September 13, 2001 In the Matter of the Petition by ROBERT P. GRAVES P.O. Box 2045 at Hollister, CA 95024-2045 P.S. Docket Nos. DCA 98-157 and AO 01-67 APPEARANCE FOR PETITIONER: Gordon J. Finwall, Esq. 1501 The Alameda San Jose, CA 95126-2311 APPEARANCE FOR RESPONDENT: Terry Beckstead Labor Relations Specialist United States Postal Service P.O. Box 882290 San Francisco, CA 94188-2290
INITIAL DECISION
Petitioner, Robert P. Graves, a former Postal Service employee, filed a Petition seeking a hearing under 39 C.F.R. Part 966, which affords former employees an opportunity for a hearing before involuntary deductions are made from their retirement to satisfy a debt claimed by the Postal Service (Respondent). The Petition, docketed as AO 01-67, was prompted by Petitioner’s receipt of notice that Respondent intended to collect a debt in this manner. Respondent filed a motion to dismiss the Petition, contending that the debt was resolved in a Debt Collection Act proceeding while Petitioner was an employee. Petitioner concedes the debt was the subject of the Debt Collection Act proceeding but argues that Respondent breached the agreement settling the earlier proceeding and should be barred from collecting the debt from his retirement pay.
FINDINGS OF FACT
1. On February 17, 1998, Respondent issued Petitioner, then a Postal Service employee, invoice number 1027515 identifying a claimed debt owed by Petitioner of $76,253.74. The alleged debt was based on a shortage in that amount in the main stock of the Brisbane, California Post Office, occurring while Petitioner was the postmaster and main stock custodian. (DCA 98-157, Petitioner’s April 13, 1998 Submission; Answer, Exhibit 1 (p. 13)).
2. Petitioner did not pay the invoice, and on March 11, 1998, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets as provided by Part 452.3 of the Employee & Labor Relations Manual, stating its intention to make deductions from his salary to collect $76,253.74 (DCA 98-157, Answer, Exhibit 1).
3. Petitioner filed a Petition for a hearing under the Debt Collection Act to challenge the proposed collection. On April 29, 1998, after Respondent filed its Answer, an oral hearing was set for May 28, 1998. (April 29, 1998 Order in DCA 98-157).
4. On May 18, 1998, the parties entered into a settlement that resolved the debt as well as a disciplinary action proposed by Respondent against Petitioner (DCA 98-157, Respondent’s May 18, 1998 Submission).
5. The settlement pertaining to DCA 98-157 provided in its entirety:
"Robert Graves represented by Jaime Chacon, Postmaster Representative (NAPUS) and Virginia Johnson, Labor Relations Specialist, representing the Agency herein agree to settle the pending appeal before the Debt Collection Board – PS Docket No. DCA-98-157, and USPS Invoice dated February 17, 1998-#1027515-Customer #[Petitioner’s SSAN] based on the following terms and conditions:
1. Robert Graves – [Petitioner’s SSAN] agrees to pay the United States Postal Service a total of $40,000. A maximum of 15% will be deducted from his disposable annuity payment upon the implementation of his retirement from the United States Postal Service.
2. Robert Graves agrees that he will retire from the Postal Service effective May 18, 1998.
3. The Postal Service agrees that the Invoice #1027515 dated February 17, 1998 will be adjusted to read net amount due $40,000.
4. Robert Graves agrees that he has made this agreement of his own free will, in good faith, without threat, coercion or intimidation.
5. Robert Graves agrees to withdraw any appeals concerning this matter and agrees to withdraw any EEO complaint or other grievance in any forum concerning this matter.
6. The Postal Service agrees to expunge all of Robert Graves [sic] discipline from his Official Personnel File effective on his retirement date.
7. This agreement represents full and final settlement of all and any issues relating to the debt and repayment of said Forty Thousand Dollar ($40,000) debt owed by Robert Graves to the United States Postal Service." (AO 01-67, Exhibit A to June 8, 2001 Declaration of Robert Graves).
6. In a separate agreement resolving the proposed disciplinary action, also executed on May 18, 1998, the parties agreed, in part:
"In signing this agreement, the employee agrees and understands that he is permanently giving up and relinquishing all rights he may have had to file any administrative or judicial challenge to his retirement from the United States Postal Service, or the remaining debt of Forty-Thousand Dollar ($40,000) owed to the United States Postal Service." (AO 01-67, Exhibit A to June 8, 2001 Declaration of Robert Graves).
