UNITED STATES OF AMERICA MERIT SYSTEMS PROTECTION BOARD

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1 UNITED STATES OF AMERICA MERIT SYSTEMS PROTECTION BOARD THOMAS J. SWEET, Appellant, 89 M.S.P.R. 28 DOCKET NUMBER CH C-2 v. UNITED STATES POSTAL SERVICE, Agency. DATE: July 5, 2001 Thomas J. Sweet, Muskegon, Michigan, pro se. Douglas M. Warner, Grand Rapids, Michigan, for the agency. BEFORE Beth S. Slavet, Chairman Barbara J. Sapin, Vice Chairman Susanne T. Marshall, Member OPINION AND ORDER 1 The appellant petitions for review of the October 12, 2000 compliance initial decision that denied his petition for enforcement. We find that the petition does not meet the criteria for review set forth at 5 C.F.R , and we therefore DENY it. We REOPEN this case on our own motion under 5 C.F.R , however, VACATE the compliance initial decision, and REMAND this case to the Central Regional Office for further adjudication consistent with this Opinion and Order.

2 2 BACKGROUND 2 The appellant originally appealed the agency s denial of his restoration to duty as a limited-duty Letter Carrier following his partial recovery from a compensable injury. MSPB Docket No. CH I-1 (I-1) File, Tab 1. The administrative judge (AJ) issued an initial decision reversing the agency s action, and ordered the agency to restore the appellant to limited duty on February 25, 1995, including, inter alia, to adjust his benefits. Id., Tab 21. The initial decision thereafter became final. The appellant timely filed a petition for enforcement of the Board s final order to restore him. MSPB Docket No. CH C-1 (C-1) File, Tab 1. The AJ issued a recommendation that the Board take action to enforce its final order. Id., Tab 5 at 2. 3 While the recommendation was pending before the Board, on February 14, 2000, the appellant sent a letter to the Board regarding other unresolved compliance issues in which he alleged, inter alia, that the agency had denied him the opportunity to purchase optional life insurance coverage since November 1, 1999, and had erroneously refunded to him premiums he had paid for optional life insurance coverage from December 10, 1995, through November 1, MSPB Docket No. CH X-1 (X-1) File, Tab 37. On April 6, 2000, the agency issued to the appellant a demand letter for $2, to recover costs for a life insurance related debt for pay periods 23/87 through 4/00. MSPB Docket No. CH C-2 (C-2) File, Tab 5 at 5. The demand letter indicated that the appellant had a right to file a grievance regarding the demand if he disputed the debt. Id. at 6. The appellant contacted his union the next day, April 7, 2000, to file a grievance regarding the demand letter, and a grievance was subsequently filed. C-2 File, Tab 1 at 2, Meanwhile, on April 10, 2000, the parties entered into a settlement agreement regarding the petition for enforcement. The agreement, titled Settlement Addendum, stated in full:

3 3 As a final resolve [sic] to all pending issues on the above referenced [petition for enforcement], it is hereby agreed between the parties as follows: The appellant, Thomas J. Sweet will be paid a lump sum payment of $37,500.00, subject to applicable taxes. With the signing of this settlement addendum, the parties agree that all unresolved issues addressed by the [a]ppellant in his February 14, 2000, correspondence to the Board, is [sic] hereby considered moot. X-1 File, Tab 42. In an April 19, 2000 written amendment to the settlement agreement, the appellant agreed to withdraw his petition for enforcement, and the parties agreed to ask the Board to make the agreement part of the record and retain jurisdiction over it for enforcement purposes. Id., Tab 44. The Board issued a May 4, 2000 Order accepting the settlement agreement and the addendum into the record for enforcement purposes and dismissing the petition for enforcement as settled. Id., Tab 45; Sweet v. U.S. Postal Service, 86 M.S.P.R. 338 (2000) (Table). 5 In July 2000, the appellant s grievance regarding the agency s April 6, 2000 demand letter was decided. C-2 File, Tab 1 at 4. The grievance decision letter determined that, inasmuch as the appellant contended that the issue of the demand letter was moot under the settlement agreement entered into before the Board, the appellant must seek resolution of this dispute in the appropriate forum before the Board. Id. at The appellant timely filed this present petition for enforcement, arguing that the alleged debt for retroactive life insurance premiums was a disputed issue until the April 10, 2000 settlement agreement was signed and the issue was then declared moot, and alleging that the agency had breached the settlement agreement by continuing to attempt collection of the premiums. Id. at 1. The agency responded that it had complied with the settlement agreement. The agency submitted a copy of a June 7, 2000 check payable to the appellant for $24, (i.e., $37,500 minus calculated applicable taxes withheld), and argued that it had corrected his optional life insurance coverage by granting his request for coverage and issuing the April 6, 2000 demand letter for the alleged

