Court Opinion

ID: 208843
Source: CourtListenerOpinion
Date Created: 2011-03-13 07:21:22+00
Date Added: 2024-06-11T17:27:55.029946
License: Public Domain

NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit
                                     2008-3270

                               ELOY J. HERNANDEZ,

                                                           Petitioner,

                                          v.

                           DEPARTMENT OF DEFENSE,

                                                           Respondent.

      Arthur G. Vega, of San Antonio, Texas, pro se.

       Gregg M. Schwind, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for respondent. With
him on the brief were Jeanne E. Davidson, Director, and Kirk T. Manhardt, Assistant
Director.

Appealed from: Merit Systems Protection Board
                          NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit

                                       2008-3270

                                ELOY J. HERNANDEZ,

                                                                       Petitioner,

                                            v.

                             DEPARTMENT OF DEFENSE,

                                                                       Respondent.

Petition for review of the Merit Systems Protection Board in DA3443060531-C-1.
                            ___________________________

                           DECIDED: April 30, 2009
                          ___________________________

Before LOURIE, RADER, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge DYK. Circuit Judge RADER concurs in the
result.

DYK, Circuit Judge.

      Petitioner Eloy J. Hernandez (“Hernandez”) appeals from a final decision of the

Merit Systems Protection Board (“MSPB” or “Board”). The Board denied Hernandez’s

petition for enforcement of a settlement agreement with the Department of Defense

(“agency”), rejecting Hernandez’s claims that the agreement had been breached.

Because we hold that the agency breached the settlement agreement, we reverse and

remand.
                                   BACKGROUND

      Hernandez worked for the Defense Logistics Agency as a Material Handling

Equipment Operator in San Antonio, Texas.         In February 2006, Hernandez was

informed that he would be separated from the agency pursuant to a reduction-in-force

(“RIF”) action, effective June 30, 2006. After his separation, Hernandez was not placed

in the agency’s Priority Placement Program (“PPP”), a program that matches

participants with agency job opportunities. Hernandez appealed his separation to the

MSPB, and in February 2007 Hernandez and the agency entered into a settlement

agreement.

      The settlement agreement focused on Hernandez’s enrollment in the agency’s

PPP. The settlement agreement stated that Hernandez would be “re-considered for

placement in the PPP for a period of one year beginning 7 calendar days after the last

signature on this Agreement.” Pet’r App. 57. The last signature date on the agreement

was February 17, 2007. Pet’r App. 58. Seven days thereafter would be February 24,

2007. For convenience we refer to this date as the effective date of the agreement.

The agency subsequently enrolled Hernandez in the PPP only from February 20, 2007,

to July 2, 2007, a period of about four and one-half months, representing approximately

the period between the effective date of the settlement agreement and the one-year

anniversary of Hernandez’s separation.

      One June 28, 2007, Hernandez filed a petition for enforcement of the settlement

agreement, asserting that the agency had not, as required, enrolled him in the PPP for a

period of one year after the effective date of the agreement. The agency provided an

affidavit from an agency human resources specialist stating that Hernandez “received

2008-3270                                2
all appropriate consideration for job placement for 12 months following his separation on

June 30, 2006,” and that enrollment in the PPP beyond the twelve-month period

following separation on June 30, 2006, “was not possible.” Pet’r App. 70.

      The administrative judge denied Hernandez’s petition for enforcement, finding

that the agreement did not require Hernandez’s enrollment for the one-year period after

the effective date of the agreement, and finding that the agency had complied with the

settlement agreement by “review[ing] relevant vacancies during the period from June

30, 2006, to February 20, 2007, to determine whether the appellant missed

consideration for any of those vacancies,” and then by registering Hernandez in the

PPP from February 20, 2007, to July 2, 2007. Hernandez v. Dep’t of Defense, No. DA-

3443-06-0531-C-1, at 5 (M.S.P.B. Sept. 11, 2007). On April 11, 2008, the Board denied

Hernandez’s petition for review of the administrative judge’s decision, and the initial

decision became the final decision of the Board. Hernandez v. Dep’t of Defense, 108

M.S.P.R. 604 (2008).

      Hernandez timely petitioned our court for review, and we have jurisdiction under

28 U.S.C. § 1295(a)(9).

                                     DISCUSSION

       The Board's decision must be affirmed unless it is found to be arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law; obtained

without procedures required by law, rule, or regulation; or unsupported by substantial

evidence. See 5 U.S.C. § 7703(c); Lary v. U.S. Postal Serv., 472 F.3d 1363, 1366-67

(Fed. Cir. 2006).

2008-3270                               3
       A settlement agreement is a contract, Tiburzi v. Dep’t of Justice, 269 F.3d 1346,

1351 (Fed. Cir. 2001), and we review the Board’s construction of a settlement

agreement without deference, Fomby-Denson v. Dep’t of the Army, 247 F.3d 1366,

1371 (Fed. Cir. 2001). Whether a breach of a contract is material is a mixed question of

law and fact, but “[w]here, as here, the facts are undisputed, the determination of

whether there has been material non-compliance with the terms of a contract . . .

necessarily reduces to a question of law.” Lary, 472 F.3d at 1367 (quoting Gilbert v.

Dep’t of Justice, 334 F.3d 1065, 1072 (Fed. Cir. 2003)).

       The sole issue is the right of Hernandez to an additional seven and one-half

months in the PPP under the settlement agreement.              The settlement agreement

provided:

       The appellant will be re-considered for placement in the PPP for a period
       of one year beginning 7 calendar days after the last signature on this
       Agreement. One year is the regulatorily-prescribed term of enrollment per
       Para. SC1800.3.7 of DOD Instruction 1400.25-M.

