Appeal of

WILLIAM RIOS

Under Contract No. 00667

PSBCA No. 5357

APPEARANCE FOR APPELLANT:
Maricarmen Almodovar Diaz, Esq.

APPEARANCE FOR RESPONDENT:
Melissa Mortimer, Esq.
Office of the General Counsel
United States Postal Service

OPINION OF THE BOARD[1]

           Appellant, William Rios, has appealed the default termination of his mail delivery contract with Respondent, United States Postal Service.  A hearing was held in San Juan, Puerto Rico.  Only entitlement is at issue in this proceeding.

FINDINGS OF FACT

            1.  On May 31, 2004, Respondent renewed Appellant's contract number HCR 00667.  Service under the contract was to begin on July 1, 2004, and continue until June 30, 2008, at an annual rate of $34,580.52 (Appeal File, Tab (AF) 1; Stip. 1).  The contract required Appellant to sort mail provided by Respondent into carrier cases and to deliver it to customers along a route originating in the Florida Post Office in Florida, Puerto Rico. 

            2.  Appellant had performed the services required under the contract for 28 consecutive years under contractual arrangements with Respondent prior to the 2004 contract renewal (Tr. II, pp. 135, 136).[2]

            3.  Contract Clause 2.3.1 (m), Termination for Default (December 2003) (Modified), authorized Respondent to terminate the contract for default by Appellant (AF 1, p. 35).

            4.  Contract Clause 2.3.1 (s)(8), incorporated by reference the Events of Default (January 1997) clause which provided that the contract could be terminated for default for reasons which included (1) “[t]he supplier’s failure to perform service according to the terms of the contract”, and (2) if the supplier “is not reliable, trustworthy, or of good character.”  (AF 1, p. 36).

            5.  The contract required Appellant to “carry all mail tendered for transportation . . . with certainty, celerity, and security” and to “protect the mail from loss, depredation, or damage.”  (AF 1, pp. 11, 12, 36).   

             6.  In January 2006, Postal Service carrier M. Nieves (Mr. Nieves) began employment as a letter carrier in the Florida Post Office.  The work stations in the post office for the contract mail carriers and the letter carriers employed by the Postal Service were within a few feet of each other.  A total of five letter carriers and three other postal employees worked in the office.  (Tr. I, pp. 25-29, 35; Appellant Exhibit (App. Exh.) 1).

            7.  Until mid-May of 2006, Mr. Nieves and Appellant had a friendly working relationship.  Mr. Nieves would often greet Appellant in the morning with a handshake (Tr. I, p. 79; Tr. II, p. 148).  Thereafter, they had a falling out.  On more than one occasion Appellant threatened to report to the postmaster what he considered to be misconduct by Mr. Nieves in the performance of his postal duties.  On one occasion, Mr. Nieves confronted Appellant while he was delivering mail along his route and again in the post office parking lot, angrily yelling obscenities at Appellant, and the two men almost engaged in a fistfight.  Thereafter, Mr. Nieves and Appellant stopped shaking hands at the beginning of the work day.  (Tr. I, pp. 46-47, 79-80; Tr. II, pp. 151-155; Nieves 2^nd Declaration, ¶ 3. Rios Declaration, ¶ 16).[3]

            8.  The “hotcase” at the Florida Post Office is a location in the carrier work area where missent[4] letters are deposited.  On or about June 19, 2006, Mr. Nieves reported to Postal Inspector Rivera that he had seen Appellant take mail from the hotcase and take money out of an envelope.  On a number of occasions thereafter, he called to report what he claimed were other instances of Appellant stealing from the mail.[5]  In response to the telephone calls from Mr. Nieves, Inspector Rivera telephoned Mr. Nieves and asked that he continue to observe Appellant and contact her when he observed Appellant engage in more of the same type of behavior.  (Tr. I, pp. 14-18, 35-37, 51, 145-46; Declaration of L. Rivera (Rivera Decl.), ¶ 2; App. Exh. 11; AF 2, p. 100).

