B-150627, MAR. 15, 1963

B-150627: Mar 15, 1963

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THERE WAS FORWARDED TO OUR OFFICE YOUR LETTER OF OCTOBER 17. FOR REIMBURSEMENT IN THE AMOUNT OF A JUDGMENT IT WAS REQUIRED TO PAY FOR DAMAGES TO PRIVATELY OWNED PROPERTY LEASED BY THE GERMAN GOVERNMENT FOR THE BENEFIT OF THE UNITED STATES FORCES. YOU HAVE RAISED THE FOLLOWING QUESTIONS CONCERNING THE MATTER: "A. "B. SINCE THE RESTORATION CLAIM AROSE ON 31 MARCH 1960 WHEN THE LEASE WAS TERMINATED AND THE CLAIM WAS SETTLED ON 9 MARCH 1962. WERE ANY VESTED RIGHTS ACQUIRED BY THE GOVERNMENT SO AS TO PROHIBIT ANY ATTEMPTED RETROACTIVE APPLICATION OF PARA J OF THE IMPLEMENTATION ARRANGEMENT DATED 10 MAY 1962? IN THIS CONNECTION REFERENCE IS MADE TO COMPTROLLER GENERAL OPINION B-145008. "C. MAY THE IMPLEMENTING ARRANGEMENT OF 10 MAY 1962 BE UTILIZED AS A CONTRACT PROVISION AND IN THE FUTURE TO ALLOW INTEREST PAYMENTS OR IS PARAGRAPH J OF SAID ARRANGEMENT TOO VAGUE AND AMBIGUOUS FOR SUCH?

B-150627, MAR. 15, 1963

TO MAJOR L. L. PERSONS, DEPARTMENT OF THE ARMY:

BY LETTER DATED JANUARY 11, 1963, FROM THE FINANCE CENTER, UNITED STATES ARMY, THERE WAS FORWARDED TO OUR OFFICE YOUR LETTER OF OCTOBER 17, 1962, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE PROPRIETY OF PAYMENT ON A VOUCHER FOR $590.41, COVERING A CLAIM OF THE DEFENSE COST OFFICE, FEDERAL REPUBLIC OF GERMANY, FOR REIMBURSEMENT IN THE AMOUNT OF A JUDGMENT IT WAS REQUIRED TO PAY FOR DAMAGES TO PRIVATELY OWNED PROPERTY LEASED BY THE GERMAN GOVERNMENT FOR THE BENEFIT OF THE UNITED STATES FORCES. THE JUDGMENT INCLUDED COURT FEES, COURT HEARING AND EVIDENCE COSTS, ACCRUED RETARDMENT INTEREST COST, AND COURT FEES AND INTEREST COSTS ARISING FROM A RESTORATION CLAIM INVOLVING THE PERIOD JANUARY 1, 1958, TO MARCH 31, 1960, AND YOU REQUEST AN ADVANCE DECISION AS TO THE PROPRIETY OF PAYMENT. YOU HAVE RAISED THE FOLLOWING QUESTIONS CONCERNING THE MATTER:

"A. WOULD PAYMENT FROM APPROPRIATED FUNDS OF (I) DM 114.63 FOR COURT FEES, (II) DM 100.75 FOR COURT HEARING AND EVIDENCE COST, (III) DM25.88 FOR ACCRUED RETARDMENT INTEREST COST, AND (IV) DM 0.66 FOR COURT FEES AND INTEREST COST ARISING FROM THE RESTORATION CLAIM INVOLVING THE PERIOD 1 JANUARY 1958 TO 31 MARCH 1960, VIOLATE COMPTROLLER GENERAL OPINION B- 134353, 20 JAN 1958, 37 COMP. GEN. 485, AND CASES CITED THEREIN ON PAGE 487?

