               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                   )
                                               )
International Automotriz                       )      ASBCA No. 59665
                                               )
Under Contract No. W912QM-13-P-0075            )

APPEARANCE FOR THE APPELLANT:                         Sra. Doris Elizabeth L. Sibrian
                                                       Owner

APPEARANCES FOR THE GOVERNMENT:                       Ray M. Saunders, Esq.
                                                       Army Chief Trial Attorney
                                                      Kyle E. Chadwick, Esq.
                                                       Trial Attorney

                 OPINION BY ADMINISTRATIVE JUDGE NEWSOM

       Appellant seeks compensation for damage to four vehicles that it rented to the
Army. The Army admitted responsibility for the damage and paid the appellant
$12,947.88. Not satisfied, appellant seeks more than $189,412.12 in additional damages,
including lost rental income, interest on loans, and other damages. For the reasons set
forth below, we hold that appellant has already received compensation for the damage for
which the government is responsible and deny appellant's appeal insofar as it seeks
additional damages.

                                   FINDINGS OF FACT

       1. On 7 June 2013, the Army awarded Contract No. W912QM-13-P-0075
(the Contract) to appellant, International Automotriz, a company located in El Salvador
(R4, tab 1 at 1). The Contract called for appellant to rent three vehicles - one sport utility
vehicle (SUV) and two pickup trucks - to special forces personnel in El Salvador, in
exchange for a rental fee of $65 per day per vehicle (R4, tab 1 at 4, 12).

       2. Originally, the Contract called for 106 rental days for the SUV and 102 days
for each of the pickup trucks, for a total Contract value of $20,150 (R4, tab 1 at 4, 12).
On 1 August 2013 the parties executed a bilateral modification changing the rental period
and reducing the total Contract value to $17,420 (R4, tab 2).

         3. The Contract incorporated Federal Acquisition Regulation (FAR) clause
52.228-8, LIABILITY AND INSURANCE - LEASED MOTOR VEHICLES (MAY 1999) (R4, tab 1
at 4 ), which stated that the government:
                     (a) ... shall be responsible for loss of or damage to-

                     (1) Leased vehicles, except for (i) normal wear and
              tear and (ii) loss or damage caused by the negligence of the
              Contractor, its agents, or employees ....

        4. International Automotriz delivered the vehicles on 24 June 2013 to U.S. service
member, Chief Adam Davis, in El Salvador (tr. 60, 104; R4, tab 1 at 12; app. supp. R4,
tab 2).

       5. International Automotriz typically provides a copy of its standard rental
agreement to persons who rent its vehicles (tr. 106). Accordingly, at delivery,
Chief Davis received, and he signed, International Automotriz's rental agreement (tr. 60,
106-07; app. supp. R4, tab 6A). This rental agreement was mostly in Spanish with
portions translated into English (app. supp. R4, tab 6A). The English translation stated,
among other things:

                            RENTAL AGREEMENT

              Celebrate the present agreement "Doris Elizabeth Lopez
              Sibrian", as the renter in this city for effect of the present
              contract will be called "THE LESSOR" and the person
              designed in the beginning on the contract will be called "THE
              LESSEE".



             9. It will be the "THE LESSEE" responsibility to pay the
             rento for period that the vehicle stays in the repair shop due to
             an accident in concept of dismissed lucre.



             16. In order to valid the collision damage waiver "THE
             LESSEE" must present a police report of the collision of the
             accident. Other way "THE LESSEE" will be responsible for
             all the damage of the vehicle.

(App. supp. R4, tabs 6, 6A at 1)

        6. The contracting officer, however, did not sign the International Automotriz
rental agreement and did not have that rental agreement when he awarded the Contract
(app. supp. R4, tab 6; tr. 105-07). Indeed, International Automotriz's owner and General


                                              2
Manager, Sra. Doris Sibrian 1, testified that she first discussed the rental agreement with
the contracting officer when International Automotriz submitted its claim (tr. 107-08).
There is no evidence in the record that Chief Davis had actual authority to bind the
government, and none to indicate that the contracting officer ratified appellant's standard
rental agreement.

