Court Opinion

ID: 4549526
Source: CourtListenerOpinion
Date Created: 2020-07-20 16:00:33.287023+00
Date Added: 2024-06-11T09:18:42.927690
License: Public Domain

Case: 19-1166    Document: 78     Page: 1   Filed: 07/20/2020

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                LOGAN B. PRESTONBACK,
                    Plaintiff-Appellant

                             v.

                    UNITED STATES,
                    Defendant-Appellee
                  ______________________

                        2019-1166
                  ______________________

     Appeal from the United States Court of Federal Claims
 in No. 1:17-cv-00439-LAS, Senior Judge Loren A. Smith.
                  ______________________

                  Decided: July 20, 2020
                  ______________________

     PETER CHARLES ROMBOLD, Hoover Law Firm, Junction
 City, KS, argued for plaintiff-appellant.

     DANIEL S. HERZFELD, Commercial Litigation Branch,
 Civil Division, United States Department of Justice, Wash-
 ington, DC, argued for defendant-appellee. Also repre-
 sented by ETHAN P. DAVIS, ROBERT EDWARD KIRSCHMAN,
 JR., DOUGLAS K. MICKLE.
                   ______________________
Case: 19-1166     Document: 78     Page: 2    Filed: 07/20/2020

 2                             PRESTONBACK   v. UNITED STATES

     Before NEWMAN, REYNA, and STOLL, Circuit Judges.
 STOLL, Circuit Judge.
      Logan B. Prestonback appeals the decision of the
 United States Court of Federal Claims upholding the Army
 Board for Correction of Military Records’ denial of his re-
 quest for waiver of the recoupment of his educational assis-
 tance debt by the United States Defense Finance and
 Accounting Service. Guided by this court’s precedential de-
 cision in Favreau v. United States, 317 F.3d 1346 (Fed. Cir.
 2002), we affirm the Court of Federal Claims’ entry of judg-
 ment on the administrative record in favor of the Govern-
 ment.
                         BACKGROUND
                               I
      In 2005, Mr. Prestonback was appointed as a cadet to
 the United States Military Academy (USMA) in West
 Point, New York. As a part of his commission, Mr. Pres-
 tonback signed a service agreement, USMA Form 5-50,
 wherein he agreed that “if [he] voluntarily fail[s], or be-
 cause of misconduct fail[s], to complete the period of active
 duty . . . [he] will reimburse the United States” the propor-
 tional amount of his educational scholarship. J.A. 1056.
 Form 5-50 further specifies that “[t]he term ‘voluntarily
 fail’ includes, but is not limited to, failure to complete the
 period of active duty because of conscientious objection, be-
 cause of resignation from the United States Military Acad-
 emy or United States Army, and marriage while a cadet.”
 Id. (emphasis added).
     Form 5-50 derived from 10 U.S.C. § 2005 (2000), which
 allowed the Secretary to “require, as a condition to the Sec-
 retary providing advanced education assistance to any per-
 son, that such person enter into a written agreement with
 the Secretary.” At the time Mr. Prestonback signed
 Form 5-50, § 2005 similarly required reimbursement if the
 person who entered into the written agreement
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 PRESTONBACK    v. UNITED STATES                              3

 “voluntarily or because of misconduct, fail[ed] to complete
 the period of active duty.” 1 Id.
     After graduating from West Point, Mr. Prestonback
 was commissioned as a Second Lieutenant on May 23,
 2009—triggering the start of his active duty service obliga-
 tion—and began his service in Fort Riley, Kansas. While
 there, he received a positive Officer Evaluation Report
 (OER) for the period between December 17, 2009 and
 July 20, 2010. Mr. Prestonback was then deployed to Iraq
 on November 4, 2010, where he was quickly promoted to
 First Lieutenant.
     For the period between July 21, 2010 and May 9, 2011,
 Mr. Prestonback received his first negative OER, stating
 that he repeatedly “failed to follow direct lawful orders,”
 “lack[ed] initiative,” “failed to properly account for his pla-
 toon’s property,” and that he had “received no fewer than
 six written and multiple verbal counseling sessions di-
 rected to improve his performance.”             J.A. 1045–46.
 Mr. Prestonback acknowledged that these statements were
 correct in his response to the OER. For the period between
 May 18, 2011 and February 7, 2012, Mr. Prestonback re-
 ceived his second negative OER, this time stating that he
 “consistently under-performed.” J.A. 1041–42. In another
 response, Mr. Prestonback acknowledged that his initial
 performance was inadequate but indicated his belief that
 his performance had improved. For the period between
 February 8, 2012 and February 7, 2013, Mr. Prestonback
 received his third negative OER, this time noting Mr. Pres-
 tonback’s repeated failure of physical fitness tests and his
 failure to meet the Army’s height and weight standards.

