April 17, 1996
Appeal of
CHRISTOPHER M. COTE’
JAMES R. GOWAN d/b/a COTE’ DISTRIBUTION SYSTEMS
PSBCA No. 3898
CHRISTOPHER M. COTE’
DONNA S. SHEPHERD d/b/a COTE’ DISTRIBUTION SYSTEM-HAWAII/
SIERRA VALLEY LINES
PSBCA No. 3899
Under Contract Nos. HCR 95066, HCR 96770
APPEARANCE FOR APPELLANTS:
Christopher M. Cote’
APPEARANCE FOR RESPONDENT:
Mark Brent Ezersky, Esq.
OPINION OF THE BOARD ON MOTIONS FOR SUMMARY JUDGMENT
Respondent filed a motion for summary judgment arguing that the terminations for default at issue in these appeals must be upheld as a matter of law. Appellants filed a declaration under penalty of perjury in opposition to the motion and argued that there remain disputed issues of material fact that preclude summary judgment.
Respondent argues that Appellants’ contracts were properly terminated for default under clause 16(a)(7)(a) of the contracts which provides:
“16. TERMINATION BY THE POSTAL SERVICE FOR DEFAULT.
(a) The Contracting Officer may terminate this contract for default:
* * *
(7) If the Contractor or a partner, if the Contractor is a partnership, or a principal operating officer or owner, if the contractor is a corporation, (a) has been or is, during the term of the contract, convicted of a crime of moral turpitude affecting his reliability or trustworthiness as a mail transportation contractor, such as any form of theft, fraud, embezzlement or assault, or (b) associates with known criminals, or (c) is not reliable, trustworthy or of good character.” (Appeal File, Tab (“AF”) 16).
The contracting officer terminated both of the contracts at issue in these appeals based on information that Christopher Cote’, a partner in each of the entities that hold these contracts, was convicted of violating section 115 of the California Penal Code. Under section 115, it is a felony knowingly to offer a false or forged instrument for recording. An untitled and unauthenticated document in the appeal file dated September 13, 1995, appears to reflect that Mr. Cote’ pled guilty to violating section 115 and was sentenced. Respondent argues that, therefore, the termination was proper under clause 16(a)(7)(a) and the appeals must be denied as a matter of law. Respondent submitted no affidavits, but relied solely on the documents in the appeal files.
Appellants argue that summary judgment is inappropriate because there are material facts in dispute. Appellants assert that they have performed all services under the contracts satisfactorily and that their contracts were singled out for termination while other highway contractors with more serious criminal convictions were allowed to continue performing. In the October 31, 1995 notice of appeal, Mr. Cote’ asserted that the legal proceeding against him was not yet final. He also pointed out that the events that allegedly violated Penal Code section 115 occurred in 1991, before either of the contracts in question was awarded.
Summary judgment may be granted only if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Rood Trucking Co., Inc., PSBCA Nos. 3121 & 3132, 93-2 BCA ¶ 25,564. Viewing the record, as we must in deciding Respondent’s motion for summary judgment, in the light most favorable to Appellant, United States v. Diebold, 369 U.S. 654, 655 (1962); Hotel Systems, Inc., PSBCA Nos. 3253-3258, 93-3 BCA ¶ 25,922 recon. denied June 30, 1993, we conclude that Respondent is not entitled to judgment as a matter of law.
First, the source, authenticity and import of the document Respondent offers to demonstrate Mr. Cote’s conviction are not apparent. Mr. Cote’ has asserted, after the date of that document, that the legal proceedings against him were not complete. This is a genuine issue of material fact that would preclude summary judgment.
There is no evidence of the circumstances surrounding the contracting officer’s exercise of his discretion in deciding to terminate the two contracts for default or of Respondent’s interpretation of the relevant clause. In its motion, Respondent assumes, without support, that a violation of Penal Code section 115 meets the standard of clause 16(a)(7)(a) and that conviction of a breach of section 115, which breach apparently occurred in 1991, affects Appellants’ reliability or trustworthiness as mail transportation contractors. To show that the terminations were warranted, Respondent must establish these elements of its case. To establish with certainty whether Mr. Cote’s conviction, if it is such, violates the termination provision and whether the contracting officer reasonably exercised his discretion under the clause when he chose to terminate both contracts will require examination of additional factual information regarding the parties’ intentions and understandings and the circumstances of the terminations. See Hotel Systems, Inc, PSBCA Nos. 3253-3258, June 30, 1993. Lacking any explanation of the contracting officer’s actions and given that we must view the record in the light most favorable to Appellants, we find that Appellants have raised issues of fact regarding the terminations that cannot be resolved in a motion for summary judgment.
For the above reasons, Respondent’s motion is denied.
Appellants filed a motion for summary judgment in PSBCA No. 3898 based on Respondent’s failure to file an answer in that appeal. These appeals have been consolidated for further proceedings (January 31, 1996 Order) as the issues are substantially the same. In fact, the paragraphs of the complaints relating to the terminations are virtually identical. Respondent filed its answer in PSBCA No. 3899, and the answer is deemed to apply to PSBCA No. 3898 as well. However, the complaint in PSBCA No. 3898 also alleges bases for recovery of money damages under HCR 95066 not present in PSBCA No. 3899 (Complaint in PSBCA No. 3898, paragraphs 6-8). Respondent did not answer separately the allegations comprising these claims, but it denied all allegations of the complaint not specifically admitted and, accordingly, will be deemed to have denied the money damage allegations as well. Therefore, there is no basis for rendering judgment in Appellants’ favor based on Respondent’s answer.
However, the Board on its own raises as an issue its jurisdiction over Appellant’s monetary claims. There is nothing in the record that indicates that these claims have ever been presented to the contracting officer. Claims for money damages may be considered by the Board, but any such consideration must be preceded by submission of the claim in writing to the contracting officer for a final decision. See 41 U.S.C. § 605(a); Paragon Energy Corp. v. United States, 645 F.2d 966, 971 (Ct. Cl. 1981); Jerome Bailey, PSBCA No. 3638, 95-1 BCA ¶ 27,447; James H. Foster, PSBCA No. 3152, 93‑1 BCA ¶ 25,362. Assertion of a monetary claim, for the first time, in the complaint does not suffice to give the Board jurisdiction. See James H. Foster, PSBCA No. 3152, 93‑1 BCA ¶ 25,362. Therefore, the portion of the complaint seeking monetary relief based on the lift-gate and delay claims is subject to dismissal. See Mr. and Mrs. Edward R. Ester, PSBCA No. 1559, March 24, 1987. However, such dismissal would be without prejudice, and Appellants could submit a proper claim to the contracting officer and file another appeal if the contracting officer denies the claim.
Appellants are allowed fifteen days from their receipt of this decision to show cause why the lift-gate and delay claims should not be dismissed. Any evidence that the claims have been submitted to the contracting officer and have been the subject of a final decision should be filed within that period.
Norman D. Menegat
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman