GRANTED: March 16, 1995 GSBCA 12829 CARDINAL MAINTENANCE SERVICE, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Joseph A. Camardo, Jr., and Catherine G. Gadway, Auburn, NY, counsel for Appellant. Richard R. Butterworth, Jr., Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DEVINE, BORWICK, and GOODMAN. GOODMAN, Board Judge. In September 1993, appellant, Cardinal Maintenance Service, Inc. (CMS), entered into a settlement agreement with respondent, the General Services Administration (GSA), with regard to a previous appeal which was docketed as GSBCA 11978. That appeal was thereafter dismissed. Cardinal Maintenance Service, Inc. v. General Services Administration, GSBCA 11978 (Oct. 4, 1993). The instant appeal arises from a claim for payment of appellant's final invoice under the contract which was the subject of the previous appeal. Respondent denied appellant's claim for payment of the final invoice, because it was respondent's position that payment of the invoice was included in the settlement of GSBCA 11978, or alternatively, that the settlement agreement in the previous claim contained an accord and satisfaction which was a release of all pending and future claims arising from the contract. As discussed below, we grant the appeal. Findings of Fact 1. Cardinal Maintenance Service, Inc., was awarded contract number GS07P-88-HTC-0284 (the Batesville contract) by GSA on or about May 10, 1989, for janitorial and other related services for the Federal Building in Batesville, Arkansas. CMS and GSA also entered into another contract on or about August 22, 1988, number GS-07P-88-HTC-0216, for custodial services at Helena, Arkansas. Appellant's Record Submission at 2. 2. On April 13, 1992, CMS filed a claim for equitable adjustment (the claim) of the Batesville contract in the amount of $75,799.01, allegedly for additional work effort and wrongful deductions for the period from contract inception until February 28, 1992. On June 17, 1992, the contracting officer issued a decision denying the claim. On August 11, 1992, CMS appealed the contracting officer's decision to this Board, and the appeal was docketed as GSBCA 11978. Thereafter, CMS updated the quantum portion of the claim to $127,724.19 for the entire contract period. Appellant's Record Submission, Exhibit A-2 at 1-2. 3. While the claim was pending, CMS invoiced GSA regularly for payments due under the contract. All of these invoices were paid except for the last invoice, invoice number 4968, dated June 1, 1993 (final invoice), in the amount of $4,524.43 for services performed during May 1993. Appellant's Record Submission, Exhibit A-1. When the invoice was first submitted for payment, there was no dispute to the fact that the work had been performed or that the amount was due and owing. At the time of execution of the settlement agreement discussed below, the invoice had not been paid and there continued to be no dispute that the work had been performed and that payment was due and owing. Respondent's Reply Submission at 2, 4; Exhibit 7, 3. 4. The Disputes clause of the contract read, in pertinent part: (c) "Claim" . . . means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. . . . A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim under the [Contract Disputes] Act . . . if it is disputed either as to liability or amount or is not acted upon in a reasonable time. 5. Section G.6 of the contract contained the following provision which read, in relevant part: GSAR 552.232-79 FINAL PAYMENT (APRIL 1986) Before final payment is made, the Contractor shall furnish the Contracting Officer with a release of all claims against the Government relating to this contract, other than claims in stated amounts that are specifically excepted by the contractor from the release. Respondent's Reply Submission, Exhibit 10. 6. By letter dated May 7, 1993, the contracting officer advised CMS with regard to the contract: As required by Section G, paragraph 6, page 33 of subject contract, upon expiration of the contract period, please complete and sign the enclosed Release of Claims form and return to this office no later than June 10, 1993. Please note that the Release of Claims form will not be valid unless signed after the expiration date of the contract and that final payment cannot be released until the form is received, properly executed, by this office. Respondent's Reply Submission, Exhibit 11. 7. The release form read in relevant part: The undersigned contractor . . . hereby releases the United States from any and all claims arising under or by virtue of said contract or any modification or change thereof except as follows: (Here list any claims against the Government and the amounts thereof. If none, so state). Respondent's Reply Submission, Exhibit 12. 