Court Opinion

ID: 9962442
Source: CourtListenerOpinion
Date Created: 2024-04-23 17:00:38.995584+00
Date Added: 2024-06-11T08:20:53.661007
License: Public Domain

UNITED STATES OF AMERICA
                   MERIT SYSTEMS PROTECTION BOARD

ERIC J. SIMON,                                  DOCKET NUMBER
                    Appellant,                  CH-0845-18-0088-I-1

             v.

OFFICE OF PERSONNEL                             DATE: April 22, 2024
  MANAGEMENT,
              Agency,

             and

PAMELA A. BREWER
             Intervenor.

             THIS ORDER IS NONPRECEDENTIAL 1

      Eric J. Simon , Monclova, Ohio, pro se.

      Dawn E. Sanderson , Esquire, Maumee, Ohio, for the intervenor.

      Carla Robinson , Washington, D.C., for the agency.

                                      BEFORE

                           Cathy A. Harris, Chairman
                        Raymond A. Limon, Vice Chairman

1
   A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
                                                                                 2

                               REMAND ORDER

      The appellant has filed a petition for review of the initial decision, which
dismissed as settled his appeal of a final decision of the Office of Personnel
Management (OPM) concerning an overpayment under the Federal Employees’
Retirement System (FERS).      Additionally, the appellant’s former spouse has
requested to intervene. For the reasons discussed below, we GRANT her request
to intervene, GRANT the appellant’s petition for review, VACATE the initial
decision, and REMAND the case to the Central Regional Office for further
adjudication in accordance with this Remand Order.

                                BACKGROUND
      In 2013, the appellant and his former spouse obtained a state court decree
dividing their martial property, which provided for his former spouse to receive
“a pro-rata share of [his] gross monthly [FERS] annuity.” Initial Appeal File
(IAF), Tab 6 at 4-7.    The appellant received a basic annuity and an annuity
supplement. Id. at 8-12. In July 2016, OPM determined that, when a qualifying
state court domestic relations order awarded a former spouse a portion of an
annuitant’s gross monthly annuity, OPM must deduct the apportionment from all
monthly annuity payments, including the basic annuity and any annuity
supplement, even if the order did not specifically address the annuity supplement.
IAF, Tab 6 at 24-25, Tab 11 at 4.      OPM applied its policy retroactively and
prospectively. IAF, Tab 6 at 24-25, Tab 11 at 4. In accordance therewith, OPM
issued the appellant a February 2, 2017 reconsideration decision, finding that he
had improperly been paid his former spouse’s apportionment of his annuity
supplement, resulting in a $4,878.38 overpayment, and set a repayment schedule
of 36 monthly installments of $135.51. IAF, Tab 6 at 24-26.
      The appellant filed an appeal of OPM’s decision, which the parties resolved
by settlement agreement. IAF, Tabs 1, 8, 10. In pertinent part, the agreement
provided that the appellant would withdraw his appeal in exchange for OPM
                                                                                    3

accepting repayment of the overpayment in 97 monthly installments of $50.00
and a final installment of $28.38, with no interest charged during this period.
IAF, Tab 11 at 5.       Pursuant to a handwritten provision in the settlement
agreement inserted by the appellant, OPM further agreed that, “IN THE EVENT
OPM IS DEEMED WRONG ON DISBERSMENT OF [the appellant’s] FERS
SUPPLEMENT OR FERS BACKPAY . . . [the appellant] WILL BE MADE
WHOLE.” Id. (spelling and ellipses as in the original). The appellant signed the
agreement on January 30, 2018. Id.
      On February 5, 2018, OPM’s Office of Inspector General (OIG) issued a
report, concluding that OPM’s act of apportioning supplemental annuities
pursuant to its July 2016 policy change was unlawful. 2 IAF, Tab 11 at 3-30. The
appellant’s case was one of the three examples OIG included in the report to
highlight the impact that the policy had on annuitants. Id. at 8. OPM disagreed
with the recommendations of its OIG. Id. at 20-23.
      On February 13, 2018, the appellant submitted into the record of this
appeal the OIG’s report and a partially executed copy of the settlement
agreement, which bore only his signature and where he highlighted the
handwritten provision. IAF, Tab 11. The following day, on February 14, 2018,
the agency received, signed, and entered the settlement agreement into the record,
without addressing the appellant’s filing. IAF, Tab 10 at 4-5.
      The administrative judge determined that the parties freely entered into the
settlement agreement, that it was lawful on its face, and that the parties intended
to enter it into the record for enforcement purposes. IAF, Tab 12, Initial Decision
(ID) at 1-3. He then issued an initial decision dismissing the appeal as settled.
Id.

