Appeal of
HOTEL SYSTEMS, INC.
Under Contract Nos. 489990-87-V-A001, 482271-86-V-A007, 489990-87-V-A008, 482271-84-V-A018, 482271-86-V-A095, 482271-85-V-A020
PSBCA Nos. 3253-3258

APPEARANCE FOR APPELLANT:
G. Michael Gruber, Esq.

APPEARANCE FOR RESPONDENT:
Judith L. Schlossberg, Esq.

OPINION OF THE BOARD ON MOTION FOR SUMMARY JUDGMENT

            Hotel Systems, Inc., Appellant, has appealed the denial of its claims for the cost to repair a number of vehicles Appellant leased to the Postal Service, Respondent, which Appellant contends were damaged while in Respondent's custody.  The contracting officer denied all of the claims as untimely, not addressing the merits, and these appeals followed.  Respondent has filed a motion for summary judgment, contending it is entitled to judgment as a matter of law because the claims were untimely filed.  The following findings of fact are made for purposes of this motion.

FINDINGS OF FACT

            1.  The Postal Service's Dallas Procurement Service Office awarded Appellant the 6 contracts at issue in these appeals during the period 1984 through 1986 (Appeal File for PSBCA No. 3253 ("AF 3253") Tab 8; AF 3254 Tab 8; AF 3255 Tab 8; AF 3256 Tab 6; AF 3257 Tab 8; AF 3258 Tab 8).

            2.  Each of the contracts included the "General Provisions for Vehicle Hire Contracts," PS Form 7476, July 1980, General Provision GP-6 of which provides, in part:

"LIABILITY PROVISIONS.

(a) Contractor's Vehicles.  The Postal Service shall be responsible for loss of, or damage to, the Contractor's vehicles while in its custody only when caused by the act or negligence of any officer or employee of the Postal Service acting in the scope of his employment, provided that such officer or employee is not the Contractor, an employee of the Contractor, or a dependent of the Contractor.  In no event shall the Postal Service be responsible for ordinary wear and tear.  The Contractor shall file a claim with the Contracting Officer within sixty days after the earliest of the following dates:

(1)  the date that the vehicle is returned to the custody of the Contractor or agent for servicing, repair, or as a result of termination or expiration of the contract,

(2)  the date of receipt by the Contractor or his agent of written notice from the Contracting Officer advising of damage to the vehicle, or

(3)  the date of receipt by the Contract [sic] or his agent of notification that the vehicle is no longer required by reason of termination or cancellation."  (Id.)

            3.  General Provision GP-8 (c) of each of the contracts permitted either party to cancel the contract after the second year of performance by giving notice to the other 120 days in advance of the effective date of the cancellation (id.).

            4.  Respondent exercised its right of cancellation under 5 of the contracts, establishing effective dates for the cancellations in 1989 (AF 3253 Tab 7; AF 3254 Tab 7; AF 3255 Tab 7; AF 3257 Tab 7; AF 3258 Tab 7).  The term of the sixth contract, number 482271-84-V-A018 (PSBCA No. 3256), expired May 1, 1990 (AF 3256 Tab 6, Tab 3, Declaration of Saundra J. Smith, submitted by Respondent, which appears in Tab 3 of each of the appeal files ("Smith Declaration"), ¶ 6).

            5.  The vehicles were jointly inspected and returned to Appellant on March 3, 1989, and April 1, 1989, for the 5 cancelled contracts and on May 15, 1990, for the sixth contract.  Damage to the vehicles noted during the inspection was recorded on the PS Form 4577, "Hired/Borrowed Vehicle Condition Report," prepared for each vehicle (AF 3253 Tab 4; AF 3254 Tab 4; AF 3255 Tab 4; AF 3256 Tab 4; AF 3257 Tab 4; AF 3258 Tab 4).

