November 8, 2001

Appeal of

ALLSTATE LEASING, INC.

Under Contract No. 475630-94-P-2217

PSBCA No. 4787

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 (4787AF) 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.  (4787AF 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. …"  (4787AF 1).

"Termination" Claims

            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.  (4787AF 2-12; 4787AF-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 15 of the leased vehicles.[1]  Each claim was accompanied by two estimates, the lower of which equaled or exceeded 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 termination claims totaled $19,479.19.  (4787AF 2-16).

            6.  In each claim, Appellant included a charge of $45.00 for cleaning the vehicle and a $30.00 charge for removing decals (4787AF 2-16).

            7.  Respondent's Supervisor of Vehicle Maintenance reviewed each of the 15 claims and recommended a payment amount to the contracting officer.[3]  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 8-10, 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 11, 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.  (4787AF 2-16; Declaration of Walter Dobson, dated September 7, 2001 (Dobson Decl.)).

            8.  With respect to vehicles 69371, 69376, and 69380, the supervisor recommended against payment for damage to seats,[4] although the damage was shown on the Forms 4577, on the basis that this damage was ordinary wear and tear.  In his declaration, the supervisor stated that the seat damage should be considered normal wear and tear since seat replacement is a normal maintenance function on Postal-owned vehicles and seats are parts that are frequently replaced.  (4787AF 3, 8, 12).

            9.  With respect to vehicle 69382, the supervisor recommended against payment for damage to the rear bumper on the basis that this damage was the result of a "not at fault" accident that had been reported to Appellant at the time it happened (4787AF 14; Dobson Decl.).

            10.  With respect to vehicle 69383, the supervisor recommended against payment for damage to the right side sliding door.  The damage was shown on the Form 4577, along with the notation "Bad repair on sliding door."  The supervisor stated that the door had been damaged in an accident in 1995, and that the damage reflected on the Form 4577 was due to the failure of the earlier repair, and was not the Postal Service's responsibility.

            11.  With respect to vehicles 69376, 69380, 69382, and 69383, 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.  (4787AF 8, 12, 14, 15).

Other Claims

            12.  In addition to the 15 claims filed by Appellant in connection with the return of its vehicles, it filed 7 other claims seeking to recover costs for vehicle repairs that it incurred during the course of contract performance.  (4787 AF 17-23).[5]

Vehicle 69342

            13.  On March 20, 2000, the postal carrier operating vehicle 69342 reported that the brakes were grinding.  As reported by Appellant's local repair company, Target Auto Repair, Inc., based on the extent of damage, the "brakes had to be metal to metal for some time to cause this amount of damage to rotors as well as brake system."  The repair company suggested that certain items of work be charged back against the Postal Service.  Those items included all of the brake-related work - both the regular servicing and the extra work due to the metal-to-metal wear.  (4787AF 17).

            14.  In a claim dated May 30, 2000, Appellant sought recovery in the amount of $404.44.  Appellant alleged that the vehicle had been driven for an extended amount of time with the brakes grinding and that the failure to report the defect in a timely manner was the direct cause of the damage for which reimbursement was sought.  (4787AF 17).

            15.  Respondent's "Recommending Official"[6] (RO) recommended against payment of the claim, stating that when the carrier noticed the noise, he reported it.  The RO stated that if the vehicle had been on a regular preventive maintenance schedule, the wear on the brakes would have been noticed and corrected before the problem arose.  (4787AF 17).

Vehicle 69353

            16.  On or about May 27, 2000, Appellant's local repair company was called to start vehicle 69353 because of a dead battery.  As reported by the repair company, the battery had gone dead because the interior lights had been left on overnight.  Appellant was charged $60.00 for this service.  On June 2, 2000, Appellant's local repair company was again called to start the vehicle because the battery had gone dead.  Again, the interior lights had been left on overnight.  On this call, the repair company was unable to start the vehicle until it replaced the battery.  Appellant was charged $147.00 for this service call, including $85.00 for the battery.  (4787AF 18, 19).

            17.  On August 25, 2000, Appellant filed two claims to recover the amounts it was charged for the two service calls, including the cost of the battery -- a total of $207.00.  Appellant alleged that Respondent was liable for the costs because its employees had left the interior lights on overnight, resulting in the need to charge and replace the battery. (4787AF 18, 19).

            18.  Respondent's RO recommended against paying either claim, taking the position that the battery was defective and would not hold a charge.  The RO asserted that replacement of the battery was normal maintenance, for which Appellant is responsible under the lease. (4787AF 18, 19).

Vehicle 69373

            19.  On or about May 15, 2000, this vehicle was towed by Appellant's local repair company because of a dead battery.  As reported by the repair company, the 4-way flasher unit was stuck on and the battery was dead.  Appellant was charged $90.00 for this service, including replacing the flasher unit.  (4787AF 21).

