B-113363, FEB. 3, 1956

B-113363, FEB. 3, 1956

TO MR. SAMUEL MARX, ATTORNEY AT LAW:

YOUR LETTER OF JANUARY 5, 1956, CONCERNS THE CLAIM OF YOUR CLIENT, JOSEPH EZUST, A FORMER TENANT OF THE PENNSYLVANIA ATHLETIC CLUB BUILDING, PHILADELPHIA, PENNSYLVANIA, FOR LOSSES ALLEGED TO HAVE BEEN INCURRED BY HIM INCIDENT TO INSTALLATION OF NEW EQUIPMENT IN ANOTHER LOCATION FOLLOWING THE GOVERNMENT'S ACQUISITION OF THE BUILDING.

THE RECORD SHOWS THAT TITLE TO THE ABOVE BUILDING WAS ACQUIRED BY THE UNITED STATES ON FEBRUARY 6, 1951, BY THE INSTITUTION OF CONDEMNATION PROCEEDINGS AND THE FILING OF A DECLARATION OF TAKING. THE ACQUISITION OF THE BUILDING WAS DETERMINED BY THE CHIEF OF ENGINEERS TO BE AN ACQUISITION PURSUANT TO THE PROVISIONS OF SECTION 501 (B), TITLE V OF THE ACT OF SEPTEMBER 28, 1951, 65 STAT. 336, 364. IT APPEARS THAT MR. EZUST AS ONE OF THE TENANTS AT THE TIME OF THE GOVERNMENT'S ACQUISITION, APPLIED FOR REIMBURSEMENT IN THE AMOUNT OF $4,368.36 AS EXPENSES ALLEGED TO HAVE BEEN INCURRED BY HIM FOR MOVING AND RELOCATING IN NEW QUARTERS. YOUR LETTER INDICATES THAT THE OFFICE OF THE CHIEF OF ENGINEERS ALLOWED ONLY $219.45 OF YOUR CLIENT'S CLAIM. THE AMOUNT ALLOWED IS STATED TO REPRESENT THE ACTUAL COST OF MOVING AND TRANSPORTATION. IT IS INDICATED THAT THE BALANCE OF THE AMOUNT CLAIMED WAS DISALLOWED AS REPRESENTING CONSEQUENTIAL DAMAGES.

IN JUSTIFICATION OF YOUR CLIENT'S CLAIM FOR THE AMOUNT DISALLOWED YOU STATE THAT HE WAS COMPELLED TO SEEK A NEW LOCATION AND THAT HIS FIXTURES WHICH HAD BEEN SPECIALLY BUILT FOR THE CONDEMNED BUILDING DID NOT FIT THE NEW QUARTERS. IN EFFECT, YOU STATE THAT THE ARMY'S REFUSAL TO PAY YOUR CLIENT'S LOSSES AMOUNTS TO TAKING OF PRIVATE PROPERTY FOR PUBLIC USE WITHOUT JUST COMPENSATION IN VIOLATION OF THE CONSTITUTION.

UNDER SECTION 501 (B) OF THE ABOVE STATUTE THE SECRETARY OF THE ARMY, TO THE EXTENT ADMINISTRATIVELY DETERMINED BY HIM TO BE FAIR AND REASONABLE, UNDER REGULATIONS APPROVED BY THE SECRETARY OF DEFENSE, IS AUTHORIZED TO REIMBURSE TENANTS OF LAND ACQUIRED UNDER THE STATUTE FOR EXPENSES AND OTHER LOSSES AND DAMAGES INCURRED BY THE TENANT IN THE PROCESS AND AS A DIRECT RESULT OF THEIR MOVING CAUSED BY THE GOVERNMENT'S ACQUISITION OF THE PROPERTY.