"B. SINCE THE RESTORATION CLAIM AROSE ON 31 MARCH 1960 WHEN THE LEASE WAS TERMINATED AND THE CLAIM WAS SETTLED ON 9 MARCH 1962, WERE ANY VESTED RIGHTS ACQUIRED BY THE GOVERNMENT SO AS TO PROHIBIT ANY ATTEMPTED RETROACTIVE APPLICATION OF PARA J OF THE IMPLEMENTATION ARRANGEMENT DATED 10 MAY 1962? IN THIS CONNECTION REFERENCE IS MADE TO COMPTROLLER GENERAL OPINION B-145008, 13 JUNE 1962 AND B-146071, 7 AUGUST 1961, PUBLISHED RESPECTIVELY IN 40 COMP. GEN. 684 AND 41 COMP. GEN. 90 AND PARA 1 OF SAID IMPLEMENTING ARRANGEMENT.

"C. MAY THE IMPLEMENTING ARRANGEMENT OF 10 MAY 1962 BE UTILIZED AS A CONTRACT PROVISION AND IN THE FUTURE TO ALLOW INTEREST PAYMENTS OR IS PARAGRAPH J OF SAID ARRANGEMENT TOO VAGUE AND AMBIGUOUS FOR SUCH? IN THIS CONNECTION REFERENCE IS MADE TO U.S. V. N.Y. RAYON IMPORTING CO., 67 S.CT. 601, 329 U.S. 654, 91 L.ED. 577 (1947).

"D. SINCE PAYMENT FROM APPROPRIATED FUNDS OF SUBJECT LITIGATION COST AND INTEREST CHARGES WOULD BE PRECEDENT SETTING AND FOLLOWED BY MORE REQUEST FOR PAYMENTS, WILL THE GENERAL ACCOUNTING OFFICE FURNISH GENERAL GUIDANCE REGARDING THE PROPER INTERPRETATION TO BE PLACED UPON THE IMPLEMENTING ARRANGEMENT OF 10 MAY 1962 SIGNED BY COLONEL (NOW BRIGADIER GENERAL) SCHERMORHORN? IS THIS ARRANGEMENT EQUIVALENT TO A STATUTE OR TREATY AND IS IT TO BE APPLIED RETROACTIVELY?

THE RECORD SHOWS THAT ON MARCH 11, 1957, THE UNITED STATES FORCES AND THE MINISTRY OF FINANCE OF THE FEDERAL REPUBLIC OF GERMANY CONCLUDED TECHNICAL ARRANGEMENTS (U.S. CONTRACT NO. DA-91-507-ENG-RE 7), IMPLEMENTING AN UNDERSTANDING DATED AUGUST 22 AND 23, 1956, BETWEEN THE GERMAN FEDERAL MINISTRY OF FINANCE AND THE AMERICAN EMBASSY ON THE LEASING OF ACCOMMODATIONS TO MEET THE REQUIREMENTS OF THE UNITED STATES FORCES AND THEIR MEMBERS. THE FEDERAL REPUBLIC OF GERMANY IS RESPONSIBLE UNDER THE TECHNICAL ARRANGEMENTS FOR THE LEASING OF PRIVATE PROPERTY TO MEET THE NEED OF THE UNITED STATES FORCES. RENTAL PAYMENTS ARE MADE BY THE FEDERAL REPUBLIC OF GERMANY, WHICH THEN PRESENTS A CLAIM FOR REIMBURSEMENT TO THE UNITED STATES FORCES. PARAGRAPH 10, ARTICLE VI OF THE ARRANGEMENTS, REGARDING DAMAGES TO LEASED PROPERTIES, PROVIDES IN PART:

"THE SETTLEMENT OF DAMAGES TO LEASED PROPERTIES WHICH WERE CAUSED DURING THE CONTINUANCE OF THE LEASE WILL BE THE SUBJECT OF SUBSEQUENT ARRANGEMENTS. * * *.'

