Appeal of ALLSTATE LEASING, INC.

November 8, 2001

Appeal of

ALLSTATE LEASING, INC.

Under Contract No. 475630-94-P-2217

PSBCA No. 4783

APPEARANCE FOR APPELLANT:

Edward J. Puls, Jr., Esq.

APPEARANCE FOR RESPONDENT:

Patrice R. Dickey, Esq.

OPINION OF THE BOARD

Appellant, Allstate Leasing, Inc., has appealed from a contracting officer's decision partially denying its claims for the cost of repairing a number of vehicles leased to Respondent, United States Postal Service. The appeal is being decided on the record under the Board's Accelerated procedure. 39 C.F.R. §§955.12, 955.13.

FINDINGS OF FACT

1. Contract No. 475630-94-P-2217 was awarded to Appellant on August 10, 1994. Under the contract, Respondent leased from Appellant 48 van-type vehicles for use in "Park and Loop" service in Miami, Florida. The term of the contract was from October 1, 1994, through September 30, 2000, with either party having the right to terminate the contract after two years on 120 days' notice. (Appeal File Tab (4783AF) 1).

2. Clause C.5 ("Servicing and Maintenance") of the contract generally placed the responsibility for all maintenance and servicing on Appellant. The clause originally required Appellant to "maintain the vehicles in a clean and safe condition (inside and out)." The requirement that Appellant keep the vehicles in a clean condition was deleted, retroactive to October 1996, through a bilateral contract modification issued in March 1998, which also reduced the daily rental rate. (4783AF 1).

3. Clause G-5 ("Liability Requirements") provided, in part, that,

"The Postal Service will be responsible for loss of, or damage to, the contractor's vehicles while in its custody only when caused by the act or negligence of any officer or employee of the Postal Service acting in the scope of his or her employment…. In no event will the Postal Service be responsible for ordinary wear and tear which includes damage to vehicles from flying rocks and debris, substandard streets and roads, minor dents and scratches to the sides of vehicles from the doors of other vehicles in parking lots and garages, inclement weather conditions and the regular passage of time. …" (4783AF 1).

4. Respondent terminated the contract early pursuant to the 120-day termination provision, and the vehicles were returned on or about June 8, 2000. Between June 12 and 14, 2000, representatives of both parties inspected the vehicles. As required by the contract, the results of the inspection of each vehicle were recorded on a PS Form 4577, Leased Vehicle Condition Report, signed by representatives of each party, certifying that the vehicle had been "examined at time of return and deficiencies noted above." The Forms 4577 in the record are single-page forms with spaces available to note the "before" and "after" mechanical condition of the vehicles and the "before" and "after" condition of the vehicle bodies. The vehicle body condition is noted by marking up small, generic preprinted drawings of the front, back, top and sides of the vehicle to show the location of damage on the vehicle. (4783AF 2-8; 4783AF 1 (clause C.3.a)).

5. On July 7, 2000, Appellant submitted a series of claims seeking to recover the cost of repairing damage to 7 of the leased vehicles.[1] Each claim was accompanied by two estimates, the lower of which corresponded to the amount of the claim. In each of the estimates, repair labor was priced at $30 per hour and refinishing work was priced at the equivalent of $45 per hour.[2] The total claimed was $6,077.01. (4783AF 2-8).

6. Appellant included a charge of $45.00 in each claim for cleaning the vehicle and, in all but one claim,[3] included a $30.00 charge for removing decals (4783AF 2-8).

7. Respondent's Supervisor of Vehicle Maintenance reviewed each of the claims and recommended a payment amount to the contracting officer. In all cases, the supervisor recommended against payment of any charges for cleaning the vehicles and removing decals. In addition, except as noted in Findings 8 and 9, below, the supervisor recommended payment for all damage shown on the Form 4577 for each vehicle, but not for damage noted on Appellant's estimates but not also shown on the Form 4577. Finally, except as noted in Finding 10, below, in those instances in which the supervisor recommended payment, he accepted the amounts contained in Appellant's estimate for repair of each item of damage. (4783AF 2-8; Declaration of Walter Dobson, dated September 7, 2001 (Dobson Decl.)).

