Dep't of Labor & Indus. v. Dean Inst. of Tech., Inc.

88 A.3d 317

DEPARTMENT OF LABOR AND INDUSTRY, BUREAU OF WORKFORCE DEVELOPMENT PARTNERSHIP, Petitioner

v.DEAN INSTITUTE OF TECHNOLOGY, INC., Respondent.

Commonwealth Court of Pennsylvania.

Argued March 10, 2014.

Decided March 27, 2014.

Beth S. Harris, Assistant Counsel, Harrisburg, for petitioner.

Emily H. Bensinger, Harrisburg, for respondent.

BEFORE: LEADBETTER, Judge, and LEAVITT, Judge, and McCULLOUGH, Judge.

OPINION BY Judge McCULLOUGH.

The Department of Labor and Industry, Bureau of Workforce Development Partnership (Department) petitions for review of the July 29, 2013 order of the Board of Claims (Board) entering judgment in favor of the Dean Institute of Technology (Dean Tech) with respect to sixty-four of eighty-three disputed invoices. We affirm.

In 2002, Dean Tech, a vocational-technical school, entered into a five-year contract, from July 1, 2002, to June 30, 2007 (2002 Master Agreement), with the Department pursuant to the Trade AdjustmentAssistance (TAA) program. ¹ Under the terms of the 2002 Master Agreement, Dean Tech could enroll new students in TAA funded programs during the first three years of the 2002 Master Agreement, and these students had until June 30, 2007, to complete such training with payment by the Department. The eighty-three disputed invoices at issue are for vocational training provided to displaced workers over a period stretching from January 2003 to December 2004, with the invoices dated February 2003 to January 2005. Under section 4(f) of the 2002 Master Agreement, the deadline for submission of invoices was originally set forth as follows: “[t]he final payment request shall be submitted 30 days prior to the expiration or termination date of the [2002 Master] Agreement and shall be marked ‘Final.’ ” (Board's Findings of Fact Nos. 2, 11–12, 15, 19, 22.)

In 2003, the parties amended the 2002 Master Agreement, effective October 31, 2003 (2003 Amendment).² (Board's Finding of Fact No. 29.) In relevant part, the 2003 Amendment shortened the deadline for submission of invoices in order to facilitate reallocation of funds from inactive accounts to pay for other students' training as follows:

The Contractor shall not be paid if invoices are not received within 60 days of the completion of the training, completion of the semester, term or quarter or the end of the month for training provided on a clock hour basis, whichever is applicable. The last invoice for each student shall be marked “Final.”

(Board's Finding of Fact No. 30) (emphasis in original).

During the period of February 2003 to January 2005, when the eighty-three disputed invoices were prepared, Dean Tech routinely filled out some invoices (including eighty-one of the eighty-three disputed invoices) on a form different from the forms prescribed by either the 2002 Master Agreement or the 2003 Amendment. The alternate invoice form Dean Tech used for those eighty-one invoices was on Dean Tech letterhead and set forth a different recipient than the ones provided in the 2002 Master Agreement and the 2003 Amendment, a different ZIP code than the one provided in the 2002 Master Agreement and the 2003 Amendment, and failed to specify that the invoices should be sent to the twelfth floor of the Department's building as specified in the 2002 Master Agreement and the 2003 Amendment. Dean Tech sent the invoices to the Department's Office of Employment Security, an entity within the Department that once handled federally funded workforce development and unemployment compensation matters but had been defunct since 1985. Although the eighty-three unpaid invoices were prepared between 2003 to 2005, Dean Tech did not make any inquiry concerning these invoices until 2006, when Richard Ali (Ali), Dean Tech's Director of Education, directed a generalized review of student files for unpaid invoices. (Board's Findings of Fact Nos. 23–24, 31–32, 34–35, 40.)

On January 28, 2007, Dean Tech sent a letter to the Department referencing a discussion between a Department representative and Ali, enclosing the eighty-three disputed invoices (among others), and requesting payment of the same. The parties acknowledge that the Department received the eighty-three disputed invoices shortly after Dean Tech submitted them by cover letter dated January 28, 2007, between two to four years after the stated dates on the actual invoices. (Board's Findings of Fact Nos. 41–42.) On March 15, 2007, the Department sent Dean Tech a letter stating that the eighty-three disputed invoices could not be paid because the “federal funds for this time frame [2/1/2003 through 12/31/2004] ha[d] expired[,]” (Board's Finding of Fact No. 43), and referenced the deadline for submission of invoices set forth in the 2003 Amendment. On July 30, 2008, Dean Tech sent a letter to the Department with a list of students and copies of the original invoices, asking the Department to confirm payment. On August 26, 2008, Dean Tech sent another letter to the Department indicating that it was being audited and requesting confirmation that the Department owed it $204,706.70, as indicated by an enclosed statement listing unpaid invoices. (Board's Findings of Fact Nos. 43, 45–46.)

