Appeal of
CENTENNIAL LEASING CORPORATION
Under Contract No. 104230-86-W-3511
PSBCA No. 3271

APPEARANCE FOR APPELLANT:
Peter DeVito, President

APPEARANCE FOR RESPONDENT:
Karren M. Dickson, Esq.

OPINION OF THE BOARD

            Appellant has appealed from the Contracting Officer's denial of $13,502.13 of its $16,165.53 claim for damage to eighteen vehicles which Appellant had leased to the Postal Service.  A hearing was held at the election of the parties.  Both issues of entitlement and quantum are before the Board.

FINDINGS OF FACT

            1.  On August 14, 1986, Respondent, United States Postal Service, awarded Appellant, Centennial Leasing Corporation of Spring Lake, New Jersey, Contract No. 104230-86-W-3511 for the lease of twenty-five 1987 Ford and twenty-five 1987 Chevrolet sedans for a period of four years.  The total contract price was $779,856 (Appeal File (AF)-1).  The vehicles were to be utilized by the Postal Inspection Service at various locations throughout the country (Id.).

            2.  The contract provided for inspection and acceptance of the vehicles at origin by an authorized representative of the Contracting Officer.  There are no records of inspection reports showing the condition of the vehicles at the time of acceptance.  The contract contained no provision for inspection of the vehicles at the expiration of the contract to determine damage to the vehicles (AF-1).

            3.  The contract contained the following Special Provision pertaining to liability for damage to the vehicles:

"Liability Provisions for Leased Vehicles

(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, . . .  In no event shall the Postal Service be responsible for ordinary wear and tear."  (AF-1)

            4.  The Fords were returned to Appellant in the early part of 1991.  Appellant submitted claims to Respondent for excess mileage driven and for damage to the vehicles and eventually agreed to settle the claims at a substantial discount in exchange for Respondent's oral assurance that Appellant would be treated fairly and reasonably in its subsequent claim for damage to the Chevrolets (Transcript (Tr.) 10, 47; AF-1, 2).

            5.  Although the contract contained no provision for joint inspection of the vehicles for damage upon their return to Appellant, the parties initially followed such a procedure.  However, after a few of the vehicles were returned to Appellant, Respondent ceased participating in a joint inspection.  Thereafter, Appellant's agent inspected the vehicles and filled out a Condition Report which described the damage to each vehicle and contained a repair estimate.  Respondent videotaped approximately half of the Chevrolets in an attempt to record any damage; however, the videotapes are of poor quality and are of little assistance in ascertaining damage (Tr. 8-11, 53-56, 65, 69; Appellant's Exhibit (AX) 1-18).

            6.  After all the Chevrolets had been returned to Appellant and Appellant had received all of the Condition Reports from its agents, Appellant submitted a claim to the Contracting Officer on December 2, 1991, in the total amount of $16,165.53, for damage to 18 of the Chevrolets (AF-2).  Two of the vehicles, Nos. 171632 and 170032, had incurred damage from a hailstorm in the respective amounts of $2,564.45 and $2,170.60 (AX 7, 6).  Another of the vehicles (No. 171616) had incurred damage of $1,918.71 (AX 5).  The greatest amount of damage was claimed for vehicle No. 171542 in the amount shown of $4,341.80 (AX 2[1].)  The damage amount shown for the remaining vehicles ranged from $150 to $891.93 (AF-2).

            7.  Since the vehicles had been utilized for police work, some had been modified by Respondent.  These modifications included installation of radios and antennas and the placing of decals on fenders, doors, and trunks (AX 5, 13, 14; Tr. 68).

            8.  The damage repair estimates shown on Appellant's Condition Reports included dents, scratches, rust chips, tire replacement, interior rips and burns, dirty carpets, hail damage, drill holes, and bent wheel covers (AX 2-18).

            9.  Appellant's December 2, 1991, claim was supported by the vehicle Condition Reports (AF 2 A-R).  No other documents were furnished to the Contracting Officer.  On May 19, 1992, the Contracting Officer wrote Appellant's president as follows:

"Confirming the telephone conversation between you and Pauline McTeer of this office earlier this month, additional documentation is required to substantiate your claim of 12/2/91 for damages to vehicles leased to the Postal Service under the subject contract.  Ed Simpson also discussed this subject with you prior to his departure from this office.  You agreed to furnish additional supporting documentation by May 8, 1992.  The information has not arrived in this office.

