IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-11025

J. LEONARD SPODEK; ROSALIND SPODEK,

Plaintiffs – Appellants

v.

UNITED STATES POSTAL SERVICE,

Defendant – Appellee.

Appeal from the United States District Court 

for the Northern District of Texas

USDC No. 3:07-CV-1888

Before STEWART, Chief Judge, and DeMOSS and CLEMENT, Circuit Judges.

PER CURIAM:*

This dispute arises from the lease of a building in Greenville, Texas. The 

lessee, the United States Postal Service (“USPS”),1 vacated the building in 

2007 alleging that it was untenantable after asbestos was detected in dust 

samples taken from various horizontal surfaces in the building. The lessors, 

J. Leonard Spodek and Rosalind Spodek (the “Spodeks”),2 sued the USPS for 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

1 The United States Postal Service is the successor in interest to the Post Office 

Department, the original lessee. 

2 The Spodeks are the successors in interest to the Penner-Ring Company, the original 

lessor.

United States Court of Appeals

Fifth Circuit

FILED

January 10, 2014

Lyle W. Cayce

Clerk

 

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breaching the lease, and the USPS brought a breach of contract counterclaim. 

The district court3 found that the Spodeks “failed to prove by a preponderance 

of the evidence that the USPS breached the lease.” Furthermore, the district 

court found “[t]he USPS proved by a preponderance of the evidence that 

Plaintiffs constructively evicted it from the leased property and defaulted on 

the lease effective June 30, 2007.” For the reasons stated below, we vacate the 

judgment of the district court and remand for reconsideration in light of this 

opinion.

I. BACKGROUND

In the late 1960s the Post Office Department issued the “Advertisement 

for Bids to Lease (Construction),” which called for bids for the construction and 

lease of a postal facility in Greenville, Texas. As part of the bid, bidders were 

required to provide an “Agreement to Lease,” a sample of which was provided 

in the advertisement for bids. The sample “Agreement to Lease” stated in part:

1. The undersigned hereby agree(s), upon acceptance of this 

agreement by the Government:

(a) To lease for postal purposes the premises described below 

from the first day of the month following acceptance by the 

Government of the completed building and/or any 

contemplated improvements, additions, repairs or

remodeling. 

. . . . 

(c) That all other terms and conditions of the basic lease term 

shall remain the same during the renewal option terms 

unless stated otherwise herein. 

. . . . 

3 With the consent of the parties, the case was transferred to the magistrate judge “to 

conduct all further proceedings and the entry of judgment, in accordance with 28 U.S.C. 

§ 636(c).” Because the magistrate judge was acting as a district judge, we will refer to the 

magistrate court as “the district court.” 

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2.(a) The property to be leased is located at: . . . A part of Block 184 

to the City of Greenville, Texas, . . . and which property will contain 

areas and spaces, improvements and appurtenances furnished and

provided in accordance with Post Office Department Drawing(s) 

No(s). 10-68-152 dated 10/15/68 (Tentative Drawing for New 

Leased Postal Facility, Greenville, Texas) including Standard 

Details and Specifications, and POD Publication 39B dated Jan. 

1966 which said drawings are made a part of this agreement by 

reference thereto.

A host of stipulations by the parties was included in the district court’s pretrial 

order, including the stipulation that “[p]rior to entry into the lease, based on a 

bidding process with the plaintiffs’ predecessor in interest, the building was 

built according to plans and specifications required by and approved by the 

Postal Service, including the use of asbestos-containing materials.” The lease, 

which was executed in 1970, is consistent with that stipulation. It states in 

relevant part: 

It is expressly understood between the parties hereto that the 

terms and conditions of the Agreement to Lease executed by 

Penner-Ring Company and accepted by the Government on 

February 19, 1969, including any amendments or modifications 

thereto, are made part of this lease and are to be complied with as 

though fully set forth herein.

Additionally, Paragraphs 7 & 10 of the lease state in relevant part:

7. The lessor shall, unless herein specified to the contrary, 

maintain the demised premises, including the building and any 

and all equipment, fixtures, and appurtenances, whether 

severable or non-severable, furnished by the lessor under this 

lease in good repair and tenantable condition, except in case of 

damage arising from the act or negligence of the Government’s 

agents or employees.

. . . . 