            6.  On or about November 11, 1991, Appellant submitted to Respondent claims under each of the contracts for the cost of repairing damage to a number of the vehicles (id.).  The date of receipt by the contracting officer is not apparent from the record, but for purposes of this motion we find the claims were filed no earlier than November 11, 1991.

            7.  In separate decisions issued during February and March of 1992, the contracting officer denied the claims under each of the contracts because they were filed beyond the time allowed in the contract (AF 3253 Tab 3; AF 3254 Tab 3; AF 3255 Tab 3; AF 3256 Tab 3; AF 3257 Tab 3; AF 3258 Tab 3).  The contracting officer did not reach the merits of the claims, stating in each decision:

"The receipt of the subject claims are considerably outside the time restriction imposed by the contract nor was any reason offered for the late filing.  If the Postal Service had been put on notice that the filing of the claims would be delayed this could have been taken into consideration.  However, since this was not the case the provision of the contract must be adhered to.  Therefore, the subject claims . . . are denied."  (Id.)

Prejudice to the Postal Service Resulting From Late-Filed Claims

            8.  When a lessor's vehicle is damaged while in the custody of the Postal Service, it is the usual practice of the Dallas Procurement Service Office and the postal organizations directly administering the vehicle hire contracts under the control of the Dallas Procurement Service Office to furnish written notice to the contractor and to send a copy of the notice to the contracting officer (Smith Declaration ¶12).  When accumulated damage claims are received from the contractor at the end of the lease, these notices are reviewed by Respondent to determine if the damage had been the subject of a notice, and if so, whether the notice reflected damage resulting from a cause that would relieve the Postal Service from liability, such as third party responsibility or vandalism (Smith Declaration ¶13).

            9.  A review of the Postal Service's files after receipt of Appellant's claims revealed that the files no longer contained copies of all documents that were sent to the contractor during the lease periods (Smith Declaration ¶14).  The record does not identify particular documents or types of documents that are missing or state that this condition exists for all of the contract files relevant to these appeals.

            10.  Many of the postal drivers and others with knowledge of how the vehicles might have been damaged are no longer working at the stations where the vehicles were used (Smith Declaration ¶16).  Documents relating to who was driving a particular vehicle when it might have been damaged were not retained (id.).  The record does not state when these records were discarded.

Payment of Similar Late Claims

            11.  Appellant held two other vehicle hire contracts, 482271-85-V-A024 and 482271-85-V-A002, with the Dallas Procurement Service Office (Appellant's September 28, 1992 Supplemental Appeal File).

            12.  Vehicles covered by these leases were returned to Appellant on July 18, 1989, and November 10, 1989.  Damage noted during inspections of the vehicles when they were returned to Appellant was recorded on the PS Form 4577 for each vehicle (id.).

            13.  In September 1991, Appellant filed accumulated damage claims for a number of the vehicles leased under the A002 and A024 contracts (id.).

            14.  The contracting officer on contract 482271-85-V-A002 disregarded the recommendation of his representative that the claims be denied as untimely, considered the claims on their merits, and on October 28, 1991, approved for payment the amounts requested by Appellant (id.).  By final decisions dated December 18, 1991, the contracting officer for contract 482271-85-V-A024 decided the claims under that contract on their merits, allowing part of each claim and denying part (id.).

DECISION

            Respondent contends it is entitled to judgment as a matter of law because Appellant filed its claims approximately 2½ years (1½ years for contract 482271-84-V-A018 (PSBCA No. 3256)) after return of the vehicles, well beyond the 60-day period allowed in the contracts (Finding 2) for filing such claims.  Appellant argues that there are material issues of fact in dispute and that Respondent is not entitled to judgment as a matter of law.

