Appeals of

GEORGE JERRY MALONE

PSBCA Nos. 6129 and 6135

Under Contract No. HCR 401A5

APPEARANCE FOR APPELLANT:
David P. Hendel, Esq.
Sarah M. Graves, Esq.
Akerman Senterfitt Wickwire Gavin

APPEARANCE FOR RESPONDENT:
Joseph Anzalone, Esq.
United States Postal Service

OPINION OF THE BOARD

            Respondent, United States Postal Service, terminated for default a mail delivery contract held by Appellant, George Jerry Malone, because he refused to deliver mail to part of his route along a road he considered unsafe.  Appellant appealed the termination as well as Respondent’s demand for costs associated with providing service on the route after Appellant’s termination.

            The appeals were consolidated and, at the election of the parties, are being decided on the record without an oral hearing in accordance with 39 C.F.R. §955.12.  At Appellant’s request, the parties were allowed oral argument before the Board in addition to filing written briefs.  Appellant elected application of the Board’s accelerated procedures, 39 C.F.R. §955.13.  Only entitlement will be addressed.

FINDINGS OF FACT

            1.  On March 12, 2004, Respondent renewed Appellant’s contract HCR 401A5 for delivery of mail to customers’ mailboxes along a route originating in the Hardinsburg, Kentucky Post Office.  The contract specified that the minimum-sized vehicle to be used was a passenger car.  The term of the contract was from July 1, 2004, to March 31, 2008, at an annual rate of $41,418.  (Appeal File, Tab (“AF”) 25; Affidavit of George Jerry Malone (“Malone Aff.”), ¶ 4; Joint Stipulations of Fact (“Stip.”) 2).

            2.  The contract required that

“[t]he supplier [Appellant] shall carry all mail tendered for transportation under this contract, whatever may be its size and weight, with certainty, celerity, and security, in accordance with the operating schedule and between the points fixed in the schedule, as modified from time to time pursuant to this contract.”

(AF 25, Contract Clause B.3.a, Sanctity of the Mail (Appeal File, Page (“p.”) 95)).

            3.  Contract Clause B.6, Safety Requirements, provided, “Extreme caution, even to the extent of stopping operation if necessary, shall be exercised by drivers when hazardous road or weather conditions prevail.”  (AF 25, Contract Clause B.6.d (p. 102).

            4.  The contract’s Changes clause authorized Respondent to impose unilaterally minor route extensions and changes in the line of travel (“Minor Service Changes”), provided the resulting service would cause Appellant’s annual rate of pay to be increased by no more than $2,500 (AF 25, Contract Clause H.8, CHANGES (TRANSPORTATION) (Clause B-67) (January 1997), subsection a (1) (p. 116)).

            5.  The contract’s Termination for Default clause authorized Respondent to terminate the contract if Appellant failed to complete the requirements of the contract within the time specified (AF 25, Contract Clause H.4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified) (p. 113)).

            6.  In an Events of Default clause, the contract identified grounds that would justify termination under the Termination for Default clause.  These included Appellant’s failure to perform service according to the terms of the contract and failure to follow the instructions of the contracting officer.  (AF 25, Contract Clause H.5, EVENTS OF DEFAULT (Clause B-69) (January 1997) (p. 114)).

            7.  The contract authorized Respondent to acquire similar, replacement services after a termination for default, “and the supplier [Appellant] will be liable to the Postal Service for any excess costs.”  (AF 25, Contract Clause H.4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified), subsection b (p. 114)).

            8.  Two customers along Appellant’s route received their mail delivery at mailboxes on a two-lane, paved road along the route’s original line of travel, even though their houses were about one-half mile away, along a county-owned and -maintained gravel road (Appellant’s Supplement to the Appeal File, Tab (“SAF”) 31; Malone Aff., ¶ 5).

            9.  In 2006, one of the customers requested that the Hardinsburg Postmaster extend mail delivery service to his house (AF 31 (p. 158); Malone Aff., ¶ 6; Declaration of T. Reasons (“Reasons Decl.”), ¶ 3; Stip. 5, 6).

            10.  During the time relevant to this appeal, when considering customer requests for service extensions, the local postal officials followed Rural Route Extension Guidelines issued December 9, 2004, by the Kentuckiana District Office in Louisville.  Those guidelines required that before granting a service extension request, the postmaster must determine that the roads to be traveled pursuant to the service extension are public roads that are maintained and passable for carrier vehicles on a year-round basis.  The extension should also include a safe place to turn the delivery vehicle around, preferably without requiring the carrier to back up.  (AF 23; Declaration of C. Butler (“Butler Decl.”), ¶ 2).

