February 19, 2013

Appeal of

SAMMY'S DELIVERY SERVICE

Under Contract No. HCR 280B0

PSBCA No. 6431  

APPEARANCE FOR APPELLANT:
Sammy Cornelius

APPEARANCE FOR RESPONDENT:
Peter J. McNulty, Esq.

OPINION OF THE BOARD
ON RESPONDENT’S MOTION IN LIMINE

Respondent, United States Postal Service, moves in limine for the Board to prohibit Appellant, Sammy's Delivery Service, to introduce hearing evidence contesting Respondent's entitlement to recover on this claim or the amount thereof.  We deny the motion.

FACTUAL BACKGROUND

 Appellant and Respondent were parties to a mail transportation contract, HCR 280B0, with a term expiring in 2010 (Appeal File Tab (AF) 1).  The contract was renewed, and presently expires in June, 2014 (AF 5).  The original and renewal contracts include different versions of a Fuel Management Program allocating responsibility for fuel used by Appellant in performing the contract (AF 1 at 99, et seq.; AF 5 at 309, et seq.).

On March 17, 2011, Respondent notified Appellant that it owed  $26,366.30 for excess fuel purchased during the expired contract (AF 4 at 231).  The parties then negotiated terms for Appellant's payment to Respondent for that excess fuel (AF 4 at 220-239).  The negotiations did not result in an agreement between the parties.  In a final decision, Respondent's contracting officer established a withholding schedule to recover the $26,366.30 claim (AF 4 at 240).

Appellant responded by "requesting an appeal [of] the repayment decision."  In the same letter, Appellant's principal stated that he "acknowledge[d] the debt and am willing to repay [on different terms]."  (AF 4 at 246).  This letter was not forwarded by the contracting officer to the Board as an appeal.  Instead, a second contracting officer for Respondent sent Appellant a letter declining to alter its imposed withholding schedule unless Appellant agreed to pay 10% interest yielding a higher debt of $30,991.35 (AF 4 at 247).

On December 14, 2011, a third contracting officer for Respondent issued a final decision referencing a $26,366.30 contract claim Appellant owed for excess fuel purchased under the expired contract's Fuel Management Program.  The final decision discussed prior negotiations between the parties concerning a withholding schedule for that amount, and imposed a schedule under which contract proceeds otherwise due Appellant would be offset by a specified amount plus 2.5% interest, until Respondent's contract claim was fully recovered, yielding a total claim amount of $27,507.61.  However, because Respondent had been withholding portions of contract payments otherwise due Appellant, the net amount Respondent claimed was reduced to $23,507.50.  (AF 7).  Appellant timely submitted a notice of appeal from this December 14 final decision which contested any liability for excess fuel usage as well as the payment schedule imposed upon it (AF 8).

DECISION

On February 4, 2013, Respondent filed a motion in limine requesting that the Board prohibit Appellant from introducing evidence at a scheduled February 21 hearing contesting Respondent's entitlement to $26,366.30.  Respondent maintains that the hearing must be limited to the payment schedule it imposed upon Appellant.
The Board discerns three arguments offered by Respondent.  First, it argues that the final decision on which this appeal is based was limited to the withholding schedule, and therefore Appellant may contest only that schedule rather than the underlying monetary claim.
 
Second, Respondent argues that Appellant's failure to have submitted its own monetary claim to the contracting officer contesting liability or damages, or seeking recovery of already withheld contract proceeds requires the Board preclude evidence contesting Respondent's entitlement claim.
 
Third, Respondent argues that in the pre-litigation discourse between the parties, Appellant admitted entitlement and the amount of damages, and so it should be precluded from offering evidence to the contrary in a hearing.
Regarding the first argument – that the final decision is limited to the withholding schedule which should limit the scope of the hearing – Respondent misconstrues the legal import of the contracting officer's decision.  In order to effect a withholding based upon a contract claim as of right, Respondent must issue a final decision.  See Transport Tire Co., GSBCA No. 5750-S, GSBCA No. 5755-S, 80-2 BCA ¶ 14,586; Heptacon Commercial Constr. & Design, Co., DOTCAB No. 2764, 95-1 BCA ¶ 27,307; B.C. Topps, PSBCA No. 2241, 89-1 BCA ¶ 21,563, recon. denied, 89-2 BCA ¶ 21,764; see also, Applied Companies v. United States, 144 F.3d 1470, 1477-78 (Fed. Cir. 1998).  No final decision has been brought to our attention that separately establishes Respondent's contract claim.   The decision at issue identifies the specific dollar amount and contractual basis for the recovery claimed, as well as establishing a withholding schedule.  We therefore construe the decision as asserting Respondent's claim and how it intended to collect that claim.  Without the first element, Respondent would have been unable to establish a withholding schedule as a legal right.  Appellant's appeal of the contracting officer's decision allows the Board to resolve the entire contractual dispute – liability, damages, and withholding schedule - which Appellant plainly intended.   See Complaint, at p. 2; Order and Memorandum of Telephone Conference, February 7, 2013.  Precluding evidence of liability at a hearing, therefore, is inappropriate.