Pet’r App. 57. The regulation cited in this provision states that “[e]ligible employees . . .

are mandatory program registrants during the RIF notice period and for one year from

separation.”   Department of Defense Civilian Personnel Manual, DoD 1400.25-M,

subchapter 1800.3.7 (Dec. 1996).

       The agency concedes that as part of the settlement agreement, the agency could

provide enrollment in the PPP for a period beyond the initial twelve months following

Hernandez’s      separation.        See       Oral   Arg.   25:50-26:32,     available    at

http://oralarguments.cafc.uscourts.gov/mp3/2008-3270.mp3. (“The [agency] instruction

is not an absolute limitation . . . generally a displaced employee is going to be eligible

for enrollment for one year from separation and there are exceptions—there are

2008-3270                                 4
procedures in there for exceptions to the policy.”). In other words, the agency concedes

that the affidavit statement that enrollment in the PPP for the one-year period following

the effective date of the agreement “was not possible” was inaccurate. The agency’s

affidavit also does not make harmless any error in the timing of Hernandez’s PPP

enrollment, because the affidavit stated that no suitable jobs were available during the

period between Hernandez’s separation and the signing of the settlement agreement,

and did not address the availability of PPP jobs during the one-year period after the

effective date of the agreement (though it did state that Hernandez was registered in the

PPP for four and one-half months of that period).

       The question is whether the settlement agreement required Hernandez’s

enrollment for one year after the effective date of the settlement agreement.          The

agency contends that it agreed only that it would “reconsider” Hernandez’s enrollment in

the PPP, in the sense that if the government decided not to include Hernandez in the

PPP at all, Hernandez would have no right to PPP enrollment under the agreement.

       The word “reconsider” in the settlement agreement is ambiguous.                   To

“reconsider” is “to think over, discuss, or debate (as a plan, decision) esp[ecially] with a

view to changing or reversing.” Webster’s Third New International Dictionary 1897

(Merriam-Webster 2002); see also Webster’s Unabridged Dictionary 1612 (Random

House 2d ed. 1998) (defining “reconsider” as “to consider again, esp[ecially] with a view

to change of decision or action”). In the judicial context, reconsideration frequently

means action that changes a result. Thus to “reconsider” a result could well mean

either that the result would be reviewed, or that the result would be changed. The most

natural meaning of “reconsider” here is that Hernandez’s enrollment in the PPP would

2008-3270                                5
be changed so that he would be enrolled for twelve months following the effective date

of the settlement agreement.

       Construction of contracts follows the “general rule of contract interpretation that

terms of a contract should not be interpreted so as to render them ineffective or

superfluous.” Abraham v. Rockwell Int’l Corp., 326 F.3d 1242, 1254 (Fed. Cir. 2003);

see also Pac. Gas & Elec. Co. v. United States, 536 F.3d 1282, 1288 (Fed. Cir. 2008);

Restatement (Second) of Contracts § 203(a) (1981) (“[A]n interpretation which gives a

reasonable, lawful, and effective meaning to all the terms is preferred to an

interpretation which leaves a part unreasonable, unlawful, or of no effect.”).

       It is plain from the face of the agreement that in exchange for dismissing his

appeal, the agency agreed to allow Hernandez to be enrolled in the PPP for a one-year

period after the effective date of the agreement. As part of the settlement agreement,

the agency agreed (a) that it would remove a reprimand from Hernandez’s record, (b)

that “[b]ecause of the removal of the Decision of Reprimand, the appellant is now

eligible to be re-considered for registration” in the PPP under the agency’s regulations,

and (c) that Hernandez would be “re-considered for placement in the PPP for a period

of one year beginning 7 calendar days after the last signature on this Agreement.” Pet’r

App. 57. Hernandez received no other consideration under the agreement. Construing

the settlement agreement as giving the agency the option not to enroll Hernandez in the

PPP would come close to rendering the settlement agreement illusory. 1            Such a

       1
                See Torncello v. United States, 681 F.2d 756, 769-70 (Ct. Cl. 1982) (en
banc) (A contract must “ensure[] that each party necessarily will end up performing in a
way that reflects some binding obligation,” and a contract in which a party had the
option of not performing would be invalid because such an option would not be
“sufficient for consideration if it alone had been bargained for.”); Restatement (Second)

2008-3270                                6
construction is disfavored. See 5 Margaret N. Kniffin, Corbin on Contracts § 24.22 at

234-35 (rev. ed. 1998) (“When the words of the contract indicate that a party has

promised to perform, such words should not be interpreted so as to make the promise

illusory, even if the context may show an intent to leave performance subject to the

party’s broad discretion.” (footnote omitted)).      We thus construe the settlement

agreement as requiring the agency to enroll Hernandez in the PPP program for twelve

months after the effective date of the settlement agreement.

      Because the agency enrolled Hernandez in the PPP for only four and one-half

months and not twelve months after the settlement agreement, we hold that the agency

breached the settlement agreement.          On remand, the MSPB should consider an

appropriate remedy for this breach. Accordingly, we reverse and remand.

                                        COSTS

      No costs.

      RADER, Circuit Judge, concurs in the result.

of Contracts § 77 cmt. a (1981) (“Words of promise which by their terms make
performance entirely optional with the ‘promisor’ do not constitute a promise.”).

2008-3270                               7