8. CMS did execute the release of claims form for the contract in Helena, Arkansas. It believed that it had executed the form for the Batesville contract and returned it to the contracting officer, but it had not done so. Appellant's Reply Submission at 1, 1. 9. On or about September 29, 1993, CMS and GSA entered into a settlement agreement. The settlement agreement recited facts concerning the award of the Helena contract and the instant contract, the filing of the claim, the contracting officer's decision and appeal thereof, the increase in the amount of the claim to $127,724.19 and the submission of a draft claim on the Helena contract between CMS and GSA. The settlement agreement read, in pertinent part: [I]n consideration of the foregoing premises, and the desire of both parties to settle any and all disputes between them, the Government and Cardinal do hereby agree as follows: 1. The Government agrees to make payment to Cardinal in the amount of $85,000.00 . . . . . . . . 3. . . . Cardinal releases the Government of and from any and all claims, demands for relief, remedies or equitable adjustments, known and unknown, of any nature or description whatsoever, legal or equitable, which under, or by virtue of Contract No. GS-07P-88- HTC-0284 or Contract No. GS-07P-88-HTC-0216, and which now or hereafter, could be properly asserted by Cardinal under these contracts, including fees and costs under the Equal Access to Justice Act . . . . Appellant's Record Submission, Exhibit A-2. The term "final payment" did not appear in the settlement agreement, nor was there any reference in the settlement agreement to CMS's final invoice under the contract. Id. 10. The settlement was reflected in modification PC04 to the contract, dated September 30, 1993, which stated, in part: This modification is issued to authorize payment for settlement of the Appeal of Cardinal Maintenance Service, Inc., GSBCA 11978, and to establish an appropriation code and Act # in accordance with the attached Settlement Agreement. Payment in the amount of $85,000.00 plus interest . . . from April 13, 1992, until the date payment is made. Appellant's Record Submission, Exhibit A-3. The term "final payment" did not appear in the modification nor was there any reference in the modification to CMS's final invoice under the contract. The modification was executed by the contracting officer. Id. 11. The contracting officer has submitted an affidavit in this appeal which reads, in relevant part: I was involved in the settlement of the appeal (GSBCA 11978) and executed the settlement document on September 29, 1993. It was my understanding and intention at the time I signed the settlement document that all monies due the appellant on both [the Helena contract and the instant contract] would be finalized with the settlement amount. Respondent's Reply Submission, Exhibit 7, 4. 12. Neither CMS nor respondent alleges that the subject of final payment or payment of the final invoice was specifically discussed during the negotiation of the settlement agreement. Respondent's counsel "did not have specific knowledge of the status of the final payment for [the contract] at the time the Settlement Agreement was negotiated between the parties." Appellant's Record Submission, Exhibit A-9 at 6. 13. On September 28, 1993, the parties filed a joint motion to dismiss GSBCA 11978. The Board issued an order dated October 4, 1993, dismissing the appeal without prejudice, to convert to a dismissal with prejudice sixty days from the date of the order. Neither the parties' motion nor the Board's order mentioned "final payment" or CMS's final invoice. Appellant's Record Submission, Exhibit A-4. 14. A memo dated October 5, 1993, executed by the contracting officer and contract administrator, reads, in relevant part: The final payment in the amount of $4,524.43 for [the contract] will not be paid since it was included in the settlement of the Appeal of Cardinal Maintenance Service, Inc., GSBCA 11978. [Respondent's counsel] determined the final payment of $4,524.43 was part of the settlement. No further action is required and the contract is closed. Respondent's Reply Submission, Exhibit 7(d). 15. Respondent issued a check dated October 8, 1993, in the amount of $93,431.58. The check states on its face "AS PER INVOICE GSBCA 11978." Appellant's Record Submission, Exhibit A- 5. 16. By letter dated February 11, 1994, by its attorney, CMS submitted a claim to the contracting officer, which read, in relevant part: The Government has failed to pay CMS for its last submitted invoice, dated June 1, 1993. In or about January 1994, CMS spoke with you to inquire of the status, and was informed that the Government would not be paying this last invoice, as it was included in the final settlement of GSBCA No. 11978 and Modification PC04. CMS is entitled to its final payment. Demand is hereby made for payment in the amount of $4,524.43 and a Contracting Officer's Final Decision. Appellant's Record Submission, Exhibit A-6. 