[00:00:00] Speaker 03:
Our first case is 2735 Jackson Ave, Avenue versus United States, 2023, 1122.

[00:00:08] Speaker 03:
Mr. Varkatapane.

[00:00:09] Speaker 03:
Thank you, Your Honor.

[00:00:17] Speaker 01:
May it please the court, Jeff Varkatapane from Varkatapane and Penisey on behalf of 2735 Jackson Ave, which I'll refer to for brevity as Jackson.

[00:00:29] Speaker 01:
Your Honors, when this contract was formed, the word untenable meant something.

[00:00:36] Speaker 01:
It was a word that has been used in landlord tenant law for over 100 years.

[00:00:41] Speaker 01:
We provided the lower court with a plethora of case law, mostly in the highest courts of the various states throughout the nation, that have wrestled with the question of what this term means.

[00:00:53] Speaker 03:
But the question is, who decides?

[00:00:58] Speaker 03:
And clearly the government had the right to decide.

[00:01:05] Speaker 01:
Our position, Judge, is that the government had the right to determine whether the space and the condition of the space satisfied the untenability definition.

[00:01:18] Speaker 01:
The definition of that term that should have been used is the definition as it's existed in landlord tenant law for over 100 years.

[00:01:27] Speaker 01:
There are no cases that have found that that term is synonymous with simply unusable.

[00:01:34] Speaker 01:
It involves a much deeper inquiry, as it should.

[00:01:38] Speaker 01:
We're talking about an extraordinarily drastic remedy.

[00:01:42] Speaker 04:
I'm not sure I understood your first answer to Judge Lurie's question.

[00:01:46] Speaker 04:
Are you saying that the determination to be made by the government does not affect the responsibility of the court to make a determination of whether there was, in fact, an untenability circumstance here?

[00:02:08] Speaker 01:
My response is that the government has an obligation

[00:02:11] Speaker 01:
to make a determination whether the space is untenable, they have to use the definition of the term untenable.

[00:02:18] Speaker 04:
If that's your position, I don't understand the difference between a contract that says that the lease can be terminated if the conditions are untenable, period, versus that the government is entitled to make a determination as to untenability.

[00:02:41] Speaker 04:
Are you saying that those are essentially the same inquiry?

[00:02:47] Speaker 01:
I don't believe they're the same.

[00:02:49] Speaker 04:
What additional rights does the government get by virtue of the untenability determination that it is entitled to make under the contract?

[00:03:00] Speaker 01:
The government has the right to make the inquiry into the facts on the ground.

[00:03:04] Speaker 04:
But that would be true even if the contract said lease terminated

[00:03:10] Speaker 04:
for untenability and no reference to the government's determination.

[00:03:14] Speaker 04:
I'm trying to get from you whether you're suggesting that this is the same standard that would be applied even if the determination clause were not in the contract.

[00:03:27] Speaker 01:
no your honor i'm not uh... i i believe that in the if you apply the correct definition of the term on tentability in the government's analysis that it is their determination governs any dispute but what they can't do and what the court said in lathe where the government had the discretion to determine fair market value is they can't just make a determination that has no basis on whether or not

[00:03:56] Speaker 01:
The amount that the government assigned is fair market value and the court said fair market value has a definition

[00:04:03] Speaker 01:
And here, Jackson is arguing, untenability has a definition.

[00:04:08] Speaker 01:
And in addition to space being temporarily unusable because of something like a flood, there's a much deeper inquiry that requires the government to determine whether the space can be restored in a reasonable period of time using ordinary repairs without unreasonable interruption with their use of the space.

[00:04:27] Speaker 01:
And those determinations in this case were never made.

[00:04:30] Speaker 02:
When we deposed the contracting officer and we inquired... Just to be clear, if the evidence were such that your definition of untenability was used by the government decision makers,

[00:04:46] Speaker 02:
you concede they unilaterally get to determine, and so you wouldn't be able to question the outcome of that determination or the weight they put on any of the various factors that go into your definition of untenability.

[00:05:00] Speaker 01:
I would, Your Honor, with the caveat that the determination still is bound by reasonableness.

[00:05:07] Speaker 01:
And when you read any of these case law that have discussed untenability and what it means and why it's not synonymous with simply unusable for a moment of time, something the Mottmann court wrestled with, and they said if we were to adopt that definition, we would essentially be rewriting all the existing contracts out there.

