December 10, 1996
Appeal of
ELAINE E. LUEBKE
Under Contract No. 475630-94-P-0600
PSBCA No. 3830
APPEARANCE FOR APPELLANT:
Elaine E. Luebke
APPEARANCE FOR RESPONDENT:
Glenn L. Smith, Esq.
OPINION OF THE BOARD
Appellant, Elaine E. Luebke, has filed a timely appeal from a final decision of a contracting officer terminating a contract with Respondent, United States Postal Service, to operate a contract postal unit. At Appellant’s election and without opposition from Respondent, the appeal is being decided on the record in accordance with 39 C.F.R. §955.12.
FINDINGS OF FACT
1. On December 3, 1993, Appellant and her son, William A. Grames, were awarded Contract No. 475630-94-P-0600 to operate the Country Pines Contract Branch, a contract postal unit (CPU), in Sarasota, FL. Appellant and Mr. Grames placed the bid as a partnership and he was proposed as the individual who would staff the unit.[1] (Appeal File (AF) Tab 15). Appellant leased a space for five years in the Center at University Parkway, where she operated the CPU and a gift shop (Complaint ¶2). Contract performance began on December 6, 1993 (AF Tab 11) at an annual price of $26,064.00 (AF Tab 15).
2. The contract was for an indefinite term and was subject to the following termination rights in Clause C.1.b, CONTRACT DURATION AND TERMINATION (CPU Clause OB-490) (June 1988):
b. Termination. This contract may be terminated by either the Postal Service contracting officer or the contractor upon 60 days’ written notice. The contracting officer may terminate the contract upon one day’s written notice if necessary to protect the Postal Service’s interest. (AF Tab 15).
3. On April 18, 1995, Mr. Grames was charged with a violation of Florida Statute, §810.014, Grand Theft, for allegedly embezzling Postal Service funds while working at the Interstate Contract Branch Postal Unit, another CPU operated by Appellant (Supplemental Appeal File (SAF) Tab B(1), Investigative Memorandum ¶4).[2]
4. On April 20, 1995, the contracting officer’s representative for the Country Pines CPU, sent a request to the contracting officer to terminate the Country Pines CPU contract on 60 days written notice and prohibit Mr. Grames from working at the station pursuant to Clause G.5, EMPLOYEES, (CPU Clause OB-493) (June 1988), of the contract (AF Tab 9). Under Clause G.5, the contracting officer “may require removal of an employee from the CPU operation if, in the opinion of the contracting officer, the employee . . . fails to comply with applicable standards of conduct” (AF Tab 15).
5. On April 26, 1995, the contracting officer issued unilateral Modification 01 terminating the contract on 60 days written notice in accordance with Clause C.1, CONTRACT DURATION AND TERMINATION (AF Tab 8; FOF 2). The date of termination was set for close of business June 30, 1995 (AF Tab 8).
6. On April 26, 1995, the contracting officer also issued a final decision terminating the Contract on 60 days written notice. The contracting officer enclosed Modification 01 with the final decision. (AF Tab 7).
7. Appellant sent a response on May 1, 1995, to a Postal Service contract technician, stating that “although we do not agree with the Contracting Officer’s decision, you have our assurance that we will honor it until such time as you advise us that that decision has been changed” (AF Tab 6).
8. On May 4, 1995, Appellant requested reconsideration of the contracting officer’s decision to terminate the Country Pines CPU contract and noted that Mr. Grames was willing to have his name removed from the contract (AF Tab 4).
9. In response to Appellant’s May 4, 1995 request for reconsideration, the contracting officer reaffirmed (in a final decision dated May 15, 1995, regarding the Interstate CPU contract), that the Country Pines CPU contract would be terminated on June 30, 1995 and would not be reinstated (AF Tab 3).
10. On May 8, 1995, Appellant appealed the contracting officer’s April 26, 1995 final decision to the Board (AF Tab 2).
DECISION
Appellant contends that Respondent terminated her contract in bad faith by falsely telling her the reason for termination was that the unit was no longer needed, and by not allowing her to transfer the Country Pines CPU contract to another entity in order to reduce her personal losses in connection with the possible sale of her gift shop. Appellant seeks $500,000.00[3] to compensate her for the loss of income from three other CPUs that she claims she was forced to abandon because of the bad faith termination of the Country Pines CPU, and the money lost on the building lease where the Country Pines CPU was located. Respondent asserts that there is no issue of material fact because Respondent properly terminated the contract on 60 days notice, as allowed under the contract’s terms, and that the appeal should be dismissed. In the alternative, Respondent contends that Appellant has failed to prove any compensable damages, or if the Board does find damages, that Appellant’s “unclean hands” would bar recovery.
The contract gave either party the right to terminate the contract with 60 days written notice. The Board has previously held that similar provisions give the contracting officer wide discretion and the decision to terminate will be upheld unless it is exercised in bad faith or constitutes an abuse of discretion. Package Plus of S.W. FL Inc., PSBCA No.3674, 95-2 BCA ¶ 27,762; Michael J. Earl, PSBCA No. 3332, 93-3 BCA ¶ 26,234. Appellant has not shown that the contracting officer either acted in bad faith or abused his discretion in terminating her contract. Sufficient reason existed for termination. Appellant’s partner, Mr. Grames, admitted he stole postal funds while working at another CPU operated by Appellant (FOF 3). Based on his embezzlement, the contracting officer had sufficient reason to bar Mr. Grames from the premises and to terminate a contract to which he was a party. The contracting officer neither acted in bad faith nor abused his discretion in his decision to terminate the contract.[4]
Accordingly, the appeal is denied.
William K. Mahn
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
[1] In her Supplement to the Complaint and Reply to the Supplemental Appeal File, Appellant asserts that she was in sole control of the CPU and that she only listed Mr. Grames’ name on the bid so that he would be able to earn a living if something happened to her. However, since Mr. Grames signed the contract, he can properly be considered a party to it.
[2] On August 9, 1995, Mr. Grames’ amended Pretrial Intervention Agreement with the State of Florida was finalized. Under the Agreement, Mr. Grames admitted his wrongdoing and agreed to pay the Postal Service $13,778.80 in restitution, the amount of shortage at the Interstate CPU plus interest. (SAF Tab B(2)).
[3] Appellant originally sought compensation in the amount of $200,000.00 in her Complaint. In her Brief, Appellant increases the amount by $300,000.00, arguing that her original request was too low to fully compensate for her losses.
[4] Since Respondent properly terminated the contract on 60 days notice, there is no need to address Respondent’s arguments regarding “unclean hands” or damages.