PARAGRAPH 10 OF THE TECHNICAL ARRANGEMENTS WAS SPECIFICALLY IMPLEMENTED BY AN IMPLEMENTING ARRANGEMENT DATED MAY 10, 1962. PARAGRAPH (A) THEREOF PROVIDES THAT THE UNITED STATES FORCES SHALL BE LIABLE FOR DAMAGE TO FACILITIES AND MOVABLES TO THE EXTENT THE FEDERAL REPUBLIC OF GERMANY IS LIABLE, AND RECOGNIZED THE UNDERSTANDING OF THE PARTIES THAT THE SCOPE OF DAMAGES FOR WHICH THE OBLIGEE (OWNER) IS ENTITLED TO COMPENSATION BE DETERMINED IN ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE GERMAN CIVIL CODE. SUCCEEDING PARAGRAPHS IN THE IMPLEMENTING ARRANGEMENT SET FORTH DETAILED PROCEDURES FOR THE SETTLEMENT OF CLAIMS, INCLUDING PROCEDURES TO BE FOLLOWED IN THE EVENT A DISPUTED CLAIM BECOMES THE SUBJECT OF COURT ACTION. PARAGRAPH (A), HOWEVER, CONSTITUTES THE BASIC PROVISION IN RESPECT TO THE LIABILITY OF THE UNITED STATES FORCE FOR THE PAYMENT OF DAMAGES, AND THE BASIS UPON WHICH DAMAGES SHALL BE DETERMINED.

ON JANUARY 22, 1958, IN ACCORDANCE WITH THE TECHNICAL ARRANGEMENTS, THE FEDERAL REPUBLIC OF GERMANY ENTERED INTO A LEASE AGREEMENT WITH DR. PAUL BARTLITZ FOR CERTAIN RESIDENTIAL PROPERTY. THE LEASE WAS TERMINATED MARCH 31, 1960, AND THE OWNER REQUESTED COMPENSATION FOR DAMAGES CAUSED TO THE PROPERTY BY THE OCCUPANCY OF THE UNITED STATES FORCES. THE UNITED STATES FORCES ACKNOWLEDGED LIABILITY FOR CERTAIN ITEMS OF THE DAMAGE CLAIM BUT DISPUTED OTHER ITEMS. AGREEMENT COULD NOT BE REACHED AND THE OWNER THEREUPON INSTITUTED SUIT AGAINST THE FEDERAL REPUBLIC OF GERMANY. MARCH 9, 1962, THE PARTIES WERE ABLE TO AGREE ON A SETTLEMENT FIGURE AND THE COURT ENTERED A CONSENT JUDGMENT AGAINST THE FEDERAL REPUBLIC OF GERMANY. BY LETTER DATED MAY 3, 1962, THE FEDERAL REPUBLIC OF GERMANY REQUESTED REIMBURSEMENT FROM THE UNITED STATES FORCES IN THE AMOUNT OF THE JUDGMENT PAID TO DR. BARTLITZ.

THE AMOUNT CLAIMED ON THE INSTANT VOUCHER DOES NOT REPRESENT INTEREST AND LITIGATION COSTS ASSESSED BY THE FEDERAL REPUBLIC OF GERMANY ON ITS CLAIM AGAINST THE UNITED STATES FORCES, BUT REPRESENTS THE AMOUNT IT WAS REQUIRED TO PAY PURSUANT TO A COURT JUDGMENT. HENCE, THE SITUATION IS TO BE DISTINGUISHED FROM THAT CONSIDERED IN 37 COMP. GEN. 485, CITED IN YOUR LETTER, WHICH INVOLVED A CLAIM FOR PAYMENT OF ITEMS ADDITIONAL TO THE AMOUNT PROVIDED IN A FIXED-PRICE CONTRACT. UNDER THE TERMS OF THE TECHNICAL ARRANGEMENT, AS IMPLEMENTED MAY 10, 1962, THE UNITED STATES FORCES ARE CONTRACTUALLY OBLIGATED TO REIMBURSE THE FEDERAL REPUBLIC OF GERMANY IN THE AMOUNT OF THE JUDGMENT IT WAS REQUIRED TO PAY. QUESTION "A" IS ANSWERED ACCORDINGLY.

