PSBCA No. 6165
May 08, 2009
Appeal of
VINCENT D'ORAZIO
PSBCA No. 6165
RETENTION AGREEMENT
APPEARANCE FOR APPELLANT:
Jeffrey L. Rhodes, Esq.
Albo & Oblon, LLP
APPEARANCE FOR RESPONDENT:
Stephen D. Lobaugh, Esq.
Office of the General Counsel
United States Postal Service
OPINION OF THE BOARD ON MOTION TO DISMISS[1]
Appellant, Vincent D’Orazio, has appealed from a contracting officer’s decision denying his claim for damages due to an alleged breach of contract by Respondent, United States Postal Service. Appellant alleges the existence of a contract between him and the Office of Inspector General (OIG), through which Appellant claimed entitlement to certain retirement benefits as a result of his service. Respondent has filed a motion to dismiss this appeal on the basis that Appellant’s claim was not cognizable under the Contract Disputes Act and that the Board, therefore, lacks jurisdiction to consider it.
FINDINGS OF FACT
Solely for the purpose of deciding the motion, we make the following findings of fact:
1. By letter dated March 6, 2003, the Postal Service Office of Inspector General (OIG), through its Acting Director of Human Resources, made a tentative offer of employment to Appellant. The offer letter provided, in part,
“Your basic salary will be … plus … locality pay, for a total salary of …. Your effective date of employment is March 22, 2003.
Please note that you will receive paid health and life insurance benefits as well as free parking. You will also receive a paid move within the Continental U.S. that will be in substitution of a paid retirement move.
Your being hired is contingent upon your signing a two (2) year retention agreement, which is attached.…” (Appeal File, Tab (AF) 8).[2]
2. The retention agreement referred to in the above letter was signed by Appellant and by the “AIG, Internal Business,” and read, in its entirety, as follows:
“In consideration of the United States Postal Service Office of Inspector General (USPSOIG) paying for a relocation within the Continental United States, I agree to remain with USPSOIG for a duration of two years from the date of my appointment (March 22, 2003).
I understand and agree that if I breach the terms of this agreement, I must pay the USPSOIG any money provided to me in connection with the relocation, and such money will be recoverable from me as a debt due to the USPSOIG.” (AF 1).
3. For approximately 12 years immediately prior to beginning his service with the OIG, Appellant had been a civilian career employee of the Department of the Navy (AF 11).
4. Respondent issued a Postal Service Form 50, “Notification of Personnel Action,” at the time Appellant began his employment with the OIG, which Form stated that the personnel action was a “career transfer from Department of Navy, Naval Audit Service with no break in service.” Respondent classified Appellant as an “EAS” employee at grade 25, and indicated that he was eligible for “PCES I” benefits. The Form 50 cited 39 U.S.C. § 1001 as authority for the action. (AF 13, pp. 79, 80, 81).
5. On March 21 and 25, 2003, Appellant executed a PS Form 61, “Appointment Affidavit.” The affidavit asked Appellant to provide and certify certain background information. Appellant signed the affidavit in the signature block for the “Applicant” on March 21 and in the signature block for the “Appointee” on March 25, after his term of employment had begun. (AF 9).
6. Appellant retired effective April 1, 2005, more than two years following the date of his appointment (AF 13, p. 85).
7. At the time of Appellant’s retirement, Respondent’s practice was to provide Relocation Management Firm (RMF) services under its Travel and Relocation Handbook (PS Handbook F-15) as a benefit to retiring PCES employees. Included in the RMF services package was a home purchase service under which the RMF would purchase the retiree’s home at market value if it was unsold after it had been on the market for 60 days. At the time of his retirement, Appellant had requested the use of RMF services, including the home purchase service, and his request had been approved. (AF 16 (esp. pp. 3-6), 14, 15).
8. In November 2005, Appellant contracted to purchase a new home and in December 2005, he contacted the RMF to begin the process of obtaining home purchase benefits in connection with the sale of his existing home (AF 3, att. 5).
9. In a directive issued on December 21, 2005, the Postal Service changed its policy with respect to the relocation benefits available for PCES retirees. In relevant part, the home purchase benefit was eliminated for those executive retirees, including Appellant, who had not completed their moves by that date. Sometime later, Appellant became aware of the change through correspondence with a representative of the RMF. (AF 3, att. 7, 8, 9).
10. By letter dated December 3, 2007, Appellant filed a certified claim under the Contract Disputes Act (CDA) seeking payment in the amount of $150,752 plus interest, based on an alleged breach of contract by Respondent. Appellant alleged that he had been hired under a two-year contract through which he had been promised home purchase benefits, but that those benefits had been denied to him upon completion of his two-year employment period. (AF 4).