8. With respect to vehicle 69366, the supervisor recommended against payment for damage to the left rear quarter panel, although that damage was reflected on the Form 4577. The basis for the supervisor's recommendation was that this damage was the result of a "not at fault" traffic accident that had been reported to Appellant at the time it happened. (4783AF 5; Dobson Decl.).

9. With respect to vehicle 69367, the supervisor apparently misread Appellant's estimate as seeking recovery for damage to the bumper and bumper cover. In fact, however, Appellant's estimate sought recovery for the bumper cover and bumper cover pad, and not for the bumper. The supervisor conceded liability for damage to the rear bumper cover, but recommended against payment for replacing the rear bumper, stating that there was damage to the bumper cover but not to the bumper. The supervisor did not challenge payment for the bumper cover pad. (4783AF 6).

10. With respect to vehicles 69363, 69367, and 69368, the supervisor acknowledged the need to replace certain parts, but recommended that only 50 percent of the claimed cost be paid. The basis for that recommendation was that used parts, rather than new parts, should be used to repair vehicles of this age, and that used parts could be purchased for approximately 50 percent of the cost of new parts. (4783AF 2, 6, 7).

11. In a final decision dated February 7, 2001, the contracting officer allowed Appellant's claims to the extent recommended by the supervisor. The total allowed by the contracting officer was $3,282.10. Appellant filed a timely appeal, seeking to recover $2,794.91, the difference between the amount claimed and the amount allowed by the contracting officer.[4] (4783AF 9, 10; Complaint).

DECISION

With regard to the claims for cleaning expenses, Appellant notes that the parties amended the contract, effective in 1996, to remove the requirement that Appellant keep the vehicles in a "clean and safe condition (inside and out)." Appellant argues that the terms of the lease should be construed against Respondent and Respondent should be held responsible for the cleanliness of the vehicles. Appellant also argues that an independent vehicle examiner noted that the vehicles required cleaning and assessed a cost of $45 per vehicle. Appellant also argues that none of the Forms 4577 stated that the vehicles were clean.

With regard to Respondent's position that, in some instances, Appellant should only be reimbursed for the cost of used parts, Appellant argues that there is no contract provision requiring the use of used parts and no evidence that used parts were available at the time the vehicles were returned. Further, Appellant argues that Respondent has provided no evidence as to how it reached its conclusion with respect to the price of the used parts it alleges should have been installed.

Addressing those instances in which the estimates prepared by Appellant's estimator indicated damage not shown on the Forms 4577, Appellant argues first that the vehicle drawings on the Form 4577 are too small to be used to record an accurate and detailed description of the damage to a vehicle. Appellant argues that its estimator's reports offered a much clearer description of the damage and the estimated cost of repairs. Appellant also argues that Respondent failed to fill out some parts of the form and that it did not provide the back of any of the forms.

In addition, Appellant argues that its representative was required to sign the Forms 4577 in order to have its vehicles returned and was not allowed to make any marks on the forms before signing them. Therefore, Appellant argues, it chose to sign the forms but also prepare inspection reports of its own (its repair estimates) to be submitted to Respondent.

Appellant contends that the Forms 4577, having been filled out by Respondent's employees with no allowance for comments by Appellant's representative, should be interpreted against Respondent.

Respondent argues generally that in order to recover, Appellant has the burden of establishing that the claimed damage was in excess of ordinary wear and tear and was caused by the act or negligence of an officer or employee of the Postal Service while acting within the scope of his or her employment. Respondent contends that Appellant has provided no basis for overturning the determination of the contracting officer.

In general, to recover for damage to its vehicles, Appellant has the burden of proving that the proximate cause of the damage was the act or negligence of an officer or employee of the Postal Service and that the damage exceeded ordinary wear and tear. Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 3286-94, 3304, 3305, 93-3 BCA ¶ 25,945, and cases cited therein; Jake Sweeney Auto Leasing, Inc., PSBCA Nos. 2859-2862, 92-1 BCA ¶ 24,444; Postal Vehicle Supply Service, PSBCA Nos. 694, 695, 1979 WL 2110, December 31, 1979. In the alternative, Appellant may show that the nature of the damage or other circumstances are such that the burden of coming forward with evidence as to the cause of the damage should be shifted to Respondent. Cardel Leasing, PSBCA No. 3223, 93-2 BCA ¶ 25,740 recon. denied 93-3 BCA ¶ 26,117.

