April 14, 2003
In the Matter of the Petition by
DARRELL KIRBY
1439 Carowinds Circle
at
Maryville, TN 37803-7703
P.S. Docket No. DCA 02-498
APPEARANCE FOR PETITIONER:
Dennis Sherfy
4582 Moccosin Place
Greenwood, IN 46142-7306
APPEARANCE FOR RESPONDENT:
Joel L. Barnes
Labor Relations Specialist
United States Postal Service
811 Royal Parkway
Nashville, TN 37299-9401
FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Petitioner, Darrell Kirby, filed a Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets from the Manager of Post Office Operations, dated October 23, 2002. This Notice stated the Postal Service’s intention to withhold $13,712.86 from Petitioner’s salary to recover money paid for invalid utility bills.
Petitioner requested a hearing on written submissions. The parties were given time to submit additional evidence and argument, beyond that filed with the Petition and the Answer. Respondent filed excerpts from Postal Service Handbook F-1, Post Office Accounting Procedures, on which it relies as the basis for financial liability. Petitioner filed his sworn declaration and an argument in reply to Respondent’s citations to the F-1 Handbook. The parties also responded to a February 28, 2003 Order asking for evidence on efforts made by the Postal Service to recover the alleged losses from the City of Maryville, Tennessee, or other parties, an issue not previously raised. Neither party presented any additional evidence. The following findings of fact are based on all the material submitted by the parties.
FINDINGS OF FACT
1. During the time pertinent to this case, Petitioner was the postmaster at Maryville, Tennessee. He became the postmaster in 1981. (Kirby Declaration).
2. When Petitioner arrived in Maryville, the Main Post Office was located at 1905 E. Broadway Avenue, and another facility at 201 E. Broadway Avenue, then known as the Downtown Station, was also in use. This second facility was owned by the General Services Administration (GSA) and leased by the Postal Service. (Kirby Declaration).
3. In 1990, partly because of the need for additional space and partly because GSA planned to sell the facility at 201 E. Broadway Avenue, the main post office moved to a facility known as Parkway Station at 715 E. Lamar Alexander Parkway. The Postal Service continued to use the 1905 E. Broadway Avenue location for some purposes, but vacated the Downtown Station at 201 E. Broadway Avenue in September 1990. (Kirby Declaration).
4. In April 2000, the Maryville Post Office vacated both the Parkway Station and the 1905 E. Broadway Avenue facility and moved to a new location. (Kirby Declaration).
5. City of Maryville Utilities bills the Maryville Post Office monthly by mail. Each bill contains a “location number.” The “location number” for 1905 E. Broadway Avenue is 200-2460-00; 715 E. Lamar Alexander Parkway is 100-6306-01; and 201 E. Broadway Avenue is 270-5150-00. The bills do not indicate that the location number is the same as the address to which the bill is mailed, and in some cases it is not. (Bills attached to Answer; James Bishop memo, attached to Answer).
6. In order for a bill to be paid, the postmaster is required to sign a PS Form 7381, Requisition for Supplies, Services, or Equipment, entering the amount, the date, and approving payment. (Bishop memo; Carolyn Bryant memo, attached to Answer).
7. After the Postal Service vacated the Downtown Station at 201 E. Broadway Avenue in September 1990, City of Maryville Utilities continued to send monthly utility bills for location number 270-5150-00 to “US Post Office 1905 E. Broadway Avenue.” These bills did not indicate that location number 270-5150-00 was 201 E. Broadway Avenue, or that the bill was for someplace other than 1905 E. Broadway Avenue. From October 1990 until December 2001, when he went on sick leave and ceased to be the Maryville Postmaster, Petitioner continued to approve payment of these bills by signing PS Forms 7381.[1] (Bills and Forms 7381, attached to Answer).
8. From the time the Postal Service vacated the building at 201 E. Broadway Avenue until Petitioner left the Maryville office in December 2001, the Postal Service paid City of Maryville Utilities a total of $27,745.98 for service to 201 E. Broadway Avenue. After the error was discovered, in May 2002, the current owner of the building at 201 E. Broadway Avenue agreed to pay $18,000, and apparently did pay that amount. There is nothing in the record to show how this figure was arrived at, or whether the Postal Service attempted to collect more from the current owner. Respondent charged Petitioner with the difference.[2] (Bills and Forms 7381, attached to Answer; C. Wade Smith memo to Petitioner, August 29, 2002, attached to Answer ).
9. Although the Maryville Post Office vacated the building at 1905 E. Broadway Avenue in April 2000, the Postal Service continued to use the building for other purposes until November 2001. After November 2001, City of Maryville Utilities continued to send monthly bills for location number 200-2460-00, addressed to 1905 E. Broadway Avenue. Petitioner authorized payment of these bills on November 29, 2001 and December 21, 2001, in the amounts of $363.26 and $412.16. Petitioner’s successor continued to authorize payments until the error was discovered in May 2002. The total amount paid by the Postal Service for utility service to this location after November 2001 is $2,218.05. (Bills and Forms 7381, attached to Answer).
10. Although the Maryville Post Office ceased using the building at 715 E. Lamar Alexander Parkway in April 2000, City of Maryville Utilities continued to send monthly bills for location number 100-6306-01, addressed to 715 E. Lamar Alexander Parkway, until November 2000. Six monthly payments, totaling $1,236.50, were authorized by PS Forms 7381 in Petitioner’s name, although Petitioner signed only two of them himself. (Bills and Forms 7381, attached to Answer).
