PSBCA Nos. 6826, 6856, & 6857

OPINION OF THE BOARD ON MOTION FOR SUMMARY JUDGMENT

Appellant, Angela Pugliese, appealed the contracting officer’s final decision terminating for default Highway Contract Route (HCR) No. 99756 (hereinafter referred to as “HCR No. 99756” or “contract”). In her appeals, she also sought the re-awarding of HCR No. 99756, or alternatively, $332,000 in damages. After her appeals were docketed, she was convicted in federal court of obstructing the mail. The Postal Service then moved for summary judgment.

We conclude that the Postal Service properly terminated the contract for default and grant its motion. The following findings of fact are made solely for the purpose of deciding the motion.

FINDINGS OF FACT

1. Ms. Pugliese and the Postal Service entered into HCR No. 99756 for the delivery of mail in the suburbs of Fairbanks, Alaska. The contract was based out of the North Pole Branch Post Office. The contract began on April 1, 2018, and was to run through September 30, 2023. (RAF, Tab 1 at 1; see also Appellant’s Statement of Genuine Issues).

2. The contract specified general requirements and prohibitions for Ms. Pugliese as a mail transportation contractor, including, in pertinent part:

a. Sanctity of the Mail

The supplier shall carry all mail tendered for transportation under this contract, whatever may be its size and weight, with certainty, celerity, and security, in accordance with the operating schedule and between the points fixed in the schedule, as modified from time to time pursuant to this contract. . . .

c. Protection of the Mail

The supplier shall protect the mail from loss, depredation, or damage. The mail shall be transported in an enclosed, water-proof compartment, equipped with secure locking devices, which shall be kept locked at all times except when access thereto is required for performance of service under this contract.

(RAF, Tab 1 at 16).

3. The contract included a general clause regarding the Postal Service’s ability to terminate for default:

m. Termination for Default. The Postal Service may terminate this contract, or any part hereof, for default by the supplier, or if the supplier fails to provide the Postal Service, upon request, with adequate assurances of future performance. In the event of termination for default, the Postal Service will not be liable to the supplier for any amount for supplies or services not accepted, and the supplier will be liable to the Postal Service for any and all rights and remedies provided by law. The debarment, suspension, or ineligibility of the supplier, its partners, officers, or principal owners under the Postal Service's procedures may constitute an act of default under this contract, and such act will not be subject to notice and cure pursuant to any termination of default provision of this contract. If it is determined that the Postal Service improperly terminated this contract for default, such termination will be deemed a termination on notice.

(RAF, Tab 1 at 55).

4. The contract’s terms and conditions also listed specific events of default by Ms. Pugliese that could warrant termination for default by the Postal Service, the most relevant of which included the following:

a. The supplier’s failure to perform service according to the terms of the contract;

b. If the supplier has been administratively determined to have violated Postal law and regulations and other laws related to the performance of the service; . . .

l. If at any time the supplier, its principal owners, corporate officers or personnel are disqualified by law or regulation from performing services under this contract, and upon notice thereof, the supplier fails to remove any such disqualification.

(RAF, Tab 1 at 46-47).

5. On March 18, 2020, Ms. Pugliese was involved in a motor vehicle accident after completing her delivery route for the day. At the time of the accident, Ms. Pugliese was operating her personal vehicle to perform the contract. She was transported from the scene by an ambulance for emergency medical treatment and her vehicle was removed by Preferred Towing Company. (RAF, Tab 5 at 68-69; Tab 17).

6. The next day, Preferred Towing contacted the North Pole Post Office about Ms. Pugliese’s vehicle and reported that it contained mail and postal equipment that Preferred Towing was unable to secure. The Administrative Official, who reported to the contracting officer, took photographs in and around Ms. Pugliese’s vehicle and then recovered a substantial amount of undelivered mail. Some of the mail dated back to 2019. (RAF, Tab 2 at 4; Tab 13; Respondent’s Motion for Summary Judgment, Exhibits B, C, D).

7. On March 20, 2020, a Postal Service employee interviewed Ms. Pugliese about the mail and postal equipment recovered from her vehicle, which resulted in Ms. Pugliese’s admission that she had violated the contract terms:

Are you aware that you are to take care of all mail and equipment and deposit it daily into the Post Office, leaving with an empty vehicle?

