B-169716, JUN. 2, 1970

B-169716, JUN. 2, 1970

TO MAJOR E. C. MILES:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED APRIL 21, 1970, FORWARDED HERE BY LETTER DATED APRIL 30, 1970, OF HEADQUARTERS, DEFENSE SUPPLY AGENCY, REQUESTING AN ADVANCE DECISION ON SUPPLEMENTAL VOUCHER SUBMITTED BY ANTHONY J. SALERNO FOR THE AMOUNT OF $60.67 ADMINISTRATIVELY DISALLOWED ON DO VOUCHER NO. 4421, PAID DECEMBER 31, 1969.

THE AMOUNT RECLAIMED WAS ADMINISTRATIVELY DISALLOWED AS THE PRO RATA PORTION OF LEGAL EXPENSES WHICH REPRESENTED ATTORNEY'S FEE FOR REPRESENTATION AND COUNSELING IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT NEW ROCHELLE, NEW YORK, INCIDENT TO MR. SALERNO'S TRANSFER FROM PHILADELPHIA, PENNSYLVANIA, TO NEW YORK, NEW YORK, UNDER TRAVEL AUTHORIZATION DATED JUNE 16, 1969. HE SHOWED THAT HE HAD PAID $457.10 FOR LEGAL AND RELATED COSTS OF PURCHASING A DUPLEX HOUSE, OF WHICH $12.10 REPRESENTED RECORDING FEES. THE ATTORNEY'S FEE IN THE AMOUNT OF $445 INCLUDED CERTAIN ITEMS OF SERVICES FOR REPRESENTATION AND COUNSELING WHICH IT WAS ESTIMATED CONSUMED THREE OUT OF THE 11 HOURS SPENT BY THE ATTORNEY ON THE TRANSACTION. THUS, THE AMOUNT OF LEGAL EXPENSES CLAIMED WAS REDUCED BY $121.35 (3 HOURS AT $40.45 PER HOUR) AND THE TOTAL AMOUNT CLAIMED WAS REDUCED BY $60.67 SINCE THE HOUSE PURCHASED AT THE NEW STATION WAS A TWO-FAMILY DUPLEX.

MR. SALERNO HAS REQUESTED PAYMENT OF THE AMOUNT DISALLOWED ON THE BASIS THAT SINCE NO REAL ESTATE AGENTS OR BROKERS WERE INVOLVED IN THE PURCHASE AND ALL OF THE NECESSARY TRANSACTIONS INCIDENT TO THE PURCHASE WERE PERFORMED BY HIS ATTORNEY HE DOES NOT BELIEVE THAT "THE SERVICES OF AN ATTORNEY CONSIDERED TO BE IN THE NATURE OF REPRESENTATION AND COUNSELING SHOULD BE DIVORCED FROM OTHER ASPECTS OF HIS FUNCTIONS IN PERFORMING ALL THE REQUIRED TRANSACTIONS INCIDENT TO THE PURCHASE OF A HOME."

SECTION 4.2C OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969, PROVIDES AS FOLLOWS:

"C. LEGAL AND RELATED COSTS. TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES, THE FOLLOWING EXPENSES ARE REIMBURSABLE WITH RESPECT TO THE SALE AND PURCHASE OF RESIDENCES IF THEY ARE CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION OR IF CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE; COSTS OF (1) SEARCHING TITLE, PREPARING ABSTRACT, AND LEGAL FEES FOR A TITLE OPINION, OR (2) WHERE CUSTOMARILY FURNISHED BY THE SELLER, THE COST OF A TITLE INSURANCE POLICY; COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS, AND CONTRACTS; RELATED NOTARY FEES AND RECORDING FEES; COSTS OF MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES; AND SIMILAR EXPENSES. COSTS OF LITIGATION ARE NOT REIMBURSABLE."

WE HAVE HELD THAT SECTION 4.2C MAKES NO PROVISION FOR PAYMENT OF ALL INCLUSIVE "LEGAL FEE" AND WHERE THE LEGAL COSTS HAVE INCLUDED ITEMS WHICH ARE CLEARLY FOR LEGAL REPRESENTATION AND COUNSELING, NO PART OF THE LEGAL COST IS PAYABLE UNLESS THAT PORTION REPRESENTING FEES FOR LEGAL SERVICE IS IDENTIFIED AND ELIMINATED FROM THE CLAIM. SEE B 163203, MARCH 1, 1968, AND MARCH 24, 1969; B-163690, MARCH 29, 1968; AND B-167985, OCTOBER 15, 1969, COPIES HEREWITH.

THE BASIS USED FOR THE COMPUTATION OF THE LEGAL FEES REIMBURSABLE TO MR. SALERNO AND WHICH RESULTED IN DENIAL OF THE $60.67 PREVIOUSLY REFERRED TO DOES NOT APPEAR UNREASONABLE. ACCORDINGLY, THE VOUCHER MAY NOT PROPERLY BE PAID AND IS RETAINED IN THE FILES OF THIS OFFICE.