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Valparaiso Univ. Law School

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Monday, March 21, 2011

Neither Snow nor Rain nor Heat nor Threat of Suit in Federal Court . . .

In Anselma Crossing v. United States Postal Service,Postal Truck the Third Circuit Court of Appeals affirmed the District Court's ruling that a federal court is not the proper venue for a breach of contract action against the United States Postal Service (USPS).

The dispute arose out of an alleged spring 2007 oral agreement according to which the USPS would lease from Anselma Crossing a new post office facility in Chester Springs, Pennsylvania.   Anselma was to build and lease a building to the Post Office beginning in or around 2010. In reliance on this agreement Anselma asserted that it expended "substantial sums" on engineering and environmental services for the property.  However, in 2008, the Post Office made the decision to rescind all new projects, which effectively cancelled the Anselma project along with about 400 others.  Anselma sued USPS in District Court, alleging promissory estoppels and breach of contract, claiming it had incurred $150,000 in costs.   The court first had to determine whether such a suit could commence a District Court.

Two conflicting Acts govern suits against the Post office. The first is the Postal Reorganization Act (PRA), which allows the USPS to “sue and be sued.”  This act also gives District Courts original (but not exclusive) jurisdiction over all actions brought by or against the Postal Service.  Easy enough for Anselma, right?  The wrench in the works is the contradictory provision in the Contract Disputes Act of 1979, whichpushes any disputes by government contractors against the USPS- and other executive agencies into either the appropriate board of appeals- in this case the Postal Service Board of Contract Appeals, or the United States Court of Federal Claims. The Third Circuit determined that the provisions of the PRA were general, while the CDA is more “recent and precisely drawn.” Therefore the CDA’s specific provisions prevail over the RPA’s general ones. Anselma’s claims should have been brought to the Postal Service Board of Contract Appeals instead of the District Court.

[Katherine Freeman & JT]

http://lawprofessors.typepad.com/contractsprof_blog/2011/03/neither-snow-nor-rain-nor-heat-nor-threat-of-suit-in-federal-court-.html

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