17. By letter dated February 24, 1994, the contracting officer responded to the claim. The letter was not in the form of a contracting officer's final decision. It stated, in relevant part: The Settlement Agreement was signed approximately 4 months after your Invoice No. 4968 was issued. Particular note is called to paragraph 3 on page 3 of the Settlement Agreement . . . . As you can see, your release was for any and all claims of any nature or description whatsoever under the above contracts. This contract has expired, all claims have been dismissed pursuant to the Settlement Agreement, and this case has been completely and finally closed. Appellant's Record Submission, Exhibit A-7. 18. No further action was taken by the contracting officer with regard to CMS's claim. By letter to the Board dated May 6, 1994, CMS filed a notice of appeal. The appeal was docketed as GSBCA 12829. The parties elected to submit this appeal for a decision on the record pursuant to Rule 11.[foot #] 1 Record submissions and reply record submissions were filed by the parties. Discussion This dispute arises from the settlement of a previous appeal. Appellant had previously appealed a contracting officer's decision denying a request for equitable adjustment under the contract. That appeal was docketed as GSBCA 11978. Finding 2. In September 1993, appellant and respondent entered into a settlement agreement and the appeal was dismissed with prejudice. Pursuant to the settlement agreement, CMS was paid a settlement amount of $85,000, plus interest. Finding 9. When the settlement agreement was executed, appellant had not been paid by respondent for the final invoice for work performed under the contract in the amount of $4,524.43 for services performed during May 1993. There was no dispute that the work was performed or that payment in the amount of $4,524.43 was due and owing for the work performed. Finding 3. After the settlement agreement was executed, respondent issued a check to appellant in the amount of $93,431.58, which included interest on the settlement amount. Finding 15. Thereafter, appellant requested payment of the final invoice. Finding 16. Respondent's contracting officer informed appellant that respondent's position was that payment of the final invoice was included in the payment settlement of GSBCA 11978. Appellant therefore demanded payment and requested a contracting officer's final decision. Id. Respondent's internal memoranda and ----------- FOOTNOTE BEGINS --------- [foot #] 1 58 Fed. Reg. 69,246, 69,257 (1993) (to be codified at 48 CFR 6101.11). ----------- FOOTNOTE ENDS ----------- correspondence with CMS indicate that the contracting officer believed the settlement amount included payment of the final invoice, and that CMS's claim for final payment was barred by the release language in the settlement agreement and the Board's dismissal with prejudice of the appeal. Findings 14, 17. Both parties agree that when the final invoice which is the subject of this dispute was submitted for payment, respondent did not dispute that the work was performed, and that GSA owed CMS for the work performed. Finding 3. The instant dispute arises because CMS believes the settlement only encompassed its disputed claims at the time of settlement, and not the final invoice. GSA posits two defenses -- the settlement amount included the amount due under the final invoice and that even if it did not, this claim is barred by paragraph 3 of the settlement agreement. The Settlement Amount Did Not Include Payment of the Final Invoice Respondent urges the Board not to consider extrinsic evidence, or consider appellant's "unspoken intentions," but to rely solely on the settlement agreement. Respondent's Reply Submission at 6. We find the settlement agreement clear and unambiguous. The agreement contains a recitation of facts concerning the award of the contract, the filing of the claim which was the subject of GSBCA 11978, which is the subject of the contracting officer's decision and appeal thereof, the increase in the amount of the claim to $127,724.19, and the submission of a draft claim on another contract between CMS and GSA. Under the settlement agreement, respondent was required to pay CMS $85,000 and the agreement clearly states the reason for the agreement is "the desire of both parties to settle any and all disputes between them." There is no mention of final payment or payment of the final invoice in the settlement agreement. Finding 9. Respondent argues that the settlement amount must have included payment of the final invoice, because