     1  Effective January 6, 2006, § 2005 was amended to
 exclude the “voluntarily or because of misconduct, fails to”
 language.
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 4                            PRESTONBACK    v. UNITED STATES

      On December 14, 2012, the Army Resources Command
 initiated Mr. Prestonback’s elimination from the Army
 based on his first two negative OERs. Mr. Prestonback
 contended that his negative OERs were based on the of-
 ficer’s opinion of him rather than his performance, and that
 he was given more senior responsibilities without the cor-
 responding promotions when he was underqualified to han-
 dle those responsibilities. On May 22, 2013, the Deputy
 Assistant Secretary of the Army determined that Mr. Pres-
 tonback should be involuntarily eliminated from the Army
 for substandard performance, and that a recoupment ac-
 tion for the proportional amount of his educational schol-
 arship would be conducted. On June 27, 2013, the Army
 discharged Mr. Prestonback.
     On September 13, 2013, the United States Defense Fi-
 nance and Accounting Service (DFAS) notified Mr. Pres-
 tonback that he owed $30,352.01 in recoupment, an
 amount proportional to the uncompleted time remaining
 on his service agreement. On October 21, 2013, Mr. Pres-
 tonback filed an Application for Correction of Military Rec-
 ord with the Army Board for Correction of Military
 Records, arguing that the recoupment action was improper
 because he was eliminated involuntarily, and Form 5-50
 only requires recoupment for voluntary action or miscon-
 duct. On February 5, 2015, the Board denied Mr. Preston-
 back’s application for correction, reasoning that “[h]e
 breached his contract agreement by being eliminated for
 substandard performance,” and so his “breach was consid-
 ered voluntary.” J.A. 1003, 1008.
                              II
     Mr. Prestonback filed a complaint in the Court of Fed-
 eral Claims pursuant to the Tucker Act, arguing that he
 should not have to pay recoupment because his Form 5-50
 agreement with the Government was governed by contract
 principles, and he neither voluntarily resigned nor was he
 terminated for misconduct.
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 PRESTONBACK    v. UNITED STATES                             5

     The Court of Federal Claims granted the Government’s
 motion for judgment on the administrative record. The
 court held “that the Board reasonably concluded that
 [Mr. Prestonback’s] involuntary termination for substand-
 ard performance fell within the terms of Form 5-50” be-
 cause his “referred OERs could reasonably be interpreted
 as a voluntary failure to fulfill the terms of his service re-
 quirement in violation of Form 5-50, which in turn trig-
 gered an involuntary separation ripe for recoupment
 actions.” Prestonback v. United States, 139 Fed. Cl. 380,
 385 (2018). The trial court reasoned that “[p]recedent dic-
 tates that agreements memorialized by documents such as
 Form 5-50, which entitle service members to compensa-
 tion, rest upon a statutory right, and therefore should not
 be analyzed according to common law contract principles.”
 Id. at 384. The trial court rejected Mr. Prestonback’s argu-
 ment that “financial recoupment was proper only in the
 event of his willful resignation or engagement of miscon-
 duct.” Id. Citing this court’s decision in Favreau, 317 F.3d
 at 1360, the trial court reasoned that “‘voluntarily failed’
 can extend to actions other than a soldier’s willful resigna-
 tion from the military.” Prestonback, 139 Fed. Cl. at 384.
 It further explained that because Form 5-50 states that
 “the term ‘voluntarily fail’ includes, but is not limited to”
 certain actions, the listed actions are not exhaustive and
 include substandard performance resulting in involuntary
 separation. Id. at 384–85 (emphasis added).
     Mr. Prestonback appeals to this court. We have juris-
 diction pursuant to 28 U.S.C. § 1295(a)(3).
                         DISCUSSION
     Mr. Prestonback raises two issues on appeal:
 (1) whether the Form 5-50 agreement rests on a statutory
 right or presents a question of government contracts; and
 (2) whether the Court of Federal Claims erred in conclud-
 ing that Mr. Prestonback’s substandard performance re-
 sulting in an involuntary separation constituted a
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 6                            PRESTONBACK   v. UNITED STATES