Please provide your additional information no later than May 27, 1992, if you wish to have it considered in the evaluation of your claim for damages."  (AF-3)

Appellant did not respond to the Contracting Officer (Tr. 66, 71).

            10.  The Contracting Officer and her staff evaluated Appellant's claim by closely examining the vehicle Condition Reports and attempting to verify the information contained in the reports by viewing the videotapes of the vehicles (see Finding of Fact No. 5).  In accordance with the language of the contract's Liability Provision, the Contracting Officer determined that she would reimburse Appellant for all damage to the vehicles in excess of ordinary wear and tear and caused by the act or negligence of Respondent.  Thus, she determined that damage to the vehicles caused by physical acts or negligence of Respondent such as drilling holes for radio and antenna installation, related painting, and burn holes was compensable.  Other damage was viewed as ordinary wear and tear and thus deemed not compensable (Tr. 67, 68, 78, 80).

            11.  The Contracting Officer issued her final decision on June 25, 1992, granting Appellant $2,663.40 for the cost to repair the damaged vehicles.  She granted reimbursement for repairing damage she concluded resulted from the acts or negligence of postal employees including carpet holes from radio mounts, antenna holes, burns in seats and carpets, and removing decals.  All damage caused by hail was denied as damage which was not caused by the act or negligence of Respondent.  The remainder of the claimed damage, consisting mainly of dents, chips, and scratches, was denied on the basis that it constituted ordinary wear and tear (AF-4).

            12.  The Contracting Officer utilized the following criteria in her final decision in determining what damage constituted "ordinary wear and tear":

"Ordinary wear and tear" or "ordinary wear and tear excepted" would (as to vehicles), in addition to the aging process, mean damage that occurred to a vehicle in the ordinary course of use of the vehicle, which was not caused by the negligence of the owner of the vehicle or by the negligence of a third party that was ascertainable.  It includes, but is not limited to, small dents on the vehicle caused by people parking next to a vehicle and hitting the car when they open their door, scratches or dents caused by rocks or other items flying up and hitting the car whether caused by the car in question or cars driven by third parties, or any parties unknown.  The definition also includes the scraping of hub caps against the curbing, as well as dented hub caps as the result of changing the wheel on the vehicle.  (AF-4)

            13.  Appellant timely filed an appeal from the Contracting Officer's decision.

DECISION

            Appellant challenges the denial of its claim on various bases:  (1) that, contrary to assurances given to Appellant when it settled its claim regarding the Ford vehicles, the Contracting Officer did not consider its claim in a fair and reasonable manner; (2) that Appellant's vehicle Condition Reports established a prima facie case of Postal Service liability for damage to its vehicles, while Respondent had no countervailing evidence; (3) that the Contracting Officer's interpretation of the contract's Liability Provision was too limited or narrow; (4) That most of the damage shown on the vehicle Condition Reports was in excess of  "ordinary wear and tear" damage; (5) that Respondent's videotapes of the damage to Appellant's vehicles masked rather than showed the damage; and (6) that Respondent should have jointly inspected the vehicles with Appellant, the procedure followed in park and loop contracts.

            We disagree with Appellant's first contention that the Contracting Officer did not consider its claim in a fair and reasonable manner.[2]  The Contracting Officer testified that an inordinate amount of time was spent by her and her staff in evaluating the claim, that each item of alleged damage was closely considered, that advice of counsel was sought, and that Appellant was given the benefit of doubt on certain items of damage.  Her testimony was credible and is accepted and establishes that she fairly and reasonably considered Appellant's claims.

            To recover under the contract, Appellant has the burden of proving that the damage to the vehicles was caused by the act or negligence of an officer or employee of the Postal Service and exceeded ordinary wear and tear.[3]  Jake

Sweeney Auto Leasing, Inc., PSBCA Nos. 2859-2862, 92-1 BCA ¶ 24,444; Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2784-2788, 2791-2798, 91-3 BCA ¶ 24,278; Lou Faro Auto Leasing, Inc., PSBCA Nos. 2746, 2747, 90-3 BCA ¶ 23,156.  Appellant argues that since it has submitted its claim in the form of vehicle Condition Reports it has made a prima facie case of liability on the part of Respondent since Respondent had the vehicles in its custody during the term of the contract and, therefore, Respondent should bear the burden of explaining vehicle damage.  However, it is a general principal of government contracting that the party asserting the claim has the burden of proving it:

"It is well established that the contractor bears the burden of proving affirmative claims against the Government. . . .  The contractor must establish its entitlement by a preponderance of the evidence."  (Fred A. Arnold, Inc., ASBCA Nos. 20150, 22154, 84-3 BCA ¶ 17,624 at 87,843 (citations omitted); see Wunderlich Contracting v. United States, 173 Ct. Cl. 180, 199, 351 F.2d 956, 968 (1965); Nicholas Nova Constr. Co., PSBCA No. 1206, 85-1 BCA ¶ 17,846 at 89,334.)

            The burden is upon Appellant to prove the essential elements of its claim.  See Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 3154, 3155, 3213,       BCA ¶      , November 23, 1992; Jake Sweeney Auto Leasing, PSBCA Nos. 2643-2675, 90-2 BCA ¶ 22,766 at 114,274.  Appellant has established that the vehicles were damaged to the extent claimed.  However, Appellant has presented no persuasive evidence that the damage to the vehicles was caused by the act or negligence of an officer or employee of Respondent and that the damage exceeded ordinary wear and tear.  Respondent, therefore, was under no obligation to present countervailing evidence showing it was not negligent.  Its obligation was to evaluate Appellant's claim in a fair and reasonable fashion as it did.

            Contrary to Appellant's assertion, the Contracting Officer's interpretation of the contract's Liability Provision was neither limited nor narrow.  In attempting to assess blame or responsibility for vehicle damage the Contracting Officer considered whether an item of damage was "caused by the act or negligence" of Respondent, the specific language of the contract.[4]

            Appellant's contention that an arbitrary standard of "ordinary wear and tear" was utilized by the Contracting Officer has no merit.  This Board has previously recognized the definition of "ordinary wear and tear" utilized by Respondent (with the exception of the last sentence) as consistent with insurance industry standards, Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2821-2826, 91-2 BCA ¶ 23,891, and Appellant failed to offer any evidence regarding the standard the Board should apply.  See Jake Sweeney Auto Leasing, PSBCA No. 3069, 93-2, BCA ¶ 25,601.

            It is true, as Appellant contends, that Respondent's videotapes of the vehicles were of a poor quality and did not clearly show the damage to the vehicles.  While a joint inspection might have been helpful in determining the existence of the damage, the contract did nor require such an inspection.  However, it is not the extent of the damage which precludes Appellant's recovery.  Simply, Appellant failed to prove that the damages incurred exceeded ordinary wear and tear and were caused by an act or negligence of Respondent.

            We hold, therefore, that the Contracting Officer evaluated Appellant's claim fairly and reasonably and that Appellant did not satisfy its burden of proving the damages incurred were caused by the act or negligence of Respondent or exceeded ordinary wear and tear.  Accordingly, the appeal is denied.

James D. Finn, Jr.
Administrative Judge
Vice Chairman

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
Norman D. Menegat
Administrative Judge
Board Member

            [1] The $4,341.80 amount shown on the Condition Report is incorrect.  A $15.22 item for a left side lamp is set forth on the adding machine tape attached to the Report as $1,522.00.  Thus an error of $1,506.78 exists, making the damage amount as adjusted to be approximately $2,835.02 without additionally adjusting for sales tax.

            [2] Appellant's understanding of oral assurances given to it by the Contracting Officer as an inducement to settle the earlier claim are not set forth in the settlement agreement (contract modification).  Of course, the Contracting Officer in any event had an obligation to evaluate Appellant's claim now in dispute in a fair and reasonable manner.

            [3]Appellant urges the Board to adopt the burden of proof standard set forth in Ron Sanders, AGBCA No. 87-150-3, 87-2 BCA ¶ 19,734.  In that decision the burden was placed on the government to prove the vehicle damage occurred as a result of ordinary wear and tear or the negligence of Appellant.  Ron Sanders is distinguishable in that the liability provision in that contract placed greater risk for vehicle damage on the government than the liability provision in the instant contract.  Regardless, however, placing the burden of proof on Respondent would be contrary to all prior decisions of this Board interpreting the liability provision before us. 

            [4] Appellant asserts that the Contracting Officer only assessed the cause of damage against a measure of negligence by Respondent, rather than act or negligence.  The Contracting Officer testified to the contrary, however.