7. P.S. Docket No. DCA 98-157 was dismissed on May 20, 1998, based on the parties’ settlement.
8. Petitioner retired effective May 18, 1998. At the time of his retirement, Petitioner was entitled to be paid in a lump sum a total of $17,018.15 for annual leave he had earned but not taken before his retirement. He was also entitled to a lump sum payment of $3,636.94 for the balance remaining in his EVA reserve account. (AO 01-67, Exhibit B to June 8, 2001 Declaration of Robert Graves).
9. On July 29, 1998, Respondent issued Petitioner a new Statement addressing Petitioner’s debt, updating the February 17, 1998 invoice (Finding 1). The new Statement reflected that the invoice amount had been reduced from $76,253.74 to $40,000 and that the total debt had been reduced by an additional $20,027.71. The second reduction resulted from Respondent withholding the lump sum payments Petitioner was entitled to upon retirement (Finding 8) and applying those amounts to the $40,000 debt claimed by Respondent. The Statement reflected a balance owed of $19,972.29, and a note to the Statement advised Petitioner that Respondent contemplated further collection efforts. (Exhibit C to June 8, 2001 Declaration of Robert Graves; Respondent’s Response to June 19, 2001 Order, Exhibit 4).
10. On January 26, 2001, Respondent’s Accounting Service Center sent Petitioner a Notice of Intent to Collect Delinquent Debt, claiming a debt in the amount of $19,972.29, the difference between $40,000 and the $20,027.71 withheld (See Finding 9). The notice advised Petitioner that Respondent intended to submit the debt to the Treasury Department to seek collection by offset against federal payments due Petitioner, including tax refunds and federal retirement pay. (AO 01-67, Exhibit D to June 8, 2001 Declaration of Robert Graves).
11. On February 21, 2001, Petitioner filed a Petition for a hearing under 39 C.F.R. Part 966, Respondent’s regulations applicable to collection of debts from former employees by offset. That Petition was docketed as P.S. Docket No. AO 01-67.
12. Respondent filed a motion to dismiss, contending that the debt was the same debt that had been resolved by settlement agreement in Docket No. DCA 98-157 and that Petitioner was precluded from seeking another hearing on the debt.
13. Petitioner opposed the motion, contending he was entitled to a hearing on the debt because he had received inadequate representation in the Debt Collection Act proceeding and inadequate advice as to his appeal rights (April 23, 2001 Submission of Suzanne Jean Gere).
14. Petitioner was given an opportunity to submit further evidence in support of his position by May 11, 2001 (Order of April 26, 2001). He requested an extension to allow him an opportunity to hire an attorney and submit further information. The time for submitting further information was extended until June 11, 2001. (Petitioner’s letter of May 3, 2001; Order of May 8, 2001).
15. In his June 8, 2001 Submission, Petitioner, through counsel, raised for the first time the argument that Respondent’s collection of the $20,027.71 from amounts he was due at retirement fully satisfied the debt he owed under the settlement agreement.
16. Postal Service regulations provide for collection of debts from final payments due a separating Postal Service employee:
"Collection of Postal Debts from Final Payments
If an employee indebted to the USPS has previously been accorded his due process rights under subchapters 450 or 460 of the Employee and Labor Relations Manual, and his current wages are subject to offset for a postal debt, any amount due the employee at the time of his separation shall be applied to the postal debt." (Postal Service Handbook F-16, Accounts Receivable, Section 282.331; see also Employee and Labor Relations Manual, Section 455.1; Postal Service Handbook F-16, Accounts Receivable, Section 712.262).
17. Postal Service regulations applicable to collection of alleged debts from former employees by administrative offset, 39 C.F.R. Part 966, provide,
"(a) A former employee who is alleged to be responsible for a debt to the Postal Service may petition for a hearing under this part, provided:
(1) Liability for the debt and/or the proposed offset schedule has not been established under Part 452.3 or Part 462.3 of the Employee & Labor Relations Manual. . . . " (39 C.F.R. §966.4 (a)(1)).
18. Part 452.3 of Respondent’s Employee & Labor Relations Manual establishes the statutory offset procedures to be provided a current employee before Respondent may offset the employee’s salary to satisfy a debt claimed by Respondent. Petitioner’s Debt Collection Act Petition, DCA 98-157, and Respondent’s underlying claim were processed according to Part 452.3 of the Employee & Labor Relations Manual (Findings 1-7).