      7. After the government picked up the vehicles, the SUV - a Toyota Prado-was
damaged, and the government returned it early to International Automotriz (tr. 61). On
30 September 2013, International Automotriz provided a replacement SUV, a Ford
Everest (tr. 61-62; app. supp. R4, tab 5).

        8. International Automotriz repaired the damaged Toyota Prado in October 2013
(tr. 70, 81). After repairing the Toyota, International Automotriz did not rent that vehicle
to other clients. International Automotriz's owner, Sra. Sibrian, used the Toyota for her
personal transportation. (Tr. 113-14)

       9. The government used the three vehicles until approximately 2 November 2013,
when it returned them. All three had been damaged while in the government's
possess10n. (App. supp. R4, tab 6 at 3) Photographs showed scratches and dents on them
(R4, tab 5).

        10. Sra. Sibrian contacted the Army contracting office to seek compensation for
the vehicle damage and was advised to submit a claim (R4, tabs 3-6). On 25 November
2013, she submitted a claim on behalf of International Automotriz (R4, tab 4). Initially,
International Automotriz claimed $10,073.91, comprising $8,123.91 in total repair costs
and $1,950 for lost rental value per vehicle for each of three of the vehicles. The
company calculated the lost rental value by assuming ten lost rental days per vehicle,
multiplied by three vehicles, multiplied by the Contract rental rate of $65 per day. At the
time, International Automotriz did not seek damages for the Toyota Prado, stating that it
"was already repaired and we will assume the cost." (R4, tab 4 at 6)

       11. Meanwhile, beginning before 2013 and continuing in 2014 and thereafter,
International Automotriz' s finances were deteriorating. Its 31 December 2013 financial
statements showed "Loss From Previous Years" of $26,550, resulting in negative equity
of $11,420.10. By year-end 2013, appellant held less than $10,000 in cash and accounts
receivable and owed more than $96,000 in debts. (App. supp. R4, tab 28 at 1)
Additionally, on 19 November 2013 - less than one month after the government returned
the vehicles - a creditor sent notice threatening legal action against International
Automotriz's for debts in arrears (app. supp. R4, tab 21 at 2). Based on the losses prior to
2013, the magnitude with which appellant's debts exceeded its cash and accounts
receivable at year-end 2013, and the November 2013 creditor demand, we find that the

1
    We refer to appellant's owner as "Senora Sibrian" or "Sra. Sibrian," because we
        understand that it is how she prefers to be addressed.
                                               3
deterioration of appellant's finances began well before it was awarded the Contract at
issue in this appeal.

      12. As a result of its deteriorating finances, during 2014, International Automotriz
was unable to pay at least some of its creditors (tr. 28-30, 38-39, 79-80), so it borrowed more
money. On 16 January 2014, it borrowed $10,000 at a monthly interest rate of 5%, plus a
5% surcharge for payments in arrears. In November 2014, it borrowed another $1,500 at a
monthly interest rate of 9.9%. (App. supp. R4, tab 21 at 26; tr. 29-30, 44-45, 52)

        13. Although these loans demonstrate that International Automotriz had
borrowing capacity, appellant never sought a loan for money to repair the vehicles
(tr. 70-71). Instead, International Automotriz gradually sold the four vehicles at issue
(tr. 109, 112-13). It sold one in 2013, another in 2014, and the two remaining vehicles in
2015. The Board finds as follows:

          •   The Nissan Frontier was not listed among the assets of International
              Automotriz as of year-end 2013, therefore we find that International
              Automotriz sold that vehicle sometime in 2013 (app. supp. R4, tab 21at19,
              tab 28).
          •   The Ford Everest was listed among the assets of International Automotriz
              as of year-end 2013, but not as of year-end 2014, therefore we find that
              International Automotriz sold the Ford Everest sometime during 2014 (app.
              supp. R4, tab 28).
          •   International Automotriz sold the Toyota Prado on 6 January 2015
              (app. supp. R4, tab 21 at 13).
          •   One of International Automotriz's creditors took possession of the
              Mitsubishi in March 2015 as collateral for a debt (app. supp. R4, tab 21
              at 26). Sra. Sibrian characterized this transaction as a vehicle sale (tr. 109).

