June 3, 2015

JM CARRANZA TRUCKING CO. v. UNITED STATES POSTAL SERVICE

PSBCA Nos. 6354, 6367, 6373, 6421, 6422

APPEARANCE FOR APPELLANT:
Joel D. Broida, Esq.
Broida & McKinney, P.A.

APPEARANCE FOR RESPONDENT:
Peter J. McNulty, Esq.
United States Postal Service Law Department

OPINION OF THE BOARD ON EAJA APPLICATION

JM Carranza Trucking Co. (Carranza Trucking) filed a timely application for attorney fees under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504, for $23,645.  We grant the application in part and award $7,881.67.

DISCUSSION

The litigation on which the EAJA application is based consolidated five appeals filed by Carranza Trucking.  These consolidated appeals were (1) the appeal of the termination for default of Contract No. HCR 33547, (2) the appeal of the termination for default of Contract No. HCR 33749, (3) Carranza Trucking’s claim for $678,285.73 for the balance of the contract proceeds for Contract No. HCR 33547, (4) Carranza Trucking’s claim for $45,402.84 for work on Contract No. HCR 33749 performed before termination, and (5) the Postal Service’s claim against Carranza Trucking for $285,549.24 for excess fuel.  See JM Carranza Trucking Co. v. United States Postal Service, PSBCA Nos. 6354, et al., 14-1 BCA ¶ 35,776.¹  We denied Carranza Trucking’s challenge of the two terminations for default, denied its claim for $678,285.73, granted $43,147 of Carranza Trucking’s $45,402.84 claim, and ultimately allowed the Postal Service to collect $81,389.90.  Id.

Carranza Trucking seeks an award of $23,645 under EAJA for the consolidated appeals.  Carranza Trucking did not break down this amount by the attorney fees associated with each appeal or each litigation issue.

To be eligible under EAJA for an award of fees and expenses, an applicant must:
         (1) have been the prevailing party in a proceeding against the United States;
         (2) if a corporation, have had not more than $7,000,000 in net worth and five hundred employees at the time the adversary adjudication
              was initiated;
         (3) submit its application within 30 days of a final disposition in the adjudication;
         (4) in that application, (a) show that it has met the requirements in numbers (1) and (2) above and (b) state the amount sought and include
              an itemized statement of costs and attorney fees; and
         (5) allege that the position of the agency was not substantially justified. 

5 U.S.C. § 504(a)(1), (2), (b)(1)(B); 39 C.F.R. Part 960; Russell Sand and Gravel Co. v. Int’l. Boundary and Water Comm’n, CBCA No. 3781-C(2235), 14-1 BCA ¶ 35,615. 

The Postal Service challenges the application for two reasons.  First, it argues that Carranza Trucking was not a prevailing party with respect to three of the five cases before the Board:  the two terminations for default and Carranza Trucking’s claim for $678,285.73.  Second, as to the remaining cases, while it concedes that Carranza Trucking was the prevailing party, the Postal Service contends that its positions before and during the litigation were substantially justified.²

Although we docketed five appeals and the parties raised numerous arguments, the underlying litigation centered on three basic issues.  Did the Postal Service act in bad faith or otherwise breach the contracts when it withheld contract proceeds because Carranza Trucking exceeded its fuel allowance?  We held that it did not.  Was the Postal Service justified in terminating the two contracts for default?  We held that it was.  Did the Postal Service breach its duty of good faith and fair dealing by allowing damages to continue to accrue once it had actual knowledge of the monthly fuel overages?  We held that it did.³  Based on our review of the record, we conclude the parties spent approximately 1/3 of their time on each of these three issues.

On the first two issues, the Postal Service prevailed.  The Postal Service acted within its contractual rights when it offset contract proceeds on one contract to pay for the fuel overage on a different contract.  Nothing in the record shows that the Postal Service acted in bad faith in withholding the money or terminating the contracts for default.  Accordingly, Carranza Trucking may not recover attorney fees for work related to those issues.  See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (a prevailing party is one that “succeed[s] on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit”); see also Chiu v. United States, 948 F.2d 711, 722 (Fed. Cir. 1991) (an EAJA application should be reduced to account for positions on which the contractor did not prevail).

On the third issue, the Postal Service argues that even though Carranza Trucking prevailed, the Postal Service was substantially justified in not informing Carranza Trucking about the fuel overages.  “When a party has prevailed in litigation against the government, the government bears the burden of establishing that its position was substantially justified.”  Doty v. United States, 71 F.3d 384, 385 (Fed. Cir. 1995); see also Pierce v. Underwood, 487 U.S. 552, 565 (1988) (the agency’s position is “justified to a degree that could satisfy a reasonable person”); Mike L. Noble, PSBCA No. 5046, 05-1 BCA ¶ 32,893.  We held that the Postal Service breached its duty of good faith and fair dealing.  On these facts, we do not believe that a position creating such a breach can be substantially justified.

A reduced fee award is appropriate if the granted relief is a portion of the litigation as a whole.  Hensley, 461 U.S. at 440; The Little Susitna Co., PSBCA Nos. 2216, et al., 93-1 BCA ¶ 25,497.  An EAJA applicant’s success rate is one indicator of the proportion of its requested attorney fees that should be awarded.  See Abcon Assocs., Inc., PSBCA No. 5291, 09-1 BCA ¶ 34,100.

In Haselrig Constr. Co., Inc., PSBCA No. 4609, 03-2 BCA ¶ 32,325, we held that the Postal Service was not justified in opposing half of Haselrig’s claim, but was justified in opposing the other half.  We awarded Haselrig half of its EAJA fees.  Id.  We use the same methodology with Carranza Trucking’s application for EAJA fees.  The three issues in the present litigation were of approximately equal weight.  Carranza Trucking did not prevail on the first two issues.  On the third issue, Carranza Trucking prevailed and the Postal Service was not substantially justified in its position.  Accordingly, we grant one third of the amount sought in Carranza Trucking’s EAJA  application.

ORDER

The application is granted in part.  We award Carranza Trucking $7,881.67.

Peter F. Pontzer
Administrative Judge
Board Member

I concur:

William A. Campbell
Administrative Judge
Chairman

Gary E. Shapiro
Administrative Judge
Vice Chairman

¹ Familiarity with the Board’s decision in JM Carranza Trucking Co. v. United States Postal Service, PSBCA Nos. 6354, et al., 14-1 BCA ¶ 35776, is presumed and the facts found therein will only be addressed as necessary to explain this Decision.

² The Postal Service does not dispute parts (2), (3), and (4) of the test.

³ The parties spent relatively little time addressing Carranza Trucking’s claim for $687,285.73 for the balance of payments due if Carranza Trucking had completed Contract HCR No. 33547.  Additionally, the Postal Service did not dispute that Carranza Trucking had successfully provided trucking services in January 2011 and was entitled to payment for this work.  We reduced the amount claimed by Carranza Trucking from $45,402.84 to $43,147 based on the exhibits in the record.