2
  In the report, OIG recommended that OPM cease implementing its policy change;
reverse any retroactive and prospective decreases to supplemental annuities when the
qualifying state court order did not expressly provide for such apportionment; and
consider whether OPM had a legal obligation to notify the public of the policy change.
IAF, Tab 11 at 20-23.
                                                                                    4

         The appellant has filed a petition for review, to which OPM has responded. 3
PFR File, Tabs 1, 8.        The appellant has filed a reply, which we have not
considered given its apparent untimeliness. PFR File, Tab 10.

                  DISCUSSION OF ARGUMENTS ON REVIEW
         On review, the appellant argues that the overpayment is unlawful because
he was not overpaid and, even if he were overpaid, he is entitled to a waiver.
PFR File, Tab 1 at 1. Given the terms of the settlement agreement, his arguments
may be construed as a petition for enforcement of the handwritten provision or a
challenge to the validity of the agreement, which enforced the overpayment but
adjusted his repayment schedule. Id.; IAF, Tab 10 at 5. Regardless, the Board
must address the apparent invalidity of the settlement agreement. A challenge to
the validity of the settlement agreement may properly be addressed on petition for
review of the initial decision dismissing the appeal as settled.         Hazelton v.
Department of Veterans Affairs, 112 M.S.P.R. 357, ¶ 8 (2009).
         A settlement agreement is a contract and may be set aside or voided only
based on certain limited grounds, including, inter alia, fraud, misrepresentation
by the agency, or a mutual mistake of material fact under which both parties
acted.    Vance v. Department of the Interior, 114 M.S.P.R. 679, ¶ 12 (2010);
Hazelton, 112 M.S.P.R. 357, ¶ 11. The administrative judge determined that the
settlement agreement was lawful. ID at 2. For the reasons discussed below, we
disagree and find that the settlement agreement is invalid. 4

3
  The appellant also submits various documents on review, only one of which was not
entered into the record below—an OPM reconsideration decision issued to another
annuitant waiving his overpayment. PFR File, Tab 1 at 3-46. We need not consider
that document in light of our decision to remand this matter, but the administrative
judge may consider it on remand.
4
  The agency argues on review that the settlement agreement was valid because the
appellant’s February 13, 2018 pleading was not a sufficient revocation of his
counteroffer, which the agency accepted on February 14, 2018. PFR File, Tab 8 at 5-6;
IAF, Tabs 10-11. Even if true, we nevertheless find the settlement agreement invalid
for separate reasons.
                                                                                    5

        Part of OPM’s inducement for obtaining the appellant’s waiver of his
Board appeal rights—promising to make him “whole” in the event that the
overpayment was “deemed wrong”—was invalid consideration. 5              IAF, Tab 10
at 5.   To have an enforceable contract, there must be consideration, i.e., a
performance or a return promise that must be bargained for and does not involve
performance of a preexisting duty.        Black v. Department of Transportation,
116 M.S.P.R. 87, ¶ 17 (2011); see Restatement (Second) of Contracts, § 71
(1981) (stating that “[i]n the typical bargain, the consideration and the promise
bear a reciprocal relation of motive or inducement: the consideration induces the
making of the promise and the promise induces the furnishing of the
consideration”).    OPM had a preexisting legal duty to return the apportioned
amount     from    the   appellant’s   annuity   supplement   if   the   overpayment
determination was unlawful or improper. 6         See 5 U.S.C. § 8421 (listing the
requirements for an entitlement to an annuity supplement); Edney v. Office of
Personnel Management, 79 M.S.P.R. 60, ¶ 6 (1998) (explaining that if an
applicant is entitled to a retirement benefit, then OPM is obligated to provide the
benefit; and, if she is not, OPM is obligated to deny the benefit); see generally
Office of Personnel Management v. Richmond, 496 U.S. 414, 416, 434 (1990)
(holding that the Government cannot be estopped from denying benefits not
otherwise permitted by law, even if the claimant was denied monetary benefits
because of his reliance on the mistaken advice of a Government official).
5
  In construing a contract, the Board looks to the terms of the agreement to determine
the parties’ intent at the time they contracted.       Sweet v. U.S. Postal Service,
89 M.S.P.R. 28, ¶ 9 (2001).      Upon such review, we find that any reasonable
interpretation of the make whole term in the handwritten provision would necessarily
include returning the apportioned annuity supplement. IAF, Tab 10 at 5.
6
   Ironically, should the handwritten provision become applicable because the
overpayment was found unlawful or improper, that mutual mistake of law would be
another basis for invalidating the settlement agreement. Farrell v. Department of the
Interior, 86 M.S.P.R. 384, ¶ 8 (2000) (explaining that a provision in a settlement
agreement must be set aside if both parties acted under a mutual mistake as to the
lawfulness of the provision at issue and the provision was material to the agreement).
We do not render any judgment as to the legality of the overpayment.
                                                                                   6