            9.  Acting on Mr. Nieves’ reports, the Inspection Service decided to make test mailings in the Florida Post Office.  Inspectors prepared three test envelopes, each of which contained postage on the exterior and a greeting card, United States currency, and fluorescent powder inside (Tr. I, p. 108; App. Exh. 1).  A record was kept of the currency (including identifying marks that had been placed thereon by the inspectors, and serial numbers) and cards contained inside each envelope (Tr. II, pp. 6, 7).  Inspector Rivera and some of the other inspectors also inserted the fluorescent powder into each of the three envelopes.[6]  After sealing the contents inside, they checked the outside of each envelope with ultraviolet light to insure that there was no fluorescent powder on the outside of the envelopes (Tr. I, p. 113; Tr. II, pp. 7, 8).  They also tested each envelope to insure that it would remain sealed during the course of normal postal processing (Tr. II, p. 8).  The amount of fluorescent powder placed in each envelope was sufficient to cause powder to be transferred to the person unsealing and opening the envelope.  (Tr. I, p. 109)  

            10.  The envelopes contained destination and return addresses in the state of Florida rather than in the town of Florida, Puerto Rico, so they could not be properly delivered to addresses served out of the Florida Post Office and should have been considered missent mail.  If properly handled, they ultimately would have been delivered to either the destination or return address.  (Tr. I, p. 108).

            11.  Pursuant to her telephonic request the previous day, on July 12, 2006, Mr. Nieves met Inspector Rivera and five other inspectors at a shopping mall near the town of Florida at 6:00 a.m.  Mr. Nieves had not been told the purpose of the meeting in advance of his arrival.  During the meeting Inspector Rivera advised that she wanted him to place the three test envelopes in and around the areas of the Florida Post Office from which he had previously reported seeing Appellant take missent mail.  The inspectors decided not to place the envelopes in the Florida Post Office themselves because the facility was very small and they thought their investigation might be compromised if employees noticed unfamiliar people in the facility.  Mr. Nieves was instructed to call Inspector Rivera as soon as he had placed the envelopes.  Mr. Nieves was not advised of the contents of the envelopes.  (Tr. I, pp. 31, 109-11).

            12.  Mr. Nieves departed the shopping mall in his vehicle and drove directly to the Florida Post Office where he arrived at approximately 7:00 a.m.  The inspectors followed him in separate vehicles to the Florida Post Office and waited outside.  (Tr. I, p. 111).

            13.  Upon arriving at the Florida Post Office, Mr. Nieves placed two of the prepared envelopes at the hotcase and one envelope at Appellant’s workstation.  Mr. Nieves telephoned Inspector Rivera as instructed to let her know that he had placed the prepared envelopes.  Mr. Nieves telephoned Inspector Rivera at least two more times before Appellant left the post office to deliver his route to advise her that the prepared envelopes were not in the locations in which Mr. Nieves had placed them.  Mr. Nieves also advised that Appellant, after having collected money from several of his coworkers, was leaving to buy them breakfast.[7]  (Tr. I, pp. 20, 22, 23, 111-13).

            14.  As a result of Mr. Nieves’ telephone calls to Inspector Rivera, the postal inspectors assumed that Appellant had taken the prepared envelopes (Tr. I, p. 158). The inspectors did not confront Appellant prior to him completing his mail delivery because they wanted to give him the opportunity to perform his post-delivery sorting of mail and to return the prepared envelopes to the post office in the event he had taken them by mistake (Tr. I, p. 114).

            15.  After Appellant returned to the post office from delivering his route shortly after 2 p.m., he was permitted to finish his post-delivery tasks and then directed by one of the inspectors to come to the postmaster’s office.  There were several inspectors inside the postmaster’s office.  Once inside, Appellant complied with Inspector Rivera’s request that he empty his pockets.  Appellant removed four $20 bills, eleven $1 bills, and one $5 bill from his pocket, which were then placed on a table by the inspectors.  The serial numbers on the currency taken from Appellant were compared to the serial numbers on the currency inserted into the test envelopes.  The serial number of the $5 bill taken from Appellant matched the serial number and bore the inspector’s mark of one of the $5 bills that was placed in one of the test envelopes.  The inspectors kept the $5 bill and returned the other currency to Appellant.  None of the three test envelopes was delivered as addressed or returned to the listed return address.  Further, none of the three test envelopes or their contents, aside from the marked $5 bill found in Appellant’s possession, was ever found at any other location.  (Tr. I, p. 115; Tr. II, pp. 162-65, 213; App. Exh. 6; Rivera Decl., ¶ 16).

