Appeals of

HARRIGILL POSTAL SERVICE, LTD.

Under Contract Nos. HCR 39030, 39032, 39036, 39040, 39631, and 39633

PSBCA Nos. 5190-5195,and 5221-5223

APPEARANCE FOR APPELLANT:
Carlisle Henderson, Esq.

APPEARANCE FOR RESPONDENT:
Stephen D. Lobaugh, Esq.

OPINION OF THE BOARD ON MOTION TO DISMISS

            Appellant, Harrigill Postal Service, Ltd., held six mail transportation contracts with Respondent, United States Postal Service.  On August 6, 2004, Appellant gave notice that it would no longer perform services under the six contracts and ceased performance as of that date.  On August 17, 2004, the contracting officer terminated the contracts effective August 6, and Appellant filed timely appeals of each termination.

            In its consolidated Complaint,^[1] Appellant admitted that it had ceased performance, but alleged that it did so because of Respondent’s actions that Appellant contends were breaches of Respondent’s obligations under the contracts.  Respondent filed a motion to dismiss the six appeals, contending that because Appellant admitted repudiating the contract and because the alleged breaches by Respondent that Appellant listed in its Complaint did not make Appellant’s performance impossible, Appellant had failed in each of the appeals to state a claim upon which relief could be granted.  Appellant filed an opposition to the motion, and Respondent replied to Appellant’s opposition.

            Our Board looks upon motions to dismiss an appeal for failure to state a claim with disfavor and will rarely grant them.  Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2784, et al., 90-3 BCA ¶ 23,186.  Respondent’s motion may not be granted “unless it appears beyond doubt that [Appellant] can prove no set of facts in support of [its] claim which would entitle [it] to relief.”  Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957); see Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2784, et al., 90-3 BCA ¶ 23,186; Stauffer Constr. Co., PSBCA No. 1099, 83-1 BCA ¶ 16,353.

            Depending on the circumstances, a material breach of the contract by Respondent may justify Appellant’s refusal to perform.  See Seven Sciences, Inc., ASBCA No. 21079, 77-2 BCA ¶ 12,730; Samson J. Hypolite, PSBCA No. 5266, 06-2 BCA ¶ 33,337, recon. denied, December 28, 2006.  “Whether the contractor has the right to refuse performance depends on the seriousness of the Government’s breach, both the nature of the breach and the impact on the contractor’s ability to perform.”  Seven Sciences, Inc., ASBCA No. 21079, 77-2 BCA ¶ 12,730.

            In its Complaint, Appellant alleges that Respondent breached the contract by, among other things, allowing unauthorized postal employees to change the contract, to impose improper fines, to issue excessive and unwarranted contract irregularity reports, to require Appellant to perform services for which Respondent refused to pay, to refuse to pay for fuel and other adjustments to which Appellant was entitled under the contract, and to interfere with Appellant’s performance in numerous other ways.  It alleges that it stopped performing because of these breaches.  These allegations, if proved, could possibly form the basis for finding that Respondent materially breached the contract.  See Willie Clarence Logan v. Department of State, GSBCA No. 15691-ST, 02-2 BCA ¶ 31,915 at 157,685.  Accordingly, we will not dismiss Appellant’s appeals for failure to state a claim.

            Respondent argues in its motion that certain of Respondent’s actions that Appellant claims breached the contract occurred several years before Appellant ceased performance and were too remote to be the basis for finding a breach.  However, in resolving this motion, we assume that the factual assertions of the Complaint are true and do not look to the evidence or lack thereof in support of them, and we make all reasonable inferences in favor of Appellant.  See New Valley Corp. v. United States, 119 F.3d 1576, 1580 (Fed. Cir. 1997); Overstreet Electric Co., ASBCA No. 53163, 01-2 BCA ¶ 31,470.  Without further factual development, the Board will not evaluate the materiality of any alleged breach.

            Respondent’s motion is denied.

Norman D. Menegat
Administrative Judge
Board Member

I concur:                                                                      I concur:
William A. Campbell                                                     David I. Brochstein
Administrative Judge                                                  Administrative Judge
Chairman                                                                    Vice Chairman

[1]  The six appeals of the contract terminations (PSBCA Nos. 5190-5195) were consolidated with Appellant’s appeals of Respondent’s assessment of reprocurement costs on three of the terminated contracts (PSBCA Nos. 5221-5223).  The appeals of the reprocurement cost assessments are not at issue in this motion to dismiss (See Order dated June 29, 2006).