April 1, 2009

Appeal of
MARY JACKSON

Under Contract No. HCR 481D8

PSBCA No. 6193

APPEARANCE FOR APPELLANT
 Mary Jackson

APPEARANCE FOR RESPONDENT
Jessica Y. Brewster-Johnson, Esq.

OPINION OF THE BOARD ON MOTION FOR SUMMARY JUDGMENT

Appellant, Mary Jackson, held a mail delivery contract awarded by Respondent, United States Postal Service.  Respondent terminated the contract for its convenience and paid Appellant the amount of liquidated damages provided in the contract.  Appellant claimed damages exceeding the amount of the liquidated damages, and appealed the contracting officer’s denial of her claim for the additional damages.

Respondent has filed a Motion for Summary Judgment, contending it is entitled to judgment based on the undisputed facts established in the record.  Appellant has filed an opposition to Respondent’s Motion.  For purposes of deciding the Motion for Summary Judgment, we make the following findings of fact.

FINDINGS OF FACT

1.  On July 28, 2005, Respondent awarded Appellant Contract No. HCR 481D8 for the delivery of mail along a box delivery route originating in the Westland Branch Post Office in Westland, Michigan.  The term of the contract was from August 1, 2005, to March 31, 2009, at an annual rate of $23,894.  (Appeal File, Tab (“AF”) 9).
2.  The contract authorized termination of the contract without fault of the contractor:
 2.3.3a  For Box Delivery and Combination Routes Only

 The contracting officer may terminate this contract or the right to perform under it, in whole or in part.  Liquidated damages will apply to box delivery and combination routes.  The supplier [Appellant] shall be paid as liquidated damages the sum provided for in Section 2.3.2.e.  The liquidated damages permitted by this contract, if any, constitute the supplier’s full remedy for a whole or partial termination under this clause.(AF 10, Contract Clause 2.3.3a (p. 55)).
 
3.  Section 2.3.2.e of the contract’s Changes clause addressed the contractor’s recovery in the event of a termination for convenience:  “[I]f this contract is terminated for convenience without fault on the part of the supplier, liquidated damages for the termination will be established as . . . [o]ne-twelfth of the annual rate (if during the fourth year.)”  (AF 10, Contract Clause 2.3.2.e (2) (p. 55)).

4.  Language in the contract also addressed termination for convenience for “Transportation Routes (i.e. Not Box Delivery or Combination Routes).”  Under those contracts, “The supplier and the contracting officer shall agree upon the whole or any part of the amount to be paid . . . to the supplier by reason of the termination.”  (AF 10, Contract Clauses 2.3.3b and 2.3.3d (p. 56)).

5.  The contract provided that the vehicle used for delivery of the mail could be a passenger vehicle and could be no more than 5 years old at the beginning of a contract term (AF 9, Contract Clause B.2.d (p. 19)).

6.  By letter dated May 29, 2008, the contracting officer advised Appellant that Respondent was terminating HCR 481D8 for the convenience of the Postal Service effective August 29, 2008.  He noted that the action did not relate to the service Appellant provided under the contract but stemmed from a recent settlement between Respondent and its labor unions.  The letter advised that Appellant would receive $2,521.45 as a one-time payment of liquidated damages.   That amount was one-twelfth of Appellant’s then-current contract rate of $30,257.46 per year.  (AF 8).

7.  The contracting officer sent Appellant a revised version of the notice on June 3, 2008, confirming the termination effective date of August 29, 2008, as well as repeating the reasons for the termination and the calculation of liquidated damages (AF 7).

8.  In a June 18, 2008 letter to Respondent, Appellant complained that the liquidated damages of $2,521.45 offered by the contracting officer were inadequate.  Appellant bought a new vehicle in March 2008 to perform the contract.  She expected to pay the $23,000 outstanding balance of the purchase price with her earnings under the contract and a possible renewal.  She claimed that section 2.3.3d of the contract (Finding 4) authorized Respondent to pay the costs she incurred in connection with the terminated contract and claimed the $20,478.55 difference between the outstanding balance owed on the vehicle and the liquidated damages.  (AF 5).

9.  On June 25, 2008, the contracting officer ordered issuance of a check to Appellant in the amount of $2,521.45 (AF 4).

10.  In a final decision dated July 2, 2008, the contracting officer denied Appellant’s claim of $20,478.55, relying on section 2.3.3a of the contract (AF 3).