10. (c) If any building or any part of it on the leased property 

becomes unfit for use for the purposes leased, the lessor shall put 

the same in a satisfactory condition, as determined by the Post 

Office Department, for the purposes leased. If the lessor does not 

do so with reasonable diligence, the Post Office Department in its 

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discretion may cancel the lease. Unfitness for use does not include 

subsequent unsuitability arising from such matters as design, size 

or location of the building.

The parties further stipulated:

2.2 The lease provided for a 20-year base term, beginning on 

July 1, 1970, and ending on June 30, 1990 . . . . 

2.3 The lease contained six five-year options, to be exercised by 

the Postal Service . . . . 

2.4 The Postal Service exercised the first four of the six five-year 

options, thus continuing their tenancy of the building through 

June 30, 2010. 

. . . . 

2.8 An inspection of the Greenville Post Office in June 1995 

confirmed that some of the building materials used in constructing 

the building were asbestos-containing materials (“ACM”). 

Specifically, the inspection confirmed the presence of asbestos in 

suspended acoustic ceiling tile, floor tile and mastic, baseboard 

mastic, pressboard flooring, and transit window panels . . . . 

. . . .

2.12 In 2000, the United States Public Health Service performed 

an asbestos and lead inspection at the Greenville post office. It 

identified several asbestos-containing building materials, 

although it did not test the plaster covering the cinder block walls. 

The USPHS identified the asbestos fiber type contained in the 

ceiling tiles as amosite asbestos, and the remaining asbestos 

materials as containing chrysotile asbestos.

. . . . 

2.31 In October 2006, the Postal Service relocated all of its 

operations from the Greenville post office to other sites within 

Greenville, Texas.

. . . .

2.35 On June 21, 2007, the contracting officer, Ms. Rybicki, 

terminated the lease, effective June 30, 2007, alleging that the 

leased space was unfit for occupancy, insofar as plaintiffs allegedly 

had failed to maintain the premises in good repair and tenantable 

condition, as required by paragraph 7 of the lease . . . . 

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Preliminary Matter

Because the Spodeks initially appealed the USPS’s cancelation of the 

lease administratively, we asked the parties to address whether “the 

appellants knowingly and voluntarily elect[ed] to proceed under the Contract 

Disputes Act.” The parties agree that the contracting officer misstated the 

Spodeks’ appellate rights in the letter informing them of the lease termination. 

Thus, we are satisfied that the Spodeks did not knowingly and voluntarily elect 

to proceed under Contract Disputes Act. See Essex Electro Eng’rs, Inc. v. 

United States, 702 F.2d 998, 1003-04 (Fed. Cir. 1983). Therefore, the Spodeks 

were permitted to seek relief in federal district court. 

II. ANALYSIS

Standard of Review

“The standard of review for a bench trial is well established: findings of 

fact are reviewed for clear error and legal issues are reviewed de novo.” Preston 

Exploration Co., L.P. v. GSF, L.L.C., 669 F.3d 518, 522 (5th Cir. 2012) (internal 

quotation marks and citation omitted). 

A. Applicable Law and Burdens of Proof

The Spodeks argue that federal common law applies, and although the 

government did not brief this issue, the authority cited by the government 

indicates that the government agrees that federal common law is applicable.

We will analyze this dispute regarding a government contract under federal 

common law. See Forman v. United States, 767 F.2d 875, 879 (Fed. Cir. 1985). 

In Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 

1987), the Federal Circuit stated: “[W]e conclude that the government should 

bear the burden of proof with respect to the issue of whether termination for 

default was justified, regardless of the forum and regardless of whose ‘claim’ is 

being asserted. Thus, the burden of proof here was on the government on the 

default issue.” Therefore, it is the government’s burden to demonstrate that 

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the Spodeks defaulted. “Once the government meets its burden, the burden 

shifts to the contractor to demonstrate that its nonperformance was 

excusable.” Lassiter v. United States, 60 Fed. Cl. 265, 268 (2004) (citing DCX, 

Inc. v. Perry, 79 F.3d 132, 134 (Fed. Cir. 1996)).

In addition to the general principles cited above, the lease itself contains 

a provision that addresses liability if the building becomes untenantable. 

