B-182276, APR 10, 1975

B-182276, APR 10, 1975

1. WHERE EMPLOYEE SIGNED 23-MONTH LEASE AS ONE OF TWO CO-TENANTS, AND LATER RELEASED, IN WRITING, OTHER CO-TENANT, SO THAT WHEN HE WAS TRANSFERRED HE WAS THE SOLE OCCUPANT OF APARTMENT, AND, ACTUALLY PAID ALL TERMINATION EXPENSES, FOR PURPOSES OF REIMBURSEMENT OF EXPENSES OF SETTLING UNEXPIRED LEASE, HE MAY BE CONSIDERED TO BE SOLE TENANT, SINCE HE WOULD ULTIMATELY HAVE TO BEAR FULL LEGAL RESPONSIBILITY FOR REMAINING RENT. 2. WHERE EMPLOYEE WAS TRANSFERRED FROM NEW YORK WITH 11 MONTHS REMAINING ON LEASE, AND MADE REASONABLE EFFORTS TO SUBLEASE APARTMENT, HE MAY BE REIMBURSED FOR FULL COST OF LEASE SETTLEMENT ($1,340 OUT OF TOTAL POSSIBLE RENT OF $2,250) SINCE, UNDER NEW YORK LAW, LANDLORD HAD NO DUTY TO MITIGATE DAMAGES. NO INTEREST IS PAYABLE ON THIS SETTLEMENT.

JEFFREY A. TOBIN - RELOCATION EXPENSES - UNEXPIRED LEASE:

THIS MATTER IS BEFORE US BASED UPON A REQUEST FOR RECONSIDERATION OF CERTIFICATE OF SETTLEMENT Z-2541731, ISSUED AUGUST 20, 1974, BY OUR TRANSPORTATION AND CLAIMS DIVISION, PARTIALLY DISALLOWING MR. JEFFREY A. TOBIN'S CLAIM FOR REIMBURSEMENT OF EXPENSES INCURRED IN SETTLING AN UNEXPIRED LEASE AT THE TIME OF HIS TRANSFER OF PERMANENT STATION.

UNDER THE AUTHORITY OF TRAVEL AUTHORIZATION OIO 74-11, DATED SEPTEMBER 10, 1973, MR. TOBIN, AN EMPLOYEE OF THE INTERNAL REVENUE SERVICE, WAS TRANSFERRED FROM NEW YORK, NEW YORK, TO WASHINGTON, D.C. ACCORDING TO THE RECORD BEFORE US, MR. TOBIN WAS ADVISED BY A LETTER DATED AUGUST 28, 1973, THAT HE WOULD BE TRANSFERRED, AND THAT HE WAS TO REPORT TO HIS NEW DUTY STATION ON OCTOBER 1, 1973. HOWEVER, HE DID NOT SEE THIS LETTER UNTIL SEPTEMBER 8, 1973, WHEN HE RETURNED FROM A TRIP OUTSIDE THE COUNTRY. HIS LEASE PERMITTED SUBLETTING ONLY WITH THE LANDLORD'S CONSENT. MR. TOBIN PLACED A NEWSPAPER ADVERTISEMENT IN AN ATTEMPT TO SUBLEASE. ADDITIONALLY, THE BUILDING SUPERINTENDENT SHOWED THE APARTMENT TO PROSPECTIVE TENANTS, BUT MR. TOBIN MET WITH NO SUCCESS, AT LEAST PARTIALLY BECAUSE THE APARTMENT WAS A "4TH FLOOR WALK UP." DURING THE EARLY NEGOTIATIONS TO TERMINATE THE LEASE, THE LANDLORD INSISTED THAT ALL OF THE RENT TO THE END OF THE LEASE BE PAID. THE TERM OF THE LEASE WAS TO RUN UNTIL JULY 31, 1974, AT A RENTAL OF $225 PER MONTH.