paragraph 3 of the settlement agreement was a "complete and total release of all rights under the contract" and because "the parties agreed broadly to a waiver of all rights under the contract." Respondent's Reply Submission at 4-5. We do not read paragraph 3 as broadly as respondent. Respondent cites us to Progressive Brothers Construction Co. v. United States, 16 Cl. Ct. 549 (1989), in which the contractor was aware of a disputed claim which it failed to note as an exception in the release, and the court held that a contractor was barred from asserting a claim which existed at the time a general release was executed. The release read as follows: For and in consideration of the payments heretofore made, and payment of the above recited sum now due by reason of performance of the above contract, the undersigned contractor hereby releases and discharges the United States of America of and from all liabilities, obligations, and claims whatsoever under or arising out of said contract, except the following . . . . Id. at 550. The instant appeal is distinguishable, with regard to the nature of the amount sought and the language of the release. When CMS executed its settlement agreement, the final invoice was a routine request for payment which was not in dispute, Finding 3, and therefore not a claim according to the Disputes clause of the contract. Finding 4. Paragraph 3 of the agreement in the instant appeal was limited to a release of "all claims, demands for relief, remedies or equitable adjustments," Finding 9, all of which concern disputes between the parties. The agreement makes no reference to and does not release undisputed obligations or liabilities of the Government, as did the general release in Progressive. As the final invoice was not a claim, it therefore was not released by the execution of the settlement agreement. Respondent's interpretation of the settlement agreement to include payment of the final invoice is unreasonable, as it is contrary to the clear, unambiguous, and plain meaning of the settlement agreement. The Payment of the Final Invoice Was Due Upon Execution of the Settlement Agreement Pursuant to the contract, before final payment was made, the contractor was required to furnish the contracting officer with a release of all claims against the Government relating to the contract, other than claims specifically excepted from the release. Finding 5. Upon execution of the settlement agreement, all claims pending under the contract were released, and the contractor had fulfilled the contractual obligation to furnish a release of all claims prior to final payment. The final invoice was not a claim, was not included in the settlement amount, and was not released by the settlement agreement. Accordingly, payment of the final invoice was due upon execution of the settlement agreement. The Claim for Payment of the Final Invoice Is Not Barred by Paragraph 3 of the Settlement Agreement As the payment of the final invoice was not included in the settlement amount, we must determine if paragraph 3 of the settlement agreement bars CMS from now pursuing a claim for payment of the final invoice, as an accord and satisfaction. Respondent argues that paragraph 3 was an accord and satisfaction as to the payment of the final invoice, and "the fact that the final payment to appellant was not in dispute at the time the settlement agreement was executed is immaterial; the settlement agreement barred any further claims under the Contract whether these claims were specifically contemplated or not." Respondent's Reply Submission at 6, 8. Respondent misstates the law. It has long been recognized that alleged conclusive language in a release will not bar consideration of a claim which was clearly not within the contemplation of the parties at the time the document containing the release language was signed. John A. Volpe Construction Co., GSBCA 2570, 70-1 BCA 8070; see also Gardner Zemke Co., IBCA 2626, 90-3 BCA 23,064 (citing L.W. Packard & Co. v. United States, 66 Ct. Cl. 184 (1928)). The scope of an accord and satisfaction agreement is determined by the specific language used and the intent of the parties as manifested by the events and communications which preceded execution. Bick-Com Corp., VACAB 1320, 80-1 BCA 14,285; Shaw Metz & Associates, VACAB 774, 71-1 BCA 8679. Releases must be scrutinized to determine the true intent of the parties as shown by the course of action or negotiation. B & M Roofing and Painting Company, ASBCA 26998, 86-2 BCA 18,833, reconsideration denied 86-3 BCA 19,306. The parties' conduct and negotiations before the settlement agreement was executed, as well as the plain meaning of the settlement agreement, convince us that the parties did not contemplate appellant would release its claim for final