Specifically, Paragraph 7 of the lease requires the lessors to maintain the 

premises, “except in case of damage arising from the act or negligence of the 

Government’s agents or employees.” The parties disagree about which party 

bears the burden of proof under this provision. It is the Spodeks’ contention 

that the government must prove not only that the building was untenantable, 

but also that the government did not cause the damage which led to that

untenantable condition. The Spodeks fail to cite any authority in support of

their position. After reviewing cases addressing similar contractual language, 

we find that if the lessee proves the building is untenantable, Paragraph 7 of 

the lease places the burden on the lessor to demonstrate that the damage arose 

from “the act or negligence of the Government’s agents or employees.” See

Russell & Assocs.-Fresno Ltd. v. United States, 1979 WL 16491, at *4, *16-17

& n.14 (Ct. Cl. Mar. 9, 1979); cf., Spodek v. United States, 73 Fed. Cl. 1, 10-12 

(2006). 

B. The Asbestos Came From the Building

Although the district court found that “[t]he source of the released 

asbestos was never determined[,]” our review of the record convinces us that 

the asbestos came from the building itself. 

Tracy K. Bramlett, was retained by the government to serve as an expert 

in this case. The “Factual Description” portion of his March 9, 2009 report 

stated in part:

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Asbestos containing materials identified in the building consist of 

the following: 1. Non-friable floor planking; 2. Non-friable caulk; 3. 

Non-friable transite panels; 4. Non-friable floor tile and mastic; 5. 

Non-friable cove base mastic adhesive; 6. Non-friable texture over 

CMU block walls; and 7. Friable ceiling tiles. 

. . . .

All of the surface samples collected within the USPS Greenville 

facility with the exception of five (5) have been determined to 

contain only Chrysotile asbestos. The other five (5) samples were 

determined to contain minor quantities of Amosite with Chrysotile 

asbestos being the dominate fiber in these samples.

The asbestos survey of the facility indicates that the ceiling tiles 

which are friable contain Amosite asbestos. Chrysotile asbestos 

has been identified in the floor tile, floor tile mastic, caulk, cove 

base mastic and the texture on the CMU block walls in the 

structure. All of these materials are considered non-friable. Nonfriable materials are difficult to get into the air unless they are 

abraded, sanded, cut, or ground. The only area in the facility that 

damaged non-friable materials were identified was on the north 

end of the processing area where there was exposed cove base 

mastic which had been disturbed at one time. In addition, damage 

was noted to the texture on the CMU block walls.

It was also reported that there have been numerous fires in the 

surrounding area and that smoke from these fires entered the 

facility from the return air grills on the south side of the building. 

It is possible that the burning structures may have contained 

asbestos which became airborne and was transmitted into the 

building via the fresh air makeup system. 

From November 27, 1999 to September 25, 2006[,] an asbestos 

fiber release occurred in the Greenville Post Office. It is not 

possible to make a determination of the airborne asbestos levels at 

the time of the release. Air sampling was performed at [the] 

facility in June and October 2006 which did not detect any asbestos 

structures in the air within the facility. The Amosite asbestos 

detected in the wipe samples indicates a minor fiber release from 

the ceiling tiles. The Chrysotile asbestos on surfaces indicates that 

an unknown source either internal or external to the building has

caused a fiber release. 

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There are no industry standards regarding asbestos dust. The 

dust on the horizontal surfaces would not pose a health hazard to 

employees unless the material is disturbed and allowed to become 

airborne. However, the actions, taken by the USPS to evacuate 

the facility were appropriate and timely based on wipe sample 

results which indicate an unknown source of Chrysotile asbestos 

in the building on some horizontal surfaces. A fiber release did 

occur at the USPS Greenville facility. It is unlikely that USPS 

employees have been exposed to asbestos from other sources in the 

building unless materials were disturbed allowing asbestos fibers 

to be entrained in the air.

Although the report stated that asbestos had been released from an 

“unknown source either internal or external to the building,” the only potential 

external sources of asbestos identified in the report were fires in the 

surrounding area which caused smoke to enter the building. But at trial, Mr. 

Bramlett indicated that there was actually a single fire. Specifically, Mr. 

Bramlett was asked: “With respect to the possibility that [the asbestos] came 

from the outside, other than having been told that there was a house fire in 

the area, did you have any other data that you went by?” Mr. Bramlett 

responded: “No.” Mr. Bramlett’s answers to further questions demonstrated 

that he was not aware of the specific details of that house fire. Furthermore, 

our own review of the incident report from that house fire and the deposition 

of the Fire Marshal addressing the same, revealed no evidence that asbestos 

was released during the house fire or even that the house contained asbestos. 

We agree with the Spodeks that Mr. Bramlett’s suggestion that the asbestos 

may have come from outside the building was speculative and not supported 

by the evidence. Additionally, the government has not directed us to evidence 

in the record that there was another plausible source of asbestos which was 

external to the building. Therefore, we find that the asbestos came from the 

building itself.