DECISION
The debt Petitioner challenges in AO 01-67 is the same debt that was at issue in the Debt Collection Act proceeding, DCA 98-157 (Findings 1, 9, 10). Under the applicable rules, a former employee is not entitled to a hearing to challenge a debt for which liability was established in a Debt Collection Act proceeding while the person was still an employee (Findings 17, 18), and, therefore, Respondent argues, this Petition should be dismissed.
Petitioner acknowledges the settlement agreement, but argues that Respondent breached the agreement when it collected over $20,000 from his terminal leave and EVA reserve account upon his retirement in 1998, an amount that otherwise would have been paid to him in a lump sum (Findings 8, 9). He argues that under the settlement agreement, Respondent’s exclusive method of recovery was by deducting a maximum of 15% from his disposable annuity payment upon his retirement. Petitioner argues that by collecting the $20,027.71 in 1998, Respondent has already recovered the present value of the stream of payments contemplated by the settlement agreement, and that Respondent should be precluded from further collection on the debt.
The settlement agreement, read as a whole, does not limit Respondent’s collection efforts to Petitioner’s annuity. The parties did not explicitly agree in the settlement agreement that the stream of payments over the years that totaled $40,000 would be Respondent’s sole avenue of recovery. The agreement consistently refers to the compromised debt as "$40,000" without reference to payments over time (Findings 5, 6). While in the first paragraph of the settlement agreement Respondent agreed to collect no more than 15% from Petitioner’s disposable annuity payment, it made no commitment to limit its collection efforts from other funds it might owe Petitioner (Finding 5). Offset against funds such as accrued leave and the EVA payment of a separating employee, such as Petitioner, was authorized by Postal Service regulations (Finding 16), and there is no evidence that the parties understood Respondent to waive such collection.
In determining the meaning of an agreement, the interpretation attributed to the agreement by the parties before the dispute arose, as indicated by their pre-dispute conduct, is important. In this case, Respondent offset Petitioner’s accrued leave and EVA payments, plainly indicating Respondent’s interpretation that the settlement agreement did not limit its ability to follow Postal Service regulations in collecting funds owed by an employee separating from the Postal Service. Petitioner says he expected to receive the lump sum leave and EVA payments at retirement, yet there is no evidence he complained when he did not because of Respondent’s offset. No later than July 1998, Respondent sent Petitioner a copy of the Statement that set forth the offset as well as the reduction of the debt to $40,000 (Finding 9), but there is no evidence in Petitioner’s declaration or elsewhere in the record to explain his failure to object.
Petitioner argues that he had no reason to object in 1998 because he did not know then that Respondent intended to go after his retirement as well as the offsets already made. However, the Statement of account from July 1998 noted that further collection action was contemplated and that there remained, in Respondent’s view, an outstanding balance of $19,972.29 (Finding 9). Petitioner has stated no grounds for believing that Respondent had decided not to collect from his retirement, and he has identified no conduct or statements by Respondent’s officials that would have supported such a belief.
If he believed in June or July of 1998 that Respondent had breached the settlement agreement, it was incumbent upon Petitioner to raise the issue with Respondent. Petitioner also could have sought relief in the Debt Collection Act proceeding based on Respondent’s alleged breach of the settlement agreement that led to dismissal of DCA 98-157, but he did not do so. This pre-dispute conduct of the parties supports the conclusion that they did not intend in the settlement agreement to limit Respondent’s collection of the $40,000 debt to recovery from Petitioner’s retirement pay.
Additionally, when Respondent notified Petitioner in 2001 that it intended to recover $19,972.29 from his retirement pay (Finding 10), Petitioner filed his Petition to challenge the collection without mentioning a breach of the settlement agreement. The basis of his challenge was subsequently clarified in Petitioner’s April 23, 2001 submission to be alleged inadequate representation and inadequate advice of his appeal rights in the Debt Collection Act proceeding; Petitioner made no argument that Respondent breached what Petitioner understood the settlement agreement to provide (Findings 11, 13). It was not until several months after the Petition that the breach of settlement agreement argument first surfaced in Petitioner’s attorney’s filings (Findings 14, 15). This delay in raising the breach argument seriously undermines Petitioner’s current contention that in 1998, when he entered into the settlement agreement, he believed the settlement allowed Respondent to collect the $40,000 only from his retirement annuity.
This matter having been resolved pursuant to the statutory offset procedures in Part 452.3 of the Employee & Labor Relations Manual, Petitioner is not entitled to a hearing under the administrative offset procedures applicable to former employees (Findings 17, 18). Accordingly, the Petition is dismissed.
Norman D. Menegat Administrative Judge