            11.  The postmaster initially denied the customer’s request, believing that the gravel road was too narrow and that a ditch along one side of the road made it unsafe for a mail delivery contractor to drive on it to the customer’s house (SAF 31 (p. 158); Amended Complaint Exhibit 4; Reasons Decl., ¶ 3; Stip. 9).  The customer was insistent, however, and continued to press for delivery service to his house (SAF 27; Malone Aff., ¶ 14).  Respondent’s officials inspected the gravel road on two other occasions in 2006, and again in April 2007, but concluded each time that the road was unsatisfactory for a service extension (Reasons Decl., ¶¶ 4-6; Butler Decl., ¶ 3).

            12.  On or about April 30, 2007, the customer submitted another formal request that his mail be delivered to a mailbox at his house (AF 18, 19; Reasons Decl., ¶ 7 and Exhibit A; Stip. 10).

            13.  In May 2007, before Respondent took final action on the customer’s latest request, the county performed work on the road, doing additional grading and adding gravel (AF 26; Declaration of R. Powers (“Powers Decl.”), ¶ 6).

            14.  After the work, the condition of the road was as follows:  The road was a flat, gravel road, with the gravel surface varying in width from 10 feet to 12 feet 8 inches.  There were grassy shoulders on at least one side of the road for substantial portions of the road, but in most stretches, there was a ditch of varying depths near one edge of the road.  Three culverts crossed beneath the road, the ends of two of which were somewhat obscured by tall grass.  Two vehicles could not have passed each other on the gravel surface of the road.  However, in many places there were solid pull off areas where two vehicles could easily pass one another by one or both pulling slightly onto the grassy shoulders.  The road was straight and level to the first house (about 1,900 feet), followed by a right turn and another straight 500 feet to an S-curve leading to the second house.  There was good visibility along the road, including around the turns, and no obstructions along the sides that would prevent a clear view of the road ahead.  As a result, an oncoming vehicle would have been plainly visible at a substantial distance.  The road dead-ended just beyond the second of the two homes on it, so there was very little traffic.  A cul de sac at the end of the road permitted a driver to turn around without backing up, and there were other places along the extension where the carrier could turn around.  (AF 5 (p. 11), 13, 14, 16; SAF 36, 37, 38, 39; Amended Complaint Exhibits 2, 3; Malone Aff., ¶¶ 8, 17, 19; Declaration of K. Harris (“Harris Decl.”), ¶ 12; Reasons Decl., ¶¶ 8, 9, 11; Butler Decl., ¶¶ 3, 4, 5; Declaration of T. Shirley, ¶¶ 5, 6; Supplemental Affidavit of George Jerry Malone; Affidavit of J. Pigman and Exhibit C thereto).

            15.  The road met State safety mandates for rural roads, which meant, among other things, that it was safe for passenger vehicle travel, and school buses would be permitted to drive on it (Powers Decl., ¶¶ 4, 5).  UPS and Fed Ex trucks, larger than Appellant’s vehicle, used the road to make deliveries (AF 9; Declaration of T. Shirley, ¶ 7).

            16.  After the county improvements, the postmaster inspected the road and concluded that driving on the gravel road to make mail deliveries would not be unsafe (AF 14, 16; SAF 28, 29, 30, 31 (p. 159); Malone Aff., ¶ 16; Butler Decl., ¶ 1).

            17.  The postmaster approved the customer’s request to move his mail box from the paved road to the gravel road in front of his house and, on July 10, 2007, advised Appellant of the pending relocation of the box (AF 15, 18; SAF 34; Reasons Decl., ¶¶ 10, 12).

            18.  Appellant objected to the relocation of the box, contending that the gravel road was unsafe notwithstanding the improvements.  Appellant stated he had no intention to provide delivery service along the gravel road.  (AF 15, 17; SAF 32 (p. 167); Reasons Decl., ¶ 12; Harris Decl., ¶ 3; Stip. 12)).

            19.  On July 12, 2007, the postmaster again inspected the gravel road, this time accompanied by the District Safety Manager of the Kentuckiana District, who had significant experience over the previous fourteen years inspecting rural roads for Respondent to gauge their safety for delivery of mail.  The District Safety Manager had inspected the road in 2006 and, at that time, had agreed with the postmaster’s denial of a service extension.  This time, her inspection of the road as improved by the county led her to conclude that it was safe for vehicle travel, and she reported to the contracting officer that it was safe for mail delivery service by a driver exercising regular driving precautions.  (AF 13, 14, 15; Reasons Decl., ¶ 13; Harris Decl., ¶ 5; Butler Decl., ¶¶ 1, 3, 4).

