SETTLEMENT

Brown v. Department of the Interior, 86 M.S.P.R. 546 (2000)
The decision sets out the rules for construction of a contract such as a settlement agreement where it appears that both parties did not give it the same construction. Among other rules, it notes that where the parties hold reasonable but different views of an ambiguous term that goes to the heart of the contract, no contract was formed. If the appellant was led to believe one thing during negotiations, and the agency was aware of that, the agreement should be interpreted in accordance with her understanding; if the appellant’s interpretation was reasonable, but the agency did not have reason to know that she attached a materially different meaning than it did, the agreement would be set aside for lack of mutual assent if the parties’ differences went to the heart of the contract. If their differences did not go to its heart, the agreement would still be in effect, but neither party would be bound by the meaning attached by the other. Finally, where an agreement is not fully integrated, the appellant may introduce evidence to show that the parties agreed to consistent, additional terms.
 

Foreman v Army, Fed. Cir. No. 00-3195, February 23, 2001.  The agency (Army) agreed in a settlement agreement to rescind the employee's removal, remove related documents from his file, and register him with the DOD priority placement program.  Subsequently, the agency failed to register him in the placement program, stating that DOD regulations preclude registration of employees  whose performance is less than fully successful (as was the employee's).  Both the Board and the Federal Circuit agreed that the Army's failure to comply with this part of the agreement was excusable on the ground of impossibility.  The Court held that the agreement could not impose an obligation upon a third-party, in this case, DOD, without its consent.  It further held that the Board lacked authority to enforce such an agreement against DOD.
 

Fomby-Denson v Army, 247 F.3d 1366, May 3, 2001.   The employee reached a settlement with the agency regarding her removal which provided that it represented “a full, complete, and final settlement of all differences and controversies between the parties,” provided for purging from her OPF all records relating to her removal, and included a confidentiality clause.  When the agency referred allegations relating to forgery of a rotation agreement to local German law enforcement officials, the employee filed a petition for enforcement with the Board and subsequently with the Federal Circuit. The Court first noted that the settlement agreement was ambiguous as to whether it encompassed referrals to law enforcement agencies.  It then went on to find that it would be contrary to public policy to construe the agreement to bar the agency from referring evidence of the employee’s alleged misconduct to law enforcement officials for investigation and possible prosecution, whether those authorities are domestic or international.
 

Tiburzi v Justice, Fed. Cir. No. 01-3123, November 1, 2001.  After the employee was removed on charges arising from what the agency characterized as a "bar brawl" at a bar near his home, his unprofessional demeanor with police officers, and his subsequent false statements, he orally entered into a settlement agreement before an MSPB AJ, who dismissed his appeal.  On review, the Federal Circuit upheld the oral agreement, rejecting the employee's claim that he entered into the agreement under "duress and extreme coercion."  The Court held that where parties intend to enter into an oral agreement, it is binding even if its terms are not embodied in a subsequent written agreement.
 

Gizzarelli v Army, 90 MSPR 269, December 10, 2001.  After the appellant was removed, a settlement was agreed to which provided that the removal SF-50 would be replaced in the employee's records with one showing "resignation after notice of proposed adverse action."   The settlement also provided that the agency "would not disclose any information to prospective employers which would indicate that the appellant was removed."  The employee subsequently was hired by SSA and in the course of a background investigation, Army officials released information to OPM showing that the employee had admitted to local military police that he had stolen government property and used agency employees to remodel his home.  The Board, taking explicit notice of the Federal Circuit's decision in Fromby-Denson, found that it would be against public policy to construe the settlement agreement as precluding the release of criminal history records to OPM.  While recognizing that public policy generally favors settlements which serve to avoid unnecessary litigation and encourage fair and speedy resolution of issues, it said such policy must be balanced against the public interest in ensuring that an individual hired in a Federal position of trust is suitable to hold such a position.   Finally, the Board limited this holding to situations involving police or criminal records where review of such records is necessary to assess the suitability of an applicant.