        14. Appellant did not provide to the Board the prices at which it sold the vehicles
despite the Board's request for that information. In its 27 April 2015 post-hearing order,
the Board asked appellant to "[i]dentify the exact date(s) on which each vehicle was sold,
and the sale price (or amount of debt assumed by the buyer), and a citation to the appeal
file by tab and page number evidencing the sale." Appellant instead provided the date
that appellant's debt on each vehicle was paid off, rather than the date that appellant sold
each vehicle. Appellant also did not provide the sale price or amount of debt assumed by
the buyer. (App. br. at 1)

        15. Six months after the company submitted its claim to the contracting officer,
the claim remained unresolved. On 20 May 2014, Sra. Sibrian submitted an updated
claim increasing the demand to $48,915. This updated claim added damages for the
Toyota Prado and additional days of lost rental value for each vehicle. The revised claim
now sought $10,500 for a "deductible" and $3 8,415 in lost rental value, measured "from
the time [the vehicles] were damage[d] until the date this claim gets resolved."
                                              4
International Automotriz assumed 197 days of lost rent per vehicle at the Contract rental
rate of$65 per vehicle per day. The updated claim also sought damages for
"consequence costs" and "anguish" to Sra. Sibrian and appellant. (R4, tab 8)

        16. About a month later, on 16 June 2014, the contracting officer issued a written
final decision to reimburse International Automotriz $12,762.42 out of the $48,915
claimed at that time, plus interest. International Automotriz received the decision the
same day. (R4, tab 10 at 2; app. supp. R4, tab 16) The award consisted of $9,187.42 "for
the actual costs of damage ... derived from the repair quotes" plus $3,575 in lost rental
value for the number of days estimated to be required to repair each vehicle. The
contracting officer assumed 12 days each to repair the Nissan, Ford, and Mitsubishi, and
19 days to repair the Toyota, for a combined total of 55 days. The contracting officer
assumed a rental rate for each vehicle at the same rate the government paid, $65 per day
per vehicle. The total granted per vehicle, excluding interest, was as follows:

          •   2012 Nissan Frontier, Plate #72002:              $3,090.55
                 o 12 repair days@ 65.00 per day=               $780.00

          •   2008 Ford Everest, Plate #606507:               $3,316.55
                 o 12 repair days@ 65.00 per day=               $780.00

          •   2010 Mitsubishi Sport, Plate #641225            $1,716.81
                 o 12 repair days@ 65.00 per day=               $780.00

          •   Toyota Prado, Plate #548169                     $1,063.51
                 o 19 repair days@ 65.00 per day=             $1,235.00

              TOTAL:                                         $12,762.42

(R4, tab 10 at 2)

       17. Processing the payment took approximately three months from the date of the
contracting officer's decision. First, on 27 August 2014, the contracting officer issued,
and appellant signed, a contract modification to authorize payment (R4, tab 11 ). Then,
on or about 17 September 2014, the government wired $12,947.88 to Sra. Sibrian's bank
account (app. supp. R4, tab 20). This amount included $185.46 in interest (compare id.
with R4, tab 10 at 2). The modification stated expressly that International Automotriz
"retains the right to appeal the Contracting Officers Final Decision" to this Board or to
the United States Court of Federal Claims (R4, tab 11 at 2).

      18. International Automotriz did not use the government's 17 September 2014
payment to repair the remaining vehicles (tr. 116-17). Indeed, as noted above, by
September 2014 the company had already sold the Nissan Frontier, and possibly also the

                                            5
Ford Everest (finding 13). Instead, International Automotriz used the government
payment to pay other debts (tr. 56, 117).

        19. In this litigation, International Automotriz asserts that it lost opportunities to
rent the vehicles to other clients because the vehicles were damaged (app. br. at 1). The
documents that it offers to show lost vehicle rental opportunities are in Spanish with only
an English summary, not a translation of each document (app. supp. R4, tab 21at41-51).
Each of those documents bears a date in 2015, as the English summary confirms (app.
supp. R4, tab 21at41-51). Thus, they do not show lost vehicle rental opportunities in
2013 or 2014. Other documents that the company offered for support of lost vehicle rent
related instead to opportunities to provide cell phones to customers, not rental vehicles
(app. supp. R4, tab 21 at 52-55).