We do not accept Appellant's argument with regard to the cleaning charge assessed against each vehicle. The contract modification cited by Appellant did relieve it of the obligation to keep the vehicles clean. Relieving Appellant of that obligation, however, did not have the effect of imposing the obligation on Respondent. J. Leonard Spodek d/b/a Nationwide Postal Management, PSBCA Nos. 3833, 3941, 97-2 BCA ¶ 29,273 at 145,644, aff'd 217 F.3d 854 (Fed. Cir. 1999) (table). Appellant has not shown that Respondent had a duty, under the contract or otherwise, to keep the vehicles clean when in use or when returned to the contractor. Accordingly, Appellant may not recover the cleaning charges it claims for each vehicle.

Respondent's position with regard to the use of used parts is also not accepted. Respondent has accepted responsibility for the damage requiring the replacement of parts. Its liability is governed by the provisions of the vehicle lease, but it has not cited any language in the lease that limits its liability in the manner claimed. Even if considered in terms of Appellant's obligation to mitigate damages, the evidence is insufficient to show that it failed to do so. The evidence Respondent offered consisted of a general statement made more than a year after the vehicles were turned in and inspected that used parts could have been purchased for approximately 50 percent of the cost of new parts. The evidence does not show that used parts were in fact available at the time the vehicles were turned in, that used parts would be appropriate for use with these vehicles, that there is any corroboration for the 50 percent figure, or that the maintenance supervisor is qualified to make the statement. Absent more specific evidence, Appellant may recover the cost of new parts.

We do not accept Appellant's argument regarding those instances in which it has claimed costs for damage listed by its estimator but not shown on the corresponding Form 4577. The Form 4577 represents the results of an inspection performed by representatives of both parties. As required by the contract, each Form 4577 was signed by both parties, agreeing to the deficiencies noted on the form. In its brief, Appellant argues that its representative was not allowed to make any markings on the Forms 4577 and was forced to sign the forms in order to retrieve the vehicles. However, Appellant offered no evidence to support that allegation.

Appellant also argues that the size of the drawings prevented recording an accurate and detailed description of the damage. However, what was recorded on the Forms 4577 was only the location of the damage, and not any details of the nature or severity of the damage. With very few exceptions, for those locations noted on the Form 4577 as being damaged, Respondent accepted Appellant's claim regarding the nature of the damage and the cost of repairs. Therefore, the absence of a detailed description of the damage on the Forms 4577 did not prejudice Appellant in any way. In the face of a Form 4577 signed by both parties and in the absence of evidence showing that Appellant was precluded from noting all deficiencies, we do not accept Appellant's estimates alone as sufficient to show that damage other than that shown on the Form 4577 actually was present when the vehicles were returned. Absent persuasive evidence that other damage occurred while the vehicles were in Respondent's custody, or other evidence showing agreement by Respondent that additional damage occurred for which it is responsible, Appellant may not recover costs for damage not shown on the Form 4577 signed by both parties.

Vehicle 69367 (Finding 9)

With regard to the damage to the rear of the vehicle, the supervisor did not question Respondent's liability for the damage, but stated that Appellant was improperly attempting to collect for damage to the bumper. Respondent's position is factually incorrect, in that Appellant is seeking to recover for damage to the bumper cover, which Respondent concedes occurred, and not for damage to the bumper. Accordingly, Appellant may recover the costs it has claimed for replacing the bumper cover.

As detailed above, the appeal is sustained to the extent that Appellant may recover the claimed cost for replacing the bumper cover on vehicle 69367, and the other half of the cost of new parts on vehicles 69363, 69367 and 69368, plus Contract Disputes Act interest. The appeal is otherwise denied.

David I. Brochstein

Administrative Judge

Vice Chairman

I concur:

James A. Cohen

Administrative Judge

Chairman

[1] Vehicles 69363 through 69369.

[2] Each hour of refinishing work was priced at $30 per hour and was matched by an hour under the category of "Materials," priced at $15 per hour, for a total of $45 per hour.

[4] Appellant has agreed that its claims for the cost of removing decals, and for the costs related to the "not at fault" accident involving vehicle 69366 should be denied. (Appellant's Brief, 6^th page).