PSBCA Nos. 5320 and 5321

Appeals of
METCALFE TRUCKING

Under Contract Nos. HCR 44812 and HCR 44832

APPEARANCE FOR APPELLANT:
Tim D. Metcalfe
Metcalfe Trucking

APPEARANCE FOR RESPONDENT:
Melissa M. Mortimer, Esq.
Office of the General Counsel
United States Postal Service

OPINION OF THE BOARD ON MOTION FOR SUMMARY JUDGMENT

            Respondent, United States Postal Service, has filed a Motion for Summary Judgment in PSBCA Nos. 5320 and 5321.^[1]  Appellant, Metcalfe Trucking, was given the opportunity to respond to the Motion for Summary Judgment, but did not do so.  The following findings of fact are made solely for the purpose of deciding the Motion.

FINDINGS OF FACT

            1.  On November 4, 2004, Respondent and Appellant entered into Amendment No. 3 to contract No. HCR 44812 for the transportation of mail between the cities of Mansfield and Toledo, Ohio.  The amendment extended an earlier renewal of the contract and was effective as of October 30, 2004.  The contract performance period was extended to June 30, 2008.  (Appeal File, Tab (AF) 1). 

            2.  On June 29, 2004, Respondent and Appellant renewed contract No. HCR 44832 for the transportation of mail between Mansfield and Loudonville, Ohio and several cities in between.  The new contract performance period was from July 1, 2004, to June 30, 2008.  (AF 2).

            3.  Both contracts contained a Termination for Default clause that allowed Respondent to terminate the contract, or any part thereof, for default for any of the reasons listed in the Events of Default clause (AF 1, p. 32 and AF 2, p. 102).

            4.  The Events of Default clause was incorporated by reference in both contracts and identified numerous events that would justify a termination for default, including:

(g) If the supplier…or a principal owner or a corporate officer, if the supplier is a corporation, (a) has been or is, during the term of the contract, convicted of a crime of moral turpitude affecting his or her reliability or trustworthiness as a mail transportation supplier, such as any form of theft, fraud, embezzlement or assault…or (c) otherwise is not reliable, trustworthy or of good character.

(AF 1, p. 33 and AF 2, p. 103; Purchasing Manual, Clause B-69 (January 1997)).

            5.  On December 3, 2004, Appellant’s owner sent graphic child pornography images over the internet.  These images were flagged by internet provider America Online and led to a warranted search of the owner’s home and computer on January 26, 2005, by the Richland County Sheriff’s office.  (Declaration of S. Balfour (Balfour Decl.), ¶¶5 & 6 and Exh. 2).

            6.  Based on the evidence discovered on January 26, 2005, Appellant’s owner was charged and on May 10, 2005, was convicted of violating Ohio Criminal Statute Revised Code 2907.321 (A)(5), Pandering Obscenity Involving a Minor, a fourth degree felony to which he pleaded guilty.  (Balfour Decl. ¶3 and Exh. 1; AF 8).^[2]

            7.  In June 2005, Appellant contacted Respondent and informed the assigned contract specialist of the conviction of Appellant’s owner, but did not provide any details.  Based on this limited information, the contracting officer initiated an investigation which was conducted by the Postal Service’s Office of the Inspector General (OIG).  (Declaration of K. Harris (Harris Decl.), ¶¶2 & 3).

            8.  On June 27, 2005, Appellant’s owner was fined $4,000 and sentenced to three years of "community control," which required him to report to a probation officer and comply with several conditions, including restricting his contact with minor children and forbidding any internet access.  Any violation of these conditions could result in "a more restrictive sanction including a prison term of 17 months."  (AF 4, pp. 140-41 and AF 8, pp. 168-72). 

            9.  On August 10, 2005, the OIG issued a report to the contracting officer advising him of the details regarding the conviction of Appellant’s owner as discussed in Findings 5 through 8 (AF 8).