 voluntary failure as set forth in 10 U.S.C. § 2005. Because
 we agree with the trial court’s interpretation of § 2005, we
 affirm its decision entering judgment on the administrative
 record.
                              I
      We find this case similar to Favreau, 317 F.3d 1346. In
 Favreau, former members of the armed services brought a
 class action suit against the United States for recouping
 previously dispersed bonus payments after their separa-
 tion from the Army. Id. at 1348. Mr. Favreau, in particu-
 lar, “was separated from the Army for failure to comply
 with weight control standards,” after which the “Army re-
 couped the unearned portion of his reenlistment bonus.”
 Id. at 1349. None of the Favreau plaintiffs were voluntarily
 separated from the Army. Id. at 1350.
      During the relevant timeframe, two provisions of the
 U.S. Code governed recoupment of bonus payments—
 37 U.S.C. §§ 308(d)(1) (1994) and 308a(b) (1994). 2 Fa-
 vreau, 317 F.3d at 1351. These sections stated, in perti-
 nent part, that “[a] member who voluntarily, or because of
 his misconduct, does not complete the term of enlistment
 for which a bonus was paid to him under this sec-
 tion . . . shall refund that percentage of the bonus,”
 § 308(d)(1) (1994), and that “a person who voluntarily, or
 because of his misconduct, does not complete the term of
 enlistment for which a bonus was paid to him under this
 section . . . shall refund that percentage of the bonus,”
 § 308a(b) (1994). This statutory language is strikingly sim-
 ilar to the provision at issue in this case.

     2   Effective October 1, 2000, 37 U.S.C. § 308a was re-
 pealed by amendments made to subsection (b) of 37 U.S.C.
 § 309, and, effective January 6, 2006, 37 U.S.C. § 308(d)(1)
 was rewritten into 37 U.S.C. § 308(d), which removed the
 “voluntary, or because of his misconduct” language.
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 PRESTONBACK    v. UNITED STATES                            7

     Defending its recoupment action, the Government in
 Favreau provided an affidavit that provided the Depart-
 ment of Defense’s interpretation of the term “voluntarily.”
 317 F.3d at 1352. The Department of Defense explained
 that the question of “whether an individual has failed to
 complete a term of enlistment ‘voluntarily’ depends on
 whether the service-member was separated for engaging in
 conduct that is within the control of the service-member
 but incompatible with military service.” Id. Continuing, it
 noted that recoupment is not limited “to separations
 granted at the request of the service-member; rather, even
 where the military service initiates the separation, we have
 concluded that recoupment is appropriate if the conduct
 that resulted in the separation was voluntary, i.e., within
 the service-member’s control.” Id.
     DFAS also promulgated recoupment regulations that
 provided a list of actions that constituted failing to com-
 plete one’s service term “voluntarily or because of miscon-
 duct.” Id. at 1354. That list did not include the category
 “weight control failure.” See id. at 1354–55. The regula-
 tions did, however, include in the preamble the non-limit-
 ing language “but is not limited to” and further included
 non-limiting examples such as “[t]ransfer to Fleet Reserve,
 Fleet Marine Corps Reserve, or the Army or Air Force Re-
 serve,” “[m]arriage—female member,” “[r]esignation-sepa-
 ration by reason of acceptance of member’s resignation,”
 and “for the convenience of the government.” Id.
     Mr. Favreau first claimed that the recoupment violated
 his re-enlistment contract, which stated that he would be
 “[e]ntitled to receive pay, allowances, and other benefits as
 provided by law and regulation.” Id. at 1356. This court
 rejected his contract claim, reasoning that the “duty to pay
 the servicemen their bonuses is not contractual.” Id. Ra-
 ther, we explained that it “is well-established that ‘a sol-
 dier’s entitlement to pay is dependent upon statutory
 right.’” Id. at 1357 (quoting Bell v. United States, 366 U.S.
 393, 401 (1961)).
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 8                            PRESTONBACK    v. UNITED STATES

