August 22, 2017

TRIUMPH DONNELLY STUDIOS LLC v. UNITED STATES POSTAL SERVICE

PSBCA No. 6683

APPEARANCE FOR APPELLANT
D.J. Donnelly
Executive Chairman
Triumph Donnelly Studios LLC

APPEARANCE FOR RESPONDENT
Richard Y. Rho, Esq.
United States Postal Service Law Department  

OPINION OF THE BOARD

Triumph Donnelly Studios LLC seeks $50,000 for damages caused by the Postal Service’s failure to deliver a Priority Mail package.  The Postal Service asserts that the Board lacks jurisdiction, while Triumph Donnelly argues otherwise.  We agree with the Postal Service, and dismiss the appeal.¹
Factual background
In August 2016, Triumph Donnelly mailed a package by Priority Mail from Seneca, South Carolina, to Los Angeles, California.  The package was never delivered as addressed, and the Postal Service acknowledges that the package is lost (Appeal at 10, 61–62).²
The Postal Service automatically provides $50 of insurance for most packages sent by Priority Mail (Domestic Mail Manual (DMM) § 503.4.2.b).³  When Triumph Donnelly discovered that its package was lost, it filed a claim for $50 under this provision, which the Postal Service paid (Appeal at 2, 64).
Triumph Donnelly then filed a tort claim in September 2016 under the Federal Tort Claims Act (FTCA) seeking $50,000 resulting from the Postal Service’s loss of its package (Appeal at 59).  The claim was denied by the Postal Service’s National Tort Center in October 2016 (Appeal at 47–48).  Triumph Donnelly asked for reconsideration of that decision (Appeal at 27), but that request was denied in March 2017 (Appeal at 8).  The National Tort Center advised Triumph Donnelly that its reconsideration decision was the Postal Service’s final administrative action on the tort claim, but that Triumph Donnelly could file suit within six months in federal district court, which it advised has exclusive jurisdiction over an FTCA action (Appeal at 8).  Instead of filing suit in federal district court, Triumph Donnelly filed an appeal here.  Upon receipt of Triumph Donnelly’s appeal, the Board, on its own initiative, asked the parties to address the Board’s jurisdiction, and both parties filed briefs addressing the issue. 
Jurisdictional analysis
Triumph Donnelly argues that the Postal Service breached a contract when it lost the Priority Mail package.  Because the Board has the authority to resolve contract disputes involving the Postal Service, Triumph Donnelly asserts that we have jurisdiction over a claim relating to a contract for the delivery of the mail, presumably under the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-09.
The Postal Service argues that its relationship with a mail customer is governed exclusively by postal laws and regulations (primarily the DMM), rather than by contract.⁴  In the alternative, the Postal Service argues that even if a contractual relationship exists, the underlying contract is not subject to the CDA, and therefore is beyond the Board’s jurisdiction.  Finally, the Postal Service argues that Triumph Donnelly neither has submitted a claim to a contracting officer within the meaning of the CDA, nor received a contracting officer’s final decision, which are required for the Board to proceed.  On the latter point, Triumph Donnelly responds that the CDA’s claim submission requirement was satisfied by the FTCA claim that it filed and which the Postal Service denied.
In appeals before the Board, the appellant bears the burden of establishing jurisdiction by a preponderance of the evidence.  Brandt v. United States, 710 F.3d 1369, 1373 (Fed. Cir. 2013).  In determining our jurisdiction, we will accept an appellant’s uncontroverted factual allegations as true and construe them in the light most favorable to the appellant.  Estes Exp. Lines v. United States, 739 F.3d 689, 692 (Fed. Cir. 2014).  In the absence of a disputes clause or jurisdiction over a matter assigned to us by the Postmaster General, neither of which are involved here, our jurisdiction is based on the Contract Disputes Act.  The CDA waives sovereign immunity and gives the Board the authority to hear appeals from contracting officer’s decisions issued by the Postal Service and the Postal Regulatory Commission.  41 U.S.C. § 7105(e)(1)(c); Winter v. FloorPro, Inc., 570 F.3d 1367, 1370 (Fed. Cir. 2009).
Initially, we note that Triumph Donnelly’s remedy for its lost Priority Mail package is set out in the Domestic Mail Manual, which in this case where additional insurance was not purchased, limits its recovery to $50.  See generally Blazavich, 29 Fed. Cl. at 375.  Nonetheless, Triumph Donnelly pursued an additional monetary claim against the Postal Service under the Federal Tort Claims Act.  To the extent that Triumph Donnelly still wants to pursue a claim under that statute, it must do so in a federal district court.  See 39 U.S.C. § 409(c); 28 U.S.C. § 1346(b)(1) (providing for exclusive jurisdiction of an FTCA action in the district court); but cf., 28 U.S.C. § 2680(b) (FTCA does not provide for recovery of a claim “arising out of the loss, miscarriage, or negligent transmission of postal matter”). 
As noted above, because the Board’s jurisdiction in this case only can be based on the CDA, we must now decide whether the parties had a contract that is covered by the CDA.  If not, we do not have jurisdiction and the appeal must be dismissed.
By its terms, the CDA “applies to any express or implied contract . . . made by an executive agency for (1) the procurement of property, other than real property in being; (2) the procurement of services; (3) the procurement of construction, alteration, repair, or maintenance of real property; or (4) the disposal of personal property.”  41 U.S.C. § 7102(a).