            16.  Shortly thereafter, Appellant accompanied two male inspectors to a janitorial closet for additional screening with an ultraviolet light.  The inspectors chose this room because it was dark once the door was closed, and fluorescent powder shows up better under ultraviolet light in a darkened room.  Once inside the closet the two inspectors examined Appellant with the ultraviolet light and discovered fluorescent powder on both of Appellant’s palms and the front pocket area of his pants.  The amount of powder discovered on Appellant indicated that he was the person who opened at least one of the prepared envelopes.  (Tr. I, pp. 116, 117; Tr. II, pp. 12, 13, 210).

            17.  Appellant could only have had the amount of fluorescent powder discovered on his person if he had opened one of the prepared envelopes.  If someone had handed Appellant a single bill of currency that had been contaminated with fluorescent powder, it would have left only a trace amount of powder on his person as opposed to the larger amount that was actually present.  (Tr. I, p. 117; Tr. II, pp. 12, 13).

            18.  Shortly after the discovery of the fluorescent powder on Appellant, he was directed by the Florida Postmaster to leave the facility (Tr. II, p. 174).

            19.  By cover memorandum dated July 13, 2006, Inspector Rivera forwarded to the contracting officer an Investigative Memorandum (IM) dated July 13, 2006.  The IM generally described the events of July 12, 2006, involving Appellant and specifically included a statement that a $5 bill contained in one of the test envelopes was found in Appellant’s possession.  (AF 5).

            20.  By letter dated July 19, 2006, the contracting officer terminated Appellant’s contract for default effective July 12, 2006.  The letter stated, among other things, that Appellant’s contract was being terminated because he was found to have in his possession a $5 bill that had been placed in one of the prepared envelopes that the postal inspectors caused to be placed in the Florida Post Office.  (AF 3).

            21.  By letter to the contracting officer dated August 7, 2006, Appellant timely appealed the contracting officer’s final decision (AF 4).

            22.  In 2003, Appellant had been accused of stealing gift cards worth $300 from the mail.  Two $150 Sears gift cards were lost from an envelope mailed to a post office box in the Florida Post Office.  Appellant used the gift cards to buy merchandise at Sears, but claimed that an acquaintance found them in the lobby of the post office and gave them to him.  A local judge dismissed related theft charges for lack of evidence.  At the contracting officer’s insistence (the same contracting officer who terminated Appellant’s contract at issue here), Appellant reimbursed the rightful owner for the cost of the cards.  Over the strong objections of the investigating postal inspectors, the contracting officer decided not to terminate Appellant’s contract and allowed him to resume performance after a suspension imposed while the criminal proceedings were pending.  (AF 2, pp. 93-95; App. Exh. 5).

DECISION

            It is Respondent’s burden to prove that Appellant failed to perform in accordance with the contract in a manner that justified terminating the contract for default.  Steve C. Miller, PSBCA No. 5264, 09-2 BCA ¶ 34,282; E & J Trucking, PSBCA No. 5092, 09-1 BCA ¶ 34,073; Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937.

            Respondent argues that the default termination of Appellant’s contract should be upheld because Appellant stole mail.  Respondent asserts that the theft is evidenced by the fact that on July 12, 2006, Appellant had in his possession a $5 bill that had been enclosed in envelopes specially prepared for mailing by Respondent and placed at the Florida Post Office by Mr. Nieves at Respondent’s behest.  Moreover, Respondent argues, the fact that Appellant had fluorescent powder on his hands and clothes that came from those same test envelopes further corroborates the theft by Appellant.  Respondent also argues that the termination is independently justified because Appellant also stole mail from the Florida Post Office prior to July 12, 2006.  Finally, Respondent argues that because he stole mail Appellant is not a person of good character and, as such, the termination of his contract for default was justified.

             Appellant argues that he did not steal the marked $5 bill nor did he steal and open any mail from the Florida Post Office, including the three test envelopes.  Appellant argues that it is unlikely that Mr. Nieves placed the letters as testified because he would have surely been observed by the four other employees who were present at the Florida Post Office at that time of day.  Notwithstanding Appellant’s argument, it is speculative to assume Mr. Nieves would have been seen and we accept as credible Mr. Nieves’ testimony regarding his placement of the test envelopes.  (Finding 13).