            10.  After receiving the OIG report, the contracting officer concluded that the conviction of Appellant’s owner indicated that he had "extremely poor character and morals" and that continuing to contract with Appellant would undermine public confidence in the Postal Service (Harris Decl., ¶6).  On October 7, 2005, the contracting officer issued final decisions terminating HCR Nos. 44812 and 44832 for default based on Appellant's violation of Clause B-69(g)(a) and (g)(c).  (AF 5).  Appellant appealed the terminations (AF 4).

OPINION

            Summary judgment may be granted only after an examination of the record in the light most favorable to the non-moving party reveals that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law.  Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987); AFV Enterprises, Inc., PSBCA Nos. 2691, 3316, 98-1 BCA ¶29,586.

            Respondent contends that the felony conviction of Appellant's owner for pandering and obscenity involving a minor precludes Appellant from disputing the relevant facts supporting the termination for default and entitles Respondent to summary judgment.  Specifically, Respondent contends that the felony conviction of Appellant’s owner was a crime of moral turpitude that resulted in Appellant and its owner being unreliable and/or untrustworthy as a supplier of mail transportation services and its owner being a person not of good character, all bases for default under Appellant's contracts.  Respondent also argues that Appellant's failure to disclose fully the details surrounding the conviction of Appellant’s owner and other concerns related to his truthfulness and honesty with respect to these contracts further demonstrate Appellant's lack of good character, trustworthiness and reliability. 

            As the moving party in this matter, Respondent bears the burden of demonstrating that there are no genuine issues of material fact and that it is entitled to a judgment as a matter of law sustaining the default termination of Appellant’s contracts.  Respondent has met its burden.  

            Respondent relies on sections (g)(a) and (g)(c) of Clause B-69, Events of Default, as grounds for the termination.  In order to justify the termination under section (g)(a) and portions of section (g)(c), Respondent must demonstrate that Appellant and/or its owner were not reliable or trustworthy (Finding 4).  Although Appellant did not respond to the motion, it argues in its Complaint that its owner’s years of service coupled with the Postal Service permitting him to continue performance for an additional three months from the time he notified the contracting officer (Finding 7) of his conviction evidences the existence of a disputed material fact regarding Appellant’s reliability and trustworthiness.  However, we need not decide the issue of Appellant’s reliability and trustworthiness as section (g)(c) also permits the termination of Appellant’s contracts if it is determined that Appellant’s owner is not a person “of good character.”  The Board addressed a similar contract provision in Contract Master Services, Inc., PSBCA No. 273, 1978 PSBCA LEXIS 30, February 28, 1978, aff’d, 225 Ct. Cl. 735 (1980) as follows:

"'Good character' refers to the moral quality of a person, one whose character is as it should be and morally sound, hence who will do what is right and his or her duty."

We find that the possession and dissemination of child pornography by Appellant’s owner and his conviction on felony charges for pandering and obscenity involving a minor demonstrate that Appellant's owner is not a person of good character and support the contracting officer's determination that Appellant’s owner had "extremely poor character and morals" (Finding 9).   This is sufficient to uphold the contracting officer’s exercise of his discretion to terminate the contracts for default under Section (g)(c) of Clause B-69.^[3]  

            Accordingly, there are no material facts in dispute regarding the relevant conduct and character of Appellant’s owner and the undisputed facts serve as a proper basis for the contracting officer’s decision to terminate the contract for default.  Respondent‘s motion for summary judgment is granted and these appeals are denied.

William A. Campbell
Administrative Judge
Chairman

I concur:                                                        I concur:
David I. Brochstein                                        Norman D. Menegat
Administrative Judge                                    Administrative Judge
Vice Chairman                                              Board Member

[1]  Appellant, Metcalfe Trucking, has two additional appeals pending before the Board that arise under the same contracts.  Those appeals are not addressed in this decision. 

[2]  The Ohio criminal statute, ORC Ann. 2907.321, reads in pertinent part:

“(A) No person, with knowledge of the character of the material or performance  involved, shall do any of the following;

* * *

(5) Buy, procure, possess, or control any obscene material that has a minor as one of its participants.”

[3]  Based on this decision, there is no need for the Board to address Respondent's other arguments.