The Department did not acknowledge Dean Tech's July 30, 2008 letter or submission of invoices. On December 29, 2008, the Department sent Dean Tech a letter responding to the August 26, 2008 submission, stating that the eighty-three disputed invoices could not be paid because federal funds for the 2002 Master Agreement had expired and payment could not be made in accordance with the terms of the 2002 Master Agreement and referencing the sixty-day deadline for submission of invoices provided in the 2003 Amendment. On January 20, 2009, Dean Tech sent a letter to the Department stating that it did not agree with the refusal to pay the eighty-three disputed invoices (among others) and requesting the re-examination of the invoices.³ By letter dated February 11, 2009, the Department responded to Dean Tech's latest request for review and again denied payment.⁴ In the February 11, 2009 letter, the Department stated that it could not be sure that the invoices had been received when they were originally submitted because the invoices indicated an address different from the one set forth in the 2002 Master Agreement. The letter concluded with an invitation to call the Department with any questions. (Board's Findings of Fact Nos. 47–48.)

On March 20, 2009, Stuart R. Kaplan (Kaplan), Dean Tech's attorney, sent a letter to Christine Enright (Enright), at the time the Department's Director of the bureau in charge of paying the invoices, requesting that the Department reconsider payment of the eighty-three disputed invoices (among others). ^5,6 The Department'schief counsel replied on July 31, 2009, stating that the Department would review Dean Tech's concerns and reply shortly.⁷ After receiving no response, Dean Tech commenced this action before the Board on August 5, 2009, by filing a statement of claim against the Department seeking payment of the invoices. (Board's Findings of Fact Nos. 4, 49, 52–53.)

The Board conducted a hearing with respect to the eighty-three disputed invoices. James Dean (Dean), Dean Tech's owner and president, testified that Dean Tech provides training to displaced adult workers through the TAA program overseen by the Department. Dean stated that he thought he was in a continuing dialogue with the Department when Dean Tech sent the January 20, 2009 letter to the Department requesting reconsideration of payment for the disputed invoices. Dean testified that, after Dean Tech received the February 11, 2009 letter from the Department, he thought Dean Tech had to file a claim and that it did so by letter dated March 20, 2009. (R.R. at 539a, 552a.) Nancy Grom (Grom), Dean Tech's former Financial Aid Director, also testified for Dean Tech. Grom stated that she and another Dean Tech employee, June Ganser, prepared the invoices and that there was never a time when she created an invoice that was not mailed. (R.R. at 707a–08a, 714a.)

Testifying for the Department, Enright stated that the 2003 Amendment was the result of trying to improve the Department's fiscal operations. (R.R. at 659a.) Karen Stepanik, the Department's Workforce Development Analyst II, testified that the Office of Employment Security was not referenced in the TAA program. (R.R. at 667a–68a.) Debra Walkowiak, the Department's Fiscal Technician, testified that during the time period in question, she delivered the mail to the Department's bureau responsible for administering the TAA program and would return misaddressed mail to the mailroom. (R.R. at 670a–71a.)

By decision and order dated July 29, 2013, the Board noted that it had subject matter jurisdiction over the claim in this case arising from the contract that Dean Tech entered into with the Department under section 1724(a)(1) of the Procurement Code.⁸ The Board determined that, because the Department's December 29, 2008 letter responding to Dean Tech's request for confirmation of payment clearly and affirmatively denied payment of the eighty-three invoices, Dean Tech's right to file an administrative claim with the Department for breach of the 2002 Master Agreement and 2003 Amendment accrued as of that date. The Board also determined that the Department's February 11, 2009 letter lacked the finality and the certainty requisite to be considered a final determination of an administrative claim and this letter did not commence the running of the fifteen-day period of limitations under section 1712.1(e) of the Procurement Code.⁹ The Board concluded that the Department did not consider this letter a final determination pursuant to Schmidt v. Commonwealth, 495 Pa. 238, 433 A.2d 456 (1981); Wayne Knorr, Inc. v. Department of Transportation, 973 A.2d 1061 (Pa.Cmwlth.2009); and In re Appeal of Borough of West View, 93 Pa.Cmwlth. 380, 501 A.2d 706 (1985), because the Department closed the...