       20. Sra. Sibrian testified that the company rented 30 vehicles to clients from
Taiwan in July 2014. She explained that the company provided the vehicles by obtaining
them from colleagues, rather than from its own fleet. (Tr. 115-16)

       21. Following receipt of the contracting officer's decision, Sra. Sibrian contacted
the Board by email in Spanish on 20 August 2014, and through additional email and
telephone communications on 21 August 2014, Board staff learned that Sra. Sibrian
sought to initiate an appeal (app. supp. R4, tab 18 at 2). An English translation of one of
Sra. Sibrian:s emails stated that she "presented a claim which was unjustly resolved," she
intended "to find out how to resolve this issue," and she requested guidance (21 August
2014 email, English translation). Board staff directed Sra. Sibrian to assemble the
relevant documents and send them to the Board, which she did ( 18 December 2014
correspondence). The appeal was formally docketed on 7 November 2014.

       22. The Board held a hearing on 22 April 2015 (tr. 1). In its 7 May 2015
post-hearing brief, International Automotriz calculated its damages at more than
$189,412.12 through the hearing date, with a continuing claim up to the date of payment
(app. hr. at 2; tr. 98, 114).

                                          DECISION

         The Board has jurisdiction pursuant to the Contract Disputes Act of 1978,
41   u.s.c. §§ 7101-7109. 2

2
    As noted above, appellant received the contracting officer's decision on 16 June 2014
         (finding 16), and sent emails to the Board on 20-21 August 2014 expressing
         dissatisfaction with the final decision and an intention to appeal (finding 22). The
         20-21 August 2014 emails satisfy the criteria for an effective notice of appeal.
         ESA Environmental Specialists, Inc., ASBCA No. 55620, 07-1BCA~33,573
         at 166,312. Accordingly, this appeal is timely.
                                                6
       In this appeal, the government admits responsibility for damaging the vehicles
(answer~ 18; gov't br. ~ 23). Indeed, when the government rents property from a
contractor, a bailment for the mutual benefit of the parties is created. Mohammad
Darwish Ghabban Est., ASBCA No. 51994, 00-2 BCA ~ 31, 114 at 153,671; Analog
Precision, Inc., ASBCA Nos. 31277, 32877, 87-2 BCA ~ 19,804 at 100,170; Innovations
Hawaii, ASBCA Nos. 30619, 30627, 87-1BCA~19,376 at 97,967. The return of bailed
property in a state unfit for service may give rise to a claim for damages. Mohammad
Darwish, 00-2 BCA ~ 31,114 at 153,671; Manufactured Housing Services, Inc., ASBCA
No. 41269 et al., 92-3 BCA ~ 25,159 at 125,407.

       Here, the sole dispute concerns quantum. International Automotriz claims more
than $189,412.12 (in addition to the $12,947.88 already paid by the government)
consisting of two elements. First, it claims more than $139,412.12 in lost rent that it
allegedly would have earned by renting the vehicles to other clients, had the vehicles not
been damaged. Second, it seeks another $50,000 in compensation for interest on
borrowed funds, litigation expenses, harm to its business reputation, and compensation
for emotional harm to appellant's owner. 3 (App. hr. at 1; app. supp. R4, tab 27; tr. 117)