            20.  On June 30, 2000, Appellant filed a claim for the amount it was charged, alleging that the battery went dead because the 4-way flashers had been left on and that the cost of the service call was Respondent's responsibility.  (4787AF 21).

            21.  Respondent's RO recommended against paying this claim, on the basis that the dead battery that necessitated the service call was caused by a defect in the 4-way flasher unit, a maintenance problem which was Appellant's responsibility.  (4787AF 21).

Vehicle 69378

            22.  On May 12, 2000, Appellant's local repair company responded to a call regarding a flat tire on this vehicle.  The repair company replaced the tire instead of repairing it, because of damage to the sidewall.  The repair company attributed the damage to scuffing the sidewall against the curb.  The repair company charged Appellant $130.95 for the service call, including $69.95 for a new tire.  (4787AF22).

            23.  On June 30, 2000, Appellant filed a claim for $130.95, on the basis that the damage to the tire was not normal "fair wear and tear."  Respondent's RO recommended against paying the claim on the bases that there was no proof that the carrier who operated the vehicle was negligent and that no Postal Service representative had inspected the tire to verify the type of damage.  (4787AF 22).

Vehicle 69379

            24.  On or about June 5, 2000, Appellant's local repair company answered a service call to re-cement the inside rear-view mirror to the windshield.  The repair company stated that the rear view mirror was missing and that it had to be replaced.  Appellant was charged $35.00 for the service call and $25.00 to replace the mirror.  (4787AF 23).

            25.  On August 25, 2000, Appellant filed a claim for the amount it had been charged by its repair company - $60.00.  Respondent's RO recommended against paying this claim on the basis that re-cementing the mirror was a normal maintenance function, and not Respondent's responsibility.  (4787 AF 23).

            26.  In a final decision dated March 23, 2001, the contracting officer allowed Appellant's claims to the extent recommended by the supervisor and the ROs.[7] The total allowed by the contracting officer was $14,981.41.  Appellant filed a timely appeal, seeking to recover the difference between the amount claimed and the amount allowed by the contracting officer, or $5,460.17.[8]  (4787AF 24, 25; Complaint).

DECISION

            Appellant argues that Respondent has applied the phrase "ordinary wear and tear" to some items not specifically listed in the definition (See Finding 3).  Moreover, Appellant argues that the definition of "ordinary wear and tear" is ambiguous in that it does not define the size and depth of the scratches and dents which would be considered "minor."  Therefore, Appellant argues that the language should be construed against Respondent as the drafter and the evaluation of Appellant's estimator given greater weight.

            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.

            With respect to vehicle 69342 (Finding 13), Appellant argues that the brakes had been "metal to metal" for some time, and that had the condition been reported earlier, repairs would have been a matter of routine maintenance.  Appellant contends that this was negligent conduct on Respondent's part.

            With respect to vehicle 69353 (Finding 16), Appellant argues that Respondent's negligence in leaving the interior lights on overnight on two occasions caused the battery to drain and die.  Appellant contends that the need to replace the battery was caused by such negligence and was not a matter of routine maintenance.

            With respect to vehicle 69371 (Finding 8), Appellant argues that damage to the seat should not be considered normal wear and tear because the damage was to the passenger-side seat and not to the driver's seat.  Appellant states that that seat is not normally used by the driver.

            With respect to vehicle 69378 (Finding 22), Appellant argues that no damage consistent with other causes, other than contact with a curb, was found on the tire.  Appellant contends that had the damage been done by a pothole, the damage would not have been limited to one side, but would have been on both sides and the tread.

            With respect to vehicle 69379 (Finding 24), Appellant argues that while the mirror may have fallen off, it was up to Respondent to provide it to Appellant's repair company so it could be reattached at little or no cost to either party.  Accordingly, Appellant maintains that the entire claim should be paid.

            With respect to vehicle 69383 (Finding 10), Appellant argues that Respondent has offered no evidence that the damage was related to a previous repair.  Appellant also argues that even if the previous repair had been done improperly, Respondent had a duty over the succeeding five-year period to notify Appellant of the defect in order to prevent further damage.

            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 that the term "ordinary wear and tear" is to be limited to the items specifically listed in the definition.  Rather, we read the items listed after the words "which includes" to be merely illustrative of "ordinary wear and tear" and not as a limitation on the definition.  See e.g., Williston on Contracts, 4^th Edition, §30:11 (1999), citing St. Paul Mercury Insurance Company v. Lexington Insurance Company, 78 F.3d 202 (5th Cir., 1996).  Accordingly, Appellant does not meet its burden of showing that damage was beyond ordinary wear and tear merely by showing that the specific damage does not appear in the list of items in the definition.

