evidence of Russell's pre-litigation interpretation of the agreement. All of the evidence summarized in the preceding paragraphs establishes that the parties' intent was to negotiate an agreement to relieve Russell of responsibility for much of the maintenance and repair of the building, but not for maintenance and repair of the roof. GSA prepared its cost estimates based upon Russell maintaining and repairing the roof. Mr. Tapper's July 1973 letter and his testimony concerning his August 1979 cost estimate confirm that he, too, presumed that Russell would maintain and repair the roof. Mr. Rochford made numerous notes to the file at the time the parties were negotiating, and his notes also indicate that Russell would maintain and repair the roof. Finally, Mr. Rochford's recollection of the parties' negotiations and GSA's and Russell's conduct for ten years after SLA 6 was signed are consistent with the conclusion that the parties intended for Russell to retain responsibility for the roof. There are two pieces of evidence that support Russell's contention that the parties intended for Russell to be relieved of responsibility for the roof. First, there is Mr. Tapper's testimony that he told Mr. Rochford, following their January 1980 meeting, that Russell wanted GSA to assume responsibility for the roof, the structure, and the foundation. Second, there is Mr. Tapper's April 1980 letter to his partners, stating that GSA would assume these responsibilities.[foot #] 3 We do not give Mr. Tapper's testimony as much weight as we give Mr. Rochford's testimony. Mr. Tapper describes himself as a friend of Mr. Russell. Compare this to Mr. Rochford's description of himself as a landlord's representative who does not usually find himself taking the government's side of an issue. As for the April 1980 letter to his partners, at the time Mr. Tapper wrote this letter, it is unlikely that he wished to add to the tension that existed between him and his partners. Russell did not produce any contemporaneous notes or memoranda to establish how it calculated the amount by which it could afford to reduce its rent or to reflect the negotiations leading up to SLA 6. The lone letter from Mr. Tapper, which is clearly contrary to the terms of SLA 6, does not convince us that the parties intended for GSA to assume responsibility for roof repair and maintenance. Recovery Russell argues that, even if the provisions of SLA 6 are interpreted in GSA's favor, Russell should recover the amount it seeks because GSA has not established that the roof repairs were needed because of defective conditions. GSA, however, did not have the burden of proof. If Russell wished to establish that roof repairs were necessitated by something other than defective conditions, it was obligated to introduce evidence supporting its position. Russell argues that, because Mr. Russell believes that the roof was well-constructed and also believes that the roof was in excellent condition more than twenty years after it was constructed, the repairs for which Russell seeks reimbursement must not have been necessitated by defective conditions. Mr. Russell's testimony, however, does not suggest what caused the need for the repairs for which Russell seeks reimbursement. Russell also mentions that the IRS installed air conditioning units on the roof, but this work was done years before SLA 6 was signed, and there is no evidence that the installation of the air conditioners is related to any of the repairs for which Russell claims reimbursement. Russell also argues that Mr. Coe's testimony establishes that repairs were not needed due to defective conditions because, in his opinion, some of the work was needed due to normal wear and tear, and other work was needed due to activity on the roof. ----------- FOOTNOTE BEGINS --------- [foot #] 3 In its May 1993 claim letter, Russell took the position that GSA agreed to assume responsibility for roof maintenance when the lease was modified to give GSA four months free rent. There was no such modification, and this position lacks any factual foundation. ----------- FOOTNOTE ENDS ----------- At the hearing, the presiding judge permitted Mr. Coe to testify about the cause of the damage to the roof in this case, and stated that the weight given to his opinion would be based upon his qualifications. Although Mr. Coe established that he was a conscientious contracting officer who was willing to shoulder the responsibility for the decisions he made, his knowledge, skill, and experience in determining the cause of roof damage does not permit us to give his testimony much weight. The weight given to Mr. Coe's testimony is of no consequence, however, because he did not provide an opinion that assists us in determining what caused the need for the repairs paid for by Russell. Mr. Coe did not provide an opinion as to why any one of the specific repairs paid for by Russell was necessary. All we have is his testimony that some unspecified repairs were necessitated by wear and tear, and others by activity on the roof. Mr. Coe's opinion is not sufficient to establish whether the repairs for which Russell seeks reimbursement were needed due to defective conditions. Decision The appeal is DENIED. _______________________________ MARTHA H. DeGRAFF Board Judge We concur: ____________________________ _______________________________ DONALD W. DEVINE MARY ELLEN COSTER WILLIAMS Board Judge Board Judge