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C. The Significance of the Building Plans and Specifications

Turning to the asbestos in the building, the district court correctly 

determined that the issue of whether the building plans and specifications 

were relevant to the relationship of the parties was a “Threshold Issue” in its

analysis. In addressing this issue, the district court relied on United Post 

Offices Corp. v. United States, 79 Ct. Cl. 173 (1934) (“UPOC”).

In UPOC, the United States Court of Claims considered whether the 

government or the lessor was responsible for updating the lighting under a 

lease which required the lessor to provide “satisfactory . . . lighting fixtures.” 

Id. at 177. The lessor argued that because the building was constructed with 

the lighting required by the government’s plans and specifications, it was not 

required to update the lighting after the government rearranged the furniture 

and additional lighting was needed. Id. The UPOC court found: 

Under existing law the undertaking exacted two contracts, the 

first to be faithfully executed prior to the execution of the second, 

and it is under the second that this cause of action arises. The 

defendant’s obligation under the first was to enter into a lease of 

the building after its satisfactory completion. The first proposal 

did not fix the terms of the lease to be thereafter agreed upon.

The plaintiff upon the record may not relieve itself of its assumed 

obligations under a ten-year lease by a contention that the plans 

and specifications for a building to be leased determine the 

relationship of landlord and tenant under the separate lease. The 

mere fact that the plans and specifications dealt expressly with the 

same subject matter in some respects is not determinable of the 

issue. In the first instance the lighting system was a 

constructional detail. In the second place, it was a matter of 

meeting satisfactorily the necessities of the tenant with respect to 

lighting during the tenancy.

Id. at 178-79 (emphasis in original). Therefore, even though the building had 

been built to the government’s specifications, the court found that the lessor 

was responsible for updating the lighting under the lease. Id. at 179-80.

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Relying on UPOC, the district court below found, “[a]s a matter of law, 

the duties of the parties in this case are governed by the terms of the lease, not 

by the plans and specifications for the building.” This was a critical juncture 

in the district court’s analysis because this determination necessarily caused 

it to disregard the parties stipulation that “the building was built according to 

plans and specifications required by and approved by the Postal Service,

including the use of asbestos-containing materials” and the related 

stipulations and evidence regarding the plans and specifications. 

The Spodeks argue that the district court should have instead applied 

Poorvu v. United States, 190 Ct. Cl. 640, 644-47 (1970), in which the United 

States Court of Claims addressed who was responsible when a building which 

was being leased by the government began to settle as a result of insufficient 

foundation pilings under the maneuvering area. The Court of Claims found 

that “[t]he documents which constitute the obligations undertaken by [the 

lessors’ predecessors in interest] and the government are the government’s 

advertisement for bids, the agreement to lease submitted by [the lessors’ 

predecessors in interest] and accepted by the government and the lease.” Id. 

at 653. The Poorvu court distinguished UPOC stating: 

It is therefore evident that unlike the obligations undertaken by 

the plaintiff in [UPOC], the contract between [the lessors’ 

predecessors in interest] and the government was of a dual 

nature—to build a post office facility in accordance with the 

government’s plans and to lease it. This was not a case of two 

contracts—one to build and one to lease. Such an interpretation is 

not consonant with the explicit references in the lease, to the plans 

on file with the Post Office Department.

Id. at 654. Based on United States v. Spearin, 248 U.S. 132 (1918), and its 

progeny, the Poorvu court found that by providing plans and specifications the 

government had created an implied warranty that a building “constructed in 

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accordance with [those plans and specifications] . . . would be fit for its intended 

purpose.” 190 Ct. Cl. at 647-652. As the court explained:

I can see no reason why a warranty which would arise if the 

government were the owner should not arise in this situation when 

it is the designerlessee. This conclusion becomes more obvious 

when it is realized that the government could not avoid a lease on 

a building which was built for it, in accordance with plans supplied 

by it, on the ground that the building was not sufficient for its 

needs. In the present situation, as in the situation where it is to 

be the owner of the facility, the government must answer for 

damage incurred because of inadequate plans it has furnished.

Nor does the fact that in this case the proof of the deficiency in the 

plans did not manifest itself until after the building was standing 

for a number of years . . . remove it from the purview of the 

principles enunciated above. It would make little sense to impose 

the obligation of an implied warranty and then limit the life of the 

warranty to the period of construction. It is an implied warranty 

that the plans, if followed, will result in a properly constructed 

building; not merely a warranty that the contractor will be able to 

build a building within a given time period for a certain price.