FINALLY, MR. TOBIN OBTAINED AN AGREEMENT WITH THE LANDLORD TO PAY $1,340 TO BE RELEASED FROM THE LEASE. THIS AMOUNT WAS TO BE MADE UP OF A $900 CASH PAYMENT AND THE RETENTION BY THE LANDLORD OF THE $440 SECURITY DEPOSIT. BY MUTUAL RELEASES SIGNED OCTOBER 22, 1973, BY THE LANDLORD AND MR. TOBIN AND HIS FORMER CO-TENANT, ALL PARTIES WERE RELIEVED OF ALL FURTHER LIABILITY WITH REGARD TO THE LEASE.

THE LEASE WAS ORIGINALLY EXECUTED ON JULY 22, 1972, TO RUN FROM SEPTEMBER 1, 1972, TO JULY 31, 1974, AT A RENTAL OF $215 PER MONTH FOR THE FIRST YEAR AND $225 PER MONTH FOR THE LAST 11 MONTHS. THE LEASE WAS EXECUTED BY JEFFREY TOBIN AND MARC FRIEDMAN AS CO-TENANTS. THEY REMAINED IN THAT STATUS UNTIL APRIL 22, 1973, WHEN MR. FRIEDMAN MOVED OUT AND MR. TOBIN RELEASED MR. FRIEDMAN FROM ALL FURTHER LIABILITY TO HIM UNDER THE LEASE IN EXCHANGE FOR $600. THE RELEASE WAS WRITTEN, SIGNED BY BOTH PARTIES, AND WITNESSED, ALTHOUGH THE ORIGINAL LEASE WITH BOTH SIGNATURES WAS NEVER AMENDED. MR. FRIEDMAN PAID $400 OF THE $600 CALLED FOR IN THE RELEASE, BUT HE REFUSED TO PAY THE FINAL $200 CONTENDING THAT HE AND MR. TOBIN HAD AGREED TO DIVIDE THE SECURITY DEPOSIT EQUALLY WHEN IT WAS RETURNED AT THE END OF THE LEASE. HE STATED THAT SINCE MR. TOBIN HAD AGREED TO FORFEIT THE ENTIRE SECURITY DEPOSIT, HE HAD GIVEN AWAY MR. FRIEDMAN'S SHARE, THEREFORE MR. FRIEDMAN WOULD RECOUP BY NOT PAYING THE FINAL $200.

FOLLOWING HIS TRANSFER, MR. TOBIN SUBMITTED A CLAIM FOR REIMBURSEMENT OF THE ENTIRE $1,340 HE PAID TO SETTLE HIS UNEXPIRED LEASE. OUR TRANSPORTATION AND CLAIMS DIVISION ALLOWED ONLY $670 ON THE GROUNDS THAT SINCE HE SHARED RESPONSIBILITY UNDER THE LEASE WITH MR. FRIEDMAN, HE COULD BE REIMBURSED ONLY FOR HIS SHARE OF THE COST OF SETTLING THE LEASE, 50 PERCENT.

AT THE TIME OF MR. TOBIN'S TRANSFER, REIMBURSEMENT OF RELOCATION EXPENSES WAS GOVERNED BY THE FEDERAL TRAVEL REGULATIONS (FPMR 101-7) (MAY 1973). THE PRECONDITIONS FOR REIMBURSEMENT OF RELOCATION EXPENSES THAT ARE RELEVANT HERE ARE FOUND IN FTR PARA. 2-6.1C (MAY 1973), WHICH PROVIDES, IN PERTINENT PART, THAT:

"C. TITLE REQUIREMENTS. THE TITLE TO THE RESIDENCE OR DWELLING AT THE OLD OR NEW OFFICIAL STATION, OR THE INTEREST IN A COOPERATIVELY OWNED DWELLING OR IN AN UNEXPIRED LEASE, IS IN THE NAME OF THE EMPLOYEE ALONE, OR IN THE JOINT NAMES OF THE EMPLOYEE AND ONE OR MORE MEMBERS OF HIS IMMEDIATE FAMILY, OR SOLELY IN THE NAME OF ONE OR MORE MEMBERS OF HIS IMMEDIATE FAMILY. ***"