            20.  On July 16, 2007, the contracting officer executed PS Form 7440, Contract Route Service Order, unilaterally amending the contract to add the service extension to Appellant’s route (See Finding 4).  The Order increased the annual mileage by 484.9 miles, adjusted the schedule to reflect an additional 15 hours annually, and officially extended the line of travel for Appellant’s route to include delivery along the gravel road.  The Order increased Appellant’s contract pay by $386.69 per year effective May 30, 2007.  (AF 12, 24; Harris Decl., ¶ 6).

            21.  When the postmaster told Appellant on August 1 that he would be required to deliver along the gravel road, Appellant again protested.  The postmaster agreed to inspect the road with Appellant, and on August 2, they visited the road together and discussed Appellant’s concerns.  After that visit, the postmaster still felt the road was safe for mail delivery.  On August 3, 2007, the postmaster directed Appellant to provide mail service directly to the relocated box and to begin doing so on the next day, Saturday, August 4.  (Reasons Decl., ¶ 14; Stip. 14; Malone Aff., ¶ 25).

            22.  On August 3, the contracting officer spoke separately by telephone to the postmaster and Appellant regarding their joint inspection of the road the previous day.  He advised Appellant that he must begin delivering to the relocated box the next day.  The contracting officer pointed out that the unilateral Contract Route Service Order (Finding 20) had changed the route’s official line of travel and that Appellant’s refusal to serve the box put him in default of his contractual obligations.  (AF 9; Harris Decl., ¶ 7).

            23.  After the customer’s box was relocated to the customer’s house on August 4, Appellant refused to deliver to it, delivering all other mail for the route, but returning mail for the relocated box to the post office (AF 8, 15; SAF 33; Malone Aff., ¶¶ 25, 28, 30; Harris Decl., ¶ 6; Reasons Decl., ¶ 15; Stip. 15, 16).

            24.  On the morning of August 6, Appellant was asked to participate in a telephone conference with a number of postal officials, including the District Safety Manager.  During the conference, the participants discussed the safety of the gravel road.  (Malone Aff., ¶ 29).

            25.  Based on Appellant’s failure to deliver to the relocated box, the contracting officer suspended his performance under the contract effective August 6, 2007 (AF 8; Malone Aff., ¶ 31; Reasons Decl., ¶ 15 and Exhibit B; Harris Decl., ¶ 8; Stip. 17).

            26.  After Appellant was suspended, another mail delivery contractor delivered the route.  She felt no concern for her safety while delivering mail along the gravel road.  (Reasons Decl., ¶ 15 and Exhibit B; Declaration of T. Shirley, ¶ 8).

            27.  On August 14, 2007, the contracting officer issued Appellant a Show Cause Notice instructing Appellant to provide, no later than August 22, 2007, any explanations or excuses for his failure to perform the services required by the contract.  He cited Appellant’s refusal to deliver mail to the relocated box notwithstanding the contracting officer’s instruction on August 3 that he do so.  He pointed out that Respondent’s safety officials had found the gravel road to be safe.  (AF 7; Malone Aff., ¶ 32; Harris Decl., ¶ 9; Stip. 18).

            28.  Appellant responded on August 21, arguing that the gravel road remained unsafe for year round travel and that the county improvements were minimal.  He concluded by restating his refusal to provide mail delivery service on the gravel road.  (AF 6; Malone Aff., ¶ 33; Harris Decl., ¶ 10).

            29.  On or about August 31, 2007, the contracting officer visited the route with the District Safety Manager.  He personally inspected the gravel road and concluded that it was safe for mail delivery.  (Harris Decl., ¶ 12; Butler Decl., ¶ 5).

            30.  By final decision dated September 12, 2007, the contracting officer terminated Appellant’s contract for default for abandonment of service and refusal to follow the directions of the contracting officer (AF 4; Malone Aff., ¶ 36; Harris Decl., ¶ 13; Stip. 19).  Appellant’s timely appeal of the termination was docketed as PSBCA No. 6129.

            31.  By final decision dated October 16, 2007, the contracting officer assessed against Appellant Respondent’s costs associated with providing replacement service on the route after Appellant’s termination.  The only damages claimed were for the salary costs of Respondent’s employees who prepared and administered a solicitation for replacement services and evaluated the offers and awarded the contract.  The total claimed was $725.49.  Against this amount, Respondent credited Appellant with $571.96, the amount of funds owed Appellant at the time of the suspension but withheld by Respondent.  Respondent claims the difference, $153.53, as reprocurement costs in this proceeding.  (AF 3; Malone Aff., ¶ 37; Harris Decl., ¶ 14; Stip. 20).  Appellant’s timely appeal of the reprocurement cost assessment was docketed as PSBCA No. 6135.