11. In a letter dated February 5, 2008, and identified as a final decision under the CDA, a contracting officer denied Appellant’s claim in its entirety. The contracting officer reasoned that the applicable retiree benefits were as specified in Handbook F-15; that Respondent had the right to amend its rules and regulations as it saw fit – including those set out in the Handbook; and that Appellant received the same retiree benefits as all other executive retirees at that time. (AF 3). Appellant filed an appeal of the February 5 decision with this Board.
12. In Appellant’s Complaint, Count One alleged entitlement to damages based on a breach of contract theory, citing the language of the retention agreement (Finding 2) as the contractual basis. Count Two alleged entitlement to damages on a quantum meruit basis. In lieu of filing an Answer, Respondent filed a motion to dismiss the appeal, alleging that the Board lacks jurisdiction to resolve this dispute on either a contractual or quantum meruit basis. Appellant was given the opportunity to respond to the motion and did so.
DECISION
Respondent argues that this dispute over entitlement to employment benefits cannot be resolved as a matter of contract inasmuch as such disputes are matters of federal employment governed by statutory and regulatory provisions and not by contract. Respondent contends that Appellant served by “appointment” and not under a contract and, therefore, that pre-employment promises such as the one alleged by Appellant may not be enforced as contract rights. Respondent also argues that even if this dispute were to be viewed as a contract matter, this Board lacks jurisdiction to resolve it since the contract in question was not one for the procurement of services that would be covered under the CDA, citing 41 U.S.C. § 602(a).[3] Finally, Respondent argues that Count Two of the Complaint must be dismissed since it seeks recovery based on an equitable, implied-in-law basis which this Board has no jurisdiction to entertain.
Appellant argues that he had an express contract with Respondent, which obtained consideration from him - i.e., the commitment to remain in his job for two years - above and beyond the statutory terms of his employment in exchange for relocation benefits. Appellant contends that this contract is within the parameters of the CDA and that this Board, therefore, has jurisdiction to resolve this dispute under that statute.
Section 1001 of Title 39 of the United States Code provides, in relevant part:
“(a) Except as otherwise provided in this title, the Postal Service shall appoint all officers and employees of the Postal Service.
(b) Officers and employees of the Postal Service (other than those individuals appointed under section … 1001 (c) of this title) shall be in the postal career service, which shall be a part of the civil service. Such appointments and promotions shall be in accordance with the procedures established by the Postal Service.…
(c) The Postal Service may hire individuals as executives under employment contracts for periods not in excess of 5 years. Notwithstanding any such contract, the Postal Service may at its discretion and at any time remove any such individual without prejudice to his contract rights.” (emphasis added).
With respect to employees who serve by appointment, the Court of Appeals for the Federal Circuit, which is our appellate authority, has generally held that there is a “well-established principle that, absent specific legislation, federal employees derive the benefits and emoluments of their positions from appointment rather than from any contractual or quasi-contractual relationship with the government.”
Chu v. United States, 773 F.2d 1226, 1229 (Fed. Cir. 1985). In addition, the Federal Circuit’s predecessor, the Court of Claims, has stated:
“… the law is well settled that ‘public employment does not, … give rise to a contractual relationship in the conventional sense.’ [citations omitted]. Therefore, plaintiff may not base his theory of recovery on contract law since he was a federal employee. Federal officials who by act or word generate expectations in the persons they employ, and then disappoint them, do not ipso facto create a contract liability running from the Federal Government to the employee, as they might if the employer were not the government.”
Shaw v. United States, 640 F.2d 1254, 1260 (Ct. Cl. 1981); accord Adams v. United States, 391 F.3d 1212, 1221 (Fed. Cir. 2004), quoting Kizas v. Webster, 707 F.2d 524, 535 (D.C. Cir. 1983); Urbina v. United States, 428 F.2d 1280, 1284 (Ct. Cl. 1970).
Respondent argues that Appellant served by appointment and, therefore, as reflected in the above cases, may not bring an action founded on the alleged breach of a contract right. Appellant suggests that Respondent “mischaracterizes” Appellant’s status, noting that 39 U.S.C. § 1001(c), quoted above, allows the Postal Service to hire individuals “under employment contracts.”