      Mr. Favreau next alleged that the recoupment of his
 bonus violated provisions of 37 U.S.C. §§ 308(d)(1) and
 308a(b). Id. Particularly, Mr. Favreau argued that he did
 not “voluntarily” separate from the Army because he did
 not apply for separation. Id. Citing a dictionary definition
 of “voluntary,” Mr. Favreau urged that it required his sep-
 aration to be “in a voluntary manner, of one’s own free
 will.” Id. (quoting WEBSTER’S NEW TWENTIETH CENTURY
 DICTIONARY (UNABRIDGED), at 2049 (2d ed. 1979)). This
 court, however, asked the question: “Is what voluntary?”
 Id. Indeed, it was undisputed that the administrative act
 of separation was not voluntary. Id. Rather, we explained
 that because the term “separated” was not used in the gov-
 erning recoupment statute, the question was whether the
 non-completion of the term of service was voluntary. Id.
 Particularly, we determined that the term “voluntary”
 modifies the term “complete the term of enlistment.” Id.
 We elaborated that the actor in the case of a separation is
 the agency, while the actor in the case of non-completion of
 the term of service is the service member. Id. We nonethe-
 less concluded that the statutory language was ambiguous
 because it does “not make it clear whether only those who
 request separation voluntarily come to the end of their en-
 listment.” Id. at 1358. We held, however, that the Depart-
 ment of Defense’s interpretation of “voluntarily, or because
 of his misconduct, does not complete the term of enlist-
 ment” to include the failure to satisfy weight and fitness
 standards was entitled to substantial deference. Id. at
 1358–61.
                              II
      With this background in mind, we first consider
 Mr. Prestonback’s challenge to the Board’s treatment of
 this case as one governed by statutory principles, rather
 than government contracts law. We review a decision of
 the Court of Federal Claims granting or denying a motion
 for judgment on the administrative record de novo, apply-
 ing the same standard of review as the trial court. Palantir
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 PRESTONBACK    v. UNITED STATES                            9

 USG, Inc. v. United States, 904 F.3d 980, 989 (Fed. Cir.
 2018) (citing Glenn Def. Marine (Asia), PTE Ltd. v. United
 States, 720 F.3d 901, 907 (Fed. Cir. 2013)). Accordingly, we
 will not disturb the decision of the Board unless it is arbi-
 trary, capricious, contrary to law, or unsupported by sub-
 stantial evidence. Chambers v. United States, 417 F.3d
 1218, 1227 (Fed. Cir. 2005) (citing Haselrig v. United
 States, 333 F.3d 1354, 1355 (Fed. Cir. 2003)).
     The Court of Federal Claims appropriately determined
 that Mr. Prestonback’s agreement with the Army, memori-
 alized through Form 5-50, rests upon a statutory right. As
 this court has previously recognized, the Supreme Court
 has ruled that military pay and benefit entitlements are
 controlled by statute, not contract. Schism v. United
 States, 316 F.3d 1259, 1271 (Fed. Cir. 2002) (en banc) (cit-
 ing Bell, 366 U.S. at 401). “It is well-established that ‘a
 soldier’s entitlement to pay is dependent upon statutory
 right.’” Favreau, 317 F.3d at 1357 (quoting Bell, 366 U.S.
 at 401). As in Favreau, where we determined that the
 “duty to pay the servicemen their bonuses is not contrac-
 tual,” id. at 1356, here, the duty to provide tuition assis-
 tance is not contractual. The fact that there exists a
 contract regarding entitlement to pay, allowances, and
 other benefits “does not transform it into a duty which, if
 violated, gives rise to contractual damages.” Id. (citing
 United States v. Larionoff, 431 U.S. 864, 869 (1977)).
 Moreover, Form 5-50 derived from a statute that allowed
 the Secretary to “require, as a condition to the Secretary
 providing advanced education assistance to any person,
 that such person enter into a written agreement with the
 Secretary.” 10 U.S.C. § 2005(a) (2000). Because tuition as-
 sistance is encapsulated by military pay and benefit enti-
 tlements, the Board properly treated Mr. Prestonback’s
 case as one governed by statutory principles.
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 10                            PRESTONBACK     v. UNITED STATES