We also reject Respondent's second argument – that for the Board to permit evidence at a hearing contesting liability or damages, or seeking recovery of amounts withheld by Respondent, Appellant must have submitted its own monetary claim to the contracting officer.  The final decision on which this appeal is based (AF 7) is a government claim affirmatively seeking recovery of money from a contractor relating to its contract with Respondent.  See 41 U.S.C. § 7103(a)(3); see also, Placeway Const. Corp. v. United States., 920 F.2d 903, 906 (Fed. Cir. 1990) (set off is a government claim); Sprint Communications Co. v. General Services Admin., GSBCA No. 14263, 97-2 BCA ¶ 29,249 (it is "well established"  that a contracting officer's assertion of a contract right for the government to withhold from its contractor a specified monetary amount qualifies as a government claim).  The appeal of that decision permits Appellant to challenge entitlement to and the amount of the monetary contract claim asserted in that decision.  See Placeway Const., 920 F.2d at 906; Kevin Anderson, ASBCA No. 57738, 12-2 BCA ¶ 35,107.  A separate contractor monetary claim is unnecessary in such circumstances.  See Iowa-Illinois Cleaning Co. v. General Services Admin., GSBCA No. 12595, 95-2 BCA ¶ 27,628 (contract deductions constitute government claims and the contracting officer's decision thereon satisfies CDA whether or not triggered by a contractor's request).

Finally, we reject Respondent's position that Appellant should be precluded from introducing evidence at a hearing denying liability or its amount because Appellant admitted entitlement and the amount of damages in negotiations prior to this litigation.   Any admissions made by Appellant during performance of the contract may serve as evidence but do not preclude Appellant's ability to attempt to persuade the Board that Respondent's claim is not supported by the facts or law.  Respondent is free to utilize such statements during a hearing. 
The motion in limine is denied.
 
Gary E. Shapiro
Administrative Judge
Board Member

I concur:

William A. Campbell 
Administrative Judge
Chairman  

I concur:

Peter F. Pontzer
Administrative Judge
Board Member

¹ Our description of the facts is based on the limited record before us, and is made solely for purposes of deciding the pending motion.

² During a February 5, 2013 telephone conference, the presiding judge orally denied the motion, subject to this subsequent written determination.  See Order and Memorandum of Telephone Conference, February 7, 2013.

³ We do not understand Respondent to be arguing that the first (May 12) final decision (AF 4 at 240) represents a separate entitlement/damages assessment.  Even if it had, however, Appellant's (June 20) reply to that letter "requesting an appeal" (AF 4 at 246) would have served as a timely appeal notwithstanding the contracting officer's failure to have forwarded it to the Board.  See 39 CFR §§ 955.2 and 955.4.

⁴ Had the parties entered into a settlement agreement regarding liability and damages, leaving only the withholding schedule in dispute, an accord and satisfaction may have yielded the result Respondent seeks.  That did not occur, therefore the final decision must be construed to address the entirety of this dispute.

⁵ This is not to say that Appellant was precluded from submitting its own monetary claim, which would have entitled it to recovery of interest were it ultimately successful in its appeal.  See American Federal Contractors, Inc., PSBCA No. 1359, 87-2 BCA ¶ 19,848 at 100,425 (decision withholding funds due a contractor related to contract performance is a cognizable CDA government claim "but if the contractor makes a written claim for the withheld amount, then interest on that portion of the claim recovered would be payable").

⁶ Respondent does not here argue that Appellant has made binding judicial admissions in this regard, nor could it, as the purported admissions on which it relies were made outside this litigation.