EXCEPT FOR THE ENACTMENT OF THE ABOVE STATUTE THERE WOULD HAVE BEEN NO AUTHORITY FOR THE PAYMENT OF EXPENSES INCURRED BY THE TENANTS IN MOVING FROM THE BUILDING. UNITED STATES V. PETTY MOTOR CO., 327 U.S. 372; UNITED STATES V. WESTINGHOUSE CO., 339 U.S. 261. THE EXPENSES INCURRED BY YOUR CLIENT INCIDENT TO RELOCATING HIS BUSINESS IN ANOTHER BUILDING ARE ONLY SUCH AS THOSE WHICH HE WOULD HAVE SUSTAINED AT THE TERMINATION OF HIS LEASE. SUCH EXPENSES GENERALLY ARE REGARDED AS CONSEQUENTIAL IN NATURE FOR WHICH NO RECOVERY IS AUTHORIZED. THE RULE IS TOO WELL ESTABLISHED TO REQUIRE EXTENSIVE DISCUSSION OR CITATION OF AUTHORITY THAT COMPENSATION FOR THE TENANT'S INTEREST IN A TAKING OF THIS CHARACTER BY THE GOVERNMENT DOES NOT INCLUDE INDIRECT OR CONSEQUENTIAL DAMAGES SUCH AS THOSE NOW ASSERTED BY YOUR CLIENT. UNITED STATES V. GENERAL MOTORS CORP., 323 U.S. 373, 379-380; WM. WRIGLEY, JR. CO. V. UNITED STATES, 75 C.CLS. 569; HOWARD CO. V. UNITED STATES, 81 C.CLS. 646.

WHILE AS INDICATED ABOVE THE PRESENT STATUTE AUTHORIZES REIMBURSEMENT FOR EXPENSES AND OTHER LOSSES AND DAMAGES INCURRED BY TENANTS IN THE PROCESS AND AS A DIRECT RESULT OF MOVING THEMSELVES AND THEIR POSSESSIONS, REIMBURSEMENT THEREFOR IS REQUIRED BY THE ACT TO BE UNDER REGULATIONS APPROVED BY THE SECRETARY OF DEFENSE AND THE AMOUNT TO BE ALLOWED UNDER SUCH REGULATIONS IS SUBJECT TO DETERMINATION BY THE SECRETARY OF THE ARMY IN AN AMOUNT CONSIDERED TO BE FAIR AND REASONABLE. THE REGULATIONS APPROVED BY THE SECRETARY OF DEFENSE PROVIDE IN PERTINENT PART, AS FOLLOWS:

"/A) TYPES OF REIMBURSABLE ITEMS:

"/1) MOVING EXPENSES, SUCH AS COST OF TRANSPORTATION, INSURANCE, CRATING AND UNCRATING;

"/2) TEMPORARY STORAGE EXPENSES;

"/3) EXPENDITURES FOR OBTAINING NEW SITE OR LAND SUCH AS COST OF APPRAISALS, SURVEYS, AND TITLE SEARCHES, WHERE SUCH EXPENSES ARE NORMALLY BORNE BY THE PURCHASER. THIS DOES NOT INCLUDE ANY PART OF PURCHASE PRICE FOR THE NEW SITE OR ANY EXPENDITURES FOR THE PURPOSE OF ADDING TO THE VALUE OR UTILITY OF THE NEW SITE.

"/B) TYPES OF NON-REIMBURSABLE ITEMS:

"/1) COSTS OF CONVEYING PROPERTY TO THE GOVERNMENT;

"/2) CONSEQUENTIAL DAMAGES OR LOSSES, SUCH AS LOSS OF GOOD WILL, LOSS OF PROFITS, LOSS OF TRAINED EMPLOYEES, OR EXPENSES OF SALES AND LOSSES BECAUSE OF SUCH SALES.' (32 C.F.R. 536.92 (A) AND (B) ).

SINCE IT APPEARS THAT THE DAMAGES NOW CLAIMED ARE CONSEQUENTIAL IN NATURE AND SINCE THE SECRETARY OF THE ARMY HAS REFUSED PAYMENT OF

SAME OUR OFFICE IS WITHOUT JURISDICTION TO AUTHORIZE ALLOWANCE OF THE ADDITIONAL AMOUNT CLAIMED.