Legal Responsibility

Appeal Brief

Appeal Letter

Appeal Analysis

Background

From September 1 through 3, 2021, remnants of Hurricane Ida caused extensive damage throughout portions of New York.[1] Chabad Lubavitch of Bronxville, Inc. (Applicant), a Private Nonprofit (PNP), requested $253,000.00 in Public Assistance (PA) funding to repair damages in a leased building (Facility), including damages to walls, floors, and ceilings. FEMA created Damage Inventory (DI) 1223632 to document the Applicant’s claimed damages.

In a Determination Memorandum dated October 25, 2022, FEMA denied the Applicant’s request for PA funding, finding the Applicant did not demonstrate it was legally responsible to perform repairs to the Facility. FEMA noted that although the Applicant identified itself as a tenant of the Facility, the lease agreement in the administrative record named a private person as the tenant.

First Appeal 

On December 8, 2022, the Applicant submitted its first appeal requesting FEMA approve $253,000.00 in PA funding. The Applicant stated that although its Executive Director signed the lease in his own name as the tenant (Tenant), he was acting on behalf of, and with the permission of, the Applicant. The Applicant asserted it was the legally responsible lessee as it assumed financial responsibility for the lease and all other Facility expenses, including rent, utilities, and insurance. Therefore, the Applicant asserted it was legally responsible to perform disaster-related repairs to the Facility.

The Applicant provided the lease agreement between HDW Stone Place LLC (Landlord) and the Tenant, effective from September 1, 2015, through August 31, 2020, as well as an addendum extending the original lease terms through August 31, 2025.[2] The lease agreement stated that the Tenant was responsible for certain repairs and maintenance of the Facility (e.g., replacing lightbulbs, maintaining Landlord-supplied fixtures, equipment, and furnishings, and making repairs to the interior of the Facility used exclusively by the Tenant) and that any loss or damage to the Tenant’s contents or personal property caused by fire or the elements was the sole risk of the Tenant.[3]

Regarding the Landlord’s responsibilities, the lease stated that the Landlord was responsible for interior structural repairs and exterior repairs.[4] The Landlord was also required to repair broken exterior window glass if damage to the glass was caused by sources outside of the Tenant’s control.[5] Furthermore, the lease stated that “any damage to the [Facility] and [Facility] equipment…resulting from fire, windstorm and other elements, shall be at the sole risk of the Landlord,” requiring the Landlord to insure the Facility and Facility equipment against fire, windstorm, and other elements, and additionally specified that if the Facility became untenantable (i.e., unfit for occupancy) due to damage “by fire, other casualty or the elements,” the Landlord was responsible to “repair and render tenantable that portion of the demised premises damaged or destroyed.”[6]

In a memorandum dated February 1, 2023, the New York State Department of Homeland Security and Emergency Services (Recipient) expressed support for the appeal.

On April 6, 2023, the FEMA Region 2 Regional Administrator denied the appeal. FEMA found that the Applicant did not establish it had legal responsibility for disaster-related restoration of the Facility at the time of the incident.  FEMA stated that even if the Applicant was the named Tenant, the lease did not transfer legal responsibility for disaster-related repairs of the Facility from the Landlord to the Tenant. Rather, FEMA determined that per the lease, the Tenant was only responsible for general repairs and maintenance.

Second Appeal

The Applicant submitted a second appeal to the Recipient on June 6, 2023, requesting $253,000.00 in PA funding to repair damaged walls, doors, windows, flooring, ceiling tiles, electrical and HVAC systems within the leased Facility. The Applicant provides previously submitted documentation as well as a letter from the Landlord, dated May 11, 2023, which states the Applicant is responsible for disaster-related repairs.[7] On August 3, 2023, the Recipient forwarded the Applicant’s appeal with its support.

Discussion

FEMA may provide PA funding for the repair, restoration, reconstruction, or replacement of eligible PNP facilities damaged or destroyed by a major disaster.[8] To be eligible for funding, work must be the legal responsibility of the applicant requesting assistance.[9] To determine legal responsibility for permanent work, FEMA evaluates whether the applicant claiming the costs had legal responsibility for disaster-related restoration of the facility at the time of the incident based on ownership and the terms of any written agreements.[10] An applicant may lease a facility owned by another party, and in that case, FEMA reviews the lease agreement to determine legal responsibility for repair of damage caused by the incident.[11] If the lease does not specify either the owner or tenant as responsible, FEMA considers the owner of the facility legally responsible for the costs to restore the facility.[12]

Here, the lease for the Facility that was applicable at the time of the incident specified that the Tenant was responsible for certain work (e.g., replacing lightbulbs and maintaining fixtures) that can be characterized as ordinary wear and tear. The lease did not expressly assign to the Tenant the responsibility to address extraordinary repairs, or repairs that would be required as a result of a disaster or any other cause beyond the parties’ control. Rather, the lease contemplated that the Tenant’s risk, with respect to fire and other elements, pertained to Tenant-related items like contents and personal property. In contrast, the lease expressly stated the Landlord: (1) was responsible for structural repairs and damage to exterior window glass damaged outside of the Tenant’s control; (2) was responsible to repair damage that rendered the Facility untenantable, if resulting from a fire or the elements; and (3) retained sole risk for any damage to the Facility or Facility equipment resulting from fire, windstorm and other elements. In addition, the lease required the Landlord to insure the Facility and Facility equipment against fire, windstorm, and other elements.

While the Applicant provided a post-disaster letter from the Landlord, dated May 11, 2023, that states disaster-related restoration of the Facility was the legal responsibility of the Applicant, the lease in effect at the time of the incident clearly demonstrates the Landlord retained legal responsibility to repair damage to the Facility, such as damage to walls, floors, and ceilings, resulting from the elements.[13] Therefore, the Applicant has not demonstrated it had legal responsibility for disaster-related repairs to the leased Facility at the time of the incident.

Conclusion

The Applicant has not demonstrated it was legally responsible for disaster-related repairs to the leased Facility at the time of the incident. Therefore, this appeal is denied.