Respondent argues that those employees hired under employment contracts authorized by 39 U.S.C. § 1001(c) also serve by appointment. We need not decide that issue because the record evidence does not support Appellant’s contention that he was hired under such a contract. We examine both the applicable statute and the hiring documents in making this determination. E.g., Federico v. United States, 70 Fed. Cl. 378, 384 (2006); Calvin v. United States, 63 Fed. Cl. 468, 473 (2005). Appellant was not hired for a fixed term “not exceeding five years,” which is the sole characteristic of such a contract specified in the statute. Further, the documents used in connection with Appellant’s hiring lead to the conclusion that his employment with the Postal Service[4] was by appointment under the authority of 39 U.S.C. § 1001(b). For example, the use of the equivalent of the PS Form 50 “has been considered one ‘of the usual indicia of civil service status.’” See Calvin v. United States, 63 Fed. Cl. at 473 (2005) (quoting Horner v. Acosta, 803 F.2d 687, 694 (Fed. Cir. 1986)). In addition, that document reflects that Appellant “[transferred] from the Department of the Navy, Naval Audit Service with no break in service,” and there is no indication that Appellant held his prior civil service position other than by appointment. Finally, that Appellant signed the Appointment Affidavit (Finding 5) as the “Appointee” also lends weight to the conclusion that Appellant served by appointment. Federico v. United States, 70 Fed. Cl. at 385. All of these circumstances support Respondent’s assertion that Appellant was “appointed” to his position within the OIG under the authority of 39 U.S.C. § 1001(b).
From this conclusion, the Federal Circuit and Court of Claims cases quoted above mandate that this dispute, which relates to retirement benefits available to Appellant, may not be resolved as a contract dispute, notwithstanding the issuance of a contracting officer’s decision citing the CDA. Frank Baiamonte, PSBCA No. 5274, 07-2 BCA ¶ 33,587. Rather, it is to be governed by statutes and the regulations of the Postal Service, which, under 39 C.F.R. § 211.2(a)(3), include the provisions of the Travel and Relocation Handbook.
Appellant has referred us to a number of cases in which the Court of Claims and the Federal Circuit enforced as contracts recruitment agreements made between the government and military members, Schism v. United States, 316 F.3d 1259 (Fed. Cir. 2002); Grulke v. United States, 228 Ct. Cl. 720 (1981), and to a number of cases in which courts have found that employee suggestion programs constituted the procurement of services under the CDA, Hayes v. United States Postal Service, 859 F.2d 354, 356 (5th Cir. 1988); Piazza v. United States Postal Service, 1989 WL 160991 (D. Mass. 1989); Ridenour v. United States, 44 Fed. Cl. 202 (1999). In the former cases, the court was considering non-pay provisions of the enlistment agreements - specifically, a member’s right to receive particular training specified in the enlistment agreement. In the latter, the courts were considering an employee’s rights under a suggestion program, again a program unrelated to the direct pay and benefits of employment. Under the facts before us in this appeal, we do not consider these cases to represent an exception to the holdings in the cases cited above, which preclude the consideration of pay and benefits matters on a contractual basis. Our jurisdiction under the Contract Disputes Act is limited to appeals “relative to a contract.” 41 U.S.C. § 607(c). Inasmuch as we have determined that the dispute before us here does not relate to a contract, we lack the jurisdiction to consider it. Accordingly, we dismiss Count One on that basis.[5]
With regard to Count Two of the Complaint - alleging entitlement to recovery on an equitable, implied-in-law basis - we agree with Respondent’s argument regarding jurisdiction. We have consistently held that we lack jurisdiction to consider recovery on that basis, e.g., Henry Burge and Alvin White, PSBCA No. 2431, 89-3 BCA ¶ 21,910. Accordingly, Count Two of the Complaint is also dismissed for lack of jurisdiction.
Respondent’s motion to dismiss this appeal is granted, and the appeal is dismissed for lack of jurisdiction.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur: I concur:
William A. Campbell Norman D. Menegat
Administrative Judge Administrative Judge
Chairman Board Member
[1] Administrative Judge Gary E. Shapiro took no part in the Board’s consideration of this appeal.
[2] Documents identified as AF 1-13 are from Respondent’s Appeal File and Supplement. Tabs 14-22 are from Appellant’s Supplement.
[3] “(a) Executive agency contracts. Unless otherwise specifically provided herein, this Act applies to any express or implied contract … entered into by an executive agency for --
…(2) the procurement of services….” (emphasis added).
[4] OIG employees are selected, appointed, and employed “subject to the applicable laws and regulations that govern such selections, appointments, and employment … within the [U.S. Postal Service].” See 5 U.S.C. App. 3 § 8G(g)(2).
[5] Because of this resolution, we address neither Respondent’s argument that this Board would not have jurisdiction over this dispute even if Appellant had been employed under a contract pursuant to 39 U.S.C. § 1001(c), nor its argument that such a contract would not in any event constitute the procurement of services.