4 4 underpayment in premiums, so that, as provided by the April 10, 2000 settlement, the optional life insurance issue was moot. C-2 File, Tab 5 at 1. The AJ issued a compliance initial decision denying the petition for enforcement upon finding that the appellant failed to meet his burden of proof that the agency breached the settlement agreement. Id., Tab 7 at 3. 7 The appellant has timely petitioned for review, arguing that the agency cannot attempt to collect on its April 6, 2000 demand letter because the demand was rendered moot by the April 10, 2000 settlement agreement reached in his prior petition for enforcement. Petition for Review File, Tab 1. The agency has not responded to the petition. ANALYSIS 8 The appellant s argument on petition for review that the agency has breached the parties settlement agreement by continuing to demand payment for retroactive optional life insurance premiums constitutes mere disagreement with the AJ s explained findings, and so we deny the petition. Weaver v. Department of the Navy, 2 M.S.P.R. 129, (1980), review denied, 669 F.2d 613 (9th Cir. 1982) (per curiam). We find, however, that the settlement agreement is ambiguous and that parol evidence must be considered in order to construe it. See Wells v. U.S. Postal Service, 52 M.S.P.R. 497, 500 (1992). We therefore reopen this case on our own motion. 9 It is well settled that a settlement agreement is a contract and the interpretation of its terms is a question of law. Greco v. Department of the Army, 852 F.2d 558, 560 (Fed. Cir. 1988). In construing a contract, one looks first to the terms of the agreement to determine the intent of the parties at the time they contracted, as evidenced by the contract itself. Id. Extrinsic evidence of intent should be considered only if the terms of the agreement are ambiguous. Id.; Brown v. Department of the Interior, 86 M.S.P.R. 546, 17 (2000). A contract is

5 5 ambiguous when it is susceptible of differing, reasonable interpretations. Gullette v. U.S. Postal Service, 70 M.S.P.R. 569, 573 (1996). 10 One reasonable interpretation of the April 10, 2000 settlement agreement is that, in consideration of the agency s lump sum payment of $37,500 (minus applicable taxes withheld), the appellant agreed to give up his pending claims before the Board, including any claims of error or impropriety regarding the agency s provision of optional life insurance. The appellant had originally filed a petition for enforcement of the Board s final order to restore him to duty. C-1 File, Tab 1. He was therefore the party seeking relief. See 5 C.F.R (a). However, the settlement agreement provided that it was a final resolve [sic] to all pending issues on the above referenced case, that all unresolved issues addressed by the [a]ppellant in his February 14, 2000, correspondence to the Board, is [sic] hereby considered moot, X-1 File, Tab 42 (emphasis supplied), and that the [a]ppellant agrees to withdraw his petition for enforcement, id., Tab Moot is a term of art; an appeal will be dismissed as moot where the appellant has obtained all of the relief he could have obtained had he prevailed before the Board, or where there is no further relief the Board can grant. Uhlig v. Department of Justice, 83 M.S.P.R. 29, 7 (1999). Where a term of art is used in a settlement agreement, the Board will apply the ordinary meaning of that term found in case law, statute, or regulation, unless it is shown that the parties intended otherwise. See Kellihan v. Department of the Navy, 72 M.S.P.R. 47, 50 (1996); Jackson v. Department of the Army, 69 M.S.P.R. 268, 273 (1996) (citing General Builders Supply Co. v. United States, 409 F.2d 246, (Ct. Cl. 1969)). It is therefore reasonable to interpret the settlement agreement to mean that the parties agreed that the lump sum payment represented all the relief that the appellant could have obtained from the Board on his petition for enforcement, and thus he would no longer press his claim before the Board regarding optional life insurance coverage and the payment of premiums thereon.