[00:05:28] Speaker 01:
because that's not what it means.

[00:05:29] Speaker 02:
So why shouldn't we read this, though, as when you signed a contract giving the government the unilateral right to make a determination, you also contracted away the right to let them define what untenable meant?

[00:05:45] Speaker 01:
Because to suggest that the term didn't have a meaning when the party signed a contract would violate fundamental principles of contract law.

[00:05:53] Speaker 01:
The parties had to agree that this particular condition has to arise in order for the right to cancel to be invoked.

[00:06:02] Speaker 01:
And that condition, what is that condition?

[00:06:04] Speaker 01:
It had to have a definition when the parties made their agreement.

[00:06:08] Speaker 01:
And what we've supplied to the court is that definition has multiple factors that must be

[00:06:13] Speaker 01:
determined, and here the government's contracting officer didn't determine them.

[00:06:19] Speaker 01:
He placed the onus on the landlord and said, provide a report to me and give me this information I need to make this determination.

[00:06:27] Speaker 01:
He deemed that report insufficient and having no knowledge about the length of time it would take to make the repairs.

[00:06:34] Speaker 01:
And whether in the rubric of untenability, whether it would be unreasonable to allow for that in the context of seven and a half years that remained on a lease, he never made the determination.

[00:06:46] Speaker 01:
He simply said, I don't have enough, and I'm terminating the lease.

[00:06:51] Speaker 01:
And that does not.

[00:06:52] Speaker 04:
You say seven and a half years on the lease.

[00:06:54] Speaker 04:
I gather it was that the lease was executed in 2009 for 10 years with an option

[00:07:02] Speaker 04:
the government to extend five years beyond that, right?

[00:07:05] Speaker 04:
That's correct.

[00:07:05] Speaker 04:
And this all occurred in 2017.

[00:07:07] Speaker 04:
So there were only two years left as to which the government was obligated on the lease.

[00:07:12] Speaker 04:
It had an option to extend for another five, right?

[00:07:19] Speaker 01:
I believe that the contract was executed on 2009, Judge, but the build-out took three years.

[00:07:25] Speaker 01:
So the government didn't declare it

[00:07:30] Speaker 01:
the beginning of the lease until 2012.

[00:07:33] Speaker 01:
So they were, in fact, only three years into their 10-year term.

[00:07:36] Speaker 04:
So the three years of the... 2012, but this... 2015.

[00:07:40] Speaker 04:
When did the flood occur?

[00:07:41] Speaker 04:
2015?

[00:07:42] Speaker 02:
January 8, 2015.

[00:07:43] Speaker 02:
Your damages claim doesn't include the five-year optional period.

[00:07:48] Speaker 01:
Of course not.

[00:07:49] Speaker 01:
That was their discretionary choice.

[00:07:53] Speaker 02:
Let me ask you, you write in the opening brief at page 50, Jackson's reasonable expectation

[00:08:00] Speaker 02:
was that the government would abide by the well-established definition of untenable, and you've suggested as much today.

[00:08:06] Speaker 02:
Is there any evidence of that?

[00:08:08] Speaker 02:
How do we know that that was the expectation and what made it reasonable to believe that the government had agreed to that definition?

[00:08:17] Speaker 01:
uh... thank you are a big our position is that's the only definition of untenable what the government has used here to conflate untenable with unusable has materially changed the definition of untenable and i and what i would use to answer your question if my client had inquired with experts in the field of landlord-tenant law and asked attorneys what does this term mean

[00:08:41] Speaker 01:
What is it that would have to happen in order for the government to be able to cancel the rest of my lease?

[00:08:46] Speaker 01:
I'm about to spend ten million dollars to do a build out for this ten year period.

[00:08:50] Speaker 01:
Any attorney who did an inquiry into that term would come back unequivocally that it means damage so great that it cannot be restored in a reasonable period of time with ordinary repairs.

[00:09:02] Speaker 02:
They would also see things like... You may be right about what experts would have said, but we're reviewing a record that comes to us on a grant of summary judgment against you, correct?

[00:09:11] Speaker 01:
Yes, that's right, Your Honor.