        The legal framework governing damages is disputed. The government argues that
FAR 52.228-8, LIABILITY AND INSURANCE - LEASED MOTOR VEHICLES (MAY 1999),
limits its liability so that the government is obligated only to pay for loss or damage to
the leased vehicles and not consequential damages such as lost rental income (gov't br.
at 6). Appellant claims entitlement to lost rent and other consequential damages, relying
in part on its standard rental agreement (finding 5; app. 20 January 2015 corr.).
Alternatively, under the common law ofbailment, appellant may be entitled to
"damages ... proximately caused" by the government's failure to safeguard the vehicles,
Manufactured Housing, 92-3 BCA ~ 25,159 at 125,407; accord 8 C.J.S. Bailments § 148
at 605 (2005), which can include the "loss of income resulting from the inability to use
the property." 46 AMJUR. 3o 361, Proof ofFacts§ 17 (1998). Appellant would be
required to prove, among other things, that the government's failure to use ordinary care
caused its claimed losses, and it must prove its losses with reasonable certainty. 8 C.J.S.
Bailments §§ 146-48 at 603-06; cf Wells Fargo Bank, NA. v. United States, 88 F.3d
1012, 1021 (Fed. Cir. 1996).

        It is unnecessary to resolve this dispute, because under any of these standards,
appellant has not proved its damages. If, as the government contends, FAR 52.228-8
limits the government's liability only to the cost of vehicle repair, then appellant is
entitled to nothing more. The government has already paid vehicle repair costs
(findings 16, 17). If appellant's vehicle rental agreement defines appellant's damages, 4

3 The demands for lost rent, plus consequential, reputational and emotional harm were
       part of appellant's updated claim (finding 15).
4 There is no showing that appellant's rental agreement was signed or ratified by anyone

       with authority to bind the government (finding 6). Accordingly that document
                                              7
appellant would be entitled to nothing more. That agreement provided for payment of
lost rent "for the period that the vehicle stays in the repair shop" - an amount which the
government already paid (findings 5, 16, 17). If the common law ofbailment governs
damages, then, as is explained below, appellant has not met its burden to prove that the
government caused its damages, nor has it proved its damages with reasonable certainty.

        Regarding its demand for lost rent, International Automotriz assumes that but for
the vehicle damage, it would have rented all four vehicles to other clients at $65 per day
per vehicle, every single day from 2 November 2013 to the present- more than 537
consecutive days per vehicle, or a combined total of more than 2, 148 consecutive days
for all four vehicles. These assumptions are not credible and are inconsistent with
appellant's actual conduct.

       Significantly, when appellant had opportunities to repair the vehicles and rent
them to other clients, it did not do so. International Automotriz repaired the Toyota in
October 2013, after which that vehicle was available to rent to other clients (finding 8).
International Automotriz chose not to rent it to other clients, as Sra. Sibrian used that
vehicle herself(id.). If appellant lost rental income on the Toyota, appellant's decisions
were the cause, not the government's failure to exercise due care.

        Similarly, appellant did not repair the remaining vehicles even after the
government paid the repair costs (findings 16-18). Instead, appellant applied that money
to other debts (finding 18). If appellant lost rental income from the vehicles after
17 September 2014, appellant's decision not to repair the vehicles were the cause, not the
government's failure to exercise due care. Certainly, moreover, appellant's decision to
sell the vehicles precludes damages for lost rent after the vehicles were sold.
International Automotriz's actual conduct is inconsistent with lost rent theory, and it
cannot establish a causal link between the vehicle damage and the claimed lost rental
income. California Federal Bank v. United States, 395 F.3d 1263, 1267 (Fed. Cir. 2005).

        Furthermore, International Automotriz did not present credible evidence that it
actually lost any rental opportunities. We examined this evidence particularly for the
period in 2013 and 2014 prior to International Automotriz's receipt of the government
payment. The documents that International Automotriz offered to show lost rental
opportunities are in Spanish with only an English summary, not a translation of each
document (finding 19). Under Board Rule 4(c), only English documents or translations
may be considered. Even if these documents could be considered, each document was
dated in 2015 and relates to a client inquiry in 2015, as the English summary confirms
(id.). Thus they do not show lost profitable opportunities in 2013 or 2014. Still other
documents offered for support of lost vehicle rent relate instead to opportunities to
provide cell phones to customers, not rental vehicles (finding 19).


      does not contractually bind the government. Trauma Serv. Group v. United States,
      104 F.3d 1321, 1325 (Fed. Cir. 1997).
                                           8
        The evidence instead shows that International Automotriz could obtain vehicles
outside its own fleet when it needed to do so. Sra. Sibrian testified that a client requested
30 rented vehicles in July 2014, and International Automotriz fulfilled that request by
obtaining vehicles from other colleagues (finding 20). If International Automotriz could
obtain 30 vehicles when needed to meet a client request, it is difficult to understand how
the alleged unavailability of three vehicles could cause more than $139,412.12 worth of
lost opportunities.