11. On August 29, 2002, Petitioner’s supervisor issued him a letter stating that he owed the Postal Service $13,712.86, broken down as $10,258.31 for the 201 E. Broadway Avenue facility; $2,218.05 for the 1905 E. Broadway Avenue facility; and $1,236.50 for the 715 E. Lamar Alexander Parkway facility.
12. There is no record of any attempt by the Postal Service to collect from other tenants for any part of the amounts improperly paid for 1905 E. Broadway Avenue or 715 E. Lamar Alexander Parkway. An email message from one Postal Service official to another, dated May 31, 2002, states that efforts would be made to collect some of the amount paid for 201 E. Broadway Avenue from the current tenant, but adds: “The amounts for the other two locations are so small, I don’t think it would be worth the time/effort to go through this process to collect as they are only $2,218 and $1,236.” This message concludes by recommending that Petitioner be issued a letter of demand for the entire amount.[3]
13. The erroneous payments were discovered in May 2002, after a mail carrier asked a supervisor to look into getting the address changed on mail from City of Maryville addressed to “US Post Office,” 1905 E. Broadway Avenue. Someone began looking at the utility bills and noticed that there were bills for different location numbers. Consultation with the Maryville Utility Board revealed the errors. (Carolyn Bryant memo, attached to Answer).
14. Postal Service Handbook F-1, Post Office Accounting Procedures, contains the following provisions that are pertinent to this case:
14 Liability for Financial Losses
When an accountable financial loss occurs and evidence shows that the postmaster or responsible manager enforced U.S. Postal Service (USPS) policies and procedures in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show that the postmaster or responsible manager met those conditions, the Postal Service charges the postmaster or responsible manager with the full amount of the loss.
16 Applying Financial Controls
The accounting service centers, inspection service, and individual post offices apply the financial controls designed to enforce safeguards and procedures in protecting USPS financial resources, as detailed below.
163 Post Offices
The postmaster or responsible manager is required to examine each facet of post office financial controls as outlined in this handbook.
66 Disbursements to Pay Utilities
Charges for utilities are accounted for separately as electricity, telephone, oil (heating), gas (heating), and water. They are further defined as being office or VMF expenditures. Post offices in leased quarters do not pay utilities unless the lease contract requires it.
661 What Utilities to Pay
661.11 Non-SFAP Units
Postmasters must pay all metered utility bills for services covering charges incurred by their post offices, stations, and VMFs [vehicle maintenance facilities] up to the amount of two no-fee money orders. . . ..
662 Guidelines for Making Payments
662.1 Verifying Bills
1. Review bills submitted by utility companies and municipal units for established rates and correctness of statement.
2. Check the lease before making payments to post offices or stations occupying leased quarters to make sure the Postal Service is required to pay for fuel and utilities.
DECISION
Respondent’s position is that the erroneous payments constitute “an accountable financial loss,” within the meaning of Section 14 of the F-1 Handbook, and that Petitioner did not enforce Postal Service policies and procedures because he did not verify the utility bills before he authorized payment, as required by Section 662.1 of the F-1 Handbook.
Petitioner makes several arguments that need not be addressed. Respondent’s case fails because Respondent has not made a sufficient showing that attempts were made to collect these losses from other parties. When there is another party, or parties, ultimately liable for losses suffered by the Postal Service, Respondent has a duty to mitigate its damages before charging the losses to an accountable postal employee. Michael A. Martin, P. S. Docket No. DCA 00-78 (May 17, 2000); Paul E. Logan, P. S. Docket No. DCA-105 (September 10, 1991).
For the amounts Petitioner is charged for improper payments for service at 1905 E. Broadway Avenue and 715 E. Lamar Alexander Parkway, Respondent has made no showing of any effort to recover these losses from the party or parties that actually received the utility service in question (see Finding of Fact #12).
The Postal Service did collect $18,000 from another party for 201 E. Broadway Avenue, but there is no evidence as to whether this was the full extent of that party’s liability for the utility service or whether it was a compromise settlement. If the latter, there is no showing of the basis for the compromise.
More important, there is no showing of any attempt to collect any part of the payments back from the City of Maryville. It is undisputed that the Postal Service ceased its use and occupation of 201 E. Broadway Avenue in September 1990 (see Finding of Fact #3), 715 E. Lamar Alexander Parkway in April 2000 (see Finding of Fact #10), and 1905 E. Broadway Avenue in November 2001 (see Finding of Fact #9). Although there is evidence that Petitioner did not notify the city that utility service should be discontinued, it is by no means clear that this made the Postal Service liable. Respondent has presented no evidence or argument as to why the City of Maryville should not be obligated to return money mistakenly paid by the Postal Service for utility service after these dates. (See United States v. Wurts, 303 U.S. 414, 82 L. Ed. 932, 58 S. Ct. 637 (1938).
The Petition is granted. Respondent may not collect money from Petitioner’s salary for the debt alleged in this case.
Bruce R. Houston
Chief Administrative Law Judge
[1] The case file includes bills and Forms 7381 only from September 1997 forward, but Petitioner has not disputed that this practice was continuous from 1990.
[2] Respondent used the figure $28,258.31 as a basis for charging Petitioner, but $512.33 of that total was paid after Petitioner left the Maryville office and payment was authorized by his successor. Respondent has not articulated any rationale for charging Petitioner with that $512.33.
[3] As noted in Finding of Fact #8, $18,000 was paid by the current owner of the building at 201 E. Broadway Avenue. A number of email messages are attached to Respondent’s Answer. The authors’ names are included, but the Answer does not further identify the authors.