[00:09:12] Speaker 02:
There's no such expert report that I saw in this record, is there?

[00:09:18] Speaker 01:
No, but it is the meaning of the term when the parties entered the contract.

[00:09:24] Speaker 01:
You look to landlord-tenant law to what does that mean, and you will never find cases that comport with, it's merely unusable.

[00:09:32] Speaker 01:
And when you look at the Mobbin case, which we cited, which was a Supreme Court case that lived in Washington,

[00:09:37] Speaker 01:
they wrestled with this very issue where a tenant was saying, hey, look, if it's unusable even for a day, it's not untenable.

[00:09:47] Speaker 01:
Or it is untenable.

[00:09:48] Speaker 01:
And the court said, having reviewed the common law definition of untenable, and as it has been interpreted in every court that's wrestled with this issue, they said, no, that's not what it means.

[00:09:58] Speaker 01:
It means something far more significant than that.

[00:10:01] Speaker 01:
And the treaties that have discussed it, say,

[00:10:06] Speaker 01:
structural damage is something that's a prerequisite.

[00:10:09] Speaker 01:
So when the party signed the contract and included this term on tenetable, they should be bound by the ordinary meaning of that term in landlord-tenant law.

[00:10:19] Speaker 01:
And I would also submit, Your Honor, if there are two reasonable definitions of that term when the party signed the contract, this was a contract prepared by the government.

[00:10:30] Speaker 01:
And here, the landlord would get the benefit of the expectations she had about what that term meant based upon how it's been used for over 100 years.

[00:10:40] Speaker 01:
And had the government wanted a contract that allowed them to cancel the lease in the event that the space was unusable even for a moment, a day, a week, they could have used that language.

[00:10:50] Speaker 01:
They didn't.

[00:10:51] Speaker 01:
And they should have to live with the consequences of that decision.

[00:10:56] Speaker 01:
And if there's any ambiguity in what that term meant, it should be resolved in favor of the landlord based upon the law that we've cited here.

[00:11:05] Speaker 04:
What would you regard as being a period of time in which the premises were unusable that would constitute sufficient period to render the property untenable?

[00:11:22] Speaker 01:
Your Honor, under the circumstances of this case.

[00:11:24] Speaker 01:
Of this case, that really is a determination that the government should have made.

[00:11:29] Speaker 01:
And that's the thrust of our argument, is that they never made a determination as to how long it would be unusable.

[00:11:35] Speaker 01:
They immediately demanded that the landlord repair the space not to usable, which would have been the appropriate inquiry.

[00:11:42] Speaker 01:
And again, their inquiry could be independent upon what it is they're asking of the landlord.

[00:11:46] Speaker 02:
Does the fact that the contract only gave them 15 days to make this determination tell us

[00:11:52] Speaker 02:
something about maybe you really were giving them the right to just on their own decide what made something untenable.

[00:12:01] Speaker 02:
That's an awfully quick time to do the kind of multi-factor analysis that you're saying they agreed to do.

[00:12:08] Speaker 01:
Well, if the definition were as the government would have the court find, you wouldn't really need more than a day.

[00:12:14] Speaker 01:
I think the fact that there's 15 days actually supports our contention that this is a very involved determination that involves more than just, can we not use this space for today, tomorrow, or a week?

[00:12:27] Speaker 01:
But I would suggest getting back to your Honor's question that in those cases where it's questionable,

[00:12:33] Speaker 01:
where the period of the time on the lease that remains is, say, for example, a few years.

[00:12:38] Speaker 01:
And it's going to be six months or eight months.

[00:12:41] Speaker 01:
That's when the as determined by the government comes in and binds the landlord.

[00:12:46] Speaker 01:
The landlord can't say, well, we don't think that's an unreasonable interruption.

[00:12:50] Speaker 01:
And that's up to them.

[00:12:51] Speaker 01:
But I would submit to this court that if you look at any of the cases in these highest courts around the nation that have wrestled with the definition of this term,

[00:13:00] Speaker 01:
that water damage, that has aesthetic damage that can be corrected.

[00:13:05] Speaker 01:
We're talking about sheetrock, drop ceilings, and carpet squares.

[00:13:09] Speaker 01:
This stuff could have been corrected in days if we're talking about just usability.