A: [Y]es, but I should have but I did not, I was tired and overwhelmed from the week.

Why did you leave mail and equipment in the Truck?

A: I was tired and overwhelmed for the week, was going to bring [it] back in the morning, I [would] usually swap the equipment . . . .

(RAF, Tab 2 at 66).

8. In a letter dated March 21, 2020, the contracting officer denied Ms. Pugliese access to mail and Postal Service premises based on the discovery of delayed mail in her vehicle (RAF, Tab 1 at 67). Although Ms. Pugliese appealed the decision, her denial of access was upheld by the Postal Service in a subsequent decision issued on May 26, 2020 (RAF, Tab 5 at 68-71; Tab 9 at 248).

9. On June 8, 2020, the contracting officer issued a final decision terminating the contract for default. The bases for default were Ms. Pugliese’s failure to return undelivered mail to the Postal Service and her failure to hire a replacement driver to continue performing the contract after her denial of access from the mail and Postal Service premises. (RAF, Tab 10).

10. Ms. Pugliese timely appealed the termination of the contract on August 25, 2020, which we docketed as PSBCA No. 6826.

11. On December 24, 2020, Ms. Pugliese submitted a monetary claim to the contracting officer for $332,000 to recoup costs related to the termination of the contract. Her claim was denied on February 28, 2021. The same day, the contracting officer also issued a decision informing Ms. Pugliese that she owed the Postal Service $50,875.75 for reprocurement costs. (RAF, Tabs 19, 20, 21). Ms. Pugliese timely appealed both decisions from February 28, 2021, which we docketed as PSBCA Nos. 6856 and 6857, respectively.¹ 

12. Separately, the Department of Justice charged Ms. Pugliese with Obstruction of mails generally, 18 U.S.C § 1701, based on the substantial quantity and substantial lateness of the undelivered mail in her vehicle at the time of the accident. She was eventually found guilty in September 2021 after a two-day trial by the United States District Court for the District of Alaska. Ms. Pugliese was fined and sentenced to three years of probation. As part of her sentence, Ms. Pugliese was ordered “not to work in any capacity for the U.S. Postal Service on a contract or as an official postal employee.” Ms. Pugliese did not appeal her conviction. (Respondent’s Motion for Summary Judgment, Exhibits C, D; see also Opposition to Motion for Summary Judgment).

DECISION

Summary judgment will be granted if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Finley v. United States Postal Service, PSBCA No. 6606, 17-1 BCA ¶ 36,676 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986)); Fed. R. Civ. Pro. 56. A party seeking summary judgment bears the burden of informing the Board of the basis for the motion and of identifying those portions of the record that the moving party claims will demonstrate the absence of a genuine dispute of material fact. Celotex, 477 U.S. at 323.

Here, the Postal Service argues that it is entitled to summary judgment because the termination for default is based on the same nucleus of facts and issues which form the basis of Ms. Pugliese’s criminal conviction, thereby precluding relitigation according to the doctrines of res judicata and collateral estoppel. See Montana v. United States, 440 U.S. 147, 153-54 (1979).

Pursuant to 18 U.S.C. § 1701, Obstruction of mails generally, “whoever knowingly and willfully obstructs or retards the passage of the mail, or any carrier or conveyance carrying the mail, shall be fined under this title or imprisoned not more than six months, or both.” Ms. Pugliese was charged and convicted of violating this statute for the substantial quantity of undelivered mail in her vehicle at the time of the accident. These facts are the same facts which form the basis for the termination for default of her contract. (Respondent’s Motion for Summary Judgment, Exhibits C, D). The contract between Ms. Pugliese and the Postal Service included various clauses, terms, and conditions that prohibited the conduct for which she was found guilty. Most specifically, Clause B-69, Events of Default, unambiguously stated that the Postal Service could terminate the contract for default if Ms. Pugliese “has been administratively determined to have violated Postal law and regulations and other laws related to the performance of the service” or, if Ms. Pugliese, at any time, was “disqualified by law or regulation from performing services under this contract, and upon notice thereof, the supplier fails to remove any such disqualification.”