6 6 12 However, another reasonable interpretation of the settlement agreement is that the parties intended to achieve a full and final settlement of all outstanding optional life insurance issues that were in dispute as of April 10, 2000, the date of the agreement. The first sentence of the settlement agreement states: As a final resolve [sic] to all pending issues on the above referenced case [Sweet v. U.S. Postal Service, MSPB Docket No. CH X-1], it is hereby agreed between the parties as follows: The appellant, Thomas J. Sweet will be paid a lump sum payment of $37,500.00, subject to applicable taxes. X-1 File, Tab 42. The Board has held that similar language in other settlement agreements expressed the parties desire to fully resolve their outstanding disputes. See, e.g., Davis v. Department of Veterans Affairs, 69 M.S.P.R. 627, 630 (1996) (where the parties settlement agreement specifically provided that it resolved the issues raised in these appeals, the Board found implicit within that term an understanding that the settlement agreement resolved the whole dispute as to whether the appellants should be disciplined for their conduct covered by the settlement agreement); Alvarez v. Office of Personnel Management, 60 M.S.P.R. 436, 439 (1994) (where the parties settlement agreement stated, inter alia, that its sole purpose was to compromise and settle all issues and factual disputes between the parties, by its terms, the agreement constituted the final and full settlement of all issues, claims, and factual disputes between the parties). 13 The second sentence of the settlement agreement states: With the signing of this settlement addendum, the parties agree that all unresolved issues addressed by the [a]ppellant in his February 14, 2000, correspondence to the Board, is [sic] hereby considered moot. X-1 File, Tab 42. Although the term moot may be a term of art, the meaning of a term used in a settlement agreement is the meaning the parties intended it to convey. See McDavid v. Department of the Army, 58 M.S.P.R. 673, 677 & n.2 (1993) (citing 17A C.J.S. 300 Contracts (1963)) (even if the term reinstatement in a settlement agreement usually had the connotation suggested by the AJ, the Board noted that

7 7 the meaning of a term used in a settlement agreement is the meaning the parties intended it to convey). Here, the pro se appellant should not be charged with meaning that only his own issues would be moot, as that term is applied in Board decisions. Indeed, the agency acknowledged in its October 2, 2000 response to the present petition for enforcement that one of the [unresolved] issues on the date of the April 10, 2000 settlement agreement was the issue of the appellant s optional life insurance, which the agency asserted it had corrected and had issued the April 6, 2000 demand letter to recover the costs for his alleged life insurance debt. * C-2 File, Tab 5 at 1. The appellant received the demand letter on April 7, and thereafter filed a grievance disputing the alleged debt. Id., Tab 1 at 2, 6. However, the agency s July 2000 grievance decision letter determined that, rather than grieve the April 6, 2000 demand letter, the appellant must seek resolution of this dispute [regarding the demand letter] in the appropriate forum, which in this dispute is the Merit Systems Protection Board. Id., Tab 1 at 4-5. This grievance pronouncement by the agency is inconsistent with the agency s position in this case that its April 6, 2000 demand letter was not covered by the April 10, 2000 settlement agreement. Under these circumstances, the parties may well have had the outstanding April 6, 2000 alleged debt in mind when they entered into the settlement agreement [a]s a final resolve [sic] to all pending issues 4 days later. X-1 File, Tab 42. We note in this regard that 5 U.S.C. 8714a(d)(2) ( Optional insurance ) provides that: If an agency fails to withhold the proper cost of optional insurance from an individual s salary, compensation, or retirement annuity, the collection of amounts properly due may be waived by the agency if, * We note that the agency s assertions of fact in its narrative response to the petition for enforcement in this case is not evidence of compliance with the April 10, 2000 settlement agreement because it was not in affidavit form or made under penalty of perjury. See, e.g., Fernandez v. Department of Justice, 80 M.S.P.R. 459, 9 (1998).