[00:13:14] Speaker 04:
Well, your estimate, I take it, was essentially a month from the date of the event until the remediation was complete.

[00:13:22] Speaker 04:
That was the estimate that your

[00:13:23] Speaker 04:
Not entirely, Judge, because there are two floors that we're dealing with.

[00:13:31] Speaker 01:
February 7th was a date that came later on after the government began putting hurdles in the place of the landlord.

[00:13:38] Speaker 01:
And we submit that that's part of our good faith and fair dealing claim, that the government

[00:13:43] Speaker 01:
came back to the landlord and added obstacles such as getting laboratory testing of whether or not there was an existence of mold despite the fact that ServPro was certifying no mold.

[00:13:54] Speaker 01:
The landlord began to replace walls and the government said they had to stop until the government approved.

[00:14:00] Speaker 01:
So the initial plan that my client had given the government based upon its original estimation without these additional obstacles

[00:14:09] Speaker 01:
was actually that the first floor would be completed by January 20th, constituting nine days of an interruption.

[00:14:16] Speaker 01:
That's the first floor.

[00:14:17] Speaker 01:
That's the forward-facing part of the government space.

[00:14:21] Speaker 03:
Council, you're well into your rebuttal time.

[00:14:24] Speaker 03:
I assume you'd like to save it.

[00:14:25] Speaker 01:
I would.

[00:14:26] Speaker 01:
Thank you.

[00:14:28] Speaker 03:
Ms.

[00:14:28] Speaker 03:
Fleming.

[00:14:42] Speaker 00:
Good morning, Your Honors.

[00:14:44] Speaker 00:
May it please the Court.

[00:14:45] Speaker 00:
This case is about whether a contract means what it says.

[00:14:49] Speaker 00:
And as the Court has pointed out in opposing counsel's argument, in fact, the language in the contract can't be severed.

[00:14:58] Speaker 00:
You can't look separately at the word untenable and separately at the phrase as determined by the government.

[00:15:04] Speaker 00:
They're part of the same sentence, they're part of the same clause, and they're meant to be construed together.

[00:15:10] Speaker 00:
In fact, if you take the natural conclusion of the petitioner's argument here, essentially they are deleting as determined by the government from this phrase.

[00:15:24] Speaker 00:
If, as the court pointed out, untenable was the only measure of whether the premises was partially destroyed, then that would have been the end of that sentence.

[00:15:32] Speaker 00:
And the petitioner would be right to suggest that some legal standard should be applied.

[00:15:38] Speaker 04:
Which standard do you think applies here?

[00:15:41] Speaker 04:
The government presumably can't simply say, well, the air conditioning was off for an hour and a half, place is untenable.

[00:15:52] Speaker 04:
You wouldn't argue that that would be sufficient under this contract to constitute a binding determination of untenability, would you?

[00:16:01] Speaker 00:
Well, Your Honor, there is no standard articulated.

[00:16:04] Speaker 00:
Well, I understand.

[00:16:04] Speaker 04:
But I actually would like an answer to that question first, and then you can tell me why.

[00:16:09] Speaker 00:
At the baseline, the government has to make a good fake determination.

[00:16:13] Speaker 00:
In this case, the court looked at whether the premises could be occupied for the purpose the lease was originally designed.

[00:16:20] Speaker 04:
But for a period of time to be determined as sufficient by the government, even if it is two hours that the air conditioning is off?

[00:16:29] Speaker 00:
I think that, as Judge Stark suggested, the limitation of 15 days the government had to make a decision is instructive.

[00:16:38] Speaker 00:
Now, that doesn't suggest that whatever damage had to be completely repaired within 15 days, but it does provide to both parties to the least a hint of the time period in which the government had to make that decision.

[00:16:54] Speaker 00:
The way that the clause is constructed, if the government did not exercise its right to termination for partial destruction within that 15-day period, it waives that right.

[00:17:05] Speaker 00:
So there's no other part of the lease that allows the government to exercise that right after that 15 days have passed.

[00:17:12] Speaker 00:
So what that means is the government has to be highly confident within that 15-day period that whatever partial destruction occurred will be remedied in some timely fashion.

[00:17:23] Speaker 02:
And in this case, it seemed, if I understood the record correctly, you determined within one day that the premises were untenable, correct?

[00:17:33] Speaker 00:
That's correct.