            We also 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 69342 (Finding 13)

            The evidence with respect to this vehicle demonstrates that the vehicle must have been driven for an extended period of time with the brakes "grinding" before a maintenance report was made, and that the extent of the damage would have been less had the condition been promptly reported.  Under these circumstances, Appellant may recover the costs attributable to the delay in reporting.  It may not recover the costs for work that would have been required in any event because of the need for regular brake repairs and service.  Cardel Leasing, PSBCA No. 3223, 93-2 BCA  ¶ 25,740 recon. denied 93-3 BCA ¶ 26,117.

Vehicle 69353 (Finding 16)

            The evidence shows that Respondent's personnel left the interior lights on overnight on two occasions, necessitating the service calls to start the vehicle.  The evidence is insufficient to show, however, that leaving the lights on caused the need to replace the battery on the second occasion.  Therefore, Appellant may recover the costs associated with the two service calls, other than the cost of replacing the battery.

Vehicle 69371 (Finding 8)

            Respondent has denied responsibility for damage to the seat on the basis that this constituted ordinary wear and tear.  In this instance, as argued by Appellant, the evidence shows that the damage in question occurred to the passenger seat, not to the driver's seat as was the case in the other cases of seat damage.  This situation is sufficiently different that we conclude that the burden of coming forward with evidence as to the cause of the damage should be shifted to Respondent.  Further, we do not accept the explanation of the maintenance supervisor, which explanation was exactly the same as that for driver's side seats, as sufficient to carry Respondent's burden.  Accordingly, Appellant may recover the cost of replacing the seat.

Vehicle 69373 (Finding 19)

            In this case, the dead-battery service call was caused by a "stuck" 4-way flasher unit.  Appellant's repair company replaced the flasher unit as part of the service call.  Accordingly, this expense was Appellant's responsibility under its general maintenance and servicing obligations, and it may not recover the expense from Respondent.

Vehicle 69378 (Finding 22)

            The tire that had to be replaced on this vehicle was not repairable due to damage to the sidewall.  It is most likely that such damage would have occurred while the vehicle was in motion and being operated by a Postal Service operator.  Accordingly, it is appropriate to shift the burden of coming forward with evidence as to the cause of the damage to Respondent.  Since Respondent has offered no such evidence, it has failed to meet its burden, and Appellant may recover the cost of replacing the tire.

Vehicle 69379 (Finding 24)

            In this instance, Respondent failed to retain the mirror that had come loose from the windshield.  While replacing the mirror would have been Appellant's responsibility under its general maintenance and servicing obligations, Respondent was required to retain the mirror so that it could be reattached.  Appellant may recover the cost of a replacement mirror, but not the cost of attaching it to the windshield.

Vehicle 69383 (Finding 10)

            On this vehicle, the notation of damage on the Form 4577 specifically refers to it as a "bad repair on sliding door."  Therefore, we do not accept Appellant's challenge to the nature of the damage.  Further, there is no evidence that the alleged failure to report the damage over the succeeding five-year period caused any increase in the cost of repairing the damage.  Appellant has not otherwise argued that the repair should be Respondent's responsibility. Therefore, Appellant may not recover the cost of the repair.

            As detailed above, the appeal is sustained to the extent that Appellant may recover the portion of the cost of parts not paid with respect to vehicles 69376, 69380, 69382, and 69383; the added cost of brake repairs in vehicle 69342; the cost of the two service calls (less the cost of the battery) in vehicle 69353; the cost of replacing the seat in vehicle 69371; the cost of replacing the tire in vehicle 69378; and the cost of a replacement mirror in vehicle 69379, plus Contract Disputes Act interest.  To the extent that Appellant has withdrawn its claims, its appeal regarding those claims is dismissed with prejudice.  The appeal is otherwise denied.

David I. Brochstein

Administrative Judge

Vice Chairman

I concur:

James A. Cohen

Administrative Judge

Chairman

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[1]  Vehicles 69370 through 69384.

[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.

[3]  Recommendations were made by use of an internal Postal Service Form (PS Form 4523), "Damage Claim Certification-Hired Vehicle."  (4787AF 2-16).

[4]  The seat damage in vehicles 69376 and 69380 was to the driver's seat.  The damage in vehicle 69371 was to the passenger-side seat.

[5]  In its brief, Appellant withdrew its claim for $60.00 with respect to vehicle 69366.  Accordingly, only six of the seven claims will be discussed.

[6]  "Recommending Official" is the term used on PS Form 4523 (footnote 3, above).  Respondent's Supervisor of Vehicle Maintenance (Finding 7) served as the Recommending Official in the 15 "termination" claims.  In the seven "other" claims, the job titles or positions of the Recommending Officials were otherwise unidentified.

[7]  For reasons unexplained in the record, the contracting officer allowed $.20 less than recommended by the supervisor with respect to vehicle 69382 (4787AF 24).

[8]  Appellant has since withdrawn its claims for removing decals, for the “not at fault” accident concerning vehicle 69382, and for the seats in vehicles 69376 and 69380 (Appellant's Brief, 9^th page).