THE TECHNICAL ARRANGEMENTS, AS CONCLUDED MARCH 11, 1957, PROVIDED THAT THE MANNER OF SETTLEMENT OF DAMAGES TO LEASED PROPERTIES WOULD BE THE SUBJECT OF SUBSEQUENT ARRANGEMENTS. THESE ARRANGEMENTS WERE COMPLETE MAY 10, 1962, AND EXPRESSLY RELATE BACK TO ALL RESTORATION CLAIMS WHICH WERE NOT SETTLED PRIOR THERETO. THE INSTANT CLAIM HAS NOT BEEN SETTLED. THERE IS NO BASIS TO CONCLUDE, SUCH AS SUGGESTED BY YOUR QUESTION "B," THAT THE UNITED STATES FORCES ACQUIRED VESTED RIGHTS SO AS TO RELIEVE THEM OF LIABILITY FOR DAMAGES TO PROPERTY LEASED FOR THEIR CONVENIENCE BY THE FEDERAL REPUBLIC OF GERMANY. QUESTION "B" IS THEREFORE ANSWERED IN THE NEGATIVE.

IN REGARD TO QUESTION "C" YOUR ATTENTION IS INVITED TO PART IV, PARAGRAPH 6, OF THE LEGAL MEMORANDUM DATED DECEMBER 21, 1962, APPROVED BY ARTHUR R. SLADE, LIEUTENANT COLONEL, JAGC, CHIEF, PROCUREMENT AFFAIRS BRANCH, IN WHICH IT IS STATED:

"* * * IT IS SUBMITTED THAT PARAGRAPH (J) IS INAPPLICABLE AS THE OBLIGATION TO PAY INTEREST IS IMPOSED BY PARAGRAPH (A) RATHER THAN PARAGRAPH (J) OF THE IMPLEMENTING ARRANGEMENT. BY PARAGRAPH (A) OF THE IMPLEMENTING ARRANGEMENT, THE US FORCES AGREED TO " ... BE LIABLE FOR DAMAGE TO FACILITIES AND MOVABLES ... TO THE EXTENT THAT THE FEDERAL REPUBLIC IS LIABLE UNDER THE TERMS OF SUCH CONTRACT" AND AGREED THAT " ... THE SCOPE OF DAMAGES FOR WHICH THE OBLIGEE IS ENTITLED TO COMPENSATION WILL BE IN ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE GERMAN CIVIL CODE.' UNDER THE PROVISIONS OF THE GERMAN CIVIL CODE (SS 286, 291), INTEREST CONSTITUTES A PART OF THE RECOVERABLE DAMAGES. AS SUCH, INTEREST IS A PART OF THE DAMAGES AND REIMBURSABLE UNDER PARAGRAPH (A) RATHER THAN A REIMBURSABLE ITEM OF "NECESSARY COSTS OF PROCEEDINGS" UNDER PARAGRAPH (J) OF THE IMPLEMENTING ARRANGEMENT.'

THE FOREGOING REPRESENTS, IN OUR OPINION, A CORRECT STATEMENT OF THE PROVISIONS OF THE CONTRACT PERTINENT TO THE PRESENT CLAIM AND THE LEGAL BASIS FOR PAYMENT OF THE CLAIM PROVIDED THAT THE GERMAN CIVIL CODE DOES PROVIDE FOR THE INCLUSION OF INTEREST AS A PART OF THE RECOVERABLE DAMAGES AS INDICATED THEREIN.

PAYMENT OF THE SUBJECT CLAIM PURSUANT TO THE TERMS OF THE CONTRACT WOULD NOT AS INDICATED IN YOUR QUESTION "D" BE PRECEDENT SETTING. WHILE WE OF COURSE WILL ANSWER ANY SPECIFIC QUESTIONS YOU MAY HAVE ON A VOUCHER BEFORE YOU FOR PAYMENT, GENERAL GUIDANCE SUCH AS REQUESTED IN QUESTION "D" IS PRIMARILY A MATTER FOR ADMINISTRATIVE CONSIDERATION.

THE VOUCHER AND ITS ACCOMPANYING PAPERS ARE RETURNED, AND PAYMENT AS ADMINISTRATIVELY ..END :