Id. at 651 (emphasis added). The Poorvu court also rejected the contention 

that the lessor’s obligation to “keep the demised premises . . . in good repair 

and tenantable condition . . . except in case of damage arising from the act or 

the negligence of the Government’s agents or employees,”4 id. at 652, cut off 

the government’s liability: 

The essence of this argument is that even if there is an implied 

warranty that the plans and specifications will be sufficient, when 

that warranty is weighed against the covenant to repair, the latter 

must reign supreme. This cannot be accepted. This court has often 

held that it will not give literal effect to broad exculpatory clauses 

(assuming for the moment that paragraph 7 is such a clause) if the 

result is to negate another provision of that contract. . . . Therefore, 

this paragraph 7 must be read to require the lessor to sustain the 

burden of repairing the premises if those repairs are not 

4 This language is nearly identical to the language of the lease in the present case.

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necessitated by damage caused by insufficient plans and 

specifications.

Moreover, it may be further argued that paragraph 7 imposes no 

duty to repair upon the lessor in this case because of the proviso 

that he is not responsible for repairs ‘arising from the act or the 

negligence of the Government’s agents or employees.’ Since the 

decision to delete the pilings under the parking and maneuvering 

area is directly traceable to the [government], it may be concluded 

that this proviso negates any duty on the lessor to repair in this

instance.

Id. at 652-53 (internal citations omitted). The Poorvu court then determined 

that the government was responsible for the settling of the building. Id. at 

667.

In the present case, the building was built pursuant to the 

“Advertisement for Bids to Lease (Construction),” the Agreement to Lease

which was accepted by the government (“Executed Agreement to Lease”), and 

the lease. Although our review of the record did not reveal the Executed 

Agreement to Lease, the sample Agreement to Lease in the “Advertisement for 

Bids to Lease (Construction)” specifically incorporated the construction 

specifications; the parties stipulated that the plans and specifications required 

“the use of asbestos-containing materials”; Paragraph 19 of the executed lease 

specifically incorporated the Executed Agreement to Lease; and the parties 

have not identified any evidence in the record to suggest that the Executed 

Agreement to Lease did not reference the construction specifications. 

Therefore, we find that the Executed Agreement to Lease incorporated the 

government’s construction specifications. 

Thus, similar to the situation in Poorvu, in the present case there was a 

single agreement because the lease incorporated the Executed Agreement to 

Lease which in turn incorporated the plans and specifications. Accordingly, 

the district court below erred in finding that there were two separate 

agreements. This error was significant because it caused the district court to 

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disregard the government’s construction plans and specifications and the 

related stipulations and evidence regarding the asbestos containing materials 

which were required by those plans and specifications. In short, the district 

court’s finding that the plans and specifications were not relevant was central 

to its conclusions regarding liability. Therefore, we vacate the judgment of the 

district court and remand for reconsideration consistent with this opinion. 

On remand the threshold issue for the district court to consider is the 

existence and scope of an implied warranty as set forth in Poorvu.5

Importantly, the existence of an implied warranty does not necessarily mean 

that the government is strictly liable for all of the consequences of the asbestos 

in the building. For example, if the evidence demonstrates that the Spodeks 

breached their maintenance responsibility under the lease and that such

breach contributed to the release of asbestos which was required by building 

plans and specifications, the district court may find it appropriate to apportion 

the damages “in accordance with the liability of each party.” Spodek v. United 

States, 73 Fed. Cl. at 26. Because the existence and scope of an implied

warranty is a threshold matter, we decline to reach the remaining issues which 

were briefed by the parties.

III. CONCLUSION

The district court erred in finding that the construction plans and 

specifications were a part of a separate agreement than the lease and 

irrelevant as a matter of law. Because the plans and specifications were part 

5 The district court’s opinion contained the following statement: “Plaintiffs failed to 

prove that asbestos-containing materials were a known contaminant when the plans and 

specifications for the bidding were acquired and approved by the Department.” We are 

unaware of any authority which supports the view that the government’s knowledge of a 

defect is an element of an implied warranty. 

 

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of the same agreement as the lease, we vacate the judgment of the district court 

in its entirety and remand for reconsideration in light of this opinion. 

VACATED and REMANDED.

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