One would be hard-pressed to find a more precise example of disqualification from performance of a mail delivery contract than a contractor’s criminal conviction for obstructing the mail. Ms. Pugliese’s case provides exactly that kind of incontrovertible conclusion, since, as a condition of probation, she was expressly prohibited from working for the Postal Service in any capacity for three years. The criminal sentence not only included a fine, but also a disqualification from performing this contract or any other Postal Service contract for three years.

In opposing the motion for summary judgment, Ms. Pugliese argues that even if the Postal Service established possible grounds for the termination for default, the Board must still determine whether the contractor’s default was excusable, or attributable to an abuse of discretion by the contracting officer. To that end, Ms. Pugliese cites prior cases where the Board did consider excuses and abuse of discretion by the contracting officer.² Those cases, however, are distinguishable because they merely involved poor performance. Here, Ms. Pugliese did not merely perform the contract poorly. She was entrusted to deliver the mail, but admitted that she did not (RAF, Tab 3 and Tab 5 at 69). This is a serious violation of her contract obligation to carry all mail tendered to her with “certainty, celerity, and security” and to protect that mail from “loss, depredation, or damage,” thereby justifying the termination of her contract for default. Rios v. United States Postal Service, PSBCA No. 5357, 10-2 BCA ¶ 34,545, and the cases cited therein. And Ms. Pugliese was later criminally convicted of obstructing the mail, supporting the Postal Service’s findings that she had breached the contract. Cf.  Joseph Morton Co. v. United States, 3 Cl. Ct. 120 (1983), aff'd, 757 F.2d 1273 (Fed. Cir. 1985)(holding that a default termination must be sustained in the face of a criminal conviction). Ms. Pugliese’s allegation that the contracting officer abused his discretion in terminating the contract is wholly unpersuasive. The Postal Service is correct that res judicata bars the defenses that the default was excusable or attributable to an abuse of discretion by the contracting officer.

The preclusive effect of a judgment by claim preclusion and issue preclusion are collectively referred to as “res judicata.” Under the doctrine of claim preclusion, a final judgment forecloses “successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit.” Issue preclusion, by contrast, bars “successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment,” even if the issue recurs in the context of a different claim. Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)).

We have applied res judicata to preclude an appellant’s claim “where claims or (causes of action) arising from the same nucleus of facts have been determined by a judicial tribunal of competent jurisdiction.” Paul A. Mason, PSBCA No. 1357, 85-2 BCA ¶ 17,998). Moreover, “it is well established that a prior criminal conviction may work an estoppel in favor of the government in a subsequent civil proceeding,” but the “estoppel extends only to questions ‘distinctly put in issue and directly determined’ in the criminal prosecution.” J.E.T.S., Inc. v. United States, 838 F.2d 1196, 1201 (Fed. Cir. 1988) quoting Emich Motors Corp. v. Gen. Motors Corp., 340 U.S. 558, 568 (1951).

Based on the evidence of record, Ms. Pugliese’s claim of wrongful contract termination (and alleged corresponding damages) is directly derived from the same nucleus of facts that led to her conviction for obstructing the mail. Ms. Pugliese had a fair and full opportunity to litigate these facts at trial, which were resolved in a United States District Court. Thus, there are no material facts in dispute for this Board to consider and res judicata bars Ms. Pugliese’s claims for wrongful termination and damages.³

The Board has considered alternate justifications proffered by the Postal Service to justify its termination of the contract for default, such as Ms. Pugliese’s alleged unreliability and untrustworthiness related to her criminal conviction. Similarly, we have considered Ms. Pugliese’s allegations of an unconstitutional search of her vehicle and a purported hostile work environment. However, res judicata precludes the need to address any remaining arguments.⁴

Because we uphold the termination for default, Ms. Pugliese has not shown that she is entitled to additional money. We therefore deny her claim for $332,000. See JTD Logistics LLC v. United States Postal Service, PSBCA Nos. 6288, 6388, and 6510, 16-1 BCA ¶ 36,191.

ORDER

The Postal Service’s motion for summary judgment is granted and PSBCA Nos.

6826 and 6856 are denied. We will schedule further proceedings on the Postal Service’s claim for reprocurement costs in PSBCA No. 6857 by separate order.