payment. According to the contracting officer's letter several months before the settlement, final payment would have been paid upon receipt of a release excepting the pending claims. Finding 6. Payment of the final invoice or final payment was never discussed during negotiations which led to the settlement of GSBCA 11978. Finding 12. When appellant negotiated and executed the settlement agreement, it therefore had no reason to contemplate the need to pursue a claim to recover the payment of the final invoice, as it was not in dispute. Similarly, respondent's counsel "did not have specific knowledge of the status of the final payment for [the contract] at the time the Settlement Agreement was negotiated between the parties." Id. Apparently, respondent's counsel had not been advised by the contracting officer that there was an undisputed, unpaid invoice when the settlement agreement was executed, and respondent's counsel therefore had no reason to contemplate a claim to recover the payment of the final invoice. The settlement agreement, signed by appellant, respondent's counsel, and the contracting officer, and the contract modification authorizing payment of the settlement amount, signed by the contracting officer, did not mention final payment or the final invoice. Findings 9, 10. After the settlement agreement was executed, the contracting officer wrote a memorandum stating that "[t]he final payment in the amount of $4,524.43 for [the contract] will not be paid since it was included in the settlement of the Appeal of Cardinal Maintenance Service, Inc., GSBCA 11978. [Respondent's counsel] determined the final payment of $4,524.43 was part of the settlement." Finding 14. How or when respondent's counsel determined that payment of the invoice was "part of the settlement" is not clear from the record, since counsel was not aware of the status of the final invoice during negotiation of the settlement. Despite the contracting officer's allegation that she intended the negotiations to encompass final payment, Finding 11, she never manifested this intent to appellant, and made no effort to raise the issue in the negotiations nor suggest language in the settlement agreement to resolve the issue. We cannot give preference to the subjective, unexpressed intent of one of the parties. Tibshraeny Brothers Construction, Inc. v. United States, 6 Cl. Ct. 463 (1984). The check which was issued in the amount of $93,431.58 included the settlement amount of $85,000, plus interest on that amount, calculated from April 13, 1992, the date the contracting officer received the claim which was settled in GSBCA 11978. Findings 10, 15. If respondent had intended the payment of the final invoice to be included in that check, it does not seem reasonable that respondent would have paid interest on the entire settlement amount from the date the claim was submitted. The words on the check "AS PER INVOICE GSBCA 11978" do not mention final payment nor any specific invoice. Finding 15. If "AS PER INVOICE" on the check was intended to be a reference to the final invoice, this intention was certainly not made clear. These circumstances lead us to conclude that the parties did not contemplate a claim for payment of appellant's final invoice at the time the settlement was negotiated and executed. We agree with respondent that paragraph 3 of the settlement agreement was an accord and satisfaction of those disputes between the parties which resulted in claims under the Helena contract and the instant contract pursued in the prior appeal. However, respondent fails to prove an accord and satisfaction as to the payment of the final invoice, since at least one critical element necessary to establish an accord of satisfaction is lacking -- a meeting of the minds.[foot #] 2 Neither the settlement discussions, the settlement agreement, the contract modification authorizing payment of the settlement, or the check which paid ----------- FOOTNOTE BEGINS --------- [foot #] 2 See, King Fisher Marine Service, Inc. v. United ___ __________________________________________ States, 16 Cl. Ct. 231 (1989), for a discussion of the elements ______ of the defense of accord and satisfaction. ----------- FOOTNOTE ENDS ----------- the settlement reflect a meeting of the minds as to this subject matter. Accordingly, as the parties did not contemplate paragraph 3 to encompass undisputed payments due, and there was no accord and satisfaction as to this issue, we grant appellant's appeal. Decision The appeal is GRANTED. Appellant is due payment of its final invoice in the amount of $4,524.43, and applicable interest. ________________________ ALLAN H. GOODMAN Board Judge We concur: __________________________ ________________________ DONALD W. DEVINE ANTHONY S. BORWICK Board Judge Board Judge