AND FTR PARA. 2-6.1F (MAY 1973), WHICH PROVIDES, IN PERTINENT PART, THAT:

"F. PAYMENT OF EXPENSES BY EMPLOYEE - PRO RATA ENTITLEMENT. THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED WERE PAID BY THE EMPLOYEE. IF ANY EXPENSES WERE SHARED BY PERSONS OTHER THAN THE EMPLOYEE, REIMBURSEMENT IS LIMITED TO THE PORTION ACTUALLY PAID BY THE EMPLOYEE. IF THE RESIDENCE IS A DUPLEX OR ANOTHER TYPE OF MULTIPLE OCCUPANCY DWELLING WHICH IS OCCUPIED ONLY PARTIALLY BY THE EMPLOYEE, OR WHENEVER THE EMPLOYEE SHARES RESPONSIBILITY FOR A LEASED PROPERTY (SUCH AS A SHARED APARTMENT ARRANGEMENT), EXPENSES SHALL BE REIMBURSED ON A PRO RATA BASIS. ***"

WHILE IT IS TRUE THAT MR. TOBIN'S LEASE COULD ONLY BE MODIFIED IN WRITING, WITH THE LANDLORD'S WRITTEN CONSENT, AND THAT THE LEASE HAD NOT BEEN MODIFIED FOLLOWING THE EXECUTION OF THE APRIL 22, 1973 RELEASE OF MR. FRIEDMAN, AT THE TIME OF MR. TOBIN'S TRANSFER, THE ULTIMATE LEGAL LIABILITY FOR THE REMAINING RENT WOULD HAVE FALLEN UPON MR. TOBIN ALONE. IF MR. TOBIN HAD NOT BEEN ABLE TO REACH AN AGREEMENT TERMINATING THE LEASE, AND HAD SIMPLY ABANDONED THE APARTMENT, THE LANDLORD WOULD HAVE BEEN ABLE TO BRING SUIT AND RECOVER A JUDGMENT AGAINST MR. TOBIN AND MR. FRIEDMAN. HOWEVER, AS BETWEEN MR. TOBIN AND MR. FRIEDMAN, MR. FRIEDMAN WOULD HAVE AS A COMPLETE DEFENSE, THE RELEASE SIGNED IN APRIL 1973. THEREFORE IN ANY ACTION TO RECOVER RENT UNDER THE LEASE BROUGHT AFTER APRIL 1973, MR. TOBIN WOULD HAVE HAD TO PAY THE ENTIRE JUDGMENT. THERE IS NO QUESTION THAT AT THE TIME OF HIS TRANSFER MR. TOBIN WAS THE SOLE OCCUPANT OF THE APARTMENT AND THAT HE PAID THE ENTIRE AMOUNT OF THE SETTLEMENT OF THE LEASE. ACCORDINGLY, IN DECIDING WHAT REIMBURSEMENT MAY BE PAID TO MR. TOBIN, HE MAY BE TREATED AS IF HE WAS THE ONLY TENANT UNDER THE LEASE.

THE CRITERIA TO BE APPLIED TO DETERMINE WHETHER OR NOT MR. TOBIN IS ENTITLED TO REIMBURSEMENT OF ANY OF THE EXPENSES INCURRED IN SETTLING HIS UNEXPIRED LEASE ARE SET OUT IN FTR PARA. 2-6.2H (MAY 1973), WHICH PROVIDES, IN PERTINENT PART, THAT:

"H. SETTLEMENT OF AN UNEXPIRED LEASE. EXPENSES INCURRED FOR SETTLING AN UNEXPIRED LEASE (INCLUDING MONTH-TO-MONTH RENTAL) ON RESIDENCE QUARTERS OCCUPIED BY THE EMPLOYEE AT THE OLD OFFICIAL STATION MAY INCLUDE BROKER'S FEES FOR OBTAINING A SUBLEASE OR CHARGES FOR ADVERTISING AN UNEXPIRED LEASE. SUCH EXPENSES ARE REIMBURSABLE WHEN (1) APPLICABLE LAWS OR THE TERMS OF THE LEASE PROVIDE FOR PAYMENT OF SETTLEMENT EXPENSES, (2) SUCH EXPENSES CANNOT BE AVOIDED BY SUBLEASE OR OTHER ARRANGEMENT, (3) THE EMPLOYEE HAS NOT CONTRIBUTED TO THE EXPENSE BY FAILING TO GIVE APPROPRIATE LEASE TERMINATION NOTICE PROMPTLY AFTER HE HAS DEFINITE KNOWLEDGE OF THE TRANSFER, AND (4) THE BROKER'S FEES OR ADVERTISING CHARGES ARE NOT IN EXCESS OF THOSE CUSTOMARILY CHARGED FOR COMPARABLE SERVICES IN THAT LOCALITY. ***"

ITEMS 3 AND 4 DO NOT APPLY SINCE THERE WAS NO PROVISION IN THE LEASE FOR NOTICE OF EARLY TERMINATION AND THERE WAS NO CLAIM FOR BROKER'S FEES OR ADVERTISING EXPENSES. WITH REGARD TO SUBLEASING, IT APPEARS THAT MR. TOBIN DID ALL THAT HE COULD REASONABLY BE EXPECTED TO DO TO SUBLEASE THE APARTMENT WITHIN THE LIMITED TIME AVAILABLE.

WE HAVE REPEATEDLY HELD THAT CONDITION 1 ABOVE DOES NOT MEAN THAT THERE MUST BE A SPECIFIC PROVISION IN THE LEASE FOR THE PAYMENT OF LIQUIDATED DAMAGES IN THE EVENT OF EARLY TERMINATION. SEE B-172947, JULY 13, 1971, AND B-175938, NOVEMBER 16, 1972. UNDER NEW YORK LAW, A LANDLORD HAS NO DUTY TO MITIGATE DAMAGES WHEN THERE HAS BEEN A PREMATURE TERMINATION OF A LEASE. HE MAY LEAVE THE APARTMENT VACANT FOR THE REMAINDER OF THE TERM OF THE LEASE, AND MAY COLLECT THE ENTIRE AMOUNT OF THE REMAINING RENT FROM THE DEPARTED TENANT. BYRNHEIM-LINDEN REALTY CORP. V. GREAT EASTERN CONTRACTING CO., 245 N.Y.S. 2D 490 (DIST. CT. 1963); BUILDING SUPERVISION CORP. V. SKOLINSKY, 50 MISC. 2D 375, 270 N.Y.S. 2D 454 (CIV. CT. 1966); AND LEO V. SANTAGADA, 45 MISC. 2D 309, 256 N.Y.S. 2D 511 (NEWBURGH CITY COURT 1964). MR. TOBIN'S POTENTIAL LIABILITY WAS $2,250, AND REDUCTION OF THAT LIABILITY TO $1,340, SUPPORTS THE FINDING THAT THE SETTLEMENT WAS REASONABLE. THEREFORE, OUR TRANSPORTATION AND CLAIMS DIVISION WILL BE INSTRUCTED TO ISSUE A CERTIFICATE OF SETTLEMENT IN THE GROSS AMOUNT OF $670 IN ACCORDANCE WITH THIS DECISION.

IN THE REQUEST FOR RECONSIDERATION SUBMITTED BY MR. TOBIN'S ATTORNEY, HE DEMANDS INTEREST ON ANY SETTLEMENT THAT MIGHT ISSUE. IT IS CLEAR THAT NO INTEREST MAY BE PAID IN THIS CASE, AS INTEREST IS PAYABLE BY THE GOVERNMENT ONLY WHERE PROVIDED FOR IN STATUTES, CONTRACTS OR JUDICIAL DECISIONS. SEE 52 COMP. GEN. 175 (1972).