DECISION

            Respondent correctly argues that Appellant’s refusal to deliver mail to the customer’s mailbox along the route extension justified the termination of his contract for default.  Once the contracting officer exercised Respondent’s right to impose a Minor Service Change through a unilateral amendment to the contract (Findings 4, 20), the extension along the gravel road became part of Appellant’s route and delivery to the relocated mailbox was part of Appellant’s duty under the contract.[1]  See Lee Ann Wyskiver, PSBCA No. 3621, 95-2 BCA ¶ 27,755 at 138,376.  Appellant’s refusal to deliver mail to the relocated box breached a material requirement of his contract that he deliver all mail tendered in accordance with the contract “as modified from time to time” (Finding 2).  This refusal to perform was a sufficient basis to sustain a default termination (Findings 5, 6), see Frank Baiamonte, PSBCA Nos. 5297, 5324, 08-1 BCA ¶ 33,852, recon. denied, 2008 WL 2910567 (P.S.B.C.A.), July 29, 2008; William Roach, PSBCA No. 3335, 97-1 BCA ¶ 28,735 at 143,414; Roger Dean Barrett, PSBCA No. 2490, 89-3 BCA ¶ 22,220, and shifts the burden to Appellant to present evidence of excusable causes for his refusal, Pamela J. Sutton, PSBCA No. 1622, 88‑3 BCA ¶ 21,031 at 106,237, or to show that the termination was an abuse of the contracting officer’s discretion, Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419 at 131,429, recon. denied, 94-2 BCA ¶ 26,951.

            Appellant argues that the gravel road in question was unsafe and that, accordingly, his refusal to deliver to the box on the route extension was excusable and that the contracting officer abused his discretion by terminating the contract for default on that ground.  See Estelle McCormick, PSBCA No. 1030, 83-2 BCA ¶ 16,574; John Horsley, PSBCA No. 1464, 86-3 BCA ¶ 19,141, recon. denied, 87-1 BCA ¶¶ 19,413, 19,450.  Appellant submitted the report of an expert in highway safety who had been asked to address whether the road in question “was safe for daily travel by Appellant as a contractor delivering mail for the U.S. Postal Service.”  The expert noted the hazards that faced Appellant if he were required to deliver along the gravel road:  the road was too narrow for two opposing vehicles to pass one another while remaining entirely on the gravel surface; it was unsafe for a vehicle to leave the gravel road at certain “constriction points” where culverts or a ditch limited shoulders; and at some points the depth of the ditch and/or the presence of culverts in those ditches made entering the ditch to avoid an oncoming vehicle hazardous.  He concluded that Appellant’s decision not to deliver the mail on the section of road at issue “was reasonable and based on significant safety concerns.”

            We are not obligated to adopt any particular conclusion or opinion reached by an expert witness, see Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1325 (Fed. Cir. 1987), and it is our responsibility to determine the weight (if any) to be given all of the evidence, whether it be expert or non-expert testimony, see id.; J.C. Equipment Corp. v. England, 360 F.2d 1311, 1315 (Fed. Cir. 2004).  Also, we may substitute our own common sense for the opinion of an expert.  Gulf Contracting, Inc., ASBCA Nos. 30195, 32839, 90-1 BCA ¶ 22,393 at 112,521.  Based on the entire record, including Appellant’s expert’s opinion, we conclude that the gravel road was not unsafe for mail delivery.  This conclusion and the supporting findings (Findings 14, 15) derive from the statements of the witnesses, the documentary evidence, and our own impressions of the road gained from our review of the many photographs in the record.  See Publix Delivery Serv., Inc., PSBCA No. 477, 79-1 BCA ¶ 13,863 at 68,021.  The terrain of the road is flat, and visibility along the road is unimpeded (Finding 14).  Vehicles approaching each other would have sufficient time to adjust their travel to avoid passing at the “constriction points” of concern to Appellant’s expert.  While the road is narrow, and there are culverts and a ditch to contend with, we find that the road was not unsafe for travel by Appellant, provided, as the District Safety Manager stated, the driver exercised regular driving precautions (Finding 19).[2]  The contracting officer, relying on the advice of responsible postal officials as well as his own inspection of the road, reasonably found that the road was safe for mail delivery.  Appellant was not excused from performing the disputed part of the route, and the contracting officer did not abuse his discretion by terminating the contract when Appellant refused to deliver mail as required by his contract.