        Presented with appellant's actual conduct, we cannot credit appellant's assumptions
that the vehicle damage prevented the company from fulfilling opportunities for vehicle
rental income from other clients. We conclude that the government's failure to exercise
ordinary care did not cause International Automotriz's alleged lost rental income.

        Appellant urged in its post-hearing brief that its lost rent calculation should be
viewed as a representation of the "rippled blow" of cascading impacts to its business,
rather than a calculation of lost rent. Appellant claims that the vehicle damage, coupled
with the government payment delay, forced appellant to incur $50,000 in borrowing
costs, plus reputational harm, litigation expenses, and emotional harm for its owner. 5
(App. br. at 2)

       The evidence does not support these contentions. International Automotriz's
financial deterioration began before it entered into the Contract with the government
(finding 11). Moreover, ifthe source of its financial problems had been the lack of
vehicles to rent to other clients, the rational choice would have been to rent out the
Toyota, use the government payment to repair the other vehicles, and rent them out as
well. Alternatively appellant could have sought to borrow money to repair the remaining
vehicles sooner to generate revenue. Appellant's borrowings in 2014, which were in
excess of$10,000, demonstrated that it had borrowing capacity to secure the $8,123.91
necessary to repair the vehicles (findings 14, 17). International Automotriz did not do
any of those things (findings 8, 13, 17).

       As a result, appellant has not proved that, but for the vehicle damage, it would
have avoided financial problems. California Federal Bank, 395 F.3d at 1267 (endorsing
"but for" test for causation of damages). Moreover, appellant has offered no evidence to
support the figure of $50,000. The amount appears to be pure speculation and therefore
these damages are not recoverable. 8 C.J.S. Bailments § 148 at 606; cf Wells Fargo

5
    International Automotriz argues that its demand is reasonable, because the cost to
          replace the vehicles would have exceeded $200,000 (app. br. at 1). This argument
          is unavailing. It relies upon vehicle valuations submitted for the first time after the
          record closed (app. br. at 1). We will not consider the newly-provided valuations.
          We note further that appellant did not lose the vehicles but sold them for amounts
          that appellant declined to disclose (finding 14).
                                                 9
    Bank, 88 F .3d at 1021.

            In contrast, the government payment was reasonable and based on assumptions
    that were favorable to International Automotriz. The government paid lost rent for the
    number of days that it estimated repairs would have taken for each vehicle (finding 16).
    In so doing, the government assumed that each vehicle would be repaired sequentially,
    rather than all vehicles repaired at the same time. This assumption stretched out the
    number of days of lost rent paid to 5 5, rather than as few as 19. We find the government
    payment adequately compensated appellant.

                                         CONCLUSION

            The Board finds that International Automotriz did not prove its damages with
    reasonable certainty, and that its claimed amounts were not caused by the government's
    failure to use ordinary care. The appeal is denied insofar as it seeks amounts in addition
    to the $12,947.88 already paid.
                                                                      /
           Dated: 16 November 2015



                                                                      .NEWSOM
                                                      Administrative Judge
                                                      Armed Services Board
                                                      of Contract Appeals


    I concur                                          I concur

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7   MARK~~                                           -RI-----'-C-HARD--S-HA_C_KL_E_F_O_RD
                                                                                      _ _ _ __
    Administrative Judge                             Administrative Judge
    Acting Chairman                                  Vice Chairman
    Armed Services Board                             Armed Services Board
    of Contract Appeals                              of Contract Appeals




                                                10
       I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59665, Appeal of
International Automotriz, rendered in conformance with the Board's Charter.


       Dated:



                                                  JEFFREY D. GARDIN
                                                  Recorder, Armed Services
                                                  Board of Contract Appeals




                                             11