      Here, the handwritten provision was a material term. It addressed the basis
for the appellant’s appeal—preventing OPM from unlawfully apportioning his
annuity supplement.      IAF, Tab 1 at 3, Tab 10 at 5; cf. Young v. U.S. Postal
Service, 113 M.S.P.R. 609, ¶ 10 (2010) (defining materiality, regarding a party’s
noncompliance with a settlement agreement term, as a matter of vital importance
or that goes to the essence of the contract). Moreover, the appellant apparently
sought to enforce it when he learned that OPM’s OIG had deemed OPM’s policy
unlawful.      IAF, Tab 11 at 1-2; see Jackson v. Department of the Army,
123 M.S.P.R. 178, ¶ 10 (2016) (finding that the appellant’s decision to invoke the
revocation provision suggested that it was material to her decision to sign the
settlement agreement).
      In addition, the handwritten provision fails to recognize that OPM had that
preexisting duty. IAF, Tab 10 at 5. Thus, the parties may have executed their
agreement under a mutual mistake of fact, i.e., the shared, mistaken belief that the
appellant needed to bargain for the return of the FERS benefits to which he was
entitled to by law, should the overpayment be deemed unlawful.          See Vance,
114 M.S.P.R. 679, ¶ 12 (explaining that a mutual mistake of fact is a shared,
mistaken belief of the parties regarding a material assumption of fact underlying
their agreement). Under these circumstances, the settlement agreement must be
set aside. See id., ¶ 16; cf. Day v. Department of the Air Force, 78 M.S.P.R. 364,
368 (1998) (recognizing that the Board may sever a nonmaterial, illegal term and
enforce the rest of the agreement).
      On the other hand, a showing that a reasonable person would have been
misled by the agency’s statements is sufficient to show misrepresentation. See
Hazelton, 112 M.S.P.R. 357, ¶ 11. The Board repeatedly has held that whether
the   agency     provided   the   misinformation   intentionally,   unintentionally,
negligently, inadvertently, or even innocently is immaterial to whether it was, in
fact, misinformation. Cf. Salazar v. Department of the Army, 115 M.S.P.R. 296,
¶¶ 11-12 (2010) (finding the appellant’s retirement involuntary because it was
                                                                                      7

based on agency misinformation). Thus, if OPM were aware of its preexisting
legal duty, as is the more likely scenario, then it failed to correct the apparently
erroneous assumption the appellant had about the existence and nature of that
duty before accepting the agreement and submitting it into the record for
enforcement purposes.        IAF, Tab 8 at 1-2, Tab 10 at 5.             Such agency
misinformation also would be a basis for invalidating the agreement. 7              See
Hazelton, 112 M.S.P.R. 357, ¶ 11.
       Accordingly, we find that the settlement agreement is invalid. We remand
the appellant’s appeal of his overpayment under FERS for a decision on the
merits. 8

                                       ORDER
       For the reasons discussed above, we remand this case to the Central
Regional Office for further adjudication in accordance with this Remand Order.
On remand, the administrative judge should allow the parties an opportunity to
submit      further   argument   and   evidence   addressing    the   merits   of   the
appellant’s overpayment appeal and hold his requested hearing. Thereafter, the

7
  The appellant effectively argues that OPM negotiated in bad faith. PFR File, Tab 1
at 1. OPM, even if not agency counsel in particular, was aware of the OIG report and
its draft findings, which explicitly referenced the appellant, as early as March 2017;
however, there is no indication that OPM apprised the appellant of that during
settlement negotiations. IAF, Tab 11 at 8, 24. Finally, the timing of OPM’s acceptance
in relation to the publication of the OIG report and the appellant’s February 13, 2018
pleading is suspect. IAF, Tabs 10-11. Negotiating in bad faith may be another basis for
setting aside the agreement. Vance, 114 M.S.P.R. 679, ¶¶ 13-16. However, we need
not reach a finding as to whether OPM also acted in bad faith, given the above-stated
reasons for invalidating the agreement.
8
  We deny OPM’s request for a stay of a decision on the appellant’s petition for review
or withdrawal of the appeal without prejudice until the Board issues its decision in
Moulton v. Office of Personnel Management, MSPB Docket No. DE-0841-18-0053-I-1.
In light of our foregoing analysis and remand decision, the requested stay or withdrawal
is not appropriate.
                                                                            8

administrative judge should issue a new initial decision on the merits of the
appeal.

FOR THE BOARD:                     ______________________________
                                   Gina K. Grippando
                                   Clerk of the Board
Washington, D.C.