                              III
     We next consider Mr. Prestonback’s contention that he
 did not “voluntarily fail[]” to complete his full term because
 an “involuntary elimination is not a voluntary elimina-
 tion.” Appellant’s Br. 15–16. Once again, we find Favreau
 instructive. The statute at issue here uses ambiguous lan-
 guage nearly mirroring the statutory provisions at issue in
 Favreau. Compare 10 U.S.C. § 2005(a)(3) (2000) (“[T]hat if
 such person, voluntarily or because of misconduct, fails to
 complete the period of active duty . . . such person will re-
 imburse”), with 37 U.S.C. § 308a(b) (1994) (“a person who
 voluntarily, or because of his misconduct, does not com-
 plete the term of enlistment . . . shall refund”). Indeed,
 Mr. Prestonback’s counsel conceded at oral argument that
 the statutory language at issue in this case and in Favreau
 is nearly identical.       See Oral Arg. at 10:54–11:05,
 http://oralarguments.cafc.uscourts.gov/default.aspx?fl=19-
 1166.mp3. And the Favreau court even cited to § 2005, rec-
 ognizing the similarity between it and the statutory provi-
 sion at issue in Favreau. See 317 F.3d at 1360 n.22.
     Moreover, as was the case in Favreau, Form 5-50 de-
 fines the term “voluntarily” to include but not be limited to
 certain actions, such as conscientious objection, resigna-
 tion, and marrying while a cadet. Compare J.A. 1056, with
 Favreau, 317 F.3d at 1354–55. Also as it did in Favreau,
 the Government interpreted “voluntarily . . . fail[s]” to en-
 compass volitional actions of a service member, such as
 substandard performance. J.A. 1008. This interpretation,
 like the Government’s interpretation of the statute at issue
 in Favreau, is “within the range of reasonable interpreta-
 tions of ambiguous code provisions.” Favreau, 317 F.3d.
 at 1361. It is reasonable to conclude that a voluntary fail-
 ure to complete active duty service as an officer (or a term
 of enlistment as in Favreau) can broadly refer to a service
 member’s voluntary actions triggering the service mem-
 ber’s separation. Thus, as in Favreau, the Government’s
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 PRESTONBACK    v. UNITED STATES                            11

 reasonable interpretation of the recoupment statute should
 be afforded deference. 3
      Mr. Prestonback asserts that “his involuntary termina-
 tion from the Army was logically the opposite of a voluntary
 termination, and that therefore recoupment was not au-
 thorized by his contract.” Appellant’s Br. 13. He continues
 that because the plain meaning of the term “voluntary” is
 clear, his elimination cannot be both voluntary and invol-
 untary. Id. at 15–16. Yet, as we explained in Favreau, the
 question is not whether the administrative act of Mr. Pres-
 tonback’s elimination from the Army was voluntary. See
 317 F.3d at 1357. Rather, the question is whether his fail-
 ure to complete the period of active duty was voluntary.
 See id. Accordingly, much as we determined that Mr. Fa-
 vreau voluntarily did not complete his term of enlistment
 for failing to meet physical standards, id. at 1349, 1357, we
 conclude that Mr. Prestonback voluntarily failed to com-
 plete his period of active duty for substandard perfor-
 mance.
      The Army’s treatment of “conscientious objection”—
 listed in Form 5-50 as an example of voluntary failure by
 the service member—as grounds for an involuntary elimi-
 nation in certain circumstances supports our view that a
 voluntary failure to serve should not be limited to a volun-
 tary elimination. At least as of December 2009, a cadet
 who applies for discharge on the grounds of conscientious
 objection “will be permitted to resign or will be involuntar-
 ily separated from the Military Academy” where that ca-
 det’s application for discharge “is disapproved or the cadet
 is reclassified.” United States Military Academy, Army

     3   Here, the level of deference we afford to the Gov-
 ernment is Skidmore deference, which is afforded to less
 formal expressions of agency interpretation. Skidmore
 v. Swift & Co., 323 U.S. 134, 140 (1944); see also United
 States v. Mead Corp., 533 U.S. 218, 227–28 (2001).
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 12                           PRESTONBACK    v. UNITED STATES

 Regulation 210-26, ¶ 6-21 (2009). This interpretation fur-
 ther demonstrates the juxtaposition between a voluntary
 failure to complete the period of active duty and the admin-
 istrative act of involuntary elimination.
     For these reasons, we conclude that the Court of Fed-
 eral Claims correctly concluded that Mr. Prestonback vol-
 untarily failed to fulfill the terms of his service
 requirement.
                        CONCLUSION
     We have considered Mr. Prestonback’s remaining ar-
 guments, but we do not find them persuasive. For the fore-
 going reasons, we affirm the decision of the Court of
 Federal Claims entering judgment on the administrative
 record.
                        AFFIRMED
                           COSTS
      No costs.