             Appellant testified that on July 12, 2006, Mr. Nieves gave him a $5 bill to pay for breakfast.  Appellant further asserted that the $5 bill given him by Mr. Nieves was the marked bill identified by the Inspectors as having been contained in one of the prepared envelopes (Tr. II, pp. 157, 158).  Mr. Nieves, however, testified that he did not give any money to Appellant on July 12, 2006 (see Finding 13, n. 7).  Since Mr. Nieves was aware that the envelopes were part of an Inspection Service investigation and given that he was not advised as to the contents of the envelopes, it is highly unlikely that he would have opened and removed money from one of the envelopes and given it to Appellant.  Accordingly, we do not accept Appellant’s allegation and argument.[8]

            That Appellant stole a portion of the contents of one of the specially prepared test envelopes has been established by the fact that the marked $5 bill which had been enclosed therein was found in his possession after he completed his delivery duties on July 12, 2006, and the fact that Appellant was found to have a significant amount of fluorescent powder on his hands and pants pockets.

            Appellant argues that he did not have any fluorescent powder on his person or his clothes on July 12, 2006, not only because he did not steal any of the test envelopes, but because Respondent never utilized fluorescent powder in its investigation of Appellant.  We have found that the postal inspectors put fluorescent powder in the prepared envelopes and that Appellant had fluorescent powder on his hands and pants pockets in an amount that could only have come from his opening and handling of at least one of the envelopes (Findings 9, 15, 16, 17).

            Appellant alternatively suggests that any fluorescent powder discovered on his person was transferred from Mr. Nieves when he allegedly shook hands with him on the morning of July 12, 2006.  This argument is not well taken as we have found that Mr. Nieves did not shake Appellant’s hand on July 12, 2006 (Finding 7).  Further, assuming arguendo that such a handshake had taken place, we have also found that the amount of fluorescent powder on Appellant’s person could only have resulted from Appellant opening at least one of the test envelopes (Finding 17).

            Accordingly, Appellant’s assertions do not refute our conclusion that Appellant stole a portion of the contents of the prepared test mail and we find that Appellant opened at least the prepared envelope that contained the marked $5 bill found in his possession.

              The theft of mail by Appellant, who was entrusted to deliver the mail, is a very serious violation of his contract obligation to carry all mail tendered to him with “certainty, celerity, and security” and to protect said mail from “loss, depredation, or damage” and justifies the termination of Appellant’s contract for default.  Rellen H. Clark, PSBCA Nos. 4096, 4097, 99-1 BCA ¶ 30,210, recon. denied, 99-1 BCA ¶ 30,351; Richard Lewis Danel, PSBCA No. 3470, 94-2 BCA ¶ 26,687; Bonnie Dolin, PSBCA No. 2394, 92-2 BCA ¶ 25,014; Karen L. Wilson, PSBCA No. 1494, 86-3 BCA ¶ 19,256. 

            As Respondent has demonstrated that by stealing the contents of mail entrusted to him, Appellant breached his contract, the burden shifts to Appellant to present evidence that his breach was excusable, Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937; Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419, at 131,429, recon. denied, 94-2 BCA ¶ 26,951; Bonnie Dolin, PSBCA No. 2394, 92-2 BCA ¶ 25,014, or to show that the termination was an abuse of the contracting officer’s discretion, Jesse A. Farmer, PSBCA No. 2702, 91-3 BCA ¶ 24,181, at 120,941.  

            Appellant does not argue that the contract breach we have found occurred was excusable.  However, Appellant argues that the contracting officer abused her discretion by relying on the inspector’s Investigative Memorandum which concluded that Appellant had in his possession the marked $5 bill that came from one of the test envelopes.  Appellant also argues that the contracting officer further abused her discretion by failing to provide Appellant an opportunity to convince her that he did not steal mail and by not questioning the truth of Mr. Nieves’ statements that he saw Appellant steal mail prior to July 12, 2006, and his statements about his placement of the test envelopes in the Florida Post Office.  Finally, Appellant argues that the contracting officer abused her discretion because, according to Appellant, she terminated Appellant’s contract for default at the behest of the Inspection Service to atone for her refusal to follow a 2003 Inspection Service recommendation to terminate Appellant for default based on an alleged theft of gift cards from the mail (Finding 22).