[00:17:34] Speaker 00:
The flooding in the unit was so extensive that it affected basically every working part of the offices.

[00:17:40] Speaker 00:
The government couldn't conduct its business.

[00:17:43] Speaker 00:
It has urgent business.

[00:17:44] Speaker 00:
It has visa applicant appointments daily.

[00:17:46] Speaker 00:
And there are hundreds of visa applicants that come to the office in that period of time.

[00:17:50] Speaker 00:
it had to immediately find other premises on which to conduct that business.

[00:17:54] Speaker 00:
Fortunately, it was able to do so, but it scheduled appointments months in advance.

[00:17:58] Speaker 02:
The business of the office could not... What about the suggestion from the other side that the 15-day period actually cuts against you and suggests

[00:18:08] Speaker 02:
that you agreed to this well-known standard, which is multifactored and would require a certain amount of investigation and balancing of how long is it going to take to get back to where you could use the premises, how much time is left on the lease, maybe how much they invested to get the premises ready to your satisfaction, and that they never would have agreed to give you the unilateral power

[00:18:31] Speaker 02:
to make a decision in 24 hours that the facility was not tenable?

[00:18:38] Speaker 00:
Well, certainly I don't think the government would argue that the only standard for the time period to make that decision was 24 hours.

[00:18:46] Speaker 00:
That was possible in this case because the flooding was so extensive and so obviously not occupiable.

[00:18:52] Speaker 00:
And apparently the petitioner agreed because they didn't object to the government decamping from the space.

[00:18:58] Speaker 00:
They never asked them to reoccupy the space why Serpro was engaged in remediation.

[00:19:02] Speaker 00:
And that was entirely consistent with the state of the offices at that time.

[00:19:08] Speaker 00:
But to look at the cases that the plaintiff, that the petitioner suggested the court should examine for what the time period for remediation is, is deceptive.

[00:19:21] Speaker 00:
The cases that the plaintiff relies upon do not include any as determined language, for one thing.

[00:19:27] Speaker 00:
And secondly, they often look at a long period that allows the lesser, the opportunity to correct the damage at the space.

[00:19:39] Speaker 00:
But here, the government did not have a long period in which to, for instance, engage with the plaintiff on its restoration and repair plans.

[00:19:47] Speaker 00:
And so it had to work with the information that it had at the time.

[00:19:51] Speaker 00:
Now I would say also that this clause doesn't actually provide

[00:19:55] Speaker 00:
any confirmation that the government must consider restoration or repair plans by the petitioner in its determination of intendability or its termination decision, but it did.

[00:20:07] Speaker 00:
And in fact, it gave Jackson multiple opportunities to ensure it that it would be not only remediating the water damage, that is removing the waterlogged tiles and carpets and walls, but also replacing those things.

[00:20:22] Speaker 00:
While Jackson has made some

[00:20:24] Speaker 00:
suggestion that the restoration phase was minimal.

[00:20:28] Speaker 00:
In fact, it involved putting new walls up and adding floors and ceilings that didn't exist.

[00:20:33] Speaker 02:
So it was quite a considerable... What is your response to their fundamental contention, which I take to be that government, that there is a well-known industry-wide understood meaning to untenability, and that the parties, the only way to interpret this contract is that the parties, including the government, agreed

[00:20:51] Speaker 02:
to that definition.

[00:20:52] Speaker 02:
And by the way, there is no evidence.

[00:20:54] Speaker 02:
I think the government can see there's no evidence that you did make a determination of untenability if that definition that they want of untenability applies, correct?

[00:21:04] Speaker 00:
We agree that we do not apply the petitioner's proposed definition.

[00:21:08] Speaker 02:
So why should we not interpret this contract as one in which you agreed to do that and you failed to do it?

[00:21:15] Speaker 00:
Because the contract here, unlike every single case that Jackson relies upon,

[00:21:21] Speaker 00:
allows the government to make that determination.

[00:21:24] Speaker 00:
And that phrase, as determined by the government, means nothing if that common law definition of untenability doesn't.

[00:21:30] Speaker 02:
That reads out the words untenability, doesn't it?

[00:21:35] Speaker 02:
How would the contract be any different if it just said, as determined by the government, government determines determinate upon partial destruction or damage.