8 8 in the judgment of the agency, the individual is without fault and recovery would be against equity and good conscience. See 39 U.S.C. 1005(f) (the provisions 5 U.S.C. chapter 87 apply to Postal Service employees); see also 5 C.F.R (i). Thus, the agency could lawfully and reasonably decide to settle this issue and waive collection of the appellant s alleged optional insurance premium debt. 14 Therefore, one reasonable interpretation of the language in the parties April 10, 2000 settlement agreement that all unresolved issues addressed by the [a]ppellant in his February 14, 2000, correspondence to the Board [pertaining to the agency s provision of his requested optional life insurance coverage and the premium payments thereon]... [are] hereby considered moot is that all current disputes between the parties regarding these issues as of April 10, 2000, were no longer live issues as a result of the settlement agreement, and that neither of the parties intended to retain a legally cognizable interest beyond the settlement. See Horner v. Merit Systems Protection Board, 815 F.2d 668, (Fed. Cir. 1987). 15 Because the settlement agreement is susceptible of two differing, reasonable interpretations, it is ambiguous, and extrinsic (parol) evidence must be considered in order to construe it. See Gullette v. U.S. Postal Service, 70 M.S.P.R. 569, 573 (1996). We therefore remand this case to allow the AJ to develop the record as to the meaning that the parties attached to the agreement. The AJ shall consider extrinsic evidence of the parties intent, including hearing testimony if necessary, see 5 C.F.R (a)(3), in order to construe the agreement. See, e.g., Birdsong v. Department of the Navy, 75 M.S.P.R. 524, 529 (1997). We have addressed above only two possible interpretations of the settlement agreement. The AJ is not precluded from finding yet another interpretation based on extrinsic evidence provided by the parties on remand. 16 After the AJ determines the proper interpretation of the settlement agreement, he shall then determine whether the agency is in compliance with the

9 9 agreement as properly construed. The agency bears the burden of producing relevant, material, and credible evidence of its compliance with the settlement agreement upon the filing of a petition for enforcement by the appellant. See, e.g., Vaughan v. U.S. Postal Service, 77 M.S.P.R. 541, 546 (1998). The agency s response to the petition for enforcement in this matter consisted only of: The narrative statement of its representative, C-2 File, Tab 5 at 1, which, as previously noted, does not constitute evidence of compliance with the settlement agreement because it was not in affidavit form or made under penalty of perjury, see, e.g., Fernandez v. Department of Justice, 80 M.S.P.R. 459, 9 (1998); a copy of the settlement agreement, C-2 File, Tab 5 at 3; a copy of the lump sum payment check, id. at 4; a copy of the April 6, 2000 demand letter, id. at 5-6; and a copy of an invoice for $2, for a payroll related debt indicating that [a] PS Form 50 was processed to change the life insurance code from C0 to Y1 effective 3/4/95, id. at 7. We cannot determine from the above argument and unexplained evidence whether the agency has provided the appellant with the optional life insurance coverage that he requested in his February 14, 2000 correspondence to the Board. Nor, assuming that the April 6, 2000 demand letter was covered by the April 10, 2000 settlement agreement, can we determine whether the agency has made any attempt, beyond issuing its demand letter, to collect the alleged debt for retroactive optional life insurance premiums. Therefore, as necessary, based on his interpretation of the settlement agreement upon considering the extrinsic evidence provided by the parties on remand, the AJ shall also order the parties to produce additional evidence on these issues and determine whether the agency has complied with the settlement agreement.

10 10 ORDER 17 Accordingly, we remand this case to the Central Regional Office for further proceedings and adjudication consistent with this Opinion and Order. FOR THE BOARD: Washington, D.C. Robert E. Taylor Clerk of the Board

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