            A motion for summary judgment may be granted only if no genuine issues of material fact exist.  Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987); Rood Trucking Co., Inc., PSBCA Nos. 3121, 3132, __ BCA ____ (November 6, 1992); On Time Postal Services, Inc., PSBCA No. 2528, 90-2 BCA ¶ 22,698.  For purposes of the motion, doubts concerning factual issues must be resolved in favor of the nonmoving party.   United States v. Diebold, 369 U.S. 654, 655 (1962); Vienna/Vienna, PSBCA Nos. 2505, 2816, 92-3 BCA ¶ 25,042.  It is not the role of the Board in considering a motion for summary judgment to resolve the genuine issues of material fact, but to determine if such issues are present.  See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); American Federal Contractors, PSBCA No. 1424, 86-2 BCA ¶ 18,891 at 95,306; D & S Universal Mining Co., Inc. v. United States, 4 Cl.Ct. 94, 96 (1983).

            In  Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2859-2862, 92-1 BCA ¶ 24,444, and  Jake Sweeney Auto Leasing, Inc., PSBCA No. 2918, 91-3 BCA ¶ 24,161, the Board concluded that absent prejudice to the Postal Service, the contracting officer must consider on their merits vehicle hire contractors' claims for damage to leased vehicles even though the claims were filed beyond the 60 days allowed in the contract liability provision.  In both cases, we found no evidence that the Postal Service was prejudiced by the failure of timely notice.  See also Gene Gibler, PSBCA No. 1278, 1985 WL 8933, February 26, 1985.

            In its motion, Respondent argues that it has demonstrated that prejudice to the Postal Service resulted from Appellant's long delay in filing its vehicle damage claims, and that there is no genuine issue of material fact on this point.  It urges that the two Jake Sweeney Auto Leasing, Inc. cases cited above are, therefore, distinguishable, and that the Board should find for Respondent as a matter of law (Memorandum in Support of Respondent's Motion for Summary Judgment).  Although the cited Jake Sweeney Auto Leasing, Inc. cases hold that a contracting officer must address the merits of a late-filed vehicle damage claim where there is no evidence of prejudice to the Postal Service resulting from the delay in filing, those holdings do not necessarily lead to the conclusion that such claims will be barred as a matter of law if Respondent demonstrates some measure of prejudice.  When a contracting officer considers whether to address the merits of a claim filed beyond a claims-filing limit stated in the contract, "prejudice to [the government] would be relevant and material in the exercise of such judgment . . . " and "the exercise of such judgment must be reasonable, not arbitrary or capricious."  Eggers & Higgins v. United States, 185 Ct. Cl. 765, 785, 403 F.2d 225, 236 (1968); accord Gulf & Western Indus. v. United States, 6 Cl.Ct. 742, 755 (1984).  The extent and significance of prejudice to the Government resulting from a contractor's delay in filing its claims are issues of fact, and it is the government's burden to establish that there are no genuine issues of material fact in this regard.  See H.H.O. Co. v. United States, 12 Cl.Ct. 147, 164 (1987); Gulf & Western Indus. v. United States, 6 Cl.Ct. at  755.  There is no presumption of prejudice.  Id.

            Respondent has failed to establish that there are no material facts in dispute regarding the existence and significance of prejudice.  The general allegations of lost documents, faded memories and unavailability of witnesses are not sufficient to demonstrate that Respondent is hampered in defending every damage claim on each of the contracts.  It demonstrates at most that some documents which may be needed to defend some parts of the appeals may not be available and some witnesses needed might be difficult or impossible to find.  Nonspecific allegations of prejudice are not sufficient to meet the movant's burden of showing that there are no material facts in issue regarding prejudice to the Postal Service in defending each of the claims asserted by Appellant, especially where there is evidence that similar claims on other contracts, also filed well beyond the 60-day period, were considered on their merits (Findings 11-14).  Cf. Radiation Systems, Inc., ASBCA No. 41065, 91-2 BCA ¶ 23,971 at 119,984.  Genuine issues of material fact remain regarding the specific prejudice that might affect Respondent's defense of each damage claim.

            The motion is denied.

Norman D. Menegat
Administrative Judge
Board Member

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
James D. Finn, Jr.
Administrative Judge
Vice Chairman