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Cherry v. United States Postal Service

U.S. Court of Appeals, Federal Circuit

February 19, 1999


Before Michel, Rader, and Schall, Circuit Judges.

The opinion of the court was delivered by: Per Curiam.

NOTE: Pursuant to Fed. Cir. R. 47.6, this Disposition is not citable as precedent. It is a public record. The Disposition will appear in tables published periodically.

Appellant James D. Cherry filed a petition for enforcement of a settlement agreement (Agreement) he executed with the United States Postal Service (Agency). Mr. Cherry and the Agency executed the Agreement after Mr. Cherry appealed his removal. The administrative Judge dismissed Cherry's petition in an initial decision. The decision became the Merit Systems Protection Board's (Board's) final decision on June 15, 1998. Because the Agency may have breached its implied obligation of good faith, this court vacates and remands.


The Agency issued a Notice of Proposed Removal to Mr. Cherry on May 9, 1997, for unsatisfactory performance. Mr. Cherry claimed that his performance was poor due to a foot injury he suffered while on the job. He appealed his removal to the Board. On August 4, 1997, Mr. Cherry and the Agency entered into a settlement agreement.

The Agreement provides in paragraph 9(a) that "the Agency will provide a supervisor's statement . . . which supports the Agency's position that the appellant's disabling medical condition results in his being unable to perform with regard to a critical element of his current position . . . and the disabling medical condition is incompatible with either useful and efficient service or retention in the position." In paragraph 9(b), the Agreement states that "[u]pon receipt of the application for disability retirement, the Agency will provide an Agency certification of reassignment and accommodation efforts in accordance with 5 C.F.R. § 831.1206(a)(1)(iii) [i.e. evidence for disability retirement] and will certify that the Agency is unable to accommodate the employee's disability condition." Furthermore, paragraph 9(c) provides that "[t]he Agency will not take further action to oppose the appellant's claim for unemployment compensation under North Carolina General Statutes, Chapter 96."

At the time Mr. Cherry and the Agency executed the Agreement, Mr. Cherry was receiving, from the Office of Workers' Compensation Program (OWCP), Workers' Compensation benefits for his claimed injury. Mr. Cherry alleges that after he and the Agency executed the Agreement, his former supervisor, Mr. Brantley, wrote to OWCP and informed OWCP that Mr. Cherry retired "for personal reasons." OWCP then stopped Mr. Cherry's benefits payments.

Mr. Cherry filed a petition for enforcement of the settlement agreement on January 23, 1998, alleging that Mr. Brantley's statements constituted a breach. The administrative jJudge dismissed the petition because the Agreement did not explicitly address Mr. Cherry's OWCP claims. Cherry v. United States Postal Service, Docket No. DC-0752-97-0648-C-1 (May 11, 1998). Mr. Cherry did not petition the Board for review of the administrative Judge's initial decision. The decision became final on June 15, 1998. Mr. Cherry filed an appeal to this court on June 22, 1998.


This court must affirm decisions of the Board unless (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by law, rule or regulation having been followed; or (3) unsupported by substantial evidence. 5 U.S.C. § 7703(c) (1994); Cheeseman v. Office of Personnel Management, 791 F.2d 138, 140-41 (Fed. Cir. 1986).

Mr. Cherry asserts that Mr. Brantley's statements to OWCP caused OWCP to stop Mr. Cherry's Workers' Compensation payments and constituted a breach of the agreement. The agreement is a contract, the interpretation of which is a question of law. See Greco v. Department of Army, 852 F.2d 558 (Fed. Cir. 1988).

In interpreting a contract, the court must look first to the plain language of the contract. See id. at 560. Although the agreement does not explicitly refer to Mr. Cherry's OWCP claim, it is a fundamental tenet of contract law that the parties must abide by contract terms in good faith. See, e.g., King v. Navy, 130 F.3d 1031, 1033-34 (Fed. Cir. 1997) (holding that good faith required the agency to "perfect" its actions so the petitioner would receive the full "benefit of her agreement."). Mr. Brantley's statements, if in fact he made the statements Mr. Cherry asserts, constitute a breach of the good faith obligation.

Paragraphs 9(a), (b) and (c), while not directly referring to OWCP claims, go to the heart of Mr. Cherry's ongoing dispute with the Agency: whether he was separated from the Agency for medical injury reasons or for other (personal or performance-related) reasons. The agreement clearly constitutes the resolution of this issue between the parties: Mr. Cherry was separated for medical injury reasons. Paragraph 9 explicitly requires that the Agency assist Mr. Cherry in his pursuit of disability retirement, and that the Agency not impede Mr. Cherry's state law claims. The contract implicitly requires the Agency to act in good faith in fulfilling these terms.

Mr. Brantley's alleged statements amount to a subversion of Mr. Cherry's medical injury claim with another Government office, OWCP in the Department of Labor. Such subversion would be a breach of the Agency's good faith obligation in executing the terms of the Agreement. However, whether Mr. Brantley did in fact make the statements Mr. Cherry asserts is an issue of fact. The Board's decision does not reveal any findings on this issue.

Therefore, this court vacates the Board's decision and remands the case to the Board. Upon remand, the Board is to determine whether Mr. Brantley in fact made the statements Mr. Cherry asserts. If the Board so finds, it is to instruct the Agency to retract (in writing) Mr. Brantley's statement that Mr. Cherry resigned for personal reasons and to state that Mr. Cherry resigned due to a medical condition incompatible with useful or efficient service in his position.


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