11.  Appellant filed a timely appeal from that final decision.  In her notice of appeal, she pointed out that the termination related to issues between Respondent and its unions; that she had been an excellent contractor with no lost days or warnings in almost four years; and that the rate she was paid was far less than the rate for city carriers when all of their benefits were considered.  She asked that the termination not be enforced or that she be allowed payments through the full term of the contract.  (AF 2).

DECISION

Respondent argues that it is entitled to judgment as a matter of law because Appellant does not challenge the termination itself and she has been paid the liquidated damages provided by the contract and identified in the contract as her sole relief under the circumstances of this appeal.  (Findings 2, 3).  Appellant argues that contract clause 2.3.3d (Finding 4) authorizes payment in excess of the liquidated damages, and that she is entitled to recover $20,478.55 as her damages because she bought the new vehicle in anticipation of the renewal of her contract, which would have required a vehicle no older than five years (Finding 5).  Alternatively, she asks that the termination of her contract be rescinded.

The contracting officer has wide discretion when deciding whether to terminate a contract for convenience.

It is not the province of the courts to decide de novo whether termination was the best course.  “In the absence of bad faith or clear abuse of discretion the contracting officer’s election to terminate is conclusive.”  John Reiner & Co. v. United States, 163 Ct. Cl. 381, 325 F.2d 438, 442 (1963).

Salsbury Indus. v. United States, 905 F.2d 1518, 1521 (Fed. Cir. 1990).  Appellant has not alleged that the contracting officer’s decision to terminate her contract for Respondent’s convenience was tainted by bad faith or constituted a clear abuse of the contracting officer’s discretion.  She confirmed the contracting officer’s stated justification that a settlement between Respondent and its unions led to the termination (Finding 11).

Appellant argues that clause 2.3.3d (Finding 4) authorizes payment of her vehicle costs after termination of her contract.  However, the specific contract language directed to termination of box delivery routes is that appearing in clause 2.3.3a (Finding 2).  That provision and the Changes clause formula (Finding 3), agreed to by Appellant when entering the contract, provide Appellant’s sole relief after the termination of her contract.  See Melvin R. Kessler, PSBCA Nos. 2820, 2972, 92 2 BCA ¶ 24,857 at 123,997; Paul A. Mason, PSBCA No. 1187, 84-3 BCA ¶ 17,572 at 87,567, recon. denied, 85-1 BCA ¶ 17,735.  As Appellant was in the fourth year of contract performance (Finding 1), her recovery was limited to one-twelfth of her annual rate of compensation.

Appellant has not challenged Respondent’s calculation of the liquidated damages or the premise on which that calculation is based: that her contract annual rate at the time of termination was $30,257.46, leading to liquidated damages amounting to one-twelfth of that rate, or $2,521.45 (Finding 6).  She has been paid $2,521.45 (Finding 9).   As Appellant has been paid the liquidated damages provided under the contract as her sole relief in the event of a termination for convenience, her claim for further damages is denied. Respondent has demonstrated that there exists no genuine issue of material fact and that it is entitled to judgment as a matter of law.  See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Rood Trucking Co., PSBCA Nos. 3121, 3132, 93-2 BCA ¶ 25,564.  Accordingly, summary judgment is granted Respondent, and the appeal is denied.  See Samson J. Hypolite, PSBCA No. 5415, 08-1 BCA ¶ 33,775.

Norman D. Menegat
Administrative Judge
Board Member

I concur:                                                           I concur:

____________________                               ___________________
William A. Campbell                                        David I. Brochstein
Administrative Judge                                     Administrative Judge
Chairman                                                       Vice Chairman

[1]  The parties were inconsistent in stating the amount of the liquidated damages, but the differences were inconsequential.

[2]  In any event, we could not order the contracting officer to rescind the termination for convenience.  The Board lacks authority to order reinstatement of Appellant’s contract.  See Gary W. Noble, PSBCA No. 4094, 99-2 BCA ¶ 30,413; Paul A. Mason, PSBCA No. 1187, 84-3 BCA ¶ 17,572 at 87,566-567, recon. denied, 85-1 BCA ¶ 17,735.

[3]  In the Order directing Appellant to respond to Respondent’s Motion for Summary Judgment, the Board specifically directed her to state any disagreement with Respondent’s conclusion that $30,257.46 was her annual rate at the time of the termination and with the calculation of the liquidated damages to be $2,521.45.  In her response to the Motion she did not state any disagreement on these matters, and conceded she had been paid the $2,521.45.