            Appellant next argues that Respondent breached the duty of good faith and fair dealing implicit in every contract by failing to consider Appellant’s safety concerns about the route extension and to address the merits of those concerns with him.  We disagree.  The record reflects that the District Safety Manager and other postal officials made a conscientious and thorough review of Appellant’s concerns about the safety of the gravel road.  The postmaster made several trips to inspect the road; the District Safety Manager made at least three visits; and the contracting officer personally visited the route to see for himself the conditions Appellant complained of (Findings 16, 19, 21, 29).  The postmaster, the contracting officer, the District Safety Manager and other postal officials discussed those issues with Appellant at various times (Findings 21, 22, 24).  That they did not come to the conclusion desired by Appellant does not mean they did not give adequate attention to his concerns or that Respondent breached the implied duty of good faith and fair dealing.  See Jack Swedberg, PSBCA No. 3876, 96-2 BCA ¶ 28,337.  We find on this record that Respondent fully considered and reasonably addressed Appellant’s safety concerns.[3]

            Appellant’s reliance on our decision in Samson J. Hypolite, PSBCA No. 5266, 06-2 BCA ¶ 33,337, recon. denied, 07-1 BCA ¶ 33,468, is misplaced.  In Hypolite, Respondent’s actions had made it virtually impossible for the contractor to perform his contractual duties, thus breaching Respondent’s implied duty of good faith and fair dealing.  In this appeal, Appellant has not pointed to conduct by Respondent’s officials that interfered with or impeded his performance.

            In conclusion, Appellant’s refusal to deliver mail along the route extension was not excusable, and the contracting officer did not abuse his discretion by terminating the contract for default based on Appellant’s refusal to perform duties required by the contract.  Further, Respondent did not breach the implied duty of good faith and fair dealing.  The appeal of PSBCA No. 6129 is denied.

            In PSBCA No. 6135, the Board is asked to consider Respondent’s entitlement to recover its reprocurement costs.  The contract authorizes recovery of such costs (Finding 7), and Respondent, by demonstrating that it incurred administrative costs associated with obtaining replacement service for Appellant’s route after the termination, has shown its entitlement to recover.  See Paul A. Mason, PSBCA No. 1335, 86-1 BCA ¶ 18,722; Gene Gibler, PSBCA No. 1278, 1985 WL 16415 (P.S.B.C.A.), February 26, 1985.  Although Respondent has not claimed costs associated with performance of the service after Appellant’s termination, as it was Appellant’s default that required Respondent to find a replacement contractor, Respondent may recover its reasonable administrative costs.  See Todd’s Letter Carriers, PSBCA Nos. 4904, et al., 05-2 BCA ¶ 33,121 at 164,137.  Calculation of the amount of recovery is remanded to the parties.

Norman D. Menegat
Administrative Judge
Board Member

I concur:                                                                     
William A. Campbell                                    
Administrative Judge                                   
Chairman                                                      

[1] Appellant has not contested Respondent’s right under the contract to impose a Minor Service Change unilaterally and has not challenged Respondent’s determination that the added extension of service caused an increase to the contract compensation of less than $2,500 per year (Findings 4, 20).

[2] Appellant’s expert also opined that adverse weather conditions could create particularly hazardous conditions along the road.  Occasional weather-related hazardous conditions permit and even require a mail delivery contractor to halt service when necessary for safety (Finding 3), but we reject Appellant’s argument that the cited contract provision gives authority to Appellant to decide whether the road is safe for regular use (Appellant’s Reply Brief, pp. 6-7).  Contract Clause B.6.d (Finding 3) allows ad hoc judgments by the contractor to determine whether the contract can be performed safely in the face of occasional hazardous conditions.  That clause does not give a contractor absolute discretion to stop performance when it claims to have encountered hazardous conditions, see Arnette B. Fleming Hauling, Inc., PSBCA No. 2872, 91-2 BCA ¶ 23,868 at 119,567, and it does not authorize Appellant to make the final judgment on the safety of the gravel road at issue for regular delivery services.  See Estelle McCormick, PSBCA No. 1030, 83-2 BCA ¶ 16,574 at 82,416; Publix Delivery Serv., Inc., PSBCA No. 477, 79-1 BCA ¶ 13,863 at 68,022.

[3] In view of this conclusion, we need not decide the precise scope of Respondent’s duty, if any, to discuss the route extension with Appellant before unilaterally imposing it under the authority granted Respondent in the Changes clause of the contract (Finding 4).  See Lee Ann Wyskiver, PSBCA No. 3621, 95-2 BCA ¶ 27,775 at 138,376 (“Under the Insignificant Minor Service Changes clause of Appellant’s contract, the contracting officer was authorized to order a minor change . . . without consulting with Appellant.”).