[00:21:47] Speaker 02:
If we just struck the untenability clause entirely, how would the contract be any different?

[00:21:54] Speaker 00:
It makes it a subjective determination, Your Honor.

[00:21:56] Speaker 00:
So the government has to determine in good faith whether it was untenable.

[00:21:59] Speaker 04:
But the good faith, and this gets us back to the answer you gave to my first question.

[00:22:06] Speaker 04:
What is entailed in good faith?

[00:22:09] Speaker 04:
Is it good faith application of the principles of untenability?

[00:22:15] Speaker 04:
Or what is your view as to what's required by good faith on the part of the government?

[00:22:22] Speaker 00:
I don't believe that suggesting good faith is the standard and then applying the common law principles would add anything to the analysis, since one presumably always acting in good faith and government actors are assumed to be doing so.

[00:22:36] Speaker 04:
Well, give me an idea of what

[00:22:40] Speaker 04:
would be required to show that the government did not act in good faith with respect to the untenability determination?

[00:22:49] Speaker 00:
Well, for instance, if the damage to the space was limited to one room in 20 rooms, and the government determined that it was untenable, that clearly is not acting in good faith.

[00:22:58] Speaker 00:
the most of the space is tentative, right?

[00:23:01] Speaker 04:
So there are... And what if it was pretty clear that the situation could be remedied within a matter of a couple of days?

[00:23:10] Speaker 00:
I think the question of... And I agree with your contention that if it was very clear that the situation could have been immediately remedied, particularly within the 15-day period in which the government had to decide, then that would not have been a reasonable or good-faith application here.

[00:23:28] Speaker 00:
What the government was looking for in particular was a plan from the plaintiffs that would allow the comfort of knowing that these repairs, this restoration would be complete in some predictable period of time.

[00:23:41] Speaker 00:
They asked for that multiple times.

[00:23:43] Speaker 00:
They asked for it as soon as three days after the actual flooding events occurred.

[00:23:49] Speaker 00:
And in each case, Jackson did not provide any plan for restoration.

[00:23:55] Speaker 00:
The most that they did was provide

[00:23:57] Speaker 00:
On June 12, a document that simply repeated what it received from ServPro in terms of remediation planning.

[00:24:05] Speaker 00:
ServPro's remediation plan had daily tasks that had a full schedule.

[00:24:09] Speaker 00:
The government understood what ServPro was going to do.

[00:24:12] Speaker 00:
For restoration, Jackson only said, we will complete first and second floor restoration by January 30.

[00:24:19] Speaker 00:
Not only did that not turn out to be the case, but in fact, that is not a plan.

[00:24:23] Speaker 00:
There's no indication that they hired a contractor.

[00:24:25] Speaker 00:
There's no indication that they ordered materials for which there is a wait time that are specialty materials.

[00:24:32] Speaker 00:
There's no indication they did any work to assure the government that they actually were going to follow through and complete the restoration plan in the time that they projected.

[00:24:41] Speaker 00:
So in this particular circumstance, it's very clear that the government made a good shape determination in the time it was allowed.

[00:24:48] Speaker 00:
And Jackson simply refused to respond with a

[00:24:52] Speaker 00:
meaningful restoration plan, even when the government on January 13th and 14th specifically requested they address restoration, including when ceiling tiles, sheet rock, other materials or specialty materials would be restored.

[00:25:06] Speaker 00:
So in this case, that is pretty clear.

[00:25:08] Speaker 00:
I think also if the court looks at Brown versus United States in that case, GSA terminated a contract.

[00:25:16] Speaker 00:
after, again, within a 15-day period clause.

[00:25:21] Speaker 00:
In that case, the government requested a plan to repair the leak and fix the premises within seven days.

[00:25:27] Speaker 00:
The lessor did not provide one, and it terminated the lease 17 days later.

[00:25:32] Speaker 00:
So the period that we're looking at is certainly a period within which other courts have found the government could reasonably conclude untenability.

[00:25:42] Speaker 02:
I want to take you back to my question, because I want to make sure I understood it.

[00:25:46] Speaker 02:
I'm looking at the key sentence.

[00:25:48] Speaker 02:
In the case of partial destruction or damage, so as to render the premises untenable, as determined by the government, the government may terminate, right?