             The postal inspectors are tasked with investigating crimes relating to the mail, including those committed by contract carriers (Tr. I, pp. 103, 104).  Appellant has presented no evidence demonstrating that the contracting officer should not have relied upon either the accuracy or veracity of the information contained in the inspector’s Investigative Memorandum when deciding to terminate Appellant’s contract for default or that the contracting officer should have conducted a separate investigation of the matter.  It is well settled that a contracting officer may rely on investigative memoranda prepared by the Postal Inspection Service in deciding whether to terminate a contractor for default.  Nuclear Research Corp. v. United States, 814 F.2d 647, 649-50 (Fed. Cir. 1987); Pacific Architects and Engineers, Inc. v. United States, 491 F.2d 734, 744 (Ct. Cl. 1974); Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937; Stephen Zucker, Packages Services Plus, PSBCA Nos. 3396, 3397, 3398, 96-2 BCA ¶ 28,282.

            Finally, Appellant offered no evidence to support his argument that the contracting officer terminated his contract to placate the postal inspectors after her refusal to terminate the contract after Appellant’s 2003 improper use of gift cards (Finding 22) and we reject it as speculative. 

            Therefore, Appellant has not shown that the contracting officer abused her discretion in terminating the contract for default.

The appeal is denied.[9]
William A. Campbell
Administrative Judge
Chairman

I concur:                             I concur:
David I. Brochstein             Norman D. Menegat
Administrative Judge         Administrative Judge
Vice Chairman                   Board Member

[1] Administrative Judge Gary E. Shapiro took no part in the Board’s consideration of this appeal.

[2] The hearing in this appeal took place over two days.  A separate transcript volume was prepared for each day.  Transcript Volume I (Tr. I) refers to testimony taken on October 15, 2008, and Transcript Volume II (Tr. II) refers to testimony taken on October 17, 2008.

[3] There is conflicting testimony regarding whether Mr. Nieves subsequently shook Appellant’s hand thereafter on July 12, 2006.  We find that Mr. Nieves did not shake Appellant’s hand on that date.

[4] Letters are considered to be “missent” if they contain a delivery address that does not match an address of a delivery point along a letter carrier’s delivery route (Tr. I, pp. 91, 92, 108).

[5] There is conflicting testimony from Mr. Nieves and Inspector Rivera as to how many times he called Inspector Rivera to alert her to activities of Appellant prior to July 12, 2006.  We find the differences to be immaterial and accept as sufficient for the purpose of this Opinion that Mr. Nieves made several calls to Inspector Rivera.  (Tr. I, pp. 17, 18, 34, 145, 146).

[6]Fluorescent powder, while normally undetectable by the naked eye, becomes visible when exposed to ultraviolet light (Tr. I, p. 109).

[7] On almost a daily basis Appellant would collect money from some of his coworkers and travel to a nearby supermarket to buy breakfast for all those who had contributed.  When he returned to the post office, Appellant and his coworkers would gather in the breakroom and eat the breakfast Appellant had purchased.  Mr. Nieves participated in the practice of contributing money to Appellant for breakfast until his relationship with Appellant soured in mid-May of 2006 (Tr. I, pp. 75, 76, 81; Nieves 2^nd Declaration, ¶¶ 4, 5).  We do not find that Mr. Nieves contributed money to the “breakfast fund” on the morning of July 12, 2006.

[8] Appellant makes much of inconsistencies in Mr. Nieves’ testimony to urge the Board not to believe him.  Appellant argues that Mr. Nieves fabricated the story about Appellant stealing mail because of his animosity towards Appellant.  However, Mr. Nieves’s motivation in reporting alleged mail theft by Appellant is irrelevant to a decision in this matter.  Likewise, whether he was completely truthful when he reported that he had seen Appellant take mail and on at least one occasion open the mail is irrelevant.  The results of the Inspection Service investigation are what matter, not what prompted the investigation.

[9] Because we find Appellant’s theft of mail on July 12, 2006, justified the termination for default under the language set out in Finding 5, we do not address Respondent’s arguments that alleged thefts by Appellant prior to July 12, 2006, and Appellant’s alleged lack of good character also justify the termination of Appellant’s contract for default.