Triumph Donnelly seeks to invoke the Board’s jurisdiction based on a contract for the provision of services by the Postal Service.  Regarding service contacts, the Federal Circuit has explained that the CDA only applies to such contracts for the procurement of services by the government; it does not apply to the provision of services by the government.  N. Star Steel Co. v. United States, 477 F.3d 1324, 1331–32 (Fed. Cir. 2007); Florida Power & Light Co. v. United States, 307 F.3d 1364, 1371 (Fed. Cir. 2002).  Therefore, the CDA does not apply to any contract between Triumph Donnelly and the Postal Service for the delivery of mail.
This rather straightforward analysis, however, is complicated by a 2006 amendment to the CDA that removed the Postal Service from the statute’s definition of executive agency.⁵  This statutory change raises a potential concern that our jurisdiction is not limited to the four contract types covered by the CDA.  We briefly addressed that question in Joseph J. Fanucchi, M.D., PSBCA No. 5356, 09-2 BCA ¶ 34,230.
In Fanucchi, the Board essentially expanded our jurisdiction beyond the four contract types described in § 7102(a).  The Board held that the CDA applied to an employment contract between a doctor and the Postal Service under which the doctor provided medical services to the Postal Service.  The Board rejected the Postal Service’s argument that the contract was not covered by the CDA because the doctor was an employee, not a contractor.  The Postal Service had argued that only service contracts resulting from procurement actions are covered by the CDA’s service contract category.  The Board also rejected that argument, reasoning that because the Postal Service is not included in the CDA’s definition of executive agency at 41 U.S.C. § 7101(8), our jurisdiction is not limited to the four contract types set out in § 7102(a).  As explained below, this portion of Fanucchi, which has not been relied upon since to provide jurisdiction that otherwise did not exist, misapplied the law, and we will not follow its reasoning.  However, we agree that the Board possessed jurisdiction in Fanucchi.  Jurisdiction was present because the contract at issue was for the acquisition of services by the Postal Service, not for the Postal Service’s provision of services, and therefore was covered by the CDA under 41 U.S.C. § 7102(a)(2).  The Board’s conclusion that it possessed jurisdiction was correct–its analysis was not.
The Third Circuit more recently addressed this issue in Anselma Crossing, L.P. v. U.S. Postal Service, 637 F.3d 238 (3d Cir. 2011).⁶  In Anselma Crossing, a real estate developer sued the Postal Service in federal district court based on claims of breach of contract and promissory estoppel.  Id. at 239.  The government moved to dismiss, arguing that, due to the CDA, the district court did not have jurisdiction over a contract claim against the Postal Service.  Id.  The district court agreed and dismissed the case for lack of jurisdiction.
On appeal, the Third Circuit held that the CDA is ambiguous regarding its applicability to the Postal Service.  Id. at 243-44.  The court, however, recognized that the Postal Service had adopted the CDA by regulation.  Id. at 244, see also 39 C.F.R. § 601.109(a).  The court thus held that it did not have to resolve the statutory ambiguity: the CDA applies to the Postal Service through either the statute itself or the regulation adopting the statute.  Id.  The court then ultimately agreed that the district court correctly dismissed the case for lack of jurisdiction because the CDA requires that contract disputes be filed in either the Court of Federal Claims or the board of contract appeals.  Id. at 240, 244–46.
We agree with the Third Circuit.  Regardless of any possible ambiguity in the statute, we hold that the CDA applies to the Postal Service.  More importantly for our analysis in this case, we hold that the entirety of the CDA applies to the Postal Service—including 41 U.S.C. § 7102.  As noted above, that provision limits the CDA’s applicability to the four contract types listed in that section.  As also noted above, in interpreting that section, the Federal Circuit has held that § 7102(a) does not apply to a contract under which the government provides a service.  N. Star Steel, 477 F.3d at 1331–32; Florida Power & Light Co., 307 F.3d at 1371.  Because the alleged contractual relationship between the Postal Service and Triumph Donnelly would be just such a contract for the government to provide a service, we hold that it is not covered by the CDA.  Simply put, we do not have jurisdiction to decide disputes between the Postal Service and its customers involving delivery of the mail.⁷
As further support for this holding, we note that under 41 U.S.C. § 7105(d)(3), the CDA applies to contract disputes before this Board in the same manner as it applies to contract disputes before the Civilian Board of Contract Appeals.  This language strongly suggests that there is no jurisdictional difference between this Board and the Civilian Board, thereby negating the argument that the change in the definition of executive agency in § 7101(8) somehow expanded this Board’s jurisdiction to include contracts not within the jurisdiction of the Civilian Board—or any other board of contract appeals for that matter.  Had Congress intended such a jurisdictional expansion for our Board alone, we believe it would have set out the change directly in the 2006 amendments to the CDA.  In the absence of such language, we will not infer an expansion to our jurisdiction.  See Vaden v. Discover Bank, 556 U.S. 49, 59 n.9 (2009) (quoting with approval from party’s brief that “when Congress wants to expand jurisdiction, it knows how to do so clearly and unequivocally”).

ORDER

The appeal is dismissed for lack of jurisdiction.⁸ 

Gary E. Shapiro
Administrative Judge
Chairman

I concur:
Alan R. Caramella
Administrative Judge
Vice Chairman

I concur:
Peter F. Pontzer
Administrative Judge
Board Member

I concur:
Diane M. Mego
Administrative Judge
Board Member