[00:25:56] Speaker 02:
How, if at all, would the government's rights be different if I simply strike the phrase so as to render the premises untenable?

[00:26:04] Speaker 02:
It would then read, in the case of partial destruction or damage, as determined by the government, the government may terminate the lease.

[00:26:13] Speaker 02:
Would that give you any lesser rights than you currently have?

[00:26:16] Speaker 00:
In that case, I think that the word untenable suggests to the government a meaning, which in this case was unfit for occupation for the normal use of the agency.

[00:26:26] Speaker 00:
That reading wouldn't have been necessary if the provision only included in the case of partial disclosure.

[00:26:33] Speaker 02:
Unfit for any period for the purposes of the agency.

[00:26:37] Speaker 02:
That's what the government understood untenable to mean.

[00:26:41] Speaker 00:
Unfit within the 15-day period the government had to consider it.

[00:26:46] Speaker 04:
But within the 15-day period, wouldn't it be necessary for the government to make at least a good fake estimate that it would be unusable for an extended period of time?

[00:26:57] Speaker 04:
Isn't that?

[00:26:58] Speaker 04:
Aren't we really talking about period of time here when we're talking about the difference between unusable versus untenable?

[00:27:06] Speaker 00:
Certainly, extensiveness of the damage is also a dimension of that.

[00:27:10] Speaker 00:
If you look at period of time, one of the challenges here was the government is not a contractor.

[00:27:15] Speaker 00:
They don't know how long it takes to restore the walls and ceilings and carpets.

[00:27:19] Speaker 00:
That's why it asked for the plaintiff, for Jackson, to provide that information so we could assess whether the timeline was reasonable and whether it could afford to, again, waive any ability it might have to terminate the contract after the 15-day period.

[00:27:32] Speaker 00:
Jackson did not comply.

[00:27:34] Speaker 00:
So GSA is not professionally in construction.

[00:27:40] Speaker 00:
It doesn't know how long the time it takes to repair that damage.

[00:27:44] Speaker 00:
It could have responded if Jackson had provided a timeline with an assessment of whether that would fit the agency's needs, but it never got that opportunity because Jackson declined to provide that information.

[00:27:56] Speaker 00:
As I mentioned, Brown, in addition to

[00:28:01] Speaker 00:
having a short timeline such as this also did not apply a common law standard of untenant ability to the decision to terminate the lease.

[00:28:08] Speaker 00:
Rather, the government prepared a letter that explained that there were repairs resulting from a leak during a blizzard.

[00:28:15] Speaker 00:
The lesser had not fixed it or provided a plan to complete the repairs, and the court found that that was sufficient.

[00:28:23] Speaker 00:
Likewise, in Richardson, a similar situation where a letter

[00:28:27] Speaker 00:
described 14 different deficiencies, which did accrue over time, but the letter was the formal notification.

[00:28:34] Speaker 00:
And the lesser refused to respond by fixing the problem, and the court supported that determination.

[00:28:42] Speaker 00:
No reference to the common law standard for untenability.

[00:28:47] Speaker 00:
Jackson also relies on a number of cases suggesting it has copious controlling authority.

[00:28:52] Speaker 00:
to show untenability must be interpreted consistent with its preferred definition.

[00:28:58] Speaker 00:
It relies upon Reserve Ranch, which is a case that was affirmed by the Federal Circuit.

[00:29:04] Speaker 00:
But that case turned on whether statutes delegated authority to two agencies to assess endangered species, not untenability.

[00:29:11] Speaker 04:
One of the arguments that's made under the rubric, I think, of good faith and fair dealing obligation is that

[00:29:21] Speaker 04:
the termination was pretextual.

[00:29:25] Speaker 04:
Do you think that pretext, if proved, would be sufficient to render the determination, in this case, not in good faith?

[00:29:37] Speaker 00:
Yes.

[00:29:39] Speaker 00:
The entire defense that, or the entire claim that the Jackson made out under good faith and fair dealing is

[00:29:47] Speaker 00:
about animus by the government, bad faith by the government, and the contention that termination was pretextual.

[00:29:53] Speaker 00:
But it could not actually demonstrate anything.

[00:29:55] Speaker 04:
That would be sufficient to constitute a violation of the duty of their dealing.

[00:30:00] Speaker 00:
I would agree.

[00:30:01] Speaker 00:
Yes.

[00:30:02] Speaker 00:
And there is no avoidance of doubt.

[00:30:04] Speaker 00:
There's no such evidence here.

[00:30:06] Speaker 00:
GSA was the decision maker, not USCIS, who was the tenant.

[00:30:12] Speaker 00:
There's plenty of law dismissing the idea

[00:30:15] Speaker 00:
Routine complaints by a tenant suggest animus of the kind that would rise to bad faith.

[00:30:23] Speaker 00:
GSA instead engaged in a process and investigated the claim.

[00:30:28] Speaker 00:
It gave Jackson the opportunity to respond with repairs.

[00:30:31] Speaker 00:
It evaluated that claim.

[00:30:33] Speaker 00:
And it did so despite USCIS's preference that the lease be terminated.

[00:30:38] Speaker 00:
There was no bad faith and no evidence of bad faith in this case.

[00:30:43] Speaker 03:
If I could also point out the- So as you can see, your time has expired.

[00:30:48] Speaker 03:
So we thank you for your argument.

[00:30:50] Speaker 03:
Thank you, Your Honor.

[00:30:51] Speaker 03:
Dr. Caterpane will give you two minutes for rebuttal.

[00:30:55] Speaker 03:
Thank you, Your Honor.

[00:31:04] Speaker 01:
The 15-day period of inquiry in the cases cited by the government, Brown and Richardson,

[00:31:12] Speaker 01:
the GSA deployed professionals.

[00:31:15] Speaker 01:
I forget which one, but one involved an earthquake of a building that was condemned and couldn't be used at all.

[00:31:21] Speaker 01:
And the GSA's experts on the field went out and prepared reports and made a determination about the length of time the space would not be able to be used, not occupiable, unfit for use, to suggest that

[00:31:35] Speaker 01:
Putting the onus on Jackson to prepare a report to the government to make that determination for it is contrary to the language of the contract.

[00:31:44] Speaker 01:
And we've supplied case law to this court that that in and of itself is a breach.

[00:31:50] Speaker 01:
When the government is given the discretion to make a determination, it is their determination to make.

[00:31:55] Speaker 01:
They cannot put the onus on the determination on the contractor and then cancel the contract

[00:32:00] Speaker 01:
simply because they find that the inquiry made was not sufficient.

[00:32:06] Speaker 01:
I would also add, the idea that the 15-day period couldn't be extended is disingenuous, I believe, because you're dealing with a landlord who's facing possible termination.

[00:32:17] Speaker 01:
And had the government said, we need an additional 10 days, otherwise we have to cancel today, I could hardly imagine a circumstance where a landlord would say, we're not going to agree to give you an additional 10-day period.

[00:32:28] Speaker 01:
This original report that was submitted had the completion of the first floor on January 20th, 12 days after the original damage occurred.

[00:32:41] Speaker 01:
And the contracting officer in his deposition

[00:32:45] Speaker 01:
said that he thought that that just was dealing with remediation and not restoration.

[00:32:49] Speaker 01:
And this is part of our good faith and fair dealing claim.

[00:32:52] Speaker 01:
Because on one hand, the government will have you believe that they had boots on the ground and knew exactly what was going on.

[00:32:57] Speaker 01:
And on the other hand, the contracting officer testified under oath that he thought that the February 7th date was only remediation.

[00:33:05] Speaker 01:
And on that date, when he canceled the contract on January 15th, remediation was complete.

[00:33:10] Speaker 01:
It had been complete since January 12th.

[00:33:12] Speaker 01:
Cerf Pro was gone.

[00:33:13] Speaker 01:
surf was wrapping up remediation on January 16th and it would be complete.

[00:33:18] Speaker 01:
Restoration would begin thereafter.

[00:33:20] Speaker 01:
The original plan provided for restoration of the entire first floor back to as built, which is something far greater than tenable, which is required under the contract by

[00:33:31] Speaker 01:
12 days after the event, and I think some nine business days, the second floor, again, as built.

[00:33:37] Speaker 01:
The government demanded it as built.

[00:33:39] Speaker 03:
Thank you, counsel.

[00:33:40] Speaker 03:
